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Wavin Annual Report 2010 | page 82rates prevailing at the end of the year is also processed directly in the reserves as a separate component of equity.Upon disposal of foreign operations these cumulative translation adjustments are recognised in the income statement.Foreign currency translation differences are recognised in other comprehensive income and presented in the foreign currencytranslation reserve in equity. However, if the operation is a non-wholly-owned subsidiary, then the relevant proportionate shareof the translation difference is allocated to the non-controlling interests. When a foreign operation is disposed of such thatcontrol, signifi cant infl uence or joint control is lost, the cumulative amount in the translation reserve related to that foreignoperation is reclassifi ed to profi t or loss as part of the gain or loss on disposal. When the Group disposes of only part of itsinterest in a subsidiary that includes a foreign operation while retaining control, the relevant proportion of the cumulativeamount is reattributed to non-controlling interest. When the Group disposes only part of its investment in an associate thatincludes a foreign operation while retaining signifi cant infl uence or joint control, the relevant proportion of the cumulativeamount is reclassifi ed to profi t or loss.The following exchange rates, for the signifi cant countries in which the Group operates, were used in preparing these fi nancialstatements:2010 2009 2010 200931 DECEMBER 31 DECEMBER AVERAGE AVERAGEPound Sterling 0.8608 0.8881 0.8577 0.8900Polish Zloty 3.9750 4.1045 3.9921 4.3293Danish Krone 7.4535 7.4418 7.4463 7.4461Norwegian Krone 7.8000 8.3000 7.9997 8.7279Czech Koruna 25.0610 26.4730 25.2133 26.4286Turkish Lira 2.0694 2.1547 1.9949 2.1599Hungarian Forint 277.9500 270.4200 274.9866 280.0983US Dollar 1.3362 1.4406 1.3262 1.3925(iii) Net investment in foreign operationsExchange differences arising from the translation of the net investment in foreign operations, and of related hedges, arerecognised in the translation reserve to the extent that net investment hedge accounting is being applied and the hedge iseffective. Upon disposal, the exchange differences in the translation reserve are released in the income statement.In respect of all foreign operations, translation differences that arose before 1 January 2004, the date of the transition to IFRS,are presented as a separate component of equity.(d) Financial instruments(i) Non-derivative financial instrumentsNon-derivative fi nancial instruments comprise investments in equity and debt securities, trade and other receivables,cash and cash equivalents, loans and borrowings as well as trade and other liabilities.Non-derivative fi nancial instruments are recognised initially at fair value. Attributable transaction costs are recognised in theincome statement when incurred. Subsequent to initial recognition non-derivative fi nancial instruments are measured asdescribed below.Cash and cash equivalents comprise cash balances and call deposits. Wavin is operating a notional cash pool system forcash management of group companies. The positive and negative positions under the cash pool system are netted. As aconsequence the fi nance income and fi nance expense related to this system are also presented on a net basis.Accounting for fi nancial income and expense is disclosed in accounting policy (ab).HELD-TO-MATURITY INVESTMENTSIf the Group has the positive ability and intent to hold debt securities to maturity, then they are classifi ed as held-to-maturity.Held-to-maturity investments are measured at amortised cost using the effective interest method, less any impairment loss.FINANCIAL ASSETS AND LIABILITIES AT FAIR VALUE THROUGH PROFIT OR LOSSFinancial assets and liabilities are classifi ed at fair value through profi t or loss if they are held for trading or are designated assuch upon initial recognition. Financial instruments are designated at fair value through profi t or loss if the Group managessuch investments and makes purchase and sale decisions based on their fair value in accordance with the Group’s