Accounting policies
Intangible assets
Intangible assets comprise computer software and a banking licence in Russia. Computer software is capitalised as an intangible asset on the basis of the costs incurred to acquire or develop the specific software and bring it into use.
Computer software is amortised on a straight-line basis over its estimated useful economic life which is generally estimated to be five years. The residual values and economic lives are reviewed by management at each balance sheet date.
The banking licence is not subject to amortisation as it is deemed to have an indefinite useful life as it will be used to allow the Group to issue credit to customers in Russia. It is tested for impairment at each balance sheet date.
Investments in subsidiaries
Investments in subsidiaries are stated at cost, where cost is equal to the fair value of the consideration used to acquire the asset. Investments are tested for impairment whenever events or changes in circumstances indicate that the carrying value may not be recoverable. An impairment loss is recognised for the amount by which the investment carrying value exceeds the higher of the asset’s value in use or its fair value less costs to sell.
Property, plant and equipment
Property, plant and equipment is shown at cost less subsequent depreciation and impairment. Cost represents invoiced cost plus any other costs that are directly attributable to the acquisition of the items. Repairs and maintenance costs are expensed as incurred.
Depreciation is calculated to write down assets to their estimated realisable value over their useful economic lives. The following are the principal bases used:
| Category | Depreciation rate | Method |
|---|---|---|
| Fixtures and fittings | 10% | Straight-line |
| Equipment (including computer hardware) | 20 to 33.3% | Straight-line |
| Motor vehicles | 25% | Reducing balance |
The residual value and useful economic life of all assets are reviewed, and adjusted if appropriate, at each balance sheet date. All items of property, plant and equipment are tested for impairment whenever events or changes in circumstances indicate that the carrying value may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying value exceeds the higher of the asset’s value in use or its fair value less costs to sell.
Share capital
IPF plc has only ordinary share capital. These shares, with a nominal value of 10p per share, are classified as equity.
Shares held by employee trust
The net amount paid by the employee trust to acquire shares is held in a separate reserve and shown as a reduction in equity.
Foreign currency translation
Items included in the financial statements of each of the Group’s subsidiaries are measured using the currency of the primary economic environment in which the subsidiary operates (‘the functional currency’). The Group’s financial information is presented in sterling.
Transactions that are not denominated in a subsidiary’s functional currency are recorded at the rate of exchange ruling at the date of the transaction.
Monetary assets and liabilities denominated in foreign currencies are translated into the relevant functional currency at the rates of exchange ruling at the balance sheet date. Differences arising on translation are charged or credited to the income statement, except when deferred in equity as qualifying cash flow hedges or qualifying net investment hedges.
The income statements of the Group subsidiaries (none of which has the currency of a hyperinflationary economy) that have a functional currency different from sterling are translated into sterling at the average exchange rate and the balance sheets are translated at the exchange rates ruling at each balance sheet date.
On consolidation, exchange differences arising from the translation of the net investment in foreign subsidiaries, and of borrowings and other currency instruments designated as hedges of such investments, are taken to equity. When a foreign operation is sold such exchange differences are recognised in the income statement as part of the gain or loss on sale.