Consolidated Financial Statements >
CONSOLIDATED FINANCIAL STATEMENTS AND EXPLANATORY NOTES
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| 2012 annual report prysmian group
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
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 for any new
interpretations or accounting standards in this regard.
Associates
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. Under the equity method:
• 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 valued under this method has negative
equity due to losses, the book value of the investment is
reduced to zero and additional losses are provided for and
a liability is recognised, only to the extent that the Group is
committed to fulfilling legal or constructive obligations of
the investee company; changes in the equity of companies
valued under the equity method which are not accounted for
through profit or loss, are recognised directly in equity;
• unrealised gains generated on transactions between
the Parent Company/subsidiaries and equity-accounted
companies, are eliminated to the extent of the Group’s
interest in the investee company; unrealised losses are also
eliminated unless they represent impairment.
Joint ventures
A joint venture is a company characterised by a contractual
arrangement between the participating parties which
establishes joint control over the company’s economic activity.
Joint venture companies are consolidated on a proportionate
basis.
Under the proportionate consolidation method adopted by the
Company, its share of the joint venture’s assets and liabilities
are consolidated proportionately on a line-by-line basis. The
Company’s consolidated income statement reflects a line-by-
line aggregation of its share of the joint venture’s income and
expenses. The procedures described above for the consolidation
of subsidiaries also apply to proportionate consolidation.
