Unlike the consolidated financial statements, which are based on the IASB’s IFRS standards, the annual financial statements of MTU Aero Engines Holding AG, Munich, are prepared in accordance with German Commercial Code (HGB) and German Stock Cooperation Act (AktG). The IFRS rules are also applied in the separate income statements where it is permissible and fitting to do so. In numerous cases, the accounting policies applied in the annual financial statements of MTU Aero Engines Holding AG, Munich, and those of the German subsidiaries whose profit/loss is transferred to MTU Aero Engines Holding AG, Munich (and whose financial statements are also prepared in accordance with the German Commercial Code), differ from the accounting policies applied in the consolidated financial statements.
The following reconciliation table therefore contains the major differences between group earnings after tax (EAT) and the net profit available for distribution by MTU Aero Engines Holding AG, Munich:
Disclosures relating to key items in the reconciliation table of group earnings after tax (EAT) to the net profit available for distribution of MTU Aero Engines Holding AG, Munich
Profit/loss of MTU Maintenance Berlin-Brandenburg GmbH, Ludwigsfelde
In the reconciliation between IFRS and HGB statements, an adjustment is applied to group earnings after tax (EAT) which include the profit and loss of the subsidiary, corresponding to the annual results of MTU Maintenance Berlin-Brandenburg GmbH, Ludwigsfelde, since a profit and loss transfer agreement between MTU Aero Engines GmbH, Munich and MTU Maintenance Berlin-Brandenburg GmbH, Ludwigsfelde, was terminated in 2006.
Construction contract receivables / PoC
Contrary to the provisions of the German Commercial Code (HGB), the international financial reporting standards (IFRSs) prescribe the use of the percentage-of-completion (PoC) method under certain conditions when accounting for construction contracts according to IAS 11, whereby revenue and profits arising from a construction contract are recognized in proportion to the stage of completion of the project. MTU satisfies the requirements for recognizing a proportion of the profits from certain of its engine projects, which must consequently be eliminated in the reconciliation between IFRS and HGB statements. Further information on the relevant accounting policies is provided in Note 5.12. (Inventories) and Note 24. (Construction contract receivables).
Amortization and partial disposal of goodwill
The goodwill arising from the merger reported in the HGB balance sheet is subject to scheduled amortization over 15 years in accordance with Section 255 (4) of the German Commercial Code. In the reconciliation between IFRS and HGB statements, an adjustment is made to group earnings before tax (EBT), which does not include any impairment of goodwill (IAS 36), corresponding to the goodwill amortization expense in the HGB annual results.
Non-capitalized development costs
The commercial MRO business has developed special repair processes capable of reducing the cost and increasing the efficiency of engine maintenance. The associated development costs, as well as those relating to development work on the GEnx and GE38 engines in the commercial and military engine business, meet the criteria for recognition of intangible assets laid down in the international financial reporting standards. By contrast, the German Commercial Code treats these as services for the company’s own account which are to be recognized as an expense.
Effects from tax-effective write-ups/write-downs on securities (treasury shares)
Unlike for IFRS accounting purposes, treasury shares acquired by MTU Aero Engines Holding AG, Munich, are required to be presented for German accounting (HGB) and tax purposes within current assets measured at their average acquisition cost. Such assets are required to be written down to their ‘fair value’ (for HGB purposes) or their ‘Teilwert’ (for tax purposes) if lower at the end of the reporting period. MTU Aero Engines Holding AG, Munich is classified for tax purposes as a finance company. In the financial year 2008, the fall in the MTU share price as a result of the financial and banking crisis made it necessary to write down the group’s holding of treasury shares by an amount of €36.9 million. In the financial year 2009, as the markets began to revive, the MTU share recovered to such an extent that it became necessary to reverse the previous year’s write-down on treasury shares of € 36.9 million, restoring their measurement to their original acquisition cost. Reference is made to Note 30.6 (Treasury shares) for the calculation of the average purchase price of treasury shares.
MAP employee stock option program
In 2009 employees purchased a total of 50,863 shares (2008: 192,959 shares at a total price of € 3.3 million (2008: € 4.9 million) and a price per share of € 21.80 (2008: € 25.19) from MTU under the terms of the employee stock option program. The average purchase price of the shares sold to group employees originally amounted to € 6.7 million (2008: € 8.2 million). The loss arising from the difference between the proceeds of the sale and the original acquisition cost, amounting to € 3.4 million (2008: € 3.3 million), was recognized in accordance with the applicable commercial laws and tax regulations.
Appropriation of net profit
The annual net profit of MTU Aero Engines Holding AG, Munich, as reported in the annual financial statements drawn up in accordance with the German Commercial Code (HGB), amounts € 159.5 million (2008: € 69.0 million).
There has been no change in capital reserves compared with the previous year.
Transfers from and allocation to revenue reserves
Reserve for treasury shares
The reserve for treasury shares contains the reversal of the write-down on treasury shares amounting to € 36.9 million (2008: write-down of € 36.9 million). An amount of € 6.7 million (2008: € 8.2 million) was transferred from the reserve for treasury shares in connection with the sale of treasury shares under the MAP employee stock option program.
Other revenue reserves
In accordance with Section 58 of the German Stock Corporation Act (AktG), half of the net profit after deduction of the reversed write-down on treasury shares amounting to € 36.9 million, namely an amount of € 159.5 million (2008: € 69.0 million) was transferred to other revenue reserves. The amount of € 6.7 million (2008: € 8.2 million) transferred from the reserve for treasury shares in connection with the sale of treasury shares under the MAP employee stock option program was added to other revenue reserves. The total increase in other revenue reserves amounted to € 68.0 million (2008: balance of additions and removals € 30.4 million).
Recommendation for the distribution of net profit
At the Annual General Meeting on April 22, 2010, the Board of Management and the Supervisory Board of MTU Aero Engines Holding AG, Munich, will recommend that a dividend of € 0.93 (2008: € 0.93) per share be distributed for the financial year 2009 after transfers to other revenue reserves. For the 48.921.808 shares entitled to a dividend, on condition that this proposal is accepted by the Annual General Meeting, the dividend payment amounts to € 45.5 million. Based on the quoted share price at the close of 2009, this is equivalent to a dividend yield of 2.4 % (2008: 4.7 %).
Pending approval by the Annual General Meeting, the dividend is to be paid on April 23, 2010.
Electronic version of the Federal Gazette
The annual financial statements of MTU Aero Engines Holding AG, Munich, which were granted an unqualified audit certificate by Deloitte & Touche GmbH, Wirtschaftsprüfungsgesellschaft, Munich, are published in the Electronic Federal Gazette (elektronischer Bundesanzeiger). Print copies can be obtained on request from MTU Aero Engines Holding AG, 80995 Munich, Germany.
Declaration of conformity with the German Corporate Governance Code
The declaration of conformity by the Board of Management and Supervisory Board of MTU Aero Engines Holding AG pursuant to Section 161 of the German Stock Corporation Act (AktG) is published in the MTU Annual Report 2009 and also permanently available to shareholders on the MTU website at www.mtu.de.
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