Annual integrated report 2017

1.8 Finance charges

Finance charges comprise interest payable on borrowings calculated using the effective interest method. The interest expense component of

finance lease payments is recognised in the statement of profit or loss using the effective interest method.

1.9 Borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of assets that take a substantial period of time to prepare

for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially complete.

Capitalisation is suspended during extended periods in which active development is interrupted. All other borrowing costs are expensed in the

period in which they are incurred.

1.10 Cash and cash equivalents

Cash and cash equivalents comprise cash on hand, deposits held on call with banks net of bank overdrafts and investment in money market

instruments, all of which are available for use by the group unless otherwise stated.

1.11 Property, plant and equipment

Property, plant and equipment are reflected at cost to the group, less accumulated depreciation and accumulated impairment losses. Land

is stated at cost and is not depreciated. The present value of the estimated cost of dismantling and removing items and restoring the site in

which they are located is provided for as part of the cost of the asset. Depreciation is provided for on the straight-line basis over the estimated

useful lives of the property, plant and equipment to anticipated residual values. Estimate useful lives are:

Freehold buildings

Up to 50 years

Leasehold premises

Over the period of the lease

Plant and equipment

5 to 20 years

Office equipment, furniture and fittings

3 to 15 years

Vehicles

3 to 15 years

Depreciation methods, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate.

Subsequent expenditure is capitalised only if it is probable that the future economic benefits associated with the expenditure will flow to

the group.

Any gain or loss on disposal of an item of property, plant and equipment is recognised in profit or loss.

1.12 Leases

Leases that transfer substantially all the risks and rewards of ownership of the underlying asset to the group are classified as finance leases.

Assets acquired in terms of finance leases are capitalised at the lower of fair value and the present value of the minimum lease payments at

inception of the lease, and depreciated over the estimated useful life of the asset. The capital element of future obligations under the leases is

included as a liability in the statement of financial position. Lease payments are allocated using the effective interest method to determine the

lease finance cost, which is charged against income over the lease period, and the capital repayment, which reduces the liability to the lessor.

Leases where the lessor retains the risks and rewards of ownership of the underlying asset are classified as operating leases. Operating

leases, which have a fixed determinable escalation, are charged against income on a straight-line basis. Leases with contingent escalations

are expensed as and when incurred.

1.13 Goodwill

Goodwill arising on acquisition of a business is carried at cost, as established at the date of the acquisition of the business, less accumulated

impairment losses. Goodwill is tested annually for impairment. For the purposes of impairment testing, goodwill is allocated to each of the

group’s cash-generating units that are expected to benefit from the synergies of the business combination. Goodwill is monitored at an

operational segment level (eg Australasia, Europe, Emerging Markets and United Kingdom).

Annual integrated report 2017

Bid Corporation Limited