Accounting policies

FOR THE YEAR ENDED 30 SEPTEMBER 2013

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The annual financial statements, comprising Reunert (referred to as “the company”), its subsidiaries, special purpose entities (“SPEs”), and joint ventures (together referred to as “the group”), incorporate the following principal accounting policies, set out below. In these accounting policies “the group” refers to the group and company.
 

STATEMENT OF COMPLIANCE

The group annual financial statements have been prepared in accordance with IFRS and its interpretations adopted by the International Accounting Standards Board in issue and effective for the group at 30 September 2013 and the SAICA Financial Reporting Guides, as issued by the Accounting Practices Committee and financial reporting pronouncements as issued by the Financial Reporting Standards Council, and the requirements of the South African Companies Act, 2008.
 

ADOPTION OF REVISED STANDARDS

The following revised Standard has been adopted in the current period. The adoption of the Standard has not had a material impact on the amounts reported in respect of the current or prior years:
 

REVISED STANDARD AFFECTING PRESENTATION AND DISCLOSURE ONLY

IAS 1 – Presentation of Financial Statements
The amendment requires items of other comprehensive income to be grouped together into two categories in the Statement of Other Comprehensive Income:
(a) Items that will not be subsequently reclassified to profit or loss, and
(b) Items that may be subsequently reclassified to profit or loss when specific conditions are met. Income tax on items of other comprehensive income is required to be allocated on the same basis.
The amendment has been applied retrospectively, and hence the presentation of items in other comprehensive income has been modified to reflect the change. Other than the above mentioned presentation change, the application of the amendment to IAS 1 does not result in any impact on profit or loss, other comprehensive income and total comprehensive income.
 

AT THE DATE OF THESE FINANCIAL STATEMENTS, THE FOLLOWING RELEVANT STANDARDS AND INTERPRETATIONS WERE IN ISSUE BUT ARE NOT YET EFFECTIVE:

Standard/
Interpretation
Details of amendment Effective for
annual periods
beginning
on or after
IFRS 7 – Financial Instruments: Disclosure Entities are required to disclose gross amounts subject to rights of set-off, amounts set off in accordance with the accounting standards and the related net credit exposure. 1 January 2013
IFRS 9 – Financial Instruments This is a new standard that forms part of a three-stage project to replace IAS 39 – Financial Instruments: Recognition and Measurement. 1 January 2015
IFRS 10 – Consolidated Financial Statements This is a new standard that replaces the consolidation requirements contained in SIC 12 – Consolidation: Special Purpose Entities and IAS 27 – Consolidated and Separate Financial Statements. 1 January 2013
IFRS 11 – Joint Arrangements New standard that deals with accounting for joint arrangements. The standard focuses on the rights and obligations of the arrangement, rather than its legal form. The standard requires a single method for accounting for interests in jointly controlled entities. 1 January 2013
IFRS 12 – Disclosure of Interests in Other Entities New and comprehensive standard on disclosure requirements for all forms of interests in other entities, including joint arrangements, associates, SPEs and other off balance sheet vehicles. 1 January 2013
IFRS 13 – Fair Value Measurement New guidance on fair value measurement and disclosure requirements. 1 January 2013
IAS 1 – Presentation of Financial Statements Annual improvements 2009 – 2011 Cycle: Amendments clarifying the requirements for comparative information including minimum and additional comparative information. 1 January 2013
IAS 16 – Property, Plant and Equipment Annual improvements 2009 – 2011 Cycle: Amendments with respect to the recognition and classification of servicing equipment. The amendments clarify that spare parts, stand-by equipment and servicing equipment should be classified as property, plant and equipment when they meet the definition of property, plant and equipment in IAS 16 and as inventory otherwise. 1 January 2013
IAS 27 – Consolidated and Separate Financial Statements Amendments as a consequence of the issue of IFRS 10, 11 and 12. 1 January 2013
IAS 28 – Investments in Associates Amendments as a consequence of the issue of IFRS 10, 11 and 12. 1 January 2013
IAS 32 – Financial Instruments: Presentation Amendments require entities to disclose gross amounts subject to the right to set-off, amounts set-off in accordance with the accounting standards and the related net credit exposure. 1 January 2014
  Annual improvements 2009 – 2011 Cycle: Amendments clarify that income tax on distributions to holders of an equity instrument and transaction costs of an equity transaction should be accounted for in accordance with IAS 12 – Income Taxes. 1 January 2013
IAS 34 – Interim Financial Reporting Annual improvements 2009 – 2011 Cycle: Amendments clarify that the total assets and total liabilities for a particular reporting segment would be separately disclosed in interim financial reporting only when the amounts are regularly provided to the chief operating decision maker and there has been a material change from the amounts disclosed in the last annual financial statements for that reportable segment. 1 January 2013
IAS 36 – Impairment of Assets The amendment addresses the disclosure of information about the recoverable amount of impaired assets if that amount is based on fair value less costs of disposal. 1 January 2014
IFRIC 21 – Levies The interpretation provides guidance on how entities should account for liabilities to pay levies imposed by governments, other than income taxes. 1 January 2014
 

IFRS 9 REQUIRES ALL RECOGNISED FINANCIAL ASSETS THAT ARE WITHIN THE SCOPE OF IAS 39 – FINANCIAL INSTRUMENTS: RECOGNITION AND MEASUREMENT TO BE SUBSEQUENTLY MEASURED AT AMORTISED COST OR FAIR VALUE.

The most significant impact of IFRS 9, with regard to the classification and measurement of financial liabilities, relates to the accounting for changes in the fair value of a financial liability (designated as at fair value through profit or loss) attributable to changes in the credit risk of that liability. In terms of this standard the amount of change in the fair value of the financial liability attributable to changes in the credit risk of that liability is presented in other comprehensive income, unless the recognition would create or enlarge an accounting mismatch in profit or loss. Changes in fair value are not subsequently reclassified to profit or loss. Under IAS 39, the entire amount of the change in the fair value of the financial liability designated as through profit and loss was presented in profit or loss.

The company expects that IFRS 9 will be adopted for the annual period commencing 1 October 2015. Given the nature of the changes contained in IFRS 9, it is not practicable to provide a reasonable estimate of the effect of adoption until a detailed review has been completed.

A package of five Standards on consolidation, joint arrangements, associates and disclosures was issued, including IFRS 10, 11, 12, IAS 27 and 28. The major changes are as follows:
IFRS 10 replaces parts of IAS 27 – Consolidated and Separate Financial Statements that deals with consolidated financial statements.
SIC 12 – Consolidation: Special Purpose Entities has been withdrawn upon the issue of IFRS 10. IFRS 10 has one basis for consolidation – control. In terms of IFRS 10 the definition of control consists of three elements:
  (a) power over an investee;
  (b) exposure or rights to variable returns from its involvement with the investee; and
  (c) the ability to use its power over the investee to affect the amount of the investor’s return.
IFRS 11 replaces IAS 31 – Interests in Joint Ventures. IFRS 11 deals with how a joint arrangement over which two or more parties have joint control should be classified. Under IFRS 11 joint arrangements are classified as joint operations or joint ventures, depending on the rights and obligations of the parties to the arrangements. Under IAS 31 there are three types of joint arrangements: jointly controlled entities, jointly controlled assets and jointly controlled operations. Under IFRS 11 joint ventures are required to be accounted for using the equity method of accounting, whereas jointly controlled entities under IAS 31 can be accounted for using the equity method or proportionate accounting.
IFRS 12 is a disclosure standard and is applicable to entities that have interests in subsidiaries, joint arrangements, associates and/or unconsolidated structured entities and in general the disclosure requirements in IFRS 12 are more extensive than those in the current standard.
 
The company expects that these standards will be adopted for the annual period beginning 1 October 2013. The application of IFRS 10 is not expected to have a material impact on the group based on its existing group structure.

The application of IFRS 11 could result in changes in accounting for the group’s jointly controlled entities as these are currently accounted for using the proportionate consolidation method and may need to be accounted for using the equity method under IFRS 11. Refer to note 26 for more information relating to the group’s jointly controlled entities.

IFRS 13 provides a single source of guidance for fair value measurement and disclosures regarding these fair values. The scope of IFRS 13 is broad as it applies to financial and non-financial instruments for which other IFRSs require or permit fair value measurements and disclosures about fair value measurements. As a whole the disclosure requirements under IFRS 13 are more extensive than those required in the current standards.

The company anticipates that IFRS 13 will be adopted for the annual period beginning 1 October 2013. The application of the new standard may affect the amounts reported in the financial statements and result in more extensive disclosure in the financial statements.

The impact of the adoption of the other standards and interpretations has not yet been determined. However, we do not anticipate that these standards will have a major impact on the group results and financial position.
 

BASIS OF PREPARATION

The group annual financial statements are presented in South African rand, which is the currency in which the majority of the group’s transactions are denominated. The group annual financial statements have been prepared on the going concern and historical cost basis, except for financial instruments that are measured at revalued amounts or fair values, as explained in the accounting policies below. Historical cost is generally based on the fair value of the consideration given in exchange for assets.

The accounting policies set out below have been applied, in all material respects, consistently by all group entities to all periods presented in these consolidated financial statements.
 

BASIS OF CONSOLIDATION

The group annual financial statements incorporate the financial statements of the company, its subsidiaries, SPEs, and joint ventures.
 

SUBSIDIARIES

A subsidiary is an entity over which the group has control. Control exists where the company has the power, directly or indirectly, to govern the financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control, potential voting rights that are currently exercisable or convertible are taken into account.

The operating results of subsidiaries are included from the date that control commences to the date that control ceases.

When a business combination is achieved in stages, the group’s previously held equity interest in the acquiree is remeasured to fair value at the acquisition date and the resulting gain or loss, if any, is recognised in profit or loss. Amounts arising from interests in the acquiree prior to acquisition date that have previously been recognised in other comprehensive income are reclassified to profit or loss where such treatment would be appropriate if that interest was disposed of.

Changes in the group’s ownership interests in subsidiaries that do not result in the group losing control over the subsidiaries are accounted for as equity transactions. The carrying amounts of the group’s interest and the non-controlling interests are adjusted to reflect the changes in their relative interests in the subsidiaries. Any difference between the amount by which the non-controlling interests are adjusted and the fair value of the consideration paid or received is recognised directly in equity and attributed to owners of the company.

Changes in the group’s ownership interests in subsidiaries that result in the group losing control over the subsidiaries are recognised in profit or loss and are calculated as the difference between:
The aggregate of the fair value of the consideration received and the fair value of any retained interests and
The previous carrying amount of the assets (including goodwill), and liabilities of the subsidiary as well as any non-controlling interests.
 
When assets of the subsidiary are carried at fair value and the related cumulative gain or loss has been recognised in other comprehensive income and accumulated in equity, the amounts previously recognised are accounted for as if the group has directly disposed of the relevant asset.

The fair value of any investment retained in the former subsidiary at the date when control is lost, is regarded as the fair value on initial recognition for subsequent accounting under IAS 39 – Financial Instruments: Recognition and Measurement or, when applicable, the cost of initial recognition of an investment in an associate or a jointly controlled entity.

A business combination of entities under common control is excluded from IFRS 3 – Business Combinations as it involves the combination of businesses that are ultimately controlled by the same company before and after the transaction. Such business combinations will be accounted for at the net asset value of the business transferred and therefore no goodwill arises on these business combinations.

Non-controlling interests in subsidiaries are identified separately from the group’s equity therein. Non-controlling interests that are present ownership interests and entitle their holders to a proportionate share of the entity’s net assets in the event of liquidation, may be initially measured at fair value of the acquiree’s identifiable net assets. The choice of measurement basis is made on a transaction-by-transaction basis. Other types of non-controlling interests are measured at fair value or, when applicable, on the basis specified in another IFRS. Subsequent to acquisition, the carrying amount of non-controlling interests is the amount of those interests at initial recognition plus the non-controlling interests’ share of subsequent changes in equity. Total comprehensive income is attributed to non-controlling interests even if this results in the non-controlling interests having a deficit balance.

Intragroup transactions and balances, including any unrealised gains and losses or income and expenses arising from intragroup transactions, are eliminated in full in preparing the consolidated annual financial statements.
 

SPECIAL PURPOSE ENTITIES

A SPE is an entity where in substance:
The activities of the SPE are being conducted on behalf of the group according to its specific business needs so that the group obtains the benefits from the SPE’s operations
The group has the decision-making powers to obtain the majority of the benefits of the activities of the SPE, or by setting up an “autopilot” mechanism, the group has delegated these decision-making powers
The group has the rights to obtain the majority of the benefits of the SPE and therefore may be exposed to risks incident to the activities of the SPE
The group retains the majority of the residual or ownership risks related to the SPE or its assets in order to obtain the benefits from its activities.
 
The operating results of SPEs are included from the date that control commences to the date that control ceases.
 

JOINT VENTURES

Joint ventures are those entities which are not subsidiaries and over which the group exercises joint control, which is defined as the contractually agreed sharing of control over an economic activity, and exists only when the strategic financial and operating decisions relating to the activity require the unanimous consent of the parties sharing control.

Joint ventures are accounted for using the proportionate consolidation method, whereby the group’s share of each of the assets, liabilities, income, expenses and cash flows of joint ventures are included on a line-by-line basis in the consolidated annual financial statements.

When a group entity transacts with a jointly controlled entity of the group, unrealised profits and losses are eliminated to the extent of the group’s interest in the joint venture.

Any difference between the cost of the acquisition and the group’s share of the net identifiable assets, fairly valued, is recognised and treated according to the group’s accounting policy for goodwill.
 

BUSINESS COMBINATIONS AND GOODWILL

All business combinations are accounted for by applying the acquisition method. The cost of acquisition is measured at the aggregate of the fair values, at the date of acquisition, of assets acquired, liabilities incurred or assumed, and equity instruments issued by the group in exchange for control of the acquiree, excluding any costs directly attributable to the business combination. All acquisition related costs are recognised as expenses in the period in which the costs are incurred and the services received, except for the costs relating to the issue of debt or equity instruments which are recognised as financial assets.

At the acquisition date, the identifiable assets acquired and the liabilities assumed are recognised at their fair value, except that:
Deferred tax assets and liabilities are recognised and measured in accordance with IAS 12 – Income Taxes;
Liabilities or equity instruments related to share-based payment arrangements of the acquiree or share-based payment arrangements of the group entered into to replace share-based payment arrangements of the acquiree are measured in accordance with IFRS 2 at the acquisition date; and
Assets or disposal groups that are classified as held for sale in accordance with IFRS 5 – Non-Current Assets Held for Sale and Discontinued Operations are measured in accordance with that Standard.
 
When the consideration transferred in a business combination includes assets or liabilities resulting from a contingent consideration arrangement, the contingent consideration is measured at its acquisition date fair value and included as part of the consideration transferred in a business combination. The obligation to pay contingent consideration is classified as a liability, or as equity, based on the definitions of an equity instrument and a financial liability in accordance with IAS 32 – Financial Instruments: Presentation. A right to the return of previously transferred consideration if specified conditions are met is recognised as an asset. Changes in the fair value of the contingent consideration that qualify as measurement period adjustments are adjusted retrospectively, with corresponding adjustments against goodwill. Measurement period adjustments are adjustments that arise from additional information obtained during the “measurement period” (a period not exceeding one year from the acquisition date) about facts and circumstances that existed at the acquisition date.

Subsequent accounting for changes in the fair value of the contingent consideration that do not qualify as measurement period adjustments, depends on how the contingent consideration is classified. Contingent consideration classified as equity is not remeasured at subsequent reporting dates and its settlement is accounted for as within equity. Contingent consideration that is classified as an asset or liability is remeasured at subsequent reporting dates in accordance with the applicable accounting standard with the corresponding gain or loss being recognised in profit or loss.

If a business combination agreement provides for an adjustment to the cost of the combination contingent on future events, the amount of the adjustment is included in the cost of the acquisition, if the adjustment is probable and can be measured reliably. At the time of initial accounting for the business combination, the adjustment is not recognised if it is either not probable or cannot be measured reliably. If that adjustment subsequently becomes probable and can be measured reliably, the additional consideration is recognised as an adjustment to the cost of the combination.

If the initial accounting for business combinations is incomplete by the end of the reporting period in which the combination occurs, the group reports provisional amounts for the items for which the accounting is incomplete. Those provisional amounts are adjusted during the measurement period, or additional assets and liabilities are recognised, to reflect new information obtained about facts and circumstances that existed at the acquisition date, which if known, would have affected the amounts recognised at that time.

Goodwill represents amounts arising on acquisition of subsidiaries and joint ventures and is measured as the excess of the sum of the consideration transferred, the amount of any non-controlling interests in the acquirer, and the fair value of the acquirer’s previously held equity interest in the acquiree, if any, over the net of the acquisition date amounts of the identifiable assets acquired and liabilities and contingent liabilities assumed. If, after assessment of the group’s interest in the fair value of the acquiree’s identifiable net assets exceeds the sum of the acquirer’s consideration transferred, the amount of any non-controlling interests in the acquiree and the fair value of the acquirer’s previously held equity interests in the acquiree (if any), the excess is recognised immediately in profit or loss as a bargain purchase gain.

Goodwill arising on acquisition of a business is initially recognised as an asset at cost and is subsequently measured at cost less any accumulated impairment losses.

For the purposes of impairment testing, goodwill is allocated to cash-generating units (CGUs) expected to benefit from the synergies of the combination. Goodwill is tested annually for impairment or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the CGU is less than the carrying amount of the unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro-rata, on the basis of the carrying amount of each asset in the unit. Any impairment loss for goodwill is recognised directly in profit or loss in the consolidated income statement. An impairment loss recognised for goodwill is not reversed in subsequent periods.

On disposal of a subsidiary or a jointly controlled entity, the attributable goodwill is included in the determination of the profit or loss on disposal.
 

INVESTMENTS IN SUBSIDIARIES

In the company financial statements, investments in subsidiaries are initially recognised at cost and classified as held-to-maturity financial assets. These investments are subsequently carried at cost less any impairment losses recognised.
 

NON-CURRENT ASSETS HELD FOR SALE

Non-current assets and disposal groups are classified as held for sale, if their carrying amount 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 non-current asset or disposal group 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 complete sale within one year from the date of classification.

When the group is committed to a sale plan involving loss of control of a subsidiary, all of the assets and liabilities of that subsidiary are classified as held for sale, regardless of whether the group will retain a non-controlling interest in the former subsidiary after the sale.

Non-current assets and disposal groups are measured at the lower of the carrying amount and fair value less costs to sell.

Any change in intention to sell will immediately result in the non-current assets and disposal groups being reclassified at the lower of their carrying amount, before they were first classified as held for sale adjusted for any depreciation, amortisation, revaluations and impairment losses and their recoverable amount at the date of the subsequent decision not to sell.
 

PROPERTY, PLANT AND EQUIPMENT AND INVESTMENT PROPERTY

All owner-occupied property is recognised at cost. Further, the cost model is also used to account for investment property.

Investment properties are held to earn rental income and for capital appreciation, whereas owner-occupied properties are held for use by the group, in the supply of goods, services or for administration purposes.

Property, plant and equipment in the course of construction for production, supply or administrative purposes, or for purposes not yet determined, are carried at cost, less any recognised impairment loss. The cost of self-constructed assets includes the cost of materials, direct labour and an appropriate proportion of normal production overheads. Depreciation of these assets, on the same basis as other property, plant and equipment, commences when the assets are ready for their intended use.

Land is not depreciated and is stated at cost less accumulated impairment losses.

All other items of plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses.

Where an item of property, plant and equipment comprises major components with different useful lives, these components are accounted for as separate items.

Subsequent expenditure relating to an item of property, plant and equipment and investment property is capitalised when it is probable that future economic benefits will flow to the group and the cost of the item can be measured reliably. All other subsequent expenditure (repairs and maintenance) is recognised as an expense when it is incurred.

Property, plant and equipment and investment property is derecognised on disposal or when no future economic benefit is expected from the continued use of the asset. Profits or losses on disposal or derecognition of property, plant and equipment and investment property are the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in profit or loss.

On disposal of an item of property, plant and equipment that is ordinarily sold, but was held for rental purposes, the net carrying value of the item is transferred to inventory directly prior to the sale. The proceeds from the sale of the item are included in revenue.

Depreciation is provided on a straight-line basis over the estimated useful lives of property, plant and equipment in order to reduce the cost of the asset to its residual value. The depreciation methods, estimated remaining useful lives and residual values are reviewed at least annually, with the effect of any changes in estimate accounted for on a prospective basis.

Assets held under finance leases are depreciated over their expected useful lives on the same basis as owned assets. When there is no reasonable certainty that ownership will be obtained by the end of the lease term, assets are depreciated over the shorter of the lease term and their useful lives.

Residual value is the estimated amount that the group would currently obtain from disposal of the asset, after deducting the estimated costs of disposal, if the asset was already of the age and in the condition expected at the end of its useful life.
 

INTANGIBLE ASSETS

INTANGIBLE ASSETS ACQUIRED SEPARATELY

Intangible assets are initially recognised at cost and are subsequently measured at cost less accumulated amortisation and accumulated impairment losses.

Subsequent expenditure on intangible assets is capitalised only when it increases future economic benefits embodied in the specific asset to which it relates. All other subsequent expenditure is expensed as incurred.

Intangible assets with finite useful lives are amortised on a straight-line basis over their estimated useful lives. The amortisation methods and estimated remaining useful lives are reviewed at least annually with the effect of any changes in estimate being accounted for in future periods. Intangible assets with an indefinite useful life are not amortised, but are tested at least annually for impairment.
 

INTERNALLY-GENERATED INTANGIBLE ASSETS – RESEARCH AND DEVELOPMENT EXPENDITURE

Expenditure on research activities is recognised as an expense in the period in which it is incurred.

An internally-generated intangible asset arising from development (or from the development phase of an internal project) is recognised if, and only if, all of the following have been demonstrated:
the technical feasibility of completing the intangible asset so that it will be available for use or sale;
the intention to complete the intangible asset and use or sell it;
the ability to use or sell the intangible asset;
how the intangible asset will generate probable future economic benefits;
the availability of adequate technical, financial and other resources to complete the development and to use or sell the intangible asset; and
The ability to measure reliably the expenditure attributable to the intangible asset during its development.
 
The amount initially recognised for internally-generated intangible assets is the sum of the expenditure incurred from the date when the intangible asset first meets the recognition criteria listed above. Where no internally-generated intangible asset can be recognised, development expenditure is recognised in profit or loss in the period in which it is incurred.

Subsequent to initial recognition, internally-generated intangible assets are reported at cost less accumulated amortisation and accumulated impairment losses, on the same basis as intangible assets that are acquired separately.
 

INTANGIBLE ASSETS ACQUIRED IN A BUSINESS COMBINATION

Intangible assets acquired in a business combination and recognised separately from goodwill are initially recognised at their fair value at the acquisition date (which is regarded as the cost).

Subsequent to initial recognition, intangible assets acquired in a business combination are reported at cost less accumulated amortisation and accumulated impairment losses, on the same basis as intangible assets that are acquired separately.
 

DERECOGNITION OF INTANGIBLE ASSETS

Intangible assets are derecognised on disposal or when no future economic benefits are expected from the continued use. Gains or losses arising from derecognition, measured as the difference between the net disposal proceeds and the carrying amount, are recognised in profit or loss on derecognition.
 

IMPAIRMENT OF ASSETS OTHER THAN GOODWILL

The carrying amounts of the group’s assets, other than deferred tax, are reviewed at the end of each reporting period or whenever events or changes in circumstances indicate that the carrying amount may not be recoverable, to determine whether there is any indication of impairment. If such indication exists, the asset’s recoverable amount is estimated in order to determine the extent of the impairment loss (if any). For an asset that does not generate cash inflows that are largely independent of those from other assets, the recoverable amount is determined for the CGU to which the asset belongs.

Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment at least annually and whenever there is an indication that the asset may be impaired.

The recoverable amount is the higher of fair value less costs 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-taxation discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.

If the recoverable amount of an asset or CGU is estimated to be less than its carrying amount, the carrying amount of the asset or CGU is reduced to its recoverable amount. Impairment losses recognised in respect of CGUs are allocated first to reduce the carrying amount of goodwill allocated to the CGUs and then to reduce the carrying amount of the other assets in the unit on a pro rata basis. An impairment loss is recognised immediately in profit or loss.

When an impairment loss subsequently reverses, the carrying amount of the asset or CGU is increased to the revised estimate of the recoverable amount, but not to an amount higher than the carrying amount that would have been determined (net of depreciation) had no impairment loss been recognised in prior years. A reversal of an impairment loss is recognised immediately in profit or loss.
 

INVENTORY AND CONTRACTS IN PROGRESS

Inventory is stated at the lower of cost and net realisable value. Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses. Cost is determined on the first-in first-out, weighted average or standard cost bases and includes direct material costs together with appropriate allocations of labour and overheads based on normal operating capacity.

Obsolete, redundant and slow-moving inventory is identified on a regular basis and is written down to its estimated net realisable value. Consumables are written down with regard to their age, condition and utility.

Contracts in progress are valued at the lower of actual cost less progress invoicing and net realisable value. Cost comprises direct materials, labour, expenses and a proportion of overhead expenditure.
 

LEASES

GROUP AS LESSOR

Finance leases

Amounts due from lessees under finance leases are recognised as receivables at the amount of the group’s net investment in the leases. Finance lease income is allocated to accounting periods so as to reflect a constant periodic rate of return on the group’s net investment outstanding in respect of the leases.
 

Operating leases

Rental income from operating leases is recognised on a straight-line basis over the term of the relevant lease. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised on a straight-line basis over the lease term.
 

GROUP AS LESSEE

Finance leases

Assets subject to finance lease agreements, where considered material and where the group assumes substantially all the risks and rewards of ownership, are capitalised as property, plant and equipment at the lower of fair value or the present value of the minimum lease payments at inception of the lease and the corresponding liability is raised.

Lease payments are allocated using the effective interest rate method to determine the lease finance cost, which is charged to profit or loss over the term of the relevant lease, and the capital payment, which reduces the liability to the lessor. Contingent rentals are recognised as expenses in the periods in which they are incurred.
 

Operating leases

Leases where the lessor retains the risks and rewards of ownership of the underlying asset are classified as operating leases. Rentals payable under operating leases are charged to the income statement on a straight-line basis over the term of the relevant lease. Contingent rentals arising under operating leases are recognised as an expense in the period in which they are incurred.
 

PROVISIONS

A provision is raised when a reliable estimate can be made of a present legal or constructive obligation, resulting from a past event, which will probably result in an outflow of economic benefits, and there is no realistic alternative to settling the obligation created by the event, which occurred before the reporting period date.

The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. Where a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows. When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, a receivable is recognised as an asset, if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably.
 

ONEROUS CONTRACTS

Present obligations arising under onerous contracts are recognised and measured as provisions. An onerous contract is considered to exist where the group has a contract under which the unavoidable costs of meeting the obligations under the contract exceed the economic benefits expected to be received under it.
 

RESTRUCTURING

A restructuring provision is recognised when the group has developed a detailed formal plan for the restructuring and has raised a valid expectation in those affected that it will carry out the restructuring by starting to implement the plan or announcing its main features to those affected by it. The measurement of a restructuring provision includes only the direct expenditures arising from the restructuring, which are those amounts that are both necessarily entailed by the restructuring and not associated with the ongoing activities of the entity.
 

PRODUCT WARRANTIES

Provision is made for the group’s estimated liability on all products still under warranty at the reporting period date. The provision is based on historical warranty data and returns and a weighting of possible outcomes against their associated probabilities.
 

CONTINGENT LIABILITIES ACQUIRED IN A BUSINESS COMBINATION

Contingent liabilities acquired in a business combination are initially measured at fair value at the date of acquisition. At the end of subsequent reporting periods, such contingent liabilities are measured at the higher of the amount that would be recognised in accordance with IAS 37 – Provisions, Contingent Liabilities and Contingent Assets and the amount initially recognised less cumulative amortisation recognised in accordance with IAS 18 – Revenue.
 

AUDIT FEES

An audit fee accrual is raised in the current reporting period for the audit to be performed in respect of this period as the company is legally obligated to undergo an audit.
 

FINANCIAL INSTRUMENTS

Financial instruments carried on the balance sheet include cash and cash equivalents, investments, receivables, trade payables, borrowings and derivative instruments. Financial assets and financial liabilities are recognised when a group entity becomes a party to the contractual provisions of the instrument.

Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognised immediately in profit or loss.
 

EFFECTIVE INTEREST METHOD

The effective interest method is a method of calculating the amortised cost of a financial instrument and of allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts (including all fees that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the financial instrument, or (where appropriate) a shorter period, to the net carrying amount on initial recognition. Income is recognised on an effective interest basis for financial instruments other than those financial assets classified as at FVTPL.
 

FINANCIAL ASSETS

The group classifies its financial assets into the following categories:
At fair value through profit or loss (FVTPL);
Held-to-maturity investments;
Loans and receivables; and
Available-for-sale financial assets.
 
The above classification is dependent on the purpose and nature for which the financial assets have been acquired. Management determines the classification of its financial assets at the time of the initial recognition and re-evaluates such designation at least annually.

All financial assets are recognised and derecognised on trade date where the purchase or sale of a financial asset is under a contract whose terms require delivery of the financial asset within the time frame established by the market concerned, and are initially measured at fair value, plus transaction costs, except for those financial assets classified as at FVTPL, which are initially measured at fair value.
 

Financial assets at FVTPL

Financial assets are classified as at FVTPL where the financial asset is either held for trading or designated as such upon initial recognition. Financial assets at FVTPL are stated at fair value, with any resultant gain or loss recognised in profit or loss. The net gain or loss recognised in the income statement includes any dividend or interest earned on the financial asset.

The group classifies derivative instruments as held for trading if it is a derivative that is not a designated and effective hedging instrument.
 

Held-to-maturity investments

Held-to-maturity investments are financial instruments with fixed or determinable payments and fixed maturity dates that the group has the positive intention and ability to hold to maturity. Held-to-maturity investments are recorded at amortised cost using the effective interest rate method less any impairment.
 

Loans and receivables

Trade receivables, loans and other receivables that have fixed or determinable payments that are not quoted in an active market are classified as loans and receivables. Loans and receivables are measured at amortised cost using the effective interest rate method, less any impairment.

Interest income is recognised by applying the effective interest rate, except for short-term receivables when the recognition of interest would be immaterial.
 

Available-for-sale financial assets

Available-for-sale financial assets are non-derivatives that are either designated as available-for-sale or are not classified as: (a) loans and receivables, (b) held to maturity investments or (c) financial assets at FVTPL.

Unlisted shares held by the group are classified as available-forsale financial assets. Unlisted shares held by the group that do not have a quoted price in an active market and whose fair value cannot be reliably measured at market value are initially measured at cost and subsequently remeasured at cost less any identified impairment losses.
 

IMPAIRMENT OF FINANCIAL ASSETS

At each reporting period date, financial assets, other than those at FVTPL, are assessed for indicators of impairment. Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows of the investment have been negatively impacted.

For financial assets carried at amortised cost, the amount of the impairment loss recognised is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the financial asset’s original effective interest rate.

For financial assets carried at cost, the amount of the impairment loss is measured as the difference between the asset’s carrying amount and the present value of the estimated future cash flows discounted at the current market rate of return for similar financial assets. The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception of trade receivables, where the carrying amount is reduced through the use of an allowance account. When a trade receivable is considered uncollectible, it is written off against the allowance account. Changes in the carrying amount of the allowance account are recognised in profit or loss.
 

DERECOGNITION OF FINANCIAL ASSETS

The group derecognises a financial asset only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity. If the group neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the group recognises its retained interest in the asset and an associated liability for amounts it may have to pay. If the group retains substantially all the risks and rewards of ownership of a transferred financial asset, the group continues to recognise the financial asset and also recognises a collateralised borrowing for the proceeds received.

On derecognition of a financial asset in its entirety, the difference between the asset’s carrying amount and the sum of the consideration received and receivable and the cumulative gain or loss that had been recognised in other comprehensive income and accumulated in equity is recognised in profit or loss.

On derecognition of a financial asset other than in its entirety, the group allocates the previous carrying amount of the financial asset and any cumulative fair value gains or losses recognised in other comprehensive income between the part it continued to recognise under the continuing involvement, and the part that it no longer recognises on the basis of the relative fair values of those parts on the date of transfer. The difference between the allocated carrying amount of the part that is no longer recognised and the sum of the consideration received for the part and any cumulative gain or loss allocated to it that had been recognised in other comprehensive income is recognised in profit or loss.
 

CASH AND CASH EQUIVALENTS

Cash and cash equivalents are stated at carrying value which is deemed to be fair value.
 

TRADE AND OTHER RECEIVABLES

Trade and other receivables are stated at their invoiced value as reduced by appropriate allowances for estimated irrecoverable amounts and cost of collection. Impairment is recognised when there is evidence that the group will not be able to collect all amounts due according to the original terms of the receivable. The amount of the impairment is charged to the income statement.
 

DERIVAT IVE INSTRUMENTS

The group is exposed to market risks from changes in interest rates, commodity prices, price risks and foreign exchange rates. The group uses forward exchange contracts, commodity hedges, options and interest rate instruments to hedge its exposure to fluctuations in foreign exchange rates, commodity prices, price risks and interest rates. In accordance with its treasury policy, the group does not hold or issue derivative instruments for trading purposes.

Derivative instruments are initially measured at fair value at the date the derivative contract is entered into and are subsequently stated at fair value at each reporting date. The resulting gains or losses are charged to the income statement.
 

EMBEDDED DERIVATIVES

Derivatives embedded in other financial instruments or other host contracts are treated as separate derivatives when their risks and characteristics are not closely related to those of the host contracts and the host contracts, are not measured at fair value, with change in fair value recognised in profit or loss.
 

FINANCIAL LIABILITIES AND EQUITY INSTRUMENTS ISSUED BY THE GROUP

Debt and equity instruments are classified as either financial liabilities or as equity instruments in accordance with the substance of the contractual terms of the arrangement and the definitions of a financial liability and an equity instrument.

Debt instruments issued, which carry the right to convert to equity that is dependent on the outcome of uncertainties beyond the control of both the group and the holder, are classified as liabilities except where the possibility of conversion is certain.
 

EQUITY INSTRUMENTS

An equity instrument is any contract that evidences a residual interest in the assets of the entity after deducting all of its liabilities. Equity instruments issued by the group are recorded at the proceeds received net of any direct issue costs.
 

TREASURY SHARES

Treasury shares are equity instruments of the company that are held by a subsidiary of the company.

Repurchase of the company’s own equity instruments is recognised and deducted directly in equity. No gain or loss is recognised in profit or loss on the purchase, sale, issue or cancellation of the company’s own equity instruments.
 

LOANS CATEGORISED AS EQUITY

At-acquisition loans introduced by non-controlling interests in terms of contractual arrangements, which are intended to be a commitment towards the business and which the non-controlling shareholder stands to lose if the business fails, are classified as equity and included in non-controlling interests. These loans are stated at their nominal value.
 

FINANCIAL LIABILITIES

Financial liabilities are either classified as:
financial liabilities at FVTPL; or
other financial liabilities.
 
Financial liabilities include interest bearing bank loans and overdrafts and trade and other payables.
 

Financial liabilities at FVTPL

Financial liabilities are classified as at FVTPL where the financial liability is either held for trading or it is designated as such upon initial recognition.

Financial liabilities at FVTPL are stated at fair value, with any resultant gain or loss recognised in profit or loss. The net gain or loss recognised in profit or loss incorporates any interest paid on the financial liability.
 

Other financial liabilities

Other financial liabilities, including interest bearing bank loans and overdrafts are initially measured at fair value, net of transaction costs.

Other financial liabilities are subsequently measured at amortised cost using the effective interest method, with interest expense recognised on an effective yield basis.

Trade and other payables are stated at their nominal value.
 

FINANCIAL GUARANTEE CONTRACT LIABILITIES

A financial guarantee contract requires the issuer to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payment when due in accordance with the original or modified terms of a debt instrument.

Financial guarantee contracts are measured initially at their fair values and are subsequently measured at the higher of:
the amount of the obligation under the contract; and
the amount initially recognised less, where appropriate, cumulative amortisation.
 

DERECOGNITION OF FINANCIAL LIABILITIES

Financial liabilities are derecognised when the liability is extinguished, that is, the obligation specified in the contract is discharged, cancelled or expires. The difference between the carrying amount of the financial liability derecognised and the consideration paid and payable is recognised in profit or loss.
 

REVENUE

Revenue comprises net invoiced sales to customers, revenue from the rendering of services, rental from leasing fixed and moveable assets, commission and interest earned in the group’s financing operations and excludes value added tax (VAT).

Revenue from the sale of goods is recognised when the significant risks and rewards of ownership are transferred to the buyer, there is no continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold, the amount of revenue can be measured reliably, it is probable that the economic benefits associated with the transaction will flow to the enterprise, and the costs incurred or to be incurred in respect of the transaction can be measured reliably.

Revenue from the rendering of services is recognised when the amount of revenue can be measured reliably, it is probable that the economic benefits will flow to the enterprise, the stage of completion at the reporting period date can be measured reliably, and the costs incurred, or to be incurred, in respect of the transaction can be measured reliably.

Contract product revenue by the cellular service provider is disclosed at the amounts charged to subscribers.

Revenue is measured at fair value of the consideration received or receivable. Revenue is reduced for estimated customer returns, rebates and other similar allowances.

Interest is recognised on a time proportion basis, taking account of the principal amount outstanding and the effective rates over the period to maturity using the effective interest rate method.

Dividends are recognised when the shareholder’s right to receive them has been established.
 

CONSTRUCTION CONTRACTS

When the outcome of a construction contract can be estimated reliably, contract revenue and contract costs are recognised by reference to the stage of completion of the contract activity at the reporting period date, as measured by the proportion that the contract costs incurred for work performed to date bear to the estimated total contract costs. Variations in contract work, claims and incentive payments are included to the extent that they have been agreed with the customer.

Where the outcome of a construction contract cannot be reliably estimated, contract revenue is recognised to the extent that contract costs incurred will be recoverable. Contract costs are recognised as expenses in the period in which they are incurred. When it is probable that total contract costs will exceed total contract revenue, the expected loss is recognised immediately.

When contract costs incurred to date plus recognised profits less recognised losses exceed progress billings, the surplus is shown as amounts due from customers for contract work. For contracts where progress billings exceed contract costs incurred to date plus recognised profits less recognised losses, the surplus is shown as amounts due to customers for contract work. Amounts received before the related work is performed are included in the balance sheet as advances received. Amounts billed for work performed but not yet paid by the customer are included under trade and other receivables.
 

GOVERNMENT GRANTS

Government grants are not recognised until there is reasonable assurance that the grants will be received.

Government grants are recognised in profit or loss on a systematic basis over the period in which the group recognises the expenses relating to costs incurred and for which the government grants are received. Specifically, government grants whose primary condition is that the group should purchase or construct non-current assets are recognised as deferred revenue in the balance sheet and transferred to profit or loss on a systematic basis over the useful lives of the related assets.
 

EMPLOYEE BENEFITS

SHORT-TERM EMPLOYEE BENEFITS

The cost of all short-term employee benefits is recognised during the period in which the employee renders the related service. The provisions for employee entitlements to wages, salaries, performance bonuses and annual leave represent the amounts which the group has a present obligation to pay as a result of employee’s services provided to the reporting period date. The provisions have been calculated at undiscounted amounts based on current wage and salary levels.
 

RETIREMENT BENEFITS

Payments to defined contribution retirement benefit plans are charged as an expense as they fall due. Payments made to state-managed retirement benefit schemes are dealt with as defined contribution plans where the group’s obligations under the schemes are equivalent to those arising in a defined contribution retirement benefit plan.
 

SHARE-BASED PAYMENTS

The group issues equity-settled share-based payments to certain employees. Equity-settled share-based payments are measured at fair value at the grant date. The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis over the vesting period, based on the group’s estimate of shares that will eventually vest, with a corresponding increase in equity. At the end of each reporting period, the group revises its estimate of the number of equity instruments expected to vest. The impact of the revision of the original estimates, if any, is recognised in profit or loss such that the cumulative expense reflects the revised estimate, with a corresponding adjustment to the equity-settled employee benefits reserve.

Fair value is measured by use of a modified binomial option pricing model. The expected lives used in the model have been adjusted, based on management’s best estimate, for the effects of non-transferability, exercise restrictions and behavioural considerations.
 

EMPOWERMENT TRANSACTIONS

Empowerment transactions involving the disposal or issue of equity interests in subsidiaries are recognised when the accounting recognition criteria have been met.

Although economic and legal ownership of such instruments have transferred to the empowerment partner, the accounting derecognition of such equity interest sold by the parent company or recognition of equity instruments issued in the underlying subsidiary is postponed until the significant risks and rewards of ownership of the equity have passed to the empowerment partner.
 

FUNCTIONAL AND PRESENTATION CURRENCY

Items included in the financial statements of each of the group’s entities are measured using the currency of the primary economic environment in which the entity operates (functional currency). The Reunert group’s functional and presentation currency is rand and all amounts, unless otherwise stated, are stated in millions of rand (Rm).
 

FOREIGN CURRENCIES

FOREIGN CURRENCY TRANSACTIONS

Transactions in foreign currencies are translated into the functional currency and accounted for at the rates of exchange ruling on the date of the transaction. Gains and losses arising from the settlement of such transactions are recognised in the income statement on a net basis unless the gains and losses are material, in which case they are reported separately.
 

FOREIGN CURRENCY BALANCES

Foreign monetary assets and liabilities of South African companies are translated into the functional currency at rates of exchange ruling at 30 September each year.

Unrealised differences on foreign monetary assets and liabilities are recognised in the income statement in the period in which they occur.
 

FOREIGN ENTITIES

The financial statements of foreign operations that are consolidated into the group financial statements are translated into rand as follows:
Assets and liabilities at rates of exchange ruling at the group’s financial year-end;
Income, expenditure and cash flow items at the average rates of exchange during the financial year, to the extent that such average rates approximate actual rates; and
Differences arising on translation are reflected in non-distributable reserves as a foreign currency translation reserve.
 
On disposal of part or all of a consolidated foreign operation, the proportionate share of the related cumulative gains and losses previously recognised in the foreign currency translation reserve are included in determining the profit or loss on disposal of that investment recognised in the income statement.

Goodwill and fair value adjustments arising on the acquisition of foreign operations are treated as assets and liabilities of the foreign operation and translated at closing rates at reporting period date.
 

TAXATION

Income tax comprises current and deferred tax.

Income tax for the group is recognised in the income statement except to the extent that it relates to items recognised directly in other comprehensive income, in which case it is recognised in other comprehensive income. The charge for taxation is based on the results for the year as adjusted for items which are non-taxable or disallowed.
 

CURRENT TAXATION

Current taxation comprises tax payable on the taxable income for the year, using the tax rates enacted at the reporting period date, and any adjustment of tax payable in respect of previous years.
 

DEFERRED TAXATION

Deferred tax is provided for using the balance sheet liability method, providing for all temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. The following temporary differences are not provided for: goodwill not deductible for tax purposes and the initial recognition of assets or liabilities (other than in a business combination) that affect neither accounting nor taxable profit.

Deferred tax is calculated at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled. Deferred tax is charged or credited in the income statement, except when it relates to items credited or charged to other comprehensive income, or directly in equity, in which case the deferred tax is also dealt with in other comprehensive income or equity.

The effect on deferred tax of any changes in tax rates is recognised in the income statement, except to the extent that it relates to items recognised in other comprehensive income or directly in equity.
 

EARNINGS PER SHARE

Earnings per share are calculated by dividing earnings attributable to equity holders of Reunert by the weighted average number of shares. Appropriate adjustments are made in calculating diluted, headline and diluted headline earnings.
 

NORMALISED HEADLINE EARNINGS

Normalised headline earnings are determined by eliminating the net economic interest in profit or loss attributable to minority interests with outstanding equity related loan accounts (including their share of any headline earnings adjustments) from headline earnings attributable to equity holders of Reunert.
 

SEGMENT REPORTING

A segment is a distinguishable component of the group that is engaged in activities from which it may earn revenue and incur expenses, including revenues and expenses relating to transactions with other components of the group, whose operating results are regularly reviewed by the chief operating decision-maker and for which discrete financial information is available. Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision-maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Board of the group. The Board makes the group’s strategic decisions.
 

CRITICAL JUDGEMENTS AND ESTIMATES

The preparation of financial statements in conformity with IFRS requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses.

The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgements about carrying values of assets and liabilities that are not readily apparent from other resources. Actual results may differ from the estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods.

In preparing the financial statements in conformity with IFRS, management has made the following significant judgements, estimates and assumptions:
 

Useful lives and residual values

The useful lives and residual values of property, plant and equipment and intangible assets are reviewed at each reporting period date. These useful lives are estimated by management based on historic analysis and other available information. The residual values are based on the assessment of useful lives and other available information.

On an annual basis, the replacement cost of plant and equipment is assessed for insurance purposes.
 

Impairments

Property, plant and equipment as well as intangible assets are considered for impairment when conditions indicate that impairment may be necessary and is considered at least annually. The discounted cash flow method is used, taking into account future expected cash flows, market conditions and the expected useful lives of the assets.

Assumptions were made in assessing any possible impairment of goodwill. Details of these assumptions and risk factors are set out in note 11.
 

Deferred taxation assets

Judgement is applied by management to determine whether a deferred taxation asset should be recognised in the event of a tax loss, based on whether there will be future taxable income against which to utilise the tax loss.
 

Contracts in progress

Various assumptions are applied in arriving at the profit or loss recognised on contracts in progress. Refer to the revenue accounting policy for more detail.
 

Provision for obsolete inventory

Judgement is required to establish whether inventory is obsolete, redundant or slow moving and the extent to which cost exceeds net realisable value.
 

Provision for doubtful debts

Judgement is required to determine the recoverability of trade, lease, rental and other receivables. Various factors are considered when deciding on whether to impair receivables, including general economic conditions, credit terms, payment history and any other knowledge of the financial viability of the customer.
 

Provisions

Various assumptions are applied in arriving at the carrying value of provisions that are recognised in terms of the requirements of IAS 37 – Provisions, Contingent Liabilities and Contingent Assets. This includes the provision for warranty claims and contract completion. The carrying amounts of the provisions are disclosed in note 21.
 

Acquisitions – going concern or asset

Judgement is required to determine whether an acquisition is regarded as a business combination, in terms of IFRS 3 – Business Combinations, or the acquisition of an asset.