The Go-Ahead Group has announced it is revising the accounting policy for its rail pension schemes.
Under the new methodology, operating profit will only recognise the group's agreed cost for rail pensions, rather than the full service charge previously included.
The group said in a statement that this is to better reflect its limited responsibility for the pensions.
As the long-term contractual responsibility for the rail schemes lies with the Department for Transport, the group's balance sheet currently only recognises the share of surplus or deficit expected to be realised over the life of each franchise.
Under the current assessment, there is no surplus or deficit and therefore no asset or liability is provided for. However, the income statement charge has included the full rail pension service cost, although a substantial part of this charge refers to an estimate of the future cost of benefits accrued in the current year, but falling beyond the duration of the franchises.
Therefore the group will revise the accounting policy through a franchise adjustment to the income statement, which is in line with emerging industry practice.
The first financial statements using the revised methodology will be the half-year results for the six months ending 31 December 2016 and will be announced on 28 February 2017. The change in reporting will only affect reported profit and has no impact on cash.
No changes will be made to the way in which bus pensions are accounted for and the Group will no longer report financial results for the bus division adjusting for the incremental impact of IAS 19 (revised).
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