Page 43


Notes to the accounts


1 Accounting policies

Accounting convention and basis of consolidation

The accounts are prepared under the historical cost convention, with the exception of certain land and buildings which are included at their revalued amounts and financial assets and financial liabilities (including derivative instruments) valued at fair value through profit and loss, and in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS. The consolidated income statement and balance sheet include the accounts of the company and all its subsidiary undertakings.

Business components that represent major lines of business or geographical areas of operations are recognised as discontinued if the operations have been disposed of, are being abandoned or meet the criteria to be classified as held for sale.

The preparation of consolidated financial statements in conformity with international financial reporting standards requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Although these estimates are based on management’s best knowledge of the amount, event or actions, actual results ultimately may differ from those estimates.

These policies have been consistently applied to all the years presented unless otherwise stated.

The following standards were adopted by the group from 1 February 2009:

– IAS 1 (revised) ‘Presentation of Financial Statements’, requires that the group presents one performance statement (‘statement of comprehensive income’) or two statements (‘income statement’ and ‘statement of comprehensive income’). The group has elected to present two statements: an ‘income statement’ and a ‘statement of comprehensive income’. IAS 1 now also requires a ‘statement of changes in equity’ as a primary statement. The consolidated financial statements have been prepared under the revised disclosure requirements. Comparative information has been represented so it is in conformity with the revised standard.
– IFRS 8 ‘Operating Segments’, requires segmental reporting to be on the same basis as internal management reporting. This standard has had no impact on the group’s profit for the period or equity. Disclosures have been amended as detailed in note 2.

The following standards, amendments and interpretations were adopted by the group from 1 February 2009 and have not had a significant impact on the group’s profit for the period, equity or disclosures:

– Amendments to IFRS 7 ‘Financial Instruments: Disclosures’.
– Amendments to IAS 23 ‘Borrowing Costs’.

There are a number of new accounting standards and amendments to existing standards that have been published and are mandatory for the group’s accounting periods beginning on or after 31 January 2010 or later periods, but which the group has not adopted early.

These are as follows:

– Revision to IFRS 3 ‘Business Combinations’.
– Amendment to IFRS 5 ‘Non-current Assets held for Sale and Discontinued Operations’.
– Amendment to IAS 1 ‘Presentation of Financial Statements’.
– Revision to IAS 27 ‘Consolidated and Separate Financial Statements’.
– Amendment to IAS 38 ‘Intangible Assets’.

These are not expected to have a material impact on the group’s profit for the period or equity, but may affect disclosures.