Babcock International Group PLC Statement re: Adoption of IFRS 15 (8912Y)
11 December 2017 - 6:00PM
UK Regulatory
TIDMBAB
RNS Number : 8912Y
Babcock International Group PLC
11 December 2017
11 December 2017
Babcock International Group PLC (Babcock or the Group)
Babcock confirms no changes required in preparation for the
adoption of IFRS 15
Babcock confirms that it believes the adoption of International
Financial Reporting Standard (IFRS) 15 will not require a change in
contract revenue or profit recognition. This demonstrates that the
Group continues to maintain a conservative contract accounting
approach.
In preparation for the adoption of IFRS 15, our auditors have
reviewed our existing contracts and we are able to make the
following statement:
"IFRS 15, 'Revenue from Contracts with Customers', effective
from 1 January 2018 and endorsed by the EU identifies performance
obligations in contracts with customers, allocates the transaction
price to the performance obligations and recognises revenue as
performance obligations are satisfied. The standard requires
revenue recognition either "over time" or at a "point in time" and
additionally requires more detailed disclosures.
"We have completed a detailed review of all material contracts,
including consideration of all types of contracts undertaken by the
Group and the results of our review confirm that IFRS 15 will not
result in a material change to the timing of revenue or profit
recognition on service provision contracts or long-term service
contracts. This assessment reflects that the Group's contracting
arrangements, which are predominantly long term service contracts,
result in the continual transfer of the benefits of the Group's
performance to customers over time.
"The review also indicates that the new standard is not expected
to introduce any material change to the Group's revenue recognition
policy in relation to revenue from the sale of goods not under
service provision contracts or long-term service contracts. Point
in time recognition of revenue will continue to apply to such
contracts."
Babcock has always adopted a prudent approach to contract
accounting with an emphasis on identifying and managing risk
throughout the life of the contract. Transparent financial control
processes ensure that recognition of profits and cash flow are
aligned closely with the delivery of our products and services
within both our Group and Joint Venture contracts.
The Group's review also confirmed that our processes for
managing working capital flows were being implemented consistently
and effectively across all contracts. This underpins our long track
record of delivering complex projects whilst producing superior
returns and cash flow, and we are content that the adoption of
accounting standard IFRS 15 will not require any changes to our
tried and proven contract management processes.
Ends
Enquiries
Babcock International
Group PLC 020 7355 5300
Franco Martinelli
Kate Hill
FTI Consulting 020 3727 1340
Andrew Lorenz
Nick Hasell
This information is provided by RNS
The company news service from the London Stock Exchange
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