annual report 2011

IOOF | annual report 2011
Notes to the financial statements (cont’d)
For the year ended 30 June 2011
Acquisitions prior to 1 July 2004 (date of transition
to IFRS’s)
As part of its transition to IFRS’s, the Group elected to restate
only those business combinations that occurred on or after
1 July 2003. In respect of acquisitions prior to 1 July 2003,
goodwill represents the amount recognised under the Group’s
previous accounting framework, Australian GAAP.
Non-controlling interests
Acquisitions of non-controlling interests are accounted for
as transactions with owners in their capacity as owners
and therefore no goodwill is recognised as a result of such
transactions. The adjustments to non-controlling interests
are based on a proportionate amount of the net assets of the
subsidiary.
(ii)
Subsidiaries
Subsidiaries are entities controlled by the Group. The financial
statements of subsidiaries are included in the consolidated
financial statements from the date that control commences
until the date that control ceases.
Losses applicable to the non-controlling interests in a
subsidiary are allocated to the non-controlling interests even if
doing so causes the non-controlling interests to have a deficit
balance.
(iii) Employee Share Trust
The Group has formed a trust to administer the Group’s
employee share scheme. This trust is consolidated, as the
substance of the relationship is that the trust is controlled by
the Group. Shares held by the IOOF Executive Performance
Share Plan Trust are disclosed as treasury shares and are
deducted from share capital.
(iv) Investments in associates (equity accounted
investees)
Associates are those entities over which the Group has
significant influence, but not control, over the financial and
operating policies. Significant influence is presumed to exist
when the Group holds between 20 and 50 per cent of the
voting power of another entity.
Investments in its associates are accounted for using the
equity method (equity-accounted investees) and are initially
recognised at cost. The cost of the investment includes
transaction costs.
The consolidated financial statements include the Group’s
share of the profit or loss and other comprehensive income,
after adjustments to align the accounting policies with
those of the Group, from the date that significant influence
commences until the date that significant influence ceases.
When the Group’s share of losses exceeds its interest in an
equity accounted investee, the carrying amount of that
interest, including any long-term investments, is reduced to
nil, and the recognition of further losses is discontinued except
to the extent that the Group has an obligation or has made
payments on behalf of the investee.
(v) Transactions eliminated on consolidation
Intra-group balances and transactions, and any unrealised
income and expenses arising from intra-group transactions, are
eliminated in preparing the consolidated financial statements.
Unrealised gains arising from transactions with 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.
(b) Foreign currency transactions
Transactions in foreign currencies are translated to the
respective functional currencies of the Group entities at
exchange rates at the dates of the transactions. Monetary
assets and liabilities denominated in foreign currencies at the
reporting date are retranslated to the functional currency at
the exchange rate at that date. The foreign currency gain or
loss on monetary items is the difference between amortised
cost in the functional currency at the beginning of the period,
adjusted for effective interest and payments during the period,
and the amortised cost in foreign currency translated at the
exchange rate at the end of the year.
Non-monetary assets and liabilities denominated in foreign
currencies that are measured at fair value are retranslated
to the functional currency at the exchange rate at the date
the fair value was determined. Non-monetary items in a
foreign currency that are measured in terms of historical
cost are translated using the exchange rate at the date of
the transaction. Foreign currency differences arising on
the retranslation are recognised in profit or loss, except
for differences arising on the retranslation of available-forsale
equity instruments, which are recognised in other
comprehensive income.
(c) Cash and cash equivalents
Cash and cash equivalents includes cash on hand, deposits
held at call with financial institutions, other short-term, highly
liquid investments with original maturities of three months or
less that are readily convertible to known amounts of cash and
which are subject to an insignificant risk of changes in value
and bank overdrafts.
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