BT 2010 Annual Report Download - page 97

FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS
95BT GROUP PLC ANNUAL REPORT & FORM 20-F
ADDITIONAL INFORMATION FINANCIAL STATEMENTS REPORT OF THE DIRECTORS REVIEW OF THE YEAR OVERVIEW
IAS 23 (Revised) ‘Borrowing costs’
In respect of borrowing costs relating to qualifying assets for which
the commencement date for capitalisation is on or after 1 April
2009, the group capitalises borrowing costs during the
construction phase as part of the cost of that asset. Previously, the
group immediately recognised all borrowing costs as an expense in
the income statement. The change in accounting policy was due to
the adoption of IAS 23 (Revised) ‘Borrowing Costs’. The change in
accounting policy has had no material impact on earnings per
share. In 2010, the group capitalised borrowing costs of £3m with
respect to property, plant and equipment under construction (note
13) and software development costs (note 12).
Amendment to IFRS 7 ‘Financial Instruments: Disclosures’
The amendment to IFRS 7 expands the disclosures required in respect
of fair value financial instruments measurements and liquidity risk.
The group has elected not to provide comparative information for
these expanded disclosures in 2010, as set out in note 32, in
accordance with the transitional relief offered in the amendment.
IFRS 8 ‘Operating Segments’
IFRS 8 is a new disclosure standard which has not changed the
group’s reportable segments but has introduced certain new
disclosures as set out in note 1.
As part of the Annual Improvements to IFRSs 2009 the IASB
modified the requirement to disclose total assets for each
reportable segment. This disclosure is now required only if a
measure of total assets by segment is reported to the ‘chief
operating decision maker’ (CODM). For BT, such a measure is not
included in the information regularly provided to the CODM. The
amendment to IFRS 8 is effective for accounting periods
commencing on or after 1 January 2010. The amendment was
endorsed by the EU on 23 March 2010 and the group has chosen
to adopt it early for 2010.
The following new and revised standards and interpretations have
also been adopted in these financial statements. Their adoption has
not had any significant impact on the amounts reported.
IFRIC 12 ‘Service concession arrangements’;
IFRIC 13 ‘Customer loyalty programmes’;
IFRIC 16 ‘Hedges of a net investment in a foreign operation’; and
IFRIC 18 ‘Transfer of assets from customers’.
Accounting standards, interpretations and
amendments to published standards not
yet effective
Certain new standards, interpretations and amendments to existing
standards have been published that are mandatory for the group’s
accounting periods beginning on or after 1 April 2010 or later
periods, which the group has not adopted early, with the exception
of the amendment to IFRS 8 as described above. Those which are
considered to be relevant to the group’s operations, but which are
not currently expected to have a significant impact on the group’s
financial statements, are as follows:
IFRS 3 (Revised) ‘Business Combinations’ (effective 1 April 2010)
IFRS 3 (Revised) revises certain aspects of accounting for business
combinations. Revisions include the requirement to expense all
transaction costs and the requirement for all payments to acquire a
business to be recorded at fair value at the acquisition date, with
future contingent consideration subsequently re-measured at fair
value through the income statement. IFRS 3 (Revised) is applied
prospectively to business combinations entered into on or after the
effective date.
IAS 27 (Revised) ‘Consolidated and Separate Financial
Statements’ (effective 1 April 2010)
IAS 27 (Revised), which is applied prospectively, requires the effects
of all transactions with non-controlling interests to be recorded in
equity if there is no overall change in control. Such transactions will
no longer result in goodwill or gains or losses being recorded. IAS
27 (Revised) also specifies that when control is lost, any remaining
interest should be re-measured to fair value and a gain or loss
recorded through the income statement.
IFRIC 17 ‘Distributions of Non-cash Assets to Owners’ (effective
1April 2010)
IFRIC 17 provides guidance on how an entity should measure
distributions other than cash when it pays dividends to its owners.
The interpretation requires the dividend payable to be measured at
the fair value of the assets to be distributed, and any difference
between the fair value and the book value of the assets is recorded
in the income statement.
Amendment to IAS 39 ‘Financial Instruments: Recognition and
Measurement: Eligible Hedged items’ (effective 1 April 2010)
This clarifies two aspects of hedge accounting relating to hedging
with options and the identification of inflation as a hedged risk.
Amendment to IAS 32 ‘Financial Instruments: Presentation-
Classification of Rights Issues’ (effective 1 April 2010)
This requires an issue to all existing shareholders of rights to acquire
additional shares to be recognised in equity, regardless of the
currency in which the exercise price is denominated.
Annual Improvements to IFRSs 2009 (effective 1 April 2010)
These improvements relate to a number of standards including
changes in presentation, recognition and measurement,
terminology and editorial changes. It incorporates minor
amendments to a number of standards in areas including operating
segments, leases, intangible assets and financial instruments.
IAS 24 (Revised)‘Related Party Disclosures’ (effective 1 April 2011)
The revised standard clarifies the definition of a related party and
provides some exemptions for government-related entities.
Amendment to IFRIC 14 ‘Prepayments of a Minimum Funding
Requirement’ (effective 1 April 2011)
This amendment permits a voluntary prepayment of a minimum
funding requirement to be recognised as an asset.
IFRIC 19 ‘Extinguishing Financial Liabilities with Equity
Instruments’ (effective 1 April 2011)
This interpretation, which is applied retrospectively, clarifies the
accounting when an entity renegotiates the terms of its debt with
the result that the liability is settled in part or in full by the debtor
issuing its own equity instrument to the creditor.
IFRS 9 ‘Financial Instruments’ (effective 1 April 2013)
IFRS 9 is the first phase of the IASB’s three phase project to replace
IAS 39 ‘Financial Instruments: Recognition and Measurement’. It is
applicable to financial assets and requires classification and
measurement in either the amortised cost or the fair value
category. IFRS 9 is applied prospectively with transitional
arrangements depending on the date of application.