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Currency translation

In the financial statements of the individual consolidated companies that form the basis for the consolidated financial statements of the LANXESS Group, all foreign currency receivables and payables are translated at closing rates, irrespective of whether they are hedged. Forward contracts serving as economic hedges against fluctuations in exchange rates are reflected at fair value.

The financial statements of each foreign entity are valued on the basis of the currency of the primary economic environment in which the entity operates (functional currency concept). By far the majority of foreign companies are financially, economically and organizationally autonomous and their functional currencies are therefore the local currencies. The assets and liabilities of these companies are translated at closing rates, while income and expense items are translated at average rates for the year.

Goodwill arising on the acquisition of a foreign entity is recorded in the currency of the acquired entity and translated at the closing rate, irrespective of the date on which it arose.

Equity (excluding income and expenses recognized directly in other comprehensive income) is translated at historical rates while income and expenses are translated at average rates. This results in differences compared with translation at closing rates, which are shown separately in other comprehensive income as exchange differences on translation of operations outside the eurozone.

If a company is deconsolidated, the relevant exchange differences are reversed and recognized in profit or loss.

The main exchange rates used for currency translation in the LANXESS Group were:

Exchange Rates
€ 1   Closing rate, Dec. 31 Average rate
    2011 2012 2011 2012
Argentina ARS 5.57 6.49 5.75 5.85
Brazil BRL 2.43 2.70 2.33 2.51
China CNY 8.16 8.22 9.00 8.11
United Kingdom GBP 0.84 0.82 0.87 0.81
India INR 68.60 72.56 64.86 68.62
Japan JPY 100.20 113.61 110.99 102.61
Canada CAD 1.32 1.31 1.38 1.28
Singapore SGD 1.68 1.61 1.75 1.61
South Africa ZAR 10.48 11.17 10.10 10.55
United States USD 1.29 1.32 1.39 1.29


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