GROUP ACCOUNTING POLICIES (continued) Translation differences on non-monetary items, such as equities held at fair value through profit or loss, are reported as part of the fair value gain or loss. 5.2 Group companies The results and financial position of all the Group entities that have a functional currency different from the presentation currency are translated into the presentation currency as follows: • assets and liabilities presented are translated at the closing rate at the date of that entity’s most recent statement of financial position; • income and expenses are translated at average exchange rates (unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the dates of the transactions); and • all resulting exchange differences are recognised as a separate component of equity. 6. Direct and indirect tax Direct tax includes South African and foreign jurisdiction corporate tax payable, as well as capital gains tax. The charge for current tax is based on the results for the year. It is calculated using taxation rates that have been enacted or substantively enacted by the reporting date, in each particular jurisdiction within which the Group operates. Tax in respect of South African life insurance operations is determined using the five-fund method applicable to life insurance companies. 7. Cash and cash equivalents Cash comprises cash on hand and demand deposits at call with banks and similar instruments. 8. Property and equipment Owner-occupied property represents offices held for administrative purposes and for capital appreciation, occupied by the Group. Owner-occupied property is initially recorded at cost, and is subsequently shown at fair value, based on annual year-end valuations by an external independent appraiser. Any accumulated depreciation on the buildings at the date of revaluation is eliminated against the carrying amount of the asset, and the net amount is restated to the revalued amount of the asset. The revaluation movement is allocated to the revaluation reserve. To avoid an accounting mismatch, the related movement in insurance policy liabilities is mirrored to the revaluation reserve. Changes to the carrying amount arising on revaluation of land and buildings are recognised through other comprehensive income. Other fixed assets are stated at historical cost less depreciation. Historical cost includes expenditure that is directly attributable to the acquisition of the items. Subsequent costs are included in the assets’ carrying amount or recognised as a separate asset, as appropriate, only 5. Foreign currency translation (continued) 116 Group Accounting Policies
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