Vodafone 2010 Annual Report Download - page 80

78 Vodafone Group Plc Annual Report 2010
Notes to the consolidated nancial statements
1. Basis of preparation
The consolidated financial statements are prepared in accordance with IFRS as
issued by the IASB. The consolidated financial statements are also prepared in
accordance with IFRS adopted by the EU, the Companies Act 2006 and Article 4 of
the EU IAS Regulations.
The preparation of financial statements in conformity with IFRS requires management
to make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expenses during the reporting
period. For a discussion on the Group’s critical accounting estimates see “Critical
accounting estimates” on pages 71 and 72. Actual results could differ from those
estimates. The estimates and underlying assumptions are reviewed on an ongoing
basis. Revisions to accounting estimates are recognised in the period in which the
estimate is revised if the revision affects only that period or in the period of the
revision and future periods if the revision affects both current and future periods.
Amounts in the consolidated financial statements are stated in pounds sterling.
Vodafone Plc is registered in England (No. 1833679).
2. Signicant accounting policies
Accounting convention
The consolidated financial statements are prepared on a historical cost basis except
for certain financial and equity instruments that have been measured at fair value.
New accounting pronouncements adopted
IFRIC 13 – “Customer Loyalty Programmes”
The Group adopted IFRIC 13 on 1 April 2009. The interpretation addresses how
companies that grant their customers loyalty award credits when buying goods and
services should account for their obligations to provide free or discounted goods and
services. It requires that consideration received be allocated between the award
credits and the other components of the sale. The adoption of this interpretation did
not result in a material impact on the Group’s results or financial position.
IAS 23 (Revised) – “Borrowing Costs”
The Group adopted IAS 23 (Revised) on 1 April 2009. This standard requires the
capitalisation of borrowing costs to the extent they are directly attributable to the
acquisition, production or construction of a qualifying asset. The option of immediate
recognition of those borrowing costs as an expense, previously used by the Group,
has been removed. The adoption of this standard did not result in a material impact
on the Group’s results or financial position.
IAS 1 (Revised) – “Presentation of Financial Statements”
The Group adopted IAS 1 (Revised) on 1 April 2009. A separate consolidated
statement of changes in equity is now included as part of the primary financial
statements. The Group changed the naming of the primar y financial statements and
adopted certain new terminology set out in the revised standard.
IFRS 7 – “Financial Instruments: Disclosure”
The Group adopted an amendment to IFRS 7 on 1 April 2009. The standard requires
enhanced disclosure regarding fair value measurements and liquidity risk. The
adoption of this standard did not impact the Group’s results or financial position.
New accounting pronouncements not yet adopted
IFRS 3 (Revised) “Business Combinations” was issued in January 2008 and will apply
to business combinations occurring on or after 1 April 2010. The revised standard
introduces a number of changes in the accounting for business combinations that
will impact the amount of goodwill recognised, the reported results in the period that
a business combination occurs and future reported results. This standard is likely
to have a significant impact on the Group’s accounting for business combinations
post adoption.
An amendment to IAS 27 “Consolidated and Separate Financial Statements” was
issued in January 2008 and is effective for annual periods beginning on or after 1 July
2009. The amendment requires that when a transaction occurs with non-controlling
interests in Group entities that do not result in a change in control, the difference
between the consideration paid or received and the recorded non-controlling
interest should be recognised in equity. In cases where control is lost, any retained
interest should be remeasured to fair value with the difference between fair value and
the previous carrying value being recognised immediately in the income statement.
The Group has historically entered into transactions that would have been within the
scope of the amendment to this standard and may do so in the future.
Phase I of IFRS 9 “Financial Instruments” was issued in November 2009 and is
effective for annual periods beginning on or after 1 January 2013. The standard
introduces changes to the classification and measurement of financial assets. The
Group is currently assessing the impact of the standard on its results, financial
position and cash flows. This standard has not yet been endorsed for use in the EU.
The Group has not adopted the following pronouncements, which have been issued
by the IASB or the IFRIC. The Group does not currently believe the adoption of these
pronouncements will have a material impact on the consolidated results, financial
position or cash flows of the Group. These pronouncements have been endorsed for
use in the EU, unless otherwise stated.
“Amendment to IAS 39 Financial Instruments: Recognition and Measurement – 
Exposures Qualifying for Hedge Accounting”, effective for annual periods
beginning on or after 1 July 2009.
“Embedded derivatives: Amendments to IFRIC 9 and IAS 39”, effective for annual 
periods beginning on or after 30 June 2009.
“Improvements to IFRSs” issued in April 2009 are effective over a range of dates, 
with the earliest being for annual periods beginning on or after 1 January 2010.
IFRS 1, “Additional Exemptions for First-time Adopters”, effective for periods 
beginning on or after 1 January 2010. This standard has not yet been endorsed for
use in the EU.
“IFRS for Small and Medium-Sized Entities”, issued July 2009, effective 
immediately. This standard has not yet been endorsed for use in the EU.
IFRS 2, “Group Cash-settled Share-based Payment Transactions”, effective for 
periods beginning on or after 1 January 2010.
“Amendment to IAS 32, “Classification of Rights Issues”, effective for annual 
periods beginning on or after 1 February 2010.
“Amendment to IAS 24, “Related Party Disclosures – State-controlled Entities and 
the Definition of a Related Party”, effective for annual periods beginning on or after
1 January 2011. This amendment has not yet been endorsed for use in the EU.
Amendment to IFRIC 14, “Prepayments on a Minimum Funding Requirement”, 
effective for annual periods beginning on or after 1 January 2011. This
interpretation has not yet been endorsed for use in the EU.
IFRIC 17, “Distributions of Non-cash Assets to Owners”, effective for annual periods 
beginning on or after 1 July 2009.
IFRIC 19, “Extinguishing Financial Liabilities with Equity Instruments”, effective 
annual periods beginning on or after 1 July 2010 with early adoption permitted.
This interpretation has not yet been endorsed for use in the EU.
Basis of consolidation
The consolidated financial statements incorporate the financial statements of the
Company and entities controlled, both unilaterally and jointly, by the Company.
Accounting for subsidiaries
A subsidiary is an entity controlled by the Company. Control is achieved where the
Company has the power to govern the financial and operating policies of an entity so
as to obtain benefits from its activities.
The results of subsidiaries acquired or disposed of during the year are included in the
income statement from the effective date of acquisition or up to the effective date of
disposal, as appropriate. Where necessary, adjustments are made to the financial
statements of subsidiaries to bring their accounting policies into line with those used
by the Group.