Cosalt plc Annual report & financial statements 2008

Financial statements
Notes to the Company financial statements
Notes to the Company financial statements
32. Statement of accounting policies
The following paragraphs summarise the main accounting policies of the Company, which have been applied consistently in
dealing with items which are considered material in relation to the Company’s financial statements.
Basis of preparation
The accounts have been prepared under the historical cost convention modified to include the revaluation of freehold and
leasehold properties including investment properties at market value and in accordance with applicable accounting standards and
the Companies Act 1985 except as stated below under ‘tangible fixed assets and depreciation’. As permitted by Section 230(4) of
the Companies Act 1985 the profit and loss account of the Company is not presented.
Under FRS 1 the Company is exempt from the requirement to prepare a cash flow statement on the grounds that the Consolidated
cash flows for all Group companies are included within the Consolidated financial statements.
As these Parent Company financial statements are presented together with the Consolidated financial statements, the Company
has taken advantage of the exemption contained in FRS 8 and has therefore not disclosed transactions or balances with entities
which form part of the Group (or investees of the Group qualifying as related parties). The Consolidated financial statements of
Cosalt plc within which this Company is included are set out on pages 40 to 74.
Investments
Fixed asset investments are stated at cost less provision for impairment where appropriate. The Directors consider annually
whether a provision against the value of investments on an individual basis is required. Such provisions are charged in the profit
and loss account in the year.
Tangible fixed assets and depreciation
In accordance with Statement of Standard Accounting Practice No 19 Accounting for investment properties:
i) investment properties are revalued annually at open market values (determined in accordance with the Guidance Notes on the
valuation of assets issued by the Royal Institution of Chartered Surveyors). Surpluses and deficits arising and the aggregate
surplus or deficit is transferred to the revaluation reserve except that any permanent diminution in the value of an investment
property is taken to the profit and loss account for the year; and
ii) no depreciation or amortisation is provided in respect of freehold investment properties and leasehold investment properties
with over 20 years to run.
This treatment, as regards certain of the Company’s investment properties, may be a departure from the requirements of the
Companies Act 1985 concerning depreciation of fixed assets. However, these properties are not held for consumption but for
investment and the Directors consider that systematic annual depreciation would be inappropriate. The accounting policy adopted
is therefore necessary for the accounts to give a true and fair view. Depreciation or amortisation is only one of the many factors
reflected in the annual valuation and the amount which might otherwise have been shown cannot be separately identified or
quantified.
Fixed assets are stated at cost, except that the Group has applied the provisions of FRS 15 and retained the book values of
freehold and leasehold land and buildings which reflect the valuations up to August 2000. The valuations have not been updated
since that date.
Tangible fixed assets, except freehold land and investment properties, are depreciated on a straight line basis at annual rates
which vary depending on the type of asset but which are generally:
Freehold buildings 2%
Buildings on land leased from
Associated British Ports on
short-term tenancy agreements 2%
Other leasehold land and buildings At rates based on life of lease
Plant and machinery 5%-20%
Motor vehicles 20%-25%
Assets subject to finance leases giving rights approximating to ownership are treated as though they have been purchased outright
and are included in tangible fixed assets at a value equal to the present value of the minimum lease payments to be made during
the term of the lease. The total amount of the future obligations is included in creditors. The amount included in tangible fixed
assets is written off over the shorter of the useful life of the asset or the term of the lease.
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