IFRS PRACTICAL IMPLEMENTATION GUIDE AND WORKBOOK

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Chapter 36 / Insurance Contracts (IFRS 4)

8. EXTRACTS FROM PUBLISHED FINANCIAL STATEMENTS BARLOWORLD Notes to the Consolidated Annual Financial Statements for the Year Ended September 30 32. Insurance Contracts Ce rta in transactions are en tered into by the group as insurer which fa lls wi thin the definition of insurance co ntrac ts per IRFS 4 , Insurance Contracts. Significant items inc lude d are the fo llowi ng : • Cre dit life and warranty products sold wi th vehicles in the motor segment • Specific portion s of mai ntenance co ntracts on equipment and vehicles so ld in the equipment, industrial distribution, and motor segments • Guaranteed res idual values on equipment and vehicles in the equipme nt and mo tor segments 2006 2005 2004 ----'1JJ.L .se: ~ 1,1 56 1,007 935 970 866 788 19 3 (92) Income Expenses Cash intlow/(outtlow)

Losses recognised on buying reinsurance Deferral of gains and losses on reinsurance The amortisation for the period Unamortised amount at the beginning of the period Unamortised amount at the end of the period

3

2

I

(2)

(2)

(4)

6 4

12

8 6

8

Liabilities At the beginning of the period Amounts added Amounts used Amounts reversed unused

373 582 (520) (I) -il ±31

Translation difference At the end of the period Maturity profile: Within one year Two to five years More than five years

219 214 ---.l ±31

Assets At the beginning of the period Amounts added Amounts used Amounts reversed unused

135 38 ( II ) 0

Translation difference At the end of the period Age analysis of items overdue but not impaired

--il lQ2

Overdue 30 to 60 days Overdue 60 to 90 days Overdue 90+ days

I 0

-il ---.l

Significant Assumptions and Risks Arising from Insurance Contracts: Credit Life and Warranty Products Th e sa le of credit life and ex tended warr anty products in the motor segme nt is co nducted through ce ll captive arr angements. The principle risk that the group faces und er the se insurance contracts is that the actu al claims and benefit paym ents exceed the carrying amounts of the insurance liabilities. Thi s could occur because the frequency or se verity of claims and ben efits are grea ter than estimated. Insuranc e events are rand om and the actual number and amounts of claims and benefits will vary from yea r to yea r from the est imate determined using statistica l techn iques. Th e key financ ial risk is that the proceed s from financial assets are not suffic ient to fund the obli– ga tions ar ising from insurance co ntrac ts and incl udes cre dit risk, interes t rate risk , currency risk, and liquidity risk . All risks are managed on behalf of the gro up by an outside insu ranc e company . Th e risks are spre ad over a large variety of clients in the South African mark et. The terms and conditions that have a materi al effect on the amount, timing, and uncertainty of future cas h flows arisi ng from these co ntracts are set out be low .