Where assets are in the course of construction at the balance sheet date they are classi ed as capital work in progress. Transfers are made to other asset categories when they are available for use.
Derivative nancial instruments
Depreciation is not provided on freehold land or capital work in progress. In the case of all other categories of property, plant and equipment, depreciation is provided on a straight line basis over the course of the nancial year from the date the asset is available for use. Depreciation is applied to speci c classes of asset so as to reduce them to their residual values over their estimated useful lives, which are reviewed annually. The range of depreciation lives are:
The Group does not trade in derivative nancial instruments. Derivative nancial instruments including forward foreign currency contracts and cross currency interest rate swaps are used by the Group to manage its exposure to risk associated with the variability in cash flows in relation to both recognised assets or liabilities or forecast transactions. All derivative nancial instruments are measured at the balance sheet date at their fair value. Where derivative nancial instruments are not designated as or not determined to be e ective hedges, any gain or loss on remeasurement is taken to the income statement. Where derivative nancial instruments are designated as and are e ective as cash flow hedges, any gain or loss on remeasurement is held in equity and recycled through the income statement when the designated item is transacted, unless related to the purchase of a business, when recycled against consideration. Where derivative nancial instruments are designated as and are e ective as net investment hedges, any gain or loss on remeasurement is held in equity and only recycled when the underlying investment is sold or disposed. Gains or losses on derivative nancial instruments no longer designated as e ective hedges are taken directly to the income statement. Derivatives embedded in non-derivative host contracts are recognised at their fair value when the nature, characteristics and risks of the derivative are not closely related to the host contract. Gains and losses arising on the remeasurement of these embedded derivatives at each balance sheet date are taken to the income statement.
Freehold buildings Steel powder production plant General plant, machinery, xtures and ttings Computers Commercial vehicles and cars
Up to to to to
Property, plant and equipment is reviewed at least annually for indications of impairment. Where an impairment charge arises in the ordinary course of business it is recorded in trading pro t. If an impairment charge arises as a part of a wider review of a cash generating unit it is presented separately within operating pro t.
Financial assets and liabilities
Financial liabilities are recorded in arrangements where payments, or similar transfers of nancial resources, are unavoidable or guaranteed. Borrowings are measured initially at fair value which usually equates to proceeds received and includes transaction costs. Borrowings are subsequently measured at amortised cost. Cash and cash equivalents comprise cash on hand and demand deposits, and overdra s together with highly liquid investments of less than 90 days maturity. Other nancial assets comprise investments with more than 90 days until maturity. Unless an enforceable right of set-o exists and there is an intention to net settle, the components of cash and cash equivalents are reflected on a gross basis in the balance sheet. Other nancial assets and liabilities, including short-term receivables and payables, are initially recognised at fair value and subsequently measured at amortised cost less any impairment provision unless the impact of the time value of money is considered to be material.