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Accounting and valuation principles

Uniform accounting and valuation regulations were used as a basis for the individual financial statements included in the consolidated financial statements of MPC Münchmeyer Petersen Capital AG, Hamburg. These regulations are explained below:

All amendments to the existing standards which have been implemented as part of the so-called "improvement project" of the IASB, which are relevant to MPC Münchmeyer Petersen Capital AG, have been applied in the 2005 consolidated financial accounts.

a) Currency translation
Monetary assets and liabilities in foreign currencies are translated and reported at the middle spot rate on the balance sheet date. As far as possible, foreign currency gains and losses were reported under the "other operating income" and "other operating expenditure" items in the profit and loss account.

b) Intangible assets
Intangible assets acquired against payment are reported on the asset side at acquisition price and, with the exception of the following tangible assets, depreciated using scheduled depreciation over the expected useful life.

The goodwill of TVP Treuhand- und Verwaltungsgesellschaft für Publikumsfonds mbH was written down on a straight-line basis between January 1, 2000 and December 31, 2004. This period is the average remaining term of the funds expected at the time of acquisition. From January 1, 2005, goodwill has no longer been written down in accordance with IFRS 3.

Since January 1, 2005, the write-downs of such goodwill and other intangible assets, which were acquired before March 31, 2004, are reported as having an indefinite useful life in accordance with the regulations of IFRS 3 ("Company mergers") and the new IAS 36 standard ("Decline in the value of assets").

c) Tangible assets

Tangible assets are valued at historical cost in accordance with IAS 16 reduced by scheduled depreciation. The depreciation is primarily calculated using the straight-line method. Office furniture and equipment are written down over the expected economic useful life of between two and thirteen years.

d) Financial assets
Participations and shares in fund companies included in the balance sheet are reported under financial assets in accordance with IAS 39 at purchase cost.

In deviation from IAS 27, "shares in affiliated companies" and "shares in companies with which the company has participating interests" reported as financial assets are not consolidated owing to their immaterial nature, despite an interest of over 50%. Instead they are reported at purchase cost in line with IAS 39. Shares in associated companies are consolidated at equity in line with IAS 28.

e) Inventories
In accordance with IAS 2, inventories are reported at the lower of acquisition and production cost or market on the closing date.

The project costs of the funds not yet fully syndicated on the balance sheet date are deferred according to the degree of completion and shown under inventories. In this respect, there are assets of the Group which will lead to a financial gain at a later date. The degree of completion corresponds to the level of placement on the balance sheet date.

f) Trade receivables
Trade receivables are reported in the balance sheet at their nominal value or at the lower value to be determined on the balance sheet date. This value represents the book value.

g) Other assets

Other assets are reported on the balance sheet at the value to be determined. This value represents the book value.

h) Liquid funds

Liquid funds cover cash and deposits and are reported at their nominal value. Liquid funds in foreign currencies are translated at the exchange rate on the reporting date.

i) Deferred taxes
In accordance with IAS 12, tax deferments are effected in accordance with the liability method for differences between the financial statements in line with IFRS and the tax accounts in accordance with the national law of the companies included, to the extent that it appears probable that the taxation difference will be equalised in future financial years ("temporary differences").

j) Prepaid expenses

Expenditure before the balance sheet date for the following financial year is reported under prepaid expenses.

k) Tax provisions
The tax provisions relate to outstanding liabilities for corporation tax, trade tax and the solidarity surcharge.

l) Other provisions
In accordance with IAS 37, other provisions for legal and factual liabilities that originated in the past are established if it is likely that the discharge of the liability will result in an outflow of Group resources and that a reliable estimate of the liability total can be made. In line with IAS 37, other provisions take into account all obligations that are recognisable vis-à-vis third parties.

Other provisions and accrued liabilities are established in an amount which, according to sound business practice, is deemed to be necessary to cover the threatened losses and uncertain liabilities existing as per the balance sheet date.

Provisions for commission payments were reported under trade payables.

m) Trade payables
Trade payables were valued at the amount repayable.

n) Sales realisation

Sales from the financial year are taken into account irrespective of the time of payment, if they are realised. Sales from the performance of services are realised if the amount owed has been furnished and no economically related obstacles impede the realisation of the means of payment (IAS 18).

o) Cost of debt

Cost of debt is reported as expenditure in the period in which it occurs.

p) Financial instruments

The portfolio of financial instruments (receivables, payables, liquid funds) can be seen in the balance sheet. The differences between the book and market values are negligible. The financial instruments of MPC Münchmeyer Petersen Capital AG, Hamburg, did not give rise to any specific risks of material significance on the balance sheet date.

Furthermore, there were no financial instruments deployed for trading or speculation purposes on the balance sheet dates.

q) Price differences

In the financial year, the income of TEUR 4,322 arising from price differences was netted against the expenditure arising from price differences of TEUR 519 owing to the economic correlation; the difference was reported in other operating expenditure.