1988 — Page 18

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1. ACCOUNTING POLICIES

(a) Basis of consolidation

NOTES ON THE ACCOUNTS

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.

Reserve arising on consolidation represents the excess of the amount of the net tangible assets of the companies acquired over the cost of investment at the date of acquisition, or vice versa for goodwill on consolidation which is charged to capital reserves in the year of acquisition.

Unrealised inter-company profits or losses arising on sale of fixed assets, constructed by a subsidiary, 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. Interest in associate is stated at cost, less provision where appropriate. The results of associate are incorporated in the accounts to the extent of the group's share of the post acquisition profits less losses calculated from the audited accounts made up to 31 December each year.

(c) Investment properties

Investment properties are included in the balance sheet at their open market value, on the basis of an annual professional valuation. An investment property is defined as property which is held for its investment potential and any income being negotiated at arm's length.

(d) Depreciation

Depreciation is provided at rates calculated to write off the cost of fixed assets over their estimated useful lives on a straight line basis at the following annual rates:-

Land held on long leases

Land held on medium and short term

leases

Buildings

Investment properties

Vessels

Motor vehicles

Machinery, furniture and other fixed assets

Nil

Over the unexpired terms of the leases

2.5% or over the unexpired terms of the leases

Nil or over the unexpired terms of the leases, if less than 20 years

3.33% 12.5%

25%

10%