Annual Report 2009/10 Excellence in Retailing - Douglas Holding

132 Financial statements
Facts & figures
Consolidated income statement
Consolidated balance sheet
Statement of changes in Group equity
Segment reporting
Consolidated Cash Flow statement
Notes
Notes to the income statement
Notes to the balance sheet
Auditor’s report
Provisions
Provisions are accounted for according to the provisions of IAS 37. Provisions are recognized
if there is a legal or constructive obligation to third parties arising from past events
and the future cash outflow to fulfill this commitment can be reliably estimated. The carrying
amount of the provision is based – for individual risks – on the best estimate of the
settlement taking into account all recognizable risks, or – for a large population of risks
– the amount computed according to the expected value method. Non-current provisions
are discounted and carried on the balance sheet at their present value. As of September 30,
2010, non-current provisions were discounted using an interest rate of 4.7 percent (previous
year: 5.9 percent). The maturity of long-term human resources commitments is based
on the date of dismissal of the employee or forecasted cash outflows. The maturity of longterm
real estate commitments is based on the duration of the lease contract.
Provisions for pensions are accounted for in line with the requirements of IAS 19. Actuarial
calculations for provisions for defined benefit plans use the projected unit credit
method. As part of this measurement, the pensions and entitlements known on the balance
sheet date are taken into account as well as the increases in salaries and pensions
to be expected in future. If changes to these calculation assumptions result in differences
between the identified pension obligations and the actual present values of the entitlements,
IAS 19 prescribes an option with respect to the recognition of actuarial gains or
losses. Within the DOUGLAS Group this option is exercised as follows: the actuarial gains
or losses are only recognized in income for the average future remaining period of service
if these are outside a corridor of 10 percent of the amount of the benefit obligation. Assets
(plan assets) and liabilities from pension plans are presented in a net amount. Plan assets
are maintained in qualified policies that are pledged to the employee. The interest portion
included in the pension expense is presented as interest expense within the financial result.
Further obligations similar to provisions for pensions such as part-time work schemes
and termination benefits are also disclosed according to the requirements of IAS 19.
Financial liabilities
According to IAS 39, financial liabilities are generally recognized at amortized cost
on the balance sheet. Acquisition costs are stated at Fair Value. Transaction costs attributable
to the acquisition are included in cost. If there is a difference between the amount
paid and the amount to be paid upon final maturity, this difference is amortized over the
term according to the effective interest rate method. Financial liabilities that arise from
leases are carried as a liability at their present values. Income and expense from non-derivative
financial liabilities arise from interest income or expense or from currency translation
adjustments. Financial liabilities are recognized at the inception of the contract and
are derecognized when the obligation is extinguished or expired (limitation of time). All
trade accounts payable have a maturity of less than one year and are non-interest bearing.
Liabilities arising from finance leases are reported under other liabilities. The election
to initially recognize financial liabilities at Fair Value to profit or loss was not applied
by the DOUGLAS Group.
Accounting for derivative financial instruments and hedging relationships
Derivative financial instruments are implemented to reduce Cash Flow fluctuations
that result from interest rate risks. Derivative financial instruments are neither used nor