Annual Report and Accounts - Hemscott IR

TRAVIS PERKINS ANNUAL REPORT AND ACCOUNTS 2012
Notes to the Financial Statements
FOR THE YEAR ENDED 31 December 2012
1. General information
Overview
Travis Perkins plc is a company incorporated in the United Kingdom
under the Companies Act 2006. The address of the registered office is
given on page 137. The nature of the Group’s operations and its principal
activities are set out in the Chief Executive’s review of the year, the
Deputy Chief Executive’s review of the year and the Finance Director’s
review of the year on pages 38 to 43.
These financial statements are presented in pounds sterling, the
currency of the primary economic environment in which the Group
operates.
Basis of accounting
The financial statements have been prepared in accordance with
International Financial Reporting Standards (‘IFRS’) issued by the
International Accounting Standards Board. The financial statements have
also been prepared in accordance with IFRS adopted by the European
Union and therefore the Group financial statements comply with Article 4
of the EU IAS Regulations.
Basis of preparation
The financial statements have been prepared on the historic cost basis,
except that derivative financial instruments are stated at their fair value.
The consolidated financial statements include the accounts of the
Company and all entities controlled by the Company (its subsidiaries)
(together referred to as ‘the Group’) from the date control commences
until the date that control ceases. Control is achieved where the Company
has the power to govern the financial and operating policies of an
investee entity to obtain benefits from its activities. As such, the results
of subsidiaries acquired during the year are included in the consolidated
income statement from the effective date of acquisition.
In the current financial year, the Group has adopted the following,
which did not have a material impact:
• IAS 1 amendments Presentation of financial statements
At the date of authorisation of these financial statements, the following
Standards and Interpretations, which have not yet been applied in these
financial statements, were in issue, but not yet effective:
• IAS 19 (revised) Employee benefits;
• IAS 27 (revised) Separate Financial Statements;
• IAS 28 (revised)Investments in Associates and Joint Ventures (2011);
• IAS 32 (amended) Offsetting Financial Assets and Liabilities;
• IFRS 9 Financial Instruments (2009);
• IFRS 10 Consolidated Financial Statements;
• IFRS 11 Joint Arrangements;
• IFRS 12 Disclosure of Interests in Other Entities;
• IFRS 13 Fair Value Measurement.
The Directors anticipate that adoption of these Standards and
Interpretations in future periods will have no material impact on the
financial statements of the Group except as follows:
As the Group has always recognised actuarial gains and losses
immediately, there will be no effect on the defined benefit obligation of all
defined benefit schemes and consequently no effect on the balance sheet
disclosures. IAS 19 revised requires interest cost and return on scheme
assets calculated under the previous version of IAS 19 to be replaced with
a net interest amount calculated by applying a discount rate to the net
defined liability or asset. The impact of this revision on profit before tax in
2012 would be to lower profit before tax by approximately £12m.
Management is currently of the opinion that the Group’s forecasts
and projections, show that the Group should be able to operate within
its current facilities and comply with its banking covenants. The Group
is, however, exposed to a number of significant risks and uncertainties,
which could affect the Group’s ability to meet management’s forecast and
projections and hence its ability to meet its banking covenants.
The Directors believe that the Group has the flexibility to react to
changing market conditions and is adequately placed to manage its
business risks successfully despite the current uncertain economic
outlook and challenging macro economic conditions.
A detailed consideration of going concern, risks and uncertainties is
provided in the Finance Director’s review of the year on pages 38 to 43.
After making enquiries, the Directors have formed a judgement at the
time of approving the financial statements, that there is a reasonable
expectation that the Company and the Group have adequate resources
to continue in operational existence for the foreseeable future. For this
reason, they continue to adopt the going concern basis in preparing the
financial statements.
2. Significant accounting policies
The principal accounting policies adopted in preparing the financial
statements are set out below.
Revenue recognition
Revenue is recognised when goods or services are received by the
customer and the risks and rewards of ownership have passed to them.
Revenue is measured at the fair value of consideration received or
receivable and represents amounts receivable for goods and services
provided in the normal course of business, net of discounts and value
added tax. For the Parent Company, revenue comprises management
charges receivable and dividend income received.
Exceptional items
Exceptional items are those items of income and expenditure that
by reference to the Group are material in size or unusual in nature or
incidence, that in the judgement of the Directors, should be disclosed
separately on the face of the financial statements (or in the notes in
the case of a segment) to ensure both that the reader has a proper
understanding of the Group’s financial performance and that there is
comparability of financial performance between periods.
Items of income or expense that are considered by the Directors
for designation as exceptional items include, but are not limited to,
significant restructurings, onerous contracts, write-downs or impairments
of current and non-current assets, the costs of acquiring and integrating
businesses, gains or losses on disposals of businesses and investments,
re-measurement gains or losses arising from changes in the fair value of
derivative financial instruments to the extent that hedge accounting is
not achieved or is not effective and pension scheme curtailment gains.
Business combinations and goodwill
All business combinations are accounted for using the acquisition
method. The cost of an acquisition represents the cash value of the
consideration and/or the fair value of the shares issued on the date the
offer became unconditional. The acquiree’s identifiable assets, liabilities
and contingent liabilities that meet the conditions for recognition under
IFRS 3 (2008) are recognised at their fair value at the acquisition date
except that:
• Deferred tax assets or liabilities and liabilities or assets related to
employee benefit arrangements are recognised and measured in
accordance with IAS 12 Income Taxes and IAS 19 Employee Benefits
respectively;
• Liabilities or equity instruments related to the replacement by the
Group of an acquiree’s share-based payment awards are measured in
accordance with IFRS 2 Share-based Payment;
FINANCIAL
STATEMENTS
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