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BLUE LABEL
INTEGRATED ANNUAL REPORT 2017
Notes
to the Group annual financial statements
continued
For the year ended 31 May 2017
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.