affect those returns through its power over the entity.
Subsidiaries are fully consolidated from the date on which
control is transferred to the Group. They are de-consolidated
from the date on which this control ceases.
All intra-group transactions are eliminated. Intra-group
shareholdings are eliminated using the acquisition method.
The consideration transferred for acquisition of a subsidiary
is defined as an aggregate of the fair values of the assets
transferred, the liabilities assumed and the equity interest
issued by the Group. The consideration transferred may
include the fair value of any asset or liability resulting from
the contingent consideration arrangement. Acquisition-
related costs are expensed as incurred. Identifiable assets
acquired, and liabilities and contingent liabilities that are
assumed in a business combination are measured at their fair
values on the acquisition date. On an acquisition-by-
acquisition basis, the Group recognizes any non-controlling
interest in the acquiree either at fair value or at the non-
controlling interest’s proportionate share of the acquiree’s
net assets.
The amount that exceeds the aggregate of 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
Group’s share of the net assets acquired is recognized as
goodwill in the Balance Sheet. If this is less than the fair value
of the net assets of the subsidiary acquired by bargain
purchase, the difference is recognized directly in the Income
Statement.
Net profit or loss for the financial year and other
comprehensive income attributable to the equity holders of
the parent and non-controlling interests are presented in the
Income Statement and in the Statement of Comprehensive
Income. The portion of equity attributable to non-controlling
interests is stated as an individual item separately from the
equity to the equity holders of the parent company. Total
comprehensive income shows separately the total amounts
attributable to the equity holders of the parent company and
to non-controlling interests. The Group recognizes negative
non-controlling interests, unless the non-controlling interest
does not have a binding obligation to cover the losses up to
the amount of their investment.
If the parent company’s ownership interest in the subsidiary
is reduced but control is retained, then the transactions are
treated as equity transactions. When the Group ceases to
have control or significant influence, any retained interest in
the entity is remeasured at its fair value, and the difference is
recognized as profit or loss.
ASSOCIATES
Associated companies are companies over which the Group
exercises significant influence (voting rights generally being
20–50 percent), but does not control. Holdings in associated
companies are consolidated using the equity method. If the
Group’s share of the associate’s losses exceeds the carrying
amount of the investment, the exceeding losses will not be
consolidated unless the Group has a commitment to fulfill
the obligations on behalf of the associate. The Group’s share
of the associated companies’ net profit for the financial year
is stated as a separate item in the consolidated Income
Statement in operating profit, in proportion to the Group’s
holdings. The Group’s share of the movements of its
associates in other comprehensive income is recognized in
the Group’s other comprehensive income.
FOREIGN CURRENCY TRANSLATION
Items included in the financial statements of each of the
Group’s entities are measured by using the currency of the
primary economic environment in which the entity operates
(the functional currency). The Consolidated Financial
Statements are presented in euros, which is the Group’s
presentation currency and the parent company’s functional
and presentation currency.
In the Consolidated Financial Statements, the Income
Statements of foreign subsidiaries are translated into EUR
using the financial year’s average foreign currency exchange
rates, and the balance sheets are translated using the
exchange rates quoted on the balance sheet date.
Translating the net profit for the period using different
exchange rates in the Income Statement and in the balance
sheet causes a translation difference recognized as equity on
the Balance Sheet. The change in this translation difference
is presented under Other Comprehensive Income. Goodwill
and fair value adjustments to the carrying amounts of the
assets and liabilities that arise from the acquisition of a
foreign entity are accounted for as part of the assets and
liabilities of the foreign entity, and are translated into EUR at
the rate quoted on the balance sheet date.
Translation differences in the loans granted to some foreign
subsidiaries are treated as an increase or decrease in other
comprehensive income. When the Group ceases to have
control over a subsidiary, the accumulated translation
difference is transferred into the Income Statement as part
of the gain or loss on the sale.
In their day-to-day accounting, the Group companies
translate foreign currency transactions into their functional
currency at the exchange rates quoted on the transaction