Page 32 - Annual Report 2019

Supervisory Board Report
Group Management Report
Consolidated Financial Statements
Annexes

(3) Consolidation principles
For first-time consolidations before 1 January 2010, capital is consolidated using the book value
method pursuant to Art. 66(3) sentence 4 of the EGHGB. First-time consolidations after this date use
the revaluation method only, as outlined in Section 301 HGB as amended by the German Accounting
Law Modernisation Act (Bilanzrechtsmodernisierungsgesetz, or BilMoG). According to this method,
the subsidiary’s equity at the time of initial consolidation is recorded as the fair value of all assets,
liabilities, accruals, deferrals and extraordinary items to be included in the consolidated annual
financial statements. Any excess of acquisition cost over the value of the equity is capitalised
as goodwill.
Goodwill capitalised in the 2018 fiscal year will be amortised over an anticipated period of five years.
The useful life is chiefly defined by short-term contracts with customers.
The results from subsidiaries that are bought or sold during the year are recognised in the
consolidated income statements from the actual date of acquisition or up until the actual date of sale.
Where necessary, the annual financial statements of new subsidiaries will be adjusted to conform
to the accounting policies used in the consolidated annual financial statements.

All receivables and payables between companies included in consolidation are eliminated.
Interim results, intragroup sales, expenses and income, receivables and payables between
consolidated companies as well as intragroup provisions are eliminated.

(4) Accounting policies

Intangible assets, provided they have been acquired in cash, are recognised at cost and amortised on
a straight-line basis over their estimated useful life. As provided in Section 248(2) HGB, companies
may exercise the option to capitalise internally generated intangible assets at cost in line with Section
255(3) sentences 1 and 2, provided these assets are not brands, newspaper mastheads, publishing
rights, customer lists or similar intangible fixed assets. The Group did not exercise this option. The
intangible fixed asset item relates in particular to software and licences purchased from third parties.
These are written down from the date of acquisition using straight-line amortisation over a period
of 5 years.
Tangible assets are recognised at cost less straight-line depreciation provided the assets are subject
to wear and tear. The cost of tangible assets produced in-house includes directly allocable expenses
and a reasonable share of necessary materials and production overheads including depreciation,
provided it is production-related. Interest on borrowed capital is not included in the production cost.

Extraordinary depreciation charges are recognised for impairment that exceeds scheduled
depreciation and is likely to be permanent. When the reasons for the impairment no longer apply,
the write-downs are reversed.
As a rule, depreciation and amortisation throughout the Group are recognised on a straight-line basis
over the expected useful life of the asset in question.

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