Read the full Annual Report in PDF format - CSIR

1PRINCIPAL ACCOUNTING POLICIES (continued)
Post-retirement benefits other than pensions (continued)
medical benefi ts to qualifying
employees, which is deemed to be
a defi ned benefi t plan. The expected
costs of these benefi ts are determined
using the projected unit credit
method, with actuarial valuations
being carried out at each reporting
date. Contributions are made to the
relevant funds over the expected
service lives of the employees entitled
to those funds. The estimated cost of
providing such benefi ts is charged
to the statement of comprehensive
income on a systematic basis over the
employees’ working lives within the
Group.
Actuarial gains and losses are
recognised in full in the statement of
comprehensive income in the year
when actuarially determined. The
amount recognised in the statement of
fi nancial position represents the present
value of the post-retirement medical aid
contribution reduced by the fair value
of the plan assets. Any asset resulting
from this calculation is limited to
actuarial losses and the present value
of available refunds and reductions in
future contributions to the plan.
less all estimated costs to completion
and costs to be incurred in selling.
Contracts in progress are stated as a
percentage of the sales value of work
completed, after provision for losses
relating to the stage of completion and
any foreseeable losses to completion of
the contract, less progress billings.
Income tax
The CSIR is exempt from South African
income tax. The income tax expense
of subsidiary companies is refl ected on
Group level.
Income tax expense comprises current
and deferred tax. The charge for
taxation is based on the profi t or loss
for the year as adjusted for items
that are non-taxable or disallowed.
It is calculated using tax rates that
have been enacted or substantially
enacted at the reporting date. Income
tax expense is recognised in profi t or
loss except to the extent that it relates
to items recognised directly in other
comprehensive income, in which case
it is recognised in other comprehensive
income.
differences, including those arising from
tax losses, give rise to a deferred tax
asset, the asset is recognised only if it
is probable that future taxable profi ts
will be suffi cient to allow the tax benefi t
of the loss to be realised.
Deferred tax assets are reviewed at
each reporting date and are reduced
to the extent that it is no longer
probable that the related tax benefi t
will be realised. Deferred tax is not
recognised for the following temporary
differences: the initial recognition of
assets or liabilities in a transaction
that is not a business combination
and that affects neither profi t or loss,
and differences relating to investments
in subsidiaries and jointly controlled
entities to the extent that it is probable
that they will not reverse in the
foreseeable future.
Deferred tax assets and liabilities
are offset when there is a legally
enforceable right and when these
relate to income taxes levied by the
same taxation authority and the Group
intends to settle its current tax assets
and liabilities on a net basis.
Inventory and contracts in
progress
Raw materials and fi nished goods
are stated at the lower of cost and
net realisable value. Cost of inventory
is determined by the weighted
average method. Net realisable value
represents the estimated selling price
Deferred tax is recognised in respect
of temporary differences arising from
differences between the carrying
amounts of assets and liabilities
in the fi nancial statements and the
corresponding tax basis used in the
computation of the taxable profi t.
Where the tax effects of temporary
The amount of deferred tax provided
is based on the expected manner
of realisation or settlement of the
carrying amount of assets and
liabilities using tax rates enacted or
substantively enacted at the reporting
date. Deferred tax is charged to the
statement of comprehensive income
133 ANNUAL FINANCIAL STATEMENTS