registration document France Telecom 2009 - Orange.com

financial information concerning the issuer’s assets and liabilities, financial position and profits and losses
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CONSOLIDATED STATEMENTS
outstanding during the year. Diluted earnings per share are
calculated based on earnings per share attributable to the
equity holders of France Telecom S.A., adjusted for the fi nance
cost of dilutive debt instruments and their impact on employee
profi t-sharing, net of the related tax effect. The number of
shares used to calculate diluted earnings per share takes into
account the conversion into ordinary shares of potentially dilutive
instruments outstanding during the period. When earnings per
share are negative, diluted earnings per share are identical to
basic earnings per share. In the event of an issuance of shares
at a price lower than the market price, and in order to ensure
comparability of earnings per share information, the weighted
average numbers of shares outstanding from current and
previous periods are adjusted. Treasury shares deducted from
consolidated equity are not taken into account in the calculation
of basic or diluted earnings per share.
2.3 Consolidation rules
Subsidiaries that are controlled exclusively by the Group, directly
or indirectly, are fully consolidated. Control is deemed to exist
when the Group owns more than 50% of the voting rights of an
entity or has power:
■ over more than one half of the voting rights of the other entity
by virtue of an agreement;
■ to govern the fi nancial and operating policies of the other
entity under a statute or agreement;
■ to appoint or remove the majority of the Members of the
Board of Directors or equivalent governing body of the other
entity; or
■ to cast the majority of votes at meetings of the Board of
Directors or equivalent governing body of the other entity.
Companies that are controlled jointly by the Group and a limited
number of other shareholders are proportionally consolidated;
if these companies have any exclusively controlled, fully
consolidated subsidiaries that are not wholly owned, indirect
non-controlling interests in these subsidiaries are recognized
separately in the consolidated fi nancial statements.
Companies over which the Group exercises signifi cant infl uence
(generally corresponding to an ownership interest of 20% to
50%) are accounted for using the equity method.
When assessing the level of control or signifi cant infl uence
exercised over a subsidiary or associate, account is taken of the
existence and effect of any exercisable or convertible potential
voting rights at the date of the end of the reporting period.
Material intragroup transactions and balances are eliminated in
consolidation.
2.4 Non-controlling interests
Accounting for the acquisition of non-controlling interests
was not addressed by IFRSs until 2009. Therefore, the Group
historically applied the French GAAP accounting treatment,
which consists of recognizing as goodwill the difference
between the acquisition cost of non-controlling interests and the
minority interest share in the net equity, without any purchase
price allocation.
Transfer of consolidated shares within
the Group resulting in changes in ownership
interest
IFRSs do not address the accounting treatment for the transfer
of consolidated shares within the Group resulting in changes in
ownership interest. The Group applies the following accounting
policy:
■ the transferred shares are maintained at historical cost and
the gain or loss on the transfer is fully eliminated in the
accounts of the acquiring entities;
■ the non-controlling interests are adjusted to refl ect the change
in their share in the equity against Group retained earnings,
with no impact on profi t and loss and equity.
Acquisition of non-controlling interests in
exchange for shares in a consolidated entity
IFRSs do not address the accounting treatment for the transfer
by minority shareholders of their interests in a consolidated entity
of the Group in exchange for shares of another consolidated
entity of the Group, nor do they address the accounting
treatment of the resulting decrease in ownership interest. The
Group has therefore considered this type of transaction as an
acquisition of non-controlling interests and the decrease in
ownership interest as a disposal, for which the corresponding
net gain or loss is recognized in income as incurred.
Commitments to purchase non-controlling
interests (put options)
Given the current status of IAS 27 “Consolidated and Separate
Financial Statements” and IAS 32 “Financial Instruments:
Disclosure and Presentation”, fi rm or contingent commitments
to purchase minority interest are recognized as a fi nancial debt.
In the absence of any guidance on this issue from the IFRIC, the
Group has opted to record the fi nancial debt against a reduction
in non-controlling interests within equity.
Where the amount of the commitment exceeds the amount
of the non-controlling interests, the difference is recorded as
a reduction in shareholders’ equity attributable to the owners
of the parent. The fair value of the commitments to purchase
non-controlling interests is revised at the end of each reporting
period and the relating fi nancial debt is adjusted against fi nancial
income or expense.
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2009 REGISTRATION DOCUMENT / FRANCE TELECOM
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