Translation of "Steuerlatenzen" in English

The rise in deferred tax assets arose from the recognition of higher provisions under HGB compared with the tax accounts and partly from increased deferred tax assets due to the findings of the tax audit carried out for 2009 to 2011.

Temporary differences which were not recognized as deferred tax assets totaled € 12.3 million for the financial year 2008 (2007: € 11.6 million).

In 2010, the Board of Management and the Supervisory Board had allocated a total of € 40.5 million of the 2010 net profit to other reserves after deducting deferred tax liabilities under the first application of the German Accounting Law Modernization Act (BilMoG).

Please see Note 14. for information on the impact of the German corporate tax reform and the associated decrease in the amount of deferred tax liabilities at the balance sheet date.

The remaining deferred tax liabilities amounting to € 37.4 million were recognized as a reduction in net profit at January 1, 2010.

From the current perspective, this will necessitate a one-time non-cash value adjustment of deferred tax assets amounting to some €25 million in the consolidated annual financial statement for the current financial year 2017/2018 (April 1, 2017 to March 31, 2018), which will result in corresponding tax expenditure and thus have a negative effect on the net result after taxes.

Applying the same accounting treatment of deferred taxes as when the convertible bond was issued, the deferred tax liabilities of € 5.1 million (2009: liabilities of € 5.1 million) relating to the equity component of the convertible bond are presented in capital reserves. Deferred taxes on cash flow hedges and securities are presented in other comprehensive income.

In accordance with Section 58 (2) of the German Stock Corporation Act (AktG), a total of € 40.5 million (2009: € 68.0 million) of the 2010 net profit – after the deduction of deferred tax liabilities under the first application of the German Accounting Law Modernization Act (BilMoG) – was allocated to other reserves by the Board of Management and the Supervisory Board of MTU Aero Engines Holding AG.

Temporary differences for which no deferred tax assets were recognized totaled € 12.3 million (2007: € 11.6 million) at the end of the reporting period and related to MTU Maintenance Canada, Canada, and MTU Aero Engines North America Inc., USA.

The income tax income of €15.0 million arose from the recognition of higher provisions under HGB compared with the tax accounts and partly from increased deferred tax assets due to the findings of the tax audit carried out for 2009 to 2011.

Temporary differences for which no deferred tax assets were recognized totaled € 3.6 million in the financial year 2011 (2010: € 3.5 million) and related to MTU Aero Engines North America.

Deferred tax assets and liabilities vis-Ã -vis the same local tax authority were netted off for each Group member and reported in Other assets or Provisions for deferred taxes.

The main cause of this substantial reduction in the tax rate for the group for the financial year 2007 is the remeasurement of accrued deferred tax assets and liabilities at December 31, 2007 on the basis of the lower tax rate associated with the entry into force of the German Corporate Tax Reform Act 2008, leading to a decrease in deferred tax liabilities of € 46.8 million (2006: € 0.0 million).

Temporary differences for which no deferred tax assets were recognized totaled € 3.5 million (2008: € 12.3 million) at the end of the reporting period and related to MTU Aero Engines North America Inc., Newington, USA.

The non-current assets comprise intangible assets, property, plant and equipment, financial assets, other assets, and non-current deferred tax assets.

No deferred taxes had to be taken into account as the entity liable for taxes, MTU Aero Engines Holding AG, Munich, and the subsidiary recognizing the asset, MTU Aero Engines GmbH, Munich, are not identical.

Similar to the treatment of deferred taxes arising on the issue of the convertible bond, the deferred tax asset of € 5.1 million (2007: € 5.7 million) relating to the equity component of the convertible bond is presented in capital reserves. Deferred taxes on cash flow hedges are presented in other comprehensive income.

Deferred tax as- sets resulting from tax loss carryforwards and other deferred tax assets were recognized if the same taxable unit was expected to record taxable profits in an appro- priate amount in the future.

From the current perspective, this will necessitate a one-time non-cash value adjustment of deferred tax assets amounting to some EUR25 million in the consolidated annual financial statement for the current financial year 2017/2018 (April 1, 2017 to March 31, 2018), which will result in corresponding tax expenditure and thus have a negative effect on the net result after taxes.