SENWES ANNUAL FINANCIAL STATEMENTS 2022
2.1.1 Joint ventures A joint venture is a type of joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the joint venture . Joint control is the contractually agreed sharing of control of an arrangement , which exists only when decisions about the relevant activities require unanimous consent of the parties sharing control . The group ’ s interests in joint ventures are accounted for by applying the equity method . In applying the equity method , account is taken of the group ’ s share of accumulated retained earnings and movements in reserves from the effective dates on which the companies become joint ventures and up to the effective dates of disposal .
Under the equity method , the investment in joint ventures is initially recognised in the statement of financial position at cost . Subsequent to acquisition date the carrying amount of the investment is adjusted with changes in the group ’ s share of net assets of the joint venture . Goodwill relating to the joint venture is included in the carrying amount of the investment and is not amortised or separately tested for impairment . The share of the results of operations of joint ventures is reflected in profit or loss . This is the profit or loss attributable to equity holders of joint ventures and is therefore profit after tax and non-controlling interests in the subsidiaries of the joint ventures . Adjustments are made where the accounting period and accounting policies of joint ventures are not in line with those of the group . Where a change in other comprehensive income of joint ventures was recognised , the group recognises its share of any changes and discloses this , where applicable , in the statement of changes in equity . Unrealised gains and losses resulting from transactions between the group and joint ventures are eliminated to the extent of the interest in joint ventures .
When downstream transactions provide evidence of a reduction in the net realisable value of the assets to be sold or contributed , or of an impairment loss of those assets , those losses shall be recognised in full by the investor . When upstream transactions provide evidence of a reduction in the net realisable value of the assets to be purchased or of an impairment loss of those assets , the investor shall recognise its share in those losses .
Where non-monetary assets are contributed to a joint venture in exchange for an equity interest in the joint venture , the profit or loss recognised shall be the portion of gain or loss attributable to the equity interests of the other venturer . The unrealised gains or losses shall be eliminated against the investment and shall not be presented as deferred gains or losses in the consolidated statement of financial position . Where such contribution lacks commercial substance , the gain or loss is regarded as unrealised and not recognised .
After application of the equity method , the group determines whether it is necessary to recognise an impairment loss on the group ’ s investments in its joint ventures . The group determines at each reporting date whether there is any objective indicators that the investments in joint ventures are impaired . If this is the case the group calculates the amount of impairment as the difference between the recoverable amount of joint ventures and its carrying value and recognises the amount in profit or loss .
Upon loss of joint control over the joint venture , the group measures and recognises any remaining investment at its fair value . Any difference between the carrying amount of the joint venture upon loss of joint control and the fair value of the retained investment and proceeds from disposal , is recognised in profit or loss .
The company ' s investments in joint ventures are accounted for at cost .
2.1.2 Associates The group ’ s investments in its associates are accounted for using the equity method of accounting . An associate is an entity in which the group has significant influence . Significant influence is the power to participate in the financial and operating policy decisions of the investee , but is not control or joint control over those policies .
Acquisition of shares in investments is reflected as financial assets at fair value through other comprehensive income until significant influence is obtained in that investment , thereafter that investment is recognised as an associate .
Under the equity method , the investment in the associate is initially recognised in the statement of financial position at cost . Subsequent to acquisition date the carrying amount of the investment is adjusted with the postacquisition changes in the group ’ s share of net assets of the associate . Goodwill relating to the associate is included in the carrying amount of the investment and is not amortised or separately tested for impairment . The share of the results of operations of associates is reflected in profit or loss . This is the profit or loss attributable to equity holders of associates and is therefore profit after tax and non-controlling interests in the subsidiaries of the associates . Adjustments are made where the accounting period and accounting policies of associates are not in line with those of the group . Where a change in other comprehensive income of associates was recognised , the group recognises its share of any changes and discloses this , where applicable , in the statement of changes in equity . Unrealised gains and losses resulting from transactions between the group and associates are eliminated to the extent of the interest in associates . After application of the equity method , the group determines whether it is necessary to recognise an impairment loss on the group ’ s investment in its associates . The group determines at each reporting date whether there is any objective evidence that the investments in associates are impaired . If this is the case the group calculates the amount of impairment as the difference between the recoverable amount of associates and its carrying value and then recognises the amount in profit or loss .
Upon loss of significant influence over associates , the group measures and recognises any retaining investment at its fair value . Any difference between the carrying amount of associates upon loss of significant influence and the fair value of the retained investments and proceeds from disposal , is recognised in profit or loss .
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