2010 Annual report - Nedbank Group Limited

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NOTES TO THE FINANCIAL STATEMENTSfor the year ended 31 December 2010 (continued)1. Significant accounting policies (continued)1.5 Leases (continued)The bank as lessee – Operating leasesLeases in respect of which a significant portion of the risks and rewards of ownership are retainedby the lessor are classified as operating leases. Payments made under operating leases (net of anyincentives received from the lessor) are recognised in profit or loss on a straight-line basis over theterm of the lease. When another systematic basis is more representative of the time pattern of theuser’s benefit, then that method is used.The bank as lessor – Finance leasesWhere assets are leased out under a finance lease arrangement, the receivable to be recognisedequals the “gross investment” in the lease discounted at the rate implicit in the lease to obtain a“net investment” figure. The difference between the gross receivable and unearned finance incomeis presented in the statement of financial position. Finance lease income is allocated to accountingperiods so as to reflect a constant periodic rate of return on the bank’s net investment outstandingin respect of the leases.The bank as lessor - Operating leasesAssets leased out under operating leases are included under property and equipment in thestatement of financial position. They are depreciated over their expected useful lives on a basisconsistent with similar assets. Rental income (net of any incentives given to lessees) is recognisedon a straight-line basis over the term of the lease. When another systematic basis is morerepresentative of the time pattern of the user’s benefit, then that method is used.Recognition of lease of landLeases of land and buildings are classified as operating or finance leases in the same way as leasesof other assets. However, when a single lease covers both land and buildings, the future minimumlease payments at the inception of the lease (including any up-front payments) are allocatedbetween the land and the building in proportion to the relative fair values of the respectiveleasehold interests. These payments are amortised over the lease term in accordance with the timepattern of benefits provided. If the lease payments cannot be allocated reliably between these twoelements, the entire lease is classified as a finance lease, unless it is clear that both elements areoperating leases.Nedbank (Swaziland) Limited Annual Report 2010102
1. Significant accounting policies (continued)1.6 ProvisionsProvisions are recognised when the bank has a present legal or constructive obligation as a result ofpast events, for which it is probable that an outflow of economic benefits will occur, and where areliable estimate can be made of the amount of the obligation. Where the effect of discounting ismaterial, provisions are discounted and the discount rate used is a pre-tax rate that reflects currentmarket assessments of the time value of money and, where appropriate, the risks specific to theliability. The unwinding of discount is recognised as a finance cost.1.7 Property and equipmentItems of property and equipment are measured at cost less accumulated depreciation andaccumulated impairment losses.Items of property and equipment are initially recognised at cost if it is probable that any futureeconomic benefits associated with the items will flow to the bank and it has a cost that canbe measured reliably. Subsequent expenditure is recognised in the carrying amount of itemsof property and equipment if it is probable that future economic benefits associated with theexpenditure will flow to the bank and its cost can be measured reliably. All other expenses arerecognised in profit or loss as an expense when incurred.Land and buildings, whose fair values can be reliably measured, are measured at revalued amounts,being the fair value at the date of revaluation less any subsequent accumulated depreciation andimpairment losses. Revaluation increases are credited directly to other comprehensive incomeand presented in equity under the heading “revaluation reserve”. However, revaluation increasesare recognised in profit or loss to the extent that they reverse a revaluation decrease of the sameasset previously recognised in profit or loss. Revaluation decreases are recognised in profit or loss.However, decreases are debited directly to other comprehensive income to the extent of anycredit balances existing in the revaluation reserve in respect of the same asset.DepreciationEach component of property and equipment with a cost that is significant in relation to the totalcost of the item, or has a different useful life is depreciated separately. Items of property andequipment that are classified as held for sale under IFRS 5 are not depreciated. The depreciableamounts of property and equipment are recognised in profit or loss on a straight-line basis overthe estimated useful lives of the items of property and equipment, unless they are included inthe carrying amount of another asset. Useful lives, residual values and depreciation methods areassessed on an annual basis. Leased assets under finance leases are depreciated over the shorter ofthe lease term and their useful lives. Land is not depreciated.On revaluation, any accumulated depreciation at the date of the revaluation is eliminated againstthe gross carrying amount of the item concerned and the net amount restated to the revaluedamount. Subsequent depreciation charges are adjusted based on the revalued amount.103Nedbank (Swaziland) Limited Annual Report 2010
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Designed by Sibane Icons - Tel: +26
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VISION, MISSION AND VALUESVISIONBui
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FINANCIAL HIGHLIGHTSKey RatiosTotal
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PROFILE AND GROUP STRUCTURE (contin
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ECONOMIC REVIEW(continued)OVERVIEW
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ECONOMIC REVIEW(continued)IN SOUTH
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INTRODUCTIONThe year 2010 ushered i
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BOARD OF DIRECTORSas at 31 December
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BOARD OF DIRECTORSas at 31 December
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MANAGING DIRECTOR’S (continued) R
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MANAGING DIRECTOR’S REPORT(contin
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Nedbank (Swaziland) Limited Strateg
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Nedbank (Swaziland) Limited Strateg
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The Bank continued its drive to gro
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Statement of Comprehensive IncomeNe
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NEDBANK (SWAZILAND) LIMITED IS WELL
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2010 saw significant growth of 16%
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ankers are the interface between th
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complex products and services. This
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asis points. The asset sensitive po
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OPERATIONAL REVIEWCREDIT RISK MANAG
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Page 54 and 55: OPERATIONAL REVIEWSUPPORT AREASHUMA
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Page 90 and 91: STATEMENT OF COMPREHENSIVE INCOMEfo
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DEFINITIONSDEFERRED TAXATION ASSETS
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DEFINITIONSKING III (THE CODE)The K
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NOTESNedbank (Swaziland) Limited An
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www.nedbank.co.sz
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2010 Annual report - Nedbank Group Limited

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