ANNUAL REPORT 2015
53
Notes to the Combined
Financial Statements
As at 30 September 2015
2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d)
Assets held under finance leases are depreciated over their expected useful lives on the same basis as owned assets or, if there is no
certainty that the lessee will obtain ownership by the end of the lease term, the asset shall be fully depreciated over the shorter of the
lease term and its useful life.
The gain or loss arising on disposal or retirement of an item of property, plant and equipment is determined as the difference between
the sales proceeds and the carrying amounts of the asset and is recognised in profit or loss.
GOODWILL - Goodwill arising in a business combination is recognised as an asset at the date that control is acquired (the acquisition
date). Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any non-controlling interest in the
acquiree and the fair value of the acquirer’s previously held equity interest (if any) in the entity over net of the acquisition-date amounts
of the identifiable assets acquired and the liabilities assumed.
If, after reassessment, the Group’s interest in the fair value of the acquiree’s identifiable net assets exceeds the sum of the consideration
transferred, the amount of any non-controlling interest in the acquiree and the fair value of the acquirer’s previously held equity interest
in the acquiree (if any), the excess is recognised immediately in profit or loss as a bargain purchase gain.
Goodwill is not amortised but is reviewed for impairment at least annually. For the purpose of impairment testing, goodwill is allocated
to each of the Group’s cash-generating units expected to benefit from the synergies of the combination. Cash-generating units to which
goodwill has been allocated are tested for impairment annually, or more frequently when there is an indication that the unit may be
impaired. If the recoverable amount of the cash-generating unit is less than its carrying amount, 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. An impairment loss recognised for goodwill is not reversed in a subsequent period.
On disposal of a subsidiary or the relevant cash generating unit, the attributable amount of goodwill is included in the determination of
profit or loss on disposal.
The Group’s policy for goodwill arising on the acquisition of associate is described under “Associates” below.
IMPAIRMENT OF NON-FINANCIAL ASSETS EXCLUDING GOODWILL - At the end of each financial year, the Group reviews the carrying
amounts of its non-financial assets to determine whether there is any indication that those assets have suffered an impairment loss. If
any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if
any). Where it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of
the cash-generating unit to which the asset belongs. Where a reasonable and consistent basis of allocation can be identified, corporate
assets are also allocated to individual cash-generating units, or otherwise they are allocated to the smallest Group of cash-generating
units for which a reasonable and consistent allocation basis can be identified.
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-tax 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 cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of
the asset (cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss.
Where an impairment loss subsequently reverses, the carrying amount of the asset (cash-generating unit) is increased to the revised
estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have
been determined had no impairment loss been recognised for the asset (cash-generating unit) in prior years. A reversal of an impairment
loss is recognised immediately in profit or loss.
ASSOCIATES - An associate is an entity over which the Group has significant influence and that is neither a subsidiary nor an interest in
a joint venture. Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not
control or joint control over those policies.
The results and assets and liabilities of associates are incorporated in these financial statements using the equity method of accounting,
except when the investment is classified as held for sale, in which case it is accounted for under FRS 105
Non-current Assets Held
for Sale and Discontinued Operations
. Under the equity method, investments in associates are carried in the combined statement of
financial position at cost as adjusted for post-acquisition changes in the Group’s share of the net assets of the associate, less any
impairment in the value of individual investments. Losses of an associate in excess of the Group’s interest in that associate (which
includes any long-term interests that, in substance, form part of the Group’s net investment in the associate) are not recognised, unless
the Group has incurred legal or constructive obligations or made payments on behalf of the associate.
