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ACCOUNTING Policies –

for the year ended June 2006 continued

FOREIGN CURRENCY TRANSLATION

Goodwill and fair value adjustments on the acquisition of a

Functional and presentation currency

foreign operation are treated as assets and liabilities of the

Items included in the financial statements of each entity in the

foreign operation and are translated at the closing rate.

Group are measured using the currency of the primary economic environment in which the entity operates (the functional

ACCOUNTING FOR BEE TRANSACTIONS

currency). The consolidated financial statements are presented

Financial instruments issued by the Group as a part of BEE

in South African Rand, which is the functional and presentation

transactions are, on initial recognition, classified as a liability or

currency of the parent.

as equity in accordance with the substance of the contractual arrangements. BEE transactions are accounted for under

Transactions and balances

IFRS 2, IAS 32 and 39. The effect of this is that the difference

Foreign currency transactions are translated into the functional

between the issue price of the ordinary and preference shares

currency using the exchange rates prevailing at the dates of

issued and the market value at the date of the transaction is

the transactions. Monetary assets and liabilities denominated in

charged to profit or loss.

foreign currencies are converted to functional currency at rates of exchange ruling at year-end. Foreign exchange gains and losses

The policy used to account for equity financial instruments

resulting from the settlement of such transactions and from

issued is disclosed on page 80 (share capital and share

the translation of monetary assets and liabilities denominated

premium). The policy used to account for compound financial

in foreign currencies are recognised in the income statement,

instruments is disclosed on page 80 (convertible, cumulative,

except when deferred in equity as qualifying cash flow hedges.

variable rate preference shares).

Translation differences on non-monetary financial assets and

PROPERTY, PLANT AND EQUIPMENT

liabilities such as equities held at fair value through profit and

Property, plant and equipment is stated at historical cost less

loss are reported as part of the fair value gain or loss. Translation

accumulated depreciation and accumulated impairment losses.

differences on non-monetary financial assets such as equities

Historical cost includes expenditure that is directly attributable

classified as available-for-sale equities are included in the

to the acquisition of the items. Cost includes transfers from

revaluation reserve in equity.

equity of any gains/losses on qualifying cash flow hedges of currency purchase costs.

Group companies The results and financial position of all Group operations (none

Subsequent costs are included in the asset’s carrying amount, or

of which has the currency of a hyperinflationary economy)

recognised as a separate asset, only when it is probable that the

that have a functional currency different from the presentation

future economic benefits associated with the item will flow to the

currency are translated into the Group’s presentation currency

Group and the cost of the item can be measured reliably. All other

on the following basis:

repairs and maintenance are charged to the income statement

• Income statements and cash flows of foreign operations

in the period in which they are incurred. Major renovations are

are translated into the Group’s presentation currency at the

depreciated over the remaining useful life of the related asset.

average exchange rate for the year, unless this average is not a reasonable approximation of the cumulative effect of

Depreciation is calculated to write-off the cost of assets to their

the rates prevailing on the transaction dates, in which case

residual values on the straight-line basis over the estimated

income and expenses are translated at the rates at the dates

remaining useful lives of the assets. The assets’ residual values

of the transactions.

and useful lives are reviewed, and adjusted if appropriate, at

• Assets and liabilities are translated at the closing rate at the balance sheet date.

each balance sheet date. The assumptions regarding estimated remaining useful lives for the 2006 financial year were as follows:

• Exchange differences arising from the translation of the net

Buildings

9 – 61 years

investment in foreign operations, as well as borrowings and

Plant, equipment and major spare parts

1 – 30 years

other currency instruments designated as hedges of such

Computer equipment

1 – 10 years

investments, are recognised as a separate component of

Office equipment and furniture

1 – 16 years

equity. When a foreign operation is sold, such exchange differences are recognised in the income statement as a part

Land and buildings comprise mainly factories and office

of the gain or loss on sale.

buildings. Land is not depreciated. Leasehold improvements

74

Aspen Annual Report 2006

Profile for Aspen Holdings

Aspen Annual Report 2006  

Aspen Annual Report 2006