150
IMI plc
C1. Significant accounting policies
The following accounting policies have been applied consistently in dealing
with items considered material in relation to the financial statements, except
where otherwise noted below:
Basis of accounting
The financial statements have been prepared under the historical cost
convention and in accordance with applicable UK accounting standards except
for certain financial instruments as defined by FRS26 ‘Financial Instruments:
Measurement’ which are stated at fair value.
The Company has not presented a separate profit and loss account as
permitted by Section 408 of the Companies Act 2006.
Under FRS1 ‘Cash Flow Statements’, the Company is exempt from the
requirement to prepare a cash flow statement on the grounds that the Company
is included in its own published consolidated financial statements.
The Company has taken advantage of the exemptions contained in FRS8
‘Related party disclosures’ and has not disclosed transactions or balances
with wholly owned entities which form part of the Group. Related party
transactions with the Company’s key management personnel are disclosed in
the Remuneration Report on pages 57 to 79 and in Section 5.2 on page 135 of
the Group financial statements. The Company has adopted the requirements
of FRS29 ‘Financial Instruments: Disclosures’ and has taken the exemption
under that standard from disclosure on the grounds that the Group financial
statements contain disclosures in compliance with IFRS7.
The Company intends to adopt FRS101 ‘Reduced Disclosure Framework’, which is
effective for accounting periods commencing on 1 January 2015. The comparatives
for the year ending 31 December 2014 will be restated to reflect this change.
Notice will be provided to shareholders at the 2015 Annual General Meeting.
Foreign currencies
Transactions in foreign currencies are recorded using the rate of exchange ruling
at the date of transaction.
Monetary assets and liabilities denominated in foreign currencies have been
translated into Sterling at the rates of exchange ruling at the balance sheet date
and the gains or losses on translation are included in the profit and loss account.
Investments
The Company’s cost of investments in subsidiary undertakings is stated at the
aggregate of (a) the cash consideration and either (b) the nominal value of the
shares issued as consideration when section 612 of the Companies Act 2006
applies or (c) in all other cases the market value of the Company’s shares on
the date they were issued as consideration.
Taxation
The charge for taxation is based on the profit for the year and takes into account
taxation deferred because of timing differences between the treatment of certain
items for taxation and accounting purposes.
Deferred tax is recognised without discounting, in respect of all timing
differences between the treatment of certain items for taxation and accounting
purposes which have arisen but not reversed by the balance sheet date, except
as otherwise required by FRS19.
Financial instruments
The principal financial instruments utilised by the Company are interest rate
swaps. These instruments are used for hedging purposes in line with the
Group’s risk management policy. Interest differentials are taken to net interest
in the profit and loss account.
If an instrument ceases to be accounted for as a hedge, for example because
the underlying hedged position is eliminated, the instrument is marked to
market and any resulting profit or loss is recognised at that time.
Equity and equity-related compensation benefits
The Company operates a number of equity and equity-related compensation
benefits as set out in Section 4.7 to the Group financial statements. The fair
value of the employee services received in exchange for the grant of the options
is recharged to the principal employing company.
When a parent grants share-based payments to employees of a subsidiary,
UITF41
‘Scope of FRS20’
and UITF44
‘Group and Treasury Share Transactions’
states that the parent receives services from the employees indirectly through
its subsidiary which should be accounted for as an increase in the investment
in the subsidiary by the parent.
Amounts recharged to subsidiaries are recognised as a reduction in the cost of
investment in the subsidiary as this recharge is considered to form part of the
determination of the net capital contribution from the parent in respect of the
share-based payment arrangement. Accordingly, there is no overall increase in
the investment in subsidiaries recorded in the Company’s financial statements.
The recharged amount is recognised as a debtor falling due for payment within
one year.
The total amount recharged over the vesting period is determined by reference
to the fair value of the options granted, excluding the impact of any non-market
vesting conditions (for example, profitability and sales growth targets). Non-
market vesting conditions are included in assumptions about the number of
options that are expected to become exercisable. The fair value of the options at
the date of grant is determined based on the Black-Scholes option-pricing model.
At each balance sheet date, the Company revises its estimate of the number
of options that are expected to vest.
It recognises the impact of the revision of original estimates, if any, in the
amount recharged to subsidiary undertakings.
For newly issued shares, the proceeds received, net of any directly attributable
transaction costs are credited to share capital (nominal value) and share
premium when the options are exercised.
Treasury shares
The consideration paid by the Company on the acquisition of treasury shares
is charged directly to retained earnings in the year of purchase. If treasury
shares are subsequently cancelled the nominal value of the cancelled shares
is transferred from share capital to the capital redemption reserve.
Dividends or shares presented within shareholders’ funds
Dividends unpaid at the balance sheet date are only recognised as a liability
at that date to the extent that they are authorised and are no longer at the
discretion of the Company. Unpaid dividends that do not meet these criteria
are disclosed in the notes to the financial statements.
C2. Remuneration of directors
The detailed information concerning directors’ emoluments, shareholdings
and options are shown in the audited section of the Remuneration Report
on pages 57 to 79 and Section 2.1.3 of the Group financial statements.
C3. Staff numbers and costs
The number of people employed by the Company, including Directors, during
the year was 28 (2013: 25) all of whom were employed in administrative roles.
The costs associated with them were borne by a subsidiary undertaking.
The Company participates in the IMI UK Funds, which are defined benefit
schemes in which the assets are held independently. The Company is unable
to identify its share of the underlying assets and liabilities of the schemes
and consequently in accordance with FRS17 paragraph 9(b) the Company
is required to account for pension costs as if the schemes were a defined
contribution schemes. Section 4.5 to the Group financial statements provides
further details regarding the defined benefit schemes.
COMPANY NOTES TO THE FINANCIAL STATEMENTS
