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4.1 CONSOLIDATED FINANCIAL STATEMENTS AND NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Note 2.Fully consolidated companies

DANONE

REGISTRATION DOCUMENT 2015

82

NOTE 2.FULLY CONSOLIDATED COMPANIES

Note 2.1. Accounting principles

Fully consolidated companies

The Group fully consolidates all subsidiaries over which it has the

ability to exercise exclusive control, whether directly or indirectly.

Exclusive control over an investee is assessed (i) by the power the

Group has over said investee, (ii) whether it is exposed, or has rights,

to variable returns from its relationship with the investee, and (iii)

whether it uses its power over the investee to affect the amount of

the Group's returns.

Full consolidation enables the recognition of all assets, liabilities and

income statement items relating to the companies concerned in the

Group's consolidated financial statements, after the elimination of

intercompany transactions, the portion of the net income and equity

attributable to owners of the Company (Group share) being distin-

guished from the portion relating to other shareholders' interests

(Non-controlling interests). Intercompany balances and transactions

between consolidated entities (including dividends) are eliminated

in the consolidated financial statements.

Business combinations: acquisitions resulting in

control being obtained, partial disposal resulting in

control being lost

The accounting treatment of acquisitions resulting in control being

obtained and partial disposals resulting in control being lost is as

follows:

•

when control is obtained, the incidental transactions costs are

recognized in the income statement under the heading Other

operating income (expense), and presented in the cash flow

statement within cash flows from operating activities, in the year

in which they are incurred. In addition, price adjustments are

initially recognized at their fair value in the acquisition price and

their subsequent changes in value are recognized in the income

statement under the heading Other operating income (expense);

all payments relating to these adjustments are presented in the

cash flow statement within cash flows from operating activities;

•

when control is obtained (or lost), the revaluation at its fair value of

the interest previously held (or the residual interest) is recognized

in the income statement under the heading (i) Other operating

income (expense) when control is lost, (ii) Share of profit of asso-

ciates when control is obtained of an entity previously accounted

for as an associate, and (iii) Other financial income (expense)

when control is obtained of an entity previously accounted for as

an investment in a non-consolidated company;

•

when control is obtained, non-controlling interests are recognized,

either at their share of the fair value of the assets and liabilities

of the acquired entity, or at their fair value. In the latter case, the

goodwill is then increased by the portion relating to these non-

controlling interests. The treatment adopted is selected on an

individual basis for each acquisition.

Business combinations may be recognized on a provisional basis, as

the amounts allocated to the identifiable assets acquired, liabilities

assumed and goodwill may be amended during a maximum period

of one year from their acquisition date.

Note 2.2. Main changes during the period

2015 fiscal year

Ownership as of December 31

(in percentage)

Notes

Division

Country

Transaction

date

(a)

2014

2015

Main companies consolidated for the first time during 2015

Fan Milk group's companies

Fresh Dairy

Products West Africa

December

49.0%

49.0%

Main consolidated companies with change in ownership percentage

Danone-Unimilk group

3.3

Fresh Dairy

Products

CIS

December

50.9%

70.9%

Danone Spain

3.4

Fresh Dairy

Products

Spain

February/

March

76.9%

92.4%

Centrale Danone

(b)

3.5

Fresh Dairy

Products

Morocco

December

90.9%

95.9%

Main companies no longer fully consolidated as of December 31

–

(a) Month of the 2015 fiscal year.

(b) Formerly Centrale Laitière. The company was renamed Centrale Danone in 2015.

As regards the Fan Milk group, accounted for as an associate as

of December 31, 2014, its companies have been fully consolidated

since December 2015 pursuant to IFRS 10,

Consolidated Financial

Statements

, since the Group has had the contractual right to exer-

cise exclusive control over them since that date. Consequently, the

put option relating to the 51% stake in the Fan Milk group not yet

held by Danone has, since that date, been recognized on the basis

of the present value of its exercise price and is presented under

the heading Liabilities relating to non-controlling interests as of

December 31, 2015. Indeed, as of December 31, 2014, since Fan

Milk was then treated as an associate, the option was recognized

at its fair market value, pursuant to IAS 39,

Financial Instruments:

Recognition and Measurement

.