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ePaper created 2012-04-27, 18:43:33 | version 1.23.1
CuRRENCY TRANSLATION The Group currency is the euro (€ ). The companies located outside the eurozone that are included in the consolidated financial statements are treated as legally independent, but economically dependent, integrated companies. The reporting currencies of these companies (Polish zloty and Hungarian forint) therefore deviate from the functional currency (euro). Under IAS 21, annual financial statements prepared in foreign currencies are translated using the functional currency method, with the result that the balance sheet is to be translated as if the transactions had arisen for the Group itself, as the local cur- rency of the integrated companies is deemed to be a foreign currency for these companies themselves. Monetary values are therefore translated at the closing rate and non-monetary items at the rate that applied at the time of initial recognition. Non- monetary items to be reported at fair value are translated at the closing rate. Items in the consolidated income statement are translated at average rates for the year or, in the event of strong fluctuations, using the rate that applied on the date of the transaction. Any translation differences that may arise if the translation rates of the balance sheet and consolidated income statement differ are recognised in profit or loss. A closing rate of HUF 311.13 (previous year: HUF 278.75) and an average rate of HUF 279.28 (previous year: HUF 275.48) were used in the translation of the separate Hungarian financial statements for Einkaufs-Center Arkaden Pécs KG, Hamburg from forint to euros. A closing rate of PLN 4.4168 (previous year: PLN 3.9603) and an average rate of PLN 4.1189 (previous year: PLN 3.9947) were taken as a basis for translat- ing the separate financial statements of the Polish property company. ChANGES IN ACCOuNTING POLICIES adJustmEnt oF prEvious yEar’s valuEs in accordancE with ias 8 (corrEction oF an Error) The parent company Deutsche EuroShop AG is an asset management holding company that has until now availed itself of the “extended trade tax deduction” (section 9 para. 1 sentence 2 Gewerbesteuergesetz (GewStG – Trade Tax Act)). Because this approach was accepted by the tax authorities for many years, Deutsche EuroShop AG had no reason until the end of February 2011 to doubt that these deductions would also be possible in the future. However, this was changed by a ruling by the German Federal Fiscal Court (BFH) on 19 October 2010 published on the BFH’s website on 23 February 2011. It could no longer be assumed that this trade tax deduction would be possible in the future. The announcement coincided with the publication of provisional annual results on 24 February 2011. In view of the complex Group structures, reliable figures on the amount of deferred tax liabilities to be created were not available by the date of presentation. Given the circumstances, it was not possible to incorporate the information into the Company’s annual financial statements. Under IAS 8.41 et seq., that represents an error that must be retroactively corrected. The previous year’s figures as at 31 December 2010 have been adjusted in the annual financial statements based on the assumption that the expanded trade tax deduction will no longer apply. The impact on the published statements is explained below. It was decided not to present the balance sheet amounts as at 1 January 2010, as the changes relate solely to the reporting date of 31 December 2010. Deferred tax liabilities are to be created on the accumulated undisclosed reserves to account for temporary differences in measurements arising particularly from the measurement of market value of properties in accordance with IAS 40 versus the respective tax accounting approach. In the consolidated financial statements as at 31 December 2010, only deferred corporation taxes of € 105.2 million were so far recognised for this purpose, taking into account any deferred tax assets on loss carryforwards that could be offset. DES Annual Report 2011 35 ConSoLIDAteD FInAnCIAL StAteMentS currency translation