Page 55 - Stellar IAR2015

NOTES TO THE ANNUAL FINANCIAL STATEMENTS1. PRESENTATION OF ANNUAL FINANCIAL STATEMENTSThe separate and consolidated nancial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB) and comply with the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee, the nancial reporting pronouncements as issued by the Financial Reporting Standards Council, the JSE Listings Requirements and the requirements of the South African Companies Act No. 71 of 2008.The consolidated nancial statements have been prepared on the historical cost basis, except for the certain nancial instruments which have been measured at fair value or at amortised cost. Amounts are presented in South African Rands.The accounting policies are consistent with those applied in the previous period except for the adoption of the investment entity exemption in IFRS 10 Consolidated Financial Statements (IFRS 10) as noted in accounting policy 1.1 below. The Group has also adopted new, revised or amended accounting standards issued by the IASB and IFRS Interpretation Committee (IFRIC) which were e ective and applicable to the Group from 1 January 2014.The signi cant accounting policies are set out below.1.1. Adoption of investment entity exemptionThe Company has adopted the investment entity exemption in IFRS 10 as at 30 November 2015, which results in the holding company being classi ed as an Investment Entity. Subsidiaries that mainly perform an investment holding function are accounted for as investments at fair value through pro t and loss (Investments at FVTPL). Subsidiaries that provide services to the Group or to third parties and do not hold investments continue to be consolidated.1.1.1. Transitional provisions under IFRS 10The directors have assessed the impact of the adoption of IFRS 10 on the prior reporting period and have concluded that the e ect thereof is not material due to the investment entity exemption in IFRS 10 only being applied to investments acquired upon the conversion of the Company to an investment entity during the current period, which investments were not held by the entity during the prior reporting period. Subsidiaries that provide services to the Group or third parties held during the prior period and current period have continued to be consolidated in accordance with IFRS 10. As a result, there are no investments in subsidiaries measured at FVTPL which were previously consolidated and therefore no restatement of prior period disclosures is required under the transitional provisions of IFRS 10. The only subsidiaries of the Company held in the prior year which would have quali ed as Investments at FVTPL in the current year were classi ed as a disposal group held for sale measured at fair value less costs to sell in accordance with the require- ments of IFRS 5 Non-current Assets Held for Sale and Discontinued Operations and disposed of during the current nancial year. The non- current assets and liabilities of the disposal group classi ed as held for sale were presented as single amounts in the statement of nancial position. Should the disposal group have been held as an Investment at FVTPL in the prior reporting period, the non-current assets and liabilities of the disposal group held for sale would have been presented as a single non-current Investment at FVTPL at the same amount as disclosed in the prior reporting period due to selling costs being immaterial. The post-tax losses of the discontinued operations as well as the post-tax losses recognised on the measurement to fair value less costs to sell, which were disclosed as a single amount in the statement of comprehensive income would have been disclosed as fair value adjustments. No change would have resulted in the Group’s key reporting metric of Net Asset Value per share or shareholder equity.1.2. Principles of Consolidation1.2.1. Accounting for subsidiaries and associatesGiven the nature of the Group’s operations, all portfolio investments are accounted for at FVTPL in terms of IAS 39 Financial Instruments: Recognition and Measurement (IAS 39), irrespective of whether they are subsidiaries or associates.Subsidiaries are entities that the Group controls by being exposed to, or having rights to, variable returns from its involvement with that entity and, where the Group has the ability to a ect those returns through its power over the entity.The subsidiaries of the Group are entities that:i. comprise portfolio investments; andii. provide services to third parties and related companies.STELLAR CAPITAL PARTNERS | 51