Page 42 - CODIC Rapport Annuel 2014/2015

6. Accounting principles

Significant accounting principles

1. BASIS OF PREPARATION
The consolidated financial statements are presented in thousands of euros and rounded to the nearest thousand
(except where otherwise indicated).
They have been prepared on the basis of historical cost, with the exception of derivative financial instruments,
which are recognised at fair value in accordance with IAS 39 – Financial Instruments: Recognition and Measurement.

2. CONSOLIDATION
These consolidated financial statements comprise the financial statements of the Company and its subsidiaries
and interests in joint ventures.
The scope of consolidation is shown in note 5* relating to the structure of the Group.

2.1. Subsidiaries
These consolidated financial statements include the financial statements of the Company and the financial
statements of the entities (including structured entities) that it controls and its subsidiaries. The Company has
control when it:

• holds power over the issuing entity;
• is exposed, or has the right, to variable returns, on account of its ties with the issuing entity;
• is capable of exercising its power in a way that influences the amount of returns that it obtains.

The Company must re-assess whether it controls the issuing entity when facts and circumstances indicate that
one or more of the three control factors listed above have changed.
The financial statements of the subsidiaries are fully consolidated. Subsidiaries’ financial statements are
consolidated from the date on which control is transferred to the group until the date that control ceases.
Intra-group transactions, balances, revenues and expenses are entirely eliminated on consolidation.
The portion of equity not held by the Group constitutes non-controlling interests. These interests are presented
separately within consolidated equity.
Non-controlling interests are measured initially either at fair value or for the proportional part of the non-
controlling interest recognised in the identifiable net assets of the acquiree. The choice of basis of valuation is
made transaction by transaction. After acquisition, the carrying amount of the non-controlling interests is the
initial value of these interests adjusted by their proportional share in the subsequent changes in equity. The
overall result is attributed to the non-controlling interests even if that leads to a negative balance.
Changes in Group interests in subsidiaries that do not result in loss of control are recognised as equity transactions.
Consequently, any difference between the amount of the adjustment in non-controlling interests and the fair
value of the consideration paid or received is recognised directly in equity.
When the Group loses control of a subsidiary, the net result is calculated as the difference between i) the sum of
the fair value of the consideration received and the fair value of any retained interest and ii) the carrying amount of
the assets (including goodwill) and the liabilities of the subsidiary as well as of any non-controlling interest. The fair
value of any retained interest in a former subsidiary is the initial carrying amount of this interest for the purposes
of subsequently accounting for it as a financial asset (IAS 39), an associate (IAS 28) or a joint venture (IAS 31).

2.2. Joint ventures
A joint venture is a contractual agreement whereby the Group and one or more other parties agree to carry
on an economic activity under their joint control, which implies that strategic financial and operating decisions
require the unanimous consent of the parties sharing control.
Since 1 January 2014, interests in entities jointly controlled by the Group, which were previously consolidated
using the proportional method, have been included in the consolidated financial statements using the equity
method. According to the latter, the contribution made by joint ventures is now visible on a specific line of the
balance sheet and of the consolidated statement of comprehensive income. The transition to IFRS 11 has not
had any impact on the net result or on the equity.
A joint undertaking is a partnership where the parties exercising joint control over the undertaking have rights
over its assets and obligations regarding its liabilities. Joint control means the contractually agreed sharing

40 Codic Annual Report 2014/2015