Full Report - Fraser and Neave Limited

NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 September 2006
2. ACCOUNTING POLICIES (cont’d)
2.4 Joint Venture Companies
A joint venture company (not being a subsidiary company) is a company in which the group has a long-term
interest of not more than 50% of the equity and has a contractual agreement to jointly share the control with
one or more parties in the joint venture company’s commercial and financial affairs.
The Group recognises its interest in joint venture companies using proportionate consolidation. The Group
combines its share of each of the assets, liabilities, income and expenses of the joint venture companies with
the similar items, line by line, in its consolidated financial statements.
The joint venture is proportionately consolidated until the date on which the Group ceases to have joint
control over the joint venture.
Joint venture companies (“JVC”) that are held directly by the Group’s joint venture companies are equity
accounted for in accordance with the accounting policies of these joint venture companies. No adjustments
have been made at the Group to recognise the interest of these JVC using proportionate consolidation as
the contribution of these JVC to the Group are not material. Details of the Group’s share of the consolidated
results, assets and liabilities of the JVC can be found in Note 17.
In the Company’s separate financial statements, interests in joint venture company is carried at cost less
impairment losses.
A list of the joint venture companies is shown in Note 42.
2.5 Associated Companies
An associated company (not being a subsidiary company or joint venture company) is a company in which
the Group exercises significant influence over the financial and operating policy decisions.
The Group’s investments in associated companies are recorded at cost less accumulated impairment losses
and adjusted to recognise the Group’s share of post-acquisition reserves of the associated companies.
Investments in associated companies include goodwill.
When the Group’s share of losses in an associated company equals or exceeds its interest in the associated
company, the Group does not recognise further losses, unless it has incurred obligations or made payments
on behalf of the associated company.
The Group’s share of the results of associated companies includes the Group’s share of taxation and
exceptional items, and net assets of the associated companies are included in the consolidated financial
statements under the equity method based on their latest audited financial statements except where their
financial periods do not end on 30 September, then management accounts to 30 September are used.
Where an investment in an associated company is acquired or sold during the year, its results are included
from the date of acquisition or excluded from the date of sale.
A list of associated companies is shown in Note 42.
Fraser and Neave, Limited & Subsidiary Companies Annual Report 2006 95