Basic HTML Version
Notes to the Consolidated Financial Statements
For the year to 28 February 2011, continued
57
Financial Statements
>
Investments in subsidiaries and jointly controlled entities where the Group
is able to control the timing of the reversal of the difference and it is
probable that the difference will not reverse in the foreseeable future.
Recognition of deferred tax assets is restricted to those instances where it is
probable that taxable profit will be available against which the difference
can be utilised.
The amount of the asset or liability is determined using tax rates that have
been enacted or substantively enacted by the statement of financial position
date and are expected to apply when the deferred tax liabilities/(assets) are
settled/(recovered).
Deferred tax assets and liabilities are offset when the Group has a legally
enforceable right to offset current tax assets and liabilities and the deferred tax
assets and liabilities relate to taxes levied by the same tax authority on either:
>
The same taxable Group company; or
>
Different Group entities which intend either to settle current tax assets
and liabilities on a net basis, or to realise the assets and settle the liabilities
simultaneously, in each future period in which significant amounts of
deferred tax assets or liabilities are expected to be settled or recovered.
Government Grants
Government grants are recognised where there is reasonable assurance that
the grant will be received and all attached conditions will be complied with.
Where the grant relates to an expense item, it is recognised as income over
the period 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, it is
credited to deferred income and released to the income statement to match
the depreciation on the related asset. Where the related asset is sold, the
remaining grant balance is taken in to account in determining the carrying
amount of the asset.
Dividends
Dividends are recognised when they become legally payable. In the case of
interim dividends to equity shareholders, this is when paid. In the case of final
dividends, this is when approved by the shareholders at the Annual General
Meeting.
Dividends on the Income Shares, which are classified as financial liabilities,
are treated as finance costs and are recognised using the effective rate
method when there is a liability to pay at the statement of financial position
date.
Property, Plant and Equipment
Freehold land and buildings and plant and equipment are stated at cost less
accumulated depreciation and any accumulated impairment in value. Such
cost includes the cost of replacing part of the plant and equipment when
that cost is incurred if the recognition criteria are met.
Depreciation is provided on items of property, plant and equipment, other
than land and assets under construction, to write off to their residual value
the carrying value of items over their expected useful lives. Useful lives and
residual values are reconsidered on an annual basis. Depreciation is applied
at the following rates:
Buildings - 2% per annum straight line
Modular buildings - 7% per annum straight line
Long life plant and machinery - 5% per annum reducing balance
Other plant and machinery - 10-14% per annum straight line
Vehicles and trailers - 14-33% per annum straight line
Fixtures, fittings and equipment - 20% per annum straight line
An item of property, plant and equipment is derecognised upon disposal or
when no future economic benefits are expected from its use or disposal.
Any gain or loss arising on derecognition of the asset (calculated as the
difference between the net disposal proceeds and the carrying amount of
the asset) is included in profit or loss in the year the asset is derecognised.
Borrowing costs attributable to qualifying assets are capitalised.
Investment Properties
Investment properties are measured initially at cost, including transaction
costs. The carrying amount includes the cost of replacing part of an existing
investment property at the time that the cost is incurred if the recognition
criteria are met; and excludes the cost of day to day servicing of an
investment property. Subsequent to initial recognition, investment properties
are stated at fair value, which reflects market conditions at the statement of
financial position date. Gains or losses arising from changes in the fair values
of investment properties are included in the income statement in the period
in which they arise.
Investment properties are derecognised when either they have been
disposed of or when the investment property is permanently withdrawn
from use and no future economic benefit is expected from its disposal. Any
gains or losses on the retirement or disposal of an investment property are
recognised in the income statement in the period of retirement or disposal.
Rental income arising from operating leases on investment properties is
spread on a straight line basis over the period of the lease. Where an
incentive (such as a rent free period) is given to a tenant, the carrying value
of the investment property excludes any amount reported as a separate asset
as a result of recognising rental income on this basis.
Inventories
Inventories are measured on a first in first out basis and are stated at the
lower of cost and net realisable value.
Non-Current Assets held for sale and Disposal Groups
Non-current assets and disposal groups are classified as held for sale when:
>
They are available for immediate sale;
>
Management is committed to a plan to sell;
>
It is unlikely that significant changes to the plan will be made or that the
plan will be withdrawn;
>
An active programme to locate a buyer has been initiated;
>
The asset or disposal group is being marketed at a reasonable price in
relation to its fair value; and
>
A sale is expected to complete within 12 months from the date of
classification (or an extended period if the delay is caused by
circumstances beyond the entity’s control but the Group remains
committed to the plan to sell the asset).
Non-current assets and disposal groups classified as held for sale are
measured at the lower of:
>
Their carrying amount immediately prior to being classified as held for
sale in accordance with the Group’s accounting policy; and
>
Fair value less costs to sell.
Following their classification as held for sale, non-current assets (including
those in a disposal group) are not depreciated.
The results of operations disposed of during the year are included in the
consolidated income statement up to the date of disposal.
A discontinued operation is a component of the Group's business that
represents a separate major line of business or geographical area of
operations or a subsidiary acquired exclusively with a view to resale, that has
been disposed of, has been abandoned or that meets the criteria to be
classified as held for sale.
Discontinued operations are presented on the income statement (including
the comparative period) as a single line which comprises the post tax profit
or loss of the discontinued operation and the post tax gain or loss recognised
on the re-measurement to fair value less costs to sell or on disposal of the
assets/disposal groups constituting discontinued operations.
Associates
The Group’s investments in its associates are accounted for using the equity
method of accounting unless the investment is classified as held for sale.
An associate is an entity in which the Group has significant influence and
which is neither a subsidiary nor a joint venture.
Under the equity method, the investment in the associate is carried in the
Consolidated Statement of Financial Position at cost plus post acquisition
changes in the Group’s share of net assets of the associate. Goodwill relating
to the associate is included in the carrying amount of the investment and is
not amortised. The income statement reflects the share of the results of
operations of the associate but the loss is limited to the equity investment
made. Where there has been a change recognised directly in the equity of the
associate, the Group recognises its share of any changes and discloses this,
when applicable, in the statement of changes in equity and the statement of