Annual Report & Accounts 2012 - Euromoney Institutional Investor ...

Euromoney Institutional Investor PLC Annual Report and Accounts 2012
www.euromoneyplc.com
Our Performance
1 Accounting policies continued
Basis of consolidation
(a) Subsidiaries
The consolidated accounts incorporate the accounts of the company and
entities controlled by the company (its ‘subsidiaries’). Control is achieved
where the company has the power to govern the financial and operating
policies of an investee entity so as to obtain benefits from its activities.
Intercompany transactions, balances and unrealised gains and losses on
transactions between group companies are eliminated.
The group uses the acquisition method of accounting to account for
business combinations. The amount recognised as consideration by
the group equates to the fair value of the assets, liabilities and equity
acquired by the group plus contingent consideration (should there be any
such arrangement). Acquisition related costs are expensed as incurred.
Identifiable assets acquired and liabilities and contingent liabilities
assumed in a business combination are measured initially at their fair
values at acquisition. On an acquisition-by-acquisition basis, the group
recognises any non-controlling interest in the acquiree either at fair value
or at the non-controlling interests proportionate share of the acquiree’s
net assets.
To the extent the consideration (including the assumed contingent
consideration) provided by the acquirer is greater than the fair value of the
assets and liabilities, this amount is recognised as goodwill. Goodwill also
incorporates the amount of any non-controlling interest in the acquiree
and the acquisition date fair value of any previous equity interest in the
acquiree over the fair value of the group’s share of the identifiable net
assets acquired.
If this is less than the fair value of the net assets of the subsidiary acquired,
the difference is recognised directly in the Statement of Comprehensive
Income.
Partial acquisitions – control unaffected
Where the group acquires an additional interest in an entity in which
a controlling interest is already held, the consideration paid for the
additional interest is reflected within movements in equity as a reduction
in non-controlling interests. No goodwill is recognised.
Step acquisitions – control passes to the group
Where a business combination is achieved in stages, at the stage at which
control passes to the group, the previously held interest is treated as if it
had been disposed of, along with the consideration paid for the controlling
interest in the subsidiary. The fair value of the previously held interest then
forms one of the components that is used to calculate goodwill, along
with the consideration and the non-controlling interest less the fair value
of identifiable net assets.
The consideration paid for the earlier stages of a step acquisition, before
control passes to the group, is treated as an investment in an associate.
(b) Transactions and non-controlling interests
Transactions with non-controlling interests in the net assets of consolidated
subsidiaries are identified separately and included in the group’s equity.
Non-controlling interests consist of the amount of those interests at the
date of the original business combination and its share of changes in
equity since the date of the combination. Total comprehensive income
is attributed to non-controlling interests even if this results in the noncontrolling
interests having a deficit balance.
Where the group owns a non-controlling interest in the equity share capital
of a non-quoted company and does not exercise significant influence, it is
held as an investment and stated in the balance sheet at the lower of cost
and net realisable value.
(c) Associates
An associate is an entity over which the group is in a position to exercise
significant influence, but not control or joint control, through participation
in the financial and operating policy decisions of the investee. The results
and assets and liabilities of associates are incorporated in these financial
statements using the equity method of accounting and are initially
recognised at cost. The group’s investment in associates includes goodwill
identified on acquisition, net of any accumulated impairment loss.
The group’s share of associate post-acquisition profit or losses is recognised
in the Income Statement, and its share of post-acquisition movements
in other comprehensive income is recognised in other comprehensive
income. The cumulative post-acquisition movements are adjusted against
the carrying amount of the investment. When the group’s share of losses
in an associate equals its interest in the associate, including any other
unsecured receivables, the group does not recognise further losses, unless
it has incurred obligations or made payments on behalf of the associate.
Unrealised gains on transactions between the group and its associates
are eliminated to the extent of the group’s interest in the associates.
Unrealised losses are also eliminated unless the transaction provides
evidence of an impairment of the asset transferred. Accounting policies of
associates have been changed where necessary to ensure consistency with
the policies adopted by the group.
Dilution gains and losses arising in investments in associates are recognised
in the Income Statement.
Notes to the Consolidated Financial Statements
Company Accounts Group Accounts Our Governance
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