The consolidated and separate financial statements have been prepared on the historical cost basis, except where otherwise stated or disclosed.

The separate and consolidated financial statements are prepared on the going concern basis. Except as otherwise disclosed, these accounting policies are consistent with those applied in the prior year.

Company financial statements
Investments in subsidiaries, associates and joint ventures in the separate financial statements presented by the company are recognised at cost less accumulated impairment loss.

Recognition of assets and liabilities
Assets are recognised if it is probable that future economic benefits associated with the asset will flow to the group and the cost or fair value can be measured reliably.

Liabilities are recognised if it is probable that an outflow of resources embodying economic benefits will result from the settlement of the present obligation and the amount at which the settlement will take place can be reliably measured. Financial instruments are recognised when the entity becomes a party to the contractual provisions of the instrument.

The gain or loss on derecognition of the financial asset or liability is treated as income or expense in the income statement as appropriate.

The consolidated financial statements include the results, financial position and cash flows of the GPI Group.

All financial results are consolidated with similar items on a line-by-line basis except for investments in associates and joint ventures, which are included in the group’s results as set out below.

Where necessary, adjustments are made to the financial results of subsidiaries, associates and joint ventures to bring their accounting policies and year-end in line with those used by the group. The group uses the purchase method to account for the acquisition of subsidiaries, associates and joint ventures.

Business combinations
Business combinations are accounted for by using the purchase method by allocating the cost of the business combination to the fair value of the assets acquired and liabilities and contingent liabilities assumed at the date of acquisition.

Goodwill acquired in a business combination is initially measured at cost being the excess of the cost of the business combination over the group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities.

Goodwill is measured at cost less accumulated impairment losses. Goodwill is tested annually for impairments. Negative goodwill arising on an acquisition is recognised directly in the income statement.

Subsidiaries
Subsidiaries are fully consolidated from the date of acquisition, being the date on which the group obtains control, and continue to be consolidated until the date that such control ceases.

All intra-group balances, transactions, income, expenses and unrealised profits and losses are eliminated in full on consolidation.

Associates
Under the equity method, the investment in the associate is carried in the balance sheet at cost plus post-acquisition changes in the group’s share of net assets of the associate.

Goodwill relating to an associate is included in the carrying amount of the investment.

After application of the equity method, the group assesses whether there is any objective evidence that the investment in the associate is impaired.

If any such indication exists, the entire carrying amount of the investment in the associate is tested for impairment by comparing the recoverable amount with its carrying amount, to determine whether it is necessary to recognise any impairment losses. As goodwill is included in the carrying amount of the investment, it is not tested for impairment separately.

The income statement reflects the share of the results of operations of the associates. Where there has been a change recognised directly in the equity of the associate, the group recognises its share of any changes and discloses this, when applicable, in the statement of changes in equity.

Losses of an associate in excess of the group’s interest in the associate (which includes any long-term interest that, in substance, forms part of the group’s net investment in the associate) are not recognised unless the group has a legal or constructive obligation in respect of those associates. If the associate subsequently reports profits, the group resumes recognising its share of those profits only after its share of the profits equals the share of losses not recognised.

Where a group entity transacts with an associate, unrealised profits and losses are eliminated to the extent of the group’s interest in the associate.

The associate is equity accounted until the date on which the group ceases to have significant influence over the associate.

Joint venture
The group has an interest in a joint venture which is a jointly-controlled entity, whereby the venturers have a contractual arrangement that establishes joint control over the economic activities of the entity. The group recognises its interest in the joint venture using proportionate consolidation. The group combines its share of each of the assets, liabilities, income and expenses of the joint venture with similar items, line by line, in its consolidated financial statements. The financial statements of the joint venture are prepared for the same reporting period as the parent company. Adjustments are made where necessary to bring the accounting policies into line with those of the group.

Adjustments are made in the group’s financial statements to eliminate the group’s share of unrealised gains and losses on transactions between the group and its jointly-controlled entity. Losses on transactions are recognised immediately if the loss provides evidence of a reduction in the net realisable value of current assets or an impairment loss. The joint venture is proportionately consolidated until the date on which the group ceases to have joint control over the joint venture.

The accounting policies adopted are consistent with those of the previous year, except that during the current financial year the group and the company have adopted and implemented the following accounting statements and amendments to existing standards and interpretations.

The changes in accounting policies result from the adoption of the following new accounting standards, interpretations and amendments to the standards that are applicable to the company and the group.

Adoption of these statements, amendments and interpretations have had the following effect on the financial statements of the group and the company and have also resulted in additional disclosures. The principal effects of these changes are as follows:

IFRIC 12 – Service Concession Arrangements
The International Financial Reporting Interpretations Committee (“IFRIC”) issued IFRIC 12 in November 2006. This interpretation applies to service concession operators and explains how to account for the obligations undertaken and rights received in service concession arrangements. No member of the group is an operator and, therefore, this interpretation has no impact on the group.

IFRIC 14 and IAS 19 – The Limit on a Defined Benefit Asset, Minimum Funding Requirements and Their Interaction
IFRIC 14 provides general guidance on how to assess the limit in IAS 19 employee benefits on the amount of the surplus that can be recognised as an asset. It also explains how the pension’s asset or liability may be affected where there is a statutory or contractual minimum funding requirement. The interpretation will standardise practice and ensure that entities recognise an asset in relation to a surplus on a consistent basis.

IAS 39 and IFRS 7 – Amendments to IAS 39 – Financial Instruments: Recognition and Measurement and IFRS 7 –Financial Instruments: Disclosures – Reclassification of Financial Assets
The amendments introduces the possibility of reclassifications for certain financial assets previously classified as “held for trading” or “available-for-sale” to another category under limited circumstances. Various disclosures are required where a reclassification has been made. Derivatives and assets designated as “fair value through profit and loss” under the fair value option are not eligible for this reclassification.

In the preparation of the annual financial statements, management is required to make estimates and assumptions that affect reported income, expenses, assets, liabilities and disclosure of contingent assets and liabilities. Use of available information and the application of judgement are inherent in the formation of estimates. Actual results in the future could differ from these estimates which may be material to the financial statements within the next financial period.

The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates and judgements concerning the future. Estimates and judgements are continually evaluated and are based on historical factors coupled with expectations about future events that are considered reasonable.

In the process of applying the group’s accounting policies, management has made the following judgements. Estimates that have a significant risk of causing material adjustment to the carrying amount of assets and liabilities within the next year and key assumptions concerning the future and other key sources of estimation uncertainty at the balance sheet date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year as they involve assessments or decisions that are particularly complex or subjective, are also discussed below.

Depreciation charges and residual values
The depreciation method reflects the pattern in which economic benefits attributable to the asset flow to the entity. The useful lives

of these assets can vary depending on a variety of factors, including but not limited to: technological obsolescence, maintenance programmes, refurbishments, product life cycles and the intention of management.

The estimation of the useful life and residual values of an asset is a matter of judgement based on the past experience of the group with similar assets, and the intention of management. (Refer to note 16.)

Deferred tax assets
Before any deferred tax asset is recognised judgement, coupled with estimates based on forecasts and budgets, is required to determine if the various companies showing deferred tax assets will make an appropriate level of taxable profit in the foreseeable future. (Refer to note 5.)

Fair value of unquoted equity instruments
The fair value of unquoted equity instruments has been valued based on expected cash flows discounted at current market rates applicable for items with similar terms and risk characteristics. The valuation requires the group to make estimates about expected future cash flows and discount rates. (Refer to note 9.)

Value in use of investments in associate
In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the group and the revenue can be measured reliably.

Revenue is measured at the fair value of the consideration received or receivable, net of any discounts, rebates and related taxes. Revenue is recognised on the bases set out below:

Dividend income
Dividend income is recognised when the shareholder’s right to receive payment is established.

Interest income
Interest income is recognised in the income statement on an accrual basis using the effective interest rate method.

Management fees
Management fees are recognised in the accounting period in which the services are rendered, by reference to completion of the specific transaction assessed on the basis of actual services provided as a proportion of the total services to be provided.

Plant and equipment are initially recognised at cost, being the cash price equivalent at the recognition date. The cost of an asset comprises directly attributable costs and any costs incurred in bringing the asset to the location and condition necessary for it to operate as intended by management.

Plant and equipment are subsequently stated at historic cost less accumulated depreciation and accumulated impairment in value. Subsequent costs are included in the asset’s carrying amount or are recognised as separate assets, as appropriate, only when it is probable that future economic benefits will flow to the group and the cost of the item can be measured reliably.

Maintenance and repairs, which do not meet these criteria, are charged against income as incurred.

Plant and equipment are depreciated on the straight-line basis over the estimated useful lives of the assets to the current values of their expected residual values. The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date.

Depreciation and impairment losses are included in the income statement.

An item of plant and equipment is derecognised upon disposal or when future economic benefits are expected from its use or disposal. Gains and losses on derecognition of assets are included in the income statement in the year that the asset is derecognised.

The group assesses at each reporting date whether there is an indication that an asset may be impaired. If any such indication exists, or when annual impairment testing for an asset is required, the group estimates the asset’s recoverable amount. An asset’s recoverable amount is the higher of an asset’s fair value less costs to sell and its value in use. When the carrying amount exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount.

Impairment losses are recognised in profit or loss. A previously recognised impairment loss is reversed only if there has been a change in the estimates used to determine the asset’s recoverable amount since the last impairment loss was recognised. If that is the case then the asset’s carrying amount is increased to its recoverable amount. That increased amount cannot exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset in prior years. Such reversal is recognised in profit and loss.

The group classifies financial instruments or their component parts on initial recognition as financial assets, financial liabilities or equity instruments in accordance with the substance of the contractual agreement. Financial instruments are initially measured at fair value. A financial asset or liability not at fair value through profit or loss are measured at transaction costs that are directly attributable to acquisition or incurral of the financial asset or liability. Subsequent to initial recognition, these instruments are measured as set out below. All regular way purchases and sales of financial assets are recognised on the trade date, i.e. the date that the group commits to purchase the asset. Regular way purchases or sales of financial assets require delivery of assets within the period generally established by regulation or convention in the market-place.

Financial assets
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market and include related party loans receivable and certain trade and other receivables. Such assets are carried at amortised cost using the effective interest method. Gains and losses are recognised in income when the loans and receivables are derecognised or impaired, as well as through the amortisation process.

Cash and cash equivalents
Cash and cash equivalents are measured at amortised cost and consist of cash on hand and balances at banks, net of outstanding bank overdrafts.

Trade and other receivables
Trade receivables are measured subsequently at amortised cost using the effective interest method. Appropriate allowances for estimated irrecoverable amounts are recognised in profit and loss when there is objective evidence that the asset is impaired.

Available-for-sale investments
Available-for-sale investments consist of investments in unlisted equity instruments. After initial recognition available-for-sale investments are measured at fair value with gains or losses being recognised as a separate component of equity until the investment is derecognised or until the investment is determined to be impaired at which time the cumulative gain or loss previously reported in equity is included in the income statement.

The fair value of investments that are actively traded in organised financial markets is determined by reference to quoted market bid prices at the close of business on the balance sheet date. The fair value of investments in equity instruments that do not have a quoted market price in an active market is measured using valuation techniques.

Investments in equity instruments that do not have a quoted market price in an active market and whose fair value cannot be reliably measured shall be measured at cost.

Financial liabilities
Trade and other payables
Trade and other payables are subsequently measured at amortised cost using the effective interest rate method.

Gains and losses are recognised in the income statement when the trade and other payables are derecognised and through interest based on the effective interest rate method.

Trade and other payables are short term in nature and are classified as current liabilities in the balance sheet. Related party loans are payable on demand and are classified as current liabilities in the balance sheet.

Preference shares
Preference shares that are redeemable on a specific date or at the option of the shareholder are classified as financial liabilities and are held at amortised cost using the effective interest method. The dividends on these preference shares are recognised in the income statement as an interest expense.

All financial assets are reviewed (individually or collectively) for impairment when events or changes in circumstances indicate that the carrying value may not be recoverable. Where the carrying value of these instruments exceeds the recoverable amount, the asset is written down to the recoverable amount.

Impairment losses are recognised in the income statement.

Financial assets carried at amortised cost
If there is objective evidence (such as uncreditworthiness of the third party) that an impairment loss on loans and receivables carried at amortised cost has been incurred, 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 (i.e. the effective interest rate computed at initial recognition). The carrying amount of the asset is reduced by any impairment loss. The amount of the loss is recognised in profit or loss.

The group first assesses whether objective evidence of impairment exists individually for the financial assets that are individually significant, and individually or collectively for financial assets that are not individually significant.

If it determines that no objective evidence of impairment exists for an individually assessed financial asset, whether significant or not, it includes the asset in a group of financial assets with similar credit risk characteristics and collectively assesses them for impairment. Assets that are individually assessed for impairment and for which an impairment loss is or continues to be recognised are not included in a collective assessment of impairment.

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, the previously recognised impairment loss is reversed. Any subsequent reversal of an impairment loss is recognised in the income statement, to the extent that the carrying value of the asset does not exceed its amortised cost at the reversal date.

Available-for-sale investments
When a decline in the fair value of an available-for- sale financial asset has been recognised directly in equity and there is objective evidence (such as changes in discounted cash flows) that the asset is impaired, the cumulative loss that had been recognised directly in equity is removed from equity and recognised in profit or loss.

If, in a subsequent period, the fair value of a debt instrument classified as available-for-sale increases and the increase can be objectively related to an event occurring after the impairment loss was recognised in profit or loss the impairment loss is reversed with the amount of the reversal recognised in profit or loss. Impairment losses recognised in profit or loss for an investment in an equity instrument classified as available-for-sale are not reversed through profit or loss.

Current income tax
Current income tax assets and liabilities for the current year and prior years are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted by the balance sheet date.

Deferred tax
Deferred tax is recognised on differences between the carrying amounts of assets and liabilities in the financial statements and

the corresponding tax base used in the computation of taxable profit, and are accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.

Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries and associates, and interests in joint ventures, except where the group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future.

Deferred tax assets are recognised for all deductible temporary differences, carry forward of unused tax credits and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences and the carry forward of unused tax credits and unused tax losses can be utilised, except:

• where the deferred tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor the taxable profit or loss; and
• in respect of deductible temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, deferred tax assets are recognised only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary difference can be utilised.

The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.

Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset realised based on tax rates/laws that have been enacted or substantively enacted by the balance sheet date.

Deferred tax is charged or credited to profit or loss, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity.

STC
STC is recognised as part of the current tax charge in the income statement when the dividend is declared.

The group will adopt the above standards and amendments on the effective date. The directors do not expect that the adoption thereof will have a material impact on the financial performance or position of the group. Certain other IFRS amendments and IFRIC interpretations that have been issued and are not yet effective have not been disclosed by the group as they are not applicable to its activities.

IFRS 3: This standard will apply prospectively. Therefore changes to the standard will only apply in the following financial year.

IAS 27: This standard requires that when an entity accounts for a subsidiary at fair value in its separate financial statements, this treatment continues when a subsidiary is subsequently classified as held for sale.

IAS 39: This standard will not be applicable to the group as it has not entered into any hedging arrangements or transactions during the current year.

IFRS 1: This standard will not be applicable to the group as it has already adopted IFRS 1.

IFRIC 17: This standard will not be applicable to the group as it has not made any non-cash asset distribution to the owners.

IFRIC 18: This standard will not be applicable to the group as no customers have transferred assets in terms of IFRIC 18 in the current year.

IFRS 8 (AC 145): IFRS 8 sets out requirements for disclosure of information about an entity’s operating segments and also about the entity’s products and services, the geographical area in which it operates and its major customers.

IAS 1 (AC 101): The changes relate to disclosure in the financial statements and are unlikely to have a significant impact on the company’s financial statements.

IAS 23 (AC 114): Borrowing costs that are directly attributed to the acquisition, construction or production of a qualifying asset form part of the cost of that asset and may no longer be expensed. Other borrowing costs are recognised as an expense.

IFRS 2 (AC 139): IFRS 2 was amended to provide more clarity on vesting conditions and cancellations.

IAS 32 (AC 125) and IAS 1 (AC 101): The amendment relates to disclosure of puttable instruments and obligations arising on liquidation. As the company does not have any puttable instruments and obligations the amendments are not applicable.

IFRS 7 (AC 144): The amendments require enhanced disclosures about fair value measurements and liquidity risk.