TENARIS S.A. ANNUAL

Business / Consolidation

B Group acc ounting (1) Sub sidiaries and transact ions with non- controlling intere sts Subsidiaries are all entities over which Tenaris has c ontrol. Tenaris controls an entity when it is e xposed to, or has rights to, variable returns from its involvement with the entity and has the abili ty to affect those returns through its power over t he e ntity. In some cases, the Company considers that it has the a bil ity to a ffect returns through i ts power over an entity even if it holds less than 50% of the shares or voti ng rights of the subsidiary because it is able to preva il a t all of the subsidiary’s general meetings, which in turn a llows Tenaris to nominate and appo int a majority of the subs idiary’s board of directors. Subsidiaries are fully consolidated from the date on which control is obtained by the Company and a re no longer consolidated fr om the date control ceases. The acquisition metho d is used to account for the acq uisition of subsidiaries by Tenaris. The cost of an acquisit ion is measured as t he fair value of the as sets transferred, equity instruments issued and l iabilities incurred or ass umed at the date of excha nge. Acquisition-related costs a re expensed as incurred. Identif iable assets acquired, liabilitie s and contingent liabilities a ssumed in a business combina tion a re generally measured initially at their fair value s at the acquisition date. Any non -controlling inte rest in the a cquiree is measured eith er at fair value or at t he non - controlling inte rest’s propor tionate share of the acquiree’s net identifiable assets. The excess of the aggregate of the considera tion transferred a nd the am ount of a ny non -control ling interest in the acquiree over the fair value of the identifiable net assets a c quired is recorded as goo dwill. If this is less than the fa ir value of the net assets of the subsidiary acquire d, the difference is reco gnized directly i n the C onsolidat ed I n come Stateme nt a s barga in purcha se. Contingent considera tion is classified either as equity or a s a financial liability. Amounts clas sified as a financial liability are subsequently re measured at fa ir value through profit or loss.