The Vorwerk Annual Report 2OO8

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equately considered in the formationof the provisions. The accrual amountsfor pensions, which relate primarilyto Germany, have been determinedin accordance with the current valueprinciple pursuant to § 6a of the IncomeTax Law (EStG); the guidelinetables 2005 G and an interest rate of 6percent being applied. Liabilities havebeen shown at the amount payable.The deferred income item relates primarilyto hire purchase finance transactions.IV. Foreign Currency ConversionAll balance sheet items of the companiesof the Group that are included inthe consolidation, but which are locatedoutside the eurozone have beenconverted into euros from the respectivecurrency at the rate of exchange prevailingas of balance sheet date (averagevalue). Income and expenditure shownin the corresponding profit and loss accountshave, with the exception of writedownscorrespondingly transformed asof balance sheet date, been convertedat the average rate of exchange for theyear 2008 (modified closing rate valuationmethod). The ensuing differencesof 7.2 million euros after conversionhave been included for the first timewithout profit effect within the partners’equity. The conversion effects resultingfrom the change in rates between balancesheet dates have led to a 7.5 millioneuro decrease in reserves within thecontext of the development of partners’equity, but having no effect on profits.V. Consolidation PrinciplesThe companies included in the consolidatedfinancial statements all have 31December as their balance sheet date.Consolidation of the balance sheets andprofit and loss accounts of the companiesincluded therein has been carriedout in accordance with the followingprinciples:1. Capital ConsolidationCapital has been consolidated in accordancewith the book value method. Inthis respect the book values of the holdingshave been set against the equitycapital level of the corresponding subsidiarycompanies including reservesand the result brought forward at thedate of initial consolidation or at thedate of acquisition. Debit differencesresulting from the first-time consolidationof the JAFRA Group have beenstated as goodwill after the appropriationof hidden reserves to assets andliabilities. The goodwill of the JAFRAGroup will be written-off over a periodof 30 years using the straight-line method.The remaining debit differencesfrom previous years have been nettedagainst reserves. Debit differences arisingfrom the acquisition of subsidariesin 2008 (10.0 million euros) have beenopenly netted against reserves in accordancewith § 309, Section 1, Clause 3 ofthe HGB. Should any credit differenceshave resulted from this netting, suchhave been incorporated into the reservesin previous years on account oftheir reserve character. The participatinginterests of outside shareholders inthe equity capital subject to consolidationand in the results of the subsidiarycompanies included in the consolidationhave been shown in the compensatingitem for minority interests. Theassociated companies of akf bankinggroup and the foreign-based logisticscompany, included at equity, havebeen consolidated in accordance withthe same principles. In this respect thevaluation principles of the associatedcompanies have been adopted withoutchange. Since Vorwerk exercises nouniform direction over the akf bankinggroup, its figures have been included inthe financial statements at equity. akfleasing Beteiligungs GmbH has preparedconsolidated financial statementsfor the companies of the akf leasingbusiness as of 31 December 2008. Inaccordance with § 312, Section 6 of theHGB, these figures have been taken asthe basis for consolidation. Vorwerk’sshare of profits for the year under reviewfrom the companies consolidatedat equity has been included in the profitand loss account as the result from participationsin associated companies.2. Consolidation of DebtAmounts due as receivables or payablesin respect of companies within the consolidatedgroup have been offset againsteach other for consolidation purposes(§ 303 of the HGB).3. Consolidation of EarningsThe consolidation of expenditure andincome contained in the items shownin the consolidated profit and lossaccount comply with § 305 of the HGB.Inter-company sales and the correspondinglevel of expenditure as wellas other, mutual inter-company expenditureand income from the consolidatedcompanies’ profit and loss accounts havebeen set against each other.4. Deferred TaxationDebit deferred taxation from the individualfinancial statements have been nettedwith credit deferred taxation balancesfrom the individual financial statementsor from the consolidation process andan amount of 3.0 million euros has been47
EXPLANATORY NOTES TO FINANCIAL STATEMENTSreported (§ 306, Clause 3 of the HGB)pursuant to the assessment option providedfor in § 274, Section 2 in associationwith § 300, Section 2 of the HGB.6.0 million euros of credit deferredtaxation balances have resulted fromthe consolidation measures, from theelimination of inter-company resultsand from the consolidation of debt. Whencalculating taxation for consolidationentries affecting profits pursuant to § 306of the HGB, a uniform Group-wideaverage rate of taxation has been applied.The calculation of deferred taxationfor individual financial statementshas been effected on the basis of taxrates applying for individual companies.VI. Other Statutory Disclosures inAccordance with § 314 of the HGBand Explanatory Notes to VariousItems in the Consolidated BalanceSheet and Consolidated Profit andLoss Account1. Other Financial CommitmentsThe expenses arising from rental, tenancyand leasing contracts amountedto 34.1 million euros in 2008 and areexpected to be at a similar level inthe next two financial years. These expensesare spread over the entire Groupworldwide and relate to contracts withvarious terms of duration. Order obligationsfor investments in tangiblefixed assets amount to 17.3 million (9.1million euros in previous year).2. Profit and Loss AccountGroup Sales (including sales tax)Breakdown by 2007 2008Region millions 1 millions 1Germany 461.1 459.9Europe 832.2 910.7North America 405.9 385.3Rest of world 77.7 75.8Total 1,776.9 1,831.7Group sales divided according to businesssegment are shown in the GroupManagement Report.3. Present Value of DerivativeFinancial InstrumentsTo hedge against currency risks, the VorwerkGroup uses exchange rate futuresand options as well as interest rate swapsboth in its operative business activitiesas well as in the area of foreign currencyfinancing. The present value of a derivativefinancial instrument is the price atwhich a party would acquire the rightsand/or obligations entailed in this financialinstrument from another party. Thebook and present values of the financialinstruments of the Vorwerk Group arereported as follows:Derivative Financial Instrumentsin 1 000a) Currency options b) Exchange futuresc) Interest rate swapsNominal value Book value Present value31. 12. 08a) 27,725 0 5,206b) 43,264 -193 43,773c) 86,654 0 -2,411valuation on closing date. The presentvalues of exchange rate futures are determinedaccording to the closing rateas of balance sheet date, taking forwarddiscounts and premiums into account.The present values of currency optionsare assessed on the basis of optionprice models pursuant to Black &Scholes. The present values of interestrate hedging instruments (interest rateswaps) are determined on the basisof discounted, anticipated future cashflows, whereby the current market interestrates for the remaining term ofthe financial instruments are applied.4. Other InformationAverage annual staffing level2007 2008Employees* 22,570 22,255Sales SystemAdvisers 543,415 555,718Kobold 9,736 9,335Thermomix 16,361 18,569Feelina 280 152JAFRA Cosmetics 515,151 525,863Lux Asia Pacific 1,887 1,799*Including employed sales advisersManagement at the parent companyVorwerk & Co. KG is in the hands of theManaging Partners Peter Oberegger,Düsseldorf and Walter Muyres, Jüchen.Wuppertal, 15 April 2009Provisions for threatening losses of0.2 million euros have been formed tocover eventualities in exchange ratefuture transactions. The nominal valueof the derivative financial instrumentsis determined using the exchange ratePeter ObereggerWalter Muyres48
Page 2 and 3: REPORT ON THE 125TH FINANCIAL YEAR
Page 4 and 5: CONTENTSA Review of Vorwerk 4Manage
Page 6 and 7: A REVIEW OF VORWERKSubsidiaries:Aus
Page 8 and 9: Vorwerk Group: Business Volume 2008
Page 10 and 11: When the continents drifted apart d
Page 13: MANAGEMENT REPORTin large divisions
Page 16: Classic horse trading generally inv
Page 20 and 21: Just pulling your legThere was an O
Page 22 and 23: women who also have another employm
Page 24 and 25: In light of the brake-light speed o
Page 26 and 27: We moveWe are movedWe would move...
Page 28 and 29: MANAGEMENT REPORT FEELINA / ENGINEE
Page 30 and 31: Excerpt from the poem to the east w
Page 32 and 33: Ball flies overa wallPolar bear cat
Page 34 and 35: MANAGEMENT REPORT CARPETS / HUMAN R
Page 36 and 37: MANAGEMENT REPORT FINANCESAssets an
Page 38 and 39: Blues USA ~1920Bolero Spain ~1780Bo
Page 40 and 41: CONSOLIDATED FINANCIAL STATEMENTS 2
Page 42 and 43: Equity and Liabilities 2008 20071 0
Page 44 and 45: Taxis is an orientation response fr
Page 46 and 47: Accumulated depreciation / amortiza
Page 50 and 51: AUDITORS' REPORTThe foregoing conso
Page 52 and 53: BrazilDistribuidora JAFRA de Cosmet

The Vorwerk Annual Report 2OO8

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