2011 Annual report - touax group

➜ note 1.2. Estimates
Drawing up financial statements in accordance with IFRS
standards has led management to perform estimates and put
forward assumptions affecting the book value of certain assets
and liabilities, income and expenses, as well as the information
given in certain notes to the statements.
Since these assumptions are intrinsically uncertain, actual
information may differ from the estimates. The Group regularly
reviews its estimates and assessments in order to take past
experience into account and factor in any elements considered
relevant regarding economic conditions.
The statements and information subject to significant estimates
especially concern the appraisal of potential losses in value of the
Group’s tangible assets, goodwill, financial assets, derivative
financial instruments, inventories and work in progress, provisions
for risks and charges, deferred taxes.
➜ note 1.3. Consolidation methods
The Group’s annual financial statements include the statements
for TOUAX SCA and its subsidiaries covering the period from
January 1 to December 31, 2011.
Companies in which TOUAX SCA has a controlling interest are
fully consolidated and the rights of minority shareholders are
recognized.
Entities over which TOUAX SCA exerts a significant influence are
consolidated by the equity method.
Entities created for asset securitization are not included in the
consolidation perimeter since they do not constitute controlled
special purpose entities in the sense of SIC 12 “Consolidation –
Special purpose entities” (see the notes to the consolidated
financial statements, note 1.5 page 56).
A list of companies included in the consolidation perimeter is
provided below in the notes to the consolidated financial
statements, note 2.2.
Commercial and financial transactions between consolidated
companies are eliminated, including internal profits.
➜ note 1.4. Foreign currency conversion
❙ note 1.4.1. Conversion of currency financial
statements for foreign subsidiaries
The functional and presentation currency of the Group is the euro.
The functional currency for foreign subsidiaries is generally the
local currency. When the majority of transactions is performed
in a third currency, the operating currency is the third currency.
Financial statements for the Group’s foreign companies are
prepared in their functional currency. The accounts of foreign
companies and are converted into the Group’s reporting
currency (euro) as follows:
• Assets and liabilities of foreign subsidiaries are converted into
euros at the closing exchange rate;
• Shareholders’ equity, maintained at the historical rate,
is converted at the closing exchange rate;
• The income and cash flow statements are converted at the
average exchange rate for the period;
• Profits or losses resulting from the conversion of the foreign
companies’ financial statements are recognized in a conversion
reserve included in the consolidated shareholders’ equity.
Goodwill generated during the acquisition of foreign companies
is recognized in the functional currency of the acquired company.
The goodwill is then converted at the current exchange rate
into the Group’s presentation currency. Any differences resulting
from the conversion are recognized in the consolidated
shareholders’ equity.
In accordance with the option authorized by IFRS 1 “First-time
Adoption of IFRS”, the Group has chosen to reclassify the
aggregated “conversion reserves” as of January 1 2004, resulting
from the conversion mechanism for foreign subsidiary financial
statements, as “consolidated reserves”.
Following the disposal of a foreign subsidiary, the aggregated
exchange differences in the “conversion reserves” account
since January 1, 2004 are recycled on the income statement as
a component of the profit or loss from the disposal.
Exchange rate for the main currencies
parity: Currency = €1
Closing rate Average rate
2011 2010 2011 2010
Swiss franc (CHF) 1.2156 1.2504 1.2326 1.3803
Czech crown (CZK) 25.787 25.061 24.5898 25.284
Polish zloty (PLN) 4.4168 3.9603 4.1205 3.9947
US dollar (USD) 1.2939 1.3362 1.392 1.3257
❙ note 1.4.2. Conversion of transactions
in foreign currency
Transactions by consolidated companies in foreign currency
have been converted into their functional currency at the
exchange rates prevailing on the date of the transaction.
Monetary assets and liabilities in foreign currency have been
converted at the exchange rates prevailing on the balance sheet
date. Latent exchange gains or losses from this conversion are
booked to net financial income.
Exchange gains/losses arising from a monetary component,
which is essentially an integral part of the net investment in a
foreign subsidiary included in the scope of consolidation are
booked to a conversion reserve in shareholders’ equity until that
net investment has been sold or otherwise liquidated.
Consolidated financial statements
Financial information concerning the issuer’s assets, financial position and result
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