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.
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.
Unsecured advances to associates bear interest at a rate of 1,7% to 5,0% (2017: 2,0% and 5,0%) and have no fixed terms of repayment.
A list of the group’s associates, their country of incorporation and principal place of business, the group’s percentage shareholding and an indication of their nature of business is included in note 12.3.
No individual associate is considered to be material, thus no summarised financial information is supplied in these financial statements.
Effective April 1 2017, Bidcorp Food Africa Pty Limited, a subsidiary of Bid Corporation Limited, signed agreements with Puratos Group NV (Puratos) whereby Puratos became an equal shareholder in Bidcorp Bakery Solutions Division (BBS, subsequently renamed Chipkins Puratos CP). CP manufactures and supplies bakery ingredients to industrial bakers, the craft market and large retailers under the Chipkins and NCP brands in South Africa.
The interest in the joint venture is accounted for using the equity method of accounting. The joint venture was initially recorded at fair value and is increased or decreased by Bidcorp’s share of the profit or loss of CP after April 1 2017. Goodwill relating to the jointly controlled entity is included in the initial carrying amount of the investment. There were no impairments recognised for the investment in CP (2017: nil).
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 consolidated profit or loss.
The CP jointly controlled entity net revenue represents 1,0% (2017: 0,9%), trading profit 1,4% (2017: 1,3%) and total assets 0,9% (2017: 0,5%) of the continuing operations for the Bidcorp Group. Thus, no summarised financial information has been supplied in these financial statements for CP.