135 348
135
B.2 BASIS OF CONSOLIDATION
The financial statements of Group operating companies used
for consolidation purposes have been prepared for the year
ended 31 December 2014 and the year ended 31 December
2013. They have been adjusted, where necessary, to bring
them into line with Group accounting policies and standards.
All the financial statements of companies included in the con-
solidation end their financial year at 31 December, except for
Yangtze Optical Fibre and Cable Joint Stock Limited Company,
consolidated using the equity method, which, following its
listing on the Hong Kong Stock Exchange, has published its
figures for the first nine months of 2014. These figures have
been combined with this company’s estimated results for the
last quarter of the year.
Subsidiaries
The Group consolidated financial statements include the
financial statements of Prysmian S.p.A. (the Parent Company)
and the subsidiaries over which the Parent Company exercises
direct or indirect control. Subsidiaries are consolidated from
the date control is acquired until the date such control ceases.
Control is connected with the ongoing existence of all the
following conditions:
• power over the investee;
• the possibility of achieving a return resulting from
ownership of the investment;
• the investor’s ability to use its power over the investee to
affect the amount of its return.
The existence of potential voting rights exercisable at
the reporting date is also taken into consideration for the
purposes of determining control.
Subsidiaries are consolidated on a line-by-line basis. The
criteria adopted for line-by-line consolidation are as follows:
• assets and liabilities, expenses and income of consolida-
ted entities are aggregated line-by-line and non-control-
ling interests are allocated, where applicable, the relevant
portions of equity and profit for the period, which are then
reported separately within equity and the consolidated
income statement;
• gains and losses, including the relevant tax effect, arising
from transactions between consolidated companies are
eliminated if not realised with third parties; unrealised
losses are not eliminated if there is evidence that the
asset transferred is impaired. The following are also
eliminated: intercompany payables and receivables,
intercompany expenses and income, and intercompany
finance income and costs;
• business combinations through which control of an entity
is acquired are recorded using the acquisition method
of accounting. The acquisition cost is measured as the
acquisition-date fair value of the assets acquired, the lia-
bilities incurred or assumed and the equity instruments
issued. The assets, liabilities and contingent liabilities
acquired are recognised at their acquisition-date fair
values. The excess of acquisition cost over the fair
value of the Group’s share of the identifiable net assets
acquired is recorded as goodwill under intangible assets.
If the acquisition cost is less than the Group’s share of
the fair value of the identifiable net assets acquired, the
difference is recognised as a gain directly in the income
statement, but only after reassessing that the fair values
of the net assets acquired and the acquisition cost have
been measured correctly;
• if non-controlling interests are acquired in entities which
are already under the Group’s control, the Group recogni-
ses any difference between the acquisition cost and the
related share of net assets acquired directly in equity;
• gains or losses arising on the disposal of ownership
interests that result in a loss of control of consolidated
companies are recognised in the income statement at the
amount equal to the difference between the sale conside-
ration and the corresponding share of consolidated equity
sold;
• gains or losses from the deconsolidation of an investee’s
net assets, resulting from the difference between the
fair value of the equity interest and the corresponding
portion of equity, are recognised in “Finance income” and
“Finance costs” respectively.
In compliance with IAS 32, put options granted to minority
shareholders of subsidiary companies are recognised in
“Other payables” at their present value. The matching entry
differs according to whether:
A. the minority shareholders have a direct interest in the
performance of the subsidiary’s business in relation to
the transfer of the risks and rewards of the shares subject
to the put option. One of the indicators that such interest
exists is fair value measurement of the option exercise
price. In addition to the presence of this indicator, the
Group assesses on a case-by-case basis the facts and
circumstances characterising existing transactions. In
these circumstances, the present value of the option is
initially deducted from the equity reserves attributable
to the Group. Any subsequent changes in the measure-
ment of the option exercise price are recognised through
the income statement, as “Other income” or “Other
expenses”.
B. the minority shareholders do not have a direct interest
in the performance of the business (eg. predetermined
option exercise price). The duly discounted option
exercise price is deducted from the corresponding amount
of capital and reserves attributable to non-controlling
interests. Any subsequent changes in the measurement
of the option exercise price follow the same treatment,
with no impact on the income statement.