[6] Currency translation

Financial statements in foreign currencies are translated in accordance with the functional currency concept (IAS 21 ‘The Effects of Changes in Foreign Exchange Rates’). The functional currency is the currency of the primary economic environment in which a company operates. The modified closing-rate method is used for currency translation.

The assets and liabilities of foreign subsidiaries, including goodwill, are translated at the middle spot exchange rate, i.e. at the average of the bid or offer rates on the reporting date. Income and expenses are translated at the average rate for the year. With the exception of income and expenses recognised as other comprehensive income (loss), equity is recognised at historical rates. The resulting translation differences are not taken to income and are recognised in other comprehensive income (loss) until subsidiaries are disposed of.

Transactions of the consolidated companies in foreign currencies are translated into the relevant company’s functional currency at the rate prevailing on the transaction date. On the reporting date, monetary items are translated at the closing rate and non-monetary items at the rate prevailing on the transaction date. Currency translation differences are taken to income and recognised in other income/expenses.

The translation rates below were used for currencies that are material to the financial statements: >> Table 042