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| Notes to the group
financial statements |
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| for the year ended
31 March 2006 |
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| 11. |
Consolidation
of group cell captive insurance arrangement |
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Following the adoption
of IFRS, the assets, liabilities, income
statement and cash flow effects attributable
to the group’s investment in a cell
captive insurance-licensed entity, operated
by a third party, are now included in the
consolidated financial statements
of the group. Previously, the group recognised
only the premiums paid to the insurer as
an operating expense, charged to its various
operations, in the relevant reporting period.
The effect is to eliminate these premium
payments to the insurer on consolidation
and to recognise the assets, liabilities,
cash flows and net operating result
of the group’s insurance cell in the
consolidated financial statements
of the group. The insurance premiums charged
to the various group operations continue
to be allocated to the relevant businesses
in determining the trading results of operations
reflected in the segmental profit
analysis.
This accounting treatment has increased
the potential for greater volatility in
reported earnings. For this reason, the
losses and profit arising from consolidation
of the group cell captive insurance arrangement
is shown as a separate line item in the
group income statement. |
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