UBI Banca Group

‐ the formation, on 20 th December 2011, of the company UBI Finance CB 2 S.r.l. The
creation of that company was necessary for the coming launch of a second programme
of covered bond issuances.
No extraordinary transactions were recorded as taking place within the Group in 2011.
However, a series of transactions to purchase shares or subscribe share issuances took place,
which resulted in changes in consolidation methods.
Further information on the changes described above is given in the section “The consolidation
scope” contained in the Management Report, which may be consulted.
With regard to the consolidation methods used, companies subject to control are consolidated
using the line-by-line method, those subject to joint control are proportionately consolidated,
while those interests over which the Group exercises significant influence are valued using the
equity method.
The line-by-line consolidation method
Subsidiaries subject to control are consolidated using the full line-by-line method. The concept
of control goes beyond a majority percentage interest in the share capital of the company
invested in and is defined as the power to determine the financial and operating policies of the
entity in question for the purpose of obtaining the benefits from its activities.
The line-by-line consolidation method involves summing the items of the income statements
and balance sheets of subsidiaries on a line-by-line basis The following adjustments are made
for this purpose:
(a) the carrying amounts of the subsidiaries held by the Parent and the corresponding part of
the equity are eliminated;
(b) the proportion of equity and of profit or loss for the year attributable to other shareholders
is stated under a separate item
If the results of the above adjustments are positive, then they are recognised (after first
allocating them if possible to the assets or liabilities of the subsidiary) as goodwill within item
130 “intangible assets” on the date of the first consolidation, if the necessary conditions apply.
If the resulting differences are negative they are normally charged to the income statement.
Intragroup balances and transactions, including revenues, costs and dividends are completely
eliminated.
The operating results of a subsidiary that is acquired during the period are included in the
consolidated balance sheet starting from the date on which it is acquired Similarly, the
operating results of a subsidiary that is disposed of are included in the consolidated balance
sheet until the date on which control over the company is released.
The accounts used in the preparation of consolidated financial statements are stated as of the
same date.
The consolidated financial statements have been prepared using uniform accounting policies
for like transactions and events.
If a subsidiary uses different accounting policies from those employed in the consolidated
financial statements for like transactions and other events in similar circumstances,
adjustments are made to its accounts for the purposes of the consolidation.
The proportionate method
An equity investment is considered as subject to joint control even in the absence of equal
voting rights, if control over the operating activities and strategic policies of the company
invested in is shared with others on the basis of contractual agreements.
Application of the proportionate method involves the inclusion in the investor’s balance sheet
of its share of the assets controlled jointly and of its share of the liabilities for which it is
jointly responsible.
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