Page 129 - ar2010

notes to the

financial statements

4 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (n) Borrowings (i) Classifcation

Borrowings are initially recognised based on the proceeds received, net of transaction costs incurred. In subsequent

periods, borrowings are stated at amortised cost using the effective yield method; any difference between proceeds (net of transaction costs) and the redemption value is recognised in the proft or loss over the period of the borrowings.

Borrowings are classifed as current liabilities unless the Group has an unconditional right to defer settlement of the liability

for at least 12 months after the end of the reporting period.

Borrowing costs incurred to fnance the freehold land and development of the new building is capitalised as part of the

cost of the property, plant and equipment during the period of time that is required to complete and prepare the asset for its intended use. All other borrowing costs are expensed to the proft or loss.

The Group has changed its accounting policy for borrowing costs upon adoption of FRS 123 “Borrowing costs” on 1

January 2010. The Group has applied the new accounting policy according to the transitional provision.

The new policy is applied to qualifying assets for which commencement date for capitalisation is on 1 January 2010.

Previously, borrowing costs were immediately expensed when incurred.

The tax expense for the period comprises current and deferred tax. Tax is recognised in proft or loss, 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.

Current tax expense is determined according to the tax laws of each jurisdiction in which the Group operates and includes all

taxes based upon the taxable profts, including withholding taxes payable by a foreign subsidiary or associate on distributions of retained earnings to companies in the Group.

Deferred tax is recognised in full, using the liability method, on temporary differences arising between the amounts attributed

to assets and liabilities for tax purposes and their carrying amounts in the fnancial statements. However, deferred tax is not accounted for if it arises from the initial recognition of an asset or liability in a transaction other than a business combination that, at the time of the transaction, affects neither accounting nor taxable proft or loss.

Deferred tax assets are recognised to the extent that it is probable that taxable profts will be available against which the

deductible temporary differences or unused tax losses can be utilised.

Deferred tax is recognised on temporary differences arising on investments in subsidiaries and associates, except where the

timing of the reversal of the temporary difference can be controlled and it is probable that the temporary difference will not reverse in the foreseeable future.

Deferred tax is measured using the tax rates (or tax laws) that are expected to apply to the period when the asset is realised or

the liability is settled, based on tax rates that have been enacted or substantively enacted at the end of the reporting period.

Deferred tax is recognised in the proft or loss, except when it arises from a transaction which is recognised directly in equity,

in which case the deferred tax is also charged or credited directly to equity, or when it arises from a business combination that is an acquisition, in which case, the deferred tax is included in the resulting goodwill.

Deferred and income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against

current tax liabilities and when the deferred income tax assets and liabilities relate to taxes levied by the same taxation authority on either the taxable entity or different taxable entities where there is an intention to settle the balance on a net basis.