Download Sabmiller Plc Annual Report 2012 PDF

98 SABMiller plc Annual Report 2012Notes to the consolidated financial statements continued1. Accounting policies continuedu) TaxationThe tax expense for the period comprises current and deferred tax.Tax is recognised in the income statement, except to the extent that itrelates to items recognised in other comprehensive income or directlyin equity, in which case it is recognised in other comprehensiveincome or directly in equity, respectively.Current tax expense is based on the results for the period as adjustedfor items that are not taxable or not deductible. The group’s liability forcurrent taxation is calculated using tax rates and laws that have beenenacted or substantively enacted by the balance sheet date.Deferred tax is provided in full using the liability method, in respectof all temporary differences arising between the tax bases of assetsand liabilities and their carrying values in the consolidated financialstatements, except where the temporary difference arises fromgoodwill (in the case of deferred tax liabilities) or from the initialrecognition (other than a business combination) of other assetsand liabilities in a transaction that affects neither accounting nortaxable profit.Deferred tax liabilities are recognised where the carrying value ofan asset is greater than its tax base, or where the carrying value ofa liability is less than its tax base. Deferred tax is recognised in fullon temporary differences arising from investment in subsidiaries,associates and joint ventures, except where the timing of thereversal of the temporary difference is controlled by the group andit is probable that the temporary difference will not reverse in theforeseeable future. This includes taxation in respect of the retainedearnings of overseas subsidiaries only to the extent that, at thebalance sheet date, dividends have been accrued as receivableor a binding agreement to distribute past earnings in future periodshas been entered into by the subsidiary. Deferred income tax is alsorecognised in respect of the unremitted retained earnings of overseasassociates and joint ventures as the group is not able to determinewhen such earnings will be remitted and when such additional taxsuch as withholding taxes might be payable.A net deferred tax asset is regarded as recoverable and thereforerecognised only when, on the basis of all available evidence, it isprobable that future taxable profit will be available against whichthe temporary differences (including carried forward tax losses)can be utilised.Deferred tax is measured at the tax rates expected to apply in theperiods in which the timing differences are expected to reversebased on tax rates and laws that have been enacted or substantivelyenacted at balance sheet date. Deferred tax is measured on anon-discounted basis.v) Dividend distributionsDividend distributions to equity holders of the parent are recognisedas a liability in the group’s financial statements in the period in whichthe dividends are approved by the company’s shareholders. Interimdividends are recognised when paid. Dividends declared after thebalance sheet date are not recognised, as there is no presentobligation at the balance sheet date.w) Employee benefits(i) Wages and salariesWages and salaries for current employees are recognised in theincome statement as the employees’ services are rendered.(ii) Vacation and long-term service awards costsThe group recognises a liability and an expense for accruedvacation pay when such benefits are earned and not when thesebenefits are paid.The group also recognises a liability and an expense for long-termservice awards where cash is paid to the employee at certainmilestone dates in a career with the group. Such accruals areappropriately discounted to reflect the future payment dates atdiscount rates determined by reference to local high-qualitycorporate bonds.(iii) Profit-sharing and bonus plansThe group recognises a liability and an expense for bonuses andprofit-sharing, based on a formula that takes into considerationthe profit attributable to the company’s shareholders aftercertain adjustments.The group recognises a provision where contractually obliged orwhere there is a past practice that has created a constructiveobligation. At a mid-year point an accrual is maintained for theappropriate proportion of the expected bonuses which wouldbecome payable at the year end.(iv) Share-based compensationThe group operates a variety of equity-settled share-basedcompensation plans and a cash-settled share-basedcompensation plan.The equity-settled plans comprise share option plans (with andwithout market performance conditions attached), performanceshare award plans (with market conditions attached) and awardsrelated to the employee element of the Broad-Based Black EconomicEmpowerment (BBBEE) scheme in South Africa. An expense isrecognised to spread the fair value of each award granted after7 November 2002 over the vesting period on a straight-line basis, afterallowing for an estimate of the share awards that will eventually vest.A corresponding adjustment is made to equity over the remainingvesting period. The estimate of the level of vesting is reviewed at leastannually, with any impact on the cumulative charge being recognisedimmediately. In addition the group has granted an equity-settledshare-based payment to retailers in relation to the retailer element ofthe BBBEE scheme. A one-off charge has been recognised based onthe fair value at the grant date with a corresponding adjustment toequity. The charge will not be adjusted in the future.The charges are based on the fair value of the awards as at the dateof grant, as calculated by various binomial model calculations andMonte Carlo simulations.The charges are not reversed if the options and awards are notexercised because the market value of the shares is lower than theoption price at the date of grant.The proceeds received net of any directly attributable transactioncosts are credited to share capital (nominal value) and share premiumwhen the options are exercised.For the cash-settled plan a liability is recognised at fair value in thebalance sheet over the vesting period with a corresponding chargeto the income statement. The liability is remeasured at each reportingdate, on an actuarial basis using the analytic method, to reflect therevised fair value and to adjust for changes in assumptions such asleavers. Changes in the fair value of the liability are recognised in theincome statement. Actual settlement of the liability will be at itsintrinsic value with the difference recognised in the income statement.