Adoption of International Financial Reporting Standards
An ‘International Accounting Standards Regulation’ was adopted by the Council of the European Union (EU) in June 2002. This regulation requires all EU companies listed on an EU stock exchange to use ‘endorsed’ International Financial Reporting Standards (IFRS), published by the International Accounting Standards Board (IASB), to report their consolidated results with effect from 1 January 2005. The IASB published 15 revised standards in December 2003 and in the quarter ended 31 March 2004 a further three revised standards together with four new standards and is in the process of completing its development of IFRSs to be adopted in 2005. A process of endorsement of IFRSs has been established by the EU for completion in sufficient time to allow adoption by companies in 2005.
SABMiller has established a project team involving representatives of businesses and functions to plan for and achieve a smooth transition to IFRS. The project team is looking at all implementation aspects, including changes to accounting policies, systems impacts and the wider business issues that may arise from such a major change. We expect that the group will be fully prepared for the transition in 2005 and for the first set of applicable financial statements for the year ending 31 March 2006. However, the implementation plan is dependent upon the completion of the standard-setting process by the IASB and the endorsement of such standards by the EU.
The group has not yet determined the full effects of adopting IFRS. The preliminary view is that the major differences between our current accounting practice and IFRS will include hedge accounting, accounting for embedded derivatives and other items falling within the scope of the financial instruments standards, accounting for business combinations, pensions and post-retirement benefits, deferred tax and share-based payments. The group will continue to monitor developments in IFRS.
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