Annual Report
2013/2014
DRIVING
EXPANSION.
ENSURING
CONTINUITY.
MAKING STRONG
COMPANIES STRONGER.

NOTES TO THE CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

9. NET RESULT OF VALUATION AND DISPOSAL OF FINANCIAL ASSETS AND LOANS AND RECEIVABLES

T€ 2013/142012/13
 50,28034,489
Net result of valuation – portfolio 21,572 31,288
Net result of disposal – portfolio 28,943 5,382
Net result of valuation and disposal – portfolio 50,51536,670
Net result of valuation – other financial assets (235) (2,181)

The portfolio consists of interests in associates, other interests in portfolio companies and fund investments as well as liability instruments in that connection (see notes 19 and 20).

The net result of valuation and disposal derives exclusively from financial assets for the periods presented.

For further information on the net result of valuation and disposal, we refer to the management report (see here).

10. CURRENT INCOME FROM FINANCIAL ASSETS AND LOANS AND RECEIVABLES

T€ 2013/142012/13
 4,2256,519
Current income from financial assets    
Portfolio 2,206 2,085
Other financial assets 423 4,275
  2,6296,360
Current income from loans and receivables    
Portfolio 1,596 159

Current income from financial assets exclusively contains distributions from corporations.

Current income from loans and receivables exclusively contains interest on profit-sharing certificates and loans to portfolio companies.

11. FEE INCOME FROM INVESTMENT SERVICES TO FUNDS

Fee income from investment services to funds is composed of the following:

T€ 2013/142012/13
 21,73618,889
DBG Fonds I 1,831 696
DBG Fonds III 20 20
DBAG Fund IV 418 614
DBAG Fund V 5,041 5,892
DBAG ECF 862 2,070
Other 28 29
Management fee income 8,2009,321
Advisory fee income (DBAG Fund VI) 13,536 9,568

Management fee income stems from the management of private equity funds, alongside of which Deutsche Beteiligungs AG co-invests (see commentary in note 40).

Advisory fee income results from advisory services to the management company of DBAG Fund VI (see commentary in note 40).

12. PERSONNEL COSTS

T€ 2013/142012/13
 16,53313,793
Wages and salaries15,42812,525
thereof variable income:    
performance-related 4,356 3,520
transaction-related 4,161 137
Social contributions and expenses for pension plans1,1051,268
thereof service cost 393 479
thereof for defined contribution plans (including employer’s contributions to state pension plans) 426 452

Performance-related income components comprise bonuses attributable to the Board of Management and variable income components for DBAG staff. The transaction-related remuneration consists of long-term components for investment performance. Of the social contributions and expenses for pension plans, T€ 541 (previous year: T€ 663) were attributable to pension benefits. The employer’s contributions to state pension plans have been allocated to social contributions, not to expenses for pension plans.

Number of employees (without Board of Management members):

 31 Oct. 201431 Oct. 2013
Employees (full-time) 46 45
Employees (part-time) 5 4
Apprentices 5 6

The Board of Management consisted of three members at the end of financial year 2013/14 (previous year: three members).

In financial year 2013/14, an average of 53 employees (previous year: 51) and five apprentices (previous year: five) were employed at Deutsche Beteiligungs AG.

13. OTHER OPERATING INCOME

T€ 2013/142012/13
 9,7515,737
Reimbursed expenses 7,610 4,128
Other 2,141 1,609

Reimbursed expenses comprise advances on behalf of DBAG funds and portfolio companies. The rise compared with the preceding year results from screening a larger number of investment opportunities for DBAG ECF as well as advisory services rendered for the first time to DBAG Fund VI for a full financial year.

“Other” contains income from the reversal of “Other provisions” that do not relate to financial assets, amounting to T€ 426 (previous year: T€ 847), and a value-added tax refund for former years of T€ 1,125 (previous year: T€ 0) from deductible input tax.

14. OTHER OPERATING EXPENSES

T€ 2013/142012/13
 21,22918,205
Transaction-related consultancy expenses 8,753 5,149
Expenses for new contacts 2,196 1,926
Other consultancy expenses 1,437 1,359
Consultancy expenses12,3868,434
Fees for fund management services 2,695 1,888
Office rental 1,059 1,043
Corporate communications, investor relations, media relations 920 977
Travel and hospitality expenses 838 1,012
Value-added tax 830 1,683
Impairment losses on property, plant and equipment and intangible assets 416 419
Supervisory Board remuneration 388 233
Other 1,697 2,516

Consultancy expenses primarily relate to potential investment transactions, tax and general legal counselling as well as IT advisory services. A part of the transaction-related consultancy expenses in the amount of T€ 7,610 (previous year: T€ 4,128) is reimbursable by DBAG funds or portfolio companies (see note 13).

Investments alongside DBAG Fund VI are structured differently than previous investments with DBAG funds: DBAG, for the first time, pays a fee for the management of co-investments through DBAG Fund VI Konzern GmbH & Co. KG. The fee became payable with the start of the fund’s investment period on 15 February 2013 and is disclosed in “Fees for fund management services”. Concurrently, DBAG receives advisory fees for advisory services to the management company of Fund VI (see note 11).

“Other” consists of miscellaneous operating expenses, in particular other personnel expenses, expenses for external staff, motor vehicles, insurance and offices supplies.

15. INTEREST INCOME

T€ 2013/142012/13
 443947
Revenue office 105 420
Securities 153 248
Other 185 279

Interest income – Revenue office in the previous financial year related to an erroneous tax refund from the revenue office, which was corrected in the same financial year. The erroneous interest credit was reversed by a charge to interest expenses (see note 16).

Interest income is attributable to the following categories of financial instruments:

T€ 2013/142012/13
 443947
Loans and receivables 290 679
Available-for-sale financial assets 153 248
Financial assets at fair value through profit or loss 0 20

16. INTEREST EXPENSES

T€ 2013/142012/13
 157831
Interest expenses for pension provisions 917 788
Expected interest income on plan assets (824) (378)
Net interest on net defined benefit liability 93410
Revenue office 5 420
Other 59 1

The rise in interest income on plan assets results from the firsttime adoption of IAS 19. Please see the commentary in note 3 (Amendments to IAS 19 “Employee Benefits”). We refer to note 30 on the inputs for the two components of net interest on the net defined benefit liability.

Please see note 15 for details on the previous year’s “Interest expense – Revenue office”.

17. INCOME TAXES

T€ 2013/142012/13
 417482
Current taxes 418 500
Deferred taxes (1) (18)

In addition to tax expenses of T€ 401 for the 2013/14 reporting period, current taxes in financial year 2013/14 also contain taxes of T€ 17 for preceding years. An erroneous tax refund and its return payment to the revenue office were recorded in current taxes in the previous year (see also note 15).

Deferred taxes are based on the occurrence or reversal of temporary differences between the IFRS carrying amounts and the tax purpose-based carrying amounts of assets and debt. Temporary differences primarily exist for financial assets and pension provisions. This financial year, the Group companies have for the most part recorded a surplus in deferred tax assets that largely originated from existing loss carryforwards. Based on the type of business activities and their applicable tax treatment, it is not probable that sufficient taxable profit will be available against which they can be utilised. These deferred tax assets were therefore not capitalised. Deferred tax income totalling T€ 1 in the reporting year (previous year: T€ 18) is exclusively attributable to DBG Advisors Kommanditaktionär GmbH & Co. KG. At 31 October 2014, there were neither deferred income tax assets, nor deferred income tax liabilities taken directly to equity.

Reconciliation between the theoretically expected tax charge for an incorporated company and the current amount recognised in the consolidated financial statements of DBAG is as follows:

T€ 2013/142012/13
Earnings before taxes 48,516 33,752
Applicable corporate tax rate % 31.93 31.93
Theoretical tax income/expenses15,48910,777
     
Change in theoretical tax income/expenses:    
Tax-exempt positive net result of valuation and disposal (14,939) (10,466)
Other untaxed losses (previous year: non-capitalised gains) (2,335) 2,137
Non-capitalised tax loss carryforwards for current year 817 3
Non-deductible negative net result of valuation and disposal 2,850 1,022
Tax-exempt current income (561) (1,688)
Non-deductible expenses 88 73
Taxes from previous years 411 89
Adjustment of corporation tax credit based on tax audit 2000 – 2003 0 (41)
Use of non-capitalised tax loss carryforwards (361) (1,050)
Tax rate differential (1,385) (406)
Other effects 343 32
Income taxes417482
Taxation ratio %0.86 1.43

A main pillar of DBAG’s business is the acquisition and disposal of investments alongside the DBAG funds. The investments relate to corporate enterprises; thus, in accordance with § 8 German Corporation Tax Act (KStG), the (positive) net result of valuation and disposal totalling T€ 14,939 (previous year: T€ -10,466) is tax-exempt.

Due to tax purpose-based negative income contributions by Group companies that largely exist, deferred taxes arising from temporary differences between the IFRS and tax-purpose-based carrying amounts were not recognised at Group level due to lack of recoverability. The tax-based reconciliation effect of T€ -2,335 (previous year: T€ 2,137) therefore reflects the carryforward of other temporary differences arising from differences between the IFRS and tax purpose-based accounting.

The expected tax rate for corporations is composed of corporation tax and a solidarity surcharge (15.83 percent) as well as municipal trade tax (16.10 percent). The tax rate for Deutsche Beteiligungs AG is 15.83 percent, since Deutsche Beteiligungs AG is recognised as an equity investment company and is exempt from municipal trade tax.