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Financial liabilities are recognised when the Group becomes a party to the contractual agreements of the
instrument. All interest related charges is recognised as an expense in “finance cost” in the income statement.
Trade payables are recognised initially at their fair value and subsequently measured at amortised cost less
settlement payments.
Dividend distributions to shareholders are included in ‘other current liabilities’ when the dividends are approved
by the shareholders’ meeting.
3.14 INVENTORIES
Inventories of finished goods, consumable store and spares are valued at cost or net realisable value, whichever
is lower. Cost of raw materials and packing materials is ascertained on a weighted average cost basis. Cost
of work-in-process and finished goods include the cost of materials consumed, labour and manufacturing
overheads. Excise and customs duty accrued on production or import of goods, as applicable, is included in the
valuation of inventories.
Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of
completion and selling expenses.
The factors that the Group considers in determining the allowance for slow moving, obsolete and other
non-saleable inventory includes estimated shelf life, planned product discontinuances, price changes, ageing of
inventory and introduction of competitive new products, to the extent each of these factors impact the Group’s
business and markets. The Group considers all these factors and adjusts the inventory provision to reflect its
actual experience on a periodic basis.
3.15 ACCOUNTING FOR INCOME TAXES
Income tax expense consists of current and deferred tax. Income tax expense is recognised in income statement
except to the extent that it relates to items recognised in Other Comprehensive Income, in which case it is
recognised in Other Comprehensive Income. Current tax is the expected tax payable on the taxable income
for the year, using tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax
payable in respect of previous years.
Deferred tax is recognised using the statement of financial position method, providing for temporary differences
between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for
taxation purposes.
Deferred tax is not recognised for the following temporary differences:
- The initial recognition of assets or liabilities in a transaction that is not a business combination and that
affects neither accounting nor taxable profit, and
- Differences relating to investments in subsidiaries and jointly controlled entities to the extent that it is
probable that they will not reverse in the foreseeable future.
In addition, deferred tax is not recognised for taxable temporary differences arising upon the initial recognition of
goodwill. Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences
when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date.
Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities
and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on
different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets
and liabilities will be realised simultaneously.
A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available
against which the temporary difference can be utilised. Deferred tax assets are reviewed at each reporting date
and are reduced to the extent that it is no longer probable that the related tax benefit will be realised.
3.16 LEASING ACTIVITIES
At the inception of a lease, the lease arrangement is classified as either a finance lease or an operating lease,
based on the substance of the lease arrangement.
Finance leases
A finance lease is recognised as an asset and a liability at the commencement of the lease, at the lower of the
fair value of the asset or the present value of the minimum lease payments. Initial direct costs, if any, are also
capitalised and, subsequent to initial recognition, the asset is accounted for in accordance with the accounting
policy applicable to that asset. Minimum lease payments made under finance leases are apportioned between
the finance expense and the reduction of the outstanding liability. The finance expense is allocated to each period
during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability.
Operating leases
Other leases are operating leases, and the leased assets are not recognised on the Company’s balance sheet.
Payments made under operating leases are recognised in income statement on a straight-line basis over the
term of the lease.
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