IAS 28 para 24, joint venture becomes associate, no remeasurement of retained interest

Serco Group plc – Annual report – 31 December 2016

Industry: support services

  1. Joint ventures and associates (extract)

The Group has certain arrangements where control is shared equally with one or more parties and accounts for these arrangements as joint ventures. AWE Management Limited (AWEML) was formerly a joint venture but in August 2016 there was a change in the AWEML shareholding structure, with the Group’s shareholding reducing from 33.3% to 24.5% by way of a return of shares and Lockheed Martin taking a majority holding. The Group was compensated for the reduction in share ownership of 8.8% through receipt of a dividend of the same amount which existed at the date of reduction. Subsequent to the change in share ownership AWEML has been accounted for as an associate as we continue to have significant influence, and therefore continue to account for the investment through equity accounting. The remainder of the arrangements are each a separate legal entity and legal ownership and control are equal with all other parties, there are no significant judgements required.