Consolidated financial statement

Consolidation principles and summary of significant accounting standards


Scope of consolidation

The Consolidated Financial Statements contain line-by-line consolidation of data pertaining to ERG S.p.A., the Parent company, and the subsidiaries either directly or indirectly controlled by ERG S.p.A. Such control exists when the Group has the power to determine the financial and operational policies of a company for the purpose of obtaining benefits from its activities.

Subsidiary companies are consolidated commencing on the date when the Group effectively obtained control and cease to be consolidated from the date when control is transferred outside the Group.

Associates, where ERG S.p.A. has significant influence, and joint ventures, where it exercises joint control over financial and operational strategy, are measured under the equity method of accounting. The Group's share of profits or losses is recognised starting on the date when the significant influence commenced and up to the date when it ceased.

Should the Group's share of the losses incurred by an associate exceed the carrying value of the investment shown in the Consolidated Statement of Financial Position, after writing off the carrying value a provision is recognised for the Group's share of the losses to the extent that the Group has legal or constructive obligations to cover the losses of the associate or, in any event, to make payments on its behalf or in relation to its scope of activity.

No companies were consolidated using the proportional method.

Investments in consolidated companies

The financial statements of subsidiaries used for consolidation purposes were drawn up as of 31 December 2013 based on the same accounting principles and policies adopted by the Group.

All financial statements of the companies consolidated line by line are expressed in Euros. When preparing the Consolidated Financial Statements, the assets, liabilities, revenues and costs of the consolidated companies are included line by line for their full amount, attributing to minority shareholders, under separate headings of the Consolidated Statement of Financial Position and income statement, their portion of shareholders' equity and profit or loss for the year. The portion of shareholders' equity pertaining to minority interests is calculated on the basis of the fair values attributed to assets and liabilities at the date control was acquired, excluding any goodwill allocable to them.

The carrying value of investments is eliminated against the corresponding portion of shareholders' equity of the investee companies, attributing to individual assets and liabilities their fair values as of the date control was acquired. Any residual difference, if positive, is recognised as "Goodwill"; if negative, it is recognised in the Consolidated Income Statement as prescribed by IFRS 3 (Business Combinations).

Intra-group transactions 

Application of the "line-by-line" method, aimed at eliminating the effects of all intra-group transactions on the Consolidated Statement of Financial Position and income statement, results in elimination of reciprocal receivables and payables among the companies included in the scope of consolidation, as well as revenues and costs, income and expenses, gains and losses, if significant, originating from sales of products and assets.


Translation of financial statements drawn up in currencies other than the Euro 

 ERG's Consolidated Financial Statements have been drawn up in Euros, which is the functional currency of ERG S.p.A. and of all companies included in the scope of consolidation.

Financial statements of the companies measured under the equity method of accounting that are expressed in currencies other than the Euro are translated into Euros by applying the year-end currency exchange rate to individual items in the statement of financial position.

Foreign currency exchange differences resulting from the translation of initial shareholders' equity items at year-end rates, compared with those in force at the end of the previous year, are charged directly to consolidated shareholders' equity.

ERG S.p.A. - Genova

Paolo Merli

Head of Corporate Finance & Investor Relations

0039 010 2401376

ERG S.p.A. - Genova

Matteo Bagnara

Investor Relations

0039 010 2401423

ir@erg.it


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