Currency translation

Items in the financial statements of Group companies are measured on the basis of the currency corresponding to that of the primary economic environment in which the company operates (functional currency). The consolidated financial statements are prepared in euros, which is the parent company’s functional currency.

Transactions in foreign currencies are generally converted into the functional currency using exchange rates prevailing on the transaction date. In accordance with IAS 21 “The Effects of Changes in Foreign Exchange Rates”, the recognition of exchange rate gains and losses on translation depends on the nature of the underlying balance sheet item.

Gains and losses from the translation of monetary assets and liabilities existing in foreign currencies are recognised in the statement of income under “Other income or expenses” in “Other income/expenses”.

Currency translation differences relating to non-monetary assets, changes of the fair values of which are carried in income, are recognised with the latter as profit or loss from fair value measurement changes. Exchange rate gains or losses from non-monetary items, such as equities classified as available for sale, are initially recognised under “Other comprehensive income” and subsequently reallocated to profit or loss when such an instrument is sold or in the event of impairment.

The Group companies’ statements of income prepared in national currencies are converted into euro at the average rates of exchange and transferred to the consolidated financial statement. The conversion of foreign currency items in the balance sheets of the individual companies and the transfer of these items to the consolidated financial statement are effected at the mean rates of exchange as at the balance sheet date. All resulting currency translation differences – including those arising out of capital consolidation – are recognised under “Other comprehensive income” and shown in the reserve for currency translation in shareholders’ equity. Currency translation differences resulting from long-term loans or open-ended loans to a foreign business operation whose repayment is neither planned nor likely are also recognised under “Other comprehensive income” and shown in the reserve for currency translation in shareholders’ equity. Goodwill arising from the acquisition of a foreign company is treated as an asset of the foreign entity and translated as at the balance sheet date.

N19 EXCHANGE RATES FOR OUR KEY FOREIGN CURRENCIES
   
  1 EUR corresponds to Balance sheet
(balance sheet date)
Statement of income
(average)
       
    2013 2012 2013 2012
  AUD Australia 1.5513 1.2690 1.3842 1.2465
  BRL Brazil 3.2095 2.6942 2.8727 2.5243
  CHF Switzerland 1.2264 1.2081 1.2273 1.2054
  CNY China 8.3445 8.2148 8.1738 8.1475
  GBP United Kingdom 0.8357 0.8180 0.8480 0.8136
  MXN Mexico 17.9831 17.1341 17.1102 17.0258
  PLN Poland 4.1502 4.0776 4.2026 4.1922
  USD USA 1.3766 1.3182 1.3293 1.2932
  ZAR South Africa 14.4390 11.2069 12.8556 10.5674