BT 1999 Annual Report Download - page 67

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Notes to the financial statements
1. Changes in accounting policies and presentation
During the year ended 31 March 1999, the company has made a number of changes in its accounting policies and in the
presentation of its financial statements, mainly impacted by the requirement to implement new UK Financial Reporting Standards
(FRSs). These changes are summarised as follows:
(a) FRS9 – Associates and joint ventures
The group’s share of its associates’ and joint ventures’ turnover is included in the profit and loss account in memorandum form.
The group’s share of their operating results is shown separately in the profit and loss account and the group’s share of their
interest charges and income is included with the respective group figures; formerly these shares were presented as one net figure.
In the cash flow statement, dividends from associates and joint ventures are shown on a separate line, whereas formerly these
dividends were included within net cash inflow from operating activities.
In the group balance sheet, the group’s investments are analysed between associates, joint ventures and other investments and
the group’s shares of its joint ventures’ gross assets and liabilities are also disclosed; formerly the investments were presented as
one figure.
Prior years’ figures have been restated for FRS9.
(b) FRS10 – Goodwill and intangible assets
Goodwill arising on acquisitions completed on or after 1 April 1998 is being capitalised and, in most cases, amortised over its
useful economic life. Where special circumstances exist such that amortising goodwill over a finite period would not give a true
and fair view, that goodwill is not amortised. Goodwill arising on acquisitions completed on or before 31 March 1998 are
continuing to be accounted for under the group’s previous accounting policy which was to write the goodwill off to reserves on
acquisition. Prior years’ figures have not had to be restated for FRS10.
(c) FRS11 – Impairment of fixed assets and goodwill
Where indications of impairment have become apparent, the group has reviewed the carrying value of the relevant assets but
no significant impairment losses have been incurred. Previously losses on fixed assets would have been recognised only when
a permanent diminution in value had become apparent.
(d) FRS12 – Provisions, contingent liabilities and contingent assets
Provisions for liabilities, with some exceptions – in particular those for pension costs and deferred taxes – may now only be made
when the group has a legal or constructive obligation at the balance sheet date. Previously, provisions were made when the
directors considered them to be required. A review has been made of the group’s relevant provisions and no significant
adjustment was found to be necessary.
Liabilities covered by insurance recoveries are now presented in the balance sheet on a gross basis; previously they were
presented net of the insurance recovery. The balance sheet at 31 March 1998 has not been restated for FRS12 as the amounts
involved are not significant.
(e) FRS13 – Derivatives and other financial instruments – disclosures
The main disclosures required by FRS13 are contained in note 33. Some of the information in this note may be found to overlap
with information in other notes impacted by other accounting disclosure requirements.
(f) FRS14 – Earnings per share
Earnings per share on both a basic and diluted basis are calculated in accordance with FRS14 and presented in the financial
statements. There has been an insignificant effect on the group’s previously reported undiluted earnings per share. The FRS
amended UITF Abstract 13 which has resulted in an insignificant change in policy for recognising dividends on the company’s
shares held in employee trusts. Under the revised policy, these dividends are neither accrued nor recognised as interest and other
similar income, whereas they were previously. These dividends are now shown as an addition to investments when reinvested in
more of the company’s shares.
(g) Computer software capitalisation
From 1 April 1998, the group has capitalised the cost of computer software for its non-network systems thereby bringing the
policy into line with that for its network systems. It has not been practical to restate prior year figures.
(h) Turnover
The previous analysis of turnover has been modified in light of the group’s emerging fast growing activities. The comparative
figures in note 2 have been restated and include the group’s share of continuing associates and joint ventures.
(i) Segmented results
The group is not required to present segmented results under SSAP25 as it is a unitary business. However, under US accounting
standard SFAS No. 131, the company is required to present segmented results based on information presented to the group’s
senior management. This information, which is set out in note 35, is presented for the first time.