Interim Results 2015 - Part 2

The interim financial statements have been prepared under the historical cost convention, as modified by the revaluation of cash-settled share-based payments, available-for-sale assets, and financial assets and liabilities (including derivatives) at fair value through profit or loss.

These interim financial statements were approved by the Board of Directors on 5 August 2015.  The Directors made an assessment of the Group's ability to continue as a going concern and confirm they are satisfied that the Group has adequate resources to continue in business for the foreseeable future. For this reason the Group continues to adopt the going concern basis of accounting for preparing the financial statements.

The accounting policies applied by the Group in these interim financial statements are the same as those applied by the Group in the preceding annual consolidated financial statements.

New accounting standards in issue but not yet effective

A number of new standards are effective for periods beginning after 1 January 2016 and have not been applied in preparing these condensed consolidated interim financial statements as these standards have not yet been endorsed by EU. These include:

·      IFRS 15 Revenue from Contracts with Customers - The effective date of IFRS 15 is 1 January 2018 with early adoption permitted. The standard provides a principles-based approach for revenue recognition and introduces the concept of recognising revenue for obligations as they are satisfied. The standard must be applied retrospectively. Whilst it is expected that a significant proportion of the Group's revenue will be outside the scope of IFRS 15, the impact of the standard is currently being assessed. It is not yet practicable to quantify the effect of IFRS 15 on these interim financial statements. IFRS 15 has yet to be endorsed by the EU.

·      IFRS 9 Financial Instruments - IFRS 9 was issued in July 2014 and has an effective date of 1 January 2018. IFRS 9 will replace IAS 39 Financial Instruments: Recognition and Measurement and introduces new requirements for the classification and measurement of financial assets and financial liabilities, a new model for recognising loan loss provisions based on expected credit losses and provides for simplified hedge accounting by aligning hedge accounting more closely with an entity's risk management methodology.

Classification and measurement - Financial assets are classified on the basis of the business model within which they are held, and their contractual cash flow characteristics. Financial assets that are held within a hold to collect business model and comprise solely payments of principal and interest (being time value of money) are classified as amortised cost. Debt instruments that comprise solely payments of principal and interest and held within a hold to collect or sell business model are classified at fair value through other comprehensive income (FVOCI). The requirements for the classification and measurement of financial liabilities were carried forward unchanged from IAS 39. However, the requirements relating to their fair value option for financial liabilities were changed to address own credit risk and, in particular, the presentation of gains and losses within other comprehensive income.

Impairment - IFRS 9 incorporates an expected loss approach for recognising credit losses. Under this approach expected credit losses or lifetime expected credit losses for all amortised cost and FVOCI debt instruments are recognised depending on whether or not significant credit deterioration has occurred since origination or acquisition. Where significant deterioration has not occurred, provision equating to 12 months of expected credit losses would be recognised whereas if there is a significant deterioration in credit risk, lifetime expected credit losses would be recognised.