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Financial Statements

NOTES TO THE INCOME STATEMENT

6. SALES

(Net) sales totaling 3,000.6 million EUR were recorded in fiscal year 2006/07. Of this amount, 32.3 percent was recorded abroad. The exact same figure was recorded in fiscal year 2005/06.

  in EUR mill. 2006/07 2005/06  
  Perfumeries 1,681.9 1,558.8  
  (outside Germany) (801.3) (720.3)  
  Books 695.7 550.9  
  (outside Germany) (163.8) (142.4)  
  Jewelry 304.7 296.9  
  Fashion 215.1 190.6  
  Confectionery 100.3 79.8  
  (outside Germany) (2.9) (2.0)  
  Services 2.9 3.0  
    3,000.6 2,680.0  

7. GROSS PROFITS FROM RETAIL BUSINESS

Gross profits from retail business totaled 1,421.9 million EUR in fiscal year 2006/07
(previous year: 1,270.3 million EUR). As in the previous fiscal year, the sales margin (ratio of gross profits to net sales) totaled 47.4 percent.

8. OTHER OPERATING INCOME

  in EUR mill. 2006/07 2005/06  
  Income from oncharged costs to third parties 122.7 110.0  
  Income from letting and sub-letting 13.2 13.6  
  Income from the disposal of non-current assets 0.7 9.2  
  Other income 64.4 41.5  
    201.0 174.3  

Income from oncharged costs to third parties includes refunds for marketing costs and other oncharges. Other income includes, for example, annual fees received for Douglas Cards, income from the reversal of provisions, income from exchange rate differences and income from damage claims. As of July 1, 2007, four of the six René Kern jewelry stores were sold, resulting in a capital gain of 10.2 million EUR.

9. PERSONNEL EXPENSES

  in EUR mill. 2006/07 2005/06  
  Wages and salaries 538.7 477.4  
  Social security, pension and other benefit costs 114.0 103.4  
  of which for pensions: 2.2 EUR mill. (previous year: 2.9 EUR mill.)      
    652.7 580.8  

10. OTHER OPERATING EXPENSES

Other operating expenses are composed as follows:

  in EUR mill. 2006/07 2005/06  
  Rent and energy costs 308.2 265.6  
  Advertising costs 145.3 138.1  
  Costs of transferring merchandise 42.0 38.6  
  Other services 54.6 48.9  
  Repair costs 15.9 14.5  
  Credit card commission 10.7 9.3  
  Office and postal costs 13.9 12.6  
  Travel and vehicle costs 13.0 11.7  
  Consumables and supplies 9.7 8.2  
  Insurance premiums 4.5 5.0  
  Other expenses 86.6 69.4  
    704.4 621.9  

11. INVESTMENT RESULT

Income from investments in associates in fiscal year 2006/07 relates to income from the interest in buch.de internet stores AG, Münster, carried at equity, totaling -0.1 million EUR (previous year: 0.5 million EUR). Moreover, in fiscal year 2005/06, carrying the investment in Köster GmbH & Co. KG, Hagen at equity contributed 0.4 million EUR to earnings from investments.

12. AMORTIZATION/DEPRECIATION

  in EUR mill. 2006/07 2005/06  
  Scheduled amortization of intangible assets and depreciation of property, plant and equipment 105.2 99.0  
  Non-scheduled amortization of intangible assets and depreciation of property, plant and equipment 3.6 1.8  
  Total amortization 108.8 100.8  

13. FINANCIAL RESULT

  in EUR mill. 2006/07 2005/06  
  Interest income 16.0 10.1  
  Income from the measurement of derivative financial instruments 0.2 2.6  
  Total financial income 16.2 12.7  
  Financing expense minority options -7.9 -8.1  
  Interest expense from discounting non-current provisions -1.6 -1.4  
  Other interest expense -20.8 -15.9  
  Total financial expens -30.3 -25.4  
  Financial result -14.1 -12.7  

The financial expenses for the minority options relate to the results of third-party
shareholders whose interests are carried as liabilities, as these either have an option right or are minority interests in German partnerships.

14. INCOME TAXES

  in EUR mill. 2006/07 2005/06  
  Income taxes 46.2 50.1  
  Inside Germany 30.8 39.9  
  Outside Germany 15.4 10.2  
  Deferred taxes 8.5 3.3  
  - from temporary differences 9.0 3.1  
  - from loss carryforwards -0.5 0.2  
  Total tax expense 54.7 53.4  

The statutory corporation tax rate in Germany for the assessment period 2006/07 totaled 25 percent. Including trade tax and the solidarity surcharge, this resulted in taxes totaling 39.4 percent. During the current fiscal year, deferred taxes at the German Group companies were generally measured at 32.0 percent (previous year: 39,4 percent) as the result of a reduction in corporation tax effective January 1, 2008. For foreign companies, a  country-specific average tax rate is generally applied.

Restating the existing deferred taxes as a result of the change in the tax rate raised the income taxes shown in the income statement by 2.1 million EUR. In accordance with current tax provisions, the current imputed corporation tax credits as of December 31, 2006 were stated at fair value through profit and loss. As of September 30, 2007 the corporate tax reduction amounts to 8.4 million EUR.

The ongoing taxes only include non-period tax income and expense to a minor
extent.

An amount of 1.1 million EUR (previous year: 0.6 million EUR) was formed and taken directly to equity under a separate component of equity.

No deferred tax assets were formed for tax losses carried forward at individual Group companies totaling 9.1 million EUR (previous year: 6.2 million EUR). Of this amount, 1.2 million EUR was used in the past fiscal year (2005/06: 1.9 million EUR).

The reconciliation from expected to effective tax expense is as follows:

Tax reconciliation statement

  in EUR mill. 2006/07 2005/06  
  Earings before taxes 143.1 129.4  
  Consolidated income tax rate (national incl. trade tax) 39.4% 39.4%  
  Expected tax expense 56.4 51.0  
  Impact of different national tax rates -2.4 -2.5  
  Non-period tax income/expense -0.1 2.6  
  Non-taxable income -1.8 -0.1  
  Effects from tax rate change 2.1 0.0  
  Non tax-deductible operating expenses 2.8 2.8  
  Financial expenses - minority options 2.5 3.2  
  Capitalization of corpoarte tax credit -8.4 0.0  
  Write-downs on deferred tax assets 5.0 0.0  
  Write-ups on deferred taxes / use of non capitalized loss carryforwards -0.8 -2.5  
  Trade tax (additions/deductions) 0.8 0.6  
  Other -1.4 -1.7  
  Effective tax expense 54.7 53.4  
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