So ist das Leben /That's life / C'est la vie / Así es la vida / È la vita ...

56 / Consolidated Financial Statements / Explanatory Notes
Other accruals and provisions with a remaining term of more
than one year have been discounted – in accordance with their
remaining term – at the average market interest rate prevailing
over the past seven business years. In evaluating semi-retirement
and anniversary provisions, the same valuation parameters
as for pension obligations are fundamentally applied,
except for term-specific interest rates for semi-retirement
obligations.
Liabilities have been shown at their settlement amounts. Pay -
ables to companies in which the company has a participating
interest concerns associated companies in the amount of
EUR 4.3 million. The capital with participation rights – included
under other liabilities – has been reported at nominal value.
Deferred income mainly includes special rental payments and
rental prepayments attributable to future business years as
well as accrued net present cash values from leasing receivables
sold to banks. Such amounts will be reversed on a straightline
basis in accordance with the underlying term and pursuant
to the principle of loss-free valuation.
To compensate for counteracting cash flows, liabilities and
pending business have been combined in financial instruments
(valuation unit). Insofar as the preconditions for the creation
of valuation units are not satisfied, the items are accounted for
in accordance with the general valuation principles.
IV. Foreign Currency Translation
All financial statements of the subsidiary companies of the
Group that are included in the consolidation, but which are
located outside the euro-zone have been translated into euros
from the respective local currency using the modified closing
rate method. The items of the balance sheet – with the exception
of the equity capital item that is translated into euros at
historical rates – have been translated at the mean spot
exchange rate as of the balance sheet date.
Cost and income shown in the corresponding profit and loss
accounts have been translated at the average annual rate of
exchange for the year 2011. The translation difference of
EUR 3 million arising therefrom has been included without
profit effect within the partners’ equity after the reserves in the
line item “partners’ equity difference from currency translation”.
The translation differences resulting from exchange
rate fluctuations have led to a EUR 8.6 million decrease in the
line item “partners’ equity difference from currency translation”
without impact on profit or loss.
V. Balance Sheet Date and Consolidation Principles
The subsidiary companies included in the consolidated financial
statements all have 31 December as their balance sheet date
with the exception of one subsidiary that has a balance sheet
date on 31 March. Consolidation of the balance sheets and
profit and loss accounts of the consolidated subsidiaries has
been carried out in accordance with the following principles:
1. Capital Consolidation
Capital consolidation for acquisitions up to 31 December 2009
was effected in accordance with the book value method. Capital
consolidation for first-time consolidations after 1 January
2010 has been carried out pursuant to the revaluation method.
In this respect, the book values of the holdings have been offset
against the allocable equity capital of the corresponding
subsidiary companies at the date of acquisition following a
revaluation of the assets and liabilities acquired and realization
of hidden reserves and hidden charges.
Capitalized differences from the first-time consolidation of the
JAFRA Group in the 2004 business year have been recognized
as goodwill on the assets side after the reversal of hidden
reserves in the assets.
Pursuant to § 253 par. 3 HGB, the goodwill of the JAFRA Group
will be amortized over the individual operational useful life of
more than five years. This is derived from the use of the brand
and brand-similar benefits which, besides the sales system
and the know-how of the staff in R&D, constitute essential
elements of the goodwill of the company. The remaining capitalized
differences from previous years have been stated separately
within the partners’ equity section. Should any credit
differences have resulted from this netting in previous years,