(formely M-Cell Limited) - Business Report 2003 - MTN Group

● income and expenditure and cash flow items are translated at the weighted average exchange
rates for the year.
Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as
assets and liabilities of the foreign entity and translated at the exchange rate at the balance sheet
date.
Exchange differences arising from the translation of foreign entities are taken directly to a foreign
currency translation reserve.
Integrated foreign operations
Where a foreign subsidiary is determined to be an integrated foreign operation, transactions and
resulting non-monetary items are translated at the ruling exchange rates when the transactions
occurred. Income statement items are translated at the appropriate weighted average exchange
rates for the period. Monetary items are translated at the ruling exchange rates at the balance
sheet dates. Translation gains and losses are taken to income for the period.
Currently, all significant international subsidiaries within the Group are classified as foreign entities
and are accounted for accordingly.
2.22 Financial instruments
Financial assets
The Group’s principal financial assets are bank balances and cash, trade receivables and equity investments.
Trade receivables are stated at the nominal value as reduced by appropriate allowances for estimated
irrecoverable amounts.
Investments where the Group is not in a position to exercise significant influence or joint control, are stated
at cost less any impairment losses, where the investments’ carrying amounts exceed their estimated
recoverable amounts.
Financial liabilities
Financial liabilities are classified according to the substance of the contractual arrangements entered into.
Significant financial liabilities include interest-bearing bank loans and overdrafts, convertible debentures
and trade and other payables.
Interest-bearing bank loans and overdrafts and convertible loan notes are recorded at the proceeds
received, net of direct issue costs. Finance charges, including premiums payable on settlement or
redemption, are accounted for on an accrual basis and are added to the carrying amount of the instruments
to the extent that they are not settled in the period in which they arise.
Set-off
Financial assets and liabilities are offset and the net amount reported in the balance sheet only when the
Group has a legally enforceable right to set off the recognised amounts and intends either to settle on a net
basis or to realise the assets and settle the liabilities simultaneously.
2.23 Basis of accounting for underwriting activities
Underwriting results are determined on an annual basis whereby the incurred cost of claims, commission
and related expenses is charged against the earned proportion of premiums, net of reinsurance, as follows:
● Claims incurred comprise claims and related expenses paid in the year and changes in the provisions for
claims incurred but not reported, and related expenses, together with any other adjustments to claims
from previous years. Where applicable, deductions are made for salvage and other recoveries.
● Claims outstanding represent the ultimate cost of settling all claims (including direct and indirect
settlement costs) arising from events that have occurred up to the balance sheet date, including
provision for claims incurred but not yet reported, less any amounts paid in respect of those claims.
Claims outstanding are reduced by anticipated salvage and other recoveries.
2.24 Research and development
Research and development costs are expensed in the period in which they are incurred.
2.25 Comparative figures
Where necessary, comparative figures have been adjusted to conform with changes in presentation and
accounting policies in the current year.
MTN BUSINESS REPORT 2003
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