Havas N.V. ANNUAL

Business / Consolidation

1.4.4 – Principle of consolidation Consolidation All companies in which Havas has a controlling interest, namely those in which it has the power to govern financial and operational policies to obtain benefits from their operations, are fully consolidated. Control as defined by IFRS 10 – Consolidated Financial Statements is based on the following three criteria to be fulfilled cumulatively to assess if the parent company exercises control: ● a parent company has power over a subsidiary when the parent company has existing rights that give it the current ability to direct the relevant activities of the subsidiary, i.e., the activities that significantly affect the subsidiary’s returns. Power may arise from existing or potential voting rights, or contractual arrangements. Voting rights must be substantial, i.e., exercisable at any time without limitation, particularly during decision-making processes related to significant activities. Assessment of the exercise of power depends on the nature of the subsidiary’s relevant activities, the internal decision-making process, and the allocation of rights among the subsidiary’s other shareowners; ● the parent company is exposed, or has rights, to variable returns from its involvement with the subsidiary which may vary as a result of the subsidiary’s performance. The term “returns” is broadly defined and includes, among other things, dividends and other economic benefit distributions, changes in the value of the investment in the subsidiary, economies of scale, and business synergies; and ● the parent company has the ability to use its power to affect the returns. Exercising power without having any impact on returns does not qualify as control. The Consolidated Financial Statements are presented as if the Group was a single economic entity with two categories of owners: (i) the owners of the parent company (Havas N.V. shareowners) and (ii) the owners of non-controlling interests (minority shareholders of the subsidiaries). A non-controlling interest is defined as the interest in a subsidiary that is not attributable, whether directly or indirectly, to a parent company. As a result, reductions in a parent company’s ownership interest in a subsidiary that do not result in a loss of control only impact equity, as control of the economic entity does not change. In addition, Havas recognizes the difference between the acqui