69
REPORT ON THE CONSOLIDATED FINANCIAL STATEMENTS
The Directors have assessed the potential future impacts of these standards, and consider that their entry into force will not have a significant impact
on the consolidated annual accounts, except for those entering into force after 2016, whose impact is being analysed.
2.2. Information on 2014
As required by IAS 1, the information from 2014 contained in this consolidated annual report is presented solely for comparison with the information
from 2015, and consequently does not in itself constitute the Group’s consolidated annual accounts for 2014.
2.3. Currency of presentation
These consolidated financial statements are presented in euros. Any foreign currency transactions have been recognised in accordance with the
criteria described in Note 4.9.
2.4. Responsibility for the information, estimates made and sources of uncertainty
The Directors of the Parent Company are responsible for the information contained in these consolidated financial statements.
Estimates made by the management of the Group and of the consolidated entities (subsequently ratified by their Directors) have been used in the
Group’s consolidated financial statements to quantify some of the assets, liabilities, revenue, expenses and undertakings recognised. These estimates
essentially refer to:
- Losses arising from asset impairment.
- The assumptions used in the actuarial calculation of liabilities for pensions and other undertakings made to the personnel.
- The useful life of the tangible and intangible assets.
- The valuation of consolidation goodwill.
- The market value of specific assets.
- Calculation of provisions and evaluation of contingencies.
These estimates were made on the basis of the best available information on the facts analysed. Nonetheless, it is possible that future events may
take place that make it necessary to modify them, which would be done in accordance with IAS 8.
2.5. Consolidation principles applied
2.5.1 Subsidiaries (See Appendix I)
Subsidiaries are considered as any company included within the scope of consolidation in which the Parent Company directly or indirectly controls
their management due to holding the majority of voting rights in the governance and decision-making body, with the ability to exercise control.
This ability is shown when the Parent Company has the power to direct an investee entity’s financial and operating policy in order to obtain profits
from its activities.
The financial statements of subsidiaries are consolidated with those of the Parent Company by applying the full consolidation method. Consequently,
all significant balances and effects of any transactions taking place between them have been eliminated in the consolidation process.
Stakes held by non-controlling shareholders in the Group’s equity and results are respectively presented in the “Non-controlling interests” item of
the consolidated balance sheet and of the consolidated comprehensive profit and loss statement.
The profit or loss of any subsidiaries acquired or disposed of during the financial year are included in the consolidated comprehensive profit and loss
statement from the effective date of acquisition or until to the effective date of disposal, as appropriate.
2.5.2 Associates (See Appendix II)
Associates are considered as any companies in which the Parent Company has the ability to exercise significant influence, though it does not
exercise either control or joint control. In general terms, it is assumed that significant influence exists when the percentage stake (direct or indirect)
held by the Group exceeds 20% of the voting rights, as long as it does not exceed 50%.
Associates are valued in the consolidated financial statements using the equity method; in other words, through the fraction of their net equity value
the Group’s stake in their capital represents once any dividends received and other equity retirements have been considered.
2.5.3 Foreign currency translation
The following criteria have been different applied for converting into euros the different items of the consolidated balance sheet and the consolidated
comprehensive profit and loss statement of foreign companies included within the scope of consolidation:
• Assets and liabilities have been converted by applying the effective exchange rate prevailing at year-end.
• Equity has been converted by applying the historical exchange rate. The historical exchange rate existing at 31 December 2003 of any
companies included within the scope of consolidation prior to the transitional date has been considered as the historical exchange rate.
• Income statement items were translated to euros at the average exchange rate for the year.
Any difference resulting from the application these criteria have been included in the “Translation differences” item under the “Equity” heading.
Any adjustments arising from the application of IFRS at the time of acquisition of a foreign company with regard to market value and goodwill are
considered as assets and liabilities of such company and are therefore converted using the exchange rate prevailing at year-end.
