SECTION 1: BASIS OF PRESENTATION AND SCOPE OF CONSOLIDATION
This section presents the information considered important to know prior to reading the consolidated financial statements of Ferrovial.
Basis of presentation and new accounting standards
The consolidated financial statements of Ferrovial were prepared in accordance with the IFRSs adopted by the European Union. The accounting policies applied are disclosed in Note 1.3 of this section.
In 2017 the change in accounting policies with the greatest impact was the early adoption of IFRS 15, Revenue from Contracts with Customers.
Although this standard is not mandatorily applicable until 2018, the Company decided to apply it in 2017. The most noteworthy impacts relate to the definition of distinct performance obligations in long-term services contracts and the allocation of a price to each obligation; the change in the method for recognising revenue from contract modifications and transactions subject to variable consideration; and the establishment of a consistent revenue recognition method for contracts with similar characteristics. This change in standards gave rise to an impact of EUR -272 million on equity attributable to the Parent (Note 1.3.1 contains a more in-depth explanation of the impacts of application of IFRS 15). In addition, an analysis is provided of the possible impact of IFRS 9, Financial Instruments and IFRS 16, Leases.
The disclosures presented in these consolidated financial statements include most notably, due to their importance, those relating to the distinction between infrastructure project companies and non-infrastructure project companies (see Note 1.1.2 for a definition). Also noteworthy are the disclosures relating to two of the Group’s main assets, the 25% ownership interest in Heathrow Airport Holdings (HAH), the company that owns Heathrow Airport, and the 43.23% ownership interest in the concession operator of the ETR 407 toll road in Toronto (Canada).
Changes in the scope of consolidation and assets and liabilities held for sale:
Note 1.1.3 provides detailed information on the main changes in the scope of consolidation in 2017, including primarily the partial sale of the investment in the Portuguese toll roads Norte Litoral and Autoestrada do Algarve, which are now accounted for using the equity method.
Use of judgements and estimates
This section includes the main estimates made by Ferrovial when measuring its assets, liabilities, income, expenses and obligations (see Note 1.3.4).
Although Ferrovial’s functional currency is the euro, a significant portion of its activities is carried on in countries outside the eurozone, its exposure including most notably that to the pound sterling, the US dollar, the Canadian dollar, the Australian dollar and the Polish zloty. The evolution of these currencies vis-à-vis the euro is shown in Note 1.4.
The main changes in the closing exchange rates for 2017 were the depreciation of the US dollar (-14%) and that of the Canadian dollar (-6%). The Australian dollar, the Chilean peso and the pound sterling also underwent significant declines in value, whereas the Polish zloty performed positively. The impact recognised in equity attributable to the Parent was EUR -318 million (see Note 5.1.1, Changes in equity).