Strategic Review
96 Finsbury Food Group Annual Report & Accounts 2018
Notes to the Company’s Financial Statements
Corporate Governance
Financial Statements
Presentation of Financial Statements
Basis of Preparation of Consolidated Financial Statements The Group has adopted the following IFRSs in these Financial Statements:
• Clarification of Acceptable Methods of Depreciation and Amortisation – Amendments to IAS 16 and IAS 38 (effective date 1 January 2016) • Equity Method in Separate Financial Statements – Amendments to IAS 27 (effective date 1 January 2016) • Annual Improvements to IFRSs – 2012-2014 Cycle (effective date 1 January 2016)
The application of the above standards and interpretations has not had a material effect on the net assets, results and disclosures of the Group. The IASB and the IFRIC have also issued the following standards and interpretations with an effective date after the date of these Financial Statements.
New Standards and Interpretations Endorsed but not yet Effective • IFRS 9 Financial Instruments – effective 1 January 2018
IFRS 9 Financial Instruments addressed the classification, measurement and recognition of financial assets and liabilities.
The Group has an interest rate swap and foreign exchange forward contracts, these financial assets and liabilities 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.
The requirements of IFRS 9 have been reviewed in respect of the financial assets and financial liabilities of the Group for classification and measurement and impairment, and the current hedging arrangements have been considered. The Directors do not anticipate that the adoption of IFRS 9 will have a material impact on the Financial Statements of the Group.
• IFRS 15 Revenue from Contracts with Customers – effective 1 January 2018
IFRS 15: ‘Revenue from Contracts with Customers’ will be effective for annual periods beginning on or after 1 January 2018, and therefore the Group will apply the standard for its reporting period commencing 1 July 2018.
The standard, which replaces IAS 18 ‘Revenue’ and IAS 11 ‘Construction contracts’, deals with revenue recognition and establishes principles for reporting useful information about the nature, amount, timing and uncertainty of revenues and cash flows arising from the Group’s contracts with its customers. The standard provides clarification about when control of goods is passed to customers and contains more guidance about the measurement of revenue contracts which have discounts, rebates and other payments to customers.
The Group has considered its customer contracts, standard terms and conditions and agreed joint business plans when working through the five-step model of IFRS 15 to assess the impact of the adoption of the new standard on reported revenue. The areas the Group considered included a review of any variable consideration arrangements, such as rebates, promotions and other payments such as for range support and marketing.
As a result of the review, it has been concluded that the Group’s current accounting policies and practices are materially in line with the new accounting standard and therefore the adoption of IFRS 15 will not have a significant impact. The Group will continue to review transactions with customers to ensure compliance.
New Standards and Interpretations not yet Endorsed and not yet Effective • IFRS 16 Leases – effective from 1 January 2019
IFRS 16 Leases sets out the principle for the recognition, measurement, presentation and disclosure of leases for both lessee and lessor. It eliminates the classification of leases as either operating leases or finance leases and introduces a single lessee accounting model where the lessee is required to recognise assets and liabilities for all material leases that have a term of greater than a year. Note 25 details current leases.
The Group will apply the standard for the reporting period commencing 30 June 2019. The Company has gathered a comprehensive database of all leases and will consider break clauses, rent reviews, material changes to contracts and appropriate discount rates. This work is ongoing to enable the modelling of the impact on adoption of the new standard.
• IFRS 2 Classification and Measurement of Share-based Payment Transactions – effective 1 January 2018 • Annual Improvements to IFRSs – 2014-2016 Cycle (effective date 1 January 2018) • IFRIC Interpretation 22 Foreign Currency Transactions and Advance Consideration (effective date 1 January 2018) Work will begin in the new financial year to assess the impact of the new standards and interpretations on the Group’s Financial Statements.
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