Inmarsat

Inmarsat plc Monitor

Inmarsat plc Annual Report 2017
CR Monitor Issue: 
2018/0919
Company covered: 
Inmarsat plc
Period End: 
31 December, 2017
Report issued on 25 September 2018 covered the following practice issues:
Change
Discussion of key audit matter included in audit report.
Change
Separate sections outlining director and auditor responsibilities included in auditors' report.
Pronouncements
Extended disclosure in respect of the impacts of new accounting standards including IFRS 15 "Revenues from contracts with customers", IFRS 16 "Leases", IFRS 9 "Financial instruments", IFRIC 22 “Foreign Currency Transactions and Advance Consideration” and IFRIC 23 “Uncertainty over Income Tax Treatments”.
Pronouncements
Disclosure of a reconciliation of movements in liabilities arising from financing activities.
Change
Additional restructuring charge line included on the face of the income statement.
Change
Introduction of a separate section discussing alternative performance measures.

IFRS 15 impact disclosures - focus on telecommunications

In our last report on IFRS 15, we looked at the disclosure of the expected impact of the standard in a randomly selected group of 20 UK listed company accounts for periods ending 31 December 2017. None of the sample of companies had early adopted IFRS 15 and only 25% of the sample anticipated the adoption to have a material impact on their next set of financial statements. 

When selecting the sample of ten for this report, we included some 31 March 2018 year-end accounts and we have only included companies in the software and mobile telecommunications industry for which the adoption of IFRS 15 is expected to have a greater impact.  The new standard sets out five core principles that preparers should following when judging how to recognise revenue from longer-term contracts. In these two industries, companies often offer customers multi-year service contracts with equipment offered for no or a low fee. Under previous rules, there were a greater number of options available to companies, whereas IFRS 15 is considerably more prescriptive, and requires companies to split the revenue from these contracts based on the performance of the contract.

This report also includes some discussion of Capita Plc, which has early adopted the standard.

 

Disclosure of the impacts of IFRS 16 "Leases"

IFRS 16 “Leases” will fundamentally change accounting by lessees as it requires assets previously off balance sheet under operating lease arrangements to be brought on balance sheet as is currently the case for finance leased assets. As a result on application companies will recognise both additional assets and additional liabilities. Consequently there will also be knock on effects in the income statement as operating lease charges are replaced by a depreciation charge and a finance expense. This report analyses the financial statements of a range of companies to firstly establish whether there has been any early adoption and secondly to establish what companies are disclosing in respect of IFRS 16 and its future impacts.