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FINANCIAL STATEMENTS AND NOTES 2007NOTES TO THE ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2007Where the outcome of the contract cannot be estimated reliably, contract revenue is recognised to the extent of contract costs incurred and probablyrecoverable. Contract costs are recognised as expenses in the period in which they are incurred. When it is probable that total contract costs willexceed total contract revenue, the expected loss is immediately recognised as an expense to the income statement. deductible in other years and it further excludes items that are not taxable or tax deductible. The company’s liability for current tax is calculated usingtax rates that have been enacted or substantively enacted by the balance sheet date.available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary differencesarise from the initial recognition (other than a business combination) of other assets and liabilities in a transaction that affects neither the taxableDeferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries and associates, and interest in jointventures, except where the company is not able to control the reversal of the temporary difference and it is probable that the temporary differencewill not reverse in the foreseeable future.The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable thatDeferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset realised. Deferred tax iswith in equity.Deferred tax assets and liabilities are off-set when there is a legally enforceable right to set off current tax assets against current tax liabilities andwhen they relate to income tax levied by the same taxation authority and the company intends to settle its current tax assets and liabilities on a netbasis. Irregular expenditure means expenditure incurred in contravention of, or not in accordance with, a requirement of any applicable legislation,including:- The PFMA; or,- Any provincial legislation providing for procurement procedures in that provincial government.Fruitless and wasteful expenditure means expenditure that was made in vain and could have been avoided had reasonable care been exercised. Allirregular, fruitless and wasteful expenditure is charged against income in the period in which it is incurred.1.22 Financing costsFinancing costs are recognised in the income statement in the period in which they are incurred.this regard.annual report 200770