1.4 Consolidation

1.4.1 Subsidiaries

Subsidiaries are companies in which Hydratec has direct or indirect control. These participations are regarded as subsidiaries. Control means that Hydratec is exposed to, or has rights to, variable revenues due to its involvement with the investee and can influence those revenues through its power over the investee. These subsidiaries’ financial statements are included in the consolidated financial statements from the date on which control was acquired until the moment Hydratec loses control.

Profits, losses and each component of the unrealised results are attributed to Hydratec’s shareholders and the third-party minority interest, even if this results in the minority share having a negative balance.

A change in the minority share without a loss of control is accounted for as a share transaction. If Hydratec ceases to have control over a subsidiary, it no longer recognises the related assets, minority interest liabilities and other components of equity, while the resulting profit or loss is recognised in the income statement.

1.4.2 Eliminated transactions in the consolidation

Balance sheet positions between companies in the Group, transactions between these companies and unrealised profits on such transactions are eliminated when preparing the consolidated financial statements.

1.4.3 Participations

Hydratec defines ‘participation’ as an investment in an entity in which it exercises significant influence but does not have control.

Investments in participations are valued at cost on initial recognition. Directly attributable acquisition costs are capitalised as part of the acquisition price. Follow-up valuation is carried out according to the equity method of accounting.