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which the entity operates (the functional currency). The consolidated
financial statements are presented in South African Rands which is the
group’s functional and presentation currency.
Transactions and balances
Transactions denominated in foreign currencies are translated at the rate
of exchange ruling on the transaction date. Monetary items denominated
in foreign currencies are translated at the rate of exchange ruling at the
end of the reporting period. Gains or losses arising on translation are
credited to or charged against income.
Foreign entities
The financial statements of foreign entities that have a functional currency
different from the presentation currency are translated into South African
Rands as follows:
� Assets and liabilities, at exchange rates ruling at the last day of the
reporting period.
� Income, expenditure and cash flow items at average exchange rates.
� Premiums on transactions with minorities and fair value adjustments
arising from the acquisition of a foreign entity are reported using the
exchange rate at the date of the transaction.
All resulting exchange differences are reflected as part of shareholders’
equity. On disposal, such translation differences are recognised in the
statement of comprehensive income as part of the cumulative gain or loss
on disposal.
PROPERTY, PLANT AND EQUIPMENT
Freehold land is included at cost and not depreciated.
All other items of property, plant and equipment are stated at historical
cost and depreciated over periods deemed appropriate to reduce carrying
values to estimated residual values over their useful lives. Historical cost
includes expenditure that is directly attributable to the acquisition of these
items. Depreciation is calculated on the straight-line method. The
principal useful lives over which the assets are depreciated are as follows:
Freehold and leasehold buildings 25 to 50 years
Infrastructure 10 to 50 years
Plant and machinery 10 to 25 years
Equipment 4 to 14 years
Furniture and fittings 5 to 10 years
Vehicles 4 to 10 years
The assets’ residual values and useful lives are reviewed annually, and
adjusted if appropriate, at each financial reporting date.
Operating equipment (which includes uniforms, casino chips, kitchen
utensils, crockery, cutlery and linen) is recognised as an expense based
on usage. The period of usage depends on the nature of the operating
equipment and varies between one to three years.
ACCOUNTING POLICIES continued
Gains and losses on disposals are determined by comparing the proceeds
with the carrying amount and are recognised in the statement of
comprehensive income.
When the carrying amount of an asset is greater than its estimated
recoverable amount, it is written down immediately to its recoverable
amount.
Costs arising subsequent to the acquisition of an asset 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. All other repairs and maintenance costs are charged to the
statement of comprehensive income during the financial year in which
they are incurred.
Costs associated with developing or maintaining computer software
programmes are recognised as an expense as incurred. However, costs
that are directly associated with identifiable and unique software products
controlled by the group and which have probable economic benefits
exceeding the costs beyond one year are recognised as intangible assets.
Direct costs include staff costs of the software development team and an
appropriate portion of the relevant overheads. Expenditure meeting the
definition of an asset is recognised as a capital improvement and added
to the original cost of the asset.
Borrowing costs and certain direct costs relating to major capital projects
are capitalised during the period of development or construction.
IMPAIRMENT OF ASSETS
Assets that have an indefinite useful life are not subject to amortisation
and are tested annually for impairment. Assets that are subject to
amortisation are reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount may not be recoverable.
An impairment loss is recognised for the amount by which the asset’s
carrying amount exceeds its recoverable amount. The recoverable amount
is the higher of an asset’s fair value less costs to sell and value in use.
For the purpose of assessing impairment, assets are grouped at the lowest
levels for which there are separately identifiable cash flows (cash
generating units).
PRE-OPENING EXPENDITURE
Pre-opening expenditure is charged directly against income and separately
disclosed. These costs include all marketing, operating and training expenses
incurred prior to the opening of a new hotel or casino development.
INVENTORY
Inventory is valued at the lower of cost and net realisable value on a firstin,
first-out basis. Net realisable value is the estimated selling price in the
ordinary course of business.
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