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Accounting Policies





for the period ended 31 December 2015

1.3 Basis of Consolidation (continued)

Loss of control

On the loss of control, the RCS Group derecognises the

assets and liabilities of the subsidiary, any non controlling

interest and the other components of equity related to the

subsidiary. Any surplus or deficit arising on the loss of

control is recognised in the income statement.

Investment in associates

An associate is an entity over which the RCS Group has

significant influence and which is neither a subsidiary nor

a joint arrangement. 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.

An investment in associate is accounted for using the equity

method, except when the investment is classified as held for

sale in accordance with IFRS 5 Non-current assets held-for-

sale and discontinued operations. Under the equity method,

investments in associates are carried in the consolidated

statement of financial position at cost adjusted for post

acquisition changes in the group’s share of net assets of the

associate, less any impairment losses.

Losses in an associate in excess of the RCS Group’s interest in

that associate are recognised only to the extent that the RCS

Group has incurred a legal or constructive obligation to make

payments on behalf of the associate.

Any goodwill on acquisition of an associate is included in

the carrying amount of the investment, however, a gain

on acquisition is recognised immediately in the income


Profits or losses on transactions between the RCS Group and

an associate are eliminated against the investment to the

extent of the RCS Group’s interest therein.

When the RCS Group reduces its level of significant influence

or loses significant influence, the RCS Group proportionately

reclassifies the related items which were previously

accumulated in equity through other comprehensive income

to profit or loss as a reclassification adjustment. In such cases,

if an investment remains, that investment is measured to fair

value, with the fair value adjustment being recognised in

profit or loss as part of the gain or loss on disposal.

Jointly controlled operations

A jointly controlled operation is a joint arrangement carried

on by each operator using its own assets in pursuit of the

joint operations. The consolidated financial statements

include the assets that the RCS Group controls and the

liabilities that it incurs in the course of pursuing the joint

operation, and the expenses that the RCS Group incurs and

its share of the income that it earns from the joint operation.

Jointly controlled ventures

A joint venture is a joint arrangement whereby the joint

venturers that have joint control of the arrangement, have

rights to the net assets of the arrangement. A joint venturer

shall recognise its interest in a joint venture as an investment

and shall account for the investment by applying the equity


1.4 Use of Estimates and Judgements

The preparation of consolidated financial statements

in conformity with IFRS, requires management to make

judgements, estimates and assumptions that may affect

the application of policies and reported amounts of assets

and liabilities, income and expenses. The estimates and

associated assumptions are based on historical experience

and various other factors that are believed to be reasonable

under the circumstances, the results of which form the basis

of making the judgements about carrying values of assets and

liabilities that are not readily apparent from other sources.

Actual results may differ from these estimates.