IFRS Foundation


ANNUAL REPORT

For the year ended

31 December 2015


Management Commentary


The IFRS Foundation (the Foundation) is a not-for-profit, public interest organisation with oversight by a geographically and professionally diverse body of Trustees, accountable to a Monitoring Board of public capital market authorities. The organisation’s structure, governance and due process are designed to keep standard-setting independent from special interests while ensuring accountability to stakeholders around the world.

The Foundation is the oversight and support body of the International Accounting Standards Board (the Board), the standard-setting body, responsible for developing and promoting the use and rigorous application of IFRS Standards. The Board currently consists of up to 16 members, selected on the basis of their professional competence and practical experience, and drawn from a variety of backgrounds, including users, preparers, standard setters and auditors.

2015 Financial Results

The Foundation’s financial statements are prepared in accordance with IFRS Standards. Financial highlights of the accompanying financial statements are as follows:

Contributions

The majority of the Foundation’s funding is based on voluntary contributions from jurisdictions that have put in place national financing regimes. Contribution levels are targeted for the jurisdictions at amounts proportional to their Gross Domestic Product (GDP). While funding mechanisms differ, most jurisdictions have established either a levy on companies, or an element of publicly supported financing. In addition, the organisation’s other main sources of income are from publications, licensing its intellectual property and contributions from international accounting firms.

An appropriate financing regime for the IFRS Foundation is vital to ensure the independence of the organisation and its standard-setting process. It must enable the IASB members and staff to engage interested parties throughout the world in the shaping of financial reporting standards and to undertake all other related activities necessary to achieve the organisation’s objectives.

The Trustees are continuing their work towards a global funding system with the following features:

In 2015 contributions were 21.3 million, a decrease of £1.3 million from 2014. Contributions in 2014 included a oneoff contribution of $3.0 million (£1.8 million) from the Financial Accounting Foundation in the United States. There were also some unfavourable fluctuations in currency exchange rates during the year, partially offset by finance income from forward foreign exchange contacts as discussed in Notes 7 and 9 of the financial statements. However, several jurisdictions also contributed above their GDP determined target and progress was made in establishing contributions from new jurisdictions. Additional information about contributions is provided in Note 5 of the financial statements.

Publications and related activities

The Foundation’s mission is also dependent on the development, distribution and protection of its intellectual property, the IFRS Standards and supporting materials. The Foundation’s commercial efforts are focussed on both generating income and serving the public interest by ensuring that reliable and up-to-date content is widely available. Sales revenues consist of publications, subscriptions to eIFRS (electronic and app-based products), commercial licences, copyright agreements for jurisdictions adopting IFRS Standards and conference income.

The staff made successful efforts in negotiating new agreements for licensing, permission and waiver fees; revenue amounted to £2.2 million, an increase of £238,000 or 12.0 per cent compared to 2014. Subscriptions and book sales amounted to £1.7 and £1.6 million respectively. During 2015, the Foundation completed a successful launch of its redesigned online product, known as eIFRS. New subscriptions and renewals during the year resulted in an 8.8 per cent increase in sales compared to 2014. Book sales were helped by the issuance of new IFRS Standards but overall sales decreased 2.2 per cent compared to 2014, reflecting a general decrease in demand for hard-copy materials. Book sales benefit from bulk sales for academic and training purposes.

The cost of publications and related expenses amounted to £3.2 million, an increase of £122,000 or 3.9 per cent, with a net result of an increase in net income of £182,000 or 7.6 per cent compared to 2014. Additional revenue and expense information for publications and related activities is provided in Note 6 of the financial statements.

Expenses

Total operating expenses were £24.5 million, unchanged from 2014. The main costs associated with developing IFRS Standards are the salaries and related costs for the Board, technical staff and support staff; these costs amount to 79 per cent of the remaining operating costs without inclusion of expenses for publications. As set out in Note 1, the Foundation did not replace two Board members who completed their terms in 2014, a reduction from 16 to 14 members.

The final determination of Board size will be concluded after the Trustees’ completion of their Review of Structure and Effectiveness that commenced in July 2015.

During the year there was a small increase in head count for technical staff, reflecting a broadening remit of projects including disclosure and research initiatives. The completion of the Foundation’s 2015 Agenda Consultation is expected to provide significant input into the Board’s work programme priorities and generally reflect changes in emphasis for the technical staff.

IFRS Standards are developed through an international consultation process, the "due process", which involves interested individuals and organisations from around the world. The Foundation’s operational staff participate with the technical staff in co-ordinating a comprehensive programme of support and outreach activities, all designed to enable others to better understand and comment on the principles proposed. The Foundation’s Trustees and senior management closely monitor operating expenses while adequately funding the costs for travel, meetings and technology upgrades to enhance external relations.

Reserves

As of 31 December 2015 the Foundation’s reserves were £19.6 million (2014: £16.9 million). This level of reserves is 80.0 per cent of 2015 operating expenses (2014: 69.1 per cent), an increase of 10.9 per cent from 2014. The Foundation’s goal is to continue to maintain and build future operating reserves of cash and working capital. The operating reserve is an unrestricted fund balance set aside to stabilise the Foundation’s finances by providing a ‘cushion’ against unexpected events or losses of income. The Trustees have included within the Foundation’s 2016 Three-Year Plan a proposal to increase reserves to a level equivalent to one year’s operating expenditure. This is expected to take a few more years.

2016 Outlook

In 2016 the Foundation will continue to manage its operating expenditure prudently and effectively and will actively pursue further initiatives to enhance the organisation’s income. The 2016 Three Year Plan does not envisage significant increases in the operating requirements of the organisation.

The IFRS Foundation and its financial statements


The IFRS Foundation (the ‘Foundation’) is an independent, not-for-profit, public interest organisation incorporated in the State of Delaware, USA, on 6 February 2001. Its primary operations are based in London.

Its mission is to develop IFRS Standards that bring transparency, accountability and efficiency to financial markets around the world. The Foundation’s work serves the public interest by fostering trust, growth and long-term financial stability in the global economy.

IFRS Standards are developed and issued by the International Accounting Standards Board (the Board), the standard-setting arm of the Foundation, working with related bodies that include the IFRS Interpretations Committee, IFRS Advisory Council and the Accounting Standards Advisory Forum.

The governance and key management responsibilities of the Foundation rest primarily with its Trustees, who provide oversight. A Monitoring Board, consisting of capital market authorities with responsibilities for financial reporting, provides a formal public accountability link between the Trustees and public authorities. The Foundation’s governance and due process are designed to keep the Foundation’s standard-setting independent from special interests while ensuring accountability to its stakeholders around the world.

These financial statements cover the year ended 31 December 2015. They have been prepared in compliance with IFRS Standards, including Interpretations, that were effective or applied early on 1 January 2015.

The financial statements were approved and authorised for issue by the Trustees of the Foundation on 18 April 2016.At that date there had been no events since 31 December 2015 that required disclosure in, or an adjustment to the financial statements.


Michel Prada

Chair of the Trustees

Independent auditor's report to the Trustees of the IFRS Foundation


We have audited the accompanying financial statements on pages 47 to 59 of IFRS Foundation (the Foundation), which comprise the statement of financial position as at 31 December 2015, the statement of comprehensive income, the statement of changes in equity and the statement of cash flows for the year ended 31 December 2015, and a summary of significant accounting policies and other explanatory information.

This report is made solely to the Foundation’s Trustees, as a body, in accordance with Section 13 of the Foundation’s Constitution. Our audit work has been undertaken so that we might state to the Foundation’s Trustees those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Foundation and the Foundation’s Trustees as a body, for our audit work, for this report, or for the opinions we have formed.

Trustees' responsibility for the financial statements

The Foundation's Trustees are responsible for the preparation of the financial statements that give a true and fair view in accordance with IFRS Standards, and for such internal control as the Trustees determine are necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditor's responsibility

Our responsibility is to audit and express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Foundation’s preparation of financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Foundation’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Trustees, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the financial statements give a true and fair view of the financial position of the Foundation as at 31 December 2015 and of its financial performance and its cash flows for the year then ended in accordance with IFRS Standards.


Grant Thornton UK LLP
Statutory Auditor, Chartered Accountants
London
United Kingdom
Date: 18 April 2016


Statement of comprehensive income


Year ended 31 December 2015

2015

2014

Note

£'000

£'000

Income

Contributions

5

21,302

22,591

Revenue from publications and related activities

6

5,806

5,502

Other income

5

324

347

27,432

28,440

Operating expenses

Technical and operational activities

- IASB member and staff costs

1

(16,780)

(16,767)

- Other technical and operating costs

1

(1,664)

(1,794)

- IFRS Advisory Council, IFRS Interpretations Committee and other Advisory bodies

1

(374)

(410)

Publications and related activities expenses

6

(3,216)

(3,094)

Trustee oversight

2

(972)

(1,001)

Premises, occupancy and related expenses

3

(1,521)

(1,453)

(24,527)

(24,519)

Net operating income

2,905

3,921

Finance income

9

1,057

656

Finance costs

9

(1,283)

(860)

(226)

(204)

Income before tax

2,679

3,717

Income tax expense

4

-

-

Comprehensive income for the year

2,679

3,717

Statement of changes in equity


Year ended 31 December 2015

Retained income at beginning of year

16,936

13,219

Comprehensive income for the year

2,679

3,717

Retained income at end of year

19,615

16,936


Statement of financial position


As at 31 December 2015

2015

2014

Note

£'000

£'000

Assets

Current assets

Cash and cash equivalents

10,495

8,074

Contributions receivable

5

1,479

1,949

Trade and other receivables

1,039

955

Prepaid expenses

676

624

Inventories

141

110

Bonds at fair value, including accrued interest

8

3,360

64

Forward currency contracts at fair value

7

311

370

17,501

12,146

Non-current assets

Bonds at fair value, including accrued interest

8

8,910

8,602

Forward currency contracts at fair value

7

-

90

Leasehold improvements, furniture and equipment

3

507

597

9,417

9,289

Total assets

26,918

21,435

Liabilities

Current liabilities

Trade and other payables

399

359

Payroll taxes payable

578

552

Accrued expenses

1,003

892

Contributions received in advance

5

1,859

254

Rent incentive

3

82

82

Publications revenue received in advance

6

1,225

965

Forward currency contracts at fair value

7

949

123

6,095

3,227

Non-current liabilities

Forward currency contracts at fair value

7

492

489

Lease reinstatement obligation

3

571

556

Rent incentive

3

145

227

1,208

1,272

Total Liabilities

7,303

4,499

Net assets

19,615

16,936


Statement of cash flows


Year ended 31 December 2015

2015

2014

Note

£'000

£'000

Operating activities

Cash received

Contributions

23,434

21,980

Publications and related activities

5,899

5,570

Funding for Asia-Oceania office

5

220

257

Interest

327

215

Foreign exchange settlements

496

184

Other receipts

18

16

Cash paid

Salaries, wages and benefits

(16,660)

(17,097)

Publications and related activities expenses

(3,208)

(3,011)

Trustees' fees

(649)

(685)

Other operating expenses

(3,615)

(4,051)

Net cash from operating activities

6,262

3,378

Investing activities

Matured bonds receipts

-

612

New bond purchases

(3,834)

(2,885)

Purchase of leasehold improvements, furniture and equipment

(170)

(50)

Net cash from operating activities

(4,004)

(2,323)

Effects of exchange rate changes on cash and cash equivalents

163

(29)

Net increase (decrease) in cash and cash equivalents

2,421

1,026

Cash and cash equivalents at the beginning of the year

8,074

7,048

Cash and cash equivalents at the end of the year

10,495

8,074


The accompanying notes form part of these financial statements.


Notes to the financial statements


For the year ended 31 December 2015

Significant accounting policies

The functional and presentation currency is sterling.

The IFRS Foundation's (the Foundation) most important intangible asset is the intellectual property embodied in the IFRS Standards. The Foundation does not recognise this asset because the value and future economic benefits cannot be reliably measured. Accordingly, costs related to the development of IFRS Standards are recognised as an expense when they are incurred.

All other accounting policies that are relevant to an understanding of the financial statements are provided throughout the notes to the financial statements.

Current period and future changes to the accounting policies (including early application)

All accounting policies have been applied consistently to the two years presented. The financial statements have been drawn up on the basis of IFRS Standards, Interpretations and amendments effective or applied early at 1 January 2015.

In 2009 the Foundation elected to early apply IFRS 9 Financial Instruments (2009); the Foundation has elected to not early apply subsequent amendments to IFRS 9 published in 2010 and 2014, which have an effective date of 1 January 2018. Also in 2014, IFRS 15 Revenue from Contracts with Customers was issued; the Foundation has elected to not early apply it before the effective date of 1 January 2018. These Standards are not expected to have a material effect on the Foundation’s financial statements.

Explanatory information

The Foundation has made important changes to the way it has organised and presented its explanatory notes to the financial statements, starting in 2014. The changes were motivated by feedback about financial report presentation that has come from the technical work of the Board in its major project on disclosure— the Disclosure Initiative.

The explanatory notes have been organised into sections that provide a more cohesive presentation of the financial reporting implications of the Foundation’s core activity—the development of IFRS Standards—how it funds that activity and how it manages the contributions from the several currencies of its funding providers. Each section presents the financial information and any material accounting policies that are relevant to understanding the activities of the Foundation.


Activities

Funding

Managment of funds

Technical and operational activities

Contributions

Foreign currency management

Trustee oversight

Publications and related activities

Investments

Premises, occupancy and related operating expenses

Finance income and finance costs

Taxation

Activities


1. Technical and operational activities

IASB member and staff costs

The main costs associated with developing IFRS Standards are the salaries of the full-time IASB members and the staff. The Foundation had an average of 139 employees including IASB members and interns during 2015 (2014: 136).

2015

2014

£'000

£'000

IASB member salaries and related costs

7,183

7,601

Technical and operational staff salaries and related costs

9,597

9,166

16,780

16,767


The Trustees' Human Capital Committee reviews, benchmarks and recommends salary and benefit levels, which are reviewed and approved annually by the Trustees as a whole. IASB members gross salaries covering all compensation and benefits for 2015 were as follows: £558,200 for the IASB Chair (2014: £ 554,000); £492,200 for the IASB Vice-Chair (2014: £488,500), and an average of £458,400 for other full-time IASB members (2014: £455,700). In 2014 the Trustees did not replace two IASB members who completed their terms in June, reducing the number of IASB members from 16 to 14. In addition to the Trustees, IASB Chair and IASB Vice-Chair, the “key management personnel” include the Executive Director at an annual gross salary of £265,000 (2014: £255,000). The Foundation pays monthly contributions, at rates between 8% and 10% of gross salary, into a defined contribution group personal pension scheme for substantially all staff except IASB members.

Other technical and operating costs

2015

2014

£'000

£'000

Audit, legal and taxation advice

72

65

Communication and technology

292

285

External relations

80

61

Human resource and recruitment activities

143

200

Meeting video conferencing

134

139

Travel and meetings

717

808

Other office related costs

226

236

1,664

1,794

IFRS Advisory Council, IFRS Interpretations Committee and other advisory bodies

In 2015 and 2014, the Foundation paid remuneration to the Chair of the IFRS Advisory Council (£75,000 per year) and in 2014 part-year to two Vice-Chairs (£25,000 per year each). Additionally, the Foundation reimbursed their travel and accommodation costs. Other members of the IFRS Advisory Council are not paid remuneration and meet all of their costs of attending meetings, such as travel and accommodation.

Members of the IFRS Interpretations Committee are not remunerated by the Foundation for their work on this body. However, they are reimbursed for their travel costs for attending the meetings.

Members of the Board’s other advisory bodies meet their own costs of attending meetings. No members of these bodies are remunerated by the Foundation.

The remuneration, travel and meeting costs for these committees and advisory bodies are as follows:

2015

2014

£'000

£'000

IFRS Advisory Council – remuneration costs

75

106

IFRS Advisory Council – travel and meeting costs

81

116

IFRS Interpretations Committee – travel and meeting costs

218

188

374

410

2 Trustee oversight

The Foundation’s management and governance is overseen by 21 Trustees (2014: 22). The Trustees meet up to four times a year. The Chair of the Trustees receives £200,000 per annum. Other Trustees receive an annual fee of £20,000 and are reimbursed for their travel on Foundation business. There are six Trustee committees; committee chairs receive an additional £7,000.

Costs associated with Trustee activities are as follows:

2015

2014

£'000

£'000

Remuneration costs

637

642

Travel and meeting costs

335

359

972

1,001

3 Premises, occupancy and related expenses

The components of premises, occupancy and related expenses are as follows:

2015

2014

£'000

£'000

Rent

759

774

Rates, insurance and energy

456

472

Service charges

379

273

Depreciation

205

208

1,799

1,727

Less amounts included in publications costs

(278)

(274)

1,521

1,453


The Foundation operates from two premises, both of which are leased. The main activities are undertaken at 30 Cannon Street in London, UK. The Foundation also has an Asia-Oceania office located in the Otemachi Financial City South Tower in Tokyo, Japan. The Foundation has commitments for operating leases for the London premises until September 2018, with options to extend for a further 10 years, and for the Tokyo premises until September 2022.

The Foundation received a rent incentive at the commencement of the lease for its London premises, which was recognised as a liability. The aggregate benefit of the incentives is recognised as a reduction of the rental expense evenly over the lease term.

The estimated costs of reinstating the premises when the leases expire are recognised as lease reinstatement obligations and are included in leasehold improvements and expensed evenly over the remaining lease term. The estimated amount of the reinstatement obligation assumes that the London occupancy would end in 2018; however, the option to extend the lease for a further 10 years could affect the timing of any outflow.

All operating lease contracts contain market review clauses. Obligations due on the leases, excluding service charges and property rates, are as follows:


2015

2014

£'000

£'000

Within one year

838

835

In two to five years

1,594

2,365

More than five years

100

149

2,532

3,349

Leasehold improvements, furniture and equipment

Leasehold improvements, furniture and equipment are initially measured at cost, and then depreciated on a straight-line basis. Leasehold improvements are depreciated over the remaining period of the lease. Furniture and equipment are depreciated over 3 and 5 years. There have been no significant movements in 2015 other than depreciation.

2015

2014

£'000

£'000

Leasehold improvements

Cost

1,384

1,361

Accumulated depreciation

( 1,103)

( 1,020)

Carrying amount

281

341

Furniture and equipment

Cost

1,111

1,095

Accumulated depreciation

(885)

(839)

Carrying amount

226

256

Total carrying amount

507

597

4 Taxation

For US tax purposes, the Foundation is classified as a not-for-profit, tax-exempt organisation. In 2006 the Foundation reached an agreement with the UK authorities regarding the status of taxation on its publications and related revenues. For 2015 the taxation expense is calculated on that basis, and is estimated to be £0 (2014: £0).

At the end of 2015 the Foundation is carrying forward a loss for UK tax purposes of £5,550,000 (2014: £5,053,000). The Foundation does not recognise this loss as a deferred tax asset because of the uncertainty of being able to utilise these losses to offset future taxable income.

Funding


5 Contributions

Contributions to the Foundation are voluntary and mainly publicly sponsored. Contributions are recognised as income in the year designated by the contributor. Contributions that have been received but are designated for use after the reporting date are deferred and recognised as liabilities. Contributions received after the reporting date, but designated for use in the reporting period are recognised as income and as contributions receivable. All contributions received are for general use by the Foundation except for funding of the Asia-Oceania office as noted below.

The Foundation received separate funding of £220,000 / JPY 50,000,000 (2014: £257,000 / JPY 50,000,000) towards the operations of the Asia-Oceania office located in Tokyo. £288,000 (2014: £330,000) has been recognised in other income to offset the related operating expenses

The Foundation receives contributions in a wide range of currencies, as follows:

2015

2014

£'000

£'000

UK Pounds

1,965

1,889

US Dollars

10,462

13,559

Euro

5,938

6,007

Other

2,937

1,136

21,302

22,591


For more information on how the Foundation manages its currency risk refer to note 7. A full list of contributors can be found in the Foundation’s annual report, which is available on its website www.ifrs.org.

6 Publication and related activities

Revenues are generated from the sales of publications and subscriptions, and, from licensing and waiver fees. Publications revenue is recognised when a sale is made, i.e. when publications are shipped. Subscriptions to the Foundation’s comprehensive package and eIFRS products are recognised as revenue on a time-apportioned basis over the period covered by the subscriptions. Licensing and waiver fees flow from contracts that grant rights to third parties to use IFRS Standards for various purposes including products and services; revenue is recognised over the term of the contract on an accrual basis. The Foundation does not generally offer credit on publication or subscription sales.

Inventories consist of the Foundation’s publications, which are carried at the lower of the cost of printing, on a first-in-first-out basis, or their net realisable value.

The following table presents the components of the net revenue generated by the Foundation’s publications and related activities.

2015

2014

£'000

£'000

Revenue

Sales of publications and subscriptions

3,353

3,243

Licensing and waiver fees

2,214

1,976

Other revenue - primarily conferences

239

283

5,806

5,502

Expenses

Staff salaries and related costs

1,836

1,726

Cost of goods sold

390

419

Depreciation

22

16

Other costs, including occupancy expenses

968

933

3,216

3,094

Net income from publications and related activities

2,590

2,408

Management of funds


7 Foreign currency management

To manage risks associated with fluctuations in voluntary contribution levels, the Trustees of the Foundation have set a target of having sufficient funds to be able to meet twelve months of its operating costs. The Foundation's expenses arise largely in sterling, whereas the organisation receives funding and future financing commitments, under various publicly sponsored funding regimes, primarily in US dollars and euros (refer to Note 5). Some expenses are incurred and paid in US dollars and euros after which the net contributions in those currencies are exchanged for sterling. This exposes the organisation to currency risk. This note explains the financial reporting consequences of how the Foundation manages the transfer of funds and the investment of its surplus funds.

The Trustees have implemented a strategy to mitigate the foreign exchange fluctuation risks connected with these expected future net contributions. The Foundation generally forward sells approximately 90 per cent of its expected net US dollar contributions and 70 per cent of its expected net euro contributions to fix a sterling equivalent. Foreign currency is sold forward on a two year rolling basis.

The forward foreign exchange contracts used by the Foundation to mitigate foreign exchange risk are recognised at fair value and subsequently measured at fair value through profit or loss.

The following table presents the fair value and notional value of these contracts by currency:

2015

2014

Forward foreign exchange contracts by currency:

Fair value

Notional value

Weighted average rate

Fair value

Notional value

Weighted average rate

'000

'000

'000

'000

Financial assets

USD (Level 2)

-

-

-

-

-

-

EUR (Level 2)

£311

4,500

1.231

£460

9,500

1.195

 

Financial liabilities

USD (Level 2)

£(1,283) $28,200

1.592

£(612) $26,000

1.618

EUR (Level 2)

£(158)

5,200

1.382

-

-

-


The fair value of forward foreign exchange contracts is bank-provided and based on price models using observable exchange rates, described as Level 2 in IFRS 13 Fair Value Measurement. All non-current forward contracts expire in 2017. The effect of these forward contracts is that the Foundation is exposed to the currency risk associated with the expected remaining 10 per cent of projected net US dollar contributions and 30 per cent of projected net euro contributions that are not covered by the forward contracts.

A potential 10 per cent increase in average exchange rates for sterling would have produced estimated losses on the remaining actual net US dollar contributions received during the year of £65,000 and on the remaining actual net euro contributions received during the year of £149,000. To the extent that projected contributions in either currency change, the Foundation actively manages the amount of each currency forward sold.

Liquidity and interest rate risk

The Foundation manages its working capital to ensure sufficient cash resources are maintained to meet short-term liabilities. The Foundation has no borrowings.

The Foundation has a target of keeping an amount in cash equal to or exceeding the upcoming quarter’s expenditure. Cash is held either as current or as short-term deposits at floating rates of interest. Part of the cash at bank is held in euro, Japanese yen and US dollar accounts to meet expenditure obligations. Surplus funds are invested in sterling-denominated, fixed rate bonds of governments, governmental agencies, or international organisations, with AAA ratings at the time of purchase. These funds are reserves for continuing operations.

The Foundation manages and receives information from its advisors on its investments in bonds on a fair value basis that includes value changes attributable to interest rate risk. Financial results are provided on that basis to the Trustees and key management personnel. Bonds can be converted into cash if necessary.

8 Investments

Bonds are recognised at fair value and subsequently measured at fair value through profit or loss. The values of these bonds are quoted on active markets, described as Level 1 in IFRS 13.

Fair values and notional values of current and non-current bonds are presented in the following table.*

2015

2015

2014

2014

Fair value

Notional value

Fair value

Notional value

£'000

£'000

£'000

£'000

Current including acccrued interest

3,360

3,266

64

-

Non-current including accrued interest

8,910

8,870

8,602

8,520

12,270

12,136

8,666

8,520


The Foundation measures all other financial instruments at amortised cost. The carrying amount of these instruments is a reasonable approximation of their fair value. These financial instruments include cash and cash equivalents, contributions receivable, publication-related receivables, and trade and other payables.


* - This information is tagged using a non-dimensional structure. Alternative dimensional tagging is available in the accompanying XBRL instance document.

9 Finance income and finance costs

2015

2014

£'000

£'000

Finance income:

Interest income

184

124

Fair value gains on forward foreign exchange contracts

220

226

Fair value gains on bonds

-

122

Exchange gains on forward foreign exchange contracts and cash holdings

653

184

1,057

656

Finance costs

Fair value losses on forward foreign exchange contracts

(1,198)

(842)

Fair value losses on bonds

(85)

-

Exchange losses on cash holdings

-

(18)

(1,283)

(860)

(226)

(204)


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