2. Significant accounting policies (CONT’D.)
2.5 Summary of significant accounting policies (cont’d.)
(b) Associates
An Associate is defined as a company, not being a Subsidiary or an interest in a joint venture, in which
the Group has significant influence. Significant influence is the power to participate in the financial
and operating policy decisions of the investee but not in control or joint control over those policies.
Details of Associates are as disclosed in Note 16.
On acquisition of an Associate, any excess of the cost of investment over the Group’s share of the net
fair value of the identifiable assets and liabilities of the investee is recognised as goodwill and included
in the carrying amount of the investment. Any excess of the Group’s share of the net fair value of the
identifiable assets and liabilities of the investee over the cost of investment is excluded from the
carrying amount of the investment and is instead included as income in the determination of the
Group’s share of the Associate’s profit or loss for the period in which the investment is acquired.
The Group’s interests in Associates are equity accounted. Under the equity method, investment in
Associates is carried in the consolidated statement of financial position at cost plus post acquisition
changes in the Group’s share of net assets of the Associates, less distribution received and any
impairment in value of individual investments. Any change in other comprehensive income (OCI) of
these investees is presented as part of the Group’s OCI.
The consolidated statement of comprehensive income reflects the share of the Associates’ results
after tax. Where there has been a change recognised directly in the equity of Associates, the Group
recognises its share of such change. Unrealised gains or losses on transactions between the Group
and its Associates are eliminated to the extent of the Group’s interest in the Associates. When the
Group’s share of losses exceeds its interest in Associates, the Group does not recognise further losses
except to the extent that the Group has incurred legal or constructive obligations or made payments
on behalf of the Associates.
The most recent available financial statements of the Associates are used by the Group in applying
the equity method. Where the dates of the audited financial statements used are not coterminous
with those of the Group, the share of results is arrived at using the last audited financial statements
available andmanagement financial statements to the end of the accounting period. Where necessary,
adjustments are made to the financial statements of the Associates to ensure consistency of the
accounting policies used with those of the Group.
After application of the equity method, the Group determines whether it is necessary to recognise an
additional impairment loss on its investment in Associate. The Group determines at each reporting
date whether there is any objective evidence that the investment in Associate is impaired. If this is the
case, the Group calculates the amount of impairment as the difference between the recoverable
amount of the Associate and its carrying value. Impairment loss is recognised in profit or loss.
An Associate is equity accounted for from the date the Group obtains significant influence until the
date the Group ceases to have significant influence. Upon loss of significant influence over the
Associate, the Groupmeasures and recognises any retaining investment at its fair value. Any difference
between the carrying amount of the Associate upon loss of significant influence and the fair value of
the retained investment and proceeds from disposal is recognised in profit or loss.
an n ual repo rt 2015
77
