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DES - Online Annual Report 2009

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Basis of consolidation and consolidation methods:
Basis of consolidation

Subsidiaries

The consolidated financial statements include all material subsidiaries in which Deutsche EuroShop AG directly or indirectly holds a majority of voting rights, plus those companies which are joint ventures.

As at 31 December 2009, the basis of consolidation comprised, in addition to the parent company, 16 (previous year: 12) fully consolidated domestic and foreign subsidiaries and seven (previous year: eight) proportionately consolidated domestic and foreign joint ventures.

On 2 January 2009, Deutsche EuroShop Verwaltungs GmbH increased its share in City-Point Kassel from 40% to 90%. The purchase price of the shares was €16.4 million. The fair value of the assets acquired and liabilities assumed exceeded the purchase price paid by €5.7 million (bargain purchase). This amount was incorporated into measurement gains/losses and was determined as follows:

in € thousands Carrying amount Fair value
ASSETS ACQUIRED    
Property assets 69,840 69,840
Cash and cash equivalents 1,004 1,004
Trade receivables 139 139
Other assets 120 120
  71,103 71,103
LIABILITIES ASSUMED    
Provision for deferred taxes   1,076
Provision for restructuring   1,272
Other provisions 19 19
Loan liabilities 41,599 41,599
Trade payables 16 16
Other liabilities 141 141
Minority interests 4,888 4,888
  46,663 49,011
Net assets acquired   22,092
Purchase price of the shares   - 16,365
Excess of identified net assets acquired over cost of acquisition   5,727

In the period under review, the company generated revenue of €7.3 million and profit of €2.0 million.

On 11 December 2009, Deutsche EuroShop AG acquired 100% of the shares in PANTA Sechzehnte Grundstücksgesellschaft m.b.H., Hamburg, at a purchase price of €26 thousand, which was paid in cash. The company reported assets of €25 thousand and equity of €25 thousand on the date of acquisition. In the period under review, the company generated no revenue and achieved a profit of €1 thousand.

In addition, on 11 December 2009, PANTA Sechzehnte Grundstücksgesellschaft m.b.H. acquired a 100% interest in Kommanditgesellschaft Neunundneunzigste Grundstücksgesellschaft m.b.H. & Co., Hamburg, at a purchase price of €0, the assets and equity of which were each €25 thousand on the reporting date. In the period under review, the company generated no revenue and made a loss of €1 thousand.

CASPIA Investments Sp. z o.o, Warsaw, in which Deutsche EuroShop holds an indirect interest of 74%, was fully consolidated for the first time in the year under review, with effect from 1 January 2009. The company had not previously been included in the consolidated financial statements. On the date of the company’s initial consolidation, the values to be included were determined in simplified form. Assets of €3.5 million and equity of €3.5 million were recognised in the consolidated balance sheet. The carrying amount of the assets and liabilities exceeded the carrying amount of the investment by €281 thousand. This was shown under measurement gains/losses in the income statement. In the period under review, the company posted revenue of €345 thousand and a loss of €89 thousand. Cash and cash equivalents of €692 thousand were recognised.

Investments over which Deutsche EuroShop AG has neither significant influence nor control are measured at fair value, in line with the provisions of IAS 39. This includes the investment in Ilwro Joint Venture Sp. z o.o, Warsaw.

Associates

In accordance with IAS 28, where Deutsche EuroShop can exercise a significant influence but not control over companies, generally holding 20% to 50% of the shares, these are measured using the equity method. Six companies fall into this category as at the balance sheet date.

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