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BUSINESS MODEL
AND STRATEGIC
OBJECTIVES
LEADERSHIP
GOVERNANCE
OPERATING
PERFORMANCE
SHAREHOLDERS’
INFORMATION AND
ADMINISTRATION
FINANCIAL
PERFORMANCE
BLUE LABEL INTEGRATED ANNUAL REPORT 2014
131
NOTES TO THE GROUP ANNUAL FINANCIAL STATEMENTS
CONTINUED
For the year ended 31 May 2014
1.
SIGNIFICANT ACCOUNTING POLICIES (continued)
Impairment of non-financial assets
The Group evaluates the carrying value of assets with finite useful lives when events and circumstances
indicate that the carrying value may not be recoverable and when there are indicators of impairment.
Intangible assets that have an indefinite useful life are not subject to amortisation and are tested annually
for impairment. Intangible assets not yet available for use are tested annually for impairment.
An impairment loss is recognised in the statement of comprehensive income when the carrying amount of an
asset exceeds its recoverable amount. An asset’s recoverable amount is the higher of the fair value less cost
to sell (the amount obtainable from the sale of an asset in an arm’s-length transaction between
knowledgeable willing parties), or its value-in-use. Value-in-use is the present value of estimated future cash
flows expected to arise from the continuing use of an asset and from its disposal at the end of its useful life.
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 the
purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately
identifiable cash flows.
An impairment loss recognised for an asset, other than goodwill, in prior years is reversed if there has been a
change in the estimates used to determine the asset’s recoverable amount since the last impairment loss was
recognised and the recoverable amount exceeds the new carrying amount. The reversal of the impairment is
limited to the carrying amount that would have been determined (net of depreciation or amortisation) had
no impairment loss been recognised in prior years. The reversal of such an impairment loss is recognised in
the statement of comprehensive income in the same line item as the original impairment charge.
Leases
(a) Finance leases
Lease agreements that transfer substantially all the risks and rewards of ownership are classified as finance
leases at inception of the lease. The asset is capitalised at the lower of the fair value of the asset or the
present value of the minimum lease payments at inception of the lease, with an equivalent amount being
stated as a finance lease liability. Finance lease liabilities are classified as non-current or current liabilities, as
appropriate. Each lease payment is allocated between the liability and finance charges using the effective
interest rate. Finance costs are charged to the statement of comprehensive income over the lease period.
The capitalised asset is depreciated over the shorter of the useful life of the asset or the lease term to its
residual value.
(b) Operating leases
Leases in which a significant portion of the risks and benefits of ownership are effectively retained by the
lessor are classified as operating leases. Payments under operating leases, net of incentives, are charged to
the statement of comprehensive income on a straight-line basis over the period of the lease. When an
operating lease is terminated before the lease period has expired, any payment required to be made to the
lessor by way of penalty is recognised as an expense in the period in which termination takes place.