The fair value of financial instruments is generally determined using stock exchange prices. If stock exchange prices are not available, the fair value is determined using measurement methods customary in the market, based on market parameters specific to the instrument.

Fair value is calculated using the discounted cash flow method, taking into account individual credit standing and other market circumstances in the form of credit and liquidity spreads generally applied in the market when determining present value.

The fair value of derivative financial instruments is determined as follows: Options are valued by external partners using Black-Scholes pricing models. Futures are measured with recourse to the stock exchange price in the relevant market. All other derivative financial instruments are measured by discounting expected future cash flows using the net present value method. As far as possible, the entry parameters used in these models are relevant observable market prices and interest rates on the balance sheet date, obtained from recognised external sources.

These calculations are based on the following interest curves:

Derivative financial instruments are generally recognised on the trading day.

For loans and receivables which are measured at amortised cost, there are no liquid markets. For current loans and receivables, it is assumed that the fair value corresponds to the carrying amount. For all other loans and receivables, the fair value is determined by discounting future expected cash flows. The interest rates applied to the loans are the same as those that would apply to new loans secured with the same risk structure, original currency and maturity.

Net gains or net losses from financial instruments result from changes in fair value, impairment and reversal of such, derecognition and foreign currency. In interest income and interest charges, gains and losses from fair value hedge accounting are offset against each other, in order to give a fair presentation of the economic effect of the underlying hedging relationship.

In the 2007 financial year, net gains or net losses arose on financial instruments as follows:

The net gains and losses include valuation gains and losses but exclude interest and dividends.

Freestanding derivatives comprise all those derivatives which are not designated as hedging instruments. They include those derivatives in economic hedging relationships not designated as hedges in respect of which gains and losses arising from the underlying transaction and the hedged item are recognised at the same time in the income statement.

The financial result includes fees and other costs of capital of EUR 13m (2006: EUR 22m) relating to financial instruments not at fair value through profit or loss.

In the 2007 and 2006 financial years, no interest income has been accrued which relates to impaired financial assets, especially receivables.

Impairment loss on financial assets:

The interest income and interest expense from financial instruments not measured at fair value through profit or loss were as follows:

Not included here are the interest income and expense from derivatives and the interest income and expense from assets and liabilities which are outside the scope of IFRS 7.