Accounting policies

for the year ended 30 September 2010


The financial statements, comprising Reunert (referred to as “the company”), its subsidiaries, special purpose entities (SPEs), joint ventures, and associates (together referred to as “the group”), incorporate the following principal accounting policies, set out below. In these accounting policies “the group” refers to the group and company.


The group financial statements have been prepared in accordance with IFRS and interpretations of those standards as issued by the International Accounting Standards Board (IASB) and the International Financial Reporting Interpretations Committee (IFRIC) of the IASB, the requirements of the JSE Limited and the requirements of the Companies Act, No 61 of 1973, as amended.

At the date of these financial statements, the following standards and interpretations were in issue but not yet effective:

  Standards and interpretations     Details of amendment     Effective for annual periods beginning on
or after  
  IFRS 1 First-time Adoption of International Financial Reporting Standards     – Amendments relating to oil and gas assets and determining whether an arrangement contains a lease
– Limited exemption from comparative IFRS 7 Disclosure for First-time Adopters  
  1 January 2010

1 July 2010  
  IFRS 2 Share-based Payment     – Amendments relating to group cash-settled share-based payment transactions     1 January 2010    
  IFRS 5 Non-current Assets Held for Sale and Discontinued Operations     – Disclosures of non-current assets (or disposal groups) classified as held for sale or discontinued operations     1 January 2010    
  IFRS 8 Operating Segments     – Disclosure of information about segment assets     1 January 2010    
  IFRS 9 Financial Instruments     – Financial instruments – classification and measurement     1 January 2013    
  IAS 1 Presentation of Financial Statements     – Current /non-current classification of convertible instruments     1 January 2010    
  IAS 7 Statement of Cash Flows     – Classification of expenditures on unrecognised assets     1 January 2010    
  IAS 17 Leases     – Classification of leases of land and buildings     1 January 2010    
  IAS 24 Related Party Disclosure     – Revised definition of related parties     1 January 2011    
  IAS 32 Financial Instruments: Presentation     – Amendments relating to classification of rights issues     1 February 2010    
  IAS 36 Impairment of Assets     – Unit of accounting for goodwill impairment test     1 January 2010    
  IAS 39 Financial Instruments: Recognition and Measurement     – Amendments for embedded derivatives when reclassifying financial instruments
– Treating loan prepayment penalties as closely related embedded derivatives
– Scope exemption for business combination contracts
– Cash flow hedge accounting  
  1 January 2010    
  IFRIC 14 The Limit on a Defined Benefit Asset, Minimum Funding Requirement and their Interaction     – Funding requirements and their interaction     1 January 2011    
  IFRIC 19 Extinguishing Financial Liabilities with Equity Instruments     – Interpretation     1 July 2010    

The impact of the adoption of the above standards and interpretations has not yet been determined. However, we do not anticipate these standards having a major impact on the group.


The group financial statements are presented in South African rand, which is the currency in which the majority of the group’s transactions are denominated. The group financial statements have been prepared on the going concern and historical cost or fair value bases under IFRS.

The preparation of financial statements in conformity with IFRS requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses.

The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgements about carrying values of assets and liabilities that are not readily apparent from other resources. Actual results may differ from the estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

Judgements made by management in the application of IFRS that may have a significant effect on the financial statements and estimates with a significant risk of material adjustment in the following year, are disclosed at the end of these policies.

The accounting policies set out below have been applied, in all material respects, consistently by all group entities to all periods presented in these consolidated financial statements.


The following new and revised standards and interpretations have been adopted in the current period and have affected the amounts reported in these financial statements:

  IAS 1 Presentation of Financial Statements   The effect of IAS 1 has been the inclusion of the statement of comprehensive income and the consequent reduction in the amount of disclosure in the statement of changes in equity.    
  IFRS 3 Business Combinations   The impact of the adoption of IFRS 3 has been:
– to allow a choice on a transaction-by-transaction basis for the measurement of non-controlling interests either at fair value or at the non-controlling interests’ share of the fair value of the identifiable net assets of the acquiree;
– to change the recognition and subsequent accounting requirements for contingent consideration;
– where the business combination in effect settles a pre-existing relationship between the group and the acquiree, to require the recognition of a settlement gain or loss; and
– to require that acquisition-related costs be accounted for separately from the business combination, generally leading to those costs being recognised as an expense in profit or loss as incurred, whereas previously they were accounted for as part of the cost of the acquisition.  
  IFRS 8 Operating Segments   The effect of IFRS 8 was the disclosure of a further segment, shown as “Other”.    


The group annual financial statements incorporate the financial statements of the company, its subsidiaries, SPEs, joint ventures and associates.

A subsidiary is an entity over which the group has control. Control exists where the company has the power, directly or indirectly, to govern the financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control, potential voting rights that are currently exercisable or convertible are taken into account.

The operating results of subsidiaries are included from the date that control commences to the date that control ceases.

Non-controlling interests in subsidiaries are identified separately from the Group’s equity therein. The interests of non-controlling shareholders may be initially measured either at fair value or at the non-controlling interests’ proportionate share of the fair value of the acquiree’s identifiable net assets. The choice of measurement basis is made on an acquisition-by-acquisition basis. Subsequent to acquisition, the carrying amount of non-controlling interests is the amount of those interests at initial recognition plus the non-controlling interests’ share of subsequent changes in equity. Total comprehensive income is attributed to non-controlling interests even if this results in the non-controlling interests having a deficit balance.

Intragroup transactions and balances, including any unrealised gains and losses or income and expenses arising from intragroup transactions, are eliminated in full in preparing the consolidated annual financial statements.

An SPE is an entity where in substance:
  • The activities of the SPE are being conducted on behalf of the group according to its specific business needs so that the group obtains the benefits from the SPE’s operations.
  • The group has the decision-making powers to obtain the majority of the benefits of the activities of the SPE, or by setting up an “autopilot” mechanism, the group has delegated these decision-making powers.
  • The group has the rights to obtain the majority of the benefits of the SPE and therefore may be exposed to risks incident to the activities of the SPE.
  • The group retains the majority of the residual or ownership risks related to the SPE or its assets in order to obtain the benefits from its activities.

The operating results of SPEs are included from the date that control commences to the date that control ceases.

Associates are those entities in which investments are held which provide the group with the power to exercise significant influence over the financial and operating policies of those entities, but are not considered to be subsidiaries or joint ventures.

Associates are accounted for by the equity method from their financial statements to 30 September. Investments in associates are carried in the consolidated balance sheet at cost and adjusted for post-acquisition changes in the group’s share of the net assets of the associates, less any impairment in the value of the individual investments.

Losses of an associate in excess of the group’s interest in that associate are not recognised, unless the group has incurred legal or constructive obligations or made payments on behalf of the associate.

Intragroup transactions with associates are eliminated to the extent of the group’s interest in the relevant associate.

Joint ventures
Joint ventures are those entities which are not subsidiaries and over which the group exercises joint control, which is defined as the contractually agreed sharing of control over an economic activity, and exists only when the strategic financial and operating decisions relating to the activity require the unanimous consent of the parties sharing control.

Joint ventures are accounted for using the proportionate consolidation method, whereby the group’s share of each of the assets, liabilities, income, expenses and cash flows of joint ventures is included on a line-by-line basis in the consolidated annual financial statements.

When a group entity transacts with a jointly controlled entity of the group, unrealised profits and losses are eliminated to the extent of the group’s interest in the joint venture.

Any difference between the cost of the acquisition and the group’s share of the net identifiable assets, fairly valued, is recognised and treated according to the group’s accounting policy for goodwill.

All business combinations are accounted for by applying the acquisition method. The cost of acquisition is measured at the aggregate of the fair values, at the date of acquisition, of assets acquired, liabilities incurred or assumed, and equity instruments issued by the group in exchange for control of the acquiree, excluding any costs directly attributable to the business combination. All acquisition-related costs are recognised as expenses in the period in which the costs are incurred and the services received except for the costs relating to the issue of debt or equity instruments which are recognised as financial assets.

Goodwill represents amounts arising on acquisition of subsidiaries and joint ventures and is measured as the excess of the sum of the consideration transferred, the amount of any non-controlling interests in the acquirer, and the fair value of the acquirer’s previously held equity interest in the acquiree (if any) over the net of the acquisition date amounts of the identifiable assets acquired and liabilities and contingent liabilities assumed. If, after assessment the group’s interest in the fair value of the acquiree’s identifiable net assets exceeds the sum of the acquirer’s consideration transferred, the amount of any non-controlling interests in the acquiree and the fair value of the acquirer’s previously held equity interests in the acquiree (if any), the excess is recognised immediately in profit or loss as a bargain purchase gain. Goodwill is initially recognised as an asset at cost and is subsequently measured at cost less any accumulated impairment losses.

Goodwill is allocated to cash-generating units (CGUs) expected to benefit from the synergies of the combination. Goodwill is tested annually for impairment or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than the carrying amount of the unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro rata on the basis of the carrying amount of each asset in the unit. An impairment loss recognised for goodwill is not reversed in a subsequent period.

On disposal of a subsidiary or a jointly controlled entity, the attributable goodwill is included in the determination of the profit or loss on disposal.

In the case of associates, any excess of the cost of acquisition over the group’s share of the net fair value of the identifiable assets, liabilities and contingent liabilities of the associate at the date of acquisition is recognised as goodwill. Any excess of the group’s share of the net fair value of the identifiable assets, liabilities and contingent liabilities over the cost of acquisition, after reassessment, is recognised immediately in the income statement.


All investments are initially recognised at fair value, which excludes transaction costs. After initial recognition, investments held- for-trading and those available-for-sale are measured at their fair values, except where stated otherwise. Where investments are held for trading purposes, gains and losses arising from changes in fair value are recognised in the income statement for the period. For available-for-sale investments, gains and losses arising from changes in fair value are recognised in comprehensive income, until the investment is disposed of or is determined to be impaired, at which time the cumulative gain or loss previously recognised in comprehensive income is recognised in the income statement for the period.

The following categories of investments are measured at amortised cost using the effective interest rate method if they
have a fixed maturity or at cost if there is no fixed maturity:
  • Loans and receivables not held-for-trading;
  • Held-to-maturity financial assets where the group has the ability and intention to hold the instrument to maturity; and
  • Investments in financial assets that do not have a quoted market price in an active market and whose fair value cannot be reliably measured.

The carrying values are reduced by any impairment losses recognised to reflect irrecoverable amounts.