Page 39 - GROUP 3 NAKED HOTEL LIMITED ANNUAL REPORT

Segment results, assets and liabilities include items directly attributable to a segment as well as
those that can be allocated on a reasonable basis. Segment capital expenditure is the total cost
incurred during the period to acquire segment assets that are expected to be used for more than one
period.

n) Goodwill
Goodwill is recognized if the cost of the business combination exceeds the net interest in the fair
value of the identifiable assets, liabilities and contingent liabilities taken over at the acquisition
date.

Goodwill is not amortized, it is tested for impairment annually, or more frequently if events or
changes in circumstances indicate that it might be impaired. Any amount for impairment of
goodwill is reflected in the Income Statement.

Goodwill is stated at cost less impairment losses

o) Impairment
The carrying amounts of the company’s assets are reviewed at each Balance Sheet date to
determine whether there is any indication of impairment. If any such indication exists, the asset’s
recoverable amount is estimated at each Balance Sheet date. An impairment loss is recognized
whenever the carrying amount of an asset or group of assets (cash generating unit) exceeds its
recoverable amount. Impairment losses are recognized in the Income Statement.
p) Employee Benefits
i)Pension Plan

The company operates a defined contribution plan administered by long life insurance limited. The
company contributes at the rate of 5% of pensionable salaries. Employees contribute at a
mandatory rate of 5% with the option of an additional 5% contribution. The company pension
costs are charged as an expense in the year in which they are due.

ii) Termination of Benefits

Termination benefits are payable whenever an employee’s employment is terminated before the
normal retirement date or whenever an employee accepts voluntary redundancy in exchange for
these benefits. The company recognizes termination benefits when it is demonstrably committed
to either terminate the employment of current employees according to a detailed formal plan
without possibility of withdrawal or to provide termination benefits as a result of an offer made to
encourage voluntary redundancy. Benefits falling due more than 12 months after the Balance Sheet
date are discounted to present value.

q) Allowance for Bad Debts
A specific allowance for bad debts is established as a result of reviews of trade debtors and is based
on an assessment which takes into consideration all factors, including business and economic
conditions.

Or
A general allowance for bad debts is established as a result of reviews of trade debtors and is based
on an assessment which takes into consideration, business and economic conditions.

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