Siegfried Annual Report 2009

exchange rates prevailing on the transaction dates. The
exchange rate differences arising from the translation of the
Financial Statements are recognized directly in consolidated
equity. Exchange rate differences arising on intercompany
loans that, in substance, form part of the net investment in
that subsidiary as well as financial liabilities that are designated
as hedges of these investments, are also recognized in
equity. Intercompany loans are regarded as part of a net
investment in a subsidiary, if the settlement of these loans is
neither planned nor likely to occur in the foreseeable future.
All other exchange rate differences are included in the
Income Statement.
Translation differences on non-monetary financial assets and
liabilities such as equities held at fair value through profit or
loss are recognized in the income statement as part of the
fair value gain or loss. Translation differences on non-monetary
financial assets such as equities classified as availablefor-sale
are included in the reserve for value fluctuations of
financial instruments in equity.
The exchange rates applied to the Group’s most important
foreign currencies are as follows:
Balance Sheet
Year-end rates 2009 2008
1 USD 1.038 1.056
1 EUR 1.488 1.489
Income Statement
Average rates 2009 2008
1 USD 1.0857 1.0831
1 EUR 1.5102 1.5874
Property, plant and equipment are valued at acquisition
or production cost less accumulated depreciation. Land is
not depreciated. Depreciation is charged on a straight-line
basis over the following estimated useful life of the assets:
Buildings
Machinery and equipment
Vehicles
IT equipment
10–45 years
8–15 years
8–10 years
3–5 years
or losses on disposal are recorded in the Income Statement.
In determining the recoverable value for items of property,
plant and equipment, expected future cash flows are discounted
to their present value. Maintenance and repair costs
are recognized in the Income Statement. Subsequent purchase
and production costs are capitalized, only if a future
economic benefit is expected and the costs of the asset can
be reliably determined. All other repair and maintenance
costs are recorded in the Income Statement in the financial
year in which these costs are incurred.
Leasing Leased property, plant and equipment for which
the significant risks and rewards are transferred to the Group
are disclosed as Financial leases. All other lease agreements
are classified as Operating leases. Financial leasing contracts
are capitalized at the beginning of the leasing period at the
lower of fair value of the leased property and the net present
value of the minimum lease payments. The corresponding
liability is disclosed under Financial Liabilities (after
deduction of the financing costs). The depreciation period
for leased objects corresponds to the guidelines for the
depreciation of property, plant and equipment (see above)
or the period of the lease if shorter. Leasing instalments are
divided into a repayment and an interest portion. The interest
portion is charged at a constant rate (for the remainder
of the liability) against financial expenses.
Intangible assets Intangible assets consist of licenses,
patents, trademarks, technology, customer base, software
and capitalized development costs for Siegfried products and
generic dossiers. Goodwill from an acquisition is allocated to
the cash-generating units on the date of the acquisition that
benefit from future cash flow as a result of the acquisition.
Goodwill is the excess of the cost of the acquisition over the
Group’s interest in the fair value of the identifiable net assets
acquired. Goodwill is carried in the local currency of the
Group company, which has performed the purchase.
Patents, licenses, trademarks and other intangible assets
acquired through acquisitions are recorded at fair value at
the acquisition date, or if separately acquired at cost.
If parts of a fixed asset have different useful lives, they are
recognized and depreciated as separate assets. The useful
lives of assets are evaluated at least once a year at the
reporting date and, if necessary, amended. Property, plant
and equipment are excluded from the Balance Sheet on
retirement or when no value in use can be expected. Gains
Financial Statements Siegfried Group 75