Genus plc – Annual report – 30 June 2021
Industry: agriculture
2. BASIS OF PREPARATION (extract)
Change in accounting policy – Software as a service (‘SaaS’) arrangements
The Company has changed its accounting policy related to the capitalisation of certain software costs; this change follows the IFRIC Interpretation Committee’s agenda decision published in April 2021 and relates to the capitalisation of costs of configuring or customising application software under ‘Software as a Service’ (‘SaaS’) arrangements.
The Group’s accounting policy has historically been to capitalise costs directly attributable to the configuration and customisation of SaaS arrangements as intangible assets in the Balance Sheet, irrespective of whether the services were performed by the SaaS supplier or third party. Following the adoption of the above IFRIC agenda guidance, current SaaS arrangements were identified and assessed to determine if the Group has control of the software. For those arrangements where we do not have control of the developed software, to the extent that the services were performed by third parties, the Group derecognised the intangible asset previously capitalised. Amounts paid to the supplier in advance of the commencement of the service period, including for configuration or customisation, are treated as a prepayment.
This change in accounting policy led to adjustments amounting to a £13.3m and £8.1m reduction in the intangible assets recognised in the 30 June 2020 and 30 June 2019 Balance Sheets respectively, and to a £5.2m and £5.9m increase in operating expenses within administrative expenses, in those respective years.
Accordingly, the prior period Balance Sheets at 30 June 2020 and 30 June 2019 have been restated in accordance with IAS 8, and, in accordance with IAS 1 (revised), a Balance Sheet at 30 June 2019 is also presented, together with related notes. The tables on the following page show the impact of the change in accounting policy on previously reported financial results.
Impact on the Group Balance Sheet
In segment assets and non-current assets (excluding deferred taxation and financial instruments), the central asset value within the UK is reduced by £13.3m. Additions to central non-current assets reduced by £5.7m and the central amortisation charge reduced by £0.5m.
Impact on Group’s Income Statement and Statement of Comprehensive Income
Impact on basic and diluted earnings per share and adjusted earnings per share
Impact on statutory tax rate and effective tax rate on adjusted profit
Impact on Group’s Statement of Cash Flows
No impact on the overall increase in cash and cash equivalent for the year.
15. INTANGIBLE ASSETS (extract)
Our Group Balance Sheet contains significant intangible assets, including acquired technology, customer relationships, software and our IntelliGen development project.
Accounting policies
Identifiable intangible assets are recognised when the Group controls the asset, it is probable that future economic benefits attributed to the asset will flow to the Group and the cost of the asset can be reliably measured.
For ‘Software as a Service‘ (‘SaaS‘) arrangements, we capitalise costs only relating to the configuration and customisation of SaaS arrangements as intangible assets where control of the software exists.
Intangible assets that we have acquired in a business combination since 1 April 2005 are identified and recognised separately from goodwill, where they meet the definition of an intangible asset and we can reliably measure their fair values. Their cost is their fair value at the acquisition date.
After their initial recognition, we report these intangible assets at cost less accumulated amortisation and accumulated impairment losses. This is the same basis as for intangible assets acquired separately.
The estimated useful lives for intangible assets are as follows:
> Porcine and bovine genetics technology 20 years
> Multiplier contracts 15 years
> Brands 10 to 15 years
> Customer relationships 10 to 17 years
> IntelliGen 10 years
> Patents and licences term of agreement (4 years)
> Software 2 to 10 years
Intangible assets acquired separately
We carry intangible assets acquired other than through a business combination at cost less accumulated amortisation and any impairment loss. We charge amortisation on a straight-line basis over their estimated useful lives and review the useful life and amortisation method at the end of each financial year, accounting for the effect of any changes in estimate on a prospective basis.
Accounts examples 