d) The Group is considering a range of funding options,
including raising additional capital through a rights issue.
If the Group is unable to continue in operational existence for
the foreseeable future, the Group may be unable to discharge its
liabilities in the normal course of business and adjustments may
have to be made to reflect the situation that assets may need to be
realised other than in the normal course of business and at amounts
which could differ significantly from the amounts at which they are
currently recorded on the balance sheet. In addition, the Group may
have to reclassify long term assets and liabilities as current
assets and liabilities. No such adjustments have been made to these
financial statements.
3.1 Basis of preparation
The consolidated financial statements of the Group have been
prepared in accordance with International Financial Reporting
Standards ("IFRS") as issued by the International Accounting
Standards Board ("IASB").
The consolidated financial statements have been prepared on a
historical cost basis, except as disclosed in the accounting
policies below.
The consolidated financial statements are presented in United
States Dollars ("USD") to facilitate the comparison of financial
results with companies in the oil-palm industry and all values are
rounded to the nearest thousand ("USD'000"), except where otherwise
indicated.
3.2 Basis of consolidation
The consolidated financial statements comprise the financial
statements of the Group and its subsidiaries as at 31 December
2013. Control is achieved when the Group is exposed, or has rights,
to variable returns from its involvement with the investee and has
the ability to affect those returns through its power over the
investee. Specifically, the Group controls an investee if and only
if the Group has:
- Power over the investee (i.e., existing rights that give it
the current ability to direct the relevant activities of the
investee)
- Exposure, or rights, to variable returns from its involvement with the investee; and
- The ability to use its power over the investee to affect its returns
When the Group has less than a majority of the voting or similar
rights of an investee, the Group considers all relevant facts and
circumstances in assessing whether it has power over an investee,
including:
- The contractual arrangement with the other vote holders of the investee
- Rights arising from other contractual arrangements
- The Group's voting rights and potential voting rights
The Group re-assesses whether or not it controls an investee if
facts and circumstances indicate that there are changes to one or
more of the three elements of control. Consolidation of a
subsidiary begins when the Group obtains control over the
subsidiary and ceases when the Group loses control of the
subsidiary. Assets, liabilities, income and expenses of a
subsidiary acquired or disposed of during the year are included in
the statement of comprehensive income from the date the Group gains
control until the date the Group ceases to control the
subsidiary.
Profit or loss and each component of other comprehensive income
("OCI") are attributed to the equity holders of the parent of the
Group and to the non-controlling interests, even if this results in
the non-controlling interests having a deficit balance. When
necessary, adjustments are made to the financial statements of
subsidiaries to bring their accounting policies into line with the
Group's accounting policies. All intra-group assets and
liabilities, equity, income, expenses and cash flows relating to
transactions between members of the Group are eliminated in full on
consolidation.
A change in the ownership interest of a subsidiary, without a
loss of control, is accounted for as an equity transaction. If the
Group loses control over a subsidiary, it:
- Derecognises the assets (including goodwill) and liabilities of the subsidiary
- Derecognises the carrying amount of any non-controlling interests
- Derecognises the cumulative translation differences recorded in equity
- Recognises the fair value of the consideration received
- Recognises the fair value of any investment retained
- Recognises any surplus or deficit in profit or loss
- Reclassifies the parent's share of components previously
recognised in OCI to profit or loss or retained earnings, as
appropriate, as would be required if the Group had directly
disposed of the related assets or liabilities
3.3 Summary of significant accounting policies
a) Business combinations and goodwill
Other than business combinations involving entities under common
control, business combinations are accounted for using the
acquisition method. The cost of an acquisition is measured as the
aggregate of the consideration transferred measured at acquisition
date fair value and the amount of any non-controlling interest in
the acquiree. For each business combination, the Group elects
whether to measure the non-controlling interests in the acquiree at
fair value or at the proportionate share of the acquiree's
identifiable net assets. Acquisition-related costs are expensed as
incurred and included in other operating expenses.
When the Group acquires a business, it assesses the financial
assets and liabilities assumed for appropriate classification and
designation in accordance with the contractual terms, economic
circumstances and pertinent conditions as at the acquisition date.
This includes the separation of embedded derivatives in host
contracts by the acquiree.
If the business combination is achieved in stages, any
previously held equity interest is re-measured at its acquisition
date fair value and any resulting gain or loss is recognised in
profit or loss. It is then considered in the determination of
goodwill.
Any contingent consideration to be transferred by the acquirer
will be recognised at fair value at the acquisition date.
Contingent consideration classified as an asset or liability that
is a financial instrument and within the scope of IAS 39 Financial
Instruments: Recognition and Measurement, is measured at fair value
with changes in fair value recognised in either profit or loss or
as a change to OCI. If the contingent consideration is not within
the scope of IAS 39, it is measured in accordance with the
appropriate IFRS. Contingent consideration that is classified as
equity is not re-measured and subsequent settlement is accounted
for within equity.
Goodwill is initially measured at cost, being the excess of the
aggregate of the consideration transferred and the amount
recognised for non-controlling interests, and any previous interest
held, over the net identifiable assets acquired and liabilities
assumed. If the fair value of the net assets acquired is in excess
of the aggregate consideration transferred, the Group re-assesses
whether it has correctly identified all of the assets acquired and
all of the liabilities assumed and reviews the procedures used to
measure the amounts to be recognised at the acquisition date. If
the re-assessment still results in an excess of the fair value of
net assets acquired over the aggregate consideration transferred,
then the gain is recognised in profit or loss.
After initial recognition, goodwill is measured at cost less any
accumulated impairment losses. For the purpose of impairment
testing, goodwill acquired in a business combination is, from the
acquisition date, allocated to each of the Group's cash-generating
units that are expected to benefit from the combination,
irrespective of whether other assets or liabilities of the acquiree
are assigned to those units.
Where goodwill has been allocated to a cash-generating unit and
part of the operation within that unit is disposed of, the goodwill
associated with the disposed operation is included in the carrying
amount of the operation when determining the gain or loss on
disposal. Goodwill disposed in this circumstance is measured based
on the relative values of the disposed operation and the portion of
the cash-generating unit retained.
Business combinations involving entities under common control:
Pooling of interest method
Business combinations involving entities under common control
are accounted for by applying the pooling of interest method. The
assets and liabilities of the combining entities are reflected at
their carrying amounts reported in the consolidated financial
statements of the controlling holding company. No adjustments are
made to reflect the fair values or recognise any new assets or
liabilities. No goodwill is recognised as a result of the
combination. Any difference between the consideration paid and the
equity of the "acquired" entity is reflected within equity as
"merger reserve". The statement of comprehensive income reflects
the results of the combining entities for the full year,
irrespective of when the combination took place. Comparatives are
restated to reflect the combination as if it had occurred from the
beginning of the earliest period presented in the financial
statements or from the date the entities had come under common
control, if later.
b) Transactions with non-controlling interests
Non-controlling interest represents the equity in subsidiaries
not attributable, directly or indirectly, to owners of the Company,
and are presented separately in the consolidated statement of
comprehensive income and within equity in the consolidated
statement of financial position, separately from equity
attributable to owners of the Company.
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