Vodafone 2015 Annual Report Download - page 115

IFRS 15 “Revenue from Contracts with Customers” was issued in May 2015; although it is effective for accounting periods beginning on or before
1 January 2017, the IASB has proposed to defer the mandatory adoption date by one year. IFRS 15 has not yet been adopted by the EU. IFRS 15 will
have a material impact on the Group’s reporting of revenue and costs as follows:
a IFRS 15 will require the Group to identify deliverables in contracts with customers that qualify as “performance obligations”. The transaction price
receivable from customers must be allocated between the Group’s performance obligations under the contracts on a relative stand-alone selling
price basis. Currently revenue allocated to deliverables is restricted to the amount that is receivable without the delivery of additional goods
or services; this restriction will no longer be applied under IFRS 15. The primary impact on revenue reporting will be that when the Group sells
subsidised devices together with airtime service agreements to customers, revenue allocated to equipment and recognised when control of the
device passes to the customer will increase and revenue recognised as services are delivered will reduce.
a Under IFRS 15, certain incremental costs incurred in acquiring a contract with a customer will be deferred on the balance sheet and amortised
as revenue is recognised under the related contract; this will generally lead to the later recognition of charges for some commissions payable
to third party dealers and employees.
a Certain costs incurred in fullling customer contracts will be deferred on the balance sheet under IFRS 15 and recognised as related revenue
is recognised under the contract. Such deferred costs are likely to relate to the provision of deliverables to customers that do not qualify
as performance obligations and for which revenue is not recognised; currently such costs are generally expensed as incurred.
The Group is currently assessing the impact of these and other accounting changes that will arise under IFRS 15; however, the changes highlighted
above are expected to have a material impact on the consolidated income statement and consolidated statement of nancial position. It is expected
that the Group will adopt IFRS 15 on 1 April 2018.
IFRS 9 “Financial Instruments” was issued in July 2014 to replace IAS 39 “Financial Instruments: Recognition and Measurement”. The standard
is effective for accounting periods beginning on or after 1 January 2018 with early adoption permitted but has not yet been endorsed for use in the
EU. The standard will impact the classication and measurement of the Group’s nancial instruments and will require certain additional disclosures.
The changes to recognition and measurement of nancial instruments and changes to hedge accounting rules are not currently considered likely
to have any major impact on the Group’s current accounting treatment or hedging activities. The Group will not consider early adoption of IFRS 9
until the standard has been endorsed by the EU which is currently expected in the second half of 2015.
Overview Strategy review Performance Governance Financials Additional information Vodafone Group Plc
Annual Report 2015
113