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101
The general model requires entities to measure an insurance contract at initial recognition at the total of
the fulfilment cash flows (comprising the estimated future cash flows, an adjustment to reflect the time
value of money and an explicit risk adjustment for non-financial risk) and the contractual service margin.
The fulfilment cash flows are re-measured on a current basis each reporting period. The unearned profit
(contractual service margin) is recognised over the coverage period.
Aside from this general model, the standard provides, as a simplification, the premium allocation approach.
This simplified approach is applicable for certain types of contract, including those with a coverage period
of one year or less.
The new Standard will result in a material impact on the Group’s financial statements.
2. CONSOLIDATION
The financial statements include the assets, liabilities and results of the operations of PPS Holdings Trust
(‘Parent’) and its subsidiaries (together ‘the Group’).
Subsidiaries
Subsidiaries are entities over which the Group directly or indirectly has control. An investor controls an investee
when the investor is exposed, or has rights, to variable returns from its involvement with the investees and
has the ability to affect those returns through its power over the investee.
Subsidiaries are consolidated from the date on which the Group obtains control. Subsidiaries are deconsolidated
when control ceases.
All the Group subsidiaries were created by the Group. There are no acquired subsidiaries and there is no
goodwill arising on consolidation.
All unit trusts which are managed by a controlled subsidiary of the Group are consolidated, irrespective of
the Group’s economic interest. Third Party unit trust holders’ interests in unit trusts are liabilities of the unit
trust and are classified as such in the Group.
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.
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.