Vetoquinol - Universal Registration Document - 2021

CONSOLIDATED FINANCIAL STATEMENTS Notes to the consolidated financial statements Vetoquinol Universal Registration Document 2020 Financial report 69 6 6.5.3.2 Effects of the COVID-19 pandemic on the consolidated financial statements In 2020, the Group continued its activity against the back- drop of the health crisis. The impact of COVID-19 was particularly felt in the Americas, especially in Brazil. This event did not have a significant effect on the financial statements and does not call into question the Group’s ability to continue its operations. 6.5.3.3 Consolidation and business combinations 6.5.3.3.1 Consolidation scope The subsidiaries comprise all entities over which the Group exercises control. The Group exercises control where it: • has power over the entity; • is exposed, or has the right, to variable returns as a result of its association with the entity; • has the capacity to exercise its power in such a way as to influence the amount of the returns it receives. The subsidiaries over which the Group directly or indi- rectly exercises exclusive control, de jure or de facto, are fully consolidated. Such control is deemed to exist when the Group holds more than half of the voting rights, either directly or indirectly via its subsidiaries. Non-controlling interests are calculated as the percentage of the equity interest not held by the parent company. Joint ventures and companies over which the Group exercises considerable influence are recognized using the equity method. The results of these entities are pre- sented separately in our consolidated income statement, on a specific line, before net income. A company is included in the consolidation scope from the date on which the Group acquires control thereof, and is deconsolidated as of the date on which the Group ceases to exercise control over it. Acquisitions of subsidiaries (representing businesses as defined by IFRS 3) are recognized using the acquisition method. The cost of an acquisition is equal to the total fair value of the assets obtained, liabilities incurred or assumed and equity instruments issued by the buyer as of the acquisition date. The identifiable assets acquired and the identifiable and contingent liabilities assumed in a business combination are initially measured at fair value as of the acquisition date, irrespective of the amount of minority interests. The excess of the acqui- sition cost over the Group’s interest in the fair value of the recorded assets, liabilities and contingent liabilities is recognized as goodwill (Note 6.5.20). Conversely, if the share of assets, liabilities and contingent liabilities at fair value exceeds the acquisition cost, the excess is posted immediately to income. Non-controlling interests are shown on the balance sheet within a specific category of shareholders’ equity. The amount of their share in consolidated net income and items of other comprehensive income is presented separately below these two items. All inter-company balances and transactions, including gains and losses, as well as dividends, are eliminated on consolidation. The Group is composed of Vetoquinol SA and its subsi- diaries. It has one joint venture, Vetoquinol-Zenoaq KK (Japan), which is recognized using the equity method. Group companies are presented under Note 6.5.45 “Group companies”. 6.5.3.4 Business combinations Acquisition expenses, other than those arising from the issuance of debt or equity securities, incurred as a result of a business combination, are expensed as they are incurred. Within a period of one year from the date of acquisition: • changes in fair value due to events and circumstances that existed as of the acquisition date result in adjust- ments to the cost of the business combination; • changes in fair value that are explicitly linked to events occurring after the acquisition date are posted to income; • following this period, any adjustment to the price of the business combination is recognized in income. The Group has a period of 12 months from the acquisi- tion date within which to finalize the accounting of the business combination in question.