Annual report and financial statements 2009
Report tools
Consolidated financial statements under International Financial Reporting Standards
Accounting policies
General information
Wm Morrison Supermarkets PLC is a public limited company incorporated in the United Kingdom under the Companies Act 1985 (Registration number 358949). The Company is domiciled in the United Kingdom and its registered address is Hilmore House, Gain Lane, Bradford, BD3 7DL, United Kingdom.
Basis of preparation
The financial statements have been prepared for the 52 weeks ended 1 February 2009 (2008: 3 February 2008) in accordance with International Financial Reporting Standards (IFRS) and International Financial Reporting Interpretation Committee interpretations (IFRIC) as adopted by the European Union and with those parts of the Companies Act 1985 applicable to companies reporting under IFRS. IFRS and IFRIC are issued by the International Accounting Standards Board (the IASB) and must be adopted into European Union law, referred to as endorsement, before they become mandatory under the IAS Regulation. Shown below are recent standards and interpretations that have been issued by the IASB, indicating their status of endorsement.
The financial statements have been prepared on a going concern basis. The Directors’ assessment of going concern has been considered within the general information section of the Directors’ report and business review.
The financial statements are presented in Pounds Sterling, rounded to the nearest million, except in some instances, where it is deemed relevant to disclose the amounts up to one decimal place. They have been prepared on the historical cost basis of accounting, except for share-based payments and derivative financial instruments, which are measured at fair value, and pension scheme liabilities that are measured using actuarial valuations.
The Group’s accounting policies are set out below and have, unless otherwise stated, been applied consistently to all periods presented in these consolidated financial statements.
The endorsement of IFRIC 14 IAS19 – The limit on a defined benefit asset, minimum funding requirements and their interaction, has no material impact on the Group’s financial statements. The accounting policy for Retirement benefits has been updated to cover the recognition of an asset if one should exist in the future.
There have been no further alterations made to the accounting policies as a result of considering all amendments to IFRS and IFRIC interpretations that became effective during the financial period as these were considered to be immaterial to the Group’s operations or were not relevant.
New IFRS and amendments to IAS and interpretations
There are a number of standards and interpretations issued by the International Accounting Standards Board that are effective for financial statements after this reporting period. The following have not been adopted by the Group:
| International Financial Reporting Standards | Effective for accounting periods starting on or after | |
|---|---|---|
| IAS 1* | Presentation of financial statements: A revised presentation | 1 January 2009 |
| IFRS 2* | Share-based payment: Vesting conditions and cancellations | 1 January 2009 |
| IFRS 8* | Operating segments | 1 January 2009 |
| IAS 23* | Borrowing costs | 1 January 2009 |
| IFRSs* | Annual improvements to IFRSs | 1 January 2009 |
| IAS 27 | Consolidated and separate financial statements | 1 July 2009 |
| IFRS 3 | Business combinations | 1 July 2009 |
| International Financial Reporting Interpretations Committee | ||
| IFRIC 13* | Customer loyalty programmes | 1 July 2008 |
*These standards and interpretations have been endorsed by the European Union.
The application of these standards and interpretations are not anticipated to have a material effect on the Group’s financial statements except for additional disclosure.
Basis of consolidation
The consolidated financial statements incorporate the financial statements of the Company and its subsidiaries, being those undertakings that it controls. Control is achieved where the Company has the power to govern the financial and operating policy of an investee entity so as to obtain benefits from its activities. The financial statements of subsidiaries used in the preparation of the consolidated financial statements are prepared for the same reporting period as the Parent Company and are based on consistent accounting policies. The results of subsidiaries acquired or disposed of during the period are included in the consolidated financial statements from the effective date of acquisition up to the effective date of disposal, as appropriate.
Intra-group balances and any unrealised gains and losses or income and expenses arising from intra-group transactions, are eliminated in preparing the consolidated financial statements.
Significant accounting policies
The Directors consider the following to be significant accounting policies in the context of the Group’s operations:
Revenue recognition
Revenue is recognised when significant risks and rewards of ownership have been transferred to the buyer, there is reasonable certainty of recovery of the consideration and the amount of revenue, associated costs and possible return of goods can be estimated reliably.
a) Sale of goods in-store and fuel
Sale of goods in-store is recorded net of value added tax, staff discounts, coupons, vouchers and the free element of multi-save transactions. Sale of fuel is recognised net of value added tax and Morrisons Miles award points. Revenue is recognised when transactions are completed in-store.
b) Manufacturing sales
Manufacturing sales are made direct to third-party customers from our manufacturing companies and are recognised on despatch of goods. Sales are recorded net of value added tax and intra-group transactions.
c) Income from concessions and commissions
Income from concessions and commissions is based on the terms of the contract. Revenue collected on behalf of others is not recognised as turnover, other than the related commission.
Other operating income
Other operating income consists of income not directly related to the operating of supermarkets and mainly comprises rental income from investment properties. Other categories of income included within ‘Other operating income’ are backhaul income and credits earned from the recycling of waste and packaging materials. Details of rental income from investment property are provided in note 10.
a) Rental income from investment property
Rental income arising from operating leases on investment properties is accounted for on a straight line basis over the lease term.