Annual Report - Miba

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3. Foreign Currency Translation
The annual financial statements of the fully consolidated foreign subsidiaries as well as the
pro rata equity capital of the associated foreign companies are translated into EURO
according to IAS 21 (The Effects of Changes in Foreign Exchange Rates) based on the concept
of functional currency. For all companies, this is their respective local currency, since
they operate independently with regard to financial, economic and organizational aspects.
Therefore, the currency translation of assets and liabilities is based on the average rate
effective as of the balance sheet date. Income and expenses are calculated at the average
annual exchange rates (except for depreciation).
Differences in currency translation between the exchange rate effective on the balance
sheet date and the average exchange rate used for the income statement are recognized
under consolidated accruals.
Differences in currency translation resulting from the revaluation of equity vs. initial
consolidation are also recognized under consolidated accruals with a neutral effect on net
income.
The resulting decrease in the capital resources during the 2004/05 fiscal year amounted to
TEUR -1,019 (TEUR -4,640 in the previous year).
The changes in the Group's fixed assets are reported at the exchange rates effective as
of the balance sheet date. Changes in the average rates on the balance sheet date in
comparison with the previous year are reported separately in the changes in the consolidated
fixed assets statement under “Currency translation”.
Differences resulting from the currency translation of monetary foreign currency items in
the individual financial statements due to exchange rate fluctuations between the time the
transaction was entered and the balance sheet date are recognized in the respective
period so as to affect net income. Currency translation differences from net investments
in independently operating foreign subunits of the Group are recognized under consolidated
accruals without effect on net income in accordance with IAS 21.17.
For foreign currency receivables or payables that are hedged through forward exchange
contracts, the unrealized exchange rate gains are reported on the balance sheet date
under other receivables and assets, whereas unrealized exchange rate losses are reported
under other accruals.
The exchange rates of the relevant currencies changed as follows: