Annual report - front page - Jubilee Insurance

NOTES TO THE FINANCIAL STATEMENTSAS AT 31ST DECEMBER 2011 (CONTINUED)2.14 EMPLOYEE BENEFITS (CONTINUED)(ii)Other entitlementsThe estimated monetary liability for employees’ accrued annual leave entitlement at the reporting date is recognizedas an expense accrual.2.15 INCOME TAX EXPENSEIncome tax expense is the aggregate of the charge to the income statement in respect of current income tax and deferredincome tax.Current income tax is the amount of income tax payable on the taxable profit for the year determined in accordance withthe relevant tax legislation.Deferred income tax is provided in full, using the liability method, on all temporary differences arising between the tax basesof assets and liabilities and their carrying values for financial reporting purposes. However, if the deferred income taxarises from the initial recognition of an asset or liability in a transaction other than a business combination that at the timeof the transaction affects neither accounting nor taxable profit nor loss, it is not accounted for. Deferred income tax isdetermined using tax rates and laws that have been enacted or substantively enacted at the reporting date and are expectedto apply when the related deferred income tax liability is settled. Deferred income tax assets are recognized only to theextent that it is probable that future taxable profits will be available against which the temporary differences can be utilized.Deferred income tax is provided on temporary differences arising on investments in subsidiaries and associates, exceptwhere the timing of the reversal of the temporary difference is controlled by the Group and it is probable that the temporarydifference will not reverse in the foreseeable future.2.16 BORROWINGSBorrowings are recognized initially at fair value, net of transaction costs incurred. Borrowings are subsequently stated atamortized cost using the effective interest method; any differences between proceeds (net of transaction costs) and theredemption value is recognized in the income statement over the period of the borrowings.2.17 DIVIDENDSDividends payable to the Group’s shareholders are charged to equity in the period in which they are declared. Proposeddividends are shown as a separate component of equity until declared.2.18 SHARE CAPITALShares are classified as equity when there is no obligation to transfer cash or other assets. Incremental costs directlyattributable to the issue of equity instruments are shown in equity as a deduction from the proceeds, net of tax.2.19 CONCESSION ARRANGEMENTSOne of the Group entities have entered into an arrangement to construct a public utility on behalf of a government under‘build-operate-transfer’ service concession arrangement. This arrangement is accounted for in accordance with IFRIC 12 –“Concession Arrangement”. In order to fall within the scope of IFRIC 12 a contract must satisfy two criteria:The grantor controls or regulates what services the operator must provide with the infrastructure, to whom it must providethem and at what price; andThe grantor controls significant residual interest in the infrastructure at the end of the concession arrangement.In accordance with IFRIC 12, such infrastructure are not recognized as assets of the operator as property, plant andequipment but either as financial assets (using the financial asset model) or intangible assets (using the intangible assetsmodel). The infrastructure with respect of the construction is accounted for as a financial asset as in this case the Group hasan unconditional right to receive cash from government while not retaining any significant demand risk.Financial assets resulting from the application of IFRIC 12 are recorded as non-current assets and measured at amortized cost.In accordance with IAS 39 – Financial Instruments, an impairment loss is recognized if the carrying amount of thesefinancial assets exceeds their fair value, which is computed by estimating the recoverable amount using discounted cash flows.JUBILEE HOLDINGS LIMITEDAnnual Report and Financial Statements 2011 35