RANBAXY SOUTH AFRICA (PTY) LTD (Registration Number 1993/001413/07) Audited Consolidated and Separate Annual Financial Statements for the year ended

Transcription

1 Audited Consolidated and Separate Annual Financial Statements for the year ended 31 March

2 Audited Consolidated and Separate Annual Financial Statements for the year ended 31 March Index The reports and statements set out below comprise the consolidated annual financial statements presented to the shareholder: General Information 2 Independent Auditor's Report 3-5 Report of the Compiler 6 Directors' Responsibilities and Approval 7 Directors' Report 8-9 Statements of Financial Position 10 Statements of Profit or Loss and Comprehensive Income 11 Statements of Changes in Equity Statements of Cash Flows Accounting Policies Notes to the Consolidated and Separate Annual Financial Statements

3 Consolidated and Separate Annual Financial Statements for the year ended 31 March General Information Country of Incorporation and Domicile South Africa Nature of Business and Principal Activities Import, marketing, manufacturing and trade of pharmaceutical goods and services Directors DW Brothers A Ajoodha (Appointed 1 December ) M Kaszas M Sudan (Resigned 30 November ) Ultimate Holding Sun Pharmaceuticals Industries Limited incorporated in India Holding Ranbaxy Netherlands BV incorporated in Netherlands Registration Number 1993/001413/07 Registered Office Ground Floor, Tugela House, Riverside Office Park 1303 Heuwel Avenue Centurion Gauteng 0046 Postal Address P O Box 1470 Pretoria 001 Independent Compilers Moollas Financial Solutions, prepared under the supervision of Muhammad Moolla CA(SA) Independent Auditors Deloitte & Touche Secretary Grant Thornton 2

4 x 3

5 x 4

6 x 5

7 Report of the Compiler To the Shareholder of Ranbaxy South Africa (Pty) Ltd We have compiled the accompanying consolidated and separate annual financial statements of Ranbaxy South Africa (Pty) Ltd based on information you have provided. These consolidated and separate annual financial statements comprise the statement of financial position of Ranbaxy South Africa (Pty) Ltd as at 31 March, the statement of comprehensive income, the statements of changes in equity and the statement of cash flows for the year then ended, a summary of significant accounting policies and other explanatory information. We performed this compilation engagement in accordance with International Standard on Related Services 4410 (Revised), Compilation Engagements. We have applied our expertise in accounting and financial reporting to assist you in the preparation and presentation of these consolidated and separate financial statements in accordance with International Financial Reporting Standards and the requirements of the Companies Act of South Africa. We have complied with relevant ethical requirements, including principles of integrity, objectivity, professional competence and due care. These consolidated and separate financial statements and the accuracy and completeness of the information used to compile them are your responsibility. Since a compilation engagement is not an assurance engagement, we are not required to verify the accuracy or completeness of the information you provided to us to compile these consolidated and separate financial statements. Accordingly, we do not express an audit opinion or a review conclusion on whether these consolidated and separate financial statements are prepared in accordance with International Financial Reporting Standards and the requirements of the Companies Act of South Africa. Moollas Financial Solutions 24 July 8 Khandan Crescent Roshnee Muhammad Moolla Vereeniging Chartered Accountant (SA)

8 Audited Consolidated and Separate Annual Financial Statements for the year ended 31 March Directors' Responsibilities and Approval The directors are required by the South African Companies Act to maintain adequate accounting records and are responsible for the content and integrity of the consolidated and separate annual financial statements and related financial information included in this report. It is their responsibility to ensure that the consolidated and separate annual financial statements satisfy the financial reporting standards as to form and content and present fairly the consolidated and separate statement of financial position, results of operations and business of the, and explain the transactions and financial position of the business of the at the end of the financial year. The consolidated and separate annual financial statements are based upon appropriate accounting policies consistently applied throughout the and supported by reasonable and prudent judgements and estimates. The directors acknowledge that they are ultimately responsible for the system of internal financial control established by the and place considerable importance on maintaining a strong control environment. To enable the directors to meet these responsibilities, the board sets standards for internal control aimed at reducing the risk of error or loss in a cost effective manner. The standards include the proper delegation of responsibilities within a clearly defined framework, effective accounting procedures and adequate segregation of duties to ensure an acceptable level of risk. These controls are monitored throughout the and all employees are required to maintain the highest ethical standards in ensuring the 's business is conducted in a manner that in all reasonable circumstances is above reproach. The focus of risk management in the is on identifying, assessing, managing and monitoring all known forms of risk across the. While operating risk cannot be fully eliminated, the endeavours to minimise it by ensuring that appropriate infrastructure, controls, systems and ethical behaviour are applied and managed within predetermined procedures and constraints. The directors are of the opinion, based on the information and explanations given by management, that the system of internal control provides reasonable assurance that the financial records may be relied on for the preparation of the consolidated and separate annual financial statements. However, any system of internal financial control can provide only reasonable, and not absolute, assurance against material misstatement or loss. The directors have reviewed the group and company's cash forecast for the year to 31 March 2018 and, in light of this review and the current financial position, they are satisfied that the group and company had or has access to adequate resources to continue in operational existence for the foreseeable future. The consolidated and separate annual financial statements have been audited by the independent auditing firm, Deloitte & Touche, who have been given unrestricted access to all financial records and related data, including minutes of all meetings of the shareholder the board of directors and committees of the board. The directors believe that all representations made to the independent auditor during the audit were valid and appropriate. The external auditors' audit report is presented on pages 3 to The consolidated and separate annual financial statements as set out on pages 8 to 53 were approved by the board on 24 July and were signed on their behalf by: DW Brothers A Ajoodha 7

9 Audited Consolidated and Separate Annual Financial Statements for the year ended 31 March Directors' Report The directors present their report for the year ended 31 March. 1. Review of activities Main business and operations The principal activity of the is import, marketing, manufacturing and trade of pharmaceutical goods and services and there were no major changes herein during the year. The operating results and consolidated statement of financial position of the are fully set out in the attached financial statements and do not in our opinion require any further comment. 2. Going concern The consolidated and separate annual financial statements have been prepared on the basis of accounting policies applicable to a going concern. This basis presumes that funds will be available to finance future operations and that the realisation of assets and settlement of liabilities, contingent obligations and commitments will occur in the ordinary course of business. The directors believe that the company and group has adequate financial resources to continue in operation for the foreseeable future and accordingly the consolidated and separate annual financial statements have been prepared on a going concern basis. The directors have satisfied themselves that the company and group is in a sound financial position and that it has access to sufficient borrowing facilities to meet its foreseeable cash requirements. The directors are not aware of any new material changes that may adversely impact the company. The directors are also not aware of any material non-compliance with statutory or regulatory requirements or of any pending changes to legislation which may affect the company and group. 3. Events after reporting date The directors are not aware of any matter or circumstance arising since the end of the financial year to the date of this report that could have a material effect on the financial position of the company. 4. Directors' interest in contracts To our knowledge none of the directors had any interest in contracts entered into during the year under review. 5. Authorised and issued share capital No changes were approved or made to the authorised or issued share capital of the company during the year under review. Borrowing limitations In terms of the Memorandum of Incorporation of the company, the directors may exercise all the powers of the company to borrow money, as they consider appropriate. 8

10 Audited Consolidated and Separate Annual Financial Statements for the year ended 31 March Directors' Report 6. Dividends Given the current state of the global economic environment, the board believes that it would be more appropriate for the group to conserve cash and maintain adequate debt headroom to ensure that the group is best placed to withstand any prolonged adverse economic conditions. The company has not declared a dividend. 7. Directors The directors of the company during the year and to the date of this report are as follows: DW Brothers A Ajoodha (Appointed 1 December ) M Kaszas M Sudan (Resigned 30 November ) 8. Secretary The 's designated secretary is Grant Thornton. 9. Independent Auditors Deloitte & Touche were the independent auditors for the year under review. 9

11 1. RANBAXY SOUTH AFRICA (PTY) LTD Audited Consolidated and Separate Annual Financial Statements as at 31 March Statements of Financial Position Figures in R Assets Notes Property, plant and equipment 5 11,956,925 22,251,020 1,201,732 1,524,536 Intangible assets 6 508, , , ,759 Investments , ,342 Deferred taxation assets 14 5,205,268 1,650,420 2,067,478 - Current Assets 17,670,344 24,618,199 4,682,703 3,146,637 Inventories 7 158,406, ,082,889 63,067,761 52,714,312 Current taxation asset 16 7,145, ,776 2,754, ,776 Trade and other receivables 8 643,267, ,813, ,190, ,690,928 Cash and cash equivalents 9 134,135, ,856,785 65,882,762 56,656, ,954, ,579, ,895, ,888,781 Total Assets 960,624, ,197, ,578, ,035, Equity and Liabilities Equity Stated Capital 10 17,511,923 17,511,923 17,511,923 17,511,923 Reserves (211,831) (211,831) - - Retained earnings 151,906,731 99,637, ,064,085 91,528, ,206, ,937, ,576, ,040,131 Non-controlling interest 21,233,867 11,925, Liabilities Current Liabilities Trade and other payables ,868, ,050, ,981, ,174,465 Current taxation liability , Loan from shareholder ,316, ,582, ,020, ,820, ,184, ,334, ,002, ,995,287 Total Equity and Liabilities 960,624, ,197, ,578, ,035,418 10

12 Audited Consolidated and Separate Annual Financial Statements for the year ended 31 March Statements of Profit or Loss and Comprehensive Income Figures in R Notes Revenue 17 1,613,253, ,638, ,833, ,491,339 Cost of sales 18 (1,397,473,538) (699,176,484) (153,392,596) (136,080,120) Gross profit 215,779, ,461, ,440, ,411,219 Other income 1,632,497 4,425,796 1,383,712 4,371,047 Operating costs (147,201,447) (134,237,389) (97,206,641) (94,560,291) Operating profit 19 70,210,664 47,650,208 17,617,892 11,221,975 Finance income 20 25,332,365 18,458,329 27,832,504 17,932,315 Finance costs 21 (10,665,383) (11,088,440) (10,201,403) (10,236,111) Profit before taxation 84,877,646 55,020,097 35,248,993 18,918,179 Taxation expense 22 (20,491,074) (10,108,537) (4,713,116) - Profit for the year 64,386,572 44,911,560 30,535,877 18,918,179 Other comprehensive income Other comprehensive income Total comprehensive income 64,386,572 44,911,560 30,535,877 18,918,179 Total comprehensive income attributable to: Non-controlling interests 12,117,450 7,768, Owners of the parent 52,269,122 37,143,539 30,535,877 18,918,179 11

13 Audited Consolidated and Separate Annual Financial Statements for the year ended 31 March Statements of Changes in Equity Figures in R Stated Capital Common Control Reserve Retained earnings Equity attributable to company Noncontrolling interest Balance at 1 April ,511,923 (211,831) 62,494,070 79,794,162 4,157,601 83,951,763 Total comprehensive income for the year Profit for the year 37,143,539 37,143,539 7,768,021 44,911,560 Total comprehensive income for the year ,143,539 37,143,539 7,768,021 44,911,560 Total Balance at 31 March 17,511,923 (211,831) 99,637, ,937,701 11,925, ,863,323 Balance at 1 April 17,511,923 (211,831) 99,637, ,937,701 11,925, ,863,323 Total comprehensive income for the year Profit for the year 52,269,122 52,269,122 12,117,450 64,386,572 Total comprehensive income for the year ,269,122 52,269,122 12,117,450 64,386,572 Dividends - - (2,809,205) (2,809,205) Balance at 31 March 17,511,923 (211,831) 151,906, ,206,823 21,233, ,440,690 Note 10 12

14 Audited Consolidated and Separate Annual Financial Statements for the year ended 31 March Statements of Changes in Equity Figures in R Stated Capital Retained earnings Balance at 1 April ,511,923 72,610,029 90,121,952 Total comprehensive income for the year Profit for the year 18,918,179 18,918,179 Total comprehensive income for the year - 18,918,179 18,918,179 Total Balance at 31 March 17,511,923 91,528, ,040,131 Balance at 1 April 17,511,923 91,528, ,040,131 Total comprehensive income for the year Profit for the year 30,535,877 30,535,877 Total comprehensive income for the year - 30,535,877 30,535,877 Balance at 31 March 17,511, ,064, ,576,008 Note 10 13

15 Audited Consolidated and Separate Annual Financial Statements for the year ended 31 March Statements of Cash Flows Figures in R Notes Cash flows from operating activities Profit before tax 84,877,646 55,020,097 35,248,993 18,918,179 Adjustments for: Finance costs 10,665,383 11,088,440 10,201,403 10,236,111 Amortisation of Intangible assets 208, , , ,170 Depreciation of Property, plant and equipment 10,877,736 10,510, ,965 1,007,331 Investment income (25,332,365) (18,458,329) (27,832,504) (17,932,315) Profit on disposal of property, plant and equipment - (269,517) - (225,289) Assets Scrapped - 78,517-78,517 Operating cash flow before working capital changes 81,297,008 58,967,196 18,561,465 13,079,704 Working capital changes Decrease/(increase) in inventories 22,676,397 (108,214,322) (10,353,449) (12,878,502) (Increase)/decrease in trade and other receivables (134,453,791) (279,202,068) 61,500,849 (118,840,265) Increase/(decrease) in trade and other payables 53,817, ,107,405 (79,193,120) 123,857,551 Cash generated by operating activities 23,337,174 52,658,211 (9,484,255) 5,218,488 Investment income 25,332,365 18,458,329 27,832,504 17,932,315 Finance costs (10,665,383) (11,088,440) (10,201,403) (10,236,111) Income tax paid (31,066,174) (3,880,782) (8,708,688) - Net cash from operating activities 6,937,982 56,147,318 (561,842) 12,914,692 Cash flows from investing activities Property, plant and equipment acquired 5 (607,029) (9,644,675) (412,161) (432,188) Intangible assets acquired 6 - (788,562) - (788,562) Proceeds on disposals of property, plant and equipment - 638, ,000 Other 23, Net cash utilised in investing activities (583,641) (9,795,237) (412,161) (652,750) Cash flows from financing activities Increase in loans from group companies 733,286 11,080,274 10,200,000 10,227,945 Dividends paid (2,809,205) Net cash utilised in financing activities (2,075,919) 11,080,274 10,200,000 10,227,945 14

16 Audited Consolidated and Separate Annual Financial Statements for the year ended 31 March Statements of Cash Flows Figures in R Notes Increase in cash and cash equivalents Cash and cash equivalents at beginning of the year Cash and cash equivalents at end of the year 9 4,278,422 57,432,355 9,225,997 22,489, ,856,785 72,424,430 56,656,765 34,166, ,135, ,856,785 65,882,762 56,656,765 15

17 Audited Consolidated and Separate Annual Financial Statements for the year ended 31 March Accounting Policies 1. Basis of preparation The consolidated and separate annual financial statements of the have been prepared in accordance with all applicable International Financial Reporting Standards (IFRSs) and the Companies Act 71 of The consolidated and separate annual financial statements have been prepared under the historical cost convention, as modified by the revaluation of land and buildings, available-for-sale financial assets, and financial assets and financial liabilities (including derivative instruments) at fair value through profit or loss. The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the consolidated and separate annual financial statements are disclosed in note Summary of significant accounting policies The principal accounting policies applied in the preparation of these consolidated and separate annual financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated. 2.1 Business combinations Subsidiaries are all entities (including structured entities) over which the has control. The controls an entity when the is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the. They are deconsolidated from the date that control ceases. The applies the acquisition method to account for business combinations. The consideration transferred for the acquisition of a subsidiary is the fair values of the assets transferred, the liabilities incurred to the former owners of the acquiree and the equity interests issued by the. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. The recognises any non-controlling interest in the acquiree on an acquisition-by-acquisition basis, either at fair value or at the non-controlling interest s proportionate share of the recognised amounts of acquiree s identifiable net assets. The excess of the consideration transferred, the amount of any non-controlling interest in the acquiree and the acquisition-date fair value of any previous equity interest in the acquiree over the fair value of the identifiable net assets acquired is recorded as goodwill. If the total of consideration transferred, non-controlling interest recognised and previously held interest measured is less than the fair value of the net assets of the subsidiary acquired in the case of a bargain purchase, the difference is recognised directly in the statement of comprehensive income. 16

18 Audited Consolidated and Separate Annual Financial Statements for the year ended 31 March Accounting Policies Basis of Consolidation The consolidated group annual financial statements incorporate the financial statements of the and entities (including special purpose entities) controlled by the (its subsidiaries). Control is achieved when the : - has power over the investee; - is exposed, or has rights, to variable returns from its involvement with the investee; and - has the ability to use its power to affect its returns. The reassesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control listed above. When the has less than a majority of the voting rights of an investee, it has power over the investee when the voting rights are sufficient to give it the practical ability to direct the relevant activities of the investee unilaterally. The considers all relevant facts and circumstances in assessing whether or not the s voting rights in an investee are sufficient to give it power, including: The size of the s holding of voting rights relative to the size and dispersion of holdings of other vote holders; - the potential voting rights held by the, other vote holder or other parties; - rights arising from other contractual arrangements; and - any additional facts and circumstances that indicate that the has, or does not have, the current ability to direct the relevant activities at the time that decisions need to be made, including voting patterns at previous shareholders meetings. Consolidation of a subsidiary begins when the obtains control over the subsidiary and ceases when the loses control over the subsidiary. Income and expenses of subsidiaries acquired or disposed of during the year are included in the consolidated statement of comprehensive income from the effective date of acquisition and up to the effective date of disposal, as appropriate. Total comprehensive income of subsidiaries is attributed to the owners of the company and to non-controlling interest even if this results in the non-controlling interest having a deficit balance. Where necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies in line with those used by other members of the. All intra-group transactions, balances, income and expenses are eliminated on consolidation Acquisition-related costs are expensed as incurred If the business combination is achieved in stages, the acquisition date carrying value of the acquirer s previously held equity interest in the acquiree is re-measured to fair value at the acquisition date; any gains or losses arising from such re-measurement are recognised in profit or loss. 17

19 Audited Consolidated and Separate Annual Financial Statements for the year ended 31 March Accounting Policies Any contingent consideration to be transferred by the is recognised at fair value at the acquisition date. Subsequent changes to the fair value of the contingent consideration that is deemed to be an asset or liability is recognised in accordance with IAS 39 either in profit or loss or as a change to other comprehensive income. Contingent consideration that is classified as equity is not re-measured, and its subsequent settlement is accounted for within equity Changes in ownership interests in subsidiaries without change of control Transactions with non-controlling interests that do not result in loss of control are accounted for as equity transactions that is, as transactions with the owners in their capacity as owners. The difference between fair value of any consideration paid and the relevant share acquired of the carrying value of net assets of the subsidiary is recorded in equity. Gains or losses on disposals to non-controlling interests are also recorded in equity Disposal of subsidiaries When the ceases to have control any retained interest in the entity is re- measured to its fair value at the date when control is lost, with the change in carrying amount recognised in profit or loss. The fair value is the initial carrying amount for the purposes of subsequently accounting for the retained interest as an associate, joint venture or financial asset. In addition, any amounts previously recognised in other comprehensive income in respect of that entity are accounted for as if the had directly disposed of the related assets or liabilities. This may mean that amounts previously recognised in other comprehensive income are reclassified to profit or loss. Investment in subsidiaries In the company s separate financial statements, investments in subsidiaries are carried at cost less any accumulated impairment. The cost of an investment in a subsidiary is the aggregate of: - the fair value, at the date of exchange, of assets given, liabilities incurred or assumed, and equity instruments issued by the company; plus - any costs directly attributable to the purchase of the subsidiary Investment in Associates Associates are all entities over which the has significant influence but not control, generally accompanying a shareholding of between 20% and 50% of the voting rights. Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control over those policies. Investments in associates are accounted for using the equity method of accounting. Under the equity method, the investment is initially recognised at cost, and the carrying amount is increased or decreased to recognise the investor s share of the profit or loss and other comprehensive income of the associate of the investee after the date of acquisition. When the investment is classified as held for sale, it is accounted for in accordance with IFRS 5 - Non-current Assets Held for Sale and Discontinued Operations. The s investment in associates includes goodwill identified on acquisition. If the ownership interest in an associate is reduced but significant influence is retained, only a proportionate share of the amounts previously recognised in other comprehensive income is reclassified to profit or loss where appropriate. 18

20 Audited Consolidated and Separate Annual Financial Statements for the year ended 31 March Accounting Policies The s share of post-acquisition profit or loss is recognised in the statement of comprehensive income, and its share of post-acquisition movements in other comprehensive income is recognised in other comprehensive income with a corresponding adjustment to the carrying amount of the investment. When the s share of losses in an associate equals or exceeds its interest in the associate, including any other unsecured receivables, the does not recognise further losses, unless it has incurred legal or constructive obligations or made payments on behalf of the associate. The determines at each reporting date whether there is any objective evidence that the investment in the associate is impaired. If this is the case, the calculates the amount of impairment as the difference between the recoverable amount of the associate and its carrying value and recognises the amount adjacent to share of profit/(loss) of associates in the statement of comprehensive income. Profit and losses resulting from upstream and downstream transactions between the and its associate are recognised in the s financial statements only to the extent of unrelated investor s interests in the associates. Unrealised losses are eliminated unless the transaction provides evidence of an impairment of the asset transferred. Dilution gains and losses arising in investments in associates are recognised in the statement of comprehensive income. 2.2 Property, Plant and Equipment Property, plant and equipment are tangible assets which the company holds for its own use or for rental to others and which are expected to be used for more than one year. An item of property, plant and equipment is recognised as an asset when it is probable that future economic benefits associated with the item will flow to the company, and the cost of the item can be measured reliably. Property, plant and equipment is initially measured at cost. Cost includes all of the expenditure which is directly attributable to the acquisition or construction of the asset, including the capitalisation of borrowing costs on qualifying assets and adjustments in respect of hedge accounting, where appropriate. Property, plant and equipment is subsequently stated at cost less accumulated depreciation and any accumulated impairment losses, except for land which is stated at cost less any accumulated impairment losses. Depreciation commences when the asset is available for use as intended by management. Depreciation is charged to write off the asset's carrying amount over its estimated useful life to its estimated residual value, using a method that best reflects the pattern in which the asset's economic benefits are consumed by the company. Leased assets are depreciated in a consistent manner over the shorter of their expected useful lives and the lease term. Depreciation is not charged to an asset if its estimated residual value exceeds or is equal to its carrying amount. Depreciation of an asset ceases at the earlier of the date that the asset is classified as held for sale or derecognised. Plant and machinery that is in the course of construction for production are carried at cost, less and recognised impairment loss. Costs include the cost of the assets and associated professional fees. Such assets are classified to the appropriate categories of property plant and equipment when completed and ready for intended use. Depreciation of these assets, on the same basis as other property plant and equipment, commences when the assets are ready for intended use. 19

21 Audited Consolidated and Separate Annual Financial Statements for the year ended 31 March Accounting Policies The useful lives of items of Property, plant and equipment have been assessed as follows: Motor vehicles Plant and Machinery Computer equipment Leasehold Improvements Furniture and fittings 3-7 years 3-15 years 3 years Period of lease 3-6 years The residual value, useful life and depreciation method of each asset are reviewed at the end of each reporting year. If the expectations differ from previous estimates, the change is accounted for prospectively as a change in accounting estimate. 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 depreciate separately. The depreciation charge for each year is recognised in profit or loss unless it is included in the carrying amount of another asset. An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected from its continued use or disposal. Any gain or loss arising from the derecognition of an item of property, plant and equipment is included in profit or loss when the item is derecognised. Any gain or loss arising from the derecognition of an item of property, plant and equipment is determined as the difference between the net disposal proceeds, if any, and the carrying amount of the item. 2.3 Intangible Assets An intangible asset is an identifiable, non-monetary asset without physical substance. Intangible assets are identifiable resources controlled by the from which the expects to derive future economic benefits. An intangible asset is identifiable if it either is separable, ie is capable of being separated or divided from the and sold, transferred, licensed, rented or exchanged, either individually or together with a related contract, identifiable asset or liability, regardless of whether the intends to do so or arises from contractual or other legal rights, regardless of whether those rights are transferable or separable from the or from other rights and obligations. An intangible asset is recognised if it is probable that the expected future economic benefits that are attributable to the asset will flow to the and the cost of the asset can be measured reliably. The assesses the probability of expected future economic benefits using reasonable and supportable assumptions that represent management s best estimate of the set of economic conditions that will exist over the useful life of the asset. Intangible assets that are acquired and have finite useful lives are initially recognised at cost with subsequent measurement at cost less any accumulated amortisation and any impairment losses. Intangible assets are 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 (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the profit or loss in the year the asset is derecognised. 20

22 Audited Consolidated and Separate Annual Financial Statements for the year ended 31 March Accounting Policies An intangible asset is regarded as having an indefinite useful life when, based on all relevant factors, there is no foreseeable limit to the period over which the asset is expected to generate net cash inflows. Amortisation is not provided for these intangible assets. For all other intangible assets amortisation is recognised in the profit or loss and is provided on the straight-line basis which, it is estimated, will reduce the carrying amount of the assets to their residual values at the end of their useful lives. Intangible assets are amortised at the following rates: Patents, trademarks and other rights 5 years Internally generated brands, mastheads, publishing titles, customer lists and items similar in substance are not recognised as intangible assets Research and development Expenditure of research activities, undertaken with the prospect of gaining new scientific or technical knowledge and understanding, is recognised in profit or loss as incurred. Development activities involve a plan or design for the production of new or sustainable improved products and processes. Development expenditure is capitalised only if development costs can be, measured reliably, the product or process is technically commercially feasible, future economic benefits are probable, and the intends to and has sufficient resources to complete development and to use or sell the asset. The expenditure capitalised includes the cost of materials, direct labour, overhead costs that are directly attributable to preparing the assets for its intended use, and capitalised borrowing costs. Other development expenditure is recognised in profit or loss as incurred. 2.4 Impairment of Non-financial assets Intangible assets that have an indefinite useful life or intangible assets not ready to use are not subject to amortisation and are tested annually for impairment. Assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset s fair value less costs of disposal and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are largely independent cash inflows (cash-generating units). Prior impairments of non- financial assets (other than goodwill) are reviewed for possible reversal at each reporting date. 2.5 Leases A lease is an agreement whereby the lessor conveys to the lessee in return for a payment or series of payments the right to use an asset for an agreed period of time. Determining whether an arrangement is, or contains, a lease is based on the substance of the arrangement and requires an assessment of whether fulfilment of the arrangement is dependent on the use of a specific asset or assets and the arrangement conveys a right to use the asset. Leases of assets are classified as finance leases when the leases transfer substantially all risks and rewards incidental to ownership of the assets to the. All other leases are classified as operating leases. Operating leases Operating lease payments are recognised as an expense on a straight-line basis over the lease term. The difference between the amounts recognised as an expense and the contractual payments are recognised as an operating lease liability. This liability is not discounted. Any contingent rentals are recognised as expenses in period they are uncurred. 21

23 Audited Consolidated and Separate Annual Financial Statements for the year ended 31 March Accounting Policies 2.6 Inventories Inventories are measured at the lower of cost and net realisable value. The cost of inventories comprises all costs of purchase, costs of conversion and other costs incurred in bringing the inventories to their present location and condition and is assigned by using the weighted average cost formula. Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale. When inventories are sold, the carrying amount of those inventories is recognised as an expense in the period in which the related revenue is recognised. The amount of any write-down of inventories to net realisable value and all losses of inventories are recognised as an expense in the period the write-down or loss occurs. The amount of any reversal of any write-down of inventories, arising from an increase in net realisable value, is recognised as a reduction in the amount of inventories recognised as an expense in the period in which the reversal occurs. The related cost of providing services recognised as revenue in the current period is included in cost of sales. 2.7 Financial assets Classification The classifies its financial assets in the following categories: at fair value through profit or loss, loans and receivables, and available for sale. The classification depends on the purpose for which the financial assets were acquired. Management determines the classification of its financial assets at initial recognition. Financial assets at fair value through profit or loss Financial assets at fair value through profit or loss are financial assets held for trading. A financial asset is classified in this category if acquired principally for the purpose of selling in the short term. Derivatives are also categorised as held for trading unless they are designated as hedges. Assets in this category are classified as current assets if expected to be settled within 12 months, otherwise they are classified as non-current. Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets, except for maturities greater than 12 months after the end of the reporting period. These are classified as non-current assets. The s loans and receivables comprise trade and other receivables, Loan to companies and cash and cash equivalents in the statement of financial position. Loans to (from) group companies These include loans to and from holding companies, fellow subsidiaries, subsidiaries, joint ventures and associates and are recognised initially at fair value plus direct transaction costs. Loans to group companies are classified as loans and receivables. Loans from group companies are classified as financial liabilities measured at amortised cost. 22

24 Audited Consolidated and Separate Annual Financial Statements for the year ended 31 March Accounting Policies Fair value measurement categories For financial reporting purposes, fair value measurements are categorised into Level 1, 2 or 3 based on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement in its entirety, which are described as follows: Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date; Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or indirectly; and Level 3 inputs are unobservable inputs for the asset or liability. The entity s assets and liabilities are comprised of Level Recognition and measurement Regular purchases and sales of financial assets are recognised on the trade-date the date on which the commits to purchase or sell the asset. Investments are initially recognised at fair value plus transaction costs for all financial assets not carried at fair value through profit or loss. Financial assets carried at fair value through profit or loss are initially recognised at fair value, and transaction costs are expensed in the statement of comprehensive income. Financial assets are derecognised when the rights to receive cash flows from the investments have expired or have been transferred and the has transferred substantially all risks and rewards of ownership. Available-for-sale financial assets and financial assets at fair value through profit or loss are subsequently carried at fair value. Loans and receivables are subsequently carried at amortised cost using the effective interest rate method. Gains or losses arising from changes in the fair value of the financial assets at fair value through profit or loss category are presented in the statement of comprehensive income within Other (losses)/gains net in the period in which they arise. Dividend income from financial assets at fair value through profit or loss is recognised in the statement of comprehensive income as part of other income when the s right to receive payments is established. Changes in the fair value of monetary and non-monetary securities classified as available for sale are recognised in other comprehensive income. When securities classified as available for sale are sold or impaired, the accumulated fair value adjustments recognised in equity are included in the statement of comprehensive income as Gains and losses from investment securities. Interest on available-for-sale securities calculated using the effective interest rate method is recognised in the statement of comprehensive income as part of other income. Dividends on available-for-sale equity instruments are recognised in the statement of comprehensive income as part of other income when the s right to receive payments is established. Offsetting financial instruments Financial assets and liabilities are offset and the net amount reported in the statement of financial position when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously. 23

25 Audited Consolidated and Separate Annual Financial Statements for the year ended 31 March Accounting Policies Impairment of financial assets The assesses at the end of each reporting period whether there is objective evidence that a financial asset or group of financial assets is impaired. A financial asset or a group of financial assets is impaired and impairment losses are incurred only if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset (a loss event ) and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated. Evidence of impairment may include indications that the debtors or a group of debtors is experiencing significant financial difficulty, default or delinquency in interest or principal payments, the probability that they will enter bankruptcy or other financial reorganisation, and where observable data indicate that there is a measurable decrease in the estimated future cash flows, such as changes in arrears or economic conditions that correlate with defaults. For loans and receivables category, the amount of the loss is measured as the difference between the asset s carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset s original effective interest rate. The carrying amount of the asset is reduced and the amount of the loss is recognised in the consolidated statement of comprehensive income. If a loan or held-to-maturity investment has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate determined under the contract. As a practical expedient, the may measure impairment on the basis of an instrument s fair value using an observable market price. If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised (such as an improvement in the debtor s credit rating), the reversal of the previously recognised impairment loss is recognised in the consolidated statement of comprehensive income. Trade and other receivables Trade and other receivables are initially measured at fair value and, after initial recognition, at amortised cost less impairment losses for bad and doubtful debts, if any, except for the following receivables: - Interest-free loans made to related parties without any fixed repayment terms or the effect of discounting being immaterial, that are measured at cost less impairment losses for bad and doubtful debt, if any; and - Short-term receivables with no stated interest rate and the effect of discounting being immaterial, that are measured at their original invoice amount less impairment losses for bad and doubtful debt, if any. At each reporting date, the assesses whether there is any objective evidence that a receivable or of receivables is impaired. Impairment losses on trade and other receivables are recognised in profit or loss when there is objective evidence that an impairment loss has been incurred and are measured as the difference between the receivable s carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at its original effective interest rate, i.e. the effective interest rate computed at initial recognition. The impairment loss is reversed if, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised. 24

26 Audited Consolidated and Separate Annual Financial Statements for the year ended 31 March Accounting Policies Cash and cash equivalents Cash comprises cash on hand and at bank and demand deposits with bank. Cash equivalents are short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. For the purpose of statement of cash flows, bank overdrafts which are repayable on demand form an integral part of the s cash management are included as a component of cash and cash equivalents. Financial liabilities Trade and other payables Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Accounts payable are classified as current liabilities if payment is due within one year or less (or in the normal operating cycle of the business if longer). If not, they are presented as non-current liabilities. Trade payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest rate method. Borrowings Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently carried 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. Share capital Ordinary shares Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary shares are recognised as a deduction from equity, net of any tax effects. 2.8 Post-employment benefits and short-term employee benefits Post-employment benefit plans The provides post-employment benefits through various defined contribution and defined benefit plans. Defined contribution plans The pays fixed contributions into independent entities in relation to several state plans and insurance for individual employees. The has no legal or constructive obligations to pay contributions in addition to its fixed contributions, which are recognised as an expense in the period that relevant employee services are received Short-term employee benefits The cost of all short-term employee benefits is recognised during the period in which the employee renders the related service on an undiscounted basis. Accruals for employee entitlement to annual leave represents the present obligation, which the has to pay as a result of employees services, provided to the reporting date. The accruals have been calculated at undiscounted amounts based on current salary rates. A liability is recognised for the amount expected to be paid under short term bonuses in the as the has a present legal constructive obligation to pay the amount as a result of past service provided by the employee, and the obligation can be estimated reliably. 25