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Notes to the Consolidated Financial Statements
(continued)
The nominal value less estimated credit
adjustments of trade receivables and payables are
assumed to approximate their fair values due to
their short-term nature. The fair value of financial
liabilities for disclosure purposes is estimated by
discounting the future contractual cash flows at the
current market interest rate that is available to the
Group for similar financial instruments.
(r) Property, Plant and Equipment –
refer note 16
Property, plant and equipment (excluding land)
is measured on a historical cost basis and is
depreciated on a straight line basis over its
estimated useful economic life, as follows:
Category
Buildings
Plant & equipment
(including motor vehicles
and computer software)
Life
40 years
2 1 / 2 – 20 years
Historical cost includes costs directly attributable
to bringing the asset to the location and condition
necessary for it to be capable of operating in the
manner intended by management, less depreciation
and any impairment.
The assets’ residual values and useful lives are
reviewed and adjusted if appropriate, at each
reporting date.
An asset’s carrying amount is written down
immediately to its recoverable amount if the asset’s
carrying amount is greater than its estimated
recoverable amount.
Gains and losses on disposals are determined
by comparing proceeds with carrying amount.
These are included in the statement of
comprehensive income.
Land and buildings are shown at cost less
subsequent depreciation for buildings. Historical
cost includes expenditure that is directly
attributable to the acquisition of the items.
Subsequent costs are included in the asset’s
carrying amount or recognised as a separate
asset, as appropriate, only when it is probable
that future economic benefits associated with the
item will flow to the Group and the cost of the
item can be measured reliably. All other repairs
and maintenance are charged to the statement of
comprehensive income during the financial period
in which they are incurred.
The cost of improvements to or on leasehold
properties is amortised over the unexpired period
of the lease (including option periods) or the
estimated useful life of the improvement to the
Group, whichever is the shorter. Assets under
construction are not amortised until they are
completed and transferred to their appropriate
asset category.
(s) Leased Assets – refer note 16
Leasing of plant and equipment where the Group
has substantially all the risks and rewards of
ownership are classified as finance leases. Assets
acquired under finance leases are capitalised at the
leases inception at the lower of the fair value of the
leased asset and the present value of the minimum
lease payments (note 32). They are amortised
over the anticipated life of the relevant lease. Lease
payments are allocated between interest expense
and reduction in the lease liability to achieve a
constant rate on the finance balance outstanding.
Leases in which a significant portion of the risks
and rewards of ownership are retained by the
lessor are classified as operating leases (note 32).
Operating lease assets are not capitalised and
rental payments are charged to the statement of
comprehensive income on a straight-line basis over
the period of the lease.
(t) Intangibles – refer note 17
Goodwill on acquisition
The difference between the purchase consideration
and the fair value of identifiable net assets
acquired is initially brought to account as
goodwill or discount on acquisition. Goodwill
on the acquisition of subsidiaries is included in
intangible assets.
Goodwill is not amortised. Instead, goodwill is
tested for impairment at each reporting date, or
more frequently if events or change in circumstances
indicate that it might be impaired and is carried
at cost less any accumulated impairment losses.
Impairment of goodwill cannot be reversed.
Goodwill is allocated to cash-generating units for
the purpose of impairment testing. Impairment
is determined by assessing the recoverable
amount of the cash generating unit to which the
goodwill relates.
Franchise rights
The Group has franchise agreements with
manufacturers for the distribution of new vehicles
and parts. These franchise rights agreements
have varying terms and periods of renewal. The
Group considers that the franchise agreements
will be renewed indefinitely and accordingly no
amortisation is charged on these assets. The Group
assesses the franchise rights for impairment on a
periodic basis, but at least at each reporting date
and where there are indications of impairment
the franchise rights values are adjusted to their
recoverable amounts.
(u) Trade and Other Payables –
refer note 18
These amounts represent liabilities for goods
and services provided to the Group prior to the
reporting date and which are unpaid at reporting
date. The amounts are generally unsecured and
are usually paid within 30 days of recognition.
Amounts are recognised initially at fair value and
subsequently at amortised cost.
(v) Interest Bearing Loans and
Borrowings – refer note 21
All loans and borrowings are initially recognised
at fair value, net of transaction costs incurred.
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Automotive Holdings Group