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Financial statements

CONSOLIDATED FINANCIAL STATEMENTS

In accordance with IAS27 “Consolidated and Separate Financial Statements”, in assessing whether control exists only potential voting rights that are currently exercisable or convertible are taken into account. No account is taken of potential voting rights that cannot be exercised or converted until a future date or until the occurrence of a future event.

B. Business combinations and loss of control – changes in scope ofconsolidation

Applicable since January1, 2010, IFRS3 (revised) “Business Combinations” and IAS27 (revised) “Consolidated and Separate Financial Statements” have led the Group to alter its accounting treatment of business combinations and transactions with noncontrolling interests carried out on or after this date, as follows:

B.1. Business combinations

Business combinations are accounted for applying the acquisition method:

a the acquisition cost is measured at the acquisition date at the fair value of the consideration transferred, including all contingent consideration. Subsequent changes in contingent consideration are accounted for either through profit or loss or through other comprehensive income;

a identifiable assets and liabilities acquired are measured at fair value. Fair value measurements must be completed within one year or as soon as the necessary information to identify and value the assets and liabilities has been obtained. They are performed in the currency of the acquiree. In subsequent years, these fair value adjustments follow the same accounting treatment as the items to which they relate;

a goodwill is the difference between the consideration transferred and the fair value of the identifiable assets and liabilities assumed at the acquisition date and is recognized as an asset in the balance sheet (see Note C. Goodwill).

Costs related to business combinations are recognized directly as expenses.

When a business combination is achieved in stages, the previously held equity interest is remeasured at fair value at the acquisition date through profit or loss. The attributable other comprehensive income, if any, is fully reclassified in operating income.

B.2. Loss of control with residual equity interest

The loss of control while retaining a residual equity interest may be analyzed as the disposal of a controlling interest followed by the acquisition of a non-controlling interest. This process involves, as of the date when control is lost:

a the recognition of a gain or loss on disposal, comprising:

-a gain or loss resulting from the percentage ownership interest sold,

-a gain or loss resulting from the remeasurement at fair value of the ownership interest retained in the entity;

a the other comprehensive income items are reclassified in the profit or loss resulting from the ownership interest disposed.

B.3. Purchases or disposals of non-controlling interest

Transactions with non-controlling interests in fully consolidated companies that do not result in a loss of control, are now accounted for as equity transactions, with no effect on profit or loss or on other comprehensive income.

B.4. Loss of significant influence while retaining aresidual interest

The loss of significant interest while retaining a residual interest may be analyzed as the disposal of shares accounted for by the equity method followed by the acquisition of a financial asset. This process involves, as of the date of disposal:

a the recognition of a gain or loss on disposal, comprising:

-a gain or loss resulting from the percentage ownership interest sold, and

-a gain or loss resulting from the remeasurement at fair value of the retained percentage ownership interest;

a the reclassification in profit of all of the other comprehensive income items.

C. Goodwill

C.1. Positive goodwill

Goodwill, representing the excess of the cost of a business combination over the Group’s interest in the net fair value of the identifiable assets and liabilities acquired at the acquisition date, is recognized in assets under “Goodwill”. Residual goodwill mainly results from the expected synergies and other benefits arising from the business combination.

In accordance with IFRS3 (revised), which is applicable to business combinations carried out on or after January1, 2010, each time it acquires a less than 100% interest in an entity, the Group must choose whether to recognize goodwill:

a by the full goodwill method (i.e. on a 100% basis): in this case, non-controlling interests are measured at fair value and goodwill attributable to non-controlling interests is recognized in addition to the goodwill recognized on the acquired interest;