NIG Prospectus - London Stock Exchange

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Level: 8 – From: 8 – Thursday, August 9, 2007 – 2:20 pm – mac5 – 3776 Section 10c : 3776 Section 10cInvestment propertiesInvestment properties are initially recorded at cost, being the purchase price and any directlyattributable expenditure for a purchased investment property, or at fair value at the date of transferif the property was transferred from another category of assets. Subsequent to initial recognition,investment properties are re-measured to fair value on an individual basis based on an externalvaluation by an independent valuer. Changes in fair value are taken to the consolidated statementof income.InvestmentsThe group has adopted the revised IAS 39 from 1 January 2005, and reclassified its investmentspreviously categorised as trading and available for sale into the following two categories;i. Investments at fair value through statement of incomeii.Available for sale investmentsInvestments at fair value through statement of incomeInvestments at fair value through statement of income are initially recognised at cost, being thefair value of the consideration given, excluding transaction costs. These investments are either“held for trading” or “designated” as such on initial recognition.Held for trading investments are acquired principally for the purpose of selling or repurchasingthem in the near term or are a part of a portfolio of identified financial instruments that aremanaged together and for which there is evidence of a recent actual pattern of short term profittaking. Designated investments are those investments which are initially designated asinvestments at fair value through statement of income.After initial recognition, investments at fair value through statement of income are re-measured atfair value and changes in fair value are recognised in the consolidated statement of income.Available for sale investmentsAvailable for sale investments are initially recognised at cost, being the fair value of theconsideration given, plus transaction costs that are directly attributable to the acquisition.After initial recognition, available for sale investments are re-measured at fair value except forinvestments whose fair value cannot be reliably measured, which are measured at cost lessimpairment.Unrealised gain or loss on re-measurement of available for sale investments to fair value isrecognised directly in equity in “cumulative changes in fair value” account until the investment isderecognised or determined to be impaired, at which time the cumulative gain or loss previouslyrecognised in equity is recognised in the consolidated statement of income.Fair valuesFor investments traded in organised financial markets, fair value is determined by reference tostock exchange quoted market bid prices at the close of business on the balance sheet date.For investments where there is no quoted market price, a reasonable estimate of fair value isdetermined by using valuation techniques. The group uses a variety of methods and makesassumptions that are based on market conditions existing at each balance sheet date. Valuationtechniques used include the use of comparable recent arm’s length transactions, discounted cashflow analysis and other valuation techniques commonly used by market participants.F-59
Level: 8 – From: 8 – Thursday, August 9, 2007 – 2:20 pm – mac5 – 3776 Section 10c : 3776 Section 10cTrade and settlement date accountingAll “regular way” purchases and sales of financial assets are recognised on the trade date, i.e. thedate that the group commits to purchase or sell the asset. Regular way purchases or sales arepurchases or sales of financial assets that require delivery of assets within the time framegenerally established by regulation or convention in the market place concerned.Recognition and derecognition of financial assets and liabilitiesA financial asset or a financial liability is recognised when the group becomes a party to thecontractual provisions of the instrument. A financial asset (in whole or in part) is derecognisedeither when the group has transferred substantially all the risk and rewards of ownership or whenit has neither transferred nor retained substantially all the risks and rewards and when it no longerhas control over the asset or a proportion of the asset. A financial liability is derecognised whenthe obligation specified in the contract is discharged, cancelled or expired.Impairment of financial assetsAn assessment is made at each balance sheet date to determine whether there is objectiveevidence that a specific financial asset, or group of similar assets, may be impaired. If suchevidence exists, the estimated recoverable amount of that asset is determined and anyimpairment loss based on the net present value of future anticipated cash flows is recognised inthe consolidated statement of income.TaxationDeferred taxation is provided in respect of all temporary differences. Deferred tax assets arerecognised in respect of unutilised tax losses when it is probable that the loss will be used againstfuture profits.InventoriesInventories are valued at the lower of cost and net realisable value. In respect of finished goodsand work-in-progress, cost includes all direct costs of production and an appropriate proportion ofproduction overheads. Cost of raw materials, consumables and spare parts is calculated using theweighted average cost method and provision is taken for slow moving and obsolete items.Wakala investmentsWakala investments are financial assets originated by the group and are stated at amortised cost.Treasury sharesTreasury shares are stated at cost as a deduction within shareholders’ equity and they are notentitled to cash dividends.Gains or losses resulting from the trading in treasury shares are taken directly to shareholders’equity under “Gain on sale of treasury shares reserve”. Should the reserve fall short of any lossesfrom the sale of treasury shares, the difference is charged to retained profits then reserves,subsequent to this, should profits arise from sale of treasury shares an amount is transferred toreserves then retained profits equal to the loss previously charged to these accounts.Bonds payableBonds payable are stated at their principal amount. Interest is charged as an expenses as itaccrues, with unpaid amounts included in other liabilities.F-60
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NIG Prospectus - London Stock Exchange

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