The method of consolidation adopted for the preparation of the consolidated financial statements is as follows:
a.Consolidation of subsidiary companies’ financial statements according to the line-by-line method, with elimination of the carrying value of the shareholdings held by the Parent Company and other consolidated companies against the relevant shareholders’ equity.
b.When a company is consolidated for the first time, any positive difference emerging from the elimination of its carrying value on the basis indicated in a. above, is allocated, where applicable, to the assets and liabilities of the subsidiary. The excess of the cost of acquisition over the net assets is recorded as "Goodwill and other intangible assets of indefinite useful life". Negative differences are recorded in the statement of income as income.
c.Intercompany receivables and payables, costs and revenues, and all significant transactions between consolidated companies, including the intragroup payment of dividends, are eliminated.
d.Unrealized profits, such as margins included in inventories, and gains and losses arising from intragroup transactions are also eliminated.
e.Minority interests in shareholders’ equity and the result for the period of consolidated subsidiaries are classified separately as "Minority interests" under shareholders’ equity and as “Net income for the year attributable to minority interests” in the consolidated statement of income.
f.The financial statements of foreign subsidiaries are translated into Euro using period-end exchange rates for assets and liabilities and average exchange rates for the period for the statement of income, except for some subsidiaries in
Romania
and
Croatia
whose functional currency differs from the presentation currency and so whose financial statements have been translated in accordance with IAS 21.
Differences arising from the translation into Euro of foreign currency financial statements are reflected directly in consolidated shareholders' equity as a separate component.