Punch Taverns plc 2007 Annual Report and Financial Statements

Notes to the financial statements
for the 52 weeks ended 18 August 2007
1 Accounting policies
Basis of preparation
The consolidated financial statements presented in this document have been prepared in accordance with IFRS as adopted by the
European Union. The Company’s financial statements have been prepared in accordance with IFRS as adopted by the European Union
and as applied in accordance with the provisions of the Companies Act 1985. The Company has taken advantage of the exemption
provided under s230 of the Companies Act 1985 not to publish its individual income statement and related notes.
The financial statements are prepared under the historical cost convention, as modified by the revaluation of derivative financial instruments
to fair value, and in accordance with those parts of the Companies Act 1985 applicable to companies reporting under IFRS as adopted
by the European Union. New standards and interpretations issued by the International Accounting Standards Board (IASB) and the
International Financial Reporting Interpretations Committee (IFRIC), becoming effective during the year, have not had a material
impact on the Group’s financial statements.
The Group and Company financial statements are presented in sterling and all values are rounded to the nearest hundred thousand
pounds, except where indicated.
Changes in comparative figures
During the current period, the provisional fair values on the acquisition of the Spirit group have been finalised. This has resulted
in goodwill and deferred tax for the Group for the period ended 19 August 2006 being restated. The impact has been to increase
goodwill by £34.4m, deferred tax liabilities by £49.6m and deferred tax assets by £15.2m, as shown in notes 12, 15 and 29 to
the financial statements.
The Company figures for the period ended 19 August 2006 have been restated to recognise the capital contributions made to its
immediate subsidiary undertaking in respect of Company shares granted to employees of another group company in return for
services provided. The impact has been to increase investments in subsidiary undertakings and amounts owed by group undertakings
by £4.3m, as shown in note 13 to the financial statements.
Standards, interpretations and amendments to published standards that are not yet effective
The IASB and IFRIC issued the following standards and interpretations with an effective date after the date of these financial
statements. They have not been adopted early by the Group and the Directors do not anticipate that the adoption of these
standards and interpretations will have a material impact on the Group’s reported income or net assets in the period of adoption.
Effective for the Group for the financial year beginning 19 August 2007:
Amendment to IAS 1 ‘Capital Disclosures’
IFRS 7 ‘Financial Instruments: Disclosure’
IFRIC 10 ‘Interim Financial Reporting and Impairment’
IFRIC 11 ‘Group and Treasury Share Transactions’
Effective for the Group for future years:
Amendment to IAS 23 ‘Borrowing costs’
IFRS 8 ‘Operating Segments’
IFRIC 12 ‘Service Concession Arrangements
IFRIC 13 ‘Customer Loyalty Programmes’
IFRIC 14 ‘The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction’
Note: The effective dates are in respect of accounting periods beginning on or after the date.
Basis of consolidation
Consolidated financial statements comprise the financial statements of the parent company (Punch Taverns plc) and all of its subsidiaries.
The Group’s interests in its joint ventures are incorporated in the financial statements using the equity method of accounting.
Subsidiaries are consolidated from the date on which control is transferred to the Group and cease to be consolidated from the date
on which control is transferred out of the Group. Investments in subsidiaries and joint ventures are carried at cost, plus post-acquisition
changes in the Group’s share of accumulated profits less distributions received and less any impairment in value of any investments,
in the financial statements of the Company.
All intra-group balances and transactions, including unrealised profits arising from intra-group transactions, are eliminated in full.
Unrealised losses are eliminated unless the transaction provides evidence of an impairment of the asset transferred.
Goodwill
Goodwill on acquisition is initially measured at cost, being the excess of the cost of the business combination over the fair value of
the Group’s share of the identifiable assets, liabilities and contingent liabilities. Following initial recognition, goodwill is measured at
cost less any accumulated impairment losses.
Goodwill carried in the balance sheet is not amortised. Goodwill is reviewed for impairment annually or more frequently if events
or changes in circumstances indicate that the carrying value may be impaired.
If the cost of acquisition is less than the fair value of the net identifiable assets, liabilities and contingent liabilities of the subsidiary
acquired, the gain is recognised immediately in the income statement.
At the date of transition to IFRS, the Group elected to re-state all business combinations that took place between 1 September 1999
and 21 August 2004, under IFRS, and restated goodwill accordingly.
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