1    significant accounting policies

The consolidated annual financial statements of Woolworths Holdings Limited ("the company") for the year ended 30 June 2006 comprise the company and its subsidiaries (together referred to as "the group").

statement of compliance

The consolidated annual financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) and its interpretations adopted by the International Accounting Standards Board (IASB). These are the group's first IFRS compliant consolidated annual financial statements and IFRS 1 First Time Adoption of International Financial Reporting Standards has been applied.

Reconciliations and descriptions of the transition from South African Statements of Generally Accepted Accounting Practice to IFRS are provided in note 34. Comparatives have been restated to reflect these adjustments.

basis of preparation

The annual financial statements are prepared on the historical cost basis, except where otherwise indicated. The accounting policies set out below have been consistently applied to all periods presented in these consolidated financial statements and in preparing an opening IFRS balance sheet at 1 July 2004 for the purposes of transition to IFRS. The accounting policies have been consistently applied by group entities.

The key changes impacting the group as a result of the conversion to IFRS arise from the following standards and details thereof are provided in note 34:

• IFRS 2 Share Based Payment;
• IAS 16 (revised) Property, Plant and Equipment;
• IAS 19 (revised) Employee Benefits;
• IAS 21 (revised) The Effects of Changes in Foreign Exchange Rates; and
• IAS 39 (revised) Financial Instruments – Recognition and Measurement.

IFRS 1 requires full retrospective application of the standards with the exception of certain optional and mandatory exemptions. The exemptions applicable to the group as noted below have been elected:

• All cumulative actuarial gains and losses which were previously deferred under AC 116 Employee Benefits under the ‘corridor’ approach, have been recognised at the date of transition to IFRS;
• IFRS 3 Business Combinations has not been applied retrospectively to business combinations prior to 1 July 2004; and
• IFRS 2 Share Based Payment has only been applied to equity instruments which were issued after 7 November 2002 and vest from I July 2004 onward.

use of estimates, judgements and assumptions

The preparation of financial statements in conformity with IFRS requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. The estimates and assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both.

Significant estimates and judgements made relate to the provision for impairment of financial assets (refer note 18), the allowance for net realisable value of inventory (refer note 17), residual values, useful lives and depreciation methods of property, plant and equipment (refer note 9), estimating the fair values of share options (refer note 19 and the share based payment accounting policy) and asset impairment tests (refer impairment accounting policy) and provisions for employee benefits. 

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basis of consolidation

The group annual financial statements consolidate the financial statements of the company and all subsidiaries. A subsidiary is an enterprise over which the group has the power to govern the financial and operating policies so as to obtain benefits from its activities. The results of subsidiaries are included from the effective date of acquisition up to the effective date of disposal. All subsidiaries with the exception of Virtual Market Place (Proprietary) Limited and the Woolworths Holdings Share Trust have financial years ending 30 June and are consolidated to that date. The results of subsidiaries with year ends differing from that of the group are compiled for a twelve month period ending 30 June and consolidated to that date.

All intragroup balances, transactions, income and expenses and profit and losses resulting from intragroup transactions are eliminated in full.

The company carries its investments in subsidiaries at cost less accumulated impairment losses.

foreign currency translations

The consolidated and company annual financial statements are presented in South African rand, the group presentation currency and both the presentation and functional currency of the company. Functional currency is the currency of the primary economic activity of the company and presentation currency is the currency in which the financial statements are presented.

Foreign currency transactions are recorded at the exchange rates ruling on the transaction dates. Monetary assets and liabilities designated in foreign currencies are translated at rates of exchange ruling at the balance sheet date, gains and losses thereon are recognised in the income statement.

Foreign operations are translated from their functional currency into South African rand at the rates of exchange ruling at the balance sheet date in respect of balance sheet items and at an average rate per month in respect of income statement items. Gains and losses on the translation of foreign operations are taken directly to non-distributable reserves.

Translation gains and losses arising on loans which form part of the net investment in the foreign operation are reported in the income statement in the company extending the loan. In the consolidated financial statements they are carried in equity until realised, when they are recognised in the income statement.

property, plant and equipment

All items of property, plant and equipment are initially recognised at cost which includes any costs directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management.

The cost of an item of property, plant and equipment is recognised as an asset if it is probable that future economic benefits associated with the item will flow to the group and the cost of the item can be measured reliably. Development costs are capitalised when the technical feasibility of the asset has been demonstrated and the intention to complete and utilise the asset is confirmed. The property portfolio is valued internally on an annual basis and every three years by independent valuers. Furniture, fittings, motor vehicles, computers and computer software are shown at original cost less accumulated depreciation and any impairment in value.

Subsequent to initial recognition, buildings and leasehold improvements are shown at cost less accumulated depreciation and any impairment in value. Land is measured at cost, less any impairment in value.

Subsequent expenditure including the cost of replacing parts of the asset, other than day-to-day servicing costs, are included in the cost of the asset when incurred if it is probable that such expenditure will result in future economic benefits associated with the item flowing to the company and the cost is reliably measurable.

An asset is depreciated from when it is available for use. Depreciation of an asset ceases at the earlier of the date that the asset is derecognised or the date classified as held for sale (or included in a disposal group that is classified as held for sale) in accordance with IFRS 5 Non-Current Assets Held for Sale and Discontinued Operations. The depreciable amount of an asset, being the cost of the asset less the residual value, is allocated on a straight-line basis over the estimated useful life of the asset. Residual value is the estimated amount that an entity would currently obtain from disposal of the asset after deducting the estimated costs of disposal, if the asset were already of the age and in the condition expected at the end of its useful life. Whilst residual value exceeds carrying value, depreciation is discontinued.

Each part of an item of property, plant and equipment with a cost that is significant in relation to the total cost of the item is depreciated separately.

The residual values, useful lives and depreciation methods applied to assets are reviewed at each financial year end based on relevant market information and management consideration.

Useful lives per asset category are:

An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset is included in the income statement in other operating costs in the year that the asset is derecognised.

Items of property, plant and equipment are assessed for impairment as detailed in the accounting policy note on impairment.

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goodwill

All business combinations are accounted for by applying the purchase method. Goodwill arises on the acquisition of subsidiaries, associates, joint ventures and business operations and represents the excess of the cost of the business combination over the group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities recognised. The cost of the business combination is the fair value at the date of exchange of the assets given, liabilities incurred or assumed, and equity instruments issued by the group, in exchange for control of the acquiree; and any costs directly attributable to the business combination.

At the acquisition date, goodwill acquired in a business combination is recognised as an asset and initially measured at its cost. The acquisition date is the date on which the group effectively obtains control of the acquiree.

After initial recognition goodwill acquired in a business combination is measured at cost less any accumulated impairment losses. Goodwill is allocated to cash generating units and tested for impairment annually using a discounted cash flow methodology. An impairment loss on goodwill is not reversed.

investment properties

Investment properties are land and buildings which are held either to earn rental income or for capital appreciation or both. Investment properties are initially recognised at cost, including transaction costs, when it is probable that future economic benefits associated with the investment property will flow to the group and the cost of the investment property can be measured reliably.

The cost of a purchased investment property comprises its purchase price and any directly attributable expenditure. The cost of a self-constructed investment property is its cost at the date when the construction development is complete.

Investment properties are accounted for under the cost model and the accounting treatment after initial recognition follows that applied to property, plant and equipment.

Any gains or losses on the retirement or disposal of an investment property are recognised in the income statement in other operating costs in the year of retirement or disposal. Transfers are made from or to investment properties when there is a change in use of the property.

taxes

current tax

Current tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered or paid to the taxation authorities. The tax rates and laws used to compute the amount are those enacted or substantively enacted by the balance sheet date.

Current tax assets and liabilities are offset if the company has a legally enforceable right to offset the recognised amounts and it intends to settle on a net basis, or to realise the asset and settle the liability simultaneously.

deferred tax

Deferred tax is provided on the liability basis on the temporary differences at the balance sheet date between the carrying values, for financial reporting purposes, and tax bases of assets and liabilities.

Deferred tax assets are recognised for all deductible temporary differences to the extent that it is probable that future taxable profit will allow the deferred tax asset to be utilised, unless the deferred tax asset arises from the initial recognition of an asset or liability in a transaction that is not a business combination, and at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred tax assets are reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient future taxable income will be available for utilisation of the asset.

Deferred tax liabilities are recognised for all taxable temporary differences except where the deferred tax liability arises from the initial recognition of goodwill, or the initial recognition of an asset or liability in a transaction which is not a business combination and at the time of the transaction affects neither accounting nor taxable profit or loss.

Deferred tax assets and liabilities are measured at tax rates that are expected to apply to the period when the asset is realised or the liability settled, based on tax rates and tax laws that have been enacted or substantively enacted at the balance sheet date.

The measurement of deferred tax assets and liabilities reflect the tax consequences that would follow from the manner in which the group expects, at the balance sheet date, to recover or settle the carrying values of its assets and liabilities.

Current and deferred tax is credited or charged directly to equity if it relates to items credited or charged directly to equity.

Deferred tax assets and liabilities are offset if the company has a legally enforceable right to set off current tax assets against current tax liabilities, and the deferred tax assets and liabilities relate to income taxes levied by the same taxation authority on the same taxable entity, or different taxable entities that intend to settle current tax assets and liabilities on a net basis, or realise the asset and settle the liability simultaneously.

secondary tax (“STC”) on companies

STC, including STC arising on the repurchase by the company of its own equity instruments, is accounted for as part of the tax charge in the income statement and not as a deduction directly from equity, in the same period as the related dividend.

current assets and liabilities

Current assets and liabilities have maturity terms of less than 12 months or are expected to be settled in the group's normal operating cycle.

inventories

Merchandise, raw materials and consumables are initially recognised at cost. The cost of merchandise is determined using the retail inventory method which reduces the sales value of inventory by the appropriate gross margin. The cost of raw materials and consumables is determined on the weighted average cost formula.

Subsequent to initial recognition, inventories are measured at the lower of cost and net realisable value. Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs necessary to make the sale. Management estimate, based on their assessment of quality and volume, the extent to which merchandise on hand at the reporting date will be sold below cost.

The carrying amount of inventories is recognised as an expense in the period in which the related revenue is recognised.

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leases

Finance leases are leases whereby substantially all the risks and rewards of ownership are passed onto the lessee. Assets acquired in terms of finance leases are capitalised and depreciated over the shorter of the useful life of the asset or lease period, with a corresponding liability raised on the balance sheet. Related finance costs are charged to income using the effective interest rate method over the period of the lease.

Leases where the lessor retains substantially all the risks and benefits of ownership of the asset are classified as operating leases. Operating lease expenses and income are recognised in the income statement on a straight line basis over the lease term. Contingent rental escalations, such as those relating to turnover, are expensed in the year in which the escalation is determined.

retirement benefits

Current contributions to defined contribution retirement plans are charged to income as incurred.

The group has an obligation to provide certain post-employment medical aid benefits to certain employees and pensioners. The calculated cost arising in respect of post-retirement medical aid benefits is charged to income as services are rendered by employees. The present value of future medical aid subsidies for past and current service is actuarially determined in accordance with IAS 19 Employee Benefits. The cost of providing benefits under the plan is determined using the projected unit credit valuation method. Plan assets are assets which can only be used to satisfy the obligations of the fund and are measured at fair value. Actuarial gains and losses are recognised as income or an expense when the cumulative unrecognised actuarial gains or losses at the end of the previous reporting period exceed 10% of the greater of the defined obligation and the fair value of the plan assets. The gains or losses are recognised over the expected average remaining working lives of the employees participating in the plan. Any curtailment benefits or settlement amounts are recognised against income as incurred.

share based payment transactions

Shares and share options granted to employees in terms of the share incentive scheme, meet the definition of share based payment transactions.  

The equity settled share option programme allows group employees to acquire shares of the company. The fair value of granted is recognised as an expense with a corresponding increase in equity. Fair value is measured at grant date and expensed over the period over which the employees become unconditionally entitled to the share options. The fair value of the share options granted is measured using a binomial model, taking into account the terms and conditions under which the options were granted. Where shares are granted at a discount to the ruling market price, the intrinsic value is expensed over the vesting period of the grant. Changes in estimates of the number of shares or share options that will ultimately vest are included in the charge for the year. No subsequent adjustments are made after the vesting date.

provisions

Provisions are recognised when the group has a present legal or constructive obligation as a result of past events, for which it is probable that an outflow of economic benefits will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. Where the effect of discounting to present value is material, provisions are adjusted to reflect the time value of money.

impairment

The carrying amount of the group's assets, other than inventories (see accounting policy note for inventories), goodwill (see accounting policy note for goodwill) and deferred tax assets (see accounting policy note for deferred tax), are reviewed at each balance sheet date for any indication of impairment. If such an indication exists, the asset's recoverable amount is estimated.

The recoverable amount is the higher of the asset's fair value less costs to sell and its value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For an asset that does not generate largely independent cash inflows, the recoverable amount is determined for the cash generating unit to which the asset belongs.

The recoverable amount of the group's investments in loans and receivables is calculated as the present value of estimated future cash flows, discounted at the asset's original effective interest rate. Financial assets are subject to impairment when there is objective evidence that a loss event has impacted the estimated future cash flows to be received from that asset.

Impairment losses are recognised in the income statement where the carrying amount of an asset or its cash generating unit exceeds its recoverable amount. assets are identified as impaired, the difference between cost and current fair value less previously recognised

If available-for-sale assets are identified as impaired, the difference between cost and current fair value less previously recognised impairment loss is transferred from equity to the income statement.

Impairment losses in respect of loans and receivables carried at amortised cost and available-for-sale assets are reversed if the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment loss was recognised. Impairment losses for property, plant and equipment are reversed if the subsequent increase in the recoverable amount can be related objectively to an event occurring after the impairment loss was recognised.

financial instruments

recognition

Financial assets and financial liabilities are initially recognised on the balance sheet when the group becomes party to the contractual provisions of the instrument.

The trade date method of accounting has been adopted for 'regular way' of purchases or sales of financial assets. The trade date is the date that an enterprise commits to purchase or sell an asset. A 'regular way' of contract is a contract for the purchase or sale of financial assets that requires delivery of the assets within the time frame generally established by regulation or convention in the market place concerned.

derecognition 

financial assets

A financial asset is derecognised where the rights to receive cash from the asset have expired, or the group has transferred the asset and the transfer qualifies for derecognition. A transfer qualifying for derecognition occurs when the group transfers the contractual rights to receive the cash flows of the financial asset, or retains the rights but assumes a contractual obligation to pay those cash flows to a third party under a pass-through arrangement, or the group has transferred control or substantially all the risks and rewards of the asset.

Where the group has transferred its rights to the cash flows from an asset and has neither transferred nor retained substantially all the risks and rewards of the asset nor transferred control of the asset, the asset is recognised to the extent of the group's continuing involvement in the asset.

financial liabilities

A financial liability is derecognised when the obligation specified in the contract is discharged, cancelled or expired. An exchange between the group and an existing lender of debt instruments with substantially different terms or a substantial modification to an existing financial liability is accounted for as an extinguishment of the original financial liability and the recognition of a new financial liability.

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measurement

Financial instruments are initially measured at fair value, which includes directly attributable transaction costs in the case of financial assets and liabilities not at fair value through profit or loss.

For the purposes of measurement after initial recognition, financial assets are classified into the four categories being, at fair value through profit or loss, held-to-maturity investments, loans and receivables, and available-for-sale.

loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Such assets are carried at amortised cost, using the effective interest method, less accumulated impairment. Gains and losses are recognised in the income statement when the loans and receivables are derecognised or impaired, and through the amortisation process.

The group has classified the following financial assets as loans and receivables:

participation in export partnerships

Amortised cost for the group's participation in export partnerships is the group's cost of original participation less principal subsequent repayments received, plus the cumulative amortisation of the difference between the initial amount and the maturity amount, less any write down for impairment or uncollectability. A corresponding deferred tax liability, equal to the cost of original participation together with the group's share of the partnership gross profit less the group's share of subsequent amounts received by the partnership, is recorded.

financial services assets

Financial services assets comprise loans to customers, Woolworths in-store card and credit card receivables.

other loans

Other loans comprise housing and other employee loans.

accounts receivable

Accounts receivable comprise all trade and non-trade debtors other than financial services debtors. Short-duration receivables with no stated interest rate are measured at original invoice amount unless the effect of imputing interest is significant.

cash and cash equivalents

Cash and cash equivalents comprise cash at bank, overdrafts and interest bearing money market borrowings. Cash equivalents are held for the purpose of meeting short-term cash commitments rather than for investment or other purposes.

available-for-sale financial assets

Available-for-sale assets are those non-derivative financial assets that are designated as available-for-sale or are not classified in one of the other three categories.

After initial recognition, available-for-sale assets are measured at fair value with gains and losses recognised in equity until the asset is derecognised or determined to be impaired at which time the cumulative gain or loss previously reported in equity is included in the income statement.

The fair value of investments traded in an active market is determined with reference to quoted market bid prices at close of business on the balance sheet date. Where there is no active market, fair value is determined using valuation techniques. Such valuation techniques include using recent arm's length market transactions, reference to current market value of other substantially similar instruments, discounted cash flow analysis and option pricing models.

The group has classified the following financial assets as available-for-sale:

investments

Investments, not held for trading, are classified as available-for-sale and are carried at fair value.

derivative instruments

The group uses derivative financial instruments, being foreign exchange contracts and interest rate swaps and options, to hedge its risks associated with foreign currency and interest rate fluctuations respectively. It is the group's policy not to trade in derivative financial instruments for speculative purposes. Details of the group's financial risk management objectives are set out in notes 28 and 29.

The fair value of forward exchange contracts is calculated by reference to forward exchange rates for contracts with similar maturity profiles at year end. The fair value of interest rate swap and option contracts is determined by reference to market values for similar instruments at year end.

Derivative instruments not designated as hedging instruments or subsequently not expected to be effective hedges are marked to market and the resulting gain or loss is recognised in the income statement in the period in which it arises.

For hedging instruments that qualify as cash flow hedges, the gain or loss on marking the instrument to market is carried in equity until such time as the transaction is entered into, at which point the amount carried in equity is reversed to the cost of the transaction.

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financial liabilities

Financial liabilities consist of term borrowings, trade and other payables, accruals and derivatives held for hedging. Financial liabilities are recognised at amortised cost, being original debt value less principal payments and amortisations, except for derivatives which are measured at fair value.

Finance costs are expensed in the income statement in the period in which they are incurred using the effective interest rate method.

offset

Where a legally enforceable right of offset exists for recognised financial assets and financial liabilities, and there is an intention to settle the liability and realise the asset simultaneously, or to settle on a net basis, such related financial assets and financial liabilities are offset.

treasury shares

Shares in Woolworths Holdings Limited held by wholly-owned group companies are classified as treasury shares. These shares are treated as a deduction from the issued and weighted average numbers of shares and the cost price of the shares is deducted from group equity. Distributions received on treasury shares are eliminated on consolidation. No gains or losses are recognised in the group income statement on the purchase, sale, issue or cancellation of treasury shares.

revenue recognition

Revenue of the group comprises:

• Turnover: net merchandise sales, sales to franchisees and logistics services; and
• Other revenue: interest, royalties, dividends, rentals, and franchise and other commissions.

Revenue is recognised when it is probable that the economic benefits associated with the transaction will flow to the group and the amount of the revenue can be measured reliably.

Revenue is recognised on the following bases: 

• sale of merchandise is recognised when the group has transferred to the buyer the significant risks and rewards of ownership of the merchandise, the amount of revenue can be measured reliably and it is probable that the economic benefits associated with the transaction will flow to the group;
• logistics services relates to the transport of goods on behalf of third parties and is recognised when the service has been provided;
• interest income is recognised as interest accrues using the effective interest method;
• royalties are recognised on an accrual basis in accordance with the substance of the relevant agreement;
• dividends are recognised when the shareholder's right to receive payment is established;
• commissions are recognised on an accrual basis in accordance with the substance of the relevant agreement when the sale which gives rise to the commission has occurred; and
• rental income for fixed escalation leases is recognised on a straight-line basis where the lease has a fixed escalation clause.
  Contingent rentals are recognised in the year in which they arise.

Revenue is measured at the fair value of the consideration received or receivable excluding value added tax.

finance costs

No finance costs associated with the development of property, plant and equipment are capitalised.

research and development

Research costs are expensed as incurred.

Development costs are recognised as an expense in the period in which they are incurred unless the product or process is clearly defined and the costs attributable to the process or product can be separately identified and measured reliably. The extent of capitalisation is limited to the amount which, when taken together with further related costs, is likely to be recovered from future economic benefits.

exceptional items

Exceptional items are significant items, of an unusual nature, identified by management as warranting separate disclosure.

segmental information

The primary segments of the group have been identified by nature of business, being retail and financial services. The retail segment is further subdivided by chain being Woolworths and Country Road. Each segment has its own revenues, profits, assets and liabilities Support charges are allocated between the retail and financial services segments on a usage basis.

Segmental results, assets and liabilities include items directly attributable to a segment and those that can be allocated on a reasonable basis.

The secondary segments are based on the location of customers and assets.

The accounting policies are consistently applied in determining the segmental information.

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earnings per share

The calculation of earnings per share is based on profit for the period attributable to ordinary shareholders and the weighted average number of ordinary shares in issue during the year. Headline earnings per share is calculated in accordance with Circular 7/2002 issued by the South African Institute of Chartered Accountants.

distributions to shareholders

Distributions are recorded in the period in which the distribution is declared and charged directly to equity.

IFRS and interpretations not yet effective

The group has early adopted the following IFRS amendment that has been issued but is not yet effective:

• IAS 1 Amendment - Capital Disclosures (effective 1 January 2007)

The group has not applied the following IFRS, IFRIC interpretations and amendments that have been issued but are not yet effective and currently have no impact on the financial statements*: 

• IFRIC 4 Determining whether an Arrangement Contains a Lease (effective 1 January 2006)
  This interpretation addresses how to determine whether an arrangement is, or contains, a lease as defined in IAS 17 when the assessment or a reassessment of whether an arrangement is, or contains, a lease should be made; and if an arrangement is, or contains, a lease, how the payments for the lease should be separated from payments for any other elements in the arrangement.
• IFRIC 8 Scope of IFRS 2 (effective 1 May 2006)
  The interpretation addresses whether IFRS 2 applies to transactions in which the entity cannot identify specifically some or all of the goods or services received and concludes that unidentifiable goods or services must be measured as the difference between the fair value of the share based payment and the fair value of any identifiable goods or services received or to be received.
• IFRIC 9 Reassessment of Embedded Derivatives (effective 1 June 2006)
  The interpretation addresses the issue of whether IAS 39 requires a reassessment to be made of whether any embedded derivatives contained in a contract are required to be separated from the host contract throughout the life of the contract. The interpretation concludes that subsequent reassessment is prohibited unless there is a change in the terms of the contract that significantly modifies the cash flows that otherwise would be required under the contract, in which case reassessment is required.
• AC 503 Accounting for Black Economic Empowerment (BEE) Transactions (effective 1 May 2006)
  This interpretation addresses the accounting treatment of costs incurred in acquiring BEE credentials and concludes that where it is not acquired in a business combination it should be expensed. When the BEE credentials are acquired as part of a business combination, it forms part of goodwill.
• IAS 19 Amendment – Employee Benefits and Actuarial Gains and Losses, Group Plans and Disclosures (effective 1 January 2006)
  The amendment allows actuarial gains and losses to be recognised directly in equity.
• IAS 39 Amendment – The Fair Value Option (effective 1 January 2006).
  The amendment allows financial assets to be designated unconditionally upon initial recognition as being held at fair value through profit and loss.

The group has not applied the following IFRS, IFRIC interpretations and amendments that have been issued but are not yet effective*: 

• IAS 39 Amendment – Financial Guarantee Contracts (effective 1 January 2006)
  The amendment requires guarantee contracts not designated as insurance contracts to be accounted for in accordance with IAS 39, measured initially at fair value and subsequently in accordance with IAS 37 Provisions, Contingent Liabilities and Contingent Assets and IAS 18 Revenue; and
• IFRS 7 Financial Instruments: Disclosure (effective 1 January 2007)
  Application of the standard will result in additional disclosure of qualitative and quantitative information in respect of the risks arising from financial instruments to which the group is exposed.

 * Effective for annual periods beginning on or after the stated date.