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1.17 Associates
An associate is a company over which the group has significant influence, but not control. Significant influence is the power to participate in
the financial and operating policy decisions of a company but is not control over those policies.
The equity method of accounting for associates is adopted in the group financial statements. In applying the equity method, account is taken
of the group’s share of accumulated retained earnings and movements in reserves from the effective dates on which the companies became
associates and up to the effective dates of disposal. In the event of associates making losses, the group recognises the losses to the extent
of the group’s exposure. The group carries its investment in associates at cost less any accumulated impairment losses.
Intra-group balances and transactions and any unrealised income and expenses arising from intra-group transactions are eliminated.
Unrealised gains arising from equity-accounted investees are eliminated against the investment to the extent of the group’s interest in the
investee. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment.
1.18 Investment in jointly controlled entity
The group accounts for its interest in a joint venture using the equity method. This interest in a joint venture is an investment in a jointly
controlled entity whereby the venturers have a contractual arrangement that establishes joint control over the economic activities of the entity.
This investment is carried in the consolidated statement of financial position at the fair value of the jointly controlled investment at the date of
acquisition and the group’s share of post-acquisition profit or loss net of dividends. Goodwill relating to the jointly controlled entity is included
in the initial carrying amount of the investment and is neither amortised nor individually tested for impairment.
Upon loss of joint control over the investment in the jointly controlled entity, the group measures and recognises any remaining investment
at its fair value. Any difference between the carrying amount of the investment in jointly controlled entity and the fair value of the remaining
investment and any proceeds from disposal is recognised in the statement of profit or loss.
1.19 Foreign operations
Assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on consolidation, are translated into South
African rand at rates of exchange ruling at the reporting date. Income, expenditure and cash flow items are translated into South African rand
at rates approximating to the foreign exchange rates ruling at the dates of the transactions. Foreign exchange differences arising on translation
are recognised directly in equity as a foreign currency translation reserve. When a foreign operation is disposed of, in part or in full, the relevant
amount in the foreign currency translation reserve is transferred to the statement of profit or loss.
Foreign exchange differences arising on translation are recognised directly in a separate component of equity.
Acquisitions and disposals of foreign operations are accounted for at the exchange rate ruling on the date of the transaction.
1.20 Financial instruments
Financial instruments are recognised when the group or company becomes party to the contractual provisions of the arrangement. Financial
instruments are initially measured at fair value plus, for instruments not carried at fair value through profit or loss, any directly attributable
transaction costs. An instrument is classified as at fair value through profit or loss if it is held-for-trading, is a derivative or is designated as
such upon initial recognition.
A financial asset is classified as held-for-trading if it has been acquired principally for the purpose of selling in the near future or it has been
part of an identified portfolio of financial instruments that the group manages together and has a recent actual pattern of short-term profit-
making.
Financial instruments at fair value through profit or loss are measured at fair value, with any resultant gain or loss being recognised in the
statement of profit or loss. The gain or loss recognised in the statement of profit or loss excludes the interest and dividends earned on the
financial asset, which are separately disclosed as such in the statement of profit or loss.
Financial instruments classified as available-for-sale financial assets are carried at fair value with any resultant gain or loss, other than
impairment losses and foreign exchange gains and losses on monetary items, being recognised directly in equity. When these investments are
derecognised, the cumulative gain or loss previously recognised directly in equity is recognised in profit or loss. Where these investments are
interest-bearing, interest calculated using the effective interest method is recognised in profit or loss.
FINANCIAL OVERVIEW
Notes to the consolidated financial statements
for the year ended June 30
FINANCIAL STAT MENTS
Annual integrated report 2017
Bid Corporation Limited
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