DES GB2012 E

Financial instruments E. FINANCIAL LIABILITIES Liabilities to banks/bank loans and overdrafts are reported at amortised cost. Discounts are deducted, which under IAS 39 must be amortised over the term of the loan agreement and recognised annually as an expense. The debt component of convertible bonds is measured using the market interest rate for a similar, non-convertible bond. This debt component is measured as a liability at amortised cost using the effective interest method until converted or repayment becomes due. The remaining proceeds from the issue represent the value of the conversion rights. This is recognised in equity within the capital reserves. The financial liability increases over time, with an effect on net income, and comes to an amount equalling the difference between the actual interest expense and the nominal interest rate. F. TRADE PAYABLES Trade payables are recognised at their repayment amount. G. SONSTIGE VERBINDLICHKEITEN Other liabilities are recognised at amortised cost. H. OTHER LIABILITIES Cash and cash equivalents include cash and bank balances (terms of up to three months) at their principal amounts. INVESTMENTS IN EQUITY-ACCOUNTED ASSOCIATES Companies with a narrow scope of business in which Deutsche EuroShop generally has an interest of between 20% and 50% and over which it exercises significant influence but not control are measured as equity-accounted associ- ates. Here, the changes in the equity of such companies corresponding to the equity interest of Deutsche EuroShop are recognised in income. DEFERRED TAXES In accordance with IAS 12, deferred taxes are recognised for all differences between the tax accounts and the IFRS balance sheet, using the currently enacted tax rate. Currently, deferred taxes are primarily formed on the differences between the IFRS carrying amounts of the properties and their carrying amounts for tax purposes. A uniform cor- poration tax rate of 15% plus the solidarity surcharge of 5.5% was used for German companies, and in some cases a rate of 16.45% for trade tax. The respective local tax rates were applied for foreign companies. In accordance with IAS 12.74, deferred tax assets on existing loss carryforwards are offset against deferred tax liabilities. OTHER PROVISIONS Under IFRS, other provisions may only be recognised if a present obligation exists towards a third party and payment is more likely than not. Non-current provisions are discounted. CONSOLIDATED FINANCIAL STATEMENTS { 156 } DES ANNUAL REPORT 2012

DES GB2012 E

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