2005/2006 - SANParks

ANNUAL FINANCIAL STATEMENTSfor the year ended 31 March 20062006South African National Parksinsurance premium. The current amount related to the self insurancefund is R10 million and it is represented by cash funds set aside forthis purpose.In the past, the entity accounted for this self insurance fund by creatinga separate insurance reserve and transferring the self insurance costsin the fi nancial year between accumulated surpluses and the insurancereserve in the statement of net assets. The accounting policy has nowbeen changed, reversing the insurance reserve and expensing theself insurance costs directly in the statement of fi nancial performance(Note 21).1.10 Property, plant and equipmentItems of property, plant and equipment are stated at cost lessaccumulated depreciation and impairment losses. Cost includes allcosts directly attributable to bringing the asset to its working conditionfor its intended usage. Depreciation is charged so as to write off thedepreciable amount of the assets, other than land, over their estimateduseful lives, using a method that refl ects the pattern in which theasset’s future economic benefi ts are expected to be consumed bythe entity.Where signifi cant parts of an item have different useful lives, or patternin which future economic benefi ts are expected to be consumed, tothe item itself, these parts are depreciated over their estimated usefullives. The methods of depreciation, useful lives and residual valuesare reviewed annually.The following methods and rates were used during the year:- Buildings, roads andinfrastructureStraight line8 to 50 years- Vehicles and mechanical Straight line5 to 20 yearsequipment(approximates km usage)- Aircraft Straight line Varies(based on expected life)- Furniture, offi ce equipmentand computer softwareLand is not depreciated.Straight line2 to 15 yearsSouth African National Parks has acquired the usage of certain landthat is registered in the name of the State and which is incorporated aspart of its national park system. This land is not refl ected as an assetof South African National Parks.Assets held under fi nance leases are depreciated over their expecteduseful lives on the same basis as owned assets or, where shorter, theterm of the relevant lease.The gain or loss arising from the disposal or retirement of an assetis determined as the difference between the sales proceeds and thecarrying amount of the asset and is recognised in the statement offi nancial performance.1.11 Work in progressProperty, plant and equipment in the course of construction forproduction, rental or administrative purposes, or for purposes not yetdetermined, are carried at cost, less any recognised impairment loss.Cost includes professional fees, direct materials, labour and overheadexpenses. Interest costs on borrowings to fi nance the construction ofinfrastructure are capitalised during the period of time that is requiredto complete and prepare the infrastructure for its intended use, as partof the cost of the asset.Depreciation of these assets, on the same basis as other property assets,commences when the assets are ready for their intended use.1.12 InventoriesInventories, which exclude fauna and fl ora, are stated at the lower ofcost and net realisable value. Cost includes all costs of purchase, costsof conversion and other costs incurred in bringing the inventories to theirpresent location and condition. Net realisable value is the estimatedselling price in the ordinary course of business, adjusted for any sellingexpenses. Cost is determined by the fi rst-in-fi rst-out method.1.13 Post-retirement health benefit obligationThe South African National Parks provides post-retirement health carebenefi ts by way of medical aid schemes to some of its retirees. The levelof entitlement to post-retirement health care benefi ts is dependent uponthe employee’s date of appointment and the employees remaining incontinued service up to their respective retirement ages. The obligationis provided for in full. Current service costs are charged to the statementof fi nancial performance and include the expense for benefi ts receivedby the employee currently in service and the cost of funding for theemployee after retirement. Actuarial gains and losses are recognisedin the statement of fi nancial performance. The current service cost isdetermined by professional qualifi ed independent actuaries, after takinginto account the level of funding for the post-retirement benefi ts. Thecurrent health benefi t obligation is unfunded.1.14 LeasingFinance leases as per the Treasury Regulations refers to a contract thattransfers the risks, rewards, rights and obligations incident to ownershipand is recorded as a purchase of equipment by means of long-termborrowings. All other leases are classifi ed as operating leases.109