PPS Integrated Report 2021 Group Accounting Policies | 140 Group Accounting Policies (continued) Intra-group transactions, balances and unrealised gains on transactions are eliminated on consolidation. Unrealised losses are also eliminated, unless the transaction provides evidence of an impairment of the asset transferred. In the Parent’s separate annual financial statements, the interests in subsidiaries are accounted for at cost. A provision for impairment is created if there is evidence of impairment. Non-controlling interest This is the minority shareholders’ interest in the surplus/deficit after tax since acquisition, and the net assets of entities controlled by the Group. In the Statement of Financial Position, the non-controlling interest is disclosed as part of equity in terms of IFRS. Associates An associate is an entity over which the Group has the ability to exercise significant influence, but not control, through participation in the financial and operating policy decisions of the entity. Judgement is applied in assessing which entities the Group has the ability to exercise significant influence over. The Group has a shareholding in one of the two associates, and therefore has rights to either net profits/losses, or net assets of this associate. 3. FINANCIAL INSTRUMENTS 3.1 General The Group initially recognises financial assets and liabilities (including assets and liabilities designated at fair value through profit or loss), when the Group becomes a party to the contractual provisions of the instrument. Financial instruments recognised in the Statement of Financial Position include investments, other receivables, cash and cash equivalents, investment contract liabilities, borrowings, accruals, third party liabilities arising on consolidation of unit trusts, and other payables. 3.2 Financial assets The Group has the following financial asset categories: financial assets at fair value through profit or loss, as well as financial assets at amortised cost. All financial assets are initially measured at fair value including, for financial assets not at fair value through profit or loss, any directly attributable transaction costs. All financial asset purchases and sales are initially recognised using trade date accounting. Financial instruments at fair value through profit or loss A financial asset is placed into this category if so designated by management upon initial recognition. Financial assets designated at fair value through profit or loss, consist of local and foreign equities, money market instruments, government bonds, corporate bonds and unit trusts. Subsequent to initial recognition, these financial assets are accounted for at fair value. Fair value gains and losses arising from changes in fair value are included in the Statement of Profit or Loss and other Comprehensive Income as net fair value gains on financial assets in the period in which they arise. Equity fair values are based on regulated exchange quoted bid prices at the close of business on the last trading day on or before the reporting date. Bond fair values are based on regulated exchange quoted closing prices at the close of business on the last trading day, on or before the reporting date. Unit trust fair values are based on the net asset value (price) on the reporting date. Financial assets at amortised cost Insurance and other receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Insurance and other receivables are initially measured at fair value and subsequently at amortised cost using the effective interest rate method less impairment adjustments (accounting policy note 13). 2. Consolidation (continued)
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