Business Report 2005 - Interseroh

Current cash in banks or bank liabilities are converted with the buying exchange rate on the
closing date and other foreign currency sums with the rate on the transaction date. Insofar as the
exchange rate on the closing date is lower for receivables or higher for liabilities, the foreign currency
value is shown converted with the rate on the closing date. Resultant currency conversion differences
are included in the group income statement with effect on net income.
The consolidated financial statements are prepared in euros. The sums are – with the
exception of the consolidated balance sheet and consolidated income statement – shown in million
euros rounded up to two decimal places. Rounding differences to the unrounded sums occurred in
individual cases.
The balance sheets and income statements of all foreign subsidiaries included in the
consolidated financial statements by way of full consolidation are also prepared in euros.
Only one associated company prepares its annual financial statements in Polish zloty. The
sums incorporated in the consolidated financial statements are converted pursuant to IAS 21 (The
Effects of Changes in Foreign Exchange Rates) to euros by the functional currency concept.
The following rates were used as a basis:
1 euro
Closing date rate Average rate
2005 2004 2005 2004
Poland PLN 3.86343 4.08518 4.02880 4.088305
The currency differences resulting from the conversion of the proportionate equity are shown in the
equity of the group without influence on net income.
V. Accounting and Valuation Methods
The annual financial statements of the fully consolidated companies have generally been prepared in
accordance with standardised accounting and valuation methods. The methods and valuation rules
applied by the parent company are also observed by the subsidiaries. There were generally no
changes to the accounting and valuation methods between the IFRS opening date (1 January 2004)
and either 31 December 2004 or 31 December 2005.
Unlike the consolidated financial statements as of 1 January 2004, some short-term liabilities
from contracts in the services segment have been shown gross since 31 December 2004, i.e.
including turnover tax. By the same token the associated receivables from deferrals and accruals have
also been shown gross since 31 December 2004.
To improve clarity, individual items in the income statement and balance sheet have been
grouped together. They are explained in the Notes. In accordance with IAS 1 (Presentation of
Financial Statements), the balance sheet distinguishes between long and short-term assets and
between long and short-term debts. Short-term assets and debts are assets and debts that are
realised or eliminated respectively within a year.
The consolidated financial statements were prepared on the basis of historical acquisition and
production costs except for the derivative financial instruments, which were valued at their fair value.
Intangible assets are generally valued at acquisition cost less scheduled depreciation over
their respective periods of use. With the exception of goodwill with unlimited periods of use, intangible
assets are depreciated linearly over a period of two to15 years. Extraordinary depreciations are
effected when this is deemed appropriate in the course of the impairment tests performed at least
annually. When the reasons for extraordinary depreciations disappear, corresponding appreciations
are – with the exception of goodwill – effected, which may not exceed the updated book values.
In accordance with the option codified in IFRS 1, the goodwill from acquisitions before 1
January 2004 is updated according to previous law. This means the scheduled and extraordinary
depreciations effected in earlier periods are kept and goodwill netted out with equity without influence
on net income is not subsequently capitalised.
Property, plants and equipment are valued at acquisition or production cost less
accumulated depreciation and scheduled depreciation in the financial year. Interest on debt capital is
not capitalised.
Rented or leased intangible assets and property, plants and equipment, which according
to the requirements of IAS 17 (Leases) must be deemed economically as fixed asset acquisitions with
long-term financing (finance-leasing), are stated in the balance sheet at the time of commencement of
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