Revenue recognition

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.

 

Capita plc Monitor

Capita plc Annual Report 2017
CR Monitor Issue: 
2018/0816
Company covered: 
Capita plc
Period End: 
31 December, 2017
Report issued on 28 August 2018 covered the following practice issues:
Pronouncements
Early adoption of IFRS 15 "Revenues from contracts with customers".
Change
Disclosure of post balance sheet restructuring plan.
Change
Result form discontinued operations presented separately on the face of the income statement.
Pronouncements
Extended disclosure of the future impacts of IFRS 16 "Leases".
Change
Alteration to segmental reporting reflects new management structure.
Change
Expanded disclosure in respect of impairments and asset write downs.

SKF AB

SKF AB 2017
CR Monitor Issue: 
2018/0807
Company covered: 
SKF AB
Period End: 
31 December, 2017
Report issued on 14 August 2018 covered the following practice issues:
Change
Change in presentation of income statement to reflect cash discounts in net sales rather than as an expense.
Pronouncements
Extended disclosure in respect of the future impact of IFRS 16 "Leases".
Restatement
Restatement of net sales by segment to reflect reallocation of businesses.
Change
Analysis of contingent liabilities altered to include liabilities in respect of tax claims.

Clariant Ltd Monitor

Clariant Ltd Annual Report 2017
CR Monitor Issue: 
2018/0708
Company covered: 
Clariant Ltd
Period End: 
31 December, 2017
Report issued on 10 July 2017 covered the following practice issues:
Pronouncements
Extended disclosure in respect of new standards issued but not yet applicable including IFRS 9 "Financial instruments", IFRS 15 "Revenues from contracts with customers" and IFRS 16 "Leases".
Change
Enhanced disclosure in respect of exchange rate policy.
Change
Reclassification of income taxes in the cash flow statement.
Change
Extended disclosure of key audit matters in the auditors' report.
Change
Reclassification of liabilities to a non-current classification to reflect maturity profile.
Change
Extended disclosure of revenue recognition policy.

BAE Systems plc Monitor

BAE systems plc Annual Report 2017
CR Monitor Issue: 
2018/0620
Company covered: 
BAE systems plc
Period End: 
31 December, 2017
Report issued on 20 June 2018 covered the following practice issues:
Pronouncements
Extended disclosure in respect of the future impacts of IFRS 15 "Revenues from contracts with customers" including detailed quantification.
Pronouncements
Presentation of a reconciliation of movements in liabilities arising from financing activities on adoption of amendment to IAS 7 "Statement of cash flows".
Change
Software assets and development costs identified as separate classes of intangible asset.

UCB SA Monitor

UCB SA Annual Report 2017
CR Monitor Issue: 
2018/0611
Company covered: 
UCB SA
Period End: 
31 December, 2017
Report issued on 19 June 2018 covered the following practice issues:
Pronouncements
Early adoption of IFRS 15 "Revenue from contracts with customers" using a full retrospective approach.
Pronouncements
Enhanced disclosure in respect of the future impacts of IFRS 16 "Leases".
Change
Fair value of previously held interest in business acquired taken into account in calculation of goodwill.
Pronouncements
Presentation of a reconciliation of movements in liabilities arising from financing activities on adoption of amendment to IAS 7 "Statement of cash flows".
Change
Discussion of key audit matters included in the auditors' report.
Change
Extended disclosure of principal risks including identification of a new risk factor.

Deutsche Telekom AG Monitor

Deutsche Telekom AG Annual Report 2017
CR Monitor Issue: 
2018/0520
Company covered: 
Deutsche Telekom AG
Period End: 
31 December, 2017
Report issued on 22 May 2018 covered the following practice issues:
Pronouncements
Disclosure of reconciliation of changes in liabilities arising from financing activities on adoption of amendment to IAS 7.
Pronouncements
Extended disclosure in respect of IFRS 15 “Revenue from contracts with customers”.
Change
Change in segment reporting structure.
Change
Discussion of key audit matters included in audit report.
Change
Change in the presentation of deferred tax information.
Restatement
Restatement of operating lease obligations.

Wolters Kluwer NV Monitor

Wolters Kluwer NV Annual Report 2017
CR Monitor Issue: 
2018/0512
Company covered: 
Wolters Kluwer NV
Period End: 
31 December, 2017
Report issued on 15 May 2018 covered the following practice issues:
Pronouncements
Introduction of a reconciliation of movements in liabilities arising from financing activities.
Pronouncements
Enhanced disclosure in respect of new accounting standards including quantification in respect of IFRS 15.
Change
Change in segment geographical entity wide disclosures.
Change
Assets held for sale presented separately on the face of the balance sheet.
Change
Amounts deducted from revenue rather than reflected as costs of sales.

Chemring Group plc Monitor

Chemring Group plc Annual Report 2017
CR Monitor Issue: 
2018/0507
Company covered: 
Chemring Group plc
Period End: 
31 October, 2017
Report issued on 08 May 2018 covered the following practice issues:
Pronouncements
Early adoption of IFRS 15 "Revenue from Contracts with Customers'.
Pronouncements
Extended disclosure in respect of the expected impacts of IFRS 16 "Leases".
Change
Change in the presentation of cash flow from operating activities.
Change
Discussion of key audit matters included in audit report.
Change
Auditors identify adoption of IFRS 15 as a key audit matter.
Change
Extended disclosure of non-IFRS performance measures.

IG Group Holdings plc Monitor

IG Group Holdings plc Annual Report 2017
CR Monitor Issue: 
2018/0501
Company covered: 
IG Group Holdings plc
Period End: 
31 May, 2017
Report issued on 1 May 2018 covered the following practice issues:
Restatement
Change in segment reporting structure including restatement of prior years.
Change
Presentation of a revenue breakdown by type of instrument.
Change
Cash flows related to purchase and maturity of investments disclosed on a net basis.
New
Presentation of a reconciliation table showing movement in the current corporation tax liability.
Restatement
Restatement of financial instrument offsetting disclosures.
Change
Change in the format of principal risk disclosures.