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B Consolidated Annual Financial Statements/Notes V. Notes to the Consolidated Financial Statements of Salzgitter AG 234 235
IAS 20 stipulates that grants may not be reported in the balance sheet until the necessary claim
prerequisites have been fulfilled and it can be anticipated that the grants will actually be paid out. In
principle, grants related to assets are reported as deductions from acquisition or production costs.
Insofar as a grant related to income refers to future financial years, it is reported using the accrual
method, and the component for future periods is transferred to an accrued item.
Impairment of Assets (Impairment Test)
On each balance sheet date, the Group examines the book values of its intangible assets and property,
plant and equipment to establish whether there is an event which could trigger impairment. If such
signs are discernible, the recoverable amount is estimated in order to determine the scope of the
impairment. If the recoverable amount for the individual asset cannot be estimated, the estimate is
made at the level of the cash generating unit (CGU) to which the asset belongs. Impairments are
carried out if the benefit deriving from the asset is lower than its book value. The benefit deriving from
an asset corresponds to the net selling price or the value in use, whichever is higher. The value in use
is determined by the net present value of future cash flows attributable to the asset. If the reason for
a previous special depreciation no longer applies, a write-up is carried out.
Non-current assets that are classified as held for sale are reported at the carrying amount or the
lower fair valueless costs to sell.
Financial Risk Management
The Group’s business activities expose it to a variety of financial risks: the market risk (includes the
currency risk, the interest rate risk and the market price risk), the credit risk and the liquidity risk. The
Group’s overall risk management program is focused on the unpredictability of developments in the
financial markets and seeks to minimize potential adverse effects on the Group’s financial position.
Risk management is carried out independently by the subsidiaries and associated companies of
Salzgitter AG in accordance with policies approved by the Executive Board. The Executive Board issues
written principles for overall risk management as well as guidelines for specific areas, such as the
currency risk, the interest rate and credit risk, the use of derivative and non-derivative financial instruments
and the investment of excess liquidity.
Currency risk
The Group operates internationally and is therefore exposed to a currency risk based on fluctuations
in the exchange rates between various foreign currencies. Currency risks arise from expected future
transactions and assets and liabilities reported in the balance sheet. The risk arises when transactions
are denominated in a currency that is not the functional currency of the company. The Group companies
use forward exchange contracts to hedge against such risks.
Consolidated Annual
Financial Statements