Page 83 - Restamax Plc Annual Report 2017

3 ACCOUNTING PRINCIPLES OF THE CONSOLIDATED FINANCIAL

STATEMENTS

Consolidation principles generated profit or loss is recorded. When the Group loses its
controlling interest in a subsidiary, the remaining portion is
Subsidiaries are companies where the Group has a control- measured at fair value on the date of the loss of control, and
ling interest. Control is created when the Group, through the difference is recorded through profit or loss.
involvement in the entity, is exposed to the entity’s variable
returns or is entitled to them, and can influence these Associated companies are companies where the Group
returns by exercising its power on the entity. exercises a significant influence over the voting rights. A
significant influence is mainly generated when the Group
The acquisition method has been used to eliminate mutual owns over 20 per cent of the company’s voting rights, or
share ownership between the Group’s companies. Subsidi- when the Group exercises a significant influence but does
aries are consolidated into the consolidated financial not have a controlling interest. Associated companies are
statements starting from the date when control is trans- consolidated into the consolidated financial statements
ferred to the Group; assigned subsidiaries are retained in using the equity method. If the Group’s share of the losses
the consolidated financial statements until the date when of an associated company exceeds the book value of the
control ceases to exist. The amount by which the acquisi- investment, the investment is recorded at zero value on
tion cost exceeds the Group’s share of the fair value of the the balance sheet; losses exceeding the book value are not
purchased net identifiable assets is recorded as goodwill. consolidated unless the Group is committed to fulfilling the
If the acquisition cost is lower than the net assets of the liabilities of the associated company. Any investment in
acquired subsidiary, the difference is marked as income in an associated company includes the goodwill accrued from
the income statement. its acquisition. Unrealised gains between the Group and
an associated company have been eliminated in accord-
Acquisition-related expenditure, excluding the expendi- ance with the Group’s holding. The portion of the associ-
ture from issuing current liability and equity convertible ated companies’ income from the financial period corre-
securities, has been recorded as expense. Any conditional sponding to the Group’s holding is presented as a separate
additional purchase price has been measured at fair value item after operating profit. Correspondingly, the Group’s
at the moment of acquisition, and has been classified as share of the changes recorded in the other items of the
liability or equity. Additional purchase price classified as associated company’s comprehensive income is entered in
liability is measured at fair value on each closing date, and the other items of the Group’s comprehensive income.
the generated profit or loss is recorded through profit or
loss. Additional purchase price classified as equity is not The consolidated financial statements include the parent
re-measured. Any non-controlling interests in the object company Restamax Plc and its subsidiaries with their
acquired are measured at either fair value or an amount subsidiaries. The subsidiaries and associated companies
corresponding to the proportion of the non-controlling consolidated into the consolidated financial statements are
interests in the net identifiable assets of the object acquired. itemised in note 31.
The measurement principle is defined separately for each
business acquisition. Segment reporting

Intragroup transactions, receivables and payables as well The Group’s operating segments, which are also reported
as unrealised gains are eliminated when drawing up the segments, are the Group’s strategic business units: restau-
consolidated financial statements. Unrealised losses are rants and labour hire. These business units produce different
not eliminated if the loss is caused by impairment. Where products and services and they are managed as separate
necessary, the accounting principles of the financial state- units, since their business requires applying a different
ments of subsidiaries have been amended to correspond to strategy. The Group’s Executive Team has been named as
those of the Group. the top operative decision-maker responsible for resource
allocation and income estimates. The Group operates solely
The distribution of the profit or loss for the financial period on the domestic market.
between the owners of the parent company and the minority
shareholders is presented in the income statement. The The segment information presented by the Group is based
distribution of the comprehensive income between the on the management’s internal reporting that is prepared in
owners of the parent company and the minority share- accordance with the IFRS standards. The pricing between
holders is presented together with the comprehensive segments is based on a fair market price. The Group’s assets
income statement. Comprehensive income is directed and liabilities are not focused or monitored per segment in
at minority shareholders, even if this would lead to the internal financial reporting.
non-controlling interest becoming negative. The portion
of equity belonging to minority shareholders is presented The Group’s evaluation of profitability and decisions
as a separate item on the balance sheet, as part of equity. concerning the resources to be allocated to a segment are
Changes to the parent company’s holding in a subsidiary based on the segments’ EBITDA. It is the understanding of
that will not lead to a loss of control are recorded as trans- the management that this is the most suitable benchmark
actions concerning equity. If an acquisition is completed in for comparing the profitability of the segments to other
stages, the earlier holding is measured at fair value, and the companies in their respective fields.

CONSOLIDATED FINANCIAL STATEMENTS 83