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Notes 31-39

39. Change in accounting policy

During the year, the Group changed its accounting policy with respect to the acquisition of minority interests in subsidiaries. The Group now applies the economic entity method, under which such transactions are accounted for as transactions between shareholders and there is no remeasurement to fair value of net assets acquired that were previously attributable to minority shareholders. Prior to this change in policy, the Group applied the parent company method to such transactions, and assets attributable to minority interests immediately prior to the respective acquisition, including goodwill and other acquired intangible assets, were remeasured to fair value at the date of acquisition.

The Group believes the new policy is preferable as it more closely aligns the accounting for these transactions with the treatment of minority interest as a component of equity and will aid comparability.

The impact of this voluntary change in accounting policy on the consolidated financial statements is primarily to reduce goodwill and acquired intangible assets and related income statement amounts arising on such transactions. This change did not result in a material impact on the current year or any years included within these consolidated financial statements. The impact on each line item of the primary financial statements since the Group’s adoption of IFRS is shown in the table below:

  As reported Adjustments Restated

 		 2007
£m		 2006
£m		 2005
£m		 2007
£m		 2006
£m		 2005
£m		 2007
£m		 2006
£m		 2005
£m
Consolidated income statement                  
(Loss)/profit for the financial year from                  
discontinued operations (491) (4,588) 1,102 75 1,690 80 (416) (2,898) 1,182
(Loss)/profit for the financial year (5,297) (21,821) 6,518 75 1,690 80 (5,222) (20,131) 6,598
Attributable to equity shareholders (5,426) (21,916) 6,410 75 1,690 80 (5,351) (20,226) 6,490
                   
Basic (loss)/earnings per share                  
(Loss)/profit from discontinued operations (0.90)p (7.35)p 1.56p 0.14p 2.70p 0.12p (0.76)p (4.65)p 1.68p
(Loss)/profit for the financial year (9.84)p (35.01)p 9.68p 0.14p 2.70p 0.12p (9.70)p (32.31)p 9.80p
                   
Diluted (loss)/earnings per share                  
(Loss)/profit from discontinued operations (0.90)p (7.35)p 1.56p 0.14p 2.70p 0.12p (0.76)p (4.65)p 1.68p
(Loss)/profit for the financial year (9.84)p (35.01)p 9.65p 0.14p 2.70p 0.12p (9.70)p (32.31)p 9.77p
                   
Consolidated statement of recognised
income and expense		                  
Foreign exchange gains transferred to the consolidated income statement 838 36 − (75) − − 763 36 −
Net (loss)/gain recognised directly in equity (808) 2,317 1,515 (75) − − (883) 2,317 1,515
(Loss)/profit for the financial year (5,297) (21,821) 6,518 75 1,690 80 (5,222) (20,131) 6,598
Total recognised income and expense
relating to the year		 (6,105) (19,504) 8,033 − 1,690 80 (6,105) (17,814) 8,113
Attributable to equity shareholders (6,210) (19,607) 7,958 − 1,690 80 (6,210) (17,917) 8,038
                   
Consolidated balance sheet                  
Total assets 109,617 126,738 147,197 − (236) (1,979) 109,617 126,502 145,218
Total equity 67,293 85,312 113,648 − − (1,690) 67,293 85,312 111,958
Total equity shareholders’ funds 67,067 85,425 113,800 − − (1,690) 67,067 85,425 112,110
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