Annual Report 2007 - Antofagasta plc

Notes to the Financial Statements1 Basis of Preparationa) Accounting standards appliedThe financial statements have been prepared in accordance with International Financial Reporting Standards(“IFRS”) and with those parts of the Companies Act 1985 applicable to companies reporting under IFRS. Forthese purposes, IFRS comprise the Standards issued by the International Accounting Standards Board (“IASB”)and Interpretations issued by the International Financial Reporting Interpretations Committee (“IFRIC”) that havebeen endorsed by the European Union (“EU”).At the date of authorisation of these financial statements, the following Standards and Interpretations whichhave not been applied in these financial statements were in issue but not yet effective:– IFRS 8 “Operating Segments”.– 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 theirInteraction”.The Directors anticipate that the adoption of these Standards and Interpretations in future periods will haveno material impact on the financial statements of the Group except as follows:– IFRS 8 “Operating Segments”. This standard will require different disclosures relating to the Group’soperating segments and how these are identified when it comes into effect for periods commencingon or after 1 January 2009.– IFRIC 12 “Service Concession Arrangements”. This interpretation requires the present classification of certainassets (acquired through the Group’s water concession) within property, plant and equipment, to bereassessed when it comes into effect for periods commencing on or after 1 January 2008.b) Change in accounting policy and adoption of new accounting standards(i) The Group has applied the hedge accounting provisions of IAS 39 “Financial Instruments: Recognition andMeasurement” with effect from 1 January 2007. From that date, changes in the fair value of derivative financialinstruments that are designated and effective as hedges of future cash flows have been recognised directly inequity, with any ineffective portion recognised immediately in the income statement. Realised gains and losseson commodity derivatives recognised in the income statement have been recorded within turnover. Prior to1 January 2007 derivatives were measured at fair value through the income statement, with gains or losseson commodity derivatives being recorded within other operating income or expense.This change in accounting policy must be applied prospectively and accordingly no restatement of prior periodinformation is required.FINANCIAL STATEMENTS(ii) The Group has adopted IFRS 7 “Financial Instruments: Disclosures” (and the related amendment to IAS 1“Presentation of Financial Statements”) which is effective from annual reporting periods beginning on or after1 January 2007. The impact of the adoption of IFRS 7 and the changes to IAS 1 has been to expand thedisclosures provided in these financial statements regarding the Group’s financial instruments and managementof capital.82Antofagasta plc Annual Report and Financial Statements 2007