NAT Nanette

estimated future cash flows are discounted using a pre-tax discount rate that 
reflects current market assessments specific to the asset. For the purposes of 
assessing impairment, assets are grouped at the lowest levels for which there 
are separately identifiable cash flows. 
 
 
       l.    Business combinations and goodwill: 
 
 
Business combinations are accounted for using the purchase method. 
 
 
The cost of an acquisition is measured as the fair value of the assets given, 
equity instruments issued and liabilities incurred or assumed at the date of 
exchange, plus costs directly attributable to the acquisition. Identifiable 
assets acquired and liabilities and contingent liabilities assumed in a business 
combination are measured initially at their fair values at the acquisition date 
irrespective of the extent of any minority interest. 
 
 
When the Group acquires a business, embedded derivatives separated from the host 
contract by the acquiree are not reassessed on acquisition unless the business 
combination results in a change in the terms of the contract that significantly 
modifies the cash flows that would otherwise be required under the contract. 
 
 
In a business combination achieved in stages, the increase in the fair value of 
the identifiable net assets relating to the interest held prior to the business 
combination is recognized as an asset revaluation surplus in equity. 
 
 
Goodwill is initially measured at cost being the excess of the cost of the 
business combination over the Group's share in the net fair value of the 
acquiree's identifiable assets, liabilities and contingent liabilities. 
 
 
Where goodwill forms part of a cash-generating unit and part of the operation 
within that unit is disposed of, the goodwill associated with the operation 
disposed of is included in the carrying amount of the operation when determining 
the gain or loss on disposal of the operation. Goodwill disposed of in this 
circumstance is measured based on the relative values of the operation disposed 
of and the portion of the cash-generating unit retained. 
 
 
 
 
The Group assesses whether there are any indicators that goodwill is impaired at 
each reporting date. Goodwill is tested for impairment, annually and when 
circumstances indicate that the carrying value may be impaired. 
 
 
Impairment is determined for goodwill by assessing the recoverable amount of the 
cash-generating units, to which the goodwill relates. Where the recoverable 
amount of the cash-generating units is less than their carrying amount an 
impairment loss is recognized. Impairment losses relating to goodwill cannot be 
reversed in future periods. The Group performs its annual impairment test of 
goodwill in the last quarter of the year. 
 
 
       m.    Inventories: 
 
 
Inventories of housing units under construction are stated at the lower of cost 
and net realizable value. The cost of inventories includes the cost of the land, 
construction costs and capitalized borrowing costs. 
 
 
The Company measures its operating cycle based on the average construction time 
of the construction projects. The operating cycle for purposes of classification 
of inventories is two to three years. 
 
 
       n.    Investment properties: 
Investment properties are measured initially at cost, including transaction 
costs. The carrying amount includes the cost of replacing part of an existing 
investment property at the time that cost is incurred if the recognition 
criteria are met; and excludes the costs of day to day servicing of an 
investment property. Subsequent to initial recognition, investment properties 
are stated at fair value, which reflects market conditions at the balance sheet 
date. Gains or losses arising from changes in the fair values of investment 
properties are included in the income statement in the year in which they 
arise. 
 
 Investment properties are derecognized when either they have been 
disposed of or when the investment property is permanently withdrawn from use 
and no future economic benefit is expected from its disposal. Any gains or 
losses on the retirement or disposal of an investment property are recognized in 
the income statement in the year of retirement or disposal. 
 
 
                   o.    Derecognition of financial assets and liabilities: 
 
 
Financial assets 
 
 
A financial asset is derecognised when: 
 
 
  *  the rights to receive cash flows from the asset have expired; 
  *  the Group retains the right to receive cash flows from the asset, but has 
  assumed an obligation to pay them in full without material delay to a third 
  party under a pass through arrangement; and 
  *  the Group has transferred its rights to receive cash flows from the asset and 
  either (a) has transferred substantially all the risks and rewards of the asset, 
  or (b) has neither transferred nor retained substantially all the risks and 
  rewards of the asset, but has transferred control of the asset. 
 
 
 
 
 
Where the Group has transferred its rights to receive cash flows from the asset 
and has neither transferred nor retained substantially all the risks and rewards 
of the asset, but retains control, the asset is recognised to the extent of the 
Group's continuing involvement in the asset. Continuing involvement that takes 
the form of a guarantee over the transferred asset is measured at the lower of 
the original carrying amount of the asset and the maximum amount of 
consideration that the Group could be required to repay. 
 
 
Where continuing involvement takes the form of a written and/or purchased option 
on the transferred asset, the extent of the Group's continuing involvement is 
the amount of the transferred asset that the Group may repurchase, except that 
in the case of a written put option on an asset measured at fair value, the 
extent of the Group's continuing involvement is limited to the lower of the fair 
value of the transferred asset and the option exercise price. 
 
 
Financial liabilities 
 
 
A financial liability is derecognised when the obligation under the liability is 
discharged or cancelled or expires. 
 
 
Where an existing financial liability is replaced by another from the same 
lender on substantially different terms, or the terms of an existing liability 
are substantially modified, such an exchange or modification is treated as a 
derecognition of the original liability and the recognition of a new liability, 
and the difference in the respective carrying amounts is recognised in the 
income statement. 
 
 
       p.    Interest-bearing loans and borrowings: 
 
 
All loans and borrowings are initially recognized at the fair value of the 
consideration received less directly attributable transaction costs. After 
initial recognition, interest-bearing loans and borrowings are subsequently 
measured at amortized cost using the effective interest method. Gains and losses 
are recognized in the income statement when the liabilities are derecognized as 
well as through the amortization process. 
 
       q.    Borrowing costs: 
 
 
Borrowing costs directly attributable to the acquisition, construction or 
production of qualifying assets, which are assets that necessarily take a 
substantial period of time to get ready for their intended use or sale, are 
added to the cost of these assets, until such time as the assets are 
substantially ready for their intended use or sale. 
 
 
Borrowing costs include exchange differences arising from foreign currency 
borrowings to the extent that they are regarded as an adjustment to interest 
costs. 
 
 
       r.    Loans and receivables: 
 
 
Loans and receivables are non-derivative financial assets with fixed or 
determinable payments that are not quoted in an active market. 
 
 
Loans and receivables are recognized initially at fair value and subsequently 
measured at amortized cost less any allowance for impairment. An allowance for 
impairment is established when there is objective evidence that the Group will 
not be able to collect all amounts due according to the original terms of loans 
and receivables. 
 
 
 
 
s.    Offsetting of financial instruments: 
 
 
Financial assets and financial liabilities are offset and the net amount 
reported in the consolidated balance sheet if, and only if, there is a currently 
enforceable legal right to offset the recognized amounts and there is an 
intention to settle on a net basis, or to realize the assets and settle the 
liabilities simultaneously. 
 
 
t.    Fair value of financial instruments: 
 
 
The fair value of financial instruments that are actively traded in organized 
financial markets is determined by reference to quoted market bid prices at the 
close of business on the balance sheet date. For financial instruments where 
there is no active market, fair value is determined using valuation techniques. 
Such techniques may include using recent arm's length market transactions; 
reference to the current fair value of another instrument that is substantially 
the same; discounted cash flow analysis or other valuation models. 
 
 
u.    Amortized cost of financial instruments: 
 
 
Amortized cost is computed using the effective interest method less any 
allowance for impairment and principal repayment or reduction. The calculation 
takes into account any premium or discount on acquisition and includes 
transaction costs and fees that are an integral part of the effective interest 
rate. 
 
 
v.    Impairment of financial assets: 
 
 
The Group assesses at each balance sheet date whether there is any objective 
evidence that a financial asset or a group of financial assets is impaired. A 
financial asset or a group of financial assets is deemed to be impaired if, and 
only if, there is objective evidence of impairment as a result of one or more 
events that has occurred after the initial recognition of the asset (an incurred 
'loss event') and that loss event has an impact on the estimated future cash 
flows of the financial asset or the group of financial assets that can be 
reliably estimated. Evidence of impairment may include indications that the 

Nanette Real Estate N.V (LSE:NAT)
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Nanette Real Estate N.V (LSE:NAT)
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