Financial Information - Uralita

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FINANCIAL INFORMATION ANNUAL REPORT 2006 Law 62/2003, of December 30, on Fiscal, Administrative and Social Measures. Note 4 sets out obligatory accounting principles and policies and measurement bases applied and the alternatives legally permitted in this respect. No standards have been applied early. The Group’s annual consolidated accounts and the accounts of the companies comprising the Group for 2006 are pending approval at their respective General Shareholders' Meetings. The parent company’s Board of Directors expects the annual accounts to be approved without significant changes. The consolidated annual accounts for 2005, which were prepared in accordance with IFRS for the first time, were approved at the General Shareholders’ Meeting of Uralita, S.A. held 22 June 2006. exercise control over. Under IAS 27, control is understood as the ability to govern the financial and operating policy of an investee so as to obtain benefits from its activities. The annual accounts of subsidiaries are consolidated using the full consolidation method. Therefore, all material balances and results of transactions carried out between consolidated companies have been eliminated on consolidation. If necessary, adjustments are made to the financial statements of subsidiaries to unify the accounting policies used with those of the Group, one of the main ones being the capitalization of recoverable tax credits not recorded in the subsidiaries. The Group’s consolidated financial statements are presented in euros. Foreign operations are recorded applying the policies established in Note 4.18. Third-party interests in Group equity and profit are presented in "Minority interests" on the consolidated balance sheet and income statement, respectively. 2.2. Consolidation principles a. Subsidiaries Subsidiaries are defined as any company included in the consolidation scope over which the Parent Company, directly or indirectly, manages by virtue of ownership of a majority of the voting rights in their representation and decision-making bodies or has the capacity to Results of subsidiaries acquired or disposed of during the year are included in the consolidated income statement from the effective date of acquisition or until the effective date of disposal, as appropriate. Appendix I details the subsidiaries and related information (name, country of incorporation, percentage ownership by the parent company). 139
ANNUAL REPORT 2006 FINANCIAL INFORMATION b. Associates Associates are entities over which the Company has significant influence and which are neither a subsidiary nor a joint venture. Usually, this influence is evidenced by a direct or indirect holding of 20% to 50% of the investee’s voting rights. The Company’s investments in associates are accounted for in the consolidated annual accounts under the equity method of accounting, i.e. at a value equivalent to the Group’s proportional share in their capital after the deduction of dividends paid to the Group and other eliminations from equity. Gains or losses from any transactions with associates are eliminated to the extent of the Group’s interest in the relevant associate. If an associate incurs losses to the extent that its equity becomes negative, it is recorded in the Group’s consolidated balance sheet with a value of zero, since the Group has no obligation to support the associate financially. c. Translation differences The various captions in the balance sheets and income statements of companies whose annual accounts are presented in other currencies have been translated to euros using the following criteria: • Assets and liabilities were translated at the official year-end exchange rates. • Capital and reserves were translated at historical exchange rates. • The income statements were translated at the average exchange rates for the year. The differences arising from the application of these criteria have been included under “Equity - Translation differences”. These differences are recognized in revenue or expenses in the period in which the investment that gave rise to them was, totally or partially, realized or sold. d. Changes in consolidation scope In 2005, the Group sold its stake in the following companies: • Aragonesas Industrias y Energía, S.A. • Aiscondel, S.A. • Aragonesas Derivados Electrolíticos Levante, S.A. • Teczone Española, S.A. • Lusofane, S.A. • Uralita Comercial Canarias, S.A. • Aquatecnic Sistemas, S.A. • Uralita Industria y Comercio, Ltda. • Cerámiques Estructurals del Penedés, S.A. • Materiales y Cubiertas Caolita, S.A. • Uralusa Instalaçoens e Montagens, S.L. The detail of the equity of companies sold at the disposal date and at 31 December 2004 is the following: 140
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Financial Information - Uralita

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