The financial statements are prepared in accordance with the historic cost convention, except for assets that are periodically revalued.
The principal accounting policies of the group, which are set out below, comply with South African Statements of Generally Accepted Accounting Practice. These accounting policies are consistent with those of the prior year except as noted below.

ADOPTION OF SOUTH AFRICAN ACCOUNTING STANDARDS
In the current year, the group has adopted the following South African Accounting Standards for the first time:

Adoption of these Standards has resulted in changes in the application of the group’s accounting policies and modifications to the financial statement presentation. However, none of these amendments has materially affected the results for the current or prior years.

BASIS OF CONSOLIDATION
The group annual financial statements present the consolidated financial position and the operating results and cash flow information of the company and its subsidiaries. Entities in which the group has an interest of more than one half of the voting rights or the power to exercise control of the board of directors, have been consolidated as subsidiaries.

The results of subsidiaries are included for the period during which the group exercises control over the subsidiary. Where necessary, accounting policies for subsidiaries are changed to ensure consistency with the policies adopted by the group.

JOINT VENTURES
Activities which are jointly controlled by way of contractual agreement between the group and other venturers are regarded as joint ventures. These joint ventures may take the form of jointly controlled operations, assets, partnerships or companies.

Joint ventures are accounted for by means of the proportionate consolidation method whereby the group’s share of the assets, liabilities, income, expenses and cash flows of joint ventures are included on a line by line basis in the financial statements unless, in the opinion of the directors, circumstances indicate that it is prudent to account for income from such investments only as and when received.

The net difference of the cost of acquisition of joint venture companies and the group’s share of the net assets, fairly valued, is recognised as goodwill on acquisition and accounted for as such.

GOODWILL
Goodwill, being the premium or discount on acquisition of subsidiary, associated and joint venture companies, is capitalised and amortised on a straight-line basis over its useful life with a maximum of ten years.

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

ASSOCIATED COMPANIES
Companies in which the group actively participates in the commercial and financial policy decisions and thereby exercises a significant influence, and which are not classified as subsidiaries or joint venture companies are regarded as associated companies. The group’s share of the results of these companies is included in the financial statements from the effective dates of acquisition using the equity method. Attributable earnings since acquisition, less dividends received, are added to the book value of the investments in these companies.

The group’s interest in associated companies is carried in the balance sheet at an amount that reflects its share of the net assets and the unamortised portion of goodwill on acquisition. Where, in the opinion of the directors, the value of the interest is below the carrying value and the diminution of value is not considered to be of a temporary nature, the investment is written down to the expected realisable value.

FOREIGN CURRENCIES
Transactions and balances
Transactions denominated in foreign currencies are translated at the rate of exchange ruling at the transaction date. Monetary items denominated in foreign currencies are translated at the rate of exchange ruling at the balance sheet date. Gains or losses arising on translation are credited to or charged against income.

Foreign entities
The financial statements of foreign entities are translated into South African rand as follows:

DEFERRED TAXATION
Deferred taxation is accounted for using the liability method for all temporary differences between the tax bases of the assets and liabilities and the carrying values for financial statement purposes.

In principle, liabilities are recognised for all taxable temporary differences and assets are recognised to the extent that it is probable that taxable profits within the group’s budgeting horizon will be available against which deductible temporary differences can be utilised.

PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment comprises immovable properties, plant, machinery, vehicles and equipment.

Immovable properties are classified as either owner-occupied property or investment property and accounted for accordingly.

Land is not depreciated as it is deemed to have an indefinite life.

Owner-occupied property is carried at cost less accumulated depreciation and accumulated impairment losses, if any.

Investment property is initially measured at cost including transaction costs. After initial recognition, all investment properties are stated at cost less any accumulated depreciation and accumulated impairment losses, if any.

Immovable properties are revalued at least every five years on the basis of current market values and major variations between such valuations and book values are incorporated into the financial statements by transfer to or from non-distributable reserves.

In the event of the sale of an immovable property that had been revalued, the revaluation is transferred to accumulated profit and taken into account in the calculation of the profit or loss on disposal.

All other property, plant and equipment is stated at cost less accumulated depreciation.

Depreciation is generally calculated on the straight line basis at rates considered appropriate to reduce the book value of the assets to estimated residual value over their useful lives as follows:

FINANCIAL INSTRUMENTS
Measurement
Financial instruments are initially measured at cost, which includes transaction costs. Subsequent to initial recognition these instruments are measured as set out below.

Trade and other receivables:
Trade and other receivables are stated at cost less provision for doubtful debts.

Financial liabilities:
Financial liabilities are recognised at amortised cost, namely original debt less principal payments and amortisations of related costs.

Offset:
Where a legally enforceable right of offset exists for recognised financial assets and financial liabilities, and there is an intention to settle the liability and realise the asset simultaneously, or to settle on a net basis, all related financial effects are offset.

LEASED ASSETS
Assets leased in terms of financial leases, where material, are capitalised at their cash cost equivalent and a corresponding liability is raised.

Capitalised leased assets are depreciated using the straight line basis at rates considered appropriate to reduce the book values over the useful lives to the estimated residual values as set out in the property, plant and equipment policy. Where it is not certain that an asset will be taken over by the group at the end of the lease, the asset is depreciated over the shorter of the lease period and the estimated useful life of the asset.

Lease payments are allocated between the lease finance cost and the capital repayment using the effective interest method. Lease finance costs are charged to operating costs as they become due.

INVESTMENTS
Investments are stated at cost, less amounts written off.

Income from investments is only brought to account to the extent that dividends have been received or declared.

INVENTORIES
Inventories comprise raw materials, properties for resale, consumable stores and in the case of manufacturing entities, work-in-progress and finished goods. Inventories are valued at the lower of cost and net realisable value generally determined on the first-in, first-out basis. Finished goods and work-in-progress, in addition to direct materials and labour, include a proportion of factory overheads appropriate to the stage of completion.

CONTRACTS IN PROGRESS AND CONTRACT RECEIVABLES
The valuation of contracts in progress and contract receivables takes account of all direct expenditure and related indirect expenditure on contracts and includes a proportion of profit determined with reference to the stage of completion and the nature of each contract. Payments on account and anticipated losses to completion are deducted.

RETIREMENT BENEFITS
Post-retirement benefits incorporate the obligations of the group to current and retired employees, and are accounted for as follows:

Defined contribution plans:
Contributions to defined contribution plans are recognised as an expense in the year to which they relate.

Defined benefit plans:
The current service cost in respect of defined benefit plans is recognised as an expense in the year to which it relates. Past-service costs, experience adjustments, effects of changes in actuarial assumptions and plan amendments in respect of existing employees are expensed over the remaining service lives of employees. Adjustments relating to retired employees are expensed in the year in which they arise.

Post-retirement medical benefits:
Post-retirement benefits are expensed over the working lives of employees. Deficits arising on these funds, if any, are recognised immediately in respect of retired employees and over the remaining service lives of current employees.

REVENUE
Revenue is the aggregate of the turnover of subsidiaries and the group’s share of the turnover of joint ventures. Contracting turnover included therein comprises the value of work executed on contracts during the year.

Sale of goods
Revenue arising from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer.

Rendering of services
Revenue from services is recognised over the period during which the services are rendered.

Long-term contracts
Where the outcome of a construction contract can be reliably measured, revenue and costs are recognised by reference to the stage of completion of the contract at the balance sheet date, as measured by the proportion that contract costs incurred for work to date bear to the estimated total contract costs. Variations in contract work, claims and incentive payments are included to the extent that agreement has been reached with the customer. Anticipated losses to completion are recognised as an expense in contract costs.

Interest and dividend income
Interest is recognised on a time proportion basis, taking account of the principal outstanding and the effective rate over the period to maturity.
Dividends are recognised when the right to receive payment is established.

EXCEPTIONAL ITEMS
Exceptional items are material items which derive from events or transactions that fall outside the ordinary trading activities of the group and which individually or, if of a similar type, in aggregate, need to be disclosed by virtue of their size or incidence if the financial statements are to give a true and fair view.

PROVISIONS
Provisions are recognised when the group has a present legal or constructive obligation as a result of past events, for which it is probable that an outflow of economic benefits will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation.

DISCONTINUED OPERATIONS
Discontinued operations are significant, distinguishable components of an enterprise that have been sold, abandoned or are the subject of formal plans for disposal or discontinuance.

The profit or loss on the sale or abandonment of a discontinued operation is determined from the formalised discontinuance date and includes the operating results from this date, the difference between the proceeds on disposal and the net carrying value of the assets and liabilities to be disposed of, as well as all costs and expenses directly associated with the disposal.
If a loss is expected, full provision is made from the discontinuance date.

IMPAIRMENT OF ASSETS
The recoverability of long-term assets which includes properties, other fixed assets, goodwill and investments is continually assessed in relation to the estimated future discounted cash flows. Provision is raised for impairments, if any, if the carrying value of the assets exceeds the future discounted cash flows.

EARNINGS PER SHARE
Earnings per share is calculated on the weighted average number of ordinary shares in issue during the financial year. For the purpose of calculating the weighted average number of ordinary shares in issue, it is assumed that shares issued for the acquisition of shares in other companies were issued on the date from which the respective income is included in earnings, irrespective of the actual date of issue.

SEGMENTAL REPORTING
The group’s primary format for reporting segmental information is determined in accordance with the nature of business and its secondary format is determined with reference to the geographical location of the operations.

Segmental revenue and expenses:
All segment revenue and expenses are directly attributable to the segments.

Segmental assets:
All operating assets used by a segment, principally property, plant and equipment, investments, inventories, contracts in progress, and receivables, net of allowances. Cash balances are excluded.

Segmental liabilities:
All operating liabilities of a segment, principally accounts payable, sub-contractor liabilities and external interest bearing borrowings.