NOTES ON THE ACCOUNTS
1. Principal accounting policies
a. Group consolidation
The consolidated accounts include the accounts of the Company and all its subsidiary companies. Minority interests represent the outside shareholders' proportion of the net assets of subsidiary companies. The consolidated accounts include the Group's portion of profits less losses of its associated companies and the relevant share of their post-acquisition reserves.
Goodwill on consolidation is charged to reserves in the year in which it arises.
b. Fixed assets
Fixed assets are stated at cost or valuation less amortisation and depreciation. Leasehold land is amortised over the last 50 years of the existing lease or over the period of the lease remaining, whichever is less; buildings are depreciated on the basis of an expected life of 50 years or the remainder thereof or over the remaining period of the lease, whichever is less. The period of the lease includes the period for which a right of renewal is attached. Freehold land is not amortised.
Depreciation of fixed assets other than land and buildings is provided at rates calculated to write off their costs over their estimated useful lives on a straight line basis at the following annual rates:
Motor vehicles
20-25%
Plant, machinery and equipment
10-20%
Quarry equipment
10-20%
Vessels
5-15%
Container terminal equipment
7-20%
Leasehold improvements
Over the unexpired period of the lease or 15%, whichever is the greater
c. Property
Property held for rental income is classified as investment property and is included in fixed assets. Property under development for sale is included in current assets. Land for property under development is valued at cost or valuation, and development expenditure is valued at the aggregate amount of progress payments paid or payable at the balance sheet date.
d. Profit on sale of property
Credit is taken for the profit on sale of property either on the date of sale or on the date of issue of the occupation permit, whichever is the later.
e. Subsidiary companies
A company is a subsidiary company if more than 50% of the issued voting capital is held long term. Investments in subsidiary companies are carried at or under cost.
f. Associated companies
A company is an associated company if, having regard to the disposition of the other shareholders, not less than 20% nor more than 50% of the issued voting capital is held as a long term investment and a significant influence in its management is exercised.
g. Other investments
Other investments are investments in which 50% or less of the issued capital is held long term and in which no significant influence in the company's management is exercised. Other investments are carried at or under cost.
h. Dealing investments
Dealing investments are current assets which are held for resale and are stated at the lower of cost and market value. Reductions to market value and profits or losses on disposal are included in the determination of trading profit.
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HUTCHISON WHAMPOA LIMITED