UBI Banca Group

The income statement of the investor includes the relative share of the income and expenses of
the jointly controlled entity.
Intragroup balances and transactions, including revenues, costs and dividends are eliminated
on the basis of the share of joint control.
The investor ceases the use of the proportionate consolidation method for the purposes of
consolidation from the date on which it ceases to have joint control over the investment
The equity method
Equity investments over which the Group exercises significant influence, which is the power to
participate in the financial and operating policy decisions but not to control or have joint
control over them are measured using the equity method.
Under this method an equity investment is initially recorded at cost and the carrying amount
is increased or decreased to reflect the investor's share of the profit or loss of the associate
after the acquisition date. The proportion of the profit or loss for the year made by the investee
attributable to the investor is stated in the income statement of the latter. Dividends received
from an investee reduce the carrying value of the investment; adjustments to the carrying
amount may also be required arising from a change in the portion of the investee's equity
attributable to the investor that have not been recognised in the income statement. These
changes include changes arising from the revaluation of property, equipment and investment
property and from exchange rate differences on items in foreign currency. The portion of those
changes attributable to the investor are recorded directly in its equity.
Where potential voting rights exist, the investor's share of profit or loss of the investee and of
changes in the investee's equity is determined on the basis of present ownership interests and
does not reflect the possible exercise or conversion of potential voting rights.
Where the investee incurs continued losses, if these exceed the carrying value of the investee,
the carrying value is written off and further losses are only recognised if the investor has
contracted legal or implicit obligations or has made payments on behalf of the investee. If the
investee subsequently realises a profit, the investor resumes recognition of its share of the
profits only after reaching the share of the profit which was previously not recognised.
For the purposes of consolidating investments in associates, the figures from the financial
statements prepared and approved by the boards of directors of the individual companies are
used. Where accounts prepared according to international standards are not available those
prepared according to national accounting standards are used after first verifying that there
are no significant differences.
The consolidating entity ceases use of the equity method from the date on which it ceases to
exercise significant influence over the associate and the investment is classified within either
“financial assets held for trading” or “available-for-sale financial assets”, according to the case,
starting from that date on condition that the associate does not become a subsidiary or
subject to joint control.
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