Page 56 - Stellar IAR2015

NOTES TO THE ANNUAL FINANCIAL STATEMENTS (CONTINUED)Subsidiaries classi ed as (i) are classi ed as Investment Entities under IFRS 10. Investment Entities are exempt from consolidation and measured at fair value on date of acquisition in terms of IAS 39. Changes in fair value subsequent to acquisition, primarily driven by revaluation of portfolio investments, are recognised in pro t and loss in the period of change. Subsidiaries classi ed as (ii) are not Investment Entities and continue to be consolidated (Consolidated Subsidiaries) in accordance with accounting policy 1.2.2.Where the Group does not have control, but has signi cant in uence, these investments are classi ed as associates. The Group does not have any joint ventures. Given the nature of the Group’s operations, associates are accounted for at acquisition at FVTPL in line with the exemption from applying the equity method of accounting provided in IAS 28 Investments in Associates and Joint Ventures. Changes in fair value subsequent to acquisition are recognised in pro t or loss in the period of change.1.2.2. Accounting for Consolidated SubsidiariesOn acquisition date, the assets and liabilities and contingent liabilities of a Consolidated Subsidiary are measured at their fair values. Any excess of acquisition cost over fair value of the identi able net assets acquired, is recognised as goodwill. Any shortfall in the acquisition cost below the fair value of the identi able net assets acquired (i.e. discount), is recognised as a gain in pro t and loss in the period of acquisition.The results of Consolidated Subsidiaries are included in the consolidated nancial statements from the e ective date of acquisition to the e ective date of disposal. Where necessary, adjustments are made to the nancial statements of Consolidated Subsidiaries in order to align their accounting policies with those of the Company. Non-controlling interests in the net assets of consolidated subsidiaries are identi ed and recognised separately within equity.All intra-Group transactions, balances, income and expenses are eliminated in full upon consolidation.1.3. Segmental reportingAs the Group has only one business segment which is managed as a single pool of capital irrespective of the sector in which the Group’s investees trade, segmental reporting is not applicable.During the prior reporting period, as the Group had no continuing operations at 30 November 2014 pending completion of the sale of Chrystalpine Investments 9 (Pty) Ltd group and Structured Connectivity Solutions (Pty) Ltd, no segmental reporting was applicable to the prior reporting period as the key operating decision maker in the prior year, Mr PJ van Zyl, managed the continuing operations of the Group as a single segment. The Group did not manage the discontinued operations as segments during the interim period between the date of the sale agreements having been entered into and the e ective date of the sale transactions.1.4. Financial instrumentsFinancial instruments include all nancial assets, nancial liabilities and equity instruments including derivative instruments.Financial assets and nancial liabilities, are recognised on the Group’s statement of nancial position when the Group becomes party to the contractual provisions of the instrument. Classi cation depends on the purpose for which the nancial instruments were obtained or incurred and takes place at initial recognition.Financial assets are derecognised when the rights to receive cash ows from the investments have expired or have been transferred and the Company has transferred substantially all risks and rewards of ownership. The Group derecognises nancial liabilities when and only when the Group’s obligations are discharged, cancelled or they expire.1.4.1. Classi cationThe Group classi es nancial instruments, or their component parts, on initial recognition as a nancial asset, a nancial liability or an equity instrument in accordance with the substance of the contractual arrangement.Financial instruments are classi ed into the following categories:i. Financial assets at fair value through pro t or loss;ii. Loans and receivables;iii. Financial liabilities at fair value through pro t or loss; andiv. Financial liabilities measured at amortised cost.52 | STELLAR CAPITAL PARTNERS