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150 Report by the Board of Administration, accounts of BayernLB and the BayernLB Group and notes to the accounts
the translation of these balance sheet items are disclosed as a balance under “Other
assets” or “Other liabilities”. Gains from the translation of other transactions hedged in
the same currency are only taken into account in so far as they compensate for tempo-
rary losses from the translation of hedging transactions (Section 340h, sub-section 2,
sentence 3 HGB), whereas translation losses are always taken into account as revenue
expenditure.
The translation of currencies in the annual accounts of the subsidiaries and joint ven-
tures included in the consolidated accounts is based on the same principles. In the
consolidated accounts, the balance sheet items and the expenses and income of our
foreign subsidiaries and joint ventures, unless their annual accounts have been pre-
pared in euros, are translated at the spot exchange rates as per the balance sheet date.
Translation gains and losses resulting from the consolidation of equity capital are set
off within the revenue reserves.
Group of consolidated companies
The consolidated accounts include BayernLB and the nine companies shown under I in
the inventory of shareholdings. In 2004, on the basis of new findings, the number of
companies included in the group of consolidated companies was adjusted by three
entities. The resulting adjustments of EUR 196 million were set off against the revenue
reserves of the Group. LB(Swiss) Privatbank AG, Zurich, is included in proportion to its
shares.
Pursuant to Section 296, Sub-section 1, No. 2 HGB, one affiliated company has not
been included in the consolidated accounts due to substantial and persistent restric-
tions affecting long-term the exercising of rights with relation to assets and manage-
ment. The remaining subsidiaries have neither been consolidated nor valued according
to the equity method because they are of subordinate importance with respect to the
financial position of the Group and the results of its operations. The non-consolidated
combined balance sheet total of these subsidiaries comes to around 1.6 percent of the
consolidated balance sheet total.
Consolidation principles
The consolidated accounts have been drawn up in accordance with the accounting and
valuation methods applicable to the annual accounts of BayernLB. The balance sheet
profit disclosed in the consolidated accounts is identical with that shown in the parent
company’s individual accounts.
Capital consolidation has been effected according to the book value method, using the
values at the time of acquisition or first consolidation of the subsidiary. Assets-side and
liabilities-side balancing items remaining after the allocation procedure laid down in
Section 301, Sub-section 1, Sentence 3 HGB are netted, the balance being transferred
to revenue reserves. The asset-side balancing item resulting from first-time consolida-