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expenditure represents the total costs incurred during the period to
acquire segment assets.
ASSOCIATES
Associates are all entities over which the company has significant influence
but not control.
CRITICAL ACCOUNTING ESTIMATES AND
JUDGEMENTS
Estimates and judgements are continually evaluated and are based on
historical experience, including expectations of future events that are
believed to be reasonable under the circumstances. The estimates and
assumptions that have a significant risk of causing a material adjustment
to the carrying amounts of assets and liabilities within the next financial
year are addressed below.
Critical accounting estimates and assumptions
The group makes estimates and assumptions concerning the future.
Actual results may differ from these estimates.
Asset useful lives and residual values
Property, plant and equipment is depreciated over its useful life taking
into account residual values where appropriate. The actual useful lives of
the assets and residual values are assessed annually. In re-assessing asset
useful lives, factors such as technological innovation, product life cycles
and maintenance programmes are taken into account. Residual value
assessments consider issues such as future market conditions, the remaining
life of the asset and projected disposal values.
Impairment of assets
Goodwill and indefinite life intangible assets are considered for impairment
at least annually. Property, plant and equipment, other intangible assets,
available-for-sale investments and non current assets held for sale are
considered for impairment if there is a reason to believe that impairment
may be necessary. Factors taken into consideration in reaching such a
decision include the economic viability of the asset itself and where it is a
component of a larger economic entity, the viability of the unit itself.
Future cash flows expected to be generated by the assets are projected,
taking into account market conditions and the expected useful lives of
assets. The present value of these cash flows, determined using an
appropriate discount rate, is compared to the current net asset value and,
if lower, the assets are impaired to the present value. If the information to
project future cash flows is not available or could not be reliably estimated
management uses the best alternative information available to estimate a
possible impairment.
Valuation of derivatives and other financial instruments
The valuation of derivatives and financial instruments is based on the
market conditions at the end of the reporting period. The value of the
instruments fluctuates on a daily basis and the actual amounts realised
may differ materially from their value at the end of the reporting period.
ACCOUNTING POLICIES continued
Consolidation of subsidiaries and special purpose entities
In assessing investment relationships, management has applied its
judgement in the assessment of whether the commercial and economic
relationship is tantamount to de facto control. Based on the fact patterns
and management’s judgement, if such control exists, the relationship of
control has been recognised in terms of IAS 27 Consolidated and
Separate Financial Statements and SIC 12 Special Purposes Entities.
Pension fund asset
Management needed to assess whether or not the group had an
unconditional right to a refund in respect of the surplus from the pension
plan. A legal interpretation was obtained which indicated that the group
does not have an unconditional right to the full refund of the surplus.
ACCOUNTING POLICY DEVELOPMENTS
Accounting policy developments include new standards issued, amendments
to standards, and interpretations issued on current standards. These
develop ments resulted in the first time adoption of new and revised
standards which require additional disclosures.
Standards, amendments and interpretations effective in 2010
IFRS 2 (Amended) Share based Payments, Vesting Conditions
and Cancellations
IFRS 2 was amended to provide more clarity on vesting conditions and
cancellations.
The amendment deals with two matters. It clarifies that vesting conditions
are service and performance conditions only. Other features of a share
based payment are not vesting conditions. It also specifies that all
cancellations, whether by the entity or other parties, should receive the
same accounting treatment.
The amendment had no impact on the group.
IFRS 3 (Revised) Business Combinations
The objective of the revised IFRS 3 is to enhance the relevance, reliability
and comparability of the information that an entity provides in its
financial statements about a business combination and its effects. It does
that by establishing principles and requirements for how an acquirer:
(a) Recognises and measures in its financial statements the identifiable
assets acquired, the liabilities assumed and any minorities’ interest in
the acquiree;
(b) Recognises and measures the goodwill acquired in the business combi
nation or a gain from a bargain purchase; and
(c) Determines what information to disclose to enable users of the
financial statements to evaluate the nature and financial effects of the
business combination.
The amendments have been adopted by the group.
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