Note 2.2 Consolidation principles The Group’s consolidated financial statements comprise the parent company and its subsidiaries as of 31 December 2021. An entity has been assessed as being controlled by the Group when the Group is exposed to, or have the rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Thus, the Group controls an entity if and only if the Group has all the following: • power over the entity; • exposure, or rights, to variable returns from its involvement with the entity; and • the ability to use its power over the entity to affect its returns. There is a presumption that if the Group has the majority of the voting rights in an entity, the entity is considered as a subsidiary. To support this presumption the Group considers all relevant facts and circumstances in assessing whether it has power over the entity, including voting rights, ownership structure and relative power, and other contractual arrangements and rights thereto. See note 4 Composition of the group for a more detailed description of the Group's assessments regarding control. The assessments are done for each individual investment. Consolidation of a subsidiary begins when the Group obtains control over the subsidiary and ceases when the Group loses control of the subsidiary. The Group re-assesses whether or not it controls an entity if facts and circumstances indicate that there are changes to one or more of the three elements of control. Business combinations are accounted for by using the acquisition method. Inter-company transactions, balances and unrealized gains on transactions between group companies are eliminated. Unrealized losses are eliminated in the same way as unrealized gains, but only to the extent that there is no evidence of impairment. Note 2.3 Foreign currency Foreign currency transactions The functional currency is determined in each entity in the Group based on the currency within the entity's primary economic environment. Transactions in foreign currency are translated to functional currency using the exchange rate at the date of the transaction. At the end of each reporting period foreign currency monetary items are translated using the closing rate, non-monetary items that are measured in terms of historical cost are translated using the exchange rate at the date of the transaction and non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was measured. Foreign operations The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on acquisition, are translated into euro at the exchange rates at the reporting date. The income and expenses of foreign operations are translated into euro at the exchange rates at the dates of the transactions. The monthly average exchange rates are used as an approximation of the transaction exchange rate. Foreign currency differences are recognized in other comprehensive income (“OCI”) and accumulated in the foreign currency translation reserve. Note 2.4 Current versus non-current classification The Group presents assets and liabilities in the consolidated statement of financial position as either current or non-current. The Group classifies an asset as current when it: • Expects to realize the asset, or intends to sell or consume it, in its normal operating cycle • Holds the asset primarily for the purpose of trading • Expects to realize the asset within twelve months after the reporting period Or • The asset is cash or a cash equivalent, unless the asset is restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period. All other assets are classified as non-current, including deferred tax assets. The Group classifies a liability as current when it: • Expects to settle the liability in its normal operating cycle • Holds the liability primarily for the purpose of trading • Is due to be settled within twelve months after the reporting period Or • It does not have an unconditional right to defer settlement of the liability for at least twelve months after the reporting period. All other liabilities are classified as non-current, including deferred tax liabilities. Fiven Annual Report 2021 34 Financial statements
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