1 Significant Accounting Policies
Te accounting policies set out below have been applied consistently to all periods presented in these consolidated Financial Statements, except as explained in the basis of preparation, which addresses any changes in accounting policies resulting from new or revised standards.
Basis of Consolidation Subsidiaries are entities controlled by the Group. Control exists when the Group has the power, directly or indirectly, to govern the financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control, potential voting rights that are currently exercisable or convertible are taken into account. Te Financial Statements of subsidiaries are included in the consolidated Financial Statements from the date that control commences until the date that control ceases. Te accounting policies of new subsidiaries are changed when necessary to align them with the policies adopted by the Group. Intra-group balances and transactions are eliminated in preparing the consolidated Financial Statements.
Lightbody Stretz Limited which is 50% owned by the Group has been consolidated into the Group accounts as a subsidiary with a corresponding non-controlling interest on the basis that the Group has the controlling interest. Control arises by virtue of the fact that Lightbody Group, a wholly owned subsidiary of Finsbury Food Group, has a majority of voting rights arising from an agreement between Lightbody Group Limited and Philippe Stretz.
Change in Accounting Policy Te Group adopted IAS 19 (revised) Employee Benefits from January 2013. As a result of IAS 19 (revised), the key change to these Statements is the “finance cost” which was previously the difference between the interest on liabilities and expected return on assets, the expected return on assets is effectively based on the discount rate with no allowances made for any outperformance expected from the Scheme’s actual asset holding.
As a result of these amendments, the comparative financial information in the Consolidated Statement of Profit and Loss and Other Comprehensive Income (OCI) have been restated for the year ending 29 June 2013. Te effect of the above was to decrease finance income in the Consolidated Statement of Profit and Loss by £575,000 from £1,401,000 to £826,000 and decrease the remeasurements of the net defined benefit pension liability in OCI by £575,000 from £1,118,000 to £543,000.
As a result of the above, the tax expense in the Consolidated Statement of Profit and Loss has decreased by £132,000 for the year ending 29 June 2013 and the deferred tax credit in the OCI has decreased by £132,000. Te effect on the cashflow statement of the amended standard was an adjustment to profit before tax and the operating reconciling items. Tere was no effect on the net cash from operating activities. Te effect on the statement of changes in equity of the amended standard was an adjustment to retained earnings, as explained above.
Foreign Currency Transactions in foreign currencies are translated to the functional currency of Group entities at the foreign exchange rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the period end date are retranslated to the functional currency at the foreign exchange rate ruling at that date.
Any exchange differences arising on the settlement of monetary items or on translating monetary items at rates different from those at which they were initially recorded are recognised in the Consolidated Statement of Profit and Loss in the period in which they arise.
Te assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on consolidation, are translated to the Group’s presentational currency, Sterling, at foreign exchange rates ruling at the period end date. Te revenues and expenses of foreign operations are translated at an average rate for the year where this rate approximates to the foreign exchange rates ruling at the dates of the transactions. Tis revaluation is recognised through Other Comprehensive Income.
Derivative Financial Instruments Te Group has derivative financial instruments in respect of interest rate swaps and foreign exchange hedges. Te Group does not hold derivative financial instruments for trading purposes. Te existing interest rate swaps and foreign exchange hedges used by the Group do not meet the criteria for hedge accounting set out by IAS 39 and have thus been treated as financial assets and liabilities which are carried at their fair value in the Consolidated Statement of Financial Position. Fair value is deemed to be market value, which is provided by the counterparty at the year end date.
Changes in the market value of interest rate swaps have been recognised through the Consolidated Statement of Profit and Loss as finance income or cost. Changes in the market value of foreign exchange hedges have been recognised through the Consolidated Statement of Profit and Loss within administrative costs.
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