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Basis of consolidation

Subsidiaries

The consolidated financial statements include all 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 2011, the basis of consolidation comprised, in addition to the parent company, 19 (previous year: 20) fully consolidated domestic and foreign subsidiaries and five (previous year: four) proportionately consolidated domestic and foreign joint ventures.

Deutsche EuroShop AG acquired the Billstedt-Center in Hamburg through a subsidiary with effect from 1 January 2011, having already paid the purchase price of € 148.4 million at the end of 2010. The fair value of the acquired property was € 156.0 million, which resulted in an excess of identified net assets acquired over the purchase price allocation. This stood at € 7.9 million and was recognised under measurement gains/ losses. It is offset by ancillary acquisition costs in connection with the acquisition of the property totalling € 8.4 million and was recognised under measurement gains/losses. In the period under review, the company generated revenue of € 10.8 million and a profit of € 9.1 million.

in € thousand	Carrying amounts	Fair value
Acquired property assets	155,977	155,977
Purchase price	-148,375	-148,375
Deferred taxes	272	272
Excess of identified net assets acquired over cost of acquisition	7,874	7,874

With effect from 1 January 2011, Deutsche EuroShop acquired 5.1% of the limited partnership shares in Stadt-Galerie Hameln KG at a purchase price of € 4.9 million, thereby increasing its shareholding to 100%. The acquisition of the shares resulted in an excess of identified net assets acquired over cost of acquisition of € 0.2 million and was recognised under measurement gains/losses.

With effect from 1 July 2011, Deutsche EuroShop acquired 11% of the limited partnership shares in City-Galerie Wolfsburg KG at a purchase price of € 6.5 million, thereby increasing its shareholding to 100%. The acquisition of the shares resulted in an excess of cost of acquisition over identified net assets acquired of € 0.8 million and was recognised under measurement gains/losses.

Joint ventures

On 30 August 2011, Deutsche EuroShop AG acquired 50% of the shares in Einkaufscenter Allee-Center Magdeburg at a purchase price of € 118.7 million. The transfer of benefits and encumbrances took place on 1 October 2011. The purchase price was paid at the start of October. The first-time proportionate consolidation of the company revealed an excess of identified net assets acquired over cost of acquisition of € 0.6 million, which was recognised under measurement gains/losses. In the period under review, the company generated revenue of € 2.0 million and a profit of € 2.8 million (according to IFRS). If the acquisition date had been 1 January 2011, revenues of € 7.8 million and profit of € 8.1 million would have flowed into the consolidated income statement.

in € thousand	Carrying amounts	Fair value
Property assets	118,790	118,790
Cash and cash equivalents	634	634
Receivables and other assets	164	164
Deferred taxes	-233	-233
Provisions	-47	-47
Other liabilities	-168	-168
Net assets acquired	119,140	119,140
Purchase price	-118,583	-118,583
Excess of identified net assets acquired over cost of acquisition	557	557

The fair values of the assets and liabilities of the acquisitions recognised were calculated on the basis of a property valuation and the application of a cost-model approach.

Associates

In accordance with IAS 28, where Deutsche EuroShop AG can exercise a significant influence but not control over companies these are measured using the equity method, irrespective of the interest held in these companies. Six companies fall into this category as at the balance sheet date.

Investees

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.

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