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Key accounting<br />
principles<br />
Basis of presentation<br />
The consolidated financial statements of the<br />
Starrag Group are prepared in accordance with<br />
International Financial <strong>Report</strong>ing Standards (IFRS).<br />
The financial statements are based on historical<br />
costs, with the exception of cash and cash<br />
equivalents as well as derivative financial instruments<br />
which are valued at market value. The<br />
presentation is in Swiss Francs (CHF). The financial<br />
statements include estimates and assumptions<br />
that affect reported amounts and related<br />
disclosures. Actual results may differ from these<br />
estimates.<br />
Consolidation principles<br />
The consolidated financial statements include<br />
those of StarragHeckert Holding AG and its directly<br />
and indirectly controlled subsidiaries. All assets<br />
and liabilities as well as income and expenses are<br />
included in the consolidated financial statements.<br />
All intercompany transactions (income and expenses,<br />
receivables and liabilities) as well as gains<br />
on such transactions are eliminated.<br />
Capital consolidation is based on the purchase<br />
method, whereby the acquisition costs of a<br />
subsidiary are eliminated at the time of acquisition<br />
against net assets at fair value, determined according<br />
to uniform corporate valuation principles.<br />
There has been no amortization of goodwill as its<br />
value is being reassessed annually (impairment<br />
test). An impairment will immediately be recorded<br />
in the income statement. Net income of acquired<br />
subsidiaries is included in the consolidated financial<br />
statements beginning at acquisition date.<br />
Currency translation<br />
Foreign currency transactions are recorded at the<br />
exchange rate of the transaction date. Foreign<br />
currency receivables and liabilities at balance<br />
sheet date are translated using the exchange rate<br />
of that date. Resulting translation differences are<br />
recorded in the income statement. Not-monetary<br />
positions are not revaluated at balance sheet date.<br />
Assets and liabilities of foreign subsidiaries are<br />
translated to CHF using the exchange rates of<br />
balance sheet date. Average exchange rates are<br />
used for the translation of the income statements.<br />
Translation differences arising from the consolidation<br />
of financial statements are carried to the<br />
statement of comprehensive income.<br />
Sales revenue and profit realisation<br />
Sales revenue is recorded on transition of benefit<br />
and risk. Sales revenue from construction contracts<br />
at fixed prices are reported including a profit<br />
share depending on percentage of completion<br />
(percentage of completion method). Percentage<br />
of completion is defined by the direct contracts<br />
costs excluding material costs. In the balance<br />
sheet, the contract value after deduction of<br />
received payments is reported under receivables<br />
or accrued expenses and deferred income from<br />
percentage of completion valued contracts.<br />
Research and development<br />
Research costs are charged to the income<br />
statement when incurred. Development costs<br />
are merely capitalized to the extent that such an<br />
amount is covered by corresponding expected<br />
income. Capitalized developments are being<br />
reassessed yearly (impairment test). All other<br />
research and development costs are charged to<br />
the income statement when incurred.<br />
Income tax<br />
Starrag Group <strong>Annual</strong> <strong>Report</strong> <strong>2011</strong> 69<br />
––<br />
Income tax expense includes all income tax on
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