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CONSOLIDATED FINANCIAL REPORT | EXPLANATORY NOTES
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In compliance with IAS 32, put options over non-controlling interests in 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 the fair value measurement of the option exercise price. In
addition to the presence of this indicator, the Group will assess 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 measurement 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.
There are currently no instances of this kind in the Prysmian Group financial statements. The treatment
described would be modified in the event of different interpretations or accounting standards in this regard.
Associates and joint arrangements: joint ventures and joint operations
Associates are those entities over which the Group has significant influence, generally accompanying a
shareholding of between 20% and 50% of the voting rights. Investments in associates are accounted for
using the equity method and are initially recorded at cost.
Joint arrangements are arrangements in which two or more parties have joint control. They are classified as
either joint ventures or joint operations depending on the rights and obligations of the parties to the
arrangement.
Joint ventures are those companies characterised by the presence of an arrangement for joint control
whereby the parties are entitled to a share of the net assets or profit or loss arising from the arrangement.
Joint ventures are accounted for using the equity method.
Joint operations are arrangements whereby the parties that have joint control of the arrangement have rights
to the assets and obligations for the liabilities relating to the arrangement. The assets, liabilities, revenues
and expenses of a joint operation are consolidated according to the rights and obligations under the related
arrangement.
Under the equity method, used to account for associates and joint ventures:
the book value of these investments reflects the value of equity as adjusted, where necessary, to
reflect the application of IFRS and includes any higher values identified on acquisition attributed to
assets, liabilities and any goodwill;
the Group's share of profits or losses is recognised from the date significant influence is acquired
until the date it ceases. If a company accounted for under this method has negative equity due to