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ENAV Group Consolidated Financial Statements

• the translation reserve included in the consolidated shareholders’ equity, includes
both the foreign exchange differences produced from converting the income
statement at a different rate to the one at year end and those produced from the
translation of the opening shareholders’ equity at a different rate to the one at
the close of the reporting period. This reserve is reversed to the Income Statement
when the related equity investment is sold.

The exchange rates used to translate the financial statements of Group companies
with a functional currency other than the Euro are as follows:

Average exchange rate for the year ended Exchange rate at 31 December

2015 2014 2015 2014

Malaysian ringgit 4,3315 4,3472 4,6959 4,2473
US dollar
1,1096 1,3288 1,0887 1,2141

Business combinations

Business combinations, under which the acquirer obtains control of the acquiree, are
accounted for in accordance with the provisions of IFRS 3 Business combinations, using
the acquisition method. The cost of acquisition is represented by the acquisition date
fair value of the assets acquired, the liabilities assumed and the equity instruments
issued. For the acquisitions of non-controlling interests in entities, the Group decides
whether to measure the minority shareholding in the acquired company at fair
value, or in proportion to the minority shareholding in the acquiree’s identifiable net
assets. The cost of acquisition is accounted for as expenses in the period incurred and
classified as administrative expenses.
When the Group acquires a business, it classifies or recognises the financial assets
acquired or liabilities assumed according to the contractual conditions, the economic
conditions and other pertinent conditions at the acquisition date.
If the business combination occurs in stages, the previously held equity interest
is measured at fair value at the acquisition date, and any resulting gain or loss is
recognised in the Income Statement.
The cost of acquisition also includes the contingent consideration, measured at
fair value at the date that control was acquired. Subsequent changes in fair value
are recognized in profit or loss or the statement of comprehensive income, if the
contingent consideration is a financial asset or liability. Contingent considerations
classified as equity is not re-measured, and its subsequent settlement is accounted
for directly in equity.
Goodwill is initially recognized at cost, represented by the difference between
the cost incurred to acquire the company and the carrying amount of any non-
controlling interest and fair value of the net identifiable assets acquired and the
liabilities assumed by the Group.

78 ENAV - Annual financial report 2015