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NOTES TO THE GROUP ANNUAL FINANCIAL STATEMENTS
CONTINUED
For the year ended 31 May 2015
105
BLUE LABEL INTEGRATED ANNUAL REPORT 2015
1.
SIGNIFICANT ACCOUNTING POLICIES continued
Foreign currencies
(a)
Functional and presentation currency
Items included in the financial statements of each of the Group’s entities are measured using the
currency of the primary economic environment in which the entity operates (the functional currency).
The Group financial statements are presented in South African rand (ZAR), which is the functional and
presentation currency of the parent company.
(b)
Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates
prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the
settlement of such transactions and from the translation at year-end exchange rates of monetary
assets and liabilities denominated in foreign currencies are recognised in the statement of
comprehensive income.
(c)
Group companies
The results and financial position of all the Group entities (none of which has the currency of a
hyperinflationary economy) that have a functional currency different from the presentation currency
are translated into the presentation currency as follows:
•
•
Assets and liabilities are translated at the closing rate as at statement of financial position date.
•
•
Income and expenses are translated at average exchange rates (unless this average is not a
reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates,
in which case income and expenses are translated at the dates of the transactions).
•
•
All resulting exchange differences are recognised as a separate component of equity.
On consolidation, exchange differences arising from the translation of the net investment in foreign
entities, and of borrowings and other currency instruments designated as hedges of such investments,
are taken to other comprehensive income. When a foreign operation is partially disposed of or sold,
such exchange differences are recognised in the statement of comprehensive income as part of the
gain or loss on sale.
Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as the
foreign entity’s assets and liabilities and are translated at the closing rate.
Financial instruments
Financial instruments carried on the statement of financial position include:
Financial assets
•
•
Loans receivable.
•
•
Trade and other receivables.
•
•
Cash and cash equivalents.
Financial liabilities
•
•
Borrowings.
•
•
Trade and other payables.