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Axiata Group Berhad | Annual Report 2016
FINANCIAL STATEMENTS
134
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2016
3.
SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(a) Economic entities in the Group (continued)
(ii) Changes in ownership interests in subsidiaries without change of control (continued)
The potential cash payments related to put options issued by the Group over the equity of subsidiaries are accounted for as financial
liabilities. The amount of financial liabilities is recognised initially at the present value of the estimated redemption amount within
derivative financial instruments with a corresponding charge directly to equity. The charge to equity is recognised separately as written
put options over non-controlling interest, adjacent to NCI in the net assets of consolidated subsidiaries.
The Group recognises the cost of writing such put options, determined as the excess of the fair value of the option over any consideration
received, as a financing cost. Such options are subsequently measured at amortised cost, using the effective interest rate method, in order to
accrete the liability up to the amount payable under the option at the date at which is first becomes exercisable. The charge arising is recorded
as a financing cost. In the event that the option expires unexercised, the liability is derecognised with a corresponding adjustment to equity.
(iii) Disposal of subsidiaries
When the Group ceases to have control, any retained interest in the entity is re-measured to its fair value at the date when control is
lost, with the change in carrying amount recognised in profit or loss. The fair value is the initial carrying amount for the purposes of
subsequently accounting for the retained interest as an associate, a joint venture or financial asset. In addition, any amounts previously
recognised in OCI in respect of that subsidiary are accounted for as if the Group had directly disposed of the related assets or liabilities.
This may mean that amounts previously recognised in consolidated OCI are reclassified to profit or loss.
Gains or losses on the disposal of subsidiaries include the carrying amount of goodwill relating to the subsidiaries sold.
(iv) Joint arrangements
A joint arrangement is an arrangement of which there is contractually agreed sharing of control by the Group with one or more parties, where
decisions about the relevant activities relating to the joint arrangement require unanimous consent of the parties sharing control. The classification
of a joint arrangement as a joint operation or a joint venture depends upon the rights and obligations of the parties to the arrangement. A
joint venture is a joint arrangement whereby the joint ventures have rights to the net assets of the arrangement. A joint operation is a joint
arrangement whereby the joint operators have rights to the assets and obligations for the liabilities, relating to the arrangement.
The Group’s interest in joint ventures are accounted for in the consolidated financial statements using the equity method as stated
in Note 3(a)(v) to the financial statements. Where necessary, in applying the equity method, adjustments are made to the financial
statements of joint venture to ensure consistency of the accounting policies with those of the Group.
Interests in joint ventures are accounted for using the equity method, after initially being recognised at cost in the consolidated statement
of financial position. Under the equity method, the investment in a joint venture is initially recognised at cost, and adjusted thereafter
to recognise the Group's share of the post-acquisition profits or losses of the joint venture in profit or loss, and the Group's share of
movements in OCI of the joint venture in OCI. Dividends received or receivable from a joint venture are recognised as a reduction in
the carrying amount of the investment. When the Group's share of losses in a joint venture equals or exceeds its interests in the joint
venture, including any long-term interests that, in substance, form part of the Group's net investment in the joint venture, the Group does
not recognise further losses, unless it has incurred legal or constructive obligations or made payments on behalf of the joint venture.
The Group determines at each reporting date whether there is any objective evidence that the investment in the joint venture is impaired.
An impairment loss is recognised for the amount by which the carrying amount of the joint venture exceeds its recoverable amount.
Unrealised gains on transactions between the Group and its joint ventures are eliminated to the extent of the Group’s interest in the joint
ventures. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting
policies of the joint ventures have been changed where necessary to ensure consistency with the policies adopted by the Group.
When the Group ceases to equity account its joint venture because of a loss of joint control, any retained interest in the entity is
remeasured to its fair value with the change in carrying amount recognised in profit or loss. This fair value becomes the initial carrying
amount for the purposes of subsequently accounting for the retained interest as an associate or financial asset. In addition, any amount
previously recognised in OCI in respect of the entity is accounted for as if the Group had directly disposed of the related assets or
liabilities. This may mean that amounts previously recognised in OCI are reclassified to profit or loss.
If the ownership interest in a joint venture is reduced but joint control is retained, only a proportionate share of the amounts previously
recognised in OCI is reclassified to profit or loss where appropriate.