A subgroup is a set of entities within a larger group that is consolidated separately, because they share a region, a business line or an intermediate holding company. The total group is the consolidation of its subgroups plus the parent.
What it includes
The entities assigned to the subgroup, their internal intercompany eliminations and, if there is one, the intermediate company that controls them. Transactions between subgroups are not eliminated at subgroup level but at the higher group level.
Example with numbers
A group with 8 entities defines two subgroups: Spain (4 entities, summed revenue 5,000,000) and Latam (4 entities, 3,000,000). Within Spain there are 400,000 of internal sales; within Latam, 200,000. Spain subgroup consolidated: 4,600,000. Latam: 2,800,000. Between the two subgroups there is another 300,000 intercompany, so the group consolidates 7,100,000.
How Fibady does it
Entities are organised into subgroups with unlimited levels, and each subgroup has its own consolidated P&L, balance sheet and cash flow with its own eliminations. The same entity can appear in one subgroup by region and another by business line, and the total consolidation is recalculated with every sync.