E_mg_GB_03_vorne-29_3_04

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150 Up to December 31, 2002, the book value of goodwill shown in the ‘Consolidated’ column was still reported at Group level. Since January 1, 2003, this goodwill – and, similarly, hidden reserves and undisclosed charges – has been broken down into the various segments and accounted for there. The increase of a11.4 million in goodwill in the Dynamit Nobel segment relates to the post-capitalization of assets under purchase accounting. Sales by geographical area were as follows: Central/ Asia, Australia, EU (excl. Rest of North South Middle t million 1/1/2003 - 12/31/2003 Germany Germany Europe America America East Africa Total Continued operations 1,732.6 1,752.1 600.4 801.6 292.3 1,081.6 142.6 6,403.2 Discontinued operations 428.6 787.9 141.5 183.1 29.1 104.6 78.9 1,753.7 Total 10/1/2002 - 12/31/2002 2,161.2 2,540.0 741.9 984.7 321.4 1,186.2 221.5 8,156.9 Continued operations 411.0 418.1 162.5 213.5 82.1 205.3 26.3 1,518.8 Discontinued operations 105.2 228.5 52.2 69.1 4.6 23.8 30.6 514.0 Total 516.2 646.6 214.7 282.6 86.7 229.1 56.9 2,032.8 Sales are broken down by geographical area according to the domicile of the customer or the location of the services provided. There were no relationships with individual customers that accounted for a significant share of the Group’s sales. As the internal figures reported to the Executive Board and the Supervisory Board are prepared according to U.S. GAAP, the above segment reporting corresponds to U.S. GAAP (management approach). The accounting principles applied to the segments are therefore the same as those described for the Group in the summary of significant accounting policies.
MANAGEMENT SHARE STRATEGY SPECIAL SECTION MANAGEMENT REPORT FINANCIAL STATEMENTS FURTHER INFORMATION Consolidated Balance Sheets • Statements of Income • Statements of Cash Flows • Statements of Changes in shareholders’ Equity • Fixed Assets Schedule • Notes • Independent Auditors’ Report MATERIAL DIFFERENCES BETWEEN GERMAN AND U.S. ACCOUNTING PRINCIPLES The mg Group utilizes the exempting provision of section 292a of the German Commercial Code (HGB), which states that consolidated financial statements and consolidated management reports may be prepared according to internationally recognized accounting standards. The consolidated financial statements have been prepared in accordance with the current United States generally accepted accounting principles (U.S. GAAP). They are consistent with the 4th and 7th EU Directives based on the interpretation according to DRS No. 1 of the German Accounting Standards Committee (DRSC). For the mg Group, the accounting policies and consolidation methods under U.S. GAAP differ from the German provisions of the HGB primarily in the following respects: Differences in the Principles of Consolidation Goodwill and Purchase Accounting While the HGB states that an acquisition may be consolidated for the first time either at the time of the acquisition or at the time the subsidiary is included in the consolidated financial statements for the first time, U.S. GAAP state that the first-time consolidation must be at the time of acquisition (change of control). The adoption of FIN 46r gives rise to further differences with respect to the companies to be consolidated. In departure from the HGB, FIN 46r states the requirement – irrespective of any controlling influence – to consolidate companies for which the reporting company is deemed to be the main beneficiary by virtue of a commercial interest. Goodwill represents the excess purchase price over the fair market value of assets acquired and liabilities assumed. U.S. GAAP state that goodwill must be capitalized and, in contrast to the HGB, may no longer be amortized over its estimated useful life. Instead, it must be tested for impairment at least once a year and, if necessary, written down. Writing off goodwill through shareholders’ equity, which is an option under section 309 of the HGB, is not permitted. If shares are issued to fund an acquisition, they must be reported at their fair value and not, as is customary under the HGB, at their nominal or par value. If the fair market value of net assets acquired exceeds acquisition cost, the consolidation of investments in subsidiaries produces negative goodwill. Section 309 (2) of the HGB states that this difference may only be recognized in income if it reflects an expected adverse trend in future earnings or it is clear that it corresponds to a realized gain. SFAS 141 (‘Business Combinations’) states that the negative goodwill must be deducted from the carrying amount of certain non-current assets acquired. Under SFAS 141, any further shortfall is reported as extraordinary income or, in exceptional cases (‘contingent considerations’), recognized as deferred income. 151
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“2003 was a year of transition fo
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Consolidated Key Figures 2003 RESUL
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Creating freedom for action CONTENT
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MANAGEMENT SHARE STRATEGY SPECIAL S
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zation As the world’s population
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The pharmaceutical industry will co
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Milk Last year, over 160 million co
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The MODUL tablet press produced by
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For a technology-driven organizatio
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mg's mission is to ensure sustainab
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Page 185: Key Figures for the mg Group RESULT
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