Consolidation principles

The consolidated financial statement was drawn up in accordance with uniform Group accounting policies. The annual financial statements included in the consolidated financial statement were for the most part prepared as at 31 December. Compilation of interim financial statements for the Group companies with diverging financial years is 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 capital consolidation is compiled in accordance with the requirements of IAS 27. Subsidiaries are all companies (including special purpose entities) with respect to which the Group exercises control over financial and business policy. Subsidiaries are included in the consolidated financial statement (full consolidation) from the point in time when control passed to the Group. They are deconsolidated at the point in time when control ends.

Investments in subsidiaries not included in the consolidated financial statement because of their subordinate importance – in relation to assets, financial position and net income of the Group – are recognized at fair value or, if this cannot be reliably established, at amortized cost in the balance sheet item “Investments in affiliated companies and participating interests”.

Acquired subsidiaries are accounted using the purchase method. The acquisition costs associated with purchase correspond to the fair value of the assets offered and liabilities arising/assumed at the time of the transaction. Acquisition-related costs are recognized in income 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 the netting of the acquisition costs with the fair value of the assets and liabilities is recognized as goodwill under intangible assets. In accordance with IFRS 3 “Business Combinations” scheduled amortization is not taken on goodwill; instead, it is written down as necessary on the basis of annual impairment tests. Immaterial and negative goodwill are recognized in the statement of income in the year of their occurrence.

Minority interests in shareholders’ equity or in the net income of majority-owned subsidiaries are shown separately in equity in the item “Minority interests” and in the statement of income in the item “Minority interest in profit or loss”.

All intra-group receivables and liabilities as well as income, expenses, and profits and losses resulting from intra-group transactions were eliminated within the scope of the debt and earnings consolidation.

Companies over which the Group is able to exercise a significant influence are normally consolidated “at equity” as associated companies and initially carried at cost of acquisition. 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 investment in associated companies includes the goodwill arising upon acquisition. The accounting policies used by associated companies were in principle modified – if necessary – in order to ensure consistent Group-wide accounting. The Group’s share in the profits and losses of associated companies is recognized separately in the consolidated statement of income in accordance with IAS 1 “Presentation of Financial Statements”.

Joint ventures, i.e. if two or more partner companies conduct a commercial activity under joint management, are included in the consolidated financial statement according to proportionate consolidation. The procedure for proportionate consolidation largely corresponds to the inclusion of subsidiaries pursuant to IAS 27. However, the assets and liabilities as well as the expenses and income of the joint venture are not carried over to the consolidated balance sheet and consolidated statement of income in the full amount, but rather only on a proportionate basis.