On May 24, 2011, Invitel Holdings announced its financial results for the quarter ended March 31, 2011.

Question:

On May 24, 2011, Invitel Holdings announced its financial results for the quarter ended March 31, 2011. The results reflect the consolidated financial results of Magyar Telecom B.V. and its subsidiaries. The reporting currency is the euro; however, the functional currency is the Hungarian forint (the currency of the primary economic environment in which the Company operates). When comparing the financial results for the quarter ended March 31, 2011, to the financial results for the quarter ended March 31, 2010, the reported results in euros have been affected by the difference between the average HUF/EUR exchange rates. The
Hungarian forint depreciated against the euro by 1% with an average HUF/EUR of 272.48 during the quarter ended March 31, 2011, compared to the average HUF/EUR of 268.57 during the quarter ended March 31, 2010.

Required:
Explain how the change in the will affect Invitel’s consolidated financial statements.

Exchange Rate
The value of one currency for the purpose of conversion to another. Exchange Rate means on any day, for purposes of determining the Dollar Equivalent of any currency other than Dollars, the rate at which such currency may be exchanged into Dollars...