161
B.2
BASIS OF CONSOLIDATION
The financial statements consolidated for Group subsidiaries
have been prepared for the year ended 31 December 2012 and
the year ended 31 December 2011. They have been adjusted,
where necessary, to bring them into line with Group accounting
policies and standards.
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 to the date such control ceases.
Control is determined when the parent directly or indirectly
owns the majority of an investee’s voting rights or is able to
exercise dominant influence, which is the power to govern,
including indirectly under a statute or an agreement, the
financial and operating policies of investees so as to obtain
the resulting benefits, even irrespective of the ownership
interest held.
When determining control, the existence of potential voting
rights exercisable at the reporting date is also taken into
consideration.
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 consolidated
entities are aggregated line-by-line and non-controlling
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, from
transactions carried out between companies consolidated
on a line-by-line basis and which have not yet been realised
with third parties, are eliminated; 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
liabilities 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 correctly
measured;
• if non-controlling interests are acquired in entities which
are already under the Group’s control, the Group recognises
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 consideration 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.
