Subsidiaries

Subsidiaries

The basis of consolidation includes the Parent Company, ACEA S.p.A., and the companies over which it directly or indirectly exercises control via a majority of the voting rights.

Subsidiaries are consolidated from the date on which control is effectively transferred to the Group and are deconsolidated from the date on which control is transferred out of the Group. Where there is loss of control of a consolidated company, the consolidated financial statements include the results for the part of the reporting period in which the ACEA Group had control.

 

Joint ventures

A joint venture is a contractual arrangement in which the Group and other parties jointly undertake a business activity, i.e. the contractually agreed sharing of control whereby the strategic, financial and operating policy decisions can only be adopted with unanimous consent of the parties sharing control. The consolidated financial statements include the Group’s share of the income and expenses of jointly controlled entities, accounted for under proportionate consolidation. The application of proportionate consolidation thus means that the consolidated financial statements include the Group’s share of all the jointly controlled entities’ assets, liabilities, income and expenses, classified according to their nature. When a Group company operates directly through joint venture arrangements, the liabilities and costs incurred directly with respect to the jointly controlled activities are recognised on an accrual basis. The share of profits deriving from the sale or use of resources produced by the joint venture, net of the related share of expenses, is recognised when it is likely that the economic benefits deriving from the transaction will be received by the Group and their value can be reliably measured.

Where joint venture agreements involve the establishment of a separate entity, the Group’s share of the jointly controlled entities’ assets, liabilities, costs and revenue is combined with similar items in its consolidated financial statements on a line-by-line basis. Unrealised profits and losses on transactions between the Group and a jointly controlled entity are eliminated to the extent of the Group’s interest in that entity, unless the unrealised losses provide evidence of impairment of the asset transferred.

 

Associates

An associate is a company over which the Group exercises significant influence, but not control or joint control, through its power to participate in the financial and operating policy decisions of the associate. The consolidated financial statements include the Group’s share of the results of associates carried at equity, unless they are classified as held for sale, from the date it begins to exert significant influence until the date it ceases to exert such influence.

When the Group’s share of an associate’s losses exceeds the carrying amount of the investment, the interest is reduced to zero and any additional losses covered from provisions to the extent that the Group has legal or implicit loss cover obligations to the associate or in any event to make payments on its behalf. Any excess of the cost of the acquisition over the Group’s interest in the fair value of the associate’s identifiable assets, liabilities and contingent liabilities at the date of the acquisition is recognised as goodwill. Goodwill is included in the carrying amount of the investment and subject to impairment tests. Where the cost of acquisition is lower than the Group’s interest in the fair value of the associate’s assets, liabilities and contingent liabilities identifiable at the date of acquisition is recognised in the income statement in the period of acquisition.

Unrealised profits and losses on transactions between the Group and an associate are eliminated to the extent of the Group’s interest in the associate, unless the unrealised losses provide evidence of an impairment of the asset transferred.