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Summary of significant accounting policies (continued)
(c) Consolidation (continued)
The excess of the consideration transferred, the amount of any non-controlling interest in the acquiree and the acquisition-date fair value
of any previous equity interest in the acquiree over the fair value of the identifiable net assets acquired is recorded as goodwill. If the total of
consideration transferred, non-controlling interest recognised and previously held interest measured is less than the fair value of the net assets
of the subsidiary acquired in the case of a bargain purchase, the difference is recognised directly in the income statement.
Inter-company transactions, balances and unrealised gains on transactions between Group companies are eliminated. Unrealised losses are
also eliminated. When necessary amounts reported by subsidiaries have been adjusted to conform with the Group’s accounting policies.
Joint arrangements
Under IFRS 11 investments in joint arrangements are classified as either joint operations or joint ventures depending on the contractual
rights and obligations each investor. WEL Networks Limited has assessed the nature of its joint arrangements and determined them to be
joint ventures. Joint ventures are accounted for using the equity method.
Under the equity method of accounting, interests in joint ventures are initially recognised at cost and adjusted thereafter to recognise the
Group’s share of the post-acquisition profits or losses and movements in other comprehensive income. When the Group’s share of losses in a
joint venture equals or exceeds its interests in the joint ventures (which includes any long-term interests that, in substance, form part of the
Group’s net investment in the joint ventures), the Group does not recognise further losses, unless it has incurred obligations or made payments
on behalf of the joint ventures.
Unrealised gains on transactions between the Group and its joint ventures are eliminated to the extent of the Group’s interest in the
joint ventures. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.
Accounting policies of the joint ventures have been changed where necessary to ensure consistency with the policies adopted by the Group.
(d) Changes in ownership interests in subsidiaries without change of control
Transactions with non-controlling interests that do not result in loss of control are accounted for as equity transactions - that is, as
transactions with the owners in their capacity as owners. The difference between fair value of any consideration paid and the relevant
share acquired of the carrying value of net assets of the subsidiary is recorded in equity. Gains or losses on disposal to non-controlling
interests are also recorded in equity.
(e) Joint venture
The interest in Ultrafast Fibre Limited (UFF) is accounted for in the consolidated financial statements using the equity method and
is carried at cost by the parent entity. Under the equity method, the share of profits or losses of the joint venture is recognised in the
Statement of Comprehensive Income, and the share of movements in reserves is recognised in reserves in the Balance Sheet.
Ultrafast Fibre Limited has a reporting date of 30 June 2015.
(f) Entities reporting
The financial statements of the ‘Parent’or ‘Company’are for WEL Networks Limited as a separate legal entity. The consolidated financial
statements of the ‘Consolidated’or ‘Group’entity are for the economic entity comprisingWEL Networks Limited and its subsidiaries.
The Parent and the consolidated entity are designated as profit oriented entities for financial reporting purposes.
(g) Statutory base
WEL Networks Limited is a limited liability company which is domiciled and incorporated in New Zealand. It is registered under the
Companies Act 1993. The financial statements have been prepared in accordance with the requirements of the Financial Reporting
Act 2013 and the Companies Act 1993.
2.2 Foreign currency translation
(a) Functional and presentation currency
Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic
environment in which the entity operates (‘the functional currency’). The consolidated and Parent financial statements are presented in
New Zealand dollars, rounded to the nearest $1,000, which is the Company’s functional and presentation currency.
(b) Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the
transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year end
exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the profit and loss component of the
statements of comprehensive income, except when deferred in equity as qualifying cash flow hedges in which case, they are recognised in
other comprehensive income.
