BT 2013 Annual Report Download - page 109

Financial statements
107
Financial statements
Notes to the consolidated financial statements
1. Basis of preparation
Preparation of the financial statements
These consolidated financial statements have been prepared in
accordance with the Companies Act 2006, Article 4 of the IAS
Regulation and International Accounting Standards (IAS) and
International Financial Reporting Standards (IFRS) and related
interpretations, as adopted by the European Union. The consolidated
financial statements are also in compliance with IFRS as issued by the
International Accounting Standards Board. The consolidated financial
statements are prepared on a going concern basis.
The consolidated financial statements are prepared on the historical
cost basis, except for certain financial and equity instruments that have
been measured at fair value. The consolidated financial statements are
presented in Sterling, the functional currency of BT Group plc, the
parent company.
Changes in presentation of the financial statements
The following changes have been made to the presentation of the
equity section of the group’s balance sheet in the current year:
—Own shares (formerly Treasury shares) balance is now presented as a
separate line item within the equity section of the group’s balance
sheet. In previous years it was presented as part of Other reserves
—Capital redemption reserve is now included in Other reserves within
equity in the group’s balance sheet rather than as a separate item
within the equity section of the group’s balance sheet.
The comparative information has also been re-presented accordingly.
In addition, following the Financial Reporting Council’s objective of
cutting clutter from financial statements, separate non-controlling
interests disclosures have been removed from the group’s consolidated
financial statements and the related notes because they are immaterial;
non-controlling interests represent profit for the year of £2m
(2011/12: £1m, 2010/11: £2m); total comprehensive income for the
year of £3m (2011/12: £2m, 2010/11: £2m); and total equity in the
balance sheet of £14m (2011/12: £11m equity).
As the changes summarised above only represent changes in
presentation or, in the case of non-controlling interests, are immaterial
to the group’s consolidated financial statements, a restated opening
balance sheet has not been provided. This is because the changes do
not have any impact on the profit for the year, other comprehensive
income (loss) for the year, assets and liabilities or total equity.
Changes in accounting policies and
standards adopted
The group’s policy for the recognition of government grants was
changed from 1 April 2012. Under the new policy, which is set out on
page 113, assets and operating costs are recognised net of government
grants receivable.
Before 1 April 2012 government grants were initially recognised as
deferred income. Subsequent to initial recognition grants that
compensated the group for costs incurred were recognised in the
income statement within other operating income. Grants that
compensated the group for the cost of an asset were recognised in the
income statement within other operating income on a straight line
basis over the useful life of the related asset.
Net presentation is considered a more appropriate policy than the
previous gross presentation as it better presents the incremental costs
to the business. The new policy has been applied prospectively and
comparative financial information has not been restated as the impact
of grants on prior period financial information is immaterial.
The amendments to IAS 1 ‘Presentation of Financial Statements’
issued by the IASB in June 2011 have been adopted early in these
consolidated financial statements. The main change resulting from the
application of these amendments is to group items together within
other comprehensive income based on whether they are potentially
reclassifiable to the income statement in future periods. Tax associated
with each group (those that might be reclassified and those that will
not be reclassified) is shown separately.
Other than as set out above, no new or amended accounting standards
and interpretations were adopted in 2012/13.
Presentation of specific items
The group’s income statement and segmental analysis separately
identify trading results before specific items. Specific items are those
that in management’s judgement need to be disclosed separately by
virtue of their size, nature or incidence. In determining whether an
event or transaction is specific, management considers quantitative as
well as qualitative factors such as the frequency or predictability of
occurrence. This is consistent with the way that financial performance is
measured by management and reported to the Board and the
Operating Committee and assists in providing a meaningful analysis of
the trading results of the group. The directors believe that presentation
of the group’s results in this way is relevant to an understanding of the
group’s financial performance, as specific items are identified by virtue
of their size, nature or incidence. Furthermore, the group considers a
columnar presentation to be appropriate, as it improves the clarity of
the presentation and is consistent with the way that financial
performance is measured by management and reported to the Board
and the
Operating Committee . Specific items may not be comparable
to similarly titled measures used by other companies.
Specific items include disposals of businesses and investments,
regulatory settlements, historic insurance or litigation claims, business
restructuring programmes, asset impairment charges, property
rationalisation programmes, net interest on pensions and the
settlement of multiple tax years in a single payment. In 2008/09 BT
Global Services contract and financial review charges were disclosed as
a specific item by virtue of their size and nature. The impact of
subsequent changes to the contract and financial review charges from
revisions in estimates and assumptions are included within trading
results before specific items, and are separately disclosed if considered
significant.
Specific items for the current and prior years are disclosed in note 9.