GuillermoRosés SRLU

Consolidated financial statements show the operating results, the cash flow and the financial and asset position of the group as a whole as though it were a single entity.

The directors of the dominant company are responsible for preparing the consolidated accounts, which consist of the consolidated balance sheet, the consolidated profit and loss account, the consolidated funds flow statement, the consolidated income and expenditure statement and the notes to the consolidated financial statements for the financial year. These all have to be prepared in accordance with the International Financial Reporting Standards adopted by the European Union. These financial statements will be accompanied by a directors’ report.

The obligation to prepare consolidated accounts arises where the parent or holding company directly or indirectly controls more than 50% of the voting rights of its associated undertakings or subsidiaries within the terms of Article 42 of the Commercial Code.

Consolidation consists of incorporating the accounts of each of the dependent companies into the annual accounts of the dominant company, as though the operations had been undertaken by the dominant company.

There are three methods of consolidation:

a)   Full integration, where the full amount of the account entries s incorporated into the accounts of the dominant company.

b)   Proportional integration, where only a percentage of the entries equal to the level of the group’s interest is incorporated into the accounts of the dominant company.

c)   Equity accounting, or the substitution of the book value of the interest by its proportional equity value, updated to the date on which the financial year ended.

There are three types of undertakings in the consolidation process:

1.   The dependent undertaking, where the direct or indirect interest exceeds 50%, which is consolidated using the full integration method.

2.   The multi-group undertaking, which can be consolidated using the proportional integration or the equity accounting method.

3.   The associated undertaking, where the interest is between 25% and 50%, which has to be consolidated using the equity accounting method.

The accounts of dependent and multi-group undertakings have to be consolidated, whilst the consolidation perimeter also includes associated undertakings.