Tiscali 2014 Annual Report Download - page 77

Annual financial report as at 31 December 2014
Date
File Name
Status
Page
-
Annual Report as at 31
December 2014
77
If, subsequently, the subsidiary reports profits, the profits attributable to the minority shareholders are
attributable to the shareholders’ equity pertaining to the parent company’s shareholders until the
portion of the losses of the minority shareholders, previously covered by the parent company’s
shareholders, have been recovered.
Equity investments in associated companies, as well as those subject to joint control, are reflected in
the consolidated financial statements among non-current assets and carried at equity, as envisaged,
respectively, by IAS 28 (Investments in associates) and by IFRS 11 (Joint arrangements).
Associated companies are those over which the Group has significant influence, i.e. the power to
participate in the financial and operating policy decisions of the investee, but without control or joint
control however. Under the equity method, equity investments in associates are initially booked to the
statement of financial position at acquisition cost, as adjusted for post-acquisition changes in the
shareholders’ equity of the associate companies, less any impairment in the value of individual equity
investments. Any excess of the cost of acquisition over the Group’s share of the net fair value of
identifiable assets, liabilities and contingent liabilities of the associate at the date of acquisition is
recognised as goodwill. The goodwill is included in the book value of the investment and is subject to
impairment testing. Any excess of the Group’s share of the net fair value of the identifiable assets,
liabilities and contingent liabilities over the cost of acquisition of the associate at the date of acquisition
is booked to the income statement in the financial year of acquisition. The consolidated financial
statements include the Group’s share in the results of the associated companies as well as those
jointly controlled as from the date when significant influence commenced until the moment this
influence ceases to exist. If the Group’s share of the losses of the associated company exceeds the
book value of the equity investment, steps are taken to write off the value of the equity investment and
the portion of the additional losses is only recorded if the Group is obliged to be responsible for them.
Unrealized profits and losses deriving from transactions with associated companies or those jointly
controlled, are eliminated against the value of the Group’s investment in the companies.
With regard to transactions which concern interests in companies which are already subsidiaries, in
the absence of a specific Standard or interpretation on the subject and referring to the provisions
contained in IAS 8 “Accounting policies, changes in accounting estimates and errors”, the Group has
applied the following accounting approaches, identifying two types of transactions:
acquisitions/disposals of interests in companies which are already subsidiaries: in the event
of acquisitions, the Group pays the minority shareholders a cash amount or a consideration
in new shares, thereby resulting in simultaneous elimination of related minority interests
and recording of Goodwill equating to the difference between the purchase cost of the
interests and the book value of the assets and liabilities acquired proportionally; in the event
of disposal, the difference between the transfer value and the corresponding book value in
the consolidated financial statements is recorded in the income statement (so-called Parent
entity extension method);
intragroup transfer of interests in subsidiary companies which lead to a change in the
shareholding: the interests transferred are recorded at historic cost and the gain or loss
emerging from the transfer is reversed in full. The shareholders’ equity of minority
shareholders that do not directly participate in the transaction, is adjusted to reflect the
change with a corresponding opposite effect on the shareholders’ equity pertaining to the
shareholders of the Parent Company without recording any goodwill and without producing
any effect on the result and the total shareholders’ equity.
Changes in the consolidation area
The consolidation area of the Group includes the financial statements of Tiscali S.p.A. (parent
company) and the companies the latter directly or indirectly controls starting from the date on which it