continued - The Lion Group

3. SIGNIFICANT ACCOUNTING POLICIES (continued)
(g) Property, Plant and Equipment
Property, plant and equipment are initially recorded at cost. Property, plant and equipment cost comprises
purchase price, including import duties and directly attributable costs of bringing the asset to working
condition for its intended use. Subsequent costs are included in the asset’s carrying amount or recognised
as a separate asset, as appropriate, only when it is probable that future economic benefits associated with
the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of
the replaced part is derecognised. All other repairs and maintenance are charged to the income statement
during the financial period in which they are incurred.
Subsequent to recognition, property, plant and equipment except for freehold land are stated at cost less
accumulated depreciation and any accumulated impairment losses.
Freehold land is stated at revalued amount, which is the fair value at the date of revaluation less any
impairment losses. The freehold land has not been revalued since it was first revalued in 1998. The Directors
have not adopted a policy of regular revaluation of this asset and no later valuation has been recorded. As
permitted under the transitional provision of IAS 16 (Revised): Property, Plant and Equipment, this asset
continues to be stated at its 1998 valuation.
Any revaluation surplus is credited to the asset revaluation reserve included within equity, except to the extent
that it reverses a revaluation decrease for the same asset previously recognised in the income statement,
in which case the increase is recognised in the income statement to the extent of the decrease previously
recognised. A revaluation deficit is first offset against unutilised previously recognised revaluation surplus in
respect of the same asset and the balance is thereafter recognised in the income statement. Upon disposal
or retirement of an asset, any asset revaluation reserve relating to the particular asset is transferred directly
to retained earnings.
Property, plant and equipment are classified as capital work-in-progress until the asset is brought to working
condition for its intended use.
Freehold land and capital work-in-progress are not depreciated. Depreciation of other property, plant and
equipment is provided for on a straight-line basis to write off the cost of each asset to its residual value over
the estimated useful life, at the following annual rates:
Buildings and land improvements 2% - 10%
Plant and machinery 3.33% - 20%
Furniture and equipment 5% - 20%
Motor vehicles 20%
The residual values, useful life and depreciation method are reviewed at each financial year end to
ensure that the amount, method and period of depreciation are consistent with previous estimates and
the expected pattern of consumption of the future economic benefits embodied in the items of property,
plant and equipment.
An item of property, plant and equipment is derecognised upon disposal or when no future economic
benefits are expected from its use or disposal. The difference between the net disposal proceeds, if any and
the net carrying amount is recognised in the income statement and the unutilised portion of the revaluation
surplus on that item is taken directly to retained earnings.
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