Barclays 2007 Annual Report Download - page 176

Consolidated accounts Barclays PLC
Accounting presentation
174 Barclays PLC Annual Report 2007
Future Accounting Developments
Consideration will be given during 2008 to the implications, if any, of the
following new and revised standards and International Financial Reporting
Interpretations Committee (IFRIC) interpretations as follows:
– IFRS 3 – Business Combinations and IAS 27 – Consolidated and
Separate Financial Statements are revised standards issued in January
2008. The revised IFRS 3 applies prospectively to business
combinations first accounted for in accounting periods beginning on or
after 1st July 2009 and the amendments to IAS 27 apply retrospectively
to periods beginning on or after 1st July 2009. The main changes in
existing practice resulting from the revision to IFRS 3 affect acquisitions
that are achieved in stages and acquisitions where less than 100% of
the equity is acquired. In addition, acquisition related costs – such as
fees paid to advisers – must be accounted for separately from the
business combination, which means that they will be recognised as
expenses unless they are directly connected with the issue of debt or
equity securities. The revisions to IAS 27 specify that changes in a
parent’s ownership interest in a subsidiary that do not result in the loss
of control must be accounted for as equity transactions. Until future
acquisitions take place that are accounted for in accordance with the
revised IFRS 3, the main impact on Barclays will be that, from 2010,
gains and losses on transactions with non-controlling interests that do
not result in loss of control will no longer be recognised in the income
statement but directly in equity. In 2007, gains of £23m and losses of
£6m were recognised in income relating to such transactions.
– IFRIC 13 – Customer Loyalty Programs addresses accounting by entities
that grant loyalty award credits (such as ‘points’ or travel miles) to
customers who buy other goods or services. It requires entities to
allocate some of the proceeds of the initial sale to the award credits and
recognise these proceeds as revenue only when they have fulfilled their
obligations. The Group is considering the implications of this
interpretation and any resulting change in accounting policy would be
accounted for in accordance with IAS 8 Accounting Policies, Changes in
Accounting Estimates and Errors in 2009.
– IFRS 8 – Operating Segments was issued in November 2006 and would
first be required to be applied to the Group accounting period
beginning on 1st January 2009. The standard replaces IAS 14 –
Segmental Reporting and would align operating segmental reporting
with segments reported to senior management as well as requiring
amendments and additions to the existing segmental reporting
disclosures. The standard does not change the recognition,
measurement or disclosure of specific transactions in the consolidated
financial statements. The Group is considering the enhancements that
permitted early adoption in 2008 may make to the transparency of the
segmental disclosures.
– IAS – 1 Presentation of Financial Statements is a revised standard
applicable to annual periods beginning on 1st January 2009. The
amendments affect the presentation of owner changes in equity and of
comprehensive income. They do not change the recognition,
measurement or disclosure of specific transactions and events required
by other standards.
– IAS 23 – Borrowing Costs is a revised standard applicable to annual
periods beginning on 1st January 2009. The revision does not impact
Barclays. The revision removes the option not to capitalise borrowing
costs on qualifying assets, which are assets that take a substantial
period of time to get ready for their intended use or sale.
– An amendment to IFRS 2 Share-based Payment was issued in January
2008 that clarifies that vesting conditions are service conditions and
performance conditions only. It also specifies that all cancellations,
whether by the entity or by other parties, should receive the same
accounting treatment, which results in the acceleration of charge. The
Group is considering the implications of the amendment, particularly to
the Sharesave scheme, and any resulting change in accounting policy
would be accounted for in accordance with IAS 8 Accounting policies,
changes in accounting estimates and errors in 2009.
– Amendments to IAS 32 Financial Instruments: Presentation and IAS 1
Presentation of Financial Statements were issued in February 2008 that
require some puttable financial instruments and some financial
instruments that impose on the entity an obligation to deliver to
another party a pro rata share of the net assets of the entity only on
liquidation to be classified as equity. The amendments, which are
applicable to annual periods beginning on 1st January 2009, do not
impact Barclays.
The following IFRIC interpretations issued during 2006 and 2007 which first
apply to accounting periods beginning on or after 1st January 2008 are not
expected to result in any changes to the Group’s accounting policies:
– IFRIC 11 IFRS 2 – Group and Treasury Share Transactions;
– IFRIC 12 – Service Concession Arrangements;
– IFRIC 14 IAS 19 – The Limit on a Defined Benefit Asset, Minimum
Funding Requirements and their Interaction.
Acquisitions
2007: On 8th February 2007, Barclays completed the acquisition of
Indexchange Investment AG. Indexchange is based in Munich and offers
exchange traded fund products.
On 28th February 2007, Barclays completed the acquisition of Nile Bank
Limited. Nile Bank is based in Uganda with 18 branches and 228
employees.