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Annual Report & Accounts 2014 - NOTES
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'merger reserve' arose on the re-domiciliation of the group from Luxembourg to the isle of man. it consists of the pre-redomiciliation reserves of the Luxembourg company plus the difference in the issued share capital (31,135,762 share at €0.01 versus 31,135,762 shares at €1.24). 'translation reserve' represents exchange differences on translation of foreign subsidiaries recognised in other comprehensive income. 1.19 finance leases management applies judgment in considering the substance of a lease agreement and whether it transfers substantially all the risks and rewards incidental to ownership of the leased asset. key factors considered include the length of the lease term in relation to the economic life of the asset, the present value of the minimum lease payments in relation to the asset's fair value, and whether the group obtains ownership of the asset at the end of the lease term. the interest element of lease payments is charged to profit or loss, as finance costs over the period of the lease. 1.20 operating leases All other leases other than finance leases are treated as operating leases. Where the group is a lessee, payments on operating lease agreements are recognised as an expense on a straight-line basis over the lease term. Associated costs, such as maintenance and insurance, are expensed as incurred. 1.21 new and revised standards that are effective for annual periods beginning on or after 1 January 2014 A number of new and revised standards are effective for annual periods beginning on or after 1 January 2014. information on these new standards is presented below. 1.21.1 iFRs 10 'consolidated Financial statements' (iFRs 10) iFRs 10 supersedes iAs 27 'consolidated and separate Financial statements' (iAs 27) and sic 12 'consolidation-special purpose entities'. iFRs 10 revises the definition of control and provides extensive new guidance on its application. these new requirements have the potential to affect which of the group's investees are considered to be subsidiaries and therefore to change the scope of consolidation. the requirements on consolidation procedures, accounting for changes in non-controlling interests and accounting for loss of control of a subsidiary are unchanged. the Directors have reviewed the group's control assessments in accordance with iFRs 10 and has concluded that there is no effect on the classification (as subsidiaries or otherwise) of any of the group's investees held during the period or comparative periods covered by these financial statements. 1.21.2 iFRs 11 'Joint Arrangements' (iFRs 11) iFRs 11 supersedes iAs 31 'interests in Joint Ventures' (iAs 31) and sic 13 'Jointly controlled entities- non-monetarycontributions by Venturers'. iFRs 11 revises the categories of joint arrangement, and the criteria for classification into the categories, with the objective of more closely aligning the accounting with the investor's rights and obligations relating to the arrangement. in addition, iAs 31's option of using proportionate consolidation for arrangements classified as jointly controlled entities under that standard has been eliminated. iFRs 11 now requires the use of the equity method for arrangements classified as joint ventures (as for investments in associates). the Directors have reviewed the group's interests in accordance with iFRs 11 and has concluded that there is no effect on the classification of any of the group's investees held during the period or comparative periods covered by these financial statements. 1.21.3 iFRs 12 'Disclosure of interests in other entities' (iFRs 12) iFRs 12 integrates and makes consistent the disclosure requirements for various types of investments, including unconsolidated structured entities. it introduces new disclosure requirements about the risks to which an entity is exposed from its involvement with structured entities. the Directors do not consider there to be any 'other entities' that require disclosure in accordance with iFRs 12. 1.21.4 consequential amendments to iAs 27 'separate Financial statements' (iAs 27) and iAs 28 'investments in Associates and Joint Ventures' (iAs 28) iAs 27 now only addresses separate financial statements. iAs 28 brings investments in joint ventures into its scope. however, iAs 28's equity accounting methodology remains unchanged. GVC HOLDINGS PLC ANNUAL REPORT 2014 35 notes to the consolidated financial statements