3 General accounting policies

3.1 Scope of consolidation

The consolidated financial statements are based on the financial statements of the individual Group companies controlled directly or indirectly by Schindler Holding Ltd. Control exists if Schindler is exposed, or has rights, to variable returns and has the ability to influence those returns through its power. Control is presumed to exist when Schindler owns, directly or indirectly, more than half of the voting rights of a company.

Changes in the interests held in Group companies are recognized as equity transactions provided control is retained. If control is lost, the difference between the consideration received and the net assets disposed of is reported as other operating income.

For information on businesses acquired and subsidiaries disposed of in the reporting year, refer to notes 23 and 24, respectively.

3.2 Translation of foreign currency

The functional currency of Group companies is generally the currency used in the primary economic environment in which they operate. Transactions in foreign currencies are translated at the spot rate. Resulting exchange gains and losses, as well as exchange gains and losses from the revaluation of foreign currency assets and liabilities at year-end rates are recognized as financial income or expenses.

For consolidation purposes, the financial statements of Group companies in foreign currencies are trans­lated into Swiss francs (CHF). Assets and liabilities are translated using year-end rates, while comprehensive income and cash flows are translated using average rates or the spot rate for significant transactions.

The change in accumulated exchange differences from the translation of foreign Group companies into Swiss francs is recognized in other comprehensive income (OCI). If a Group company is sold, or if control is lost, the accumulated exchange differences are reclassified to the income statement.

The following exchange rates were used for the most significant foreign currencies: