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fair value of the Group's investment properties are set out in note 11.
Acquisition of investment properties
The Group has acquired and intends to acquire further investment properties. At the time of
each purchase the Directors assess whether an acquisition represents the acquisition of an
asset or the acquisition of a business. To date all acquisitions of properties have been direct
asset purchases.
The Group may in future acquire entities that own property assets. These acquisitions would
be accounted for as a business combination only if an integrated set of activities were to be
acquired in addition to the property. In the situations where such an acquisition was not be
judged to be an acquisition of a business, the Group would not treat it as a business
combination. Rather, the cost to acquire the entity concerned would be allocated between
the identifiable assets and liabilities of the entity based upon their relative
NOTES TO THE FINANCIAL STATEMENTS
fair values at the acquisition date. Accordingly, no goodwill or additional deferred taxation
would arise from such an acquisition.
Operating lease contracts - the Group as lessor
The Group has acquired investment properties that are subject to commercial property
leases with tenants. The Directors have concluded, based on an evaluation of the terms and
conditions of the arrangements, that the Group retains all the significant risks and rewards
of ownership of the properties acquired to date and so has accounted for these leases as
operating leases rather than finance lease. Such considerations are required each time that
the Group acquires a property.
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The principal accounting policies applied in the preparation of the condensed consolidated
financial statements are set out below.
3.1 Basis of consolidation
The condensed consolidated financial statements comprise the financial statements of the
Company and all of its subsidiaries drawn up to 31 December 2017.
Subsidiaries are those entities, including special purpose entities, directly or indirectly
controlled by the Company. Control exists when the Company is exposed, or has rights, to
variable returns from its investment with the investee and has the ability to affect those
returns through its power over the investee. In assessing control, potential voting rights that
presently are exercisable are taken into account.
The financial statements of subsidiaries are included in the consolidated financial
statements from the date that control commences until the date that control ceases.
In preparing the consolidated financial statements, intra group balances, transactions and