2. Key accounting and valuation principles Principles of financial reporting The present annual accounts for Transitgas AG have been prepared in accordance with the regulations of Swiss financial reporting law and are presented in Swiss Francs (CHF). The main accounting and valuation principles used, which are not already specified by the Code of Obligations, are described as follows. Estimates and assumptions made by management Financial reporting under the Code of Obligations requires certain estimates and assumptions to be made by management. These are made continuously and are based on past experience and other factors. The results subsequently achieved may deviate from these estimates. Main actual items in the annual accounts, which are based on the estimates and assumptions made by management, are as follows: a) Tangible fixed assets b) Technical equipment c) Intangible fixed assets d) Provisions Foreign currency items The currency in which Transitgas AG operates is Swiss Francs (CHF). Transactions in foreign currencies are converted into the currency in which the Company operates (CHF) at the exchange rate on the day the transaction takes place. Monetary assets and liabilities in foreign currencies are converted into the currency in which the Company operates at the exchange rate on the balance sheet date. Any profits or losses resulting from the exchange are recorded in the profit and loss account. Non-monetary assets and liabilities at historical costs are converted at the foreign exchange rate at the time of the transaction. Any foreign exchange profits are deferred in the balance sheet as not having an effect on net income. Foreign exchange losses, on the other hand, are recorded in the profit and loss account. Related parties Related parties include members of the Board of Directors and Transitgas AG shareholders. Transactions with related parties take place under proper market conditions (dealing at an arm’s length). Cash The cash item includes cash holdings, bank deposits and fixed deposits due within 90 days after the balance sheet date. 41
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