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2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d)
ASSOCIATES
- An associate is an entity over which the Group has significant influence and that is neither a subsidiary nor
an interest in a joint venture. Significant influence is the power to participate in the financial and operating policy decisions
of the investee but is not control or joint control over those policies.
The results and assets and liabilities of associates are incorporated in these financial statements using the equity method
of accounting, except when the investment is classified as held for sale, in which case it is accounted for under FRS 105
Non-current Assets Held for Sale and Discontinued Operations. Under the equity method, investments in associates are
carried in the consolidated statement of financial position at cost as adjusted for post-acquisition changes in the Group’s
share of the net assets of the associate, less any impairment in the value of individual investments. Losses of an associate
in excess of the Group’s interest in that associate (which includes any long-term interests that, in substance, form part
of the Group’s net investment in the associate) are not recognised, unless the Group has incurred legal or constructive
obligations or made payments on behalf of the associate.
Any excess of the cost of acquisition over the Group’s share of the net fair value of the identifiable assets, liabilities
and contingent liabilities of the associate recognised at the date of acquisition is recognised as goodwill. The goodwill
is included within the carrying amount of the investment and is assessed for impairment as part of the investment.
Any excess of the Group’s share of the net fair value of the identifiable assets, liabilities and contingent liabilities over the
cost of acquisition, after reassessment, is recognised immediately in profit or loss.
Where a Group entity transacts with an associate of the Group, profits and losses are eliminated to the extent of the
Group’s interest in the relevant associate.
INTERESTS IN JOINT VENTURES
- A joint venture is a contractual arrangement whereby the Group and other parties
undertake an economic activity that is subject to joint control, that is when the strategic financial and operating policy
decisions relating to the activities require the unanimous consent of the parties sharing control.
Where a Group entity undertakes its activities under joint venture arrangements directly, the Group’s share of jointly
controlled assets and any liabilities incurred jointly with other venturers are recognised in the financial statements of the
relevant entity and classified according to their nature. Liabilities and expenses incurred directly in respect of interests
in jointly controlled assets are accounted for on an accrual basis. Income from the sale or use of the Group’s share of
the output of jointly controlled assets, and its share of joint venture expenses, are recognised when it is probable
that the economic benefits associated with the transactions will flow to/from the Group and their amount can be
measured reliably.
NOTES TO FINANCIAL STATEMENTS
March 31, 2013
