Annual Report 2011 - Hong Kong Monetary Authority

Valuation policies
Translation of financial statements
in foreign currency
Transactions in foreign currency are reported at the exchange
rate applicable on the date of the relevant transaction.
Profits and losses arising from the settlement of these
transactions are reported in the profit and loss account,
along with profits and losses arising from the conversion at
the exchange rate on the balance sheet date of claims and
liabilities on money market placements denominated in
foreign currency.
The balance sheets of fully consolidated companies expressed
in foreign currency are trans lated into Swiss francs
at the year-end exchange rate, except for share holders’
equity which is translated at historical rates.
The profit and loss accounts of Group companies are
translated at yearly average exchange rates.
In the case of foreign companies consolidated using the
equity method, the year-end market rate is applied to the
Group’s share of equity expressed in foreign currency. The
Group’s share of the net income of these affiliated companies
is translated at the annual average exchange rate.
Translation differences resulting from full conso lidation and
from the equity method are reported as shareholders’
equity in “Retained earnings”.
The exchange rates used to convert sums in foreign currency
are as follows:
Closing
rate
2011 2010
Average
2011 rate
Closing
rate
Average
2010 rate
Major currencies
USD 0.94 0.88 0.94 1.04
GBP 1.46 1.41 1.45 1.60
EUR 1.22 1.23 1.25 1.37
68 2011 ANNUAL REPORT - BANQUE PRIVÉE EDMOND DE ROTHSCHILD SA
Transaction bookings
and balance sheet reporting
Since 31 Dec. 2006 the balance sheet and profit and loss
statement have been drawn up on the basis of settlement
dates.
Results of forex
and precious metals transactions
Trading positions in forex and precious metals are evaluated
at year-end rates and prices.
Forward positions are estimated at year-end at the forward
rate for the remainder of the period. Forex differences are
recorded in the profit and loss account.
Income and expenses expressed in foreign currency are
translated at the market rate prevailing on the transaction
date.
Fixed assets
and financial investments
Fixed assets are stated at cost less depreciation (see Note 8),
except for the equity stakes in associated companies
consolidated as per the equity method. These are shown
under “Non-consolidated holdings”.
Income and expenses
The income and expenses generated by the Group companies
are accounted for in the period to which they relate.
No substantial intermediate profit arises from on intercompany
transactions.