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FINANCIAL STATEMENTS
6
CONSOLIDATED FINANCIAL STATEMENTS
Basis of consolidation
FULLY-CONSOLIDATED SUBSIDIARIES
Companies over which the Group exercises control are consolidated.
IFRS 10 has introduced a single model of control based on three criteria:
“an investor controls an investee when the investor is exposed, or has
rights, to variable returns from its involvement with the investee and has
the ability to affect those returns through its power over the investee”.
Previously, control was defined in IAS 27 as the power to govern the
financial and operating policies of an entity so as to obtain benefits
from its activities.
Assets, liabilities, income and expenses of consolidated subsidiaries
are included in the consolidated financial statements from the date on
which control is transferred to the Group until the date the Group ceases
to control the subsidiary. All inter-company transactions and balances
are eliminated on consolidation. Non-controlling interests are presented
separately in the financial statements.
JOINT VENTURES AND JOINT OPERATIONS
Joint arrangements are classified into two types: joint ventures and
joint operations. The Group determines the type of joint arrangement
in which it is involved by considering its rights and obligations in the
arrangement, assessed based on the structure and legal form of the
arrangement, the contractual terms agreed to by the parties to the
arrangement and, when relevant, other facts and circumstances.
A joint venture is a joint arrangement whereby the parties with joint
control (“joint venturers”) have rights to the net assets of the arrangement.
A joint operation is a joint arrangement whereby the parties with joint
control (“joint operators”) have rights to the assets and obligations for
the liabilities of the arrangement.
Joint arrangements that qualify as joint ventures are accounted for using
the equity method (equity-accounted investees).
For joint operations, each of the joint operators must recognise the assets
and the liabilities (and income and expenses) relating to its interest in
the joint operation.
Translation of foreign companies’ financial statements
and foreign-currency denominated transactions
FUNCTIONAL CURRENCY AND PRESENTATION CURRENCY
Items included in the financial statements of each of the Group’s entities
are measured using the currency of the primary economic environment
in which the entity operates,
i.e.
in which the entity mainly generates
and expends cash. This currency is called the “functional currency”.
The consolidated financial statements are presented in euros, which is
the Group’s presentation currency.
TRANSACTIONS AND BALANCES
Foreign-currency transactions are translated into the functional currency
using the exchange rates prevailing at the dates of the transactions.
Foreign exchange gains and losses resulting from the settlement of such
transactions and from the translation at year-end exchange rates of
monetary assets and liabilities denominated in foreign currencies are
recognised in the income statement, except when included in other
comprehensive income as the effective portion of qualifying cash flow
hedges and qualifying net investment hedges.
TRANSLATION OF FINANCIAL STATEMENTS OF SUBSIDIARIES
The financial statements of foreign subsidiaries whose functional currency
is not the euro are translated into euros as follows:
●
assets and liabilities for each balance sheet presented are translated
at the closing rate at the date of that balance sheet;
●
income and expenses for each income statement presented are
translated at average exchange rates, with this average representing
a reasonable approximation of the cumulative effect of the rates
prevailing on the transaction dates (except in the event of significant
exchange rate fluctuations).
All resulting exchange differences are recognised in other comprehensive
income in a separate line.
Goodwill arising on the acquisition of a foreign entity is recognised in
the entity’s functional currency and translated into euros at the closing
rate.
Business combinations
Business combinations which occurred between 1 January 2004
and 31 December 2009 were recognised in accordance with the
requirements of the previous version of IFRS 3.
Since 1 January 2010, business combinations have been recognised
based on the requirements of the revised version of IFRS 3 (IFRS 3R).
In accordance with IFRS 3R, when an entity over which the Group
exercises exclusive control is consolidated for the first time:
●
the identifiable assets acquired and liabilities assumed are measured
at fair value on the date when control is transferred to the Group.
When the Group acquires a business, it assesses the assets and
liabilities (including client contracts and portfolios) for appropriate
classification and designation
●
any non-controlling interest in the acquiree is recognised on an
acquisition-by-acquisition basis, either at fair value or at the non-
controlling interest’s proportionate share of the recognised amounts
of the identifiable net assets of the acquiree.
ASSYSTEM
FINANCIAL REPORT
2015
81