Annual Report 2016
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2. Significant accounting policies
The accounting policies set out below have been applied consistently to the periods presented in these financial
statements, and have been applied consistently by the Group entities, unless otherwise stated.
(a) Basis of consolidation
(i) Subsidiaries
Subsidiaries are entities, including structured entities, controlled by the Company. The financial statements of
subsidiaries are included in the consolidated financial statements from the date that control commences until
the date that control ceases.
The Group controls an entity when it is exposed, or has rights, to variable returns from its involvement with the
entity and has the ability to affect those returns through its power over the entity. Potential voting rights are
considered when assessing control only when such rights are substantive. The Group also considers it has
de facto power over an investee when, despite not having the majority of voting rights, it has the current ability
to direct the activities of the investee that significantly affect the investee’s return.
Investments in subsidiaries are measured in the Company’s statement of financial position at cost less any
impairment losses, unless the investment is classified as held for sale or distribution. The cost of investments
includes transaction costs.
(ii) Business combinations
Business combinations are accounted for using the acquisition method from the acquisition date, which is the
date on which control is transferred to the Group.
Acquisitions on or after 1 April 2011
For acquisitions on or after 1 April 2011, the Group measures the costs of goodwill at the acquisition date as:
• the fair value of the consideration transferred; plus
• the recognised amount of any non-controlling interests in the acquiree; plus
• if the business combination is achieved in stages, the fair value of the existing equity interest in the
acquiree; less
• the net recognised amount (generally fair value) of the identifiable assets acquired and liabilities assumed.
When the excess is negative, a bargain purchase gain is recognised immediately in profit or loss.
For each business combination, the Group elects whether it measures the non-controlling interests in the
acquiree either at fair value or at the proportionate share of the acquiree’s identifiable net assets at the
acquisition date.
Transaction costs, other than those associated with the issue of debt or equity securities, that the Group incurs
in connection with a business combination are expensed as incurred.
Acquisitions between 1 April 2006 and 31 March 2011
For acquisitions between 1 April 2006 and 31 March 2011, goodwill represents the excess of the cost of the
acquisition over the Group’s interest in the recognised amount (generally fair value) of the identifiable assets,
liabilities and contingent liabilities of the acquiree. When the excess was negative, a bargain purchase gain
was recognised immediately in profit or loss.
Transaction costs, other than those associated with the issue of debt or equity securities, that the Group
incurred in connection with business combinations were capitalised as part of the cost of the acquisition.
Notes to the Financial Statements
(Cont’d.)
