LensCrafters 2013 Annual Report Download - page 100

In addition, certain prior year comparative information in the financial statements has been revised to conform
to the current year presentation. The revision relates to the reclassification of the warehouse and freight-in shipping
expenses of certain subsidiaries of the Company from operating expenses, primarily general and administrative
expenses, to cost of sales. The Company has determined that the revision, totaling Euro 56.9 million in 2012, is
immaterial to the previously reported financial statements and it does not impact any of the key Group’s financial
indicators.
These consolidated financial statements are composed of a consolidated statement of income, a consolidated
statement of comprehensive income, a consolidated statement of financial position, a consolidated statement of cash
flows, a consolidated statement of changes in equity and related notes to the Consolidated Financial Statements.
The Company’s reporting currency for the presentation of the consolidated financial statements is the Euro.
Unless otherwise specified, the figures in the statements and within these Notes to the Consolidated Financial
Statements are expressed in thousands of Euro.
The Company presents its consolidated statement of income using the function of expense method. The
Company presents current and non-current assets and current and non-current liabilities as separate classifications in its
consolidated statements of financial position. This presentation of the consolidated statement of income and of the
consolidated statement of financial position is believed to provide the most relevant information. The consolidated
statement of cash flows was prepared and presented utilizing the indirect method.
The financial statements were prepared using the historical cost convention, with the exception of certain
financial assets and liabilities for which measurement at fair value is required.
The consolidated financial statements have been prepared on a going concern basis. Management believes that
there are no financial or other indicators presenting material uncertainties that may cast significant doubt upon the
Group’s ability to meet its obligations in the foreseeable future and in particular in the next 12 months.
1. CONSOLIDATION PRINCIPLES, COMPOSITION OF THE GROUP AND SIGNIFICANT
ACCOUNTING POLICIES
CONSOLIDATION PRINCIPLES
Subsidiaries
Subsidiaries are any entities over which the Group has control. The Group controls an entity when the Group is
exposed to, or has the rights to, variable returns from its involvement with the entity and has the ability to affect those
returns through its power over the entity. Power is generally presumed with an ownership of more than one-half of the
voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible are
considered when assessing whether the Group controls another entity. Subsidiaries are fully consolidated from the date
on which control is transferred to the Group. They are deconsolidated from the date that control ceases.
The Group uses the acquisition method of accounting to account for business combinations. The consideration
transferred for the acquisition of a subsidiary is measured as the fair value of the assets transferred, the liabilities
incurred and the equity interests issued by the Group. The consideration transferred includes the fair value of any asset
or liability resulting from a contingent consideration arrangement. Acquisition-related costs are expensed as incurred.
Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured
initially at their fair values at the acquisition date. On an acquisition-by-acquisition basis, the Group recognizes any
non-controlling interest in the acquiree at either fair value or the non-controlling interest’s proportionate share of the
acquiree’s net assets.
The excess of the consideration transferred, the amount of any non-controlling interest in the acquiree and the
acquisition date fair value of any previous equity interest in the acquiree over the fair value of the Group’s share of the
identifiable net assets acquired is recorded as goodwill. If this is less than the fair value of the net assets of the
subsidiary acquired in the case of a bargain purchase, the Group makes a new assessment of the net assets acquired and
any residual difference is recognized directly in the consolidated statement of income.
In business combinations achieved in stages, the Group remeasures its previously held equity interest in the
acquiree at its acquisition date fair value and recognizes the resulting gain or loss, if any, in operating income reflecting
the Group’s strategy to continue growing through acquisitions.