98 / 198
NOTES TO THE GROUP ANNUAL FINANCIAL STATEMENTS
continued
For the year ended 31 May 2016
BLUE LABEL INTEGRATED ANNUAL REPORT 2016
96
2.
Group composition
continued
Basis of consolidation continued
(d) Associates and joint ventures
Investments in associates and joint ventures are accounted for using the equity method of accounting. Under the equity
method, the investment is initially recognised at cost, and the carrying amount is increased or decreased to recognise the
investor’s share of the profit or loss of the investee after the date of acquisition. The Group’s investment in associates and
joint ventures includes goodwill identified on acquisition. Loans made to associates and joint ventures that are equity in
nature are treated as part of the cost of the investment made.
Associates are all entities over which the Group has significant influence but not control, generally accompanying a
shareholding of between 20% and 50% of the voting rights.
Investments in joint arrangements are classified as either joint operations or joint ventures depending on the contractual
rights and obligations of each investor. The Group has assessed the nature of its joint arrangements and determined them
to be joint ventures.
The Group’s share of post-acquisition profit or loss is recognised in the income statement, and its share of post-acquisition
movements in other comprehensive income is recognised in other comprehensive income with a corresponding
adjustment to the carrying amount of the investment. The carrying amount of the investment is also adjusted for the
Group’s share of post-acquisition movements in other net assets.
The Group determines at each reporting date whether there is any objective evidence that the investment in the associate
or joint venture is impaired. If this is the case, the Group calculates the amount of impairment as the difference between
the recoverable amount of the associate or joint venture and its carrying value and recognises the amount adjacent to
share of profit/(loss) from associates in the income statement.
Profits and losses resulting from upstream and downstream transactions between the Group and its associates and joint
ventures are recognised in the Group’s financial statements only to the extent of unrelated investors’ interests in the
associates and joint ventures. Unrealised losses are eliminated unless the transaction provides evidence of an impairment of
the asset transferred. Accounting policies of associates and joint ventures have been changed where necessary to ensure
consistency with the policies adopted by the Group.
Dilution gains and losses arising in investments in associates and joint ventures are recognised in the income statement.
If the ownership interest in an associate is reduced but significant influence is retained, only a proportionate share of the
amounts previously recognised in other comprehensive income is reclassified to profit or loss where appropriate.
When the Group’s share of losses in an associate or joint venture equals or exceeds its interests in the associate or joint
venture (which includes any long-term interests that, in substance, form part of the Group’s net investment in the associate
or joint venture), the Group does not recognise further losses, unless it has incurred obligations or made payments on
behalf of the associate or joint venture.
The Company financial statements account for investments in associates and joint ventures at cost less any accumulated
impairment.