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IFRS or SMEs Illustrative consolidated

fnancial statements 2010


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PricewaterhouseCoopers IFRS and corporate governance publications and tools 2009

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3PricewaterhouseCoopers

IFRS or SMEs Illustrative consolidatednancial statements 2010

Preace

The International Financial Reporting Standard or Small and Medium-sized Entities

(IFRS or SMEs) applies to all entities that do not have public accountability. An

entity has public accountability i it les its nancial statements with a securities

commission or other regulatory organisation or the purpose o issuing any class o

instrument in a public market, or i it holds assets in a duciary capacity or a broad

group o outsiders or example, a bank, insurance entity, pension und, securities

broker/dealer. The denition o an SME is thereore based on the nature o an entity

rather than on its size.

The standard is applicable immediately. It is a matter or authorities in each territory

to decide which entities are permitted or even required to apply IFRS or SMEs.

The IASB developed this standard in recognition o the diculty and cost to

private companies o preparing ully compliant IFRS inormation. It also recognised

that users o private entity nancial statements have a dierent ocus rom those

interested in publically listed companies. IFRS or SMEs attempts to meet the

users needs while balancing the costs and benets to preparers. It is a stand-alone

standard; it does not require preparers o private entity nancial statements to cross-

reer to ull IFRS.

The more modest disclosure requirements will appeal to users and preparers.

Embedding the standard across a private group with extensive global operations

that use a variety o local reporting standards will signicantly ease the monitoring

o nancial inormation, reduce the complexity o statutory reconciliations (thereby

reducing the risk o error), make the consolidation process more ecient and

streamline reporting procedures across group entities.

This publication is a part o PricewaterhouseCoopers ongoing commitment to help

companies navigate the switch rom local GAAP to IFRS or SMEs. For inormation

on other publications in our series on IFRS or SMEs, see the inside ront cover.

Hugo van den Ende, Global ACS partner (SME)

Aude Joly, senior manager, Switzerland

Fiona Hacket, senior manager, Ireland

Note: This IFRS or SMEs Illustrative consolidated fnancial statements

2010 is designed or the inormation o readers. While every eort has been

made to ensure accuracy, inormation contained in this publication may not

be comprehensive, or some inormation may have been omitted that may be

relevant to a particular reader. This publication is not intended to cover all

aspects o IFRS or SMEs, or as a substitute or reading the actual Standardsand Interpretations when dealing with specic issues. No responsibility or loss

to any person acting or reraining rom acting as a result o any material in this

publication can be accepted by PricewaterhouseCoopers. Recipients should not

act on the basis o this publication without seeking proessional advice.


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4 PricewaterhouseCoopers

Introduction

This publication provides an illustrative set o consolidated nancial statements,

prepared in accordance with the International Financial Reporting Standard or

Small and Medium-sized Entities (IFRS or SMEs), or a ctional ruit grower, wineand ruit juice producer, wholesale and retail group (ABC Limited).

ABC Limited is a rst-time adopter o the IFRS or SMEs and prepares consolidated

nancial statements.

This publication is based on the requirements o the IFRS or Small and Medium-

sized Entities published 9 July 2009.

These illustrative nancial statements show how IFRS or SMEs should be applied

to a company that has many dierent types o assets and business arrangements.

In reality, ew companies using the IFRS or SMEs will be as complex as this.

These nancial statements are 56 pages long, which may seem surprisingly long

or nancial statements using IFRS or SMEs. But their relative brevity can be

understood by considering that, i prepared under ull IFRS, we believe they would

be over 100 pages long. A shorter, simpler example the nancial statements o a

much simpler company is available in the appendix to the IASBs standard.

Certain items may not apply to some entities. For example, i the reporting entity

does not have material operating leases, disclosure o the accounting policy or

operating leases does not need to be included.

We have made the ollowing assumptions in preparing these consolidated nancial

statements:

The entity does not ull the requirements or presenting a combined statement

o income and retained earnings. Instead, it presents a consolidated statement o

comprehensive income and a consolidated statement o changes in equity. Under

Section 3 paragraph 18, i the only changes to equity during the periods or which

nancial statements are presented arise rom prot or loss, payment o dividends,

correction o prior-period errors and changes in accounting policy, the entity

may present a single statement o income and retained earnings in place o the

statement o comprehensive income and statement o changes in equity.

The entity is a rst-time adopter o IFRS or SMEs.

The entity has complex transactions such as business combinations, discontinued

operations, share-based payments, government grants, hedge accounting and

biological assets.

ABC Limited owns 100% o the voting rights in all o its subsidiaries.

Certain accounting policy choices have been made in preparing the nancial

statements or example, the application o air value or investment property and

biological assets. Alternative accounting policies permitted by the IFRS or SMEs are

disclosed in Appendix I as additional guidance.

Certain types o transaction have been excluded, as they are not relevant to the

groups operations. Example disclosures or some o these additional items have

been included in Appendix II.

The example disclosures should not be considered the only acceptable orm o

presentation. The orm and content o each reporting entitys nancial statements

are the responsibility o the entitys management. Alternative presentations to those

proposed in this publication may be equally acceptable i they comply with the

specic disclosure requirements prescribed in the IFRS or SMEs.


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These illustrative nancial statements are not a substitute or reading the standard

or or proessional judgement as to airness o presentation. They do not cover all

possible disclosures that the IFRS or SMEs requires. Further specic inormation

may be required in order to ensure air presentation under the IFRS or SMEs. We

recommend that readers reer to our IFRS or SMEs disclosure checklist, to bereleased in December 2009.

In addition, urther requirements may apply in order to comply with local laws,

national nancial reporting standards and/or other regulations.

Many countries require separate nancial statements to be published or a parent

in addition to consolidated nancial statements. This is the case in Europe, or

example, based on the EU Directives. This set o illustrative nancial statements

assumes that ABC Limited is not required to prepare separate nancial statements.

Format

The reerences in the let-hand margin o the nancial statements represent the

paragraph o the standard in which the disclosure appears or example, 21p15

indicates IFRS or SMEs section 21, paragraph 15.The designation DV (disclosure

voluntary) indicates that IFRS or SMEs does not require the disclosure.

Additional notes and explanations are shown in ootnotes.


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ABC LimitedConsolidated nancial statements

31 December 2010


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Contents

Consolidated statement o nancial position 8

Consolidated statement o comprehensive income by nature o expense 9

Consolidated statement o changes in equity 10

Consolidated statement o cash fows 11

Accounting policies and explanatory notes to the nancial statements: 13

1 General inormation 13

2 Summary o signicant accounting policies 13

3 Transition to the IFRS or SMEs 22

4 Inormation about key sources o estimation uncertainty and judgements 25

5 Cash and cash equivalents 28

6 Financial instruments 28

7 Derivative nancial instruments 29

8 Trade and other receivables 29

9 Inventories 30

10 Biological assets 30

11 Property, plant and equipment 31

12 Investment property 31

13 Intangible assets 32

14 Borrowings 32

15 Trade and other payables 33

16 Provisions 33

17 Employee benet obligations 34

18 Share capital and premium 36

19 Other reserves 37

20 Revenue 38

21 Other income 38

22 Employee salaries and benets expense 38

23 Other gains/(losses) net 39

24 Other expenses 39

25 Finance income and costs 39

26 Income tax 40

27 Discontinued operations 42

28 Contingencies 42

29 Commitments 43

30 Business combination 44

31 Related-party transactions 45

32 Events ater the end o the reporting date 46

Illustrative auditors report IFRS or SMEs 47


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Appendix I Alternative accounting policies and disclosures or areas

relevant to ABC LimitedInvestment property cost model 49

Biological assets cost model 51

Investments in associates equity method and air value model 52

Appendix II Policies and disclosures or areas not relevant

to ABC Limited

Construction contracts 53

Joint ventures 55

Non-controlling interest 56Impairment 56


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(All amounts in C thousands unless otherwise stated)

Consolidated statement o nancial position

4p2, 4p9, 4p10 As at 31 December

Note 2010 2009

Assets

4p5 Current assets

Cash and cash equivalents 5 2,128 3,407

Derivative nancial instruments 7 146 120

Trade and other receivables 8 2,209 1,968

Inventories 9 2,470 1,818

Biological assets 10 173 0

7,126 7,313

4p6 Non-current assets

Property, plant and equipment 11 15,534 10,023Investment property 12 1,182 797

Intangible assets 13 2,627 2,070

Biological assets 10 1,742 1,491

Investments in associates 1,337 1,324

Deerred income tax assets 26 352 332

22,774 16,037

Total assets 29,900 23,350

4p4, 4p7 Liabilities

Current liabilities

Borrowings 14 1,172 1,826Trade and other payables 15 1,667 1,248

Current tax liability 257 277

Provisions 16 268 301

3,364 3,652

4p8 Non-current liabilities

Borrowings 14 11,512 9,635

Deerred tax liability 26 1,237 905

Employee benet obligations 17 464 223

Provisions 16 146 40

13,359 10,803Total liabilities 16,723 14,455

Equity 18 13,177 8,895

Total equity attributable to the owners o the parent 13,177 8,895

Total liabilities and equity 29,900 23,350

The notes on pages 8 to 46 are an integral part o these consolidated nancial statements.


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Consolidated statement o comprehensiveincome by nature o expense1

5p2(a), 5p4, 5p5

Year ended

31 December

Note 2010 2009

5p5(a) Revenue 20 19,326 10,458

Other income 21 1,967 1,078

Changes in inventories o nished goods and work in

progress 9 (695) 230

Raw materials and consumables used (5,082) (3,272)

Gain/(loss) arising rom changes in air value o

biological assets 10 (462) 41

Gain/(loss) rom changes in air value o investment

property 12 385 (87)Employee salaries and benets expense 22 (4,008) (1,549)

Depreciation and amortisation 11/13 (2,103) (1,185)

Transportation expense (958) (624)

Advertising costs (1,095) (350)

Research and development (581) (195)

20p16(b) Operating lease expenses (1,060) (850)

Other gains/(losses) net 23 (10) 7

Other expenses 24 (178) (85)

Operating prot 5,446 3,617

Finance income 25 173 161

Finance costs 25 (834) (1,205)

5p5(b) Finance costs net 25 (661) (1,044)

Prot beore income tax 4,785 2,573

5p5(d) Income tax expense 26 (1,461) (868)

Prot or the year rom continuing operations 3,324 1,705

Discontinued operations:

5p5(e) Prot or the year rom discontinued operations 27 10 13

5p5(f) Prot or the year 3,334 1,718

5p5(g) Other comprehensive income:

5p4(b) Gains/(losses) recognised directly in equity

Currency translation dierences 794 (16)

Actuarial loss on employee benet obligations, net o tax 0 (49)

Changes in air value o hedging instruments, net o tax 19 37

Transer to oreign exchange gains/(losses) (29) 0

Other comprehensive income or the year, net o tax 784 (28)

5p5(i) Total comprehensive income or the year 4,118 1,690

5p6 Prot attributable to:

Owners o the parent 3,334 1,718

Total comprehensive income attributable to:Owners o the parent 4,118 1,690


1 5p11 also allows a classication o expenses by unction, whichever provides inormation that is reliableand more relevant.


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Consolidated statement o changes in equity

Attributable to owners o the parent

Share capital

and sharepremium

(note 18)

Other

reserves

Retained

earnings Total

At 1 January 2009 3,042 636 4,847 8,525

Prot or the year 1,718 1,718

Currency translation dierences (16) (16)

Actuarial loss on employee

benet obligations, net o tax (49) (49)

Changes in air value o hedging

instruments, net o tax 37 37

Total comprehensive income orthe year (28) 1,718 1,690

Dividend paid (1,697) (1,697)

Employee share option schemes

Value o employee services 93 93

Issue o shares 284 284

At 31 December 2009 3,326 701 4,868 8,895

Prot or the year 3,334 3,334

Currency translation dierences 794 794

Changes in air value o hedginginstruments, net o tax 19 19

Transer to oreign exchange

gains/(losses) (29) (29)

Total comprehensive income or

the year 784 3,334 4,118

Employee share option schemes

Value o employee services 69 69

Issue o shares 95 95

At 31 December 2010 3,421 1,554 8,202 13,177



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Consolidated statement o cash fows

Year ended

31 December

7p3, 7p8 Note 2010 2009

7p4 Cash fows rom operating activities

Prot including discontinued operations 3,334 1,718

Adjustments or non-cash income and expenses:

Taxes 26 1,461 868

Depreciation 11 1,777 966

Amortisation 13 326 219

Impairment o trade receivables 8 48 35

Reduction in provision or impairment o inventories (39) 0

Changes in provisions 16 73 (49)

Fair value (gains)/losses biological assets 10 462 (139)

Fair value (gains)/losses investment property 12 (385) (87)

(Prot)/loss on disposal o property, plant and

equipment 23 (2) 10

Share-based payment and increase in retirement

benet obligations 153 109

Fair value (gains)/losses on hedging instruments 23 27 (21)

Finance costs net 25 661 1,044

Unrealised oreign exchange losses/(gains) on

operating activities (178) (153)

Changes in working capital (excluding the eectso acquisition and exchange dierences on

consolidation):

Trade and other receivables 8 (289) (373)

Inventories 9 (652) (451)

Trade and other payables 15 (399) (295)

Cash generated rom operations 5,369 3,401

Interest paid 25 (1,087) (1,328)

Income tax paid (774) (563)

Net cash rom operating activities 3,508 1,510

7p5 Cash fows rom investing activities Acquisition o subsidiary, net o cash acquired 30 (1,395) 0

Purchases o property, plant and equipment (PPE) 11 (976) (604)

Proceeds rom sale o PPE 689 317

Purchases biological assets 10 (616) (107)

Purchases o intangible assets 13 (517) 0

Interest received 25 96 98

Dividends received 0 0

Net cash used in investing activities (2,719) (296)

Table continues on next page.


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Consolidated statement o cash fows (cont.)

Year ended

31 December

Note 2010 2009

7p6 Cash fows rom nancing activities

Proceeds rom issuance o ordinary shares 95 284

Proceeds rom borrowings 2,006 1,207

Repayments o borrowings (542) 0

Dividends paid to companys shareholders 0 (1,697)

Net cash used in nancing activities (1,741) (206)

7p20

Net (decrease)/increase in cash, cash equivalents

and bank overdrats (952) 1,008

Cash, cash equivalents and bank overdrats at

beginning o year 2,761 1,759

Exchange gains/(losses) on cash, cash equivalents and

bank overdrats 54 (6)

Cash, cash equivalents and bank overdrats at end

o year 5 1,863 2,761



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Notes the the fnancial statements


Accounting policies and explanatory notes to theconsolidated nancial statements

1 General inormation

3p24(b) ABC Limited (the company) and its wholly-owned subsidiaries (together the

group) manuacture, distribute and sell a range o beverages through a network

o independent retailers and ABC Limited retail outlets. The group has vineyards

and manuacturing plants around the world and sells mainly in countries within the

Currency-zone, Australia and the UK. During the year, the group acquired control o

DEF Inc, a ruit grower and ruit juice producer or the wholesale market operating

in southern Europe. ABC Limited also sold its assets and liabilities related to the

company XYZ Australia Limited, a wine retailer in Australia.

3p24(a) The company is a limited liability company incorporated and domiciled in Euravia.

The address o its registered oce is Nice Walk Way, Runningbourg.

32p9 These group consolidated nancial statements were authorised or issue by the

9p23 board o directors on 20 March 2011.

2 Summary o signifcant accounting policies

This is the rst set o nancial statements prepared by ABC Limited in accordance

with the IFRS or Small and Medium-sized Entities issued by the InternationalAccounting Standards Board. The principal accounting policies applied in the

preparation o these consolidated nancial statements are set out below. These

policies have been consistently applied to all the years presented, unless otherwise

stated.

2.1 Basis o presentation

3p3 The consolidated nancial statements o ABC Limited have been prepared in

accordance with the International Financial Reporting Standard or Small and

Medium-sized Entities (IFRS or SMEs). They have been prepared under the

historical cost convention, as modied by the revaluation o investment property,biological assets and derivative nancial instruments at air value.

8p6 The preparation o nancial statements in conormity with the IFRS or SMEs

8p7 requires the use o certain critical accounting estimates. It also requires management

to exercise its judgement in the process o applying the groups accounting

policies. Areas involving a higher degree o judgement or complexity, or areas

where assumptions and estimations are signicant to the consolidated nancial

statements, are disclosed in note 4.

2.2 Consolidation

(a) Subsidiaries1

9p4 Subsidiaries are all entities (including special purpose entities) over which the group

9p5 has the power to govern the nancial and operating policies so as to obtain benets

9p11 rom its activities, generally accompanying a shareholding o more than hal

1 It is assumed in these consolidated statements that ABC Limited owns 100% o its subsidiaryundertakings. There is thereore no non-controlling interest within its consolidated equity. An exampleaccounting policy or transactions with non-controlling interest under the IFRS or SMEs is included inAppendix II.


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Notes the the fnancial statements (continued)


o the voting rights. Subsidiaries are ully consolidated rom the date on which

control is transerred to the group. They are de-consolidated rom the date that

control ceases.

19p6 The purchase method o accounting is used to account or business combinations

19p11 that result in the acquisition o subsidiaries by the group. The cost o a business

combination is measured as the air value o the assets given, equity instruments

issued and liabilities incurred or assumed at the date o exchange, plus costs

directly attributable to the business combination. Identiable assets acquired

and liabilities and contingent liabilities assumed in a business combination are

measured initially at their air values at the acquisition date. Any excess o the cost

o the business combination over the acquirers interest in the net air value o the

identiable assets, liabilities and contingent liabilities recognised is recorded as

goodwill.

9p15 Inter-company transactions, balances and unrealised gains on transactions between

33p5 Drink 4 You Limited and its subsidiaries, which are related parties, are eliminated in

ull. Intra-group losses are also eliminated but may indicate an impairment that

9p17 requires recognition in the consolidated nancial statements.

Accounting policies o subsidiaries have been changed where necessary to ensure

consistency with the policies adopted by the group.

(b) Associates1

14p2 Associates are all entities over which the group has signicant infuence but not

14p5 control, generally accompanying a shareholding o between 20% and 50% o the

voting rights. As there are no published price quotations available or the groupsassociates, the group has elected to account or investments in associates at cost

less any accumulated impairment losses.

2.3 Foreign currency translation

30p2 (a) Functional and presentation currency

3p23(d) Items included in the nancial statements o each o the groups entities are

3p23(e) measured using the currency o the primary economic environment in which the

30p26 entity operates (the unctional currency). The consolidated nancial statements

are presented in currency (C), which is the companys unctional and the groups

presentation currency.

(b) Transactions and balances

30p7 Foreign currency transactions are translated into the unctional currency using

the exchange rates prevailing at the dates o the transactions. Foreign exchange

gains and losses resulting rom the settlement o such transactions and rom

the translation at year-end exchange rates o monetary assets and liabilities

denominated in oreign currencies are recognised in prot or loss.

Foreign exchange gains and losses that relate to borrowings and cash and cash

equivalents are presented in prot or loss within nance income or costs. All otheroreign exchange gains and losses are presented in prot or loss within other

(losses)/gains net.

(c) Group companies

1 There is an accounting policy election when accounting or investments in associates in consolidatednancial statements. The air value model has to be applied or investments in associates or which thereis a published price quotation. Alternatively, an entity can apply the cost model or equity method. ABCLimited applies the cost model. Reer to Appendix I or suggested alternative accounting policy options.


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30p18 The results and nancial position o all the group entities that have a unctional

30p19 currency dierent rom the presentation currency are translated into the presentation

currency as ollows:

(i) Assets and liabilities or each statement o nancial position presented aretranslated at the closing rate at the reporting date;

(ii) Income and expenses or each statement o comprehensive income are

translated at average exchange rates (unless this average is not a reasonable

approximation o the exchange rates at the dates o the transactions, in which

case income and expense items are translated at the exchange rates at the

dates o the transactions); and

(iii) All resulting exchange dierences are recognised in other comprehensive income.

30p23 Goodwill and air value adjustments arising on the acquisition o a oreign operation

30p18 are treated as assets and liabilities o the oreign operation and translated at theclosing rate at each reporting date.

2.4 Cash and cash equivalents

7p2 Cash and cash equivalents includes cash on hand, demand deposits and other

7p20 short-term highly liquid investments with original maturities o three months or less.

Bank overdrats are shown within borrowings in current liabilities on the statement o

nancial position.

2.5 Derivative nancial instruments and hedging activities

11p40 Derivatives are initially recognised at air value on the date a derivative contract is

12p8 entered into and are subsequently re-measured at their air value, at each reporting

12p27 date. The method o recognising the resulting gain or loss depends on whether the

12p18 derivative is designated as a hedging instrument, and i so, the nature o the item

being hedged. The group uses oreign currency orward exchange contracts to

limit its exposure to oreign exchange risk on highly probable orecast oreign

currency sales transactions. The group designates these derivatives as hedges

that is, a hedge o oreign exchange risk associated with highly probably orecast

sales transactions.

12p16 The group designates and documents, at the inception o a hedging transaction, thehedging relationship so that the risk being hedged, the hedged item and the hedging

instrument are clearly identied and the risk in the hedged item is the risk being

hedged with the hedging instrument. Hedge accounting is only applied when the

group expects the derivative nancial instrument to be highly eective in osetting

the designated hedged oreign currency risk associated with the hedged item.

The ull air value o a hedging derivative is classied as a non-current asset or

liability when the remaining maturity o the hedged item is more than 12 months, and

as a current asset or liability when the remaining maturity o the hedged item is less

than 12 months.

12p23 The eective portion o changes in the air value o derivatives that are designated

and qualiy as hedges is recognised in other comprehensive income. The gain or

loss relating to the ineective portion is recognised immediately in prot or loss

within other gains/(losses) net.

Amounts recognised in other comprehensive income are reclassied to prot or

loss in the periods when the orecast sales take place and are included within other

gains/(losses) net.

12p25 When a oreign currency orward exchange contract expires or is sold, or when a

hedge no longer meets the criteria or hedge accounting, any cumulative gain or


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loss existing in equity at that time remains in equity and is recognised when the

orecast transaction ultimately aects prot or loss. When a orecast transaction

is no longer expected to occur, the cumulative gain or loss that was recognised in

other comprehensive income is immediately transerred to prot or loss within other

gains/(losses) net.

2.6 Trade receivables

11p13 Trade receivables are recognised initially at the transaction price. They are

11p21 subsequently measured at amortised cost using the eective interest method,

less provision or impairment. A provision or impairment o trade receivables is

established when there is objective evidence that the group will not be able to

collect all amounts due according to the original terms o the receivables.

2.7 Inventories

13p4 Inventories are stated at the lower o cost and estimated selling price less costs

13p5 to complete and sell. Cost is determined using the rst-in, rst-out (FIFO) method.

27p2 The cost o nished goods and work in progress comprises packaging costs, raw

materials, direct labour, other direct costs and related production overheads (based

on normal operating capacity). At each reporting date, inventories are assessed or

impairment. I inventory is impaired, the carrying amount is reduced to its selling

price less costs to complete and sell; the impairment loss is recognised immediately

in prot or loss.

2.8 Biological assets1

34p2(a) Biological assets comprise vineyards, orchards and citrus groves held or use in

34p4 production. As the air value o these biological assets can be readily determined

without undue cost or eort, the assets are initially recognised and subsequently

carried at air value less costs to sell. Any resultant gain or loss on re-measuring to

air value less costs to sell at each reporting date is recognised in prot or loss.

13p15 At the time o harvesting, the grapes and other ruit are recognised at air value less

costs to sell and are included in inventory at this amount. They are not subsequently

re-measured.

2.9 Property, plant and equipment

17p10(b) Property, plant and equipment is stated at historical cost less accumulated

depreciation and any accumulated impairment losses. Historical cost includes

expenditure that is directly attributable to bringing the asset to the location and

condition necessary or it to be capable o operating in the manner intended by

management.

17p6 The group adds to the carrying amount o an item o property, plant and equipment

17p15 the cost o replacing parts o such an item when that cost is incurred i the

replacement part is expected to provide incremental uture benets to the group.

The carrying amount o the replaced part is derecognised. All other repairs

and maintenance are charged to prot or loss during the period in which they

are incurred.

17p16 Land is not depreciated. Depreciation on other assets is charged so as to allocate

1 Only where the air value o biological assets cannot be readily determined without undue cost oreort, such biological assets are initially recognised at their cost and subsequently carried at costless accumulated depreciation and accumulated impairment losses. The accounting policy has to bedetermined according to IFRS or SMEs 34p2 or each class o biological asset. It is assumed in theseillustrative nancial statements that air value is determinable or each class. Reer to Appendix I orsuggested wording o alternative accounting policy where the cost model is applied.


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17p31(b) the cost o assets less their residual value over their estimated useul lives, using the

straight-line method. The estimated useul lives range as ollows:

17p31(c) Buildings 25-40 years

Machinery 10-15 years

Vehicles 3-5 years

Furniture, ttings and equipment 3-8 years

17p19 The assets residual values, useul lives and depreciation methods are reviewed, and

17p23 adjusted prospectively i appropriate, i there is an indication o a signicant change

since the last reporting date.

27p5 An assets carrying amount is written down immediately to its recoverable amount

i the assets carrying amount is greater than its estimated recoverable amount

(note 11).

DV Gains and losses on disposals are determined by comparing the proceeds with

the carrying amount and are recognised within other gains/(losses) net in the

statement o comprehensive income.

2.10 Investment property1

16p7 The group owns a reehold oce building that is held to earn long-term rental

income and or capital appreciation. The property is not occupied by the group.

Investment property is carried at air value, derived rom the current market prices

or comparable real estate determined annually by external valuers. The valuers use

observable market prices, adjusted i necessary or any dierence in the nature,location or condition o the specic asset. Changes in air value are recognised in

prot or loss.

2.11 Intangible assets

(a) Goodwill

19p23 Goodwill represents the excess o the cost o a business combination over the air

27p28 value o the groups share o the net identiable assets o the acquired subsidiary

at the date o acquisition. Goodwill on acquisitions o subsidiaries is included in

intangible assets. Goodwill is carried at cost less accumulated amortisation and

accumulated impairment losses. Goodwill amortisation is calculated by applying

the straight-line method to its estimated useul lie. I a reliable estimate cannot be

made, the useul lie o goodwill is presumed to be 10 years. At each reporting date,

the group assesses whether there is any indication that goodwill may be impaired. I

any such indication exists, the entity estimates the recoverable amount o the asset.

Impairment losses on goodwill are not reversed. Gains and losses on the disposal o

an entity include the carrying amount o goodwill relating to the entity sold.

1 Where a reliable measure o the air value o investment property is unavailable without undue cost oreort, investment properties are initially recognised at their cost and subsequently accounted or asproperty, plant and equipment. They are measured at cost less accumulated depreciation and accumulatedimpairment losses (16p7).


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27p25 Goodwill is allocated to cash-generating units (CGUs) (or groups o CGUs) or

the purpose o impairment testing. The allocation is made to those CGUs units or

groups o CGUs that are expected to benet rom the synergies o the business

combination, irrespective o whether other assets or liabilities o the acquiree are

assigned to those units.1

(b) Trademarks, licences and customer related intangible assets

18p10 Separately acquired trademarks and licences are shown at historical cost.

18p11 Trademarks, licences (including sotware) and customer-related intangible assets

18p18 acquired in a business combination are recognised at air value at the acquisition

18p19 date. Trademarks, licences and customer-related intangible assets have a

nite useul lie and are carried at cost less accumulated amortisation and any

accumulated impairment losses. Amortisation is calculated using the straight-line

method to allocate the cost o trademarks, licences and customer related intangible

assets over their estimated useul lives, as ollows:

Trademarks: 10 years

Customer-related intangible assets: 5 years

Acquired computer sotware licences are capitalised on the basis o the costs

incurred to acquire and bring to use the specic sotware. These costs are amortised

over their estimated useul lives o three to ve years.

(c) Research and development costs

18p14 All research and development costs are recognised as an expense unless they orm

part o the cost o another asset that meets the recognition criteria.

2.12 Impairment o non-nancial assets other than inventories

27p5 Assets that are subject to depreciation or amortisation are assessed at each

27p7 reporting date to determine whether there is any indication that the assets are

27p11 impaired. Where there is any indication that an asset may be impaired, the carrying

27p29 value o the asset (or cash-generating unit to which the asset has been allocated) is

tested or impairment. An impairment loss is recognised or the amount by which the

assets carrying amount exceeds its recoverable amount. The recoverable amount is

the higher o an assets (or CGUs) air value less costs to sell and value in use. For

the purposes o assessing impairment, assets are grouped at the lowest levels orwhich there are separately identiable cash fows (CGUs). Non-nancial assets other

than goodwill that suered an impairment are reviewed or possible reversal o the

impairment at each reporting date.

2.13 Borrowings

11p13 Borrowings are recognised initially at the transaction price (that is, the present

11p14 value o cash payable to the bank, including transaction costs). Borrowings are

11p40 subsequently stated at amortised cost. Interest expense is recognised on the basis

o the eective interest method and is included in nance costs.

4p7 Borrowings are classied as current liabilities unless the group has an unconditional

right to deer settlement o the liability or at least 12 months ater the reporting date.

1 I the reporting entity cannot allocate goodwill to individual CGUs (or groups o CGUs) that are expected tobenet rom the synergies o a business combination, it should test or impairment o goodwill either at thelevel o the group as a whole, i the group has integrated the acquired business (27p27b), or at the level othe acquired entity in its entirety, i the acquired business has not been integrated (27p27a).


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2.14 Trade payables

11p13 Trade payables are recognised initially at the transaction price and subsequently

measured at amortised cost using the eective interest method.

2.15 Provisions

21p4 Provisions or restructuring costs and legal claims are recognised when: the group

21p10 has a present legal or constructive obligation as a result o past events; it is probable

that a transer o economic benets will be required to settle the obligation; and

the amount can be reliably estimated. Restructuring provisions comprise lease

termination penalties and employee termination payments. Provisions are not

recognised or uture operating losses.

21p7 Provisions are measured at the present value o the amount expected to be required

to settle the obligation using a pre-tax rate that refects current market assessments

o the time value o money and the risks specic to the obligation. The increase inthe provision due to passage o time is recognised as interest expense.

2.16 Employee benet obligations

(a) Pension obligations

28p9 The group has both dened benet and dened contribution plans. A dened

28p10 contribution plan is a pension plan under which the group pays xed contributions

into a separate entity and has no legal or constructive obligations to pay urther

contributions i the und does not hold sucient assets to pay all employees the

benets relating to employee service in the current and prior periods. A denedbenet plan is a pension plan that is not a dened contribution plan. Typically

dened benet plans dene an amount o pension benet that an employee will

receive on retirement, usually dependent on one or more actors such as age, years

o service and compensation.

28p15 The liability recognised in the statement o nancial position in respect o dened

28p18 benet pension plans is the present value o the dened benet obligation at the

28p17 reporting date minus the air value o plan assets. The dened benet obligation is

measured using the projected unit credit method. The present value o the dened

benet obligation is determined by discounting the estimated uture payments by

reerence to market yields at the reporting date on high-quality corporate bonds thatare denominated in the currency in which the benets will be paid, and that have

terms to maturity approximating to the terms o the related pension liability.1

28p24(b) Actuarial gains and losses are charged or credited to other comprehensive income in

the period in which they arise.2

28p25(e) Past-service costs are recognised immediately in prot or loss.

28p13 For dened contribution plans, the group pays contributions to publicly or privately

administered pension insurance plans on a mandatory or contractual basis. The

contributions are recognised as employee benet expense when they are due.

I contribution payments exceed the contribution due or service, the excess isrecognised as an asset.

1 I an entity is not able, due to undue cost or eort, to use the projected unit credit method to measureits obligations and cost under dened benet plans, 28p19 permits the entity to make the ollowingsimplications in measuring its dened benet obligation with respect to current employees: ignoreestimated uture salary increases; ignore uture service o current employees; and ignore possible in-servicemortality o current employees between the reporting date and the date employees are expected to beginreceiving post-employment benets.

2 28p24 allows entities an accounting policy choice in relation to the recognition o actuarial gains and lossesas ollows: a) recognise all actuarial gains and losses in prot or loss; or b) recognise all actuarial gains andlosses in other comprehensive income.


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(b) Share-based compensation

26p1(a) The group operates an equity-settled, share-based compensation plan, under

26p6 which the entity receives services rom employees as consideration or equity

26p7 instruments (options) o the parent entity. The air value o the employee services

26p8 received is measured by reerence to the estimated air value at the grant date o

26p11 equity instruments granted and is recognised as an expense over the vesting

period. The estimated air value o the option granted is calculated using a binomial

option pricing model. The total amount expensed is recognised over the vesting

period, which is the period over which all o the specied vesting conditions are to

be satised.

The proceeds received net o any directly attributable transaction costs are credited

to share capital (nominal value) and share premium when the options are exercised.

2.17 Share capital

Ordinary shares are classied as equity.

22p8 Equity instruments are measured at the air value o the cash or other resources

received or receivable, net o the direct costs o issuing the equity instruments. I

payment is deerred and the time value o money is material, the initial measurement

is on a present value basis.

2.18 Revenue recognition

23p3 Revenue comprises the air value o the consideration received or receivable or the

sale o goods in the ordinary course o the groups activities. Revenue is shown neto sales/value-added tax, returns, rebates and discounts and ater eliminating sales

within the group.

The group recognises revenue when: the amount o revenue can be reliably

measured; it is probable that uture economic benets will fow to the entity; and

specic criteria have been met or each o the groups activities, as described below.

(a) Sales o goods wholesale

The group manuactures and sells a range o beverage products in the wholesale

market. Sales o goods are recognised when a group entity has delivered products

to the wholesaler, the wholesaler has ull discretion over the channel and price to sellthe products, and there is no unullled obligation that could aect the wholesalers

acceptance o the products. Delivery does not occur until the products have been

shipped to the specied location, the risks o obsolescence and loss have been

transerred to the wholesaler, and either the wholesaler has accepted the products in

accordance with the sales contract, the acceptance provisions have lapsed, or the

group has objective evidence that all criteria or acceptance have been satised.

(b) Sales o goods retail

23p11 The group operates a chain o retail outlets or selling wine. Sales o goods are

recognised when a group entity sells a product to the customer as control passes tothe customer on the day the transaction takes place. Retail sales are usually in cash

or by credit card.


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(c) Interest income

23p29(a) Interest income is recognised using the eective interest method.

(d) Rental income

20p25 Rental income rom investment property that is leased to a third party under an

operating lease is recognised in the statement o comprehensive income on a

straight-line basis over the lease term and is included in other income.

(e) Dividend income

23p29(c) Dividend income rom associates is recognised when the groups right to receive

14p6 payment has been established and is shown as other income.

2.19 Current and deerred income tax

29p7 The tax expense or the period comprises current and deerred tax. Tax is

recognised in prot or loss, except that a change attributable to an item o income

or expense recognised as other comprehensive income is also recognised directly in

other comprehensive income.

29p6 The current income tax charge is calculated on the basis o tax rates and laws that

have been enacted or substantively enacted by the reporting date in the countries

where the companys subsidiaries operate and generate taxable income.

29p15 Deerred income tax is recognised on temporary dierences (other than temporary

29p16 dierences associated with unremitted earnings rom oreign subsidiaries and

29p18 associates to the extent that the investment is essentially permanent in duration,or temporary dierences associated with the initial recognition o goodwill) arising

between the tax bases o assets and liabilities and their carrying amounts in the

consolidated nancial statements and on unused tax losses or tax credits in the

group. Deerred income tax is determined using tax rates and laws that have been

enacted or substantively enacted by the reporting date.

29p21 The carrying amount o deerred tax assets are reviewed at each reporting date and

29p22 a valuation allowance is set up against deerred tax assets so that the net carrying

amount equals the highest amount that is more likely than not to be recovered

based on current or uture taxable prot.

2.20 Government grants

24p4 Grants rom the government are recognised at their air value in prot or loss where

there is a reasonable assurance that the grant will be received and the group has

complied with all attached conditions. Grants received where the group has yet

to comply with all attached conditions are recognised as a liability (and included

in deerred income within trade and other payables) and released to income when

all attached conditions have been complied with. Government grants received are

included in other income in prot or loss.


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2.21 Leases

20p4 Leases in which substantially all the risks and rewards o ownership are retained by

20p15 the lessor are classied as operating leases. Payments made under operating leases

(net o any incentives received rom the lessor) are charged to prot or loss on a

straight-line basis over the period o the lease.

20p9 The group leases certain items o property, plant and equipment. Leases o property,

plant and equipment where the group has substantially all the risks and rewards

o ownership are classied as nance leases. Finance leases are capitalised at the

leases commencement at the lower o the air value o the leased property and the

present value o the minimum lease payments.

Each lease payment is apportioned between the liability and nance charges

using the eective interest method. Rental obligations, net o nance charges, are

included in borrowings in the statement o nancial position. The property, plant

and equipment acquired under nance leases is depreciated over the shorter o theuseul lie o the asset and the lease term.

The group leases out (as an operating lease) an oce building that it owns. The

asset is included in the statement o nancial position as an investment property.

Rental income is recognised in accordance with the rental income accounting policy

in note 2.18.

2.22 Dividend distribution

22p17 Dividend distribution to the companys shareholders is recognised as a liability in the

groups nancial statements in the period in which the dividends are approved bythe companys shareholders.

3 Transition to the IFRS or SMEs

3.1 Basis o transition to the IFRS or SMEs

3.1.1 Application o the IFRS or SMEs

The groups nancial statements or the year ended 31 December 2010 are its rst

annual nancial statements prepared under accounting policies that comply with theIFRS or SMEs.

ABC Limiteds transition date is 1 January 2009. The group prepared its opening

IFRS or SMEs statement o nancial position at that date.

In preparing these consolidated nancial statements in accordance with the IFRS

or SMEs, the group has applied all the mandatory exceptions and certain o the

optional exemptions rom ull retrospective application o the IFRS or SMEs.

35p10 3.1.2 Exemptions rom ull retrospective application

ABC Limited has elected to apply the ollowing optional exemptions rom ull

retrospective application:

(a) Business combinations

ABC Limited has applied the business combinations exemption in the IFRS or

SMEs. It has not restated business combinations that took place prior to the 1

January 2009 transition date. The carrying value o goodwill at the date o transition

to the IFRS or SMEs is the deemed cost o goodwill under the IFRS or SMEs at

that date.


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(b) Share-based payment transactions

The group has elected to apply the share-based payment exemption. It has not

applied the provisions o Section 26 o the IFRS or SMEs to equity instruments that

were granted beore 1 January 2009.

(c) Cumulative translation dierences

ABC Limited has elected to set the previously accumulated cumulative translation

dierences or all oreign operations to zero at 1 January 2009.

3.2 Reconciliation

The ollowing reconciliations show the eect on the groups equity o the transition

rom the groups previous GAAP to the IFRS or SMEs at 1 January 2009 and

31 December 2009, and the groups prot or the year ended 31 December 2009.

35p13(b) 31 December

2009

1 January

2009

Total equity under local GAAP 9,525 8,108

Capitalisation o costs directly attributable to site

preparation

78 56

Write-o o deerred charges that do not meet the IFRS

or SMEs denition o an intangible asset

(668) (264)

Restatement o provision or post-employment benets

on a projected unit credit method basis

(57) (27)

Fair value adjustment to biological assets 473 432

Fair value adjustment to investment property 340 215

Restatement o investments in associates to cost (1,874) (562)

Deerred tax adjustments 1,078 567

Total equity under IFRS or SME 8,895 8,525

35p13(c) 2009

Results or the year under previous GAAP 2,765

Capitalisation o costs directly attributable to site

preparation

22

Write-o o deerred charges that do not meet the IFRS

or SME denition o an intangible asset (404)

Adjustment in respect o dened benet pension

schemes (30)

Fair value adjustment to biological assets 41

Fair value adjustment to investment property 125

Restatement o investments in associates to cost (1,312)

Deerred tax adjustments 511

Result or the year under IFRS or SMEs 1,718


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3.3 Explanation o transition to the IFRS or SMEs

(a) Capitalisation o costs attributable to site preparation

The costs incurred in relation to the preparation o vineyards were expensed under

previous GAAP. Such costs qualiy to be recognised as part o the cost o property,plant and equipment under the IFRS or SMEs.

(b) Write-o o deerred charges that do not meet capitalisation criteria

Costs in relation to deerred charges do not meet the denition o intangible assets

under the IFRS or SMEs and have been included in retained earnings at the groups

date o transition.

(c) Restatement o provision or post-employment benefts

Under previous GAAP, the groups dened benet pension scheme liabilities were

not calculated on the basis o the projected unit credit method, as they excluded theimpact o uture salary increases.

(d) Fair value adjustment o biological assets

Under previous GAAP, biological assets were stated at cost less accumulated

depreciation. This adjustment refects the measurement o the groups biological

assets to air value.

(e) Fair value adjustment to investment property

Under previous GAAP, investment properties were stated at cost less accumulated

depreciation. This adjustment refects the uplit o the groups investment propertiesto air value.

() Investment in associates accounted or at cost

Under previous GAAP, the group accounted or its investment in associates using

the equity method o accounting. On adoption o the IFRS or SMEs, the group has

elected to account or its investments in associates at cost.

(g) Deerred tax adjustments

This adjustment refects the deerred tax impact o the other adjustments recognised

on transition. The adjustment also refects the impact o recognising deerred taxon the basis o temporary dierences between the carrying amounts o assets and

liabilities and their tax bases, compared to deerred tax calculated on the dierence

between items included in the income or accounting purposes and items included

in the tax return.

3.4 Statement o cash fows

A number o changes have been made to the presentation o the groups

consolidated statement o cash fows.


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4 Inormation about key sources o estimation uncertainty

and judgements

Estimates and judgements are continually evaluated. They are based on historical

experience and other actors, including expectations o uture.

4.1 Key sources o estimation uncertainty

8p6 The group makes estimates and assumptions concerning the uture. The resulting

accounting estimates will, by denition, seldom equal the related actual results.

8p7 The estimates and assumptions that have a signicant risk o causing a material

adjustment to the carrying amounts o assets and liabilities within the next nancial

year are disclosed below.

34p7(b) (a) Fair value o biological assets

The air value o the groups biological assets represent the present values o

estimated net cash fows relating to the biological assets owned by the entity,

determined by application o assumptions made by independent valuation experts

to cash fow models. The external valuers make use o the measurements o

plants to conrm model assumptions and growth trends. Cash fows are gross o

income tax and are expressed in real terms. The signicant assumptions made in

determining the air value o the groups biological assets are listed below.

Vineyards, orchards and citrus groves are valued based on expected volumes

o grapes and ruit that could be obtained rom existing vineyards, orchards and

citrus groves, given current management strategies, and legislative and other

externally imposed restrictions.

The limit o the cash fow analysis is the expected rotation period or the

vineyards, orchards and citrus groves. This ranges rom 15 years to 100 years.

The ongoing costs o maintaining the vineyards, orchards and citrus groves are

deducted in determining the net cash fows. Harvest costs are also included.

Costs, prices, growth yields, waste and recovery rates are based on actual and

expected rates.

The valuations assume that all biological assets will be appropriately managed in

the uture to best industry practices.

Pre-tax discount rates o 10-14% per annum are applied to the estimated cash

fows. The discount rates take into account the risk associated with uture cash

fows associated with each project and are based on cost o capital calculations,

with reerence to industry standards. The discount rates in respect o each group

are as ollows:

Vineyards: 10%

Apples: 13.5%

Citrus groves: 12-14%

Continued water availability or projects exposed to high risk water catchments.

A stable market environment throughout the lie o each project.

A continued high level o management commitment to investment in biological

assets.


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The productive lie o the asset.

The period over which the asset will mature.

The expected uture sales price. Expected uture sales prices or all biological

assets are based on average current prices increased or infation.

34p5, 13p15 (b) Fair value o agricultural produce at the point o harvest

At the time o harvesting, the groups grapes and picked ruit are recognised at air

value less costs to sell. The air value less estimated costs to sell o agricultural

produce at the point o harvest is determined by reerence to market prices or

grapes and picked ruit in the local area at the time o harvest, less estimated costs

to sell (determined based on estimated uture cash fows).

The air value less estimated costs to sell is determined on a pre-tax basis.

Signicant assumptions are made in determining the air value o agricultural

produce, as ollows:

There is an active market or grapes and picked ruit in the local area and these

prices are readily available.

The expected uture costs to sell, such as labour, packaging and processing

costs. Expected uture costs are based on average current prices increased or

infation.

An allowance is made or produce lost in the production process this is based

on historical data about loss rates.

In the case o juice products, the period between harvest and sale is insignicant.

In the case o wine products, the period over which the wine will mature.

In the case o wine products, a pre-tax discount rate o 12% per annum has been

applied to the estimated cash fows o costs to sell.

(c) Fair value o investment property

16p10 The air value o investment property is derived rom the current market prices o

comparable real estate. The air value is based on a valuation made by independent

appraisers who hold a recognised and relevant valuation licence (rom the Euravian

valuers organisation) and have recent experience in valuing oce buildings in the

same location as the groups investment property.

(d) Income taxes

The group is subject to income taxes in numerous jurisdictions. Signicant

judgement is required in determining the worldwide provision or income

taxes. There are many transactions and calculations or which the ultimate tax

determination is uncertain. The group recognises liabilities or anticipated tax audit

issues based on estimates o whether additional taxes will be due. Where the

nal tax outcome o these matters is dierent rom the amounts that were initially

recorded, such dierences will impact the current and deerred income tax assetsand liabilities in the period in which such determination is made.


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(e) Fair value o share options issued to directors and employees

The group uses a binomial model to determine the air value o share options

granted to directors and key employees. Use o such a model involves a number o

assumptions including the ollowing:

Market price o the companys ordinary share, which is also the exercise price o

the option.

Volatility o the companys share price.

Discount rate.

Expected lie o the options.

Dividend yield.

As the groups shares are not traded in an active market, the market price andvolatility o the groups ordinary shares are based on the directors best estimates

o these parameters, taking into account all relevant inormation that is available to

them, including the volatility o the share price o comparable listed companies. The

discount rate is based on the risk-ree rate o government bonds with a three-year

term in Euravia. The expected lie o the option is based on historical experience o

exercises by option holders. The dividend yield is based on historical experience o

dividends paid over a term equal to the expected option lie.

() Pension benefts

The present value o the pension obligations depends on a number o actors

that are determined on an actuarial basis using a number o assumptions. The

assumptions used in determining the net cost (income) or pensions include the

discount rate. Any changes in these assumptions will impact the carrying amount o

pension obligations.

The group determines the appropriate discount rate at the end o each year. This is

the interest rate that is used to determine the present value o estimated uture cash

outfows expected to be required to settle the pension obligations. In determining

the appropriate discount rate, the group considers the interest rates o high-quality

corporate bonds that are denominated in the currency in which the benets will

be paid, and that have terms to maturity approximating the terms o the related

pension liability.

Other key assumptions or pension obligations are based in part on current market

conditions. Additional inormation is disclosed in note 17.

8p6 4.2 Judgements in applying the entitys accounting policies

Contingent liability

19p12 In respect o the acquisition o DEF Inc during the year, the group is

19p14 obligated to pay an additional consideration o 5% o prot ater tax i DEF Inc

19p20 achieves sales in excess o C20,000 or 2011. The maximum amount payable

is C1,000. At the date o acquisition and at year-end, it was not considered

probable that this amount would be paid. It has thereore not been included in the

consideration or the business combination, but the obligation has been disclosed

as a contingent liability. The judgement about the expectation o paying this amount

is based on sales o DEF Inc in the last ve years and sales growth in those years.


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5 Cash and cash equivalents

2010 2009

Cash at bank and on hand 840 2,865

Short-term bank deposits 1,288 542

Total 2,128 3,407

7p20 Cash, cash equivalents and bank overdrats include the ollowing or the purposes o

the cash fow statement:

2010 2009

Cash and cash equivalents 2,128 3,407

Bank overdrats (note 14) (265) (646)

Total 1,863 2,761

7p18 Non-cash transactions

The principal non-cash transaction is the grant o share options to directors and

selected employees (note 18).

6 Financial instruments

11p41 Financial assets 2010

11p41(b) Financial assets measured at amortised cost less impairment 4,33711p41(a) Hedging derivatives measured at air value 146

Total 4,483

Financial liabilities

11p41 (e) Financial liabilities measured at amortised cost 14,351

Total 14,351


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7 Derivative fnancial instruments

2010 2009

Assets

Foreign currency orward exchangecontracts hedging derivatives 146 120

Total 146 120

Foreign currency orward exchange contracts

DV The notional principal amounts o the outstanding oreign currency orward

exchange contracts at 31 December 2010 were C9,237 (2009: C8,969).

12p29(a) The hedged highly probable orecast sales transactions denominated in oreign

currency are expected to occur at various dates during the next 12 months. Gains

and losses recognised in the hedging reserve in equity (note 19) on orward oreignexchange contracts as o 31 December 2010 will be recognised in prot or loss in

the period or periods during which the hedged orecast sales take place.

11p43 The air value o derivative nancial instruments that are not traded in an active

market is determined by using valuation techniques. The group uses its judgement

to select a variety o methods and make assumptions that are mainly based on

market conditions existing at each reporting date. The group has used discounted

cash fow analysis to air value such derivative nancial instruments. The main

assumptions used in the calculation o the air value are discount rate o 4% and the

year-end Eur/C six-month orward oreign exchange rate o 0.97.

8 Trade and other receivables

4p11(b) 2010 2009

Trade receivables net 1,621 1,327

Prepayments 130 115

Receivables rom related parties (note 31) 5 5

Loans to related parties (note 31) 49 20

Accrued income 404 501

Total 2,209 1,968

11p48 The group recognised an impairment loss o C48 (2009: C35) against trade

receivables due to deault by customers.


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9 Inventories

4p11(c) 2010 2009

13p22(b) Raw materials 762 761

Work in progress 181 180Finished goods 1,527 877

Total 2,470 1,818

13p22(c) The cost o inventories recognised as expense amounted to C6,025 (2009: C2,946).

13p22(d) The group recognised an impairment loss in the line item changes in inventories o

nished goods and work in progress o C21 (2009: C17) in relation to inventories.

27p32 The group reversed C60 o a previous inventory write-down in July 2010. This

reversal is included in the line item changes in inventories o nished goods and

work in progress. The group has sold all the goods that were written down to an

independent retailer in Australia at original cost.

10 Biological assets

34p7(c) Fair value at 1 January 2010 1,491

Gain or (loss) rom changes in air value less costs to sell (462)

Increases due to purchases 616

Decreases rom harvest (383)

Acquisition through business combination (note 30) 507

Exchange dierences, net 132

Other changes 14

Fair value at 31 December 2010 1,915

Current 173

Non-current 1,742

34p7(a) The air value o biological assets comprise o the ollowing elements.

2010 2009

Grape vines and grapes on the vine 924 772

Fruit trees and unharvested ruit 991 719

Total 1,915 1,491

DV (a) Nature o groups activities involving vines

At 31 December 2010, grape vines comprise approximately 88 hectares (2009: 53

hectares) o vineyards, ranging rom newly established vineyards to vineyards that

are more than 25 years old.

DV (b) Nature o groups activities involving ruit trees

At 31 December 2010, ruit trees comprise approximately 74 hectares (2009: 67

hectares) o orchards, ranging rom newly established orchards and citrus groves to

orchards and citrus groves that are 30 years old.


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11 Property, plant and equipment

4p11(a), 17p31(d),

17p31(e) Land and

buildings

Vehicles

and

machinery

Furniture,

ttings and

equipment TotalCost

At 1 January 2010 4,022 6,813 2,003 12,838

Exchange dierences 271 118 305 694

Additions 713 43 220 976

Disposals (400) (1,639) (608) (2,647)

Acquisitions through

business combinations

(note 30) 4,907 551 1,320 6,778

At 31 December 2010 9,513 5,886 3,240 18,639

Accumulated depreciation

and impairment

At 1 January 2010 (120) (1,910) (785) (2,815)

Exchange dierences (142) (60) (271) (473)

Annual depreciation (356) (477) (944) (1,777)

Accumulated depreciation

o assets disposed o 200 1,213 547 1,960

At 31 December 2010 (418) (1,234) (1,453) (3,105)

Carrying amount

At 1 January 2010 3,902 4,903 1,218 10,023

At 31 December 2010 9,095 4,652 1,787 15,534

17p32(a) Bank borrowings are secured on land and buildings or the value o C3,768 (2009:

C5,131) (note 14).

20p13(c) The group leases various vehicles and machinery under non-cancellable nance

lease agreements. The lease terms are between three and 15 years. Ater the

expiration o this term ownership o the assets transers to the group.

Vehicles and machinery includes the ollowing amounts where the group is a lessee

under a nance lease:

2010

20p13(a) Net carrying amount 2,318

12 Investment property

2010

16p10(e) Opening carrying amount 797

Net gain rom air value adjustment 385

Closing carrying amount 1,182

16p10(b) The investment properties are valued annually on 31 December at air value,

determined by an independent, proessionally qualied valuer.


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13 Intangible assets

Goodwill

Trademarks

and

licences

Customer

related

intangibles Total18p27. 19p26 Cost

1 January 2010 2,000 871 140 3,011

Exchange dierences 49 49

Additions 517 517

Acquisitions through business

combinations

89 100 171 360

At 31 December 2010 2,138 1,488 311 3,937

Accumulated amortisation

and impairment

1 January 2010 (800) (71) (70) (941)

Exchange dierences (43) (43)

Annual amortisation (200) (94) (32) (326)

At 31 December 2010 (1,043) (165) (102) (1,310)

Carrying amount

At 1 January 2010 1,200 800 70 2,070

At 31 December 2010 1,095 1,323 209 2,627

14 Borrowings

2010 2009

4p7 Non-current

Bank borrowings 10,831 8,834

Finance lease liabilities 681 801

11,512 9,635

Current

Bank overdrats (note 5) 265 646

Bank borrowings 688 921

Finance lease liabilities 219 259

1,172 1,826

Total borrowings 12,684 11,461

(a) Bank borrowings

11p42 Bank borrowings mature until 2014 and bear average xed-rate coupons o 7.5%

annually (2009: 7.4% annually). The group makes quarterly repayments on the bank

borrowings. The group is subject to externally imposed restrictions and must seek

approval rom the principal lending bank or any capital transactions that the group

wishes to enter into that are in excess o C12,000.

17p32(a) Total borrowings include secured liabilities o C3,768 (2009: C5,131). Bank

borrowings are secured by the land and buildings o the group (note 11).

The acilities expiring within one year are annual acilities subject to review at various

dates during 2011. The other acilities have been arranged to help nance the

proposed expansion o the groups activities in southern Europe.


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(b) Finance lease liabilities

Lease liabilities are eectively secured as the rights to the leased asset revert to the

lessor in the event o deault.

2010

20p13 Gross nance lease liabilities minimum lease payments

No later than 1 year 275

Later than 1 year and no later than 5 years 629

Later than 5 years 206

1,110

DV Future nance charges on nance leases (210)

15 Trade and other payables

2010 2009

4p11(d) Trade payables 1,098 950

Amounts due to related parties (note 31) 220 120

Social security and other taxes 201 96

Deerred income government grants 50 42

Accrued expenses 98 40

Total 1,667 1,248

24p4 At 31 December 2010, the group deerred the income (totalling C50) related to a24p6 government grant, as it had not completed the required easibility studies and tests

on its new harvesting machine by year-end. The group completed this work ater the

year-end and recognised the amount o C50 as income in February 2011.

16 Provisions

Environ-

mental

restoration

Restruc-

turing

Legal

claims

Prot-

sharing

and

bonuses Total4p11(e), 21p14(a) At 1 January 2010 84 0 96 161 341

Charged/(credited) to

prot or loss:

Additions during

the year 132 199 242 96 669

Amount charged

against provision

during year (28) (89) (306) (160) (583)

Unused amounts

reversed (2) 0 (2) (1) (5)

Exchange dierences (1) 0 (7) 0 (8)

At 31 December 2010 185 110 23 96 414

Non-current provisions consist o environmental restoration (C146); the remainder

relates to current provisions.


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21p14(b), 21p14(c) (a) Environmental restoration

In some countries, legislation has been implemented that prohibits using certain

pesticides and requires cleaning o the soil i certain pesticides have been used in

the past. A provision is recognised or the present value o costs to be incurred or

the cleaning o some vineyards. It is expected that C39 will be used during 2011.

(b) Restructuring

The group has recognised a restructuring provision resulting rom its decision to

downsize its manuacturing operations in the UK. This provision represents the

estimated cost o the employee termination benets (C80) and an onerous lease

provision. It is estimated that the termination benets will all be paid in the year

ended 31 December 2011 and that the onerous lease provision will be settled in the

years ended 31 December 2011 and 2012.

(c) Legal claims

The legal claims provision recognises claims against ABC Limited arising rom

prosecution in relation to legislative and contractual breaches. The liability at period-

end was assessed by management by reviewing individual claims and discussing

the groups position with their legal advisers. The liability is inherently uncertain

due to the existence or amount o individual claims being in dispute. The group

anticipates that the liability will be settled or released over the next ve years.

(d) Proft-sharing and bonuses

The provision or prot-sharing and bonuses is payable within three months o

nalisation o the audited nancial statements.

17 Employee beneft obligations

2010 2009

4p11(e) Statement o nancial position obligation or:

Pension benets 464 223

Statement o comprehensive income (note 22) or:

28p41(g) Pension benets 90 60

Pension benefts

28p41(a, d) The group operates dened benet pension plans in Euravia based on employee

pensionable remuneration and length o service. The majority o plans are externally

unded. Plan assets are held in trusts, oundations or similar entities, governed by

local regulations and practice in each country, as is the nature o the relationship

between the group and the trustees and their composition.

The most recent comprehensive actuarial valuation coincided with the year-end

reporting date.


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DV The amounts recognised in the statement o nancial position are determined as

ollows:

2010 2009

Present value o dened benet obligation 716 394Fair value o plan assets (252) (171)

Liability in the statement o nancial position 464 223

28p41(e) The movement in the dened benet obligation over the year is as ollows:

2010

At 1 January 394

Benets paid (37)

Current service cost (note 22) 90

Acquired in a business combination (note 30) 157Other changes 112

At 31 December 716

28p41(f) The movement in the air value o plan assets o the year is as ollows:

2010

At 1 January 171

Contributions 96

Benets paid (37)

All other changes 22At 31 Decembe

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