The consolidated financial statements are presented in euros, which is the Company’s functional currency. Amounts are rounded to the nearest million euros, unless otherwise indicated.
A subsidiary is an entity controlled by the Groupe. Control is exercised when the Groupe is exposed or entitled to the variable returns and provided that it can exercise its power to influence such returns.
Subsidiaries are consolidated as of the time that the Groupe obtains control until the date on which control is transferred to an entity outside the Groupe.
Intra-group balances and transactions arising from transactions between consolidated subsidiaries are eliminated. Similarly, intercompany gains or losses on sales, internal dividends and provisions relating to subsidiaries are eliminated from consolidated results, except in the case of impairment loss.
The Groupe’s interests in equity-accounted investees includes both joint ventures and associates.
A joint venture is a partnership giving the Groupe joint control, under which it has rights to the net assets of the partnership, rather than rights to its assets and obligations for its liabilities.
An associate company is an entity in which the Groupe has significant influence over financial and operating policies without having control or joint control. This situation is generally coupled with a shareholding of between 20% and 50% of voting rights.
The Groupe’s interests in a joint venture or associate company are accounted for using the equity method. They are recognized in the balance sheet at acquisition cost, which includes transaction costs. After initial recognition, the Groupe’s financial statements include the Groupe’s share in the overall income of the equity-accounted investee, until the date on which joint control or significant influence ends. The Groupe’s investment includes the amount of any goodwill, which is treated in accordance with the accounting policy presented in Section 1.3 below.
Gains arising from transactions with equity-accounted investee are eliminated through the offsetting entry for share of profit of equity-accounted investees to the extent of the Groupe’s interest in the investee. Losses are eliminated in the same way as gains, but only to the extent that they do not represent an impairment loss.
The income statement reflects the Groupe’s share of the joint venture or associate’s net income after taxes for the period.
Transactions in foreign currencies are recognized at the exchange rate applicable on the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are translated at the exchange rate applicable at the reporting date. All differences arising are recognized in the income statement, except for differences on loans and borrowings that, in substance, form part of the net investment in a foreign entity. These differences are recognized in equity until such time as the net investment is disposed of, at which time they are recorded in the income statement.
The functional currency of each Groupe entity is the currency of the economic environment in which it operates. The financial statements of subsidiaries located outside the euro zone presented in local currencies are translated into euros, the reporting currency of the consolidated financial statements, in the following manner:
Goodwill and fair value adjustments of assets and liabilities recognized in the context of the acquisition of a foreign entity are expressed in the functional currency of the acquired company and translated at the exchange rate applying at the reporting date.
Changes in the Groupe’s percentage ownership in a subsidiary that do not result in a loss of control are recognized as equity transactions.
