Annual Report and Accounts 2006 - DCC plc

58notes to the financial statements1. Summary of significant accounting policiesStatement of complianceThe consolidated financial statements of DCC plc have been prepared in accordance with International Financial ReportingStandards (‘IFRS’) and their interpretations approved by the International Accounting Standards Board (‘IASB’) as adoptedby the European Union (‘EU’) and those parts of the Companies Acts, 1963 to 2005 applicable to companies reportingunder IFRS. Both the Parent Company and the Group financial statements have been prepared in accordance with IFRS asadopted by the EU. In presenting the Parent Company financial statements together with the Group financial statements,the Company has availed of the exemption in Section 148(8) of the Companies Act 1963 and section 7(1A) of theCompanies (Amendment) Act 1986 not to present its individual Income Statement and related notes that form part of theapproved Company financial statements.The accounting policies applied in the preparation of the financial statements for the year ended 31 March 2006 are setout below. These policies have been applied consistently with the exception of those accounting policies pertaining to IAS32 Financial Instruments: Disclosure and Presentation and IAS 39 Financial Instruments: Recognition and Measurementwhich in accordance with the transitional provisions of IFRS 1 First-time Adoption of International Financial ReportingStandards were not applied in the restatement of the 2005 comparatives presented in these financial statements.These consolidated financial statements are the Group’s first financial statements to be prepared in accordance with IFRS.The IFRS adopted by the EU applied by the Company and Group in the preparation of these financial statements are thosethat were effective at 31 March 2006 together with the early adoption of the Amendment to IAS 19 ActuarialGains and Losses, Group Plans and Disclosures.Basis of preparationThe consolidated financial statements, which are presented in euro, rounded to the nearest thousand, have been preparedunder the historical cost convention, as modified by the measurement at fair value of share options and derivative financialinstruments. The carrying values of recognised assets and liabilities that are hedged are adjusted to record changes in thefair values attributable to the risks that are being hedged.The accounting policies set out below have been applied consistently by Group entities to all periods presented in theseconsolidated financial statements and in preparing the opening IFRS Balance Sheet as at 1 April 2004 for the purposes ofthe transition to IFRS reporting with the exception of IAS 32 and IAS 39 which, as noted above, were not applied in therestatement of the 2005 comparatives.The transition to IFRS is accounted for in accordance with IFRS 1. This standard sets out how to adopt IFRS for the firsttime and mandates that most standards are to be fully applied retrospectively. There are certain limited exemptions fromthis requirement. The impact of IFRS on the financial statements for the year ended 31 March 2005 and the significantdecisions taken in respect of availing, or otherwise, of the exemptions available on the transition to IFRS are outlined innote 47 to the financial statements.The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. Inaddition, it requires management to exercise judgement in the process of applying the Company’s accounting policies.The areas involving a high degree of judgement or complexity, or areas where assumptions and estimates are significantto the consolidated financial statements, relate primarily to accounting for defined benefit pension schemes and goodwillimpairment and are documented in the relevant accounting policies below.Standards, interpretations and amendments to published standards that are not yet effectiveCertain new standards, amendments and interpretations to existing standards which are relevant to the Group have beenpublished that are mandatory for the Group’s accounting periods beginning on or after 1 April 2006 or later periods butwhich the Group has not early adopted. These include the following:IFRS 7 Financial Instruments: Disclosures;Amendment to IAS 1 Capital Disclosures;Amendment to IAS21 Net Investment in a Foreign Operation;Amendment to IAS 39 Cash Flow Hedge Accounting of Forecast Intragroup Transactions;