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Software AG GB 2012, englisch

221 06 HIGHLIGHTS 08 LETTER FROM THE MANAGEMENT BOARD 12 THE COMPANY 38 SOFTWARE AG SHARE 46 CORPORATE GOVERNANCE 58 REPORT OF THE SUPERVISORY BOARD 68 GROUP MANAGEMENT REPORT 155 CONSOLIDATED FINANCIAL STATEMENTS 245 FURTHER INFORMATION CONSOLIDATED INCOME STATEMENT 156 STATEMENT OF COMPREHENSIVE INCOME 157 CONSOLIDATED BALANCE SHEET 158 CONSOLIDATED STATEMENT OF CASH FLOWS 160 CONSOLIDATED STATEMENT OF CHANGES 162 IN EQUITY NOTES TO THE CONSOLIDATED FINANCIAL 164 STATEMENTS RESPONSIBILITY STATEMENT 243 AUDITORS‘ REPORT 245 b) Exchange rate risk In order to hedge the risk of future fluctuations in exchange rates, the Company enters into currency forward contracts. Foreign currency receivables and liabilities are offset if possible, and only the remaining net expo- sure is hedged. Estimated cash flows are also hedged in accordance with internal guidelines. Hedging transactions are measured at their fair value. The amounts are reported in the balance sheet under other assets or current liabilities. Changes in the fair value of derivative financial instruments designated as cash flow hedges are reported under other reserves until the hedged item is required to be recognized in income. The ineffective portions of cash flow hedges as well as changes in the value of hedging instruments that do not meet the requirements of hedge accounting are recognized immediately in profit or loss for the year in which they are incurred. The sensitivity analysis required by IFRS 7 relates to exchange rate risk arising from monetary financial instru- ments that are denominated in a currency other than the functional currency in which they are measured. Exchange differences arising from the translation of financial statements into the Group currency (translation risk) and non-monetary items are not taken into account. Most significant monetary financial instruments are denominated in the functional currency. For Software AG, significant effects on earnings result only from the relationship of the euro to the U.S. dollar. Hedging transactions are based on existing hedges or estimated cash flows and thus reduce any potential effects on earnings. In the case of designated cash flow hedges, exchange rate changes affect other reserves included in equity. Based on the monetary financial instruments available as of the reporting date, a devaluation of the euro in the amount of 10 percent against the U.S. dollar would have increased earnings by €1,213 (2011: €1,155 thousand) and left other reserves unchanged (2011: decreased by €1,160 thousand). This amount only represents a theoretical risk for us as these instruments are hedges of recognized transactions, rather than open trading positions.

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