Consolidation principles

The consolidated financial statements were drawn up according to uniform Group accounting policies in accordance with International Financial Reporting Standards – IFRS . The annual financial statements included in the consolidated financial statements were for the most part prepared as at 31 December. Compilation of interim financial statements for the Group companies with diverging financial years was not required pursuant to IAS 27 “Consolidated and Separate Financial Statements” because their closing dates are no more than three months prior to the Group closing date. The effects of significant transactions between diverging financial years and the Group closing date were taken into account.

The capital consolidation is compiled in accordance with the requirements of IAS 27. Subsidiaries are all companies (including special purpose entities) with respect of which the Group exercises control over financial and business policy or, in the case of special purpose entities, where the majority of economic risks and benefits remain within the Group. The Group also considers potential exercisable voting rights when assessing control. Subsidiaries are included in the consolidated financial statements (full consolidation) from the point when control passed to the Group. They are deconsolidated at the point when this control ends.

Acquired subsidiaries are accounted using the purchase method. The acquisition costs associated with purchases correspond to the fair value of the assets offered and liabilities arising/assumed at the time of the transaction. Acquisition-related costs are recognised as an expense when they are incurred. Assets, liabilities and contingent liabilities that can be identified in the context of a corporate acquisition are measured upon initial consolidation at their fair values at the time of acquisition. A difference arising out of the netting of the acquisition costs with the fair value of the assets and liabilities is recognised as goodwill under intangible assets. If the difference is negative, the Group recognises a gain from the acquisition at a price below market value, directly through profit or loss.

Non-controlling interests in acquired companies are generally recognised based on the proportionate interest in the net assets of the acquired companies. Changes in the interest of the Group in a subsidiary that do not result in a loss of control are recognised as an equity transaction. Non-controlling interests in shareholders’ equity or in the net income of majority-owned subsidiaries are shown separately in equity in the item “Non-controlling interests in equity” and in the statement of income in the item “Non-controlling interests”.

All intra-group receivables and liabilities as well as income, expenses and interim results derived from intra-group transactions were eliminated as part of the consolidation of debt, earnings and interim results. Transactions between disposal groups and the Group’s continuing operations are also eliminated.

Companies over which the Group is able to exercise a significant influence are normally consolidated using the equity method in accordance with IAS 28 “Investments in Associates” as associated companies and initially carried at the cost of acquisition, including transaction costs. A significant influence is presumed to exist if a company belonging to the Group directly or indirectly holds at least 20% – but no more than 50% – of the voting rights. The Group’s interest in associated companies includes the goodwill arising upon acquisition. The accounting policies used by associated companies were modified – if necessary – in order to ensure consistent Group-wide accounting.

Joint ventures, i.e. companies whose commercial activities are jointly managed by the Group with one or more partners, are essentially included in the consolidated financial statements using the equity method, a choice provided by IAS 31 “Interests in Joint Ventures”.

Interests in associated companies and joint ventures consolidated using the equity method are recognised in the balance sheet item “Interests in associated companies and joint ventures” in the area of “Assets under own management”. The share of the Group in the profits and losses of these companies is recognised separately in the Group’s statement of income under net investment income in accordance with IAS 1 “Presentation of Financial Statements”. For further details please refer to the “Accounting policies” section and the information in note 5 “Investments in associated companies and joint ventures” as contained in the section “Notes on individual items of the consolidated balance sheet”.