Annual Report 2014

Etex Annual Report 2014
Financial report
Consolidated financial statements
Lands (excluding lands with
mineral reserves)
Lands with mineral reserves
Lands improvements and buildings
Plant, machinery and equipment
Furniture and vehicles
nil
exploitation
lifetime
10 - 40 years
5 - 30 years
3 - 10 years
Mineral reserves, which are presented as
“lands” of property, plant and equipment,
are valued at cost and are depreciated
based on the physical unit-of-production
method over the estimated tons of raw
materials to be extracted from the reserves.
The residual values, useful lives and
depreciation methods are reviewed,
and adjusted if appropriate, at each
financial year-end.
B - Intangible assets
Intangible assets acquired separately are
measured on initial recognition at cost.
The cost of intangible assets acquired in
a business combination is the fair value as
at the date of acquisition. Following initial
recognition, intangible assets are carried
at cost less accumulated amortisation and
accumulated impairment losses (see Note E).
Internally generated intangible assets
are capitalised if the product or process
is technically and commercially feasible
and the Group has sufficient resources
to complete development. Expenditure
capitalised include the costs of materials,
direct labour and an appropriate portion
of overheads.
The useful lives of intangible assets are
assessed to be either finite or indefinite
on the following bases:
Patents, trademarks and similar rights
Software ERP
Other software
Development costs
Customer lists
Brands
Technology and design
Rights to exploit and extract
mineral resources
Indefinite
10 years
5 years
15 years
3 - 15 years
15 years
15 years
usage
Intangible assets with finite lives are
amortised over the useful economic life
using the straight-line method.
The estimated useful lives are reviewed at
least at each reporting date. Changes in
the expected useful life or the expected
pattern of consumption of future economic
benefits embodied in the asset are
accounted for by changing the amortisation
period or method, as appropriate, and
treated as changes in accounting estimates
by changing the amortisation charge
for the current and future periods. The
amortisation expense is recognised in the
income statement in the expense category
consistent with the function of the asset.
C - Goodwill
Goodwill represents the excess of the
cost of a business combination over the
Group’s interest in the net fair value of the
identifiable assets, liabilities and contingent
liabilities of a subsidiary, equity accounted
investees or joint venture at the date of
acquisition. Goodwill on acquisitions of
equity accounted investee or joint ventures
is included in the carrying amount of the
investments. Goodwill on the acquisition of
subsidiaries is presented separately, and is
stated at cost less accumulated impairment
losses (see Note E).
If the Group’s interest in the net fair value
of the identifiable assets, liabilities and
contingent liabilities exceeds the cost
of the business combination, this excess
(frequently referred to as negative goodwill
or badwill) is immediately recognised
in the profit and loss statement, after
a reassessment of the fair values.
Additional investments in subsidiaries in
which the Company already has control
are accounted for as equity transactions;
any premium or discount on subsequent
purchases of shares from minority interest
are recognised directly in the Company’s
shareholders equity.
D - Investment property
Investment property is property held
to earn rental income or for capital
appreciation or for both and is valued
at acquisition cost less accumulated
depreciation and impairment losses.
The carrying amount includes the cost
of replacing part of an existing investment
property at the time that cost is incurred if
the recognition criteria are met. Investment
property is depreciated similar to owned
property (see Note A).
Investment properties are derecognised
when either they have been disposed
of or when the investment property is
permanently withdrawn from use and no
future economic benefit is expected from
its disposal. Any gains or losses on the
retirement or disposal of an investment
property are recognised in the income
statement in the year of retirement
or disposal.
Transfers are made to investment
property when there is a change in use,
evidenced by ending of owner-occupation,
commencement of an operating lease to
another party or ending of construction
or development. Transfers are made
from investment property when there
is a change in use, evidenced by
commencement of owner-occupation.
E - Impairment of assets
At each reporting date, the Group assesses
whether there is any indication that an
asset, other than inventories and deferred
taxes, may be impaired. If any such
indication exists, the recoverable amount
of the asset (being the higher of its fair
value less costs to sell and its value in use)
is estimated. In assessing the value in use,
the estimated future cash flows
are discounted to their present value using
a pre-tax discount rate that reflects the
current market assessments of the time
value of money and the risks specific
to the asset. Where it is not possible to
estimate the recoverable amount of an
individual asset, the Group estimates the
recoverable amount of the smallest cash-
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