ANNUAL REPORT 2008 | 2009 - SinnerSchrader AG

52NotesConsolidated Financial Statements of SinnerSchrader AG2.4 Consolidation PrinciplesAll transactions and balances within the group between affiliated companies were eliminated. The ConsolidatedFinancial Statements were prepared on the basis of the individual financial statements of the above-mentionedGroup companies, which are compiled according to the relevant local accounting regulations, in particular theregulations of the German Commercial Code, with any necessary adjustments to IFRS being made. For theConsolidated Financial Statements, the same balancing and evaluation principles were used as a basis for thesame business incidents and events under similar conditions.For newtention technologies GmbH, newtention services GmbH, next commerce GmbH, and SinnerSchraderBenelux BV, interim reports were drawn up as of the reporting date of the parent company because they havedifferent financial years from their parent company. The financial statements of all other companies included inthe consolidation group are prepared according to the reporting date of the parent company. This is the same asthe Group reporting date.2.5 Report Currency and Currency ConversionThe currency of the report is the euro (€). The report is cited in full euro amounts.The functional currency of the foreign subsidiaries outside the euro zone - the group of European countries thathave introduced the euro as their currency - is the relevant national currency. The financial statements of theseforeign subsidiaries are converted into euros, with the assets and liabilities being converted at the conversion rateof the balance sheet date and the sales revenues, the costs of sales revenues and expenditure being convertedat the average rate for the financial year in question. The accumulated currency profits and currency losses fromforeign currency conversion for the financial statements are identified in a separate balancing item in shareholders’equity. Where relevant, currency profits and losses from foreign currency transactions are treated with an effecton profits.2.6 Estimates and AssumptionsDrawing up consolidated financial statements according to IFRS requires the management to make estimatesand assumptions that have an influence on the values posted for assets and liabilities and the information oncontingent claims and contingent liabilities on the balance sheet date and on the posted revenues and expensesfor the period covered by the report. The actual results may deviate from these estimates. Major estimates concernthe application of the percentage-of-completion (POC) method, the posting of accrued expenses, and theapproach for the purchase price instalments which depend on the future results of spot-media AG, newtentiontechnologies GmbH, and the customer relationship acquired by spot-media AG.Estimates are also made in connection with determining the reduction in the value of fixed assets and intangibleassets. Indications of a reduction in value, the estimates of future cash flows, and the determination of thecurrent value to be ascribed to assets (or groups of assets) are associated with major estimates which themanagement must make regarding the identification and review of signs of a reduction in value, of the expectedcash flows, the applicable discount rates, the respective usage periods, and the residual value. To determine theamount achievable by a cash-generating unit, assumptions are also made regarding the development of revenuesand markets which have a significant effect on the amount of the current value to be ascribed to goodwill.