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ELN » Topics » 2 SIGNIFICANT ACCOUNTING POLICIES

This excerpt taken from the ELN 6-K filed Aug 28, 2009.
2  SIGNIFICANT ACCOUNTING POLICIES
 
The accounting policies applied in these interim financial statements are the same as those applied in our Consolidated Financial Statements as at and for the year ended 31 December 2008, as set out on pages 118 to 127 of the 2008 Annual Report.
 
The following new standards and amendments to standards are mandatory for the first time for the financial year beginning 1 January 2009.
 
  •  IFRS 8, “Operating Segments,” (IFRS 8). We adopted IFRS 8 which replaces IAS 14, “Segmental Reporting,” (IAS 14), during the six months ended 30 June 2009. IFRS 8 requires a “management approach” under which segment information is presented on the same basis as that used for internal reporting purposes. IAS 14 required identification of two sets of segments — one based on business units and the other on geographical areas. IFRS 8 requires additional disclosures around identifying segments and their products and services.


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Our operations are organised into two business units, Biopharmaceuticals and EDT; and the performance of the business is reviewed on this basis. Our Biopharmaceuticals unit engages in research, development and commercial activities, primarily in Alzheimer’s disease, Parkinson’s disease, MS, CD and severe chronic pain. EDT develops and manufactures innovative pharmaceutical products that deliver clinically meaningful benefits to patients, using its extensive experience and proprietary drug technologies in collaboration with pharmaceutical companies. An established, profitable, fully integrated drug delivery business unit of Elan, EDT has been applying its skills and knowledge to enhance the performance of dozens of drugs that have subsequently been marketed worldwide.
 
There has been no change to the operating segments as a result of the adoption of IFRS 8 and the reportable segments are consistent with those previously reported under the primary business segment format of the segment reporting under IAS 14. The additional disclosures around identifying segments and their products and services will be disclosed in the annual financial statements.
 
  •  IAS 1 (revised), “Presentation of Financial Statements”. The revised standard prohibits the presentation of items of income and expenses (that is “non owner changes in equity”) in the statement of changes in equity, requiring “non owner changes in equity”) to be presented separately from owner changes in equity. All “non owner changes in equity” are required to be shown in a performance statement.
 
Entities can choose whether to present one performance statement (the statement of comprehensive income) or two statements (the income statement and the statement of comprehensive income). We have elected to present two statements: an income statement and a statement of comprehensive income.
 
The following new interpretations are mandatory for the first time for the financial year beginning 1 January 2009, but are not currently relevant for the Company.
 
  •  IFRIC 13, “Customer Loyalty Programmes”
 
  •  IFRIC 12, “Service Concession Arrangements”
 
  •  IFRIC 16, “Hedges of a Net Investment in a Foreign Operation”
 
  •  IFRIC 15, “Agreements for the Construction of Real Estate”
 
The following new amendments to standards and interpretations have not yet been endorsed by the European Union and consequently have not been adopted in these interim financial statements, and would be mandatory in our financial reporting in the fiscal year ending 31 December 2009, assuming endorsement is to occur.
 
  •  IAS 39 (amendment), “Financial Instruments: Recognition and Measurement”
 
  •  IFRS 7 (amendment), “Financial Instruments: Disclosures”
 
Although these new amendments to standards and interpretations have not yet been endorsed by the European Union, we have considered them and they are not currently applicable to the Company.
 
The following new standards, amendments to standards and interpretations have been issued, but are not effective for the financial year beginning 1 January 2009 and have not been early adopted:
 
  •  IFRS 3 (revised), “Business Combinations” and consequential amendments to IAS 27, “Consolidated and Separate Financial Statements”, IAS 28, “Investments in Associates” and IAS 31, effective prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after 1 July 2009. Management is assessing the impact of the new requirements regarding acquisition accounting, consolidation and associates on the Company although this is not expected to be significant.
 
The revised standard continues to apply the acquisition method to business combinations, with some significant changes. For example, all payments to purchase a business are to be recorded at fair value at the acquisition date, with contingent payments classified as debt subsequently re-measured through the statement of comprehensive income. There is a choice on an acquisition-by-acquisition basis to measure the minority interest in the acquiree either at fair value or at the minority interest’s proportionate share of the


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acquiree’s net assets. All acquisition-related costs should be expensed. We will apply IFRS 3 (revised) to all business combinations from 1 January 2010.
 
  •  IFRIC 17, “Distributions of Non-cash Assets to Owners”, effective for annual periods beginning on or after 1 July 2009. This is not currently applicable to the Company, as it has not made any non-cash distributions.
 
  •  IFRIC 18, “Transfers of Assets from Customers”, effective for transfers of assets received on or after 1 July 2009. This is not relevant to the Company, as it has not received any applicable assets from customers.
 
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