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## 6. Other Short-term Financial Assets 

This item includes the valuation of derivative financial instruments that existed as of the balance sheet date and where recognized as assets. The financial instruments as of the balance sheet date include forward exchange transactions used to hedge 

## 7. Deferred Taxes 

Deferred taxes relate to the following items: 

existing balance sheet items and future transactions. The value recorded corresponds to the market value valid on the balance sheet date. 

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As of December 31, 2004 tax losses carried forward totaled € 5.4 million (previous year: € 9.4 million). This leads to deferred tax assets of € 2.3 million (previous year: € 3.0 million). Following value adjustment, the tax losses carried forward were included in deferred tax assets to the amount of € 0.4 million (previous year: € 0.6 million). The tax losses carried forward primarily relate to inactive companies so that use of these tax losses seems unlikely. 

Other than in the previous year, deferred tax liabilities for withholding tax from possible dividends on all distributable profits of subsidiaries are included. Due to this change in 

accounting, the tax expense is € 2 million higher. Excluding this effect, the tax ratio for financial year 2004 would be 29.6% which represents a 0.5%-pts. deviation from the current 30.1% tax rate as disclosed in the annual financial statement. 

Deferred taxes from items recorded in equity with neutral effect on profits (hedge accounting) are included to the amount of € 15.7 million (previous year: € 7.2 million). 

Deferred tax assets and liabilities are netted if they relate to the same tax authority. Accordingly, they are disclosed in the balance sheet as follows: 

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