. 9 5
ANNUAL
REPORT
20 1 7
THE BE ST
I N US
NOTESTOTHE
FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2017
2.
SUMMARYOF SIGNIFICANTACCOUNTINGPOLICIES (CONT’D)
2.12
Inventories
Inventories, which aremadeupofmainlymaterials, components and spares, are stated at the lower of cost
and net realisable value. Costs incurred in bringing the inventories to their present location and condition
are accounted for as follows:
– Rawmaterials: purchasecosts on aweighted averagemethod.
– Work-in-progress: costsof directmaterialsand labour andaproportionofmanufacturingoverheads
basedonnormal operatingcapacity.
Wherenecessary, allowance isprovided fordamaged,obsoleteandslow-moving items toadjust thecarrying
valueof inventories to the lower of cost andnet realisable value.
Net realisable value is the estimated sellingprice in theordinary courseof business, less estimated costs of
completion and theestimatedcosts necessary tomake the sale.
2.13
Provisions
General
Provisionsare recognisedwhen theGrouphasapresentobligation (legalorconstructive) asa resultof apast
event, it is probable that anoutflowof economic resources embodying economic benefitswill be required
to settle theobligation and the amount of theobligationcanbeestimated reliably.
Provisions are reviewed at each reportingperioddate and adjusted to reflect the current best estimate. If it
is no longer probable that an outflow of economic resources will be required to settle the obligation, the
provision is reversed. If the effect of the time value ofmoney ismaterial, provisions are discounted using a
current pre-tax rate that reflects, where appropriate, the risks specific to the liability. When discounting is
used, the increase in theprovisiondue to thepassageof time is recognised as a financecost.
Warrantyprovision
Provisions for warranty-related costs are recognised when the product is sold or service provided. Initial
recognition isbasedonhistorical experience. The initial estimateofwarranty-relatedcost is revisedannually.
