Notes to the financial statements (cont’d) (ii) Non-controlling interests (iii) Subsidiaries (iv) Employee Share Trust (the “Trust”) (v) Investments in associates (equity-accounted  investees) (i) Business combinations For the year ended 30 June 2012 Control of an entity is identified where the Group has the  power to govern the financial and operating policies of that  entity so as to obtain benefits from its activities, generally  accompanying a shareholding of more than half of the voting  rights. In assessing control, the Group takes into consideration  potential voting rights that currently are exercisable. The benefit funds, and any trusts controlled by those funds, are  treated as statutory funds in accordance with the Life Insurance  Act 1995. These statutory funds, in addition to the statutory  funds of the life insurance business conducted by the Group,  are shown separately from shareholder funds in the notes to  the financial statements.  Refer to Note 3(k) Contract classification for information in  relation to the different accounting treatment of investment  contracts with discretionary participating features. Business combinations are accounted for using the acquisition  method as at the acquisition date, which is the date on which  control is transferred to the Group. The Group measures goodwill at the acquisition date as: When the excess is negative, a bargain purchase gain is  recognised immediately in profit or loss. The consideration transferred does not include amounts  related to the settlement of pre-existing relationships. Such  amounts are generally recognised in profit or loss. Costs related to the acquisition, other than those associated  with the issue of debt or equity securities, that the Group  incurs in connection with a business combination are  expensed as incurred. Any contingent consideration payable is recognised at fair  value at the acquisition date. If the contingent consideration  is classified as equity, it is not remeasured and settlement is  accounted for within equity. Otherwise, subsequent changes  to the fair value of the contingent consideration are recognised  in profit or loss. When share-based payment awards (replacement awards) are  required to be exchanged for awards held by the acquiree’s  employees (acquiree’s awards) and relate to past services, then  all or a portion of the amount of the acquiree’s replacement  awards is included in measuring the consideration transferred  in the business combination. This determination is based on  the market-based value of the replacement awards compared  with the market-based value of the acquiree’s awards and the  extent to which the replacement awards relate to past and/or  future service. Acquisitions of non-controlling interests are accounted for  as transactions with owners in their capacity as owners  and therefore no goodwill is recognised as a result of such  transactions. The adjustments to non-controlling interests  are based on a proportionate amount of the net assets of the  subsidiary. Subsidiaries are entities controlled by the Group. The financial  statements of subsidiaries are included in the consolidated  financial statements from the date that control commences  until the date that control ceases.  Losses applicable to the non-controlling interests in a  subsidiary are allocated to the non-controlling interests even if  doing so causes the non-controlling interests to have a deficit  balance. The Group has formed a trust to administer the Group’s  employee share scheme. The trust is consolidated, as the  substance of the relationship is that the trust is controlled by  the Group. Shares held by the Trust are disclosed as treasury  shares and are deducted from share capital. Associates are those entities over which the Group has  significant influence, but not control, over the financial and  operating policies. Significant influence is presumed to exist  when the Group holds between 20 and 50 per cent of the  voting power of another entity.  Investments in its associates are accounted for using the  equity method (equity-accounted investees) and are initially  recognised at cost. The cost of the investment includes  transaction costs. The consolidated financial statements include the Group’s  share of the profit or loss and other comprehensive income,  after adjustments to align the accounting policies with  those of the Group, from the date that significant influence  commences until the date that significant influence ceases.  When the Group’s share of losses exceeds its interest in an  equity accounted investee, the carrying amount of that  page 62 •  the fair value of the consideration transferred; plus •  the recognised amount of any non-controlling interests in  the acquiree; plus •  if the business combination is achieved in stages, the fair  value of the existing equity interest in the acquiree; less •  the net recognised amount (generally fair value) of the  identifiable assets acquired and liabilities assumed.