Replacement Annual Financial Report -16-
April 30 2010 - 11:47AM
UK Regulatory
on prior notice to and clearance by the Financial Regulator. The euro
denominated shares were admitted to the Official List and began trading on the
London Stock Exchange on 12 April 2006. The US$ denominated shares were
admitted to the Official List and began trading on the London Stock Exchange on
9 December 2008.
The Company's investment objective is to produce attractive and stable returns,
with low volatility compared to equity markets, by investing in a diversified
portfolio of senior notes of collateralised debt obligations collateralised by
senior secured bank loans and equity and mezzanine tranches of collateralised
debt obligations.
The previous reporting period was a nine month period from 1 April 2008 to 31
December 2008. The Company resolved to change its accounting year end on 16
October 2008 from 31 March to 31 December to coincide with the year end of its
subsidiary, Abingdon Finance Limited. This subsidiary has now been fully
liquidated. The comparative information presented is the audited results of the
Company for the nine month period ended 31 December 2008.
The Company has been established with a 15 year life.
2. SIGNIFICANT ACCOUNTING POLICIES
2a. Statement of compliance
The parent and consolidation financial statements are prepared in accordance
with International Financial Reporting Standards ("IFRS") as issued by the
International Accounting Standards Board ("IASB") and adopted by the European
Union.
2b. Basis of preparation
The consolidated financial statements have been prepared on a historical cost
basis, except for financial instruments classified at fair value through profit
or loss that have been measured at fair value. The consolidated financial
statements are presented in euro.
2c. Basis of consolidation
The consolidated financial statements of the group comprise the financial
statements of the Company and its subsidiaries (including special purpose
entities ("SPEs") that the Company consolidates) for the year ended 31 December
2009. The financial statements of the Company's subsidiaries are prepared for
the same reporting period as for the Company, using consistent accounting
policies.
All intra-group balances, transactions, income and expenses are eliminated in
full.
NOTES TO THE FINANCIAL STATEMENTS (continued)
For the year ended 31 December 2009
2. SIGNIFICANT ACCOUNTING POLICIES (continued)
2c. Basis of consolidation (continued)
Subsidiaries are fully consolidated from the date on which control is
transferred to the Company. Control is achieved where the Company has the power
to govern the financial and operating policies of an entity so as to obtain
benefits from its activities. The results of subsidiaries acquired during the
year are included in the consolidated statement of comprehensive income from the
date of acquisition The Company also consolidates SPEs where the substance of
its relationship with them indicates that it has control over them. The results
of SPEs are included in the consolidated statement of comprehensive income from
the date the Company is deemed to have assumed the majority of the residual risk
in the subsidiary. Investments in subsidiaries are accounted for at fair value
with fair value being determined as described in 2l (iii) below. Changes in fair
value are recorded within "Net unrealised loss on financial assets and financial
liabilities designated at fair value through profit or loss".
Non-controlling interests represent the portion of profit and loss and net
assets not owned, directly or indirectly, by the Company and are presented
separately in the consolidated statement of comprehensive income and in the
consolidated statement of financial position. Any losses applicable to the
non-controlling interest in excess of the non-controlling interest are allocated
against the interests of the parent. Acquisitions of non-controlling interests
are accounted for using the parent equity extension method, whereby, the
difference between the consideration and the fair value of the share of the net
assets acquired is recognised as goodwill.
2d. Business Combinations and goodwill
Business combinations are accounted for using the purchase method. Where the
Company obtains the power to govern the financial and operating policies of
another entity, the Company is deemed to be the acquirer in a business
combination. The cost of an acquisition is measured as the fair value of the
assets given, shares issued and liabilities incurred or assumed at the date of
exchange, plus costs directly attributable to the acquisition. Identifiable
assets acquired and liabilities and contingent liabilities assumed in a business
combination are measured initially at fair values at the date of acquisition,
irrespective of the extent of any non controlling interest.
Goodwill is initially measured at cost being the excess of the cost of the
business combination over the Group's share in the net fair value of the
acquiree's identifiable assets, liabilities and contingent liabilities. If the
cost of the acquisition is less than the fair value of the net assets of the
subsidiary acquired, the difference is recognised directly in the income
statement.
After initial recognition, goodwill is measured at cost less any accumulated
impairment losses. Goodwill is tested for impairment at the balance sheet date
and when circumstances indicate that the carrying value may be impaired.
Impairment is determined for goodwill by assessing the recoverable amount of
each cash-generating unit to which goodwill relates. Where the recoverable
amount of the cash-generating unit is less than their carrying amount an
impairment loss is recognised.
2e. Changes in accounting policies and disclosures
The accounting policies adopted are consistent with those of the previous
financial year except as follows:
The Company has adopted the following new and amended IFRS as of 1 January 2009:
o IFRS 7 Financial Instruments: Disclosure - improving disclosures about
financial instruments effective 1 January 2009
o IFRS 8 Operating Segments effective 1 January 2009
o IAS 1 Presentation of Financial Statements effective 1 January 2009
o IAS 23 Borrowing Costs (Revised) effective 1 January 2009
o IAS 32 Financial Instruments: Presentation effective 1 January 2009
o Improvements to IFRSs (May 2008)
o Improvements to IFRSs (April 2009, early adopted)
NOTES TO THE FINANCIAL STATEMENTS (continued)
For the year ended 31 December 2009
2. SIGNIFICANT ACCOUNTING POLICIES (continued)
2e. Changes in accounting policies and disclosures (continued)
When the adoption of the standard or interpretation is deemed to have an impact
on the financial statements or performance of the Company, its impact is
described below:
IFRS 7 Financial Instruments: Disclosure
The amended standard requires additional disclosures about fair value
measurement and liquidity risk. Fair value measurements related to items
recorded at fair value are to be disclosed by source of inputs using a three
level fair value hierarchy, by class, for all financial instruments recognised
at fair value:
o quoted prices (unadjusted) in active markets for identical assets or
liabilities (Level 1);
o inputs other that quoted prices included in Level 1 that are observable for
the asset or liability, either directly (as prices) or indirectly (derived from
prices) (Level 2);
o inputs for the asset or liability that are not based on observable market
data (unobservable inputs) (Level 3).
In addition, a reconciliation between the beginning and ending balance for Level
3 fair value measurements is required, as well as significant transfers between
levels in the fair value hierarchy. The amendments also clarify the requirements
for liquidity risk disclosures with respect to derivative transactions and
assets used for liquidity management. The fair value measurement disclosures are
presented in Note 3. The liquidity risk disclosures are not significantly
impacted by the amendments and are presented in Note 14.
IFRS 8 Operating Segments
IFRS 8 replaced IAS 14 Segment Reporting upon its effective date. The Company
concluded that the operating segments determined in accordance with IFRS 8 are
the same as the business segments previously identified under IAS 14. IFRS 8
disclosures are shown in Note 18, including the related revised comparative
information.
IAS 1 Presentation of Financial Statements
The revised standard introduces the statement of comprehensive income. It
presents all items of recognised income and expense, either in one single
statement, or in two linked statements. The Company has elected to present one
single statement.
IAS 23 Borrowing Costs
The revised IAS 23 requires capitalisation of borrowing costs that are directly
attributable to the acquisition, construction or production of a qualifying
asset. The main change from the previous version is the removal of the option to
immediately recognise as an expense borrowing costs that relate to assets that
take a substantial period of time to get ready for use or sale.
IAS 32 Financial Instruments: Presentation
The standard has been amended to allow a limited scope exception for puttable
financial instruments to be classified as equity if they fulfil a number of
specified criteria. The adoption of this amendment did not have any impact on
the financial position or the performance of the Company.
NOTES TO THE FINANCIAL STATEMENTS (continued)
For the year ended 31 December 2009
2. SIGNIFICANT ACCOUNTING POLICIES (continued)
2e. Changes in accounting policies and disclosures (continued)
Improvements to IFRSs
In May 2008 and April 2009 the IASB issued an omnibus of amendments to its
standards, primarily with a view to removing inconsistencies and clarifying
wording. These amendments are the result of conclusions the IASB reached on
proposals made in its annual improvements project. There are separate
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