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Notes to the consolidated fnancial statements (continued)

for the year ended 30 June 2011

33. Signifcant accounting policies (continued)

33.1 Signifcant accounting policies applicable to all Group entities (continued)

33.1.12 Hedge accounting (continued)

(b) Fair value hedges

A fair value hedge is a hedge of the exposure to changes in fair value of:

–– a recognised asset or liability –– an unrecognised frm commitment; or –– an identifed portion of such an asset, liability or frm commitment,

that is attributable to a particular risk and could affect proft and loss.

Where an effective hedge relationship is established, fair value gains or losses on the hedging instrument are recognised in proft or loss. The hedged item attributable to the hedged risk is carried at fair value with the gain or loss recognised in proft or loss.

When a hedge relationship no longer meets the criteria for hedge accounting, the hedged item is accounted for under the effective interest method from that point and any accumulated adjustment to the carrying value of the hedged item from when it was effective is released to proft or loss over the period to when the hedged item will mature.

33.1.13 Assets and liabilities classifed as held for sale

These are non-current assets and liabilities that are expected to be recovered primarily through sale rather than continuing use. Once classifed, the assets and liabilities are measured at the lower of their carrying amount and fair value less cost to sell. Impairment losses on initial classifcation and subsequent gains or losses on re-measurement are recognised in the proft or loss. Gains are not recognised in excess of any cumulative impairment loss.

33.1.14 Property, plant and equipment

(a) Recognition and initial measurement

Property, plant and equipment are measured at cost less accumulated depreciation and accumulated impairment losses. Cost includes expenditure that is directly attributable to the acquisition.

Property, plant and equipment are derecognised upon disposal or where no future economic benefts are expected from its use. The resulting gain or loss is recognised and calculated as the difference between the carrying amount of the asset at the time of disposal and the net proceeds.

(b) Depreciation

The depreciable value of the asset, which is the cost of an asset less any residual value, is depreciated over the asset’s useful life. The straight-line method of depreciation is used with assets being depreciated from the date they become available for use.

Useful lives and depreciation methods are reviewed at each annual reporting period. Residual values, if signifcant, are reassessed annually. The depreciation rates used for the current and comparative periods are as follows:

CLASS BUILDINGS

LEASEHOLD IMPROVEMENTS

PLANT AND EQUIPMENT

Depreciation rate 2.5% 10% to 20% 10% to 50%

33.1.15 Intangible assets

(a) Initial recognition and measurement

Intangible assets are recognised at cost less any accumulated amortisation and any accumulated impairment losses. Where an intangible asset is acquired in a business combination, the cost of that asset is its fair value at acquisition date. Goodwill is recognised at cost from business combinations as described in note 33.1.2 and is subsequently measured at cost less accumulated impairment loss. Goodwill on equity accounted investments is included in the carrying value of the investment.

Internally generated intangible assets

Internally generated intangible assets such as software are recorded at cost, which comprises all directly attributable costs necessary to purchase, create, produce, and prepare the asset to be capable of operating in the manner intended by management.

All other expenditure, including expenditure on software maintenance, research costs and brands is recognised as an expense as incurred. (b) Amortisation

Amortisation is recognised in a manner that refects the pattern in which the asset’s future economic benefts are expected to be consumed over the estimated useful lives of fnite intangible assets, from the date the assets are available for use. The amortisation method and useful lives are reviewed annually. The estimated useful lives of intangible assets are as follows:

CATEGORY BRANDS

CUSTOMER CONTRACTS & OTHER RELATIONSHIPS

OUTSTANDING CLAIMS LIABILITIES

INTANGIBLE SOFTWARE

Useful life 1-50 years 1-30 years 20 years 3–7 years

Intangible assets deemed to have an indefnite useful life are not amortised but are tested for impairment at least annually.