Page 35 - Annual Report 2019

Supervisory Board Report
Group Management Report
Consolidated Financial Statements
Annexes

Other provisions must be recognised for uncertain liabilities and impending losses from on-going
transactions. Provisions must also be set aside for deferred maintenance, which is to be completed
within three months after the start of the subsequent financial year, and for warranties granted
with no legal obligation. Provisions are recognised in the amount required to meet these obligations
as determined by prudent business judgement, taking all foreseeable risks into account. We have
allowed for future price and cost increases where they seemed likely to occur based on objective
evidence. Provisions with a remaining term of more than one year were discounted using the relevant
average market interest rate from the past seven financial years in accordance with the remaining
term.

Liabilities are recognised at their settlement amount as of the balance sheet date. Contingencies
from liability agreements correspond to the loan amounts actually drawn down at the balance sheet
date.
Where hedge accounting is applied pursuant to Section 254 HGB, the amounts are reported using
the so-called “net hedge presentation method” (Einfrierungsmethode).

(5) Currency translation

Assets and liabilities denominated in foreign currency were translated using the average spot
market rate on the balance sheet date. Where the residual term is less than one year, the acquisition
cost no longer represents the upper value limit and gains must be recognised in income. The assets
and liabilities of all companies within the Group are translated using the period-end closing rate.
Differences arising from the debt consolidation are included in the items “change in equity
from currency translation” without affecting net income. Historic exchange rates are used for all
equity items. Expenses and income are converted at the annual average rate published by
the European Central Bank.

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