annual report - Hypo Real Estate Holding AG

Group Accounts
Inter-company transactions, balances and unrealised gains on transactions between Group companies are eliminated.
Unrealised losses are also eliminated unless the transaction provides evidence of impairment of the asset
transferred.
The financial statements and group reporting of all subsidiaries are drawn up to the year ended 31 December, and
the accounting policies applied in their preparation are consistent with the Group accounting policies.
Minority interests comprise minority shareholders’ proportionate share in shareholders’ equity and net income.
The Group applies the parent company method of consolidation. Therefore, goodwill can arise on the acquisition
of minority interests and the sale of such interests can give rise to a profit or loss in the income statement.
Common control transactions
Common control transactions are business combinations involving businesses or entities under common control.
These transactions are accounted for at book value. Consequently, any differences between consideration
paid/received and the book value are transferred directly to shareholders equity and no goodwill arises.
In 2002, the Group was reorganised, the purpose of which was to de-merge the Property Finance and IT Services
activities from the Public Finance business and which resulted in the formation of the current parent company,
DEPFA BANK plc. This de-merger was treated as a discontinued operation.
DEPFA BANK plc was created by a share for share exchange with the previous parent company, DEPFA Deutsche
Pfandbriefbank AG. This share for share exchange and other transfers of assets and property as part of the re orga -
nisation were treated as a transaction under common control and accounted for at book value.
Under Irish company law, a share premium was created on the above share for share exchange. A merger adjustment
arose being the difference between the fair value of the shares issued and the book value of the net assets
acquired. The merger adjustment was transferred to retained earnings.
The Group availed of the exemption in IFRS 1 to apply IFRS to business combinations, including common control
transactions, from 15 March 2002, the date of the Group restructuring.
On 31 December 2007 the Company acquired Hypo Public Finance Bank from Hypo Real Estate Holding AG. This
was accounted for as a transaction under common control. A merger adjustment arose being the difference between
the fair value of the shares acquired and the book value of the net assets acquired. The merger adjustment
was transferred to retained earnings.
Segment reporting
A business segment is a group of assets and operations engaged in providing products or services that are
subject to risks and returns that are different from those of other business segments. A geographical segment is
engaged in providing products or services within a particular economic environment that are subject to risks and
returns that are different from those of segments operating in other economic environments.
The Group’s primary segments are based on the nature of the products provided (“business segment”) whereas
the secondary segments are based on the geographical location of the booking entity (“geographical segment”).
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