Full Report - Fraser and Neave Limited

NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 September 2006
2. ACCOUNTING POLICIES (cont’d)
2.18 Cash and Cash Equivalents
Cash and cash equivalents include cash on hand and in bank, deposits with financial institutions and bank
overdrafts. Bank overdrafts are included in bank borrowings on the balance sheet.
Cash on hand and in banks and fixed deposits are classified and accounted for as loans and receivables under
FRS 39. The accounting policy is stated in Note 2.26.
2.19 Trade and Other Creditors
Trade and other creditors, including payables to related parties, are initially measured at fair value and
subsequently measured at amortised cost using the effective interest method.
2.20 Employee Benefits
(a) Retirement Benefits
Provision for retirement benefits is made in accordance with:
(i) the terms of agreements concluded by group companies with various categories of employees;
(ii) pension and retirement benefit schemes; or
(iii) defined contribution plans under statutory regulations in the country, where applicable.
Retirement benefits in accordance with agreements
The provisions represent the present value of the amounts likely to become payable in respect of
services already rendered. An independent actuarial calculation of the provision is made every three
years. Internal calculation of the provision is made each intervening year on the same basis as those
used for the independent actuarial calculation.
Pension and retirement benefit schemes
Certain companies within the Group operate pension and retirement benefit schemes. The
cost of retirement benefits is determined by using accrued or projected benefit valuation methods
as appropriate. Costs are charged to the profit statement systematically relating to the receipt of
the employees’ services. Actuarial gains and losses are recognised as income or expenses when the
cumulative unrecognised actuarial gains or losses for each plan exceeds the greater of 10% of present
value of the obligation and 10% of the fair value of plan assets. These gains or losses are recognised
over the average remaining working lives of the employees participating in the plans.
Defined contribution plans under statutory regulations
As required by the law in certain countries, companies within the Group make contribution to the
state pension scheme. The companies pay fixed contributions into separate entities and will have no
legal or constructive obligation to pay further contributions if any of the funds do not hold sufficient
assets to pay all employee benefits relating to employee services in the current and preceding financial
years. Contributions to state pension schemes are recognised as compensation expense in the profit
statement in the same period as the employment that gives rise to the contribution.
102 Fraser and Neave, Limited & Subsidiary Companies Annual Report 2006