The Group KD Group and KD Group dd

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The Group KD Group Annual Report 2009 Notes to Consolidated Financial Statements as at and for the year ended 31 December 2009 2.6 Investment property Investment property is property (land or a building, or part of a building, or both) held to earn rentals and/or for capital appreciation or both, rather than for administrative purposes or sale in the ordinary course of business. Investment property is initially measured at cost. After initial recognition, investment property of the Group is carried at its cost less accumulated depreciation and accumulated impairment losses, if any (cost model), i.e. the same as property, plant and equipment. The Group reviews once a year the proportion of investment property obtained by other companies in the Group under lease agreements; in the consolidated balance sheet, the value of investmet property is recognised within the items of property, plant and equipment. The recognition and derecognition policies and methods of accounting for depreciation and impairment are defined under property, plant and equipment. The costs of day-to-day servicing of the investment property (repairs and maintenance) are expensed when incurred. 2.7 Intangible assets After initial recognition, an intangible asset is carried at its cost less any accumulated amortisation and any accumulated impairment losses (cost model). An entity assesses whether the useful life of an intangible asset is finite or indefinite. If finite, it is amortised over its useful life. An intangible asset with an indefinite useful life is not amortised. Goodwill Goodwill represents the excess of the cost of acquisition over the fair value of the Group’s share of the net identifiable assets, liabilities and contingent liabilities of the acquired subsidiary, and is disclosed under intangible assets with an indefinite useful life. Goodwill on acquisition of subsidiaries is included in intangible assets and carried at cost less accumulated impairment losses. Goodwill on acquisitions of associates is included in investments in associates. Separately recognised goodwill is tested annually, and any impairment is recognised in the income statement. Impairment losses on goodwill are not reversed. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold. Once a year the adequacy of the goodwill is reviewed and any impairment loss is recognised in the profit and loss account. The reversal of impairment of goodwill is not allowed. Gains and losses on disposal of subsidiaries also include the value of goodwill, which refers to the disposed subsidiary. Excess of fair value of the acquired identifiable assets, liabilities and contingent liabilities above the cost of their acquisition is reassessed, and any excess remaining after the reassessment is recognised as income in the income statement. Goodwill is allocated to cash-generating units for the purpose of impairment testing. Goodwill is allocated to the Group’s cashgenerating units that are expected to benefit from the synergies of the combination. Other intangible assets The Group’s intangible assets with a finite useful life include computer software and licences. The cost of acquired software comprises the costs of acquisition and preparation of the asset for its intended use, and for licences it is the cost of acquisition. Throughout the useful life of an individual item of an intangible asset the Group consistently allocates the amount of its amortisation to individual accounting periods as amortisation at that time. Amortisation is calculated using the straightline method. Amortisation is charged individually. The periods of amortisation of intangible assets with a finite useful life are the following: Intangible assets: Licences Computer software 3 to 5 years 3 to 5 years 92
The Group KD Group Annual Report 2009 Notes to Consolidated Financial Statements as at and for the year ended 31 December 2009 2.8 Financial assets The Group classifies its financial assets in the following categories: financial assets at fair value through profit or loss; loans and receivables; held-to-maturity investments; and available-for-sale financial assets. Management determines the classification of its investments at initial recognition. 2.8.1 Financial assets at fair value through profit or loss This category has two sub-categories: financial assets held for trading, and those designated at fair value through profit or loss at inception. A financial asset is classified as held for trading if it is acquired or incurred principally for the purpose of selling or repurchasing in the near term or if it is part of a portfolio of identified financial instruments that are managed together and for which there is evidence of a recent actual pattern of short-term profit-taking. Financial assets and financial liabilities are designated at fair value through profit or loss when: - doing so significantly reduces measurement inconsistencies that would arise if the related derivatives were treated as held for trading and the underlying financial instruments were carried at amortised cost for loans and advances to customers or banks and debt securities in issue; and - certain investments, such as equity investments, are managed and evaluated on a fair value basis in accordance with a documented risk management or investment strategy and reported to key management personnel on that basis, and are designated at fair value through profit or loss. 2.8.2 Held-to-maturity financial assets Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments and fixed maturities that the Group’s management has the positive intention and ability to hold to maturity. If the Group were to sell other than an insignificant amount of held-to-maturity assets, the entire category would be reclassified as available for sale. 2.8.3 Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted on an active market, other than: (a) those that the entity intends to sell immediately or in the short term, which are classified as held for trading, and those that the entity upon initial recognition designates as at fair value through profit or loss; (b) those that the entity upon initial recognition designates as available for sale; or (c) those for which the holder may not recover substantially all of its initial investment, other than for reason of credit deterioration. If the loan is irrecoverable, it is written-off and recognised in revaluation expenses - impairment of loans. Loans are considered to be irrecoverable when all the necessary procedures of recovery have been performed and the amount of loss can be determined. The subsequent repayments of debts written off reduce the impairment loss recognised in the income statement, providing the repayments are received in the current year; if not, they increase the revenue. 2.8.4 Available-for-sale financial assets Available-for-sale investments are those intended to be held for an indefinite period of time, and which may be sold in response to needs for liquidity or changes in interest rates, exchange rates or equity prices. 2.8.4.1. Recognition of financial assets Regular purchases and sales of financial assets at fair value through profit or loss, held to maturity and available for sale are recognised at the trade-date – the date on which the Group commits to purchase or sell the asset. Financial assets are initially recognised at fair value plus transaction costs for all financial assets not carried at fair value through profit or loss. Financial assets carried at fair value through profit or loss are initially recognised at fair value, and transaction costs are expensed in the income statement. Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired or where the Group has transferred substantially all risks and rewards of ownership. Financial liabilities are derecognised when they are extinguished − that is, when the obligation is discharged, cancelled or expires. 93
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