Annual Report - Miba

statements and a group management report according to internationally accepted accounting
principles is exempt from preparing financial statements based on the national requirements
of the Commercial Code.
Differences between IFRS and the Austrian reporting requirements
The reporting requirements according to IFRS have the objective of providing investors with
relevant information for decision-making. Therefore, according to IFRS, commercial reporting
and tax reporting are strictly separated, accruals for expenditures are not allowed, the definition
of realized profits differs in some cases, reporting and valuation rights are more narrowly
defined and notes and explanations to the financial statements are more extensive.
Goodwill from consolidation of capital: According to IFRS 3, goodwill is capitalized and
annually subjected to an impairment test. Since the 2004/05 fiscal year, goodwill is no longer
systematically amortized. According to the Austrian Commercial Code, an allocation to
reserves with a neutral effect on income or a capitalization with depreciation on a straightline
basis is allowed.
Deferred taxes: Under the Austrian reporting regulations, deferred tax liabilities are
allowed only to the extent that there are temporary differences affecting income, whereas
deferred tax assets may be optionally capitalized. According to IFRS rules, all temporary
differences are subject to deferred taxes at the currently applicable tax rate. This also
applies in relation to tax losses carried forward insofar as these are expected to be reversed
by future gains.
Other accruals: With regard to accruals, the IFRS and the Austrian Commercial Code differ
in their interpretation of the principle of caution. The IFRS tend to have stricter requirements
regarding the probability of relevant events and the definition of accruable amounts.
Financial assets: Current financial assets are reported at market prices (market value as
of the balance sheet date). In contrast to the Austrian Commercial Code, an upward
revaluation is not limited by the acquisition costs.
Foreign currency valuation: The two reporting systems differ in recognizing unrealized
gains from the valuation of foreign currency as of the balance sheet date. According to
Austrian law, only unrealized losses must be reported in accordance with the imparity
principle, whereas according to IFRS, unrealized gains also have to be included, and therefore,
any foreign currency fluctuation will immediately affect income. According to IFRS,
unrealized exchange rate gains or losses from intercompany loans are reported under
shareholder’s equity with a neutral effect on income.
Receivables from production on contract: According to the Austrian Commercial Code,
sales and profits will not be recognized until the customers have been invoiced (completed
contract method). According to IAS 11, production on contract is reported in accordance
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