01
Accounting
policies
cont...
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NOTES
TO THE FINANCIAL STATEMENTS
v_Long-term contracts
Profit on long-term contracts is taken as the work is carried out if the final outcome can be assessed with reasonable certainty. The profit is calculated on a prudent basis to reflect the proportion of the work carried out at the year end, by recording turnover and related costs, being cost of direct materials and labour, as contract activity progresses. Turnover is calculated by reference to the value of work carried out based on requirements completed to date relative to total contractual requirements as at the balance sheet date. Revenues derived from variations on contracts are recognised only when they have been agreed by the customer. Full provision is made for losses on all contracts in the year in which they are first foreseen.
vi_Foreign exchange
Transactions denominated in foreign currencies are translated into sterling at the rates ruling at the dates of transactions. Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are translated at the rates ruling at that date. Translation differences are taken to the profit and loss account.
Results of overseas subsidiaries are translated using the average exchange rate for the period. The balance sheets of overseas subsidiaries are translated using the closing year end rate. Exchange differences arising from the re-translation of the opening net assets of overseas subsidiaries are taken to reserves.
vii_Tangible fixed assets
Tangible fixed assets are stated at invoice cost less any applicable discounts. Depreciation is provided at rates calculated to write down the cost of tangible assets over their estimated useful life on a straight-line basis. The annual rates of depreciation, by category of fixed asset, are as follows:
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freehold property |
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2% |
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office equipment, fixtures and fittings |
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12.5% to 20.0% |
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computer equipment |
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33.3% |
viii_Assets held for resale
Acquired assets held for resale are stated at the directors' valuation of anticipated net realisable value.
ix_Stocks
Stocks comprise goods held for resale and are stated at the lower of cost and net realisable value. Cost includes all costs in bringing each product to its present location and condition.
x_Share schemes
The Company has taken advantage of the exemption in UITF 17 "Employee
Share Schemes" (Revised 2000) in respect of the accounting for
its employee savings related option schemes which states that
the requirements of the Abstract need not be applied to such schemes.
The cost in relation to the deferred bonus scheme is charged in
the year of performance. The related credit entry is made within
liabilities reflecting the fact that the deferred shares will
be satisfied by a purchase of shares from the market.
xi_Fixed asset investments
Fixed asset investments are stated at cost less any write down for impairment.
xii_Leased assets
Assets held under finance leases are included in the balance sheet and depreciated in accordance with the Group's normal accounting policy for the class of asset concerned. The present value of future rentals is shown as a liability. The interest element of rental obligations is charged to the profit and loss account over the period of the lease in proportion to the balance of capital repayments outstanding.
Rentals payable under operating leases are charged to the profit and loss account on a straight-line basis over the period of the lease.
xiii_Taxation
Corporation tax is provided on taxable profits at the current rate.
Deferred tax is provided on timing differences that have arisen but not reversed by the balance sheet date, where the timing differences result in an obligation to pay more tax, or a right to pay less tax, in the future. Timing differences arise because of differences between the treatment of certain items for accounting and taxation purposes.
Deferred tax assets are recognised to the extent that it is regarded as more likely than not that they will be recovered.
Deferred tax is measured at the tax rates that are expected to apply in the periods when the timing differences are expected to reverse, based on tax rates and law enacted or substantively enacted at the balance sheet date. Deferred tax assets and liabilities are not discounted.
Where law or accounting standards require gains and losses to be recognised in the statement of total recognised gains and losses, the related taxation is also taken directly to the statement of total recognised gains and losses.
xiv_Pensions
Defined benefit pension schemes are accounted for in accordance with FRS17. The pension scheme assets are measured using market values. Pension scheme liabilities are measured using the projected unit actuarial method and are discounted at the current rate of return on a high quality corporate bond of equivalent term and currency to the liability. Any increase in the present value of liabilities within the Group's defined benefit pension schemes expected to arise from employee service in the period is charged to operating profit. The expected return on the schemes' assets and the increase during the period in the present value of the schemes' liabilities arising from the passage of time are included in other finance income/cost. Actuarial gains and losses are recognised in the consolidated statement of total recognised gains and losses. Pension scheme surpluses, to the extent that they are considered recoverable, or deficits are recognised in full and presented on the face of the balance sheet net of related deferred tax.
The Group also operates a number of defined contribution pension schemes. The pension charge shown in the financial statements for these schemes represents the total contributions payable by the Group for the year.
Multi-employer defined benefit schemes are accounted for as defined contribution schemes when the Group is unable to identify its share of the underlying assets and liabilities of the schemes.
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