Accounting policies

for the year ended 31 March 2007

The principal accounting policies adopted in the preparation of these financial statements are set out below. Unless otherwise stated, these policies have been consistently applied to all the years presented. The financial statements are presented in South African rands (“R”), rounded to the nearest thousand.

BASIS OF PREPARATION

These financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS); its interpretations adopted by the International Accounting Standards Board and the Companies Act 1973 and the PFMA as amended. These financial statements have been prepared using the historical cost basis except for certain financial instruments, such as trading liabilities and derivative financial instruments, which are stated at fair value.

The preparation of financial statements that conform to IFRS, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the balance sheet date and revenue and expenses during the reporting period. Although these estimates are based on management’s best knowledge at the time, actual amounts may ultimately be different from these estimates. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed in Note 8.

CONSOLIDATION

Subsidiary undertakings, which are those companies in which the company, directly or indirectly, has an interest of more than one half of the voting rights or otherwise has power to exercise control over the operations, have not been consolidated due to the fact that all subsidiaries were dormant during the period of review.

PROPERTY, PLANT AND EQUIPMENT (PPE)

Owned assets
PPE consist out of office furniture, office equipment, computer hardware and computer software. These assets are stated at cost less accumulated depreciation. Depreciation is calculated on the straight line basis over the estimated useful lives of the assets as follows


Office furniture	6 years
Office equipment	3 years
Computer hardware	3 years
Computer software	2 years

Leased assets

Operating leases

Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Rental payments made under operating leases (net of any rebates received from the lessor) are charged to the income statement on a straight-line basis over the term of the lease.

INTANGIBLE ASSETS

Computer software licences

Cost associated with the acquisition of computer software licences which are not directly related to the research and development activities of PBMR are capitalised. These computer software licences are amortised on a straight-line basis over the periods of the expected benefit, which is one year.

Research and development expenditure

All ongoing research expenditure is expensed in the period in which it is incurred.

An intangible asset arising from development expenditure on an individual project is recognised only when the company can demonstrate:

the technical feasibility of completing the intangible asset so that it will be available for use or sale;
its intention to complete the intangible asset and use or sell it;
its ability to use or sell the intangible asset;
how the intangible asset will generate probable future economic benefits;
the availability of adequate technical, financial and other resources to complete the development and to use or sell the intangible asset; and
its ability to measure reliably the expenditure attributable to the intangible assets during its development.

No development expenditure was recognised as intangible assets during the reporting period.

TRADE AND OTHER RECEIVABLES

All debtors are recognised at the amounts receivable as they are due for settlement at no more than 30 days from the date of recognition. Collectability of debtors is reviewed on an ongoing basis. Debts which are uncollectible are written off. A provision for doubtful debts is raised when some doubt as to collection exists.

CASH AND CASH EQUIVALENTS

Cash and cash equivalents comprise cash on hand, deposits held on call with banks, and investments in money market instruments.

SHARE CAPITAL

Ordinary shares are classified as equity. Dividends on ordinary shares are recognised in equity in the period in which they are paid.

PROVISIONS

A provision is recognised in the balance sheet when the company has a present legal or constructive obligation as a result of a past event, and it is probable that an outflow of economic benefits will be required to settle the obligation and the amount can be reliably estimated. Provisions are valued at the present value of the directors’ best estimate of the expenditure required to settle the obligation at the balance sheet date.

TRADE AND OTHER PAYABLES

These amounts represent liabilities for goods and services provided to PBMR prior to the end of the financial year and which are unpaid. The amounts are unsecured and are usually paid within 30 days of recognition.

10.

EMPLOYEE BENEFITS

Defined contribution plan

Obligations for contributions to defined contribution pension plan are recognised as an expense in the income statement as incurred.

11.

INCOME

Contributions/Government grants received

Receipts from contributing parties, being receipts of a capital nature, are recognised in the income statement. Such receipts in excess of the period under review, are reflected in the balance sheet and taken to the income statement during the period in which the expenses are funded.

Revenue

Revenue, which excludes value added tax, comprises the supplying of specialised nuclear engineering services.

12.

NET FINANCING INCOME

Net financing income comprises interest expense, interest received on funds invested and foreign exchange gains and losses on hedging instruments that are recognised in the income statement. Interest income is recognised in the income statement as it accrues, using the effective interest method. Interest expense is recognised in the income statement using the effective interest rate method.

13.

FOREIGN CURRENCY TRANSACTIONS

Transactions in foreign currencies are translated at the foreign exchange rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are translated to rands at the foreign exchange rate ruling at that date. Foreign exchange differences arising on translating are recognised in the income statement. Non-monetary assets and liabilities that are measured in terms of historical cost in a foreign currency are translated using the exchange rate at the date of the transaction. Non-monetary assets and liabilities denominated in foreign currencies that are stated at fair value are translated to rands at foreign exchange rates ruling at the dates the fair value was determined.

14.

DERIVATIVE FINANCIAL INSTRUMENTS

The company uses derivative financial instruments to hedge its exposure to foreign exchange. It is company policy to hedge all foreign firm and ascertained commitments exceeding R50 000. A firm and ascertained commitment exists once the successful supplier and PBMR have signed a contract and the amount, cash flow(s) and payment date(s) are determinable. The company does not hold or issue derivative financial instruments for trading purposes. Derivatives that do not qualify for hedge accounting are accounted for as trading instruments.

Derivative financial instruments are recognised initially at cost. Subsequent to initial recognition, derivative financial instruments are stated at fair value. The gain or loss on remeasurement to fair value is recognised immediately in surplus and loss. However, where derivatives qualify for hedge accounting, recognition of any resultant gain or loss depends on the nature of the item being hedged.

15.

HEDGE OF MONETARY ASSETS AND LIABILITIES

Where a derivative financial instrument is used to hedge economically the foreign exchange exposure of a recognised monetary asset or liability, no hedge accounting is applied and any gain or loss on the hedging instrument is recognised in the income statement.

16.

FINANCIAL INSTRUMENTS

Exposure to credit, interest rate and currency risks arises in the normal course of the company’s business. Derivate financial instruments are used to hedge exposure to fluctuations in foreign exchange rates.

17.

FAIR VALUE

The fair value of forward contracts are determined directly in full by reference to published price quotations in an active market and represent the amounts (using a rate quote by bank) that the company would receive to terminate the contracts at the reporting date, thereby taking into account the unrealised gains or losses of open contracts.

18.

INTEREST RATE RISK MANAGEMENT

The company manages interest rate risks by transacting with reputable financial institutions at floating rates for current financial instruments. Surplus funds are invested either at call or in short-term fixed deposits to ensure that sufficient free cash flow is available to service supplier payments.

19.

LIQUIDITY RISK

Prudent liquidity risk management implies maintaining sufficient cash and marketable securities, the availability of funding through an adequate amount of committed credit facilities and the ability to close out market positions.

The company manages liquidity by compiling annual budgets to determine funding requirements and obtaining agreement from contributing parties to refund these budgets on a quarterly basis and then exercising strict controls over working capital requirements. The unutilised funding requirements are negotiated to provide funding for contingencies.