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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
133
NOTES TO THE GROUP ANNUAL FINANCIAL STATEMENTS
CONTINUED
For the year ended 31 May 2014
1.
SIGNIFICANT ACCOUNTING POLICIES (continued)
Provisions
Provisions are recognised when the Group has a present legal or constructive obligation as a result of past
events, it is more likely than not that an outflow of resources embodying economic benefits will be required
to settle the obligation and a reliable estimate of the amount of the obligation can be made. Provisions are
not recognised for future operating expenses.
Provisions are measured at the present value of the expenditures expected to be required to settle the
obligation using a pre-tax rate that reflects current market assessments of the time value of money and the
risks specific to the obligation.
The increase in the provision due to the passage of time is recognised as an interest expense.
Borrowings
Borrowings are recognised initially at fair value, net of transaction costs incurred, when the relevant contracts
are entered into. Borrowings are subsequently stated at amortised cost; any difference between the proceeds
(net of transaction costs) and the redemption value is recognised in the statement of comprehensive income
over the period of the borrowings using the effective interest rate method.
Financial liabilities are derecognised when the obligation specified in the contract is discharged, cancelled or
expired.
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 year-end.
Normal taxation
The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at
year-end in the countries where the Company’s subsidiaries and associates operate and generate taxable
income. Management periodically evaluates positions taken in tax returns with respect to situations in which
applicable tax regulations are subject to interpretation and establishes provisions where appropriate on the
basis of amounts expected to be paid to the tax authorities.
The tax expense for the period comprises current and deferred tax. Tax is recognised in the statement of
comprehensive income, except to the extent that it relates to items recognised in other comprehensive
income or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly
in equity respectively.
Uncertain tax positions are considered by the Group at the level of the individual uncertainty or group of
related uncertainties.