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(b) Finance leasesAt commencement of the lease term, assets and liabilities are recognisedat the lower of the present value of future minimum lease paymentsor fair value of the leased item. All property, plant and equipment sorecognised is depreciated over the shorter of the asset’s expected usefullife or the lease term.In cases where land and buildings are acquired under finance leases,separate values of the land and buildings are established.2.20. Discontinued operationsA discontinued operation is a component of the Group’s businessthat represents a separate major line of business or geographicalarea of operations that has been disposed of or is held for sale, or is asubsidiary acquired exclusively with a view to resale. Classification asa discontinued operation occurs upon disposal or when the operationmeets the criteria to be classified as held for sale, if earlier. When anoperation is classified as a discontinued operation the comparativeincome statement is re-presented as if the discontinued operationhad been discontinued from the start of the comparative period.2.21. Dividend distributionsDividend distributions to Richemont shareholders are recognised asa liability in the Group’s financial statements in the period in whichthe dividends are approved by the shareholders of the Company.2.22. Changes to IFRSCertain new accounting standards issued by IASB and new interpretationsissued by IFRIC are not yet effective for the year ended 31 March2009 and have not been applied in preparing these consolidatedfinancial statements.• IFRS 2 (Amendment), (effective for accounting periods beginningon or after 1 January 2009) deals with two matters. It clarifiesthat vesting conditions can be service conditions and performanceconditions only. Other features of share-based payment are notvesting conditions. It also specifies that all cancellations, whetherby the entity or by other parties, should receive the same accountingtreatment. This has no impact for the Group.• IFRS 8, Operating Segments which is effective for accountingperiods beginning on or after 1 January 2009 requires segmentalinformation based on the internal reports regularly reviewed by theGroup’s chief operating decision-maker in order to assess eachsegment’s performance and to allocate resources to them. It isexpected that the application of this new standard will lead to achange in segmental information in the disclosure of the Group’soperating segments.• IAS 1 (revised), Presentation of Financial Statements (effective from1 January 2009). It primarily affects the presentation of ownerchanges in equity and of comprehensive income. It does not changethe recognition, measurement or disclosures of specific transactionsand other events required by other IFRSs.• IAS 23 (Amendment), Borrowing Costs (effective from 1 January2009) requires that an entity capitalise, as part of the cost of theasset, borrowing costs directly attributable to the acquisition,construction or production of a qualifying asset. This is the Group’sexisting policy therefore the revised standard will not impact theGroup’s consolidated financial statements.• IAS 27 (revised), Consolidated and Separate Financial Statementsmust be applied for annual periods beginning on or after 1 July2009. The amendments to this standard relate to the accountingfor non-controlling interests and loss of control of a subsidiary.These revisions will require any future transactions between theGroup and minority shareholders (‘non-controlling interests’) tobe accounted for in equity.• IAS 32, Financial Instruments: Presentation and IAS 1 Presentationof Financial Statements – Puttable Financial Instruments andObligations arising on Liquidation (Amendment) (effective from1 January 2009). The amendment requires certain puttable financialinstruments and some financial instruments that impose on theentity an obligation to deliver to another party a pro rata shareof the net assets of the entity only on liquidation to be classified asequity rather than as a liability. These amendments are not expectedto have any impact on the Group’s financial statements.• IFRS 3 (revised), Business Combinations is effective for businesscombinations with an acquisition date on or after 1 July 2009.These revisions concern the accounting for business combinationsin Group and separate financial statements. The Group will applythe requirements of these standards to business combinations withan acquisition date on or after 1 July 2009.• IFRS 5 (Amendment), Non-Current Assets held-for-sale andDiscontinued Operations (and consequential amendment to IFRS 1,First-Time Adoption) (effective from 1 July 2009). The amendmentis part of the IASB’s annual improvements project published in May2008. The amendment clarifies that all of a subsidiary’s assets andliabilities are classified as held for sale if a partial disposal sale planresults in loss of control. Relevant disclosure should be made forthis subsidiary if the definition of a discontinued operation is met.A consequential amendment to IFRS 1 states that these amendmentsare applied prospectively from the date of transition to IFRSs.The Group will apply the IFRS 5 (Amendment) prospectivelyto all partial disposals of subsidiaries from 1 April 2010.• IAS 23 (Amendment), Borrowing Costs (effective from 1 January2009). The amendment is part of the IASB’s annual improvementsproject published in May 2008. The definition of borrowing costshas been amended so that interest expense is calculated using theeffective interest method defined in IAS 39 Financial Instruments:Recognition and Measurement. This eliminates the inconsistency ofterms between IAS 39 and IAS 23. The Group will apply the IAS 23(Amendment) prospectively to the capitalisation of borrowing costson qualifying assets from 1 April 2009.Richemont Annual Report and Accounts 2009 65Consolidated financial statements