PRINCIPAL ACCOUNTING POLICIES

FOR THE YEAR ENDED 30 JUNE 2010

STATEMENT OF COMPLIANCE

The consolidated and company financial statements are prepared in accordance with International Financial Reporting Standards (IFRS) and the interpretations adopted by the International Accounting Standards Board (IASB) and the International Financial Reporting Interpretations Committee of the IASB.

BASIS OF PREPARATION

The consolidated and company financial statements have been prepared on the historical cost basis, except for specific financial assets and derivative financial instruments which are measured at fair value through profit and loss. The accounting policies adopted have been consistently applied throughout the group to all the periods presented.

SIGNIFICANT JUDGEMENTS AND ESTIMATES

In preparing the annual financial statements, management is required to make estimates and assumptions that affect the amounts represented in the financial statements and related disclosures. Judgements and estimates are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Actual results in the future could differ from these estimates, which may be material to the financial statements. Significant estimates include:

a) Impairment of trade receivables
Estimates based on management’s assessment of the likelihood of collecting receivables outstanding for longer than 120 days.

b) Inventories
Where inventories are recognised at net realisable value, estimates are made of the expected selling price, cost of completion and marketing, selling and distribution costs.

c) Property, plant and equipment
Management uses the best available information to make estimates of the residual values and useful lives of items of property, plant
and equipment.

d) Impairment of assets
In determining the recoverable amount of an asset, estimates are made of suitable discount rates, growth rates and working capital requirements in order to calculate present value as well as the future cash flows expected to arise from a specific asset. For any assets that do not generate cash flows largely independently of those from other assets (including goodwill), the recoverable amount is determined for the cash-generating unit to which the asset relates.

e) Fair value of assets acquired in business combinations
On the acquisition of a company, fair values reflective of the conditions that exist are attributed to the identifiable assets (including intangibles), liabilities, and contingent liabilities acquired. Fair values are determined by reference to active market value or, if unavailable, by reference to the current market price of similar assets or obligations, or by discounting expected future cash flows to their present values, using either market values or risk free rates adjusted for risk.

f) Provisions
Provisions are recognised when deemed necessary by management and are based on the estimate of expected outflows using the relevant information available.

g) Contracting profit or loss recognition
Estimates are made of the total expected costs of individual contracts when applying the stage of completion method. In certain instances management is required to exercise judgement to determine whether the outcome of a contract can be reliably estimated.

h) Taxation
The group is subject to taxes in numerous jurisdictions. Judgment is required in determining the provision for taxes as the tax liability and treatment thereof cannot be finally determined until a formal assessment has been made by the relevant tax authority.

BUSINESS COMBINATIONS

SUBSIDIARIES

Subsidiaries are entities in which the group has an interest of more than half of the voting rights or the power to govern the financial and operating policies relevant to the entity. Subsidiaries are incorporated into the consolidated financial statements from the effective dates of their acquisition until it is classified as held for sale, at which time it is accounted for in accordance with IFRS 5 “Non-current Assets Held for Sale and Discontinued Operations”, or any other date where there is a change in shareholding such that there is no longer control.

The cost of an acquisition is measured as the fair value of assets transferred (including intangibles), equity instruments issued and liabilities(including contingent liabilities) incurred or assumed. Non-controlling interests are determined as the non-controlling shareholders’ proportionate share of the fair value of the net assets of subsidiaries at the acquisition date and their further interest in the subsidiary company’s equity from the date of acquisition.

Changes in the shareholding of a subsidiary that do not result in a loss of control are accounted for as equity transactions (ie transactions with owners in their capacity as owners). After adjusting the non-controlling interests to reflect the changes in their relative interests in the subsidiary any difference between the amount by which the non-controlling interests are adjusted and the fair value of the consideration paid or received shall be recognised directly in equity and attributed to the owners of the parent.

ASSOCIATE ENTITIES

An associate company is an entity over which the group has the ability to exercise significant influence, but not control. Investments in associates are initially recognised at cost. The group’s share of the post-acquisition earnings and reserves of its associates are incorporated in the financial statements using the equity method of accounting, from the effective dates of their acquisition until the effective dates of their disposal or any other date where there is a change in shareholding or control such that the entity becomes or ceases to be classified as an associate. The group’s share of post-acquisition losses are recognised until such time as the carrying amount of the investment including any post-acquisition losses, are written down to nil. Post-acquisition losses in excess of the group’s interest in an associate are not recognised unless there is an obligation to make good those losses.

In the company’s separate annual financial statements, investments in associates are carried at cost less any accumulated impairment.

JOINT VENTURES

Joint ventures are contractual agreements where the group and third parties undertake an economic activity that is subject to joint control and usually take the form of jointly-controlled entities. The financial and operational decisions surrounding the activities require the unanimous consent of all parties.

Interests in joint ventures are accounted for using the proportionate consolidation method where the group aggregates its share of the assets and liabilities, revenues and expenses, and cash flows on a line by line basis with similar items within its own financial statements.

GOODWILL

The purchase method is used when an entity is acquired. On the acquisition date, fair values are attributed to the identifiable assets, liabilities, and contingent liabilities. Fair values of the identifiable assets and liabilities and contingent liabilities, are determined by reference to market values of those or similar items, where available, or by discounting expected future cash flows to achieve present values. Assets which are held for sale in accordance with IFRS 5 are measured at fair value less costs to sell.

The excess of the cost of acquisition over the fair value of the group’s share of the net identifiable assets is recorded as goodwill on the acquisition date.

Goodwill is subjected to an annual impairment test and any impairment is recognised immediately in the statement of financial performance and is not subsequently reversed. To the extent that the fair value of the net identifiable assets of the entity acquired exceeds the cost of acquisition, the excess is recognised in the statement of financial performance at the acquisition date.

Goodwill recognised on the acquisition of a subsidiary or a joint venture is included in intangible assets. Goodwill on the acquisition of an associate company is included in investment in associates.

On disposal of a subsidiary, joint venture or associate the attributable goodwill is included in the determination of the profit or loss on disposal. The same principle is applicable for partial disposals, where a portion of the attributable goodwill is recognised as part of the cost of the disposed assets.

BASIS OF CONSOLIDATION

The consolidated financial statements include the financial position, financial performance and cash flow information of the holding company, its subsidiaries, joint ventures and associates. All financial results are consolidated with similar items on a line by line basis with the exception of investments in associates.

Where accounting policies other than those adopted in the consolidated financial statements are used, appropriate adjustments are made in preparing the consolidated financial statements.

Inter-company and inter-segment transactions and balances as well as unrealised gains and losses between entities are eliminated on consolidation.

Unrealised gains and losses in respect of associates are eliminated against the investment in the associate to the extent of the group’s interest in these entities.

Gains and losses on transactions between the group and jointly controlled entities are recognised only to the extent of unrelated investors’ interest in the joint venture. The investor’s share in the jointly controlled entity’s profits and losses resulting from these transactions is eliminated against the asset or liability of the jointly controlled entity arising on the transaction.

Special purpose entities are consolidated on a line for line basis where the group is deemed to have control over the entity.

SEGMENTAL REPORTING

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-makers, identified as the executive directors. The group’s reportable segments represent strategic business units that offer the main services of the group.

FINANCIAL INSTRUMENTS

Financial instruments are recognised when the entity becomes a party to the contractual provisions of the instruments. Financial instruments are derecognised when substantially all risks and rewards of ownership have been transferred.

Financial instruments are recognised initially on transaction date at fair value. For financial instruments carried at fair value through profit and loss, transaction costs are either added to or deducted from the fair value on recognition.

The group classifies its financial instruments into the following categories depending on the purpose for which the instrument was acquired. Management determines the classification at the time of initial recognition.

The group’s categories are as follows:

  • financial assets and liabilities at fair value through profit and loss
  • loans and receivables
  • financial liabilities held at amortised cost

FINANCIAL ASSETS AND LIABILITIES AT FAIR VALUE THROUGH PROFIT AND LOSS

These instruments include trading investments, non-trading investments and derivative financial instruments and are measured at fair value. Changes in fair value are recognised annually in the statement of financial performance.

The fair value of instruments that are actively traded in organised financial markets are determined by reference to quoted market prices at the close of business on the statement of financial position date. For instruments where there is no active market, fair value is determined using valuation techniques. Such techniques include using recent arm’s length market transactions or by reference to the current market value of another instrument which is substantially the same and discounted cash flow analysis.

Financial assets and liabilities at fair value on the face of the statement of financial position include:

a) Concessions
These investments are revalued based on the present value of expected future cash flows and are carried as current assets on the face of the statement of financial position.

b) Listed share investments
The value of these investments varies according to the share price as traded on the Johannesburg Stock Exchange (JSE). These assets are represented as current assets on the face of the statement of financial position.

c) Derivatives
Derivative financial assets and liabilities are financial instruments whose value changes in response to underlying conditions and require little or no initial investment. Derivatives are separated between their current and non-current portions on the face of the statement of financial position depending on their expected maturity dates.

LOANS AND RECEIVABLES

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market and are subsequently measured at amortised cost. Amortised cost is calculated using the effective interest rate method.

Gains and losses are recognised in the statement of financial performance when the loans and receivables are derecognised or impaired, as well as through the amortisation process.

The recoverable amount of the group’s loans and receivables is calculated as the present value of estimated future cash flows, discounted at the original effective interest rate (i.e. the effective interest rate computed at initial recognition of these financial assets).

An impairment loss in respect of loans and receivables carried at amortised cost is reversed if the subsequent increase in recoverable amount can be related objectively to an event occurring after the impairment loss was recognised.

Loans and receivables on the face of the statement of financial position include:

a) Trade and other receivables
Trade and other receivables are measured at cost less provision for impairment. An impairment arises when there is objective evidence that the group will be unable to collect the balance owed in respect of the receivable’s trade terms. The provision is recognised in the statement of financial performance.

b) Cash and cash equivalents
Cash and cash equivalents include cash on hand, deposits held on call with banks, investments in money market instruments and bank overdrafts. Cash on hand is measured at fair value. Deposits held on call and investments in money market instruments are classified as loans and receivables and carried at amortised cost.

c) Loans receivable
Loans are recognised at amortised cost and include accrued interest (where applicable). Loans are classified as current assets in terms of loan agreements.

FINANCIAL LIABILITIES HELD AT AMORTISED COST

These instruments include trade payables, accruals and amounts owed for assets held under finance lease agreements. These instruments are carried at amortised cost.

Financial liabilities shown on the face of the statement of financial position include:

a) Trade and other payables
These instruments are recognised at amortised cost using the effective interest rate method. The obligation arising is expected to be settled within 12 months of the statement of financial position date.

b) Borrowings
Borrowings are recognised at amortised cost net of finance costs. Borrowings are sub-divided between current and non-current portions on the statement of financial position depending on when the obligation will fall due.

PROPERTY, PLANT AND EQUIPMENT

MEASUREMENT

Property, plant and equipment is stated at historical cost less accumulated depreciation and impairment. Land is not depreciated. Cost includes all qualifying expenditure that is directly attributable to the acquisition of the item.

SUBSEQUENT COSTS

Subsequent costs are included in an asset’s carrying value only when it is probable that the future economic benefits associated with the item will flow to the group and these costs can be measured reliably.

SITE RESTORATION AND DISMANTLING COSTS

Where there is an obligation to dismantle items of property, plant and equipment and to restore a site to its original condition before those assets were placed there, a provision must be recognised. The cost of the item of property, plant and equipment includes the initial estimate of the costs of dismantling and removing the asset and restoring the site on which the asset was located.

Any changes in the estimated costs of dismantling and site restoration are added to, or deducted from, the cost of the related asset in the current period or in the statement of financial performance if the cost adjustment exceeds the carrying value of the asset. If the adjusted cost results in an addition to the cost of the asset, management should consider if the new carrying amount of that asset is fully recoverable. If not, an impairment test should be carried out and any resulting loss recognised in the statement of financial performance.

REVALUATIONS

Property, plant and equipment is not revalued.

COMPONENTS

Where plant and equipment comprises major components with different useful lives, such components are accounted for and depreciated as separate items. Expenditure incurred to replace or modify a significant component is capitalised and any remaining book value of the component replaced is written off in the statement of financial performance. All other expenditure is recognised in the statement of financial performance.

ASSETS HELD UNDER FINANCE LEASES

Assets held under finance leases which will result in substantially all the risks and rewards of ownership are capitalised as property, plant and equipment. Finance lease assets are initially recognised at an amount equal to their fair value and depreciated over their useful lives. The capital portion of the lease is included under liabilities (current or non-current as appropriate) in the statement of financial position. The interest portion is expensed to the statement of financial performance over the lease term to reflect the remaining obligation for the financial period.

DEPRECIATION

Property, plant and equipment is depreciated to its estimated residual values over its expected useful life. The depreciation methods, estimated remaining useful lives and residual values are reviewed at least annually. The depreciation methods and average depreciation periods are set out in note 2.

CONTRACTS IN PROGRESS

Profits or losses in respect of long-term contracts are recognised on an individual contract basis using the stage of completion method. Where the outcome of a construction contract can be estimated reliably, the stage of completion is determined on the basis of the actual costs incurred for work performed at the statement of financial position date and is compared to the estimated total costs of the contract. Anticipated losses on incomplete contracts are fully provided for as soon as the loss is foreseen and includes any loss related to future work on the contract. Contracts in progress are stated at cost plus profit taken to date less cash received or receivable less any provision for losses. On contracts where the outcome cannot be reliably estimated, revenue is recognised to the extent that the recoverability of costs incurred is probable.

INVENTORIES

Inventories are valued at the lower of cost or net realisable value. Cost is determined on the following basis:

  • materials on site, consumable stores and trading stock are valued at cost on the weighted-average basis; and
  • property for development is stated at cost together with development expenditure incurred during the development stage, unless the capitalisation of such expenditure would result in the value of the property exceeding the value which, in the opinion of the directors, would be realised when sold.

Net realisable value represents the estimated selling price less all estimated costs to completion and costs to be incurred in marketing, selling and distribution.

NON-CURRENT ASSETS HELD-FOR-SALE

Non-current assets are classified as held-for-sale if their carrying value will be recovered through a sale transaction rather than through continuing use. This condition is regarded as being met only when the sale is highly probable and the asset is available for immediate sale in its present condition. Management must be committed to the sale, which should be expected to qualify for recognition as a completed sale within one year from the date of classification. Non-current assets held-for-sale are stated at the lower of the carrying amount and fair value less costs to sell.

IMPAIRMENT OF ASSETS

Impairment tests are undertaken annually at the financial year end or whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Where the carrying amount of an asset exceeds its recoverable amount (being the higher of value in use or fair value less costs to sell), the asset is written down accordingly.

The recoverable amount is the greater of an asset’s fair value less cost to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For an asset that does not generate cash inflows largely independent of those from other assets (including goodwill), the recoverable amount is determined for the cash-generating unit to which the asset relates to. Impairment losses recognised in respect of cash-generating units are allocated first to reduce the carrying amount of any goodwill allocated to such cash generating units and thereafter, to reduce the carrying amounts of the other assets in the unit on a pro rata basis.

Where it is not possible to estimate the recoverable amount of an individual asset, the impairment test is carried out on the asset’s cash-generating unit (i.e. the lowest group of assets in which the asset belongs for which there are separately identifiable cash flows). Goodwill is allocated on the initial recognition to each of the group’s cash-generating units that are expected to benefit from the synergies of the combination giving rise to the goodwill.

Impairment charges are included in the administrative expense line item in the consolidated statement of financial performance.
An impairment loss recognised for goodwill is not reversed.

In respect of other assets an impairment loss is only reversed if there is an indication that the impairment loss may no longer exist and there has been a change in the estimates used to determine the recoverable amount. However, the amount of the impairment reversed cannot result in the final balance exceeding the carrying amount that would have been determined (net of depreciation or amortisation), had no impairment loss been recognised in previous years.

LEASED ASSETS

FINANCE LEASES

Leases of property, plant and equipment where the group assumes substantially all the benefits and risks of ownership are classified as finance leases on inception of the lease. Assets leased in terms of finance lease agreements are capitalised on inception at amounts equal to the fair value of the leased asset or, if lower, at the present value of the minimum lease payments and are depreciated in accordance with the policies applicable to equivalent items of property, plant and equipment. The corresponding rental obligations, net of finance charges, are stated as finance lease liabilities.

Lease finance charges are amortised over the duration of the leases by using a constant periodic rate of interest on the remaining balance of the liability for each period.

OPERATING LEASES

Leases of assets under which all the risks and rewards of ownership are effectively retained by the lessor are classified as operating leases. Operating lease rentals are charged against operating profit on a straight-line basis over the period of the lease. The difference between the amount recognised as an expense and the contractual payment is recognised as an operating lease liability. This liability is not discounted.

PROVISIONS

Provisions are recognised when there is a present legal or constructive obligation resulting from past events, where the settlement of such obligation will result in the probable outflow of resources from the group and a reliable estimate can be made of the amount of the obligation. If a present obligation does not exist or the amount cannot be reliably measured, the provision is not recognised but rather disclosed as a contingent liability.

Provisions are measured at the directors’ best estimate of the expenditure required to settle the obligation at year-end and are discounted to present value if the effect is material.

Provisions for future expenses are not raised, unless supported by an onerous contract, being a contract in which unavoidable costs will be incurred in meeting contract obligations in excess of the economic benefits expected to be received from the contract.

BORROWING COSTS

Borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset are capitalised as part of the cost of that asset until such time as the asset is ready for its intended use.

The amount of borrowing costs eligible for capitalisation is determined as follows:

  • actual borrowing costs on funds specifically borrowed for the purpose of obtaining a qualifying asset less any income earned from any temporary investment of these borrowings;
  • weighted average of the borrowing costs applicable to the entity on funds generally borrowed for the purpose of obtaining a qualifying asset; and
  • the borrowing costs capitalised may not exceed the total borrowing costs incurred.

The capitalisation of borrowing costs commences when:

  • expenditures for the asset are being incurred;
  • borrowing costs have been incurred; and
  • activities that are necessary to prepare the asset for its intended use or sale are in progress.

Capitalisation ceases when construction of the qualifying asset is interrupted for an extended period or when the asset is substantially complete. Any further borrowing costs are recognised in the statement of financial performance.

REVENUE AND REVENUE RECOGNITION

Revenue is recognised when it can be reliably measured and it is probable that the economic benefits associated with the transaction will flow to the entity.

CONTRACT REVENUE

Where the outcome of a construction contract can be reliably estimated, contract revenue is recognised based on the fair value of measured work done including variations on claims, taking into account the stage of completion of each contract.

SALE OF GOODS

Revenue arising from the sale of goods and services is recognised when the significant risks and rewards of ownership have been transferred to the purchaser.

RENDERING OF SERVICES

Revenue from rendering services is recognised over the period over which the services are rendered.

OTHER INCOME

Other income earned by the group which is not included in revenue, is recognised on the following basis:

  • Interest income is recognised in the statement of financial performance using the effective interest rate method; and
  • Dividend income is recognised in the statement of financial performance when the shareholder’s right to receive payment has been established.

FOREIGN CURRENCY TRANSLATION

PRESENTATION CURRENCY

The consolidated financial statements are presented in rands which is the presentation currency and functional currency of the majority of the operations of the group.

FOREIGN OPERATIONS

Items included in each of the group’s entities are measured using the currency of the primary economic environment in which the entity operates (the functional currency). The results and financial position of all the group entities that have a functional currency different from that of the presentation currency are translated into the presentation currency as follows:

  • assets and liabilities are translated at the closing rate;
  • income and expenses are translated at average exchange rates; and
  • all resulting exchange differences are recognised as a separate component of equity until such foreign entity is disposed of at which time such translation difference is recognised in the statement of financial performance.

TRANSACTIONS AND BALANCES

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the transaction dates. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the statement of financial performance.

Goodwill and fair value adjustments arising on the acquisition of a foreign entities are treated as assets of the foreign entity and translated at the closing rate.

TAXATION

CURRENT TAXATION

The current tax charge is the calculated tax payable on the taxable income for the year using substantively enacted tax rates and includes any adjustments to tax payable in respect of prior years.

DEFERRED TAXATION

Deferred taxation is provided using the statement of financial position liability method on all temporary differences between the carrying amounts for financial reporting purposes and the amounts used for taxation purposes.

No deferred tax is provided on temporary differences relating to:

  • goodwill;
  • the initial recognition of an asset or liability to the extent that neither accounting nor taxable profit is affected on acquisition; and
  • investments in subsidiaries to the extent they will probably not reverse in the foreseeable future.

A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available against which the unused tax losses and deductible temporary differences can be utilised.

Enacted or substantively enacted tax rates that are expected to apply when the asset is realised or liability settled, are used to determine the deferred taxation provision at statement of financial position date.

SECONDARY TAXATION ON COMPANIES (STC)

STC is recognised as a component of the current tax charge in the statement of financial performance when the related dividend is declared. When dividends received in the current year can be offset against future dividend payments to reduce the STC liability, a deferred tax asset is recognised to the extent of the future reduction in STC.

EMPLOYEE BENEFITS

DEFINED CONTRIBUTION BENEFITS

Under defined contribution plans the group’s legal or constructive obligation is limited to the amount that it agrees to contribute to the fund. Consequently the risk that assets invested will be insufficient to meet the expected benefits is borne by the employees.

Contributions to a defined contribution plan in respect of service in a particular period are recognised as an expense in that period.

DEFINED BENEFIT FUNDS

The cost of providing benefits under the defined benefit plan is determined using the projected unit credit actuarial valuation method. Actuarial gains and losses are recognised as income or expense when the net cumulative unrecognised actuarial gains and losses for each individual plan at the end of the previous reporting period exceeded 10% of the higher of the defined benefit obligation and the fair value of plan assets at that date (the corridor method). These gains or losses are recognised over the expected average remaining working lives of the employees participating in the plan.

The past service cost is recognised as an expense on a straight line basis over the average period until the benefits vest. If the benefits have already vested immediately following the introduction of, or changes to, a pension plan, past service cost is recognised immediately.

The defined benefit asset or liability comprises the present value of the defined benefit obligation less past service cost not yet recognised and less the fair value of plan assets out of which the obligations are to be settled directly. The value of any asset is restricted to the sum of any past service cost not yet recognised and the present value of any economic benefits available in the form of refunds from the plan or reductions in the future contributions to the plan.

LEAVE PAY

Employee entitlements to annual leave are recognised when they accrue to employees. An accrual is made for the liability for annual leave, as a result of services by employees, up to the statement of financial position date.

BONUS PLANS

A liability for employee benefits in the form of bonus plans is recognised as a provision as past practice has created a valid expectation by employees that they will receive a bonus and amounts can be determined before the time of issuing the financial statements.

SHARE BASED COMPENSATION

The group operates both equity settled and cash settled share based schemes.

a) Equity settled
The fair value of shares and deferred delivery shares granted to employees is recognised as an employee expense with a corresponding increase in equity. The fair value is measured at grant date taking into account the structure of the grant, and expensed over the period during which the employees are required to provide services in order to become unconditionally entitled to the equity instruments and allowing for an estimate of the shares that will eventually vest. The fair value of the instruments granted is measured using generally accepted valuation techniques, taking into account the terms and conditions upon which the instruments are granted. Where an employee resigns from the scheme, the estimated share based payment expense is adjusted such that on a cumulative basis, no expense is recognised in respect of that employee.

Where goods or services are received by the group in return for the equity compensation benefits, the fair value of the equity instrument provided, determined using valuation techniques, is expensed on receipt of goods or, in the case of services, on a straight-line basis over their vesting periods. Where no goods or services can be determined to be received by the group the net cost of shares, as calculated above, is expensed in the statement of financial performance immediately.

b) Cash settled
The fair value of the amount payable to employees in respect of share appreciation rights is recognised as an expense with a corresponding increase in liabilities. The liability is re-measured at each statement of financial position date or any settlement dates to fair value. The fair value of the instruments granted is measured by reference to quoted prices in active markets.

TREASURY SHARES

Shares held by the various share trusts are treated as treasury shares. The shares are treated as a deduction from the issued and weighted average number of shares and the cost price of the shares is deducted from the share capital and share premium in the statement of financial position on consolidation. Dividends received on treasury shares are eliminated on consolidation.No profit or loss is recognised in the statement of financial performance on the purchase, sale, issue or cancellation of the group’s own equity instruments.

STANDARDS AND INTERPRETATIONS

SIGNIFICANT STANDARDS AND INTERPRETATIONS ADOPTED IN THE CURRENT YEAR

The group and company adopted the following statements and interpretations during the financial year:

IAS 1 (REVISED) – PRESENTATION OF FINANCIAL STATEMENTS

This revision deals with amendments to the structure of financial statements and current/non-current classification of derivatives and is effective for periods on or after 1 January 2009. Changes include the presentation of the statement of changes in equity as a primary statement and non-mandatory changes to the titles of primary statements as well as the introduction of the statement of financial performance. The two statement approach is allowed whereby a separate income statement and statement of financial performance is presented.

The group has chosen to change the titles of its primary statements and to follow the two-statement approach.

IFRS 3 – BUSINESS COMBINATIONS

This amendment deals with the accounting for business combinations. This amendment to the standard is effective for annual periods beginning on or after 1 July 2009. The effect of this amendment has resulted in goodwill of additional acquisitions in current subsidiaries being recognised in equity. Where step acquisitions have taken place, the investment in associate is deemed disposed of (resulting profit/loss on disposal recognised in the statement of financial performance) and reacquired as a subsidiary, with goodwill raised in accordance with the original standard. The amendment also provides that all transaction costs be expensed.

IFRS 7 – FINANCIAL INSTRUMENTS: DISCLOSURES

This amendment deals with enhanced disclosures about fair value measurements and liquidity risk as well as dealing with disclosures about financial instruments, and introduces a three level hierarchy for fair value measurement disclosure.

IFRS 8 – OPERATING SEGMENTS

This revision requires that operating segments reflect the management structure of the group and disclosure of separate reportable items in a manner as reported to the executive committee.

Standards and interpretations adopted in the current year with no significant impact

  • Annual improvements to IFRSs (2009)
  • IAS 23 (revised) Borrowing Costs
  • IFRS 2 Share Based Payments – vesting conditions and cancellations
  • Amendments to IFRS 1 – First time adoption of IFRS and IAS 27 – Consolidated and separate financial statements
  • IFRIC 15 – Agreements for the construction of real estate
  • IAS 19 – The limit on a defined benefit asset and minimum funding requirements

SIGNIFICANT STANDARDS AND INTERPRETATIONS IN ISSUE BUT NOT YET ADOPTED

At the date of authorisation of these financial statements, the following new and amended Standards and Interpretations were in issue but not yet adopted.

  • IFRS 2 – Group cash-settled and share based payment transactions (effective date 1 January 2010)
  • IAS 32 – Financial instruments – classification of rights issues (effective date 1 February 2010)
  • IFRIC 19 – Extinguishing financial liabilities with equity instruments (effective date 1 July 2010)
  • Annual improvements to IFRSs (2010) (effective date 1 January 2011)
  • IAS 24 – Related party disclosures (effective date 1 January 2011)
  • IFRIC 14 – Defined benefit plans (effective date 1 January 2011)
  • IFRS 9 – Financial instruments (effective date 1 January 2013)