Non-controlling interest

Why does it matter in a group?

When a parent owns less than all of a subsidiarySubsidiaryA company that is controlled by another company, its parent.Open the glossary entry, the group still consolidates 100 percent of its assets, liabilities, income and expenses. The outside owners’ share of its equity and of its profit is then shown separately: in equity apart from the parent’s own equity, and as a split of the profit for the year.¹ It used to be called minority interest, though an outside holder can own more than half of a subsidiary’s shares without controlling it.

A small example

Zenvara owns 80 percent of Kestrelwick. Kestrelwick has net assets of GBP 5,000,000 and a profit of GBP 500,000. The non-controlling interest is 20 percent: 1,000,000 of equity and 100,000 of profit. The parent’s share of profit is 400,000.