2
BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING POLICIES CONTINUED¡
(i) Goodwill
Goodwill is initially measured at cost being excess of the aggregate of the consideration transferred, the amount recognised
for non-controlling interests and any fair value of the Group’s previously held equity interests in the acquiree over the fair
value of the net identifiable assets acquired and liabilities assumed. Goodwill on acquisition of a foreign operation is treated
as an asset of the foreign operation.
Goodwill arising on acquisition is retained at the carrying amount as a separate asset or, as applicable, included within
investments in associated companies and joint ventures at the date of acquisition, and subject to impairment test annually and
when there are indications that the carrying value may not be recoverable. If the cost of acquisition is less than the fair value of the
Group’s share of the net identifiable assets of the acquired company, the di
erence is recognised directly in the income statement.
The profit or loss on disposal of a subsidiary company, associated company or joint venture is calculated by reference to
the net assets at the date of disposal including the attributable amount of goodwill but does not include any attributable
goodwill previously eliminated against reserves.
(j) Railway usage rights
Railway usage rights are carried at cost less accumulated amortisation. Amortisation is calculated using the straight-line
basis over the period of operation of approximately 45 years.
(k) Current and deferred tax
The tax expense for the year comprises current and deferred tax. Tax is recognised in the income statement, 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.
The current tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end of the reporting
period in the countries where the group companies operate and generate taxable income. Management periodically evaluates
positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation and
establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.
Deferred tax is provided in full, using the liabilities method, on temporary di
erences arising between the tax bases of assets
and liabilities and their carrying amounts in the financial statements. Deferred tax assets are recognised to the extent that it
is probable that future taxable profit will be available against which the temporary di
erences can be utilised.
Deferred tax assets and liabilities are o
set when there is a legally enforceable right to o
set current tax assets against current
tax liabilities and when the deferred tax assets and liabilities relate to income taxes levied by the same taxation authority on
either the taxable entity or di
erent taxable entities where there is an intention to settle the balances on a net basis.
(l) Investments
Investments (other than investments in subsidiary companies, associated companies or joint ventures) are non-derivative
financial assets that are not classified as loans and receivables, held-to-maturity investments or financial assets at fair value
through profit or loss. At the end of the reporting period subsequent to initial recognition, these financial assets are carried
at fair value and changes in fair value are recognised in other comprehensive income and accumulated under the heading
of revaluation reserve except for impairment losses which are charged to the income statement. Where these investments
are interest bearing, interest calculated using the e
ective interest method is recognised in the income statement. Dividends
from investments are recognised as other operating income in the income statement when the right to receive payment is
established. When investments are sold, the cumulative fair value gains or losses previously recognised in revaluation reserve
are removed from revaluation reserve and recognised in the income statement.
Notes to the
Financial Statements
OPTIMISING FOR THE FUTURE
080
