Essay:

Essay details:

  • Subject area(s): Marketing
  • Price: Free download
  • Published on: 14th September 2019
  • File format: Text
  • Number of pages: 2

Text preview of this essay:

This page is a preview - download the full version of this essay above.

Introduction:

An interesting company for study is Stagecoach Group PLC, as this group works in international public transport and has extensive operations in the UK, United States and Canada.

 

Stagecoach Group PLC released on 29 September 2005 a regulatory announcement “From 1 May 2005 onwards, the Group is required to prepare its consolidated financial statements in accordance with International Accounting Standards (\"IAS\") and International Financial Reporting Standards (\"IFRS\") as adopted by the European Union (\"EU\")”  . This will be discussed in depth later in the review.

AS THE GROUP HAS PREPARED ITS' FINANCIAL STATEMENTS IT IS AN ASSUMPTION THEY WILL CONTINUE TO OPERATE FOR THE FORESEEABLE FUTURE.

ACCOUNTING POLICIES:

As mentioned in the introduction the group had adopted the International Financial Reporting Standards whilst reporting their consolidated financial statements, The International Financial Reporting Standards framework describes the basic concepts that underlie the preparation and presentation of financial statements for external users .

The basis of preparation for the groups' annual report year ending 30 April 2016 was in accordance with the International Financial Reporting Standards (IFRS) and International Financial Reporting Interpretations Committee (“IFRIC”) interpretations as adopted by the European Union (and therefore comply with Article 4 of the European Union International Accounting Standards Regulation), and with those parts of the Companies Act 2006 applicable to companies reporting under International Financial Reporting Standards.  

The consolidated financial statements have been presented in sterling pound and all values are rounded to the nearest one hundred thousand (0.1m).

The group had adopted new accounting standards during the year, which were made mandatory for the first time at the beginning of the financial year 1 May 2016. The adopted standards are amendments to IAS 19 and IFRIC 21, both of which have not materially impacted the financial statements of the group.

There are other standards issued by The International Accounting Standards Board (IASB) and the International Financial Reporting Interpretations Committee (IFRIC) that the group did not adopt. They were not adopted due to the Directors review of the requirements and did not expect them to have any material impact on the Groups' consolidated financial statements.

The objective of general purpose financial reporting is the foundation of the conceptual framework. Its' purpose is to help the users of the reports to make decisions about investing or lending.

The information in the annual report for the group provides the information needed to make decisions as an existing or potential investor, lender or other creditor to provide resources to the entity. The cash flow statement helps them assess the prospects for the future based on the entitys' change in resources and claims other than the sale of shares.

An investor would be looking at the dividends, principal and interest payments, market price increases or resources, lenders would be dependent on the principal and interest payments or other returns they could expect.

Where appropriate comparative figures have been adjusted to provide comparability, the consolidated income statement includes the results of businesses purchased from the effective date of acquisition and excludes the results of disposed operations and businesses sold from the effective date of disposal .

After studying the Group, it is apparent they have followed the principals in the conceptual framework as explained above.

The framework also comes with a cost constraint as the more information being reported the more it costs; hence the group has adopted FRS 101: Reduced Disclosure Framework as reported on their website  and published by News Bites Pty Ltd . The group also released a notification of change of auditor  to Ernst and Young LLP after tendering it as a result of a recommendation of the Audit Committee. The appointment of Ernst and Young LLP was sought at the 2016 AGM for the approval of the shareholders, this resolution passed.

Non-current asset review:

This review will be on intangible assets also I will briefly touch on impairments within the group for the financial year ending 30 April 2016.

INTANGIBLE ASSETS IAS 38:

The accounting requirements for intangible assets are outlined in IAS 38. Intangible assets are long term resources of an entity which are without physical substance, identifiable and non-monetary. These assets are measured at cost so long as they meet the recognition criteria. Intangible assets are amortised over their useful lives, unless if the asset has an infinite life then it is not amortised.

The asset is identifiable when it is can be separated and arises from contractual or other legal rights. An asset, a resource, controlled by the entity as a result of a purchase or creating it, that provides economic benefits.

Stagecoach Group PLC has a range of resources; their intangible assets assist in giving the Group a competitive advantage in the markets it operates in. These assets include customer contracts and operating leases on favourable terms to market purchased as part of business combinations, the right to operate UK Rail franchises and software costs.

The operating leases are recognised under IAS 38.35 business combinations. It is presumed that the fair value of an intangible asset acquired in a business combination can be measured reliably and therefor that would be the cost of the asset.

UK Rail franchises are identifiable under IAS 38.12 as they are separable and arise from contractual or legal rights, customer contracts would also be identified under the same International Accounting Standards.

Software costs are capitalised upon purchase and are therefore recognised under IAS 38 and amortised over its useful life.

Amortisation of intangible assets relating to customer contracts and lease contracts is amortised based on the pattern of the consumption of economic benefits obtained from the relevant contract. Amortisation of other intangible assets is calculated on the straight line method. Intangible assets relating to rail franchises of a finite duration are amortised over the expected life of the franchise , software is amortised over 2 to 5 years.

Where the life of a contract or rail franchise is shortened or extended, the useful economic lives of any related intangible assets are reviewed, the intangible assets are reviewed for impairment and the remaining carrying value of each asset is amortised over its revised, remaining economic life. New contracts and franchises are not treated as extensions of existing arrangements, even when they cover the same business operations as expiring contracts and franchises. Marketing costs incurred during the start-up phase of a new activity are charged to the income statement as incurred.

The movements in intangible assets, none of which were internally generated and all of which are assumed to have finite useful lives are included in note 11 in the annual report page 88. During the financial year the group acquired additions totaling £19.6m, disposals to the total of £11.4m, due to disposals the operating leases are no longer included in the final total of intangible asset in the financial position statement as they were fully disposed. Amortisation charged to the Statement of Profit and Loss and Other Comprehensive Income was £15.8m. As the group is international and the consolidated financial statements are prepared in sterling currency the total of foreign exchange movement is £0.2m in the financial year ending 30 April 2016. The table below shows all these transactions to calculate the total of intangible assets as shown in the Consolidated Statement of Financial Position.

Description Total in Mil

At the beginning of the year £133.4

Additions £19.6

Disposals £11.4

Accumulated Amortisation 1/5/2015 £48.7

Amortisation for year ending 30/4/2016 £15.8

Foreign exchange movement £0.2

Net book value on 30/4/2016 £88.7

IMPAIRMENTS IAS 36:

IAS 36 Impairment of Assets seeks to ensure that an entity\'s assets are not carried at more than their recoverable amount .

This standard applies to land, buildings, equipment, property, investments in subsidiaries among other assets.

Key definitions [IAS 36.6] Impairment loss: the amount by which the carrying amount of an asset or cash-generating unit exceeds its recoverable amount .

The carrying value of the Group's interest in Twin America is impaired as a result of the challenging market within the New York sightseeing market. Management has undertaken an impairment review as at 30 April 2016 of the carrying value of the Group's interest in Twin America and has concluded that the carrying value is fully impaired at the balance sheet date .

Sheffield Supertram was affected by the closure of parts of the tram network for replacement of the tram track. The financial performance has not recovered as it has been foreseen. Management has concluded that the carrying value of the asset is impaired by £6.0m.

Note 2 page 80 of the annual report part c joint ventures, shows the amount Twin America was impaired by and totaling £35.9m.

Note 3 page 82 of the annual report Operating costs and other operating income, shows the impairment of £6.0m as a result of the declined financial performance of Sheffield Supertram.

Bibliography

Conceptual Framework for Financial Reporting 2010. (n.d.). Retrieved November 15, 2016, from http://www.iasplus.com/en/standards/other/framework

Cowie, M. (2016, July 20). Stagecoach Group Annual Report and Financial Statements 2016. Retrieved November 15, 2016, from http://www.stagecoach.com/~/media/Files/S/Stagecoach-Group/Attachments/pdf/annual-report-2016-v2.pdf

IAS 36 — Impairment of Assets. (n.d.). Retrieved November 18, 2016, from http://www.iasplus.com/en/standards/ias/ias36

IAS 36 — Impairment of Assets. (n.d.). Retrieved November 18, 2016, from http://www.iasplus.com/en/standards/ias/ias36

REG-Stagecoach Group PLC IFRS - Part 1. (2005, September 29). Retrieved November 17, 2016, from http://otp.investis.com/clients/uk/stagecoach/rns/regulatory-story.aspx?cid=273&newsid=47172

Stagecoach Group Annual Report and Financial Statements 2016. (2016, July 20). Retrieved November 15, 2016, from http://www.stagecoach.com/~/media/Files/S/Stagecoach-Group/Attachments/pdf/annual-report-2016-v2.pdf

Stagecoach Group Annual Report and Financial Statements 2016. (2016, July 20). Retrieved November 15, 2016, from http://www.stagecoach.com/~/media/Files/S/Stagecoach-Group/Attachments/pdf/annual-report-2016-v2.pdf

Stagecoach Group Annual Report and Financial Statements 2016. (2016, July 20). Retrieved November 15, 2016, from http://www.stagecoach.com/~/media/Files/S/Stagecoach-Group/Attachments/pdf/annual-report-2016-v2.pdf

Stagecoach Group Annual Report and Financial Statements 2016. (2016, July 20). Retrieved November 15, 2016, from http://www.stagecoach.com/~/media/Files/S/Stagecoach-Group/Attachments/pdf/annual-report-2016-v2.pdf

Stagecoach Group PLC : Notification of change of auditor. (2016, January 26). Retrieved November 15, 2016, from http://otp.investis.com/clients/uk/stagecoach/rns/regulatory-story.aspx?cid=273&newsid=651103

Stagecoach Group PLC: Notice of Adoption of FRS 101 - Reduced Disclosure Framework. (2016, April 01). Retrieved November 16, 2016, from http://otp.investis.com/clients/uk/stagecoach/rns/regulatory-story.aspx?cid=273&newsid=692620

Stagecoach Group PLC: Notice of Adoption of FRS 101 - Reduced Disclosure Framework. (2016, April 02). Retrieved November 15, 2016, from http://search.proquest.com.ergo.southwales.ac.uk/docview/1777455897/fulltext/C134110DE7684E15PQ/1?accountid=15324

Word count of submission: 1496

...(download the rest of the essay above)

About this essay:

This essay was submitted to us by a student in order to help you with your studies.

If you use part of this page in your own work, you need to provide a citation, as follows:

Essay Sauce, . Available from:< https://www.essaysauce.com/essays/marketing/2016-11-19-1479598525.php > [Accessed 20.10.19].