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NOTES TO THE GROUP ANNUAL FINANCIAL STATEMENTS
CONTINUED
For the year ended 31 May 2015
113
BLUE LABEL INTEGRATED ANNUAL REPORT 2015
1.
SIGNIFICANT ACCOUNTING POLICIES continued
Provisions
Provisions are recognised when the Group has a present legal or constructive obligation as a result of
past events, it is more likely than not that an outflow of resources embodying economic benefits will
be required to settle the obligation and a reliable estimate of the amount of the obligation can be
made. Provisions are not recognised for future operating expenses.
Provisions are measured at the present value of the expenditures expected to be required to settle the
obligation using a pre-tax rate that reflects current market assessments of the time value of money
and the risks specific to the obligation.
The increase in the provision due to the passage of time is recognised as an interest expense.
Borrowings
Borrowings are recognised initially at fair value, net of transaction costs incurred, when the relevant
contracts are entered into. Borrowings are subsequently stated at amortised cost; any difference
between the proceeds (net of transaction costs) and the redemption value is recognised in the
statement of comprehensive income over the period of the borrowings using the effective interest
rate method.
Financial liabilities are derecognised when the obligation specified in the contract is discharged,
cancelled or expired.
Borrowings are classified as current liabilities unless the Group has an unconditional right to defer
settlement of the liability for at least 12 months after year-end.
Normal taxation
The current income tax charge is calculated on the basis of the tax laws enacted or substantively
enacted at year-end in the countries where the Company’s subsidiaries, associates and joint ventures
operate and generate taxable income. Management periodically evaluates positions taken in tax
returns with respect to situations in which applicable tax regulations are subject to interpretation and
establishes provisions where appropriate on the basis of amounts expected to be paid to the tax
authorities.
The tax expense for the period comprises current and deferred tax. Tax is recognised in the statement
of comprehensive income, 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.
Uncertain tax positions are considered by the Group at the level of the individual uncertainty or group
of related uncertainties.