ANNUAL REPORT AND FINANCIAL STATEMENTS 2012 | 47
Accounting Policies
Basis of preparation and statement of compliance These are the Consolidated Financial Statements of F&C Asset Management plc and its subsidiaries (the Group) which have been prepared on a going concern basis and in accordance with International Financial Reporting Standards, as adopted by the European Union (EU adopted IFRS), and those parts of the Companies Act 2006 applicable to companies reporting under adopted IFRS. These Consolidated Financial Statements are presented in millions of pounds Sterling, rounded to one decimal point, except where otherwise indicated.
Certain figures reported in the 2011 Financial Statements have been reclassified within these Financial Statements for consistency with the presentation applied within these Financial Statements. These changes are presentational in nature and do not change the previously reported financial results for the year ended 31 December 2011 nor the aggregate assets and liabilities at that date.
Going concern The Group’s business activities, together with the factors likely to affect its future development, performance and position are set out in the Business Review on pages 2 to 19. The financial position of the Group, its cash flows and liquidity position are also described in the Business Review. In addition, note 35 to the Financial Statements includes the Group’s objectives, policies and processes for managing its capital; its financial risk management objectives; details of its financial instruments and its exposure to credit risk, liquidity risk and market risks.
The Group has considerable financial resources together with long- term contracts with a number of clients across different geographic areas and industries. After making enquiries, the Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing these Financial Statements.
New or revised standards The revisions to the standards below, which were effective during the year ended 31 December 2012, did not have any impact on the accounting policies, financial position or performance of the Group:
(a) Amendments to IFRS: IFRS 7 Financial Instruments: Disclosures (Amendment)
IAS 12 Income Taxes (Amendment) – Deferred Taxes: Recovery of Underlying Assets
(b) Improvements to IFRS (effective June 2012): IAS 1
Presentation of Financial Statements – Clarification of the requirements for comparative information
Parent Company Financial Statements The parent Company has continued to present individual Financial Statements prepared on a UK GAAP basis as permitted by section 395(1) of the Companies Act 2006, adopting the exemption of omitting the Profit and Loss Account and related notes conferred by
section 408 of that Act. The Company Financial Statements, together with their respective accounting policies and notes, are presented on pages 121 to 133.
Accounting estimates, assumptions and judgements The preparation of the Financial Statements necessitates the use of estimates, assumptions and judgements. These estimates, assumptions and judgements affect the reported amounts of assets, liabilities, contingent assets and contingent liabilities at the reporting date as well as the reported income and expenses for the year. While estimates are based on management’s best knowledge and judgement using information and financial data available to them, the actual outcome may differ from these estimates.
The key sources of estimation, uncertainty and critical judgements in applying accounting policies are disclosed, where appropriate, in the following notes to the Consolidated Financial Statements:
(a) Impairment testing of intangible assets The projected revenue growth, projected operating cost growth and discount rates applied to cash flow projections, as disclosed in note 13.
(b) Pension assumptions The mortality assumptions, expected rates of return, discount rates, rates of salary increases and inflation increases, as disclosed in note 24.
(c) Provisions Onerous contract provisions for premises are subject to uncertainties over time, including market rent reviews and break options within the lease arrangements. Details are disclosed in note 23.
(d) F&C REIT put option liabilities The fair value of the F&C REIT put option liabilities is based upon an external valuation of the F&C REIT business. By its nature, the valuation is subject to a significant number of assumptions and judgements and could differ from any price ultimately agreed between the parties if the put options were exercised. Details of the key valuation assumptions used are outlined in note 27.
(e) Share-based payments The share-based payment expense in respect of the TRC Commutation arrangements, as detailed in notes 6(a)(iv) and 25(g), is dependent upon whether the underlying call options are exercised and, if exercised, the expense will vary according to a number of factors, including the level of earnings of the respective Investment Teams and the latest audited financial results of the F&C Group.
(f) Deferred tax assets The quantum of deferred tax assets recognised, as detailed in note 16, is based upon assumptions as to the future profitability of the underlying companies to which they relate.
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