Business combinations are accounted for using the acquisition method:
Acquisition costs are recognized as an expense when incurred and are recorded under “Other operating costs” in the consolidated income statement.
Any earn-out commitments on business combinations are recognized at fair value on the acquisition date and on each reporting date. At the end of the allocation period for the acquisition price, which is no later than one year after the acquisition date, any changes in fair value are recorded in income. Within this allocation period, any changes in this fair value explicitly linked to events subsequent to the acquisition date are also recognized in income. Other changes are recognized as an offset to goodwill.
At the acquisition date, goodwill represents the difference between:
Although deferred tax assets were not recognized at the acquisition date because their recoverability was uncertain, any subsequent recognition or utilization of these deferred taxes after the allocation period will be recorded as an offset to income (i.e. with no impact on the amount recorded as goodwill).
Subsequently, goodwill is measured at cost less accumulated impairment losses. Impairment losses are recognized immediately in profit or loss and are irreversible in accordance with IAS 36.
Commitments to buy out non-controlling interests made at the time of a business combination
Pending an IFRIC interpretation or a specific IFRS standard on this matter, the following accounting treatment has been adopted in accordance with currently applicable IFRS standards and the AMF recommendation:
Step acquisition resulting in control of a previously equity-accounted investee
The step acquisition leads to the consolidation of the subsidiary as of date control is obtained. The previously held equity interest remeasured at fair value and any difference between the fair value and carrying value, if any, is recognized through profit or loss at the time of the acquisition.
Additional interest in subsidiaries
When the Groupe acquires additional interest in a subsidiary while maintaining control, any difference between the fair value of the consideration paid and the carrying amount of the non-controlling interest acquired is recognized directly in equity attributable to holders of the Company. The consolidated value of the subsidiary’s identifiable assets and liabilities, including goodwill, remains unchanged.
In the statement of cash flows, the transaction is presented as net cash flows relating to financing activities.
Reduction in interest in a subsidiary without loss of control
In the event of a reduction of the Groupe’s interest in a subsidiary without loss of control, the difference between the fair value of the consideration received and the carrying amount of the non-controlling interest sold is recognized in equity attributable to holders of the Company. The consolidated value of the subsidiary’s identifiable assets and liabilities, including goodwill, remains unchanged.
In the statement of cash flows, the transaction is presented as net cash flows relating to financing activities.
Loss of control
When the Groupe loses control over a subsidiary, it derecognizes the assets and liabilities of the subsidiary, and any related non-controlling interests and other components of equity. Any resulting gain or loss is recognized in profit or loss. Any interest retained in the former subsidiary is measured at fair value when control is lost.
