Notes to the consolidated financial statements

1. Accounting policies continued

(y) Accounting standards

During the year, the IASB and IFRIC have issued the following standards and interpretations with an effective date after the date of these financial statements:

International Accounting Standards (IAS/IFRS)	Effective for accounting periods beginning on or after
IFRS 2: Share-based Payments – Vesting Conditions and Cancellations	1.1.2009
IFRS 3: Business Combinations (Revised)	1.7.2009
IFRS 8: Operating Segments	1.1.2009
IAS 1: Presentation of Financial Statements (Revised)	1.1.2009
IAS 23: Borrowing Costs (Revised)	1.1.2009
IAS 27: Consolidated and Separate Financial Statements (Revised)	1.7.2009
Amendments to IAS 32 Financial Instruments: Presentation and
IAS 1 Presentation of Financial Statements – Puttable Financial Instruments and
Obligations Arising on Liquidation	1.1.2009
Amendment to IAS 39 Financial Instruments: Recognition and Measurement –
Eligible Hedged Items	1.7.2009
Improvements to IFRS May 2008	1.1.2009, 1.7.2009
Improvements to IFRS April 2009	1.7.2009, 1.1.2010

International Financial Reporting Interpretation Committee (IFRIC)	Effective for accounting periods beginning on or after
IFRIC 15: Agreements for the Construction of Real Estate	1.1.2009
IFRIC 16: Hedges of a Net Investment in a Foreign Operation	1.10.2008
IFRIC 17: Distributions of Non-Cash Assets to Owners	1.7.2009
IFRIC 18: Transfers of Assets from Customers	1.7.2009

With the exception of IAS 23: Borrowing Costs (Revised), the directors do not anticipate that the adoption of these standards and interpretations will have a material impact on the Group’s financial statements in the period of initial application. The directors continue to assess the impact of IAS 23: Borrowing Costs (Revised) on the Group’s financial statements.

(z) Key assumptions

The directors consider that the key assumptions applied at the balance sheet date, which may have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are:

• those assumptions used in arriving at the pension asset/liability under IAS 19. These key assumptions and their possible impact are disclosed in note 25, ‘Pensions and other post-retirement benefits’;
• the bad debt provision which is calculated by applying a range of percentages to debt of different ages. These percentages also vary between different categories of debt. Higher percentages are applied to those categories of debt which are considered to be of greater risk and also to debt of greater age. The value of the bad debt provision is sensitive to the specific percentages applied; and
• the asset lives assigned to property, plant and equipment, details of which can be found in note 1(f).

2. Segmental analysis

The primary segment reporting format is determined to be business segments. The secondary segment reporting format is determined to be geographical. However, as more than 98% of the Group’s activities are within the UK, revenue, profit before interest, assets and liabilities have been attributed to one geographical segment.

Northumbrian Water Limited

NWL is one of the ten regulated water and sewerage businesses in England and Wales. NWL operates in the north east of England, where it trades as Northumbrian Water, and in the south east of England, where it trades as Essex & Suffolk Water. NWL also has non-regulated activities closely related to its principal regulated activity.

Water and waste water contracts

NWG owns a number of special purpose companies for specific water and waste water contracts in Scotland, Ireland and Gibraltar.