2009 Annual Report - CRH

floating rates (using interest rate swaps), are measured at amortised cost adjusted
for changes in value attributable to the hedged risks arising from changes in
underlying market interest rates. The computation of amortised cost includes any
issue costs and any discount or premium materialising on settlement. Borrowings
are classified as current liabilities unless the Group has an unconditional right to
defer settlement of the liability for at least 12 months after the balance sheet
date.
Gains and losses are recognised in the Consolidated Income Statement through
amortisation on the basis of the period of the loans and borrowings and/or on
impairment and derecognition of the associated loans and borrowings.
Borrowing costs arising on financial instruments are recognised as an expense in
the period in which they are incurred (unless capitalised as part of the cost of
property, plant and equipment).
Provisions for liabilities
A provision is recognised when the Group has a present obligation (either legal or
constructive) as a result of a past event; it is probable that a transfer of economic
benefits will be required to settle the obligation and a reliable estimate can be
made of the amount of the obligation. Where the Group anticipates that a
provision will be reimbursed, the reimbursement is recognised as a separate
asset only when it is virtually certain that the reimbursement will arise. The
expense relating to any provision is presented in the income statement net of any
reimbursement. Provisions are measured at the present value of the expenditures
expected to be required to settle the obligation. The increase in the provision due
to passage of time is recognised as interest expense. Provisions arising on
business combination activity are recognised only to the extent that they would
have qualified for recognition in the financial statements of the acquiree prior to
acquisition. Provisions are not recognised for future operating losses.
Tax (current and deferred)
Current tax represents the expected tax payable (or recoverable) on the taxable
profit for the year using tax rates enacted or substantively enacted at the balance
sheet date and taking into account any adjustments stemming from prior years.
Any interest or penalties arising are included within current tax.
Deferred tax is provided using the liability method on all relevant temporary
differences at the balance sheet date between the tax bases of assets and
liabilities and their carrying amounts for financial reporting purposes. Deferred tax
assets and liabilities are not subject to discounting and are measured at the tax
rates that are anticipated to apply in the period in which the asset is realised or
the liability is settled based on tax rates and tax laws that have been enacted or
substantively enacted at the balance sheet date.
Deferred tax liabilities are recognised for all taxable temporary differences with the
exception of the following:
# where the deferred tax liability arises from the initial recognition of goodwill or
of an asset or a liability in a transaction that is not a business combination and,
at the time of the transaction, affects neither the accounting profit nor the
taxable profit or loss; and
# in respect of taxable temporary differences associated with investments in
subsidiaries, associates and joint ventures, where the timing of reversal of the
temporary differences can be controlled and it is probable that the temporary
differences will not reverse in the foreseeable future.
Deferred tax assets are recognised in respect of all deductible temporary
differences, carry-forward of unused tax credits and unused tax losses, to the
extent that it is probable that taxable profits will be available against which to
offset these items. The following exceptions apply in this instance:
# where the deferred tax asset arises from the initial recognition of an asset or a
liability in a transaction that is not a business combination and affects neither
the accounting profit nor the taxable profit or loss at the time of the transaction;
and
# where, in respect of deductible temporary differences associated with
investments in subsidiaries, joint ventures and associates, a deferred tax asset
is recognised only if it is probable that the deductible temporary difference will
reverse in the foreseeable future and that sufficient taxable profits will be
available against which the temporary difference can be utilised.
The carrying amounts of deferred tax assets are subject to review at each balance
sheet date and are reduced to the extent that future taxable profits are considered
to be inadequate to allow all or part of any deferred tax asset to be utilised.
Where items are accounted for outside of profit or loss, the related income tax is
recognised either in other comprehensive income or directly in equity as
appropriate.
Government grants
Capital grants are recognised at their fair value where there is reasonable
assurance that the grant will be received and all attaching conditions have been
complied with. When the grant relates to an expense item, it is recognised as
income over the periods necessary to match the grant on a systematic basis to
the costs that it is intended to compensate. Where the grant relates to an asset,
the fair value is treated as a deferred credit and is released to the Consolidated
Income Statement over the expected useful life of the relevant asset through
equal annual instalments.
Share capital
Treasury Shares
Own equity instruments (i.e. Ordinary Shares) acquired by the Parent Company
are deducted from equity and presented on the face of the Consolidated Balance
Sheet. No gain or loss is recognised in profit or loss on the purchase, sale, issue
or cancellation of the Parent Company’s Ordinary Shares.
Own shares
Ordinary Shares purchased by the Employee Benefit Trust on behalf of the Parent
Company under the terms of the Performance Share Plan are recorded as a
deduction from equity on the face of the Consolidated Balance Sheet.
Dividends
Dividends on Ordinary Shares are recognised as a liability in the Consolidated
Financial Statements in the period in which they are declared by the Parent
Company.
Emission rights
Emission rights are accounted for such that a liability is recognised only in
circumstances where emission rights have been exceeded from the perspective
of the Group as a whole and the differential between actual and permitted
emissions will have to be remedied through the purchase of the required additional
rights at fair value; assets and liabilities arising in respect of under and overutilisation
of emission credits respectively are accordingly netted against one
another in the preparation of the Consolidated Financial Statements. To the
extent that excess emission rights are disposed of during a financial period, the
profit or loss materialising thereon is recognised immediately within operating
profit in the Consolidated Income Statement.
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