Summary of Significant Accounting Policies

Stocks are valued at the lower of weighted average cost and net realisable value after adequate provision is made for damaged, obsolete or slow-moving stocks on an item by item basis. For finished goods and work-in-progress, cost comprises materials, direct labour and an appropriate proportion of fixed and variable overheads.

Profits are not recognised on short-term contracts until the contracts are completed. In the case of partly completed long-term contracts, profits are recognised using the percentage of completion method based on the stage of physical completion. When losses are expected, full provision is established in the accounts after adequate allowance has been made for estimated costs to completion.

Progress claims made against work-in-progress are offset against the cost of work-in-progress and the profits recognised on partly completed long-term contracts less any provision required to reduce cost to estimated realisable value.

k.   Trade and Other Debtors

Trade debtors are recognised and carried at original invoice amounts less provisions for any uncollectible amounts. Receivables from related companies are recognised and carried at cost less provisions for any uncollectible amounts. Known bad debts are written off and specific provisions are made for any debts which are considered doubtful.

l.   Trade and Other Creditors

Trade and other creditors are carried at cost which is the fair value of the consideration to be paid in the future for goods and services received, whether or not billed to the Group. Payables to related companies are carried at cost.

m.   Impairment of Assets

At each balance sheet date, the Group reviews the carrying amounts of its assets to determine whether there is any indication that the assets have suffered an impairment loss.

If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss. Whenever the recoverable amount of an asset is estimated to be less than its carrying amount, the impairment loss is recognised in the profit and loss account.

Reversal of impairment losses recognised in prior years is recorded when there is an indication that the impairment losses recognised for the asset no longer exist or have decreased. The reversal is recorded in the profit and loss account.