Basis of consolidation
3. Consolidation methods
Consolidation is carried out by offsetting the consideration transferred against the fair value of the acquired assets and assumed liabilities.
All significant companies whose financial and operating activities are directly or indirectly controlled by EVN AG (i.e. subsidiaries) are fully consolidated. EVN is considered to have a controlling interest over a company in which it holds an investment when it has a right to variable returns from the investee and can influence the amount of these returns through its control.
This is usually the case when EVN’s voting rights exceed 50.0%, but may also apply if EVN has the power of disposition over and is the primary beneficiary of any economic benefits arising from the business operations of these companies or if EVN is required to carry most of the risks. Companies are initially consolidated on the acquisition date or at the time EVN gains control and are deconsolidated when control ends.
In accordance with IFRS 3, assets and liabilities (including contingent liabilities) obtained through business combinations are recognised at their full fair value, irrespective of any existing non-controlling interests. Non-controlling interests in subsidiaries are carried at the proportional share of net assets (excluding the proportional share of goodwill). Intangible assets are recognised separately from goodwill if they can be separated from the acquired company or arise from statutory, contractual or other legal rights. Restructuring provisions may not be created as part of the purchase price allocation. Any remaining positive differences which represent compensation to the seller for market opportunities or developmental potential that cannot be individually identified are recognised in local currency as goodwill and allocated to cash-generating units (CGUs) in the relevant segment. Negative differences are recognised in profit or loss after a repeated measurement of the acquired company’s identifiable assets and liabilities (including contingent liabilities) and measurement of the acquisition cost. The differences between fair value and the carrying amount are carried forward in accordance with the related assets and liabilities during the subsequent consolidation. A change in the investment in a fully consolidated company is accounted for directly in equity without recognition through profit or loss.
Joint arrangements are included in the consolidated financial statements of EVN AG depending on the rights and obligations attributed to the controlling parties by the respective agreement. If only rights to the net assets are involved, the joint arrangement is classified as a joint venture according to IFRS 11 and included at equity. If rights to the assets and obligations for the liabilities are involved, the joint arrangement is classified as a joint operation according to IFRS 11 and included in the consolidated financial statements through line-by-line consolidation.
Associates – i.e. companies in which EVN AG can directly or indirectly exercise significant influence – are included at equity.
Subsidiaries, joint ventures and associates are not consolidated if their influence on EVN’s asset, financial and earnings position is considered to be immaterial, either individually or in total. These companies are reported at cost less any necessary impairment losses. The materiality of an investment is assessed on the basis of the balance sheet total, the proportional share of equity, external revenue and annual profit or loss as reported in the last available financial statements in relation to the respective Group totals.
Intragroup receivables, liabilities, income and expenses as well as intragroup profits and losses are eliminated unless they are immaterial. The consolidation procedure for profit or loss includes the effects of income taxes as well as the recognition of deferred taxes.
4. Scope of consolidation
The scope of consolidation is determined in accordance with the requirements of IFRS 10 (also see note 2. Reporting in accordance with IFRS). Accordingly, 30 domestic and 37 foreign subsidiaries (including the parent company EVN AG) were fully consolidated in the consolidated financial statements as of 30 September 2016 (previous year: 31 domestic and 37 foreign subsidiaries). A total of 25 subsidiaries (previous year: 36) were not consolidated due to their immaterial influence on EVN’s asset, financial and earnings position, either individually or in total.
EVN AG is the sole limited partner of EVN KG and, as such, participates to 100.0% in profit or loss of EVN KG. EnergieAllianz serves as the general partner of EVN KG, but does not hold an investment in this company. The agreements concluded between the EnergieAllianz shareholders for the management of EVN KG result in joint control. EVN KG is therefore classified as a joint venture in the sense of IFRS 11 and consolidated at equity. Contractual agreements also lead to the classification of the EnergieAllianz Group (EnergieAllianz and its subsidiaries) as a joint venture in the sense of IFRS 11; the group is therefore included in the consolidated financial statements at equity.
RBG, a fully consolidated company in which EVN AG has an unchanged interest of 50.03%, holds a 100.0% stake in RAG. RAG is consolidated at equity because contractual agreements prevent EVN from exercising control.
Bioenergie Steyr GmbH, in which EVN Wärme GmbH holds a stake of 51.0%, is included in the consolidated financial statements of EVN at equity because contractual agreements exclude any possibility of control.
Verbund Innkraftwerke Deutschland GmbH, in which EVN AG has an unchanged interest of 13.0%, is included at equity due to special contractual arrangements that allow EVN AG to exercise significant influence.
For those companies in which 50.00% is held, there is no control in accordance with IFRS 10. These companies are classified as joint ventures in the sense of IFRS 11 based on the contractual agreements and are therefore included in the consolidated financial statements at equity.
An overview of the companies included in the consolidated financial statements is provided under EVN’s investments. Notes 50. Non-controlling interests and 66. Disclosures of interests in other entities provide detailed information on the subsidiaries with major non-controlling interests as well as joint ventures and associates that are included in the consolidated financial statements.
The scope of consolidation (including EVN AG as the parent company) developed as follows during the reporting year:
|4. Changes in the scope of consolidation||Full consolidation||Line-by-line |
|thereof foreign companies||37||1||5||43|
Nevawasser Projektgesellschaft mbH, Essen, Germany, which was previously not included in the consolidated financial statements of EVN for reasons of immateriality, was spun off from WTE Wassertechnik GmbH, Essen, Germany, to WTE Projektgesellschaft Süd-West Wasser mbH, Essen, Germany, in the third quarter of 2015/16. The name of the company was subsequently changed to WTE Abwicklungsgesellschaft Russland mbH, Essen, Germany. WTE Abwicklungsgesellschaft Russland mbH, Essen, Germany, was initially included through full consolidation in the third quarter of 2015/16.
Naturkraft EOOD, Plovdiv, Bulgaria, which was previously included through full consolidation, was merged with EVN Kavarna EOOD, Plovdiv, Bulgaria, as of 8 March 2016 and deconsolidated during the second quarter of 2015/16.
EVN Projektmanagement GmbH, Maria Enzersdorf, which was previously included through full consolidation, was merged with EVN Finanzservice GmbH, Maria Enzersdorf, retroactively as of 30 September 2015 based on a merger agreement dated 4 May 2016. It was deconsolidated during the third quarter of 2015/16.
The operating business of the equity accounted investee e&t Energie Handelsgesellschaft m.b.H, Vienna, was sold to ENERGIEALLIANZ Austria GmbH (EAA) as of 1 October 2015. The company was then merged with Naturkraft Energievertriebsgesellschaft m.b.H, Vienna, retroactively as of 30 September 2015 through a merger contract dated 3 December 2015 and subsequently deconsolidated.
EconGas GmbH, Vienna, which was previously included in the consolidated financial statements at equity was sold to OMV Gas & Power GmbH as of 20 May 2016 and deconsolidated in the third quarter of 2015/16.
In the course of the unbundling of the individual business segments in the energy business in Macedonia, the network business from EVN Macedonia AD, Skopje, Macedonia, is intended to be spun off to EVN Elektrodistribucija DOOEL, Skopje, Macedonia, which was newly founded for this purpose. EVN Macedonia AD, Skopje, Macedonia, which served as network company to date, holds 100.0% of the shares in EVN Elektrodistribucija DOOEL, Skopje, Macedonia. The newly founded EVN Elektrodistribucija DOOL, Skopje, Macedonia, is currently not included in the consolidated financial statements of EVN for reasons of immateriality.
On 13 July 2016, EVN Wärme acquired 50.0% of the shares in the cooperative society FWG- Fernwärmeversorgung Amstetten, registrierte Genossenschaft mit beschränkter Haftung, Amstetten. Due to its insignificance, the company is not included in EVN’s consolidated financial statements.
The companies in the environmental services business that were not included in EVN’s consolidated financial statements due to immateriality OOO WTE Wassertechnik West, Moscow, Russia, OAO WTE Kurjanovo, Moscow, Russia, OAO EVN Ljuberzy, Moscow, Russia, ZAO STAER, Moscow, Russia, ZAO STAER-ZWK, Moscow, Russia, as well as OOO Nordwasserwerk, Moscow, Russia, were merged into OOO EVN Umwelt Service, Moscow, Russia, as of 14 September 2016.
B3 ENERGIE GmbH, Maria Enzersdorf, which was not included in the consolidated financial statements of EVN due to immateriality, was retroactively merged into EVN Wärme GmbH, Maria Enzersdorf, as of 31 December 2015 based on a merger agreement dated 16 September 2016.
The cooperative society FWG-Fernwärmeversorgung Hollabrunn registrierte Genossenschaft mit beschränkter Haftung in Liquidation, Göllersorf, which was not included in the consolidated financial statements of EVN due to its insignificance, was deleted from the company register after its liquidation on 2 July 2016.
WTE Projektmanagement GmbH, Essen, Germany, which was not included in EVN‘s consolidated financial statements for reasons of immateriality, was liquidated on 15 April 2016 and subsequently deleted from the company register.
ALBNOR Company DOO, Tetovo, Macedonia, which was not included in EVN‘s consolidated financial statements for reasons of immateriality, was sold during the third quarter of 2015/16.
Anlagenbetriebsgesellschaft Waidhofen/Ybbs GmbH, Maria Enzersdorf, which was not included in the consolidated financial statements of EVN for reasons of immateriality, was merged with EVN Wärme GmbH, Maria Enzersdorf, retroactively to 30 September 2015 as of 11 November 2015.
As in the previous financial year there was no new acquisition of companies according to IFRS 3 during the reporting period.
5. Foreign currency translation
All Group companies record their foreign currency business transactions at the average exchange rate in effect on the date of the relevant transaction. Monetary assets and liabilities denominated in a foreign currency are also translated at the average exchange rate on the balance sheet date. Any resulting foreign currency gains or losses are recognised in profit or loss.
In accordance with IAS 21, the annual financial statements of Group companies that are prepared in a foreign currency are translated into euros for inclusion in the consolidated financial statements. This translation is based on the functional currency method, under which the assets and liabilities of companies not reporting in euros are converted by applying the average exchange rate on the balance sheet date and any income and expenses are converted at the average annual rate. Unrealised currency translation differences from long-term Group loans are recorded under the currency translation reserve in equity without recognition in profit or loss. Currency translation differences directly recognised in equity resulted in an increase of EUR 1.0m in equity during 2015/16 (previous year: decrease of EUR –10.7m); furthermore, an amount of EUR 3.0m was transferred from other comprehensive income to the consolidated statement of operations in the financial year 2015/16.
Additions and disposals are reported at the applicable average exchange rates in all tables. Changes in the average exchange rates between the balance sheet date for the reporting year and the previous year as well as differences arising from the use of average exchange rates to translate changes during the financial year are reported separately under currency translation differences in all tables.
Goodwill resulting from the acquisition of foreign subsidiaries is recorded at the exchange rate in effect on the acquisition date. This goodwill is subsequently allocated to the acquired company and translated at the exchange rate in effect on the balance sheet date. When a foreign company is deconsolidated, any related currency differences are recognised in profit or loss.
The following key exchange rates were used for foreign currency translation:
|5. Foreign currency translation||2015/16||2014/15|
|Currency||Exchange rate on the|
balance sheet date
|Average1)||Exchange rate on the|
balance sheet date
|1) Average on the last day of each month|
2) The exchange rate was determined by Bulgarian law.