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TIH Limited
3
Significant accounting policies (continued)
3.1 Investment entity and basis of consolidation (continued)
(ii) Subsidiaries
Subsidiaries are entities controlled by the Group. The Group controls an entity when it is exposed
to, or has rights to, variable returns from its involvement with the entity and has the ability to affect
those returns through its power over the entity.
The Company holds controlled subsidiary investments which include special purpose entities
(“SPEs”) and a wholly owned subsidiary which provides investment-related services. The SPEs
have no operations and are incorporated for the purpose of holding underlying investments (the
‘portfolio companies’) on behalf of the Company. Consequently, these subsidiary investments are
measured at fair value through profit or loss. The investment in the subsidiary which provides
investment-related services is consolidated from the date the control commences until the date that
control ceases in accordance with FRS 110.
The accounting policies of subsidiaries have been changed when necessary to align them with
the policies adopted by the Group. Losses applicable to the non-controlling interest (“NCI”) in a
subsidiary are allocated to the NCI even if doing so causes the NCI to have a deficit balance.
(iii) Associates
Associates are those entities in which the Group has significant influence, but not control or joint
control, over the financial and operating policies of these entities. Significant influence is presumed
to exist when the Group holds 20% or more of the voting power of another entity.
Investments in associates which are held as part of the Group’s investment portfolio are designated
upon initial recognition as investments at fair value through profit or loss as their performance is
evaluated on a fair value basis. This treatment is permitted by FRS 28 Investments in Associates
(“FRS 28”) which allows investments held by Investment Entities to be recognised and measured
at fair value through profit or loss and accounted for in accordance with FRS 39 Financial
Instruments: Recognition and Measurement (“FRS 39”), with changes in fair value recognised in
the profit or loss in the period of change. In accordance with FRS 39, investments in associates are
accounted for in the same way in the Company’s financial statements.
(iv) Subsidiary in the separate financial statements
Investment in subsidiary that provides investment-related services are stated in the Company’s
statement of financial position at cost less accumulated impairment losses.
3.2 Foreign currency
Foreign currency transactions
Transactions in foreign currencies are translated to the respective functional currencies of Group entities
at exchange rates at the dates of the transactions. Monetary assets and liabilities denominated in foreign
currencies at the end of the reporting period are retranslated to the functional currency at the exchange rate
at that date. The foreign currency gain or loss on monetary items is the difference between amortised cost
in the functional currency at the beginning of the year, adjusted for effective interest and payments during
the year, and the amortised cost in foreign currency translated at the exchange rate at the end of the year.
