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SUN INTERNATIONAL ANNUAL REPORT ’10
The principal accounting policies adopted in the preparation of these
financial statements are set out below:
BASIS OF PREPARATION
The financial statements have been prepared in accordance with International
Financial Reporting Standards (IFRS). The financial statements
have been prepared under the historical cost convention except as
disclosed in the accounting policies below. The policies used in preparing
the financial statements are consistent with those of the previous year
except as indicated under ’Accounting Policy Developments’.
Preparation of the financial statements in conformity with IFRS requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities at the date of the financial statements
and the reported amounts of revenues and expenses during the reporting
period. More detail on the estimates and assumptions are included under
the policy dealing with ‘Critical accounting estimates and judgements’.
Actual results may differ from those estimates.
GROUP ACCOUNTING
Subsidiaries
Subsidiaries are those entities (including special purpose entities) over
which the group has the power to govern the financial and operating
policies, generally accompanying a shareholding of more than half of the
voting rights or has de facto control over the operations. The existence
and effect of potential voting rights that are currently exercisable or
convertible are considered when assessing whether the group controls
another entity.
Subsidiaries are consolidated from the date on which control is transferred
to the group and are no longer consolidated from the date that control
ceases.
The purchase method of accounting is used to account for the acquisition
of subsidiaries by the group. The cost of an acquisition is measured as
the fair value of the assets given, equity instruments issued and liabilities
incurred or assumed at the date of exchange. Identifiable assets acquired
and liabilities and contingent liabilities assumed in a business combination
are measured initially at their fair values at the acquisition date, irrespective
of the extent of any minority interest. The excess of the cost of acquisition
over the fair value of the group’s share of the identifiable net assets
acquired is recorded as goodwill. If the cost of acquisition is less than the
fair value of the net assets of the subsidiary acquired, the difference is
recognised directly in the statement of comprehensive income.
Intercompany transactions, balances and unrealised gains on transactions
between group companies are eliminated. Unrealised losses are also
eliminated unless the transaction provides evidence of an impairment of the
asset transferred. Accounting policies of subsidiaries have been changed to
ensure consistency with the policies adopted by the group.
The company accounts for subsidiary undertakings at cost.
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ACCOUNTING POLICIES
Transactions with minority shareholders
Minority shareholders are treated as equity participants. Acquisitions and
disposals of additional interests in the group’s subsidiaries are accounted
for as equity transactions and the excess of the purchase consideration
over the carrying value of net assets acquired is recognised directly in
equity. Profits and losses arising on transactions with minority shareholders
where control is maintained subsequent to the disposal is recognised
directly in equity. Any dilution gains or losses are also recognised directly
in equity.
Special purpose entities
Special purpose entities (SPEs) are those entities that are created to satisfy
specific business needs of the group, which has the right to obtain the
majority of the benefits of the SPE and is exposed to the risk incident
to the activities thereof. SPEs are consolidated in the same manner as
subsidiaries when the substance of the relationship indicates that the SPE
is controlled by the group.
INTANGIBLE ASSETS
Goodwill
Goodwill represents the excess of the cost of an acquisition over the fair
value of the group’s share of the net assets of the acquired subsidiary at
the date of acquisition. Goodwill on acquisition of subsidiaries is included
in intangible assets. Separately recognised goodwill is assessed for
impairment on an annual basis and is carried at cost less accumulated
impairment losses. Impairment losses on goodwill are not reversed. The
calculation of gains and losses on the disposal of an entity includes the
carrying amount of goodwill relating to the entity sold.
Goodwill is allocated to cash generating units for the purpose of
impairment testing. The allocation is made to those cash generating units
or groups of cash generating units that are expected to benefit from the
business combination in which the goodwill arose. Cash generating units
are defined as operating units.
Other intangible assets
Indefinite life intangible assets are not amortised and are assessed
annually for impairment.
Expenditure on leasehold premiums anticipated, successful gaming licence
bids and acquired management contracts are capitalised and amortised
using the straight line-method as follows:
Leasehold premiums Lease period
Gaming licence bids Period of the licence and/or up to a
maximum of 20 years
Management contracts Period of initial contract
FOREIGN CURRENCY TRANSLATION
Items included in the financial statements of each of the group’s entities
are measured using the currency of the primary economic environment in