Financial performance 2024 consolidated financial statements 05 Note 4 CHANGES IN THE SCOPE OF CONSOLIDATION ACCOUNTING POLICIES The Group's consolidated financial statements include all subsidiaries, joint ventures and associates of Compagnie Générale des Établissements Michelin. The Group treats transactions with non-controlling interests, as long as they do not result in a change of control over the entities in question (no loss nor gain of control), as equity transactions having no impact on comprehensive income. Expenses relating to these transactions are directly accounted for in equity. At the date the Group gains control of an entity, the carrying amount of previously held non-controlling interests, if any, is adjusted to fair value and the difference is recognized in the income statement. All other related items previously recognized in other comprehensive income are reclassified to the income statement. When the Group loses control over an entity but keeps some non-controlling interests in the entity, the transaction is analyzed as an exchange, i.e., the disposal of a controlling interest and the acquisition of a noncontrolling interest. Shareholdings in companies which are not subsidiaries, joint ventures or associates are not consolidated. They are accounted for as non-derivative financial assets (note 9.4). Subsidiaries The Group controls an entity when it has: n power over the investee; n exposure, or rights, to variable returns from its involvement with the investee; and n the ability to use its power over the investee to affect the amount of the investor's returns. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases. Intercompany transactions and balances, as well as unrealized gains on transactions between Group companies are eliminated. Unrealized losses are also eliminated unless an impairment loss on the transferred asset arises on the transaction. Group accounting policies are applied consistently by all subsidiaries. Joint ventures and associates Joint ventures are joint arrangements (arrangements over which the Group has joint control with one or more other parties) in which the Group has rights to the net assets. Joint control is defined as the contractually agreed sharing of control over an arrangement, which exists only when decisions about the relevant activities require the unanimous consent of the parties sharing control. Associates are all entities over which the Group has significant influence. Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control of those policies. Generally, associates are entities in which the Group has a shareholding representing between 20% and 50% of the voting rights. Investments in joint ventures and associates are initially recognized at their acquisition cost and are subsequently accounted for using the equity method. The Group's investments in joint ventures and associates include goodwill identified at the acquisition date and are presented net of any accumulated impairment losses. 4.1 Transactions in 2024 On October 10, 2024, the Group sold its stake in AddUp, and in 2024, the Group’s equity-accounted share of the joint venture’s loss amounted to €35 million including the disposal loss. During 2024, the Group completed several investments and acquisitions that were individually not material, representing a total investment of €2 million. The companies and controlling interests acquired in 2024, including Watèa, contributed €6 million to consolidated sales for the year and reduced segment operating income by €4 million and other operating income and expenses by €16 million. 366 2024 UNIVERSAL REGISTRATION DOCUMENT_MICHELIN
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