Consolidated financial statements

E. Consolidation principles

Capital consolidation applies the book value method according to which the carrying values are offset against the pro-rata share of the equity of the subsidiary at the point in time of its first-time consolidation. The positive differential amounts resulting from the consolidation are generally offset against existing reserves in line with Section 261 (1) of the Austrian Commercial Code (UGB). Provisions are set up to cover negative differential amounts provided that losses are expected or, in as far as these may be regarded as realised gains or where expected losses have been incurred, these are either set up or released as reserves, in accordance with Section 261 (2) of the UGB.

Shares in the equity of subsidiaries not held by the Group are recognised under the position Minority interests. During the consolidation, licences, lendings, accounts receivable – trade, other receivables and accrued income and prepayments are offset against corresponding liabilities and provisions.

All Group-internal expenses and income are balanced in the course of the expenses and income consolidation of the Group subsidiaries in accordance with Section 257 (1) of the UGB. In the event of Group-internal construction work on major assets, the associated revenues are reclassified as own work capitalised.

Temporary effects within the Group are eliminated in accordance with the principal of materiality. No elimination of temporary effects has been applied to companies valued under the equity method given that their influence on the overall standing of the Group is immaterial.

Deferred tax assets based on temporary effects, and resulting from the different accounting options available during the preparation of the consolidated financial statements as opposed to the financial statements of the individual subsidiaries, are deferred where these are material in the context of Group results. The untaxed reserves (with the exception of investment allowances) recognised in the financial statements of the subsidiaries are, after taking into account any tax deferrals, recognised under the position Retained earnings. Any material taxation differences resulting from these temporary effects are also deferred.

The differential amounts resulting from the capital accounting of companies accounted for under the equity method are determined according to the same principles applied to fully consolidated companies. Wherever possible and material, these valuations are adjusted to correspond to group-wide valuation methods.

These consolidated financial statements are based to a certain extent on estimations and assumptions which have an influence on the values of assets and liabilities, the representation of other obligations on the balance sheet date, and the details of revenues and expenses during the period under review. The actual figures and amounts may deviate from these estimations.