1.
NOTES ON THE ACCOUNTS
PRINCIPAL ACCOUNTING POLICIES
(a) Basis of consolidation
The consolidated accounts include the audited accounts of the company and all its subsidiaries made up to 31 December each year together with the group's share of the post acquisition profits or losses of its associates based upon audited accounts made up to 31 December each year.
Differences between the fair value of the net tangible assets of the companies acquired over the cost of investment at the date of acquisition, representing capital reserves or goodwill arising on consolidation, are credited or charged to capital reserves in the year of acquisition.
Unrealised inter-company profits or losses arising on the sale of fixed assets, constructed by a subsidiary, to the group, are credited or debited to capital reserves.
All other material inter-company sales, rents and other charges are eliminated on consolidation.
(b) Associate
An associate is defined as an investment where the group holds for long term purposes between 20% and 50% of the issued share capital and exercises significant influence over that company's management. Results of associated companies are accounted for by the company only to the extent of dividends received or receivable. The consolidated profit and loss account includes the group's share of the results of its associated companies for the year. In the consolidated balance sheet, investments in associated companies are stated at the group's attributable share of the net assets and goodwill of the associated companies, after adjusting for the fair value of their assets at the date of acquisition plus any premium or discount on acquisition.
(c) Investment properties
Investment properties are stated in the balance sheet at their open market value. Surpluses arising on revaluations are credited to the investment property revaluation reserve; deficits arising on revaluations are firstly set off against any previous revaluation surpluses and thereafter taken to the profit and loss account. Rentals receivable are accounted for on an accrual basis.
No depreciation is provided in respect of investment properties with an unexpired lease term of over 20 years since the valuation takes into account the state of each property at the date of valuation.
(d) Hotel properties
Hotel properties are stated in the balance sheet at cost. No depreciation is provided on hotel properties held on leases of more than 20 years. It is the group's policy to maintain the hotel properties in such condition that their value is not diminished by the passage of time and the related expenditure is charged to the profit and loss account in the year in which it is incurred so that any element of depreciation would be immaterial. An annual provision based on the projected maintenance cost for the next five years under the planned maintenance scheme is charged to the profit and loss account.
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