2011 Annual Report - Italcementi Group

2011 Annual Report
Presentation 4
General information 15
Annual Report Consolidated Annual Report Directors’ report 150
Extraordinary session Italcementi S.p.A. Annual Report Separate financial statements 239
of the equity investment. The original cost is restored in subsequent periods if the grounds for the adjustments
no longer exist. Adjustments and any restatements of value are charged to the income statement.
Joint ventures
Joint ventures are companies whose business operations are controlled by the company jointly with one or
more other parties, under contractual arrangements. Joint control presupposes that strategic, financial and
management decisions are taken with the unanimous consent of the parties that control the venture.
Interests in joint ventures are measured on a cost basis and, as with investments in subsidiaries and
associates, this amount is subjected to periodic impairment testing.
They are included in investments in subsidiaries or associates as from the date on which joint control is
assumed and until such control is relinquished.
1.5. Business combinations
On first-time adoption of the IFRS, as allowed by IFRS 1, the company elected not to apply IFRS 3
retrospectively to business combinations that took place before January 1, 2004.
Until December 31, 2009, business combinations were accounted for with the purchase method in IFRS 3.
Since January 1, 2010, business combinations have been accounted for with the acquisition method in IFRS3
revised.
Cost of business combinations
Under IFRS 3 revised, acquisition cost is the sum of the acquisition-date fair value of the contingent
consideration and the amount of any non-controlling interests in the acquired entity. For each business
combination, any non-controlling interests in the acquired entity must be measured at fair value or in proportion
to their interest in the identifiable net assets of the acquired entity.
IFRS 3 revised provides that costs relating to the acquisition be expensed in the periods in which they are
incurred and the services are received. Any costs incurred in 2009 relating to business combinations in 2010
were expensed in 2009.
Allocation of the cost of business combinations
Goodwill is measured as the positive difference between:
- the aggregate of the consideration transferred, the amount of any non-controlling interests in the acquired
entity, the acquisition-date fair value of the acquirer’s previously held equity interest in the acquired entity,
with respect to
- the net amount at the acquisition date of identifiable assets acquired and liabilities assumed.
If the difference is negative, it is recognized in the income statement.
If on initial recognition the acquisition cost of a business combination can only be determined provisionally, the
allocated amounts are adjusted within twelve months of the acquisition date (measurement period).
1.6. Translation of foreign currency items
Foreign currency transactions
Foreign currency transactions are initially translated to the functional currency using the exchange rate at the
transaction date. At the reporting date, foreign currency monetary assets and liabilities are translated to the
functional currency at the closing rate. Exchange rate gains and losses are taken to the income statement.
Non-monetary foreign currency assets and liabilities measured at cost are translated at the exchange rate
ruling at the transaction date; those measured at fair value are translated with the exchange rate at the date
fair value was determined.
249
www.italcementigroup.com