About Equity Pickup

Equity pickup (EPU) functionality enables you to revaluate the investments owned by a holding company. The purpose of the reevaluation is to adjust the investments in the Balance Sheet of the holding company to reflect the current value of the corresponding share in the equity of the subsidiary. The underlying principle of the equity pickup adjustment is to provide a fair picture of the value of the portfolio owned by the holding company.

Like most assets, investments are presented in the Balance Sheet at their historical cost. Investment amounts reflect acquisition prices. However, due to profit or loss incurred in the subsidiary since the acquisition, historical cost may differ from the actual value of the investment owned. In the case of a subsidiary in a foreign country, exchange currency fluctuations may also affect the value of the investment when translated into the holding company's currency. Equity pickup adjustments account for this difference.

An equity pickup adjustment replaces the historical cost with the actual value of the equity owned. In this respect, equity pickup is similar to the equity method in statutory consolidation.

Equity pickup adjustments are made in the local currency of the holding company, before any consolidation of this holding into the group. These adjustments belong to the holding company, independently from any ultimate parent entity.

For each company owned, the adjustment is expressed as follows:

Direct Ownership Percentage * Equity of Owned Entity

= Current Equity Value

- Investment

= Equity Pickup Adjustment