Savills plc 2012 Annual Report - (PDF) - Investor relations

When the Group ceases to have control or significant influence,any retained interest in the entity is remeasured to its fair value,with the change in carrying amount recognised in profit or loss.The fair value is the initial carrying amount for the purpose ofsubsequently accounting for the retained interest as an associate,joint venture or financial asset. In addition, any amounts previouslyrecognised in other comprehensive income in respect of thatentity are accounted for as if the Group had directly disposedof the related assets or liabilities. This may mean that amountspreviously recognised in other comprehensive income arereclassified to profit or loss.If the ownership interest in an associate is reduced but significantinfluence is retained, only a proportionate share of the amountspreviously recognised in other comprehensive income arereclassified to profit or loss where appropriate.AssociatesAssociates are all entities over which the Group has significantinfluence but not control, generally accompanying a shareholdingof between 20% and 50% of the voting rights. Investments inassociates are accounted for using the equity method and areinitially recognised at cost. The Group’s investment in associatesincludes goodwill (net of any accumulated impairment loss)identified on acquisition (see Note 16(a)).The Group’s share of its associates’ post-acquisition profitsor losses is recognised in the income statement and its share ofpost-acquisition movements in other comprehensive income isrecognised in other comprehensive income. The cumulative postacquisitionmovements are adjusted against the carrying amountof the investment. When the Group’s share of losses in anassociate equals or exceeds its interest in the associate, includingany other unsecured receivables, the Group does not recognisefurther losses unless it has incurred legal or constructiveobligations or made payments on behalf of the associate.Unrealised gains on transactions between the Group and itsassociates are eliminated to the extent of the Group’s interest inthe associates. Unrealised losses are also eliminated unless thetransaction provides evidence of an impairment of theasset transferred.Accounting policies of associates have been aligned to ensureconsistency with the policies adopted by the Group. Gains andlosses on dilution of the Group’s share of equity in associates arerecognised in the income statement.Joint venturesA joint venture is a contractual arrangement whereby two or moreparties undertake an economic activity that is subject to jointcontrol, which exists only when the strategic financial andoperating decisions relating to the activity require the unanimousconsent of the venturers. The Group’s joint ventures areaccounted for using the equity method.Segment reportingOperating segments are reported in a manner consistent withthe internal reporting provided to the chief operating decisionmaker. The chief operating decision maker, who is responsible forallocating resources and assessing performance of the operatingsegments, has been identified as the Group Executive Board.A business segment is a group of assets and operations engagedin providing products or services that are subject to risks andreturns that are different from those of other business segments.A geographical segment is engaged in providing products orservices within a particular economic environment that is subjectto risks and returns that are different from those of segmentsoperating in other economic environments.As the Group is strongly affected by both differences in the typesof services it provides and the geographical areas in which itoperates, the matrix approach of disclosing both the businessand geographical segments formats is used.Revenues and expenses are allocated to segments on the basisthat they are directly attributable or the relevant portion can beallocated on a reasonable basis.Foreign currency translation– Functional and presentation currencyItems included in the financial statements of each of the Group’sentities are measured using the currency of the primary economicenvironment in which the entity operates (‘the functional currency’).The consolidated financial statements are presented in Sterling,which is also the Company’s functional and presentation currency.– Transactions and balancesForeign currency transactions are translated into the functionalcurrency using the exchange rates prevailing at the dates of thetransactions. Foreign exchange gains and losses resulting fromthe settlement of such transactions and from the translation atyear end exchange rates of monetary assets and liabilitiesdenominated in foreign currencies are recognised in the incomestatement, except when deferred in other comprehensive incomeas qualifying net investment hedges.Translation differences on non-monetary financial assets andliabilities are reported as part of the fair value gain or loss and arerecognised in the income statement, except for available-for-saleequity investments, which are recognised in other comprehensiveincome. Non-monetary items carried at historical cost arereported using the exchange rate at the date of the transaction.The differences between retained profits of foreign subsidiariesand associated undertakings translated at average and closingrates of exchange are taken to reserves, as are differences arisingon the retranslation of foreign net assets to Sterling at the end ofthe year (using closing rates of exchange). Any differences thathave arisen since 1 January 2004 are presented as a separatecomponent of equity. As permitted under IFRS 1, any differencesprior to that date are not included in this separate componentof equity.Our business Our governance Our resultsSavills plc Report and Accounts 2012 67