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regulated activities. Rate regulation can have a significant impact on the timing and amount of an entity’s
revenue. An entity that already presents IFRS financial statements in not eligible to apply the Standard. The
Standard is effective from 01 January 2016 with early application permitted. The Group/Company will assess
the impact of the Standard in its consolidated/separate financial statements. This Standard has not been
adopted by the European Union yet.
3.2 Consolidation
Subsidiaries:
All the companies that are managed or controlled, directly or indirectly, by another company
(parent) either through the majority of voting rights or through its dependence on the know-how provided from
the Group. Therefore, subsidiaries are companies in which control is exercised by the parent. Mytilineos S.A.
acquires and exercises control through voting rights.
The existence of potential voting rights that are exercisable at the time the financial statements are prepared,
is taken into account in order to determine whether the parent exercises control over the subsidiaries.
Subsidiaries are consolidated completely (full consolidation) using the purchase method from the date that
control over them is acquired and cease to be consolidated from the date that control no longer exists.
The acquisition of a subsidiary by the Group is accounted for using the purchase method. The acquisition
cost of a subsidiary is the fair value of the assets given as consideration, the shares issued and the liabilities
undertaken on the date of the acquisition plus any costs directly associated with the transaction. The individual
assets, liabilities and contingent liabilities that are acquired during a business combination are valued during
the acquisition at their fair values regardless of the participation percentage. The acquisition cost over and
above the fair value of the individual assets acquired is booked as goodwill. If the total cost of the acquisition
is lower than the fair value of the individual assets acquired, the difference is immediately transferred to the
income statement.
Inter-company transactions, balances and unrealized profits from transactions between Group companies are
eliminated in consolidation. Unrealized losses are also eliminated except if the transaction provides indication
of impairment of the transferred asset. The accounting principles of the subsidiaries have been amended so as
to be in conformity to the ones adopted by the Group.
For the accounting of transactions with minority, the Group applies the accounting principle based on which
such transactions are handled as transactions with third parties beyond the Group. The sales towards the
minority create profit and losses for the Group, which are booked in the results. The purchases by the minority
create goodwill, which is the difference between the price paid and the percentage of the book value of the
equity of the subsidiary acquired.
Associates:
Associates are companies on which the Group can exercise significant influence but not “control”
and which do not fulfill the conditions to be classified as subsidiaries or joint ventures. The assumptions used
by the group imply that holding a percentage between 20% and 50% of a company’s voting rights suggests
significant influence on the company. Investments in associates are initially recognized at cost and are
subsequently valued using the Equity method. At the end of each period, the cost of acquisition is increased
by the Group’s share in the associates’ net assets change and is decreased by the dividends received from the
associates.
Any goodwill arising from acquiring associates is contained in the cost of acquisition. Whether any impairment
of this goodwill occurs, this impairment decreases the cost of acquisition by equal charge in the income
statement of the period.
