Annual Report 2005/06 - voestalpine

B. Summary of accounting policies
ConsoliDaTion meThoDs
The financial statements of all subsidiaries or
proportionately consolidated entities are prepared
in accordance with standard accounting
practices and valuation methods. For
entities consolidated using the equity method,
local reporting and valuation methods are
maintained if the relevant amounts are
immaterial.
Where subsidiaries are consolidated for the
first time, the assets and liabilities and contingent
liabilities are assessed at their fair
values at the date of acquisition. Any excess
of the cost of acquisition over the fair values
of the identifiable net assets acquired is
recognized as goodwill. Any deficiency of the
cost of acquisition below the fair values of the
identifiable net assets acquired is credited to
profit and loss in the period of acquisition.
Hidden reserves or charges attributable to
minority shareholders are also disclosed.
All intra-group transactions, balances,
income and expenses are eliminated on
consolidation.
Foreign CUrrenCy TranslaTion
In accordance with IAS 21 the annual
financial statements of foreign companies
included in the consolidated financial
statements are translated into euros using the
functional currency method. The relevant
national currency is the functional currency
in all cases since these entities operate
independently from a financial, economic and
Consolidated Financial Statements
organizational perspective. Assets and
liabilities have been translated into euros at
the closing rate at the balance sheet date.
Income and expenses have been converted
into euros at the average rates over the
reporting period.
Equity items are valued at historical exchange
rates. Goodwill from acquisitions of
foreign entities has been calculated in euros
following initial consolidation.
Any currency translation differences have
been directly charged or credited to the
currency translation reserve in equity.
In the separate financial statements of the
consolidated entities, foreign currency
transactions are translated into the functional
currency of the individual entity using the
exchange rates prevailing at the dates of the
transactions. Foreign exchange gains and
losses resulting from the settlement of such
transactions and from the translation of
remaining balances at year-end exchange
rates are recognized in the consolidated
income statement.
Currency exchange rates of key currencies have shown the
following trends:
Closing rate Annual average rate
03/31/2006 03/31/2005 2005/06 2004/05
USD 1.2104 1.2964 1.2174 1.2583
GBP 0.6964 0.6885 0.6821 0.6819
Annual Report 2005/06
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