Accounts

Accounting Policies

for the year ended 31st March 2013

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Share-based payments and employee share ownership trust (ESOT)

The fair value of outstanding shares allocated to employees under the long term incentive plan is calculated by adjusting the share price on the date of allocation for the present value of the expected dividends that will not be received. The resulting cost is charged to the income statement over the relevant vesting periods, adjusted to reflect actual and expected levels of vesting where appropriate.

The group and parent company provide finance to the ESOT to purchase company shares in the open market. Costs of running the ESOT are charged to the income statement. The cost of shares held by the ESOT is deducted in arriving at equity until they vest unconditionally with employees.

Pensions and other post-employment benefits

The group operates a number of contributory and non-contributory plans, mainly of the defined benefit type, which require contributions to be made to separately administered funds.

The costs of the defined contribution plans are charged to the income statement as they fall due.

For defined benefit plans, the group and parent company recognise the net assets or liabilities of the plans in their balance sheets. Obligations are measured at present value using the projected unit credit method and a discount rate reflecting yields on high quality corporate bonds. Assets are measured at their fair value at the balance sheet date. The changes in plan assets and liabilities, based on actuarial advice, are recognised as follows:

Standards and interpretations adopted in the year

During the year, Amendments to IFRS 7 – ‘Disclosures – Transfers of Financial Assets’, Amendments to IAS 12 – ‘Deferred Tax: Recovery of Underlying Assets’ and Amendments to IFRS 1 – ‘Severe Hyperinflation and Removal of Fixed Dates for First-time Adopters’ were adopted. There was no material impact on the reported results or financial position of the group and parent company.

Standards and interpretations issued but not yet applied

The impact of the adoption of IFRS 9 – ‘Financial Instruments’, Amendments to IFRS 9 and IFRS 7 – ‘Mandatory Effective Date and Transition Disclosures’, IFRS 10 – ‘Consolidated Financial Statements’, IFRS 11 – ‘Joint Arrangements’, IFRS 12 – ‘Disclosure of Interests in Other Entities’ and IFRS 13 – ‘Fair Value Measurement’ and the revised IAS 27 – ‘Separate Financial Statements’ and IAS 28 – ‘Investments in Associates and Joint Ventures’ are still being evaluated.

IAS 19 – ‘Employee Benefits’ was revised in June 2011 and is applicable for periods beginning on or after 1st January 2013 and so will be applied for the year starting 1st April 2013. It removes the ‘corridor approach’ for recognising actuarial gains and losses and eliminates options for presenting gains and losses which will have no effect on the group and parent company. It also amends the disclosures and requires the replacement of the expected return on plan assets and interest cost on plan obligations with net interest on the net defined benefit liability based on the discount rate. In addition, past service costs will no longer be spread over the vesting period but will be immediately expensed. The group has decided that it will include net interest on the net defined benefit liabilities in finance costs. Had the standard been applied for the year ended 31st March 2013, the group’s operating profit would have increased by £1.3 million, its net finance costs increased by £7.6 million and its employee benefit obligations decreased by £2.1 million. This would have decreased the earnings per share (basic, diluted and underlying) by 2.3p. The parent company’s profit for the year would have decreased by £3.2 million with no effect on its employee benefit obligations. It is estimated that for the year ending 31st March 2014, the group’s operating profit will increase by £1.5 million and its net finance costs increase by £10.5 million. The parent company’s profit for the year is estimated to decrease by £3.9 million.

The effects of any standards and interpretations amended or issued after 30th April 2013 have not yet been evaluated.

The group and parent company do not consider that any other standards or interpretations issued by the IASB but not yet applicable will have a significant impact on their reported results or net assets.

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