ANNUAL REPORT 2015 |
111
NOTES TO THE FINANCIAL STATEMENTS
30 June 2015 (cont’d)
4. SIGNIFICANT ACCOUNTING POLICIES (cont’d)
4.9 Impairment of non-financial assets (cont’d)
In estimating the value in use, the estimated future cash inflows and outflows to be derived from continuing use of
the asset and from its ultimate disposal 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 which the future cash flow
estimates have not been adjusted. An impairment loss is recognised in profit or loss when the carrying amount of the
asset or the CGU, including the goodwill or intangible asset, exceeds the recoverable amount of the asset or the CGU.
The total impairment loss is allocated, first, to reduce the carrying amount of any goodwill allocated to the CGU and then
to the other assets of the CGU on a pro-rata basis of the carrying amount of each asset in the CGU.
The impairment loss is recognised in profit or loss immediately.
An impairment loss on goodwill is not reversed in subsequent periods. An impairment loss for other assets is reversed
if, and only if, there has been a change in the estimates used to determine the assets’ recoverable amount since the last
impairment loss was recognised.
An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount
that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.
Such reversals are recognised as income immediately in profit or loss.
4.10 Inventories
Inventories are stated at the lower of cost and net realisable value.
Cost is determined using the weighted average method. The cost of consumables and raw materials comprises all costs
of purchase plus other costs incurred in bringing the inventories to their present location and condition. The cost of
work-in-progress and finished goods includes the cost of rawmaterials, direct labour, other direct cost and a proportion
of production overheads based on normal operating capacity of the production facilities.
Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of
completion and the estimated costs necessary to make the sale.
4.11 Financial instruments
A financial instrument is any contract that gives rise to a financial asset of one enterprise and a financial liability or equity
instrument of another enterprise.
A financial asset is any asset that is cash, an equity instrument of another enterprise, a contractual right to receive
cash or another financial asset from another enterprise, or a contractual right to exchange financial assets or financial
liabilities with another enterprise under conditions that are potentially favourable to the Group.
A financial liability is any liability that is a contractual obligation to deliver cash or another financial asset to another
enterprise, or a contractual obligation to exchange financial assets or financial liabilities with another enterprise under
conditions that are potentially unfavourable to the Group.
Financial instruments are recognised on the statement of financial position when the Group has become a party to the
contractual provisions of the instrument. At initial recognition, a financial instrument is recognised at fair value plus, in
the case of a financial instrument not at fair value through profit or loss, transaction costs that are directly attributable
to the acquisition or issuance of the financial instrument.
