Annual Financial Statements (HGB) as at 31 December 2012 Deutsche Post AG, Bonn

Transcription

1 Annual Financial Statements (HGB) as at 31 December 2012 Deutsche Post AG, Bonn

2 Contents 3 Balance sheet 4 Income statement 5 Notes 52 Annexes 52 Annex 1 Statement of changes in non-current assets 53 Annex 2 Maturity structure of liabilities 54 Annex 3 Cash flow statement 55 Annex 4 Statement of changes in equity 56 Annex 5 List of shareholdings 76 Responsibility statement 77 Auditor s report 79 Management report 2

3 Balance sheet as at 31 December 2012 Assets m Notes 31 Dec Dec A. Non-current assets I. Intangible assets II. Property, plant and equipment III. Non-current financial assets ,301 14, ,280 13,947 17,212 16,352 B. Current assets I. Inventories II. Receivables and other assets III. Securities IV. Cash and cash equivalents ,143 4,263 2, , ,088 15,478 11,059 C. Prepaid expenses ,857 27,652 Equity and liabilities m Notes 31 Dec Dec A. Equity I. Issued capital Contingent capital 75 million II. Capital reserves ,209 3,349 1,209 3,434 III. Revenue reserves 26 5,250 5,250 IV. Net retained profit 27 1,520 1,314 11,328 11,207 B. Provisions ,564 5,428 C. Liabilities 32 13,961 11,013 D. Deferred income ,857 27,652 3

4 Income statement 1 January to 31 December 2012 m Notes Revenue 34 12,669 12, Other capitalised services Other operating income 36 1,777 1,343 14,458 13, Materials expense 37 a) Cost of consumables and supplies and of goods purchased and held for resale b) Cost of purchased services 4,126 4,409 3,877 4, Staff costs 38 a) Wages, salaries and emoluments 5,448 5,590 b) Social security contributions, retirement benefit expenses and assistance benefits 1,558 7,006 1,562 7, Amortisation of intangible assets and depreciation of property, plant and equipment Other operating expenses 40 1,794 1,977 13,427 13, Financial result Result from ordinary activities Extraordinary result Income tax expense Net profit for the period Retained profits brought forward from previous year Net retained profit 27 1,520 1,314 4

5 Annual Financial Statements Jahresabschluss (HGB) (HGB) Notes to the Annual Financial Statements of Deutsche Post AG Basis of presentation 1 Basis of accounting Deutsche Post AG is a large corporation within the meaning of section 267 of the Handelsgesetzbuch (HGB German Commercial Code). The annual financial statements for the year ended 31 December 2012 were prepared in accordance with the accounting and reporting provisions of the HGB (sections 238 ff and 264 ff of the HGB) and the Aktiengesetz (AktG German Stock Corporation Act). As the parent company of Deutsche Post DHL, Deutsche Post AG prepares consolidated financial statements on the basis of the International Financial Reporting Standards (IFRSs), in accordance with section 315a(1) of the HGB. For this reason, no consolidated financial statements are prepared in accordance with the requirements of the HGB. The financial year is the calendar year. 2 Classification of the balance sheet and the income statement The total cost (type of expenditure) method was applied to the income statement. Amounts are presented in millions of euros ( m). To enhance the clarity of presentation, the items of the balance sheet and the income statement are shown summarised together; they are broken down and explained separately in the Notes. The cash flow statement and the statement of changes in equity are attached as annexes to the notes to the financial statements. 5

6 Accounting policies Application of the accounting policies as detailed below was unchanged as against the previous year. 3 Intangible assets Purchased intangible assets are carried at cost, including incidental costs of acquisition, and reduced by straight-line amortisation and write-downs. They have a useful life of five years which is reduced appropriately in the event of a shorter contract term. The option under section 248(2) of the HGB is exercised for internally generated intangible assets, which have been recognised at cost (development costs) since 1 January Cost includes attributable direct costs from the consumption of merchandise and the utilisation of services, as well as an appropriate portion of indirect materials and labour costs and amortisation expenses attributable to the development process. 4 Property, plant and equipment Property, plant and equipment that will be used for business operations for more than one year is carried at acquisition or production cost, including incidental costs of acquisition or production, and reduced by straight-line depreciation. The following useful lives are applied: Usefull lives Buildings Technical equipment and machinery Other vehicles IT systems Other operating and office equipment Low-value assets with an acquisition cost of 150 1, to 50 years 10 to 20 years 10 years 4 to 5 years 8 to 10 years 5 years Additions to items of property, plant and equipment are depreciated on a time-proportionate basis. Impairment losses are recognised if the fair values of individual assets are lower than their carrying amounts and impairment is expected to be other than temporary. 6

7 Subsidies received are reported under deferred income and reversed over the useful life of the property, plant and equipment. 4 The cost of moveable items of non-current assets subject to wear and tear that can be used independently is recognised in full as an operating expense in the tax year of acquisition, production, or contribution. However, the cost of the individual asset may not exceed 150, net of any input tax contained in that amount. An annual pooled item within the meaning of section 6(2a) of the Einkommensteuergesetz (EStG German Income Tax Act) is recognised for lowvalue assets whose cost, net of any input tax contained in that amount, is more than 150 and up to 1,000. The annual pooled item is depreciated over five years, reducing income. The pooled item is not reduced if an item of operating assets is disposed of before the end of the five-year period. 5 Non-current financial assets Shares in affiliated companies and other equity investments are carried at cost or, if their value is impaired for a prolonged period, at the lower fair value. Shares and investments in foreign affiliated companies denominated in foreign currencies are translated at the acquisition date exchange rate. If the currency risk of acquisitions was hedged, they are carried at the hedging rate. The cost of long-term, low-interest or non-interest-bearing loans corresponds to their present value at the grant date. The other loans are carried at their principal amounts. Amounts of accumulated interest are reported under additions. 6 Inventories Postage stamps and spare parts for conveyor and sorting systems at freight mail centres are reported under inventories at fixed value; the other consumables and supplies are carried at moving or weighted average prices, or at the lower market prices at the balance sheet date. Goods purchased and held for resale are measured at cost or at moving average prices. Appropriate valuation allowances are applied where necessary. 7 Receivables and other assets Receivables and other assets are carried at their principal amounts less any specific valuation allowances. The general risk of counterparty default is taken into account by a general bad debt allowance. 7

8 8 Securities Securities classified as current assets are carried at cost or the lower fair value at the balance sheet date. 9 Cash and cash equivalents Bank balances, cash-in-hand and cheques are carried at their nominal amounts. Foreign currency cash holdings are measured at the middle spot rate on the closing date. 10 Prepaid expenses Cash expenditures prior to the balance sheet date that represent expenses for a certain period after that date are recognised as prepaid expenses. The company exercises the option set out in section 250(3) of the HGB and recognises discounts as assets. The difference between the settlement amount and the issue amount of a liability is included in prepaid expenses and reduced over the term of the liability. 11 Equity The issued capital is carried at its notional amount. 12 Provisions Provisions are recognised at the settlement amount dictated by prudent business judgement. Provisions with a remaining maturity of more than one year are discounted at the average market interest rate for the preceding seven financial years corresponding to their remaining maturity. Provisions for pensions and similar obligations are recognised on the basis of actuarial reports. They are measured using the projected unit credit method. The 2005 G mortality tables published by Prof. Dr Klaus Heubeck are applied to the calculation of the provisions. They are recognised at their settlement amount, which reflects discounting at the average market interest rate for the preceding seven years. A remaining maturity of 15 years is assumed in accordance with section 253(2) sentence 2 of the HGB. The option to allocate the amount to be added to provisions for pensions rateably over 15 years due to the new measurement requirements under the Bilanzrechtsmodernisierungsgesetz (BilMoG German Accounting Law Modernisation Act) (effective 1 January 2010) has been exercised. The annual amount is reported in the extraordinary result. In accordance with section 246(2) sentence 2 of the HGB, assets that may only be used to meet liabilities from pension obligations or similar long-term obligations will be offset against the relevant provisions. Provisions for taxes and other provisions are recognised in the case of obligations to third parties that can be reliably estimated and that will lead to an outflow of economic resources. They are recognised in the amount dictated by prudent business judgement. 8

9 13 Liabilities Liabilities are carried at their settlement amount. In cases where the redemption amount of a liability is higher than the issue amount, the difference is capitalised and allocated across the term of the liability. 14 Deferred income Cash payments received prior to the balance sheet date that represent income for a certain period after that date are recognised as deferred income. 15 Foreign currency translation Foreign currency transactions are generally translated at the historical exchange rate at the date of initial recognition. For reasons of simplification, they are translated during the course of the financial year at the middle spot rate on the last day of the preceding month. Balance sheet items are measured as follows: Non-current foreign currency receivables are recognised at the offer rate when the receivable is recognised or at the lower middle spot rate at the reporting date in accordance with the principle of lower of cost or market value (principle of imparity). Current foreign currency receivables (maturity of one year or less) and cash funds or other current foreign currency assets are translated at the middle spot rate at the balance sheet date. Non-current foreign currency liabilities are recognised at the bid rate when the liability is recognised or at the higher closing rate, using the middle spot rate at the reporting date (principle of imparity). Current foreign currency liabilities (maturity of one year or less) are translated at the middle spot rate at the balance sheet date. 16 Deferred taxes Deferred taxes are attributable to the differences between the amounts recognised for assets, liabilities, prepaid expenses and deferred income in the HGB financial statements and in the tax accounts. Deutsche Post AG not only includes the differences relating to its own balance sheet items in the offsetting process, but also those relating to companies in its consolidated tax group and to partnerships in which Deutsche Post AG holds an equity interest. Tax loss carryforwards are taken into account in addition to temporary differences. The net amount is not recognised as an asset in the balance sheet in accordance with the recognition option available under section 274(1) sentence 2 of the HGB. 9

10 Balance sheet disclosures Disclosures on assets 17 Intangible assets The changes in and composition of intangible assets are presented in the statement of changes in non-current assets (Annex 1). In cases where development began after 1 January 2010, the total development costs incurred for internally generated software are capitalised. Developments costs totalling 55 million were incurred in the year under review. 26 million of this amount was capitalised as internally generated intangible assets in the year under review. 18 Property, plant and equipment The changes in and composition of property, plant and equipment are presented in the statement of changes in non-current assets (Annex 1). Of the 75 million invested in land and buildings 28 million relates to the construction of a parcel centre in Obertshausen, Hesse, as part of the modernisation of the parcel network in Germany. Further additions to property, plant and equipment are attributable to technical equipment (primarily conveyor and sorting systems) ( 51 million) and other equipment, operating and office equipment ( 55 million). 59 million relates to assets under construction. The investments in other equipment, operating and office equipment relate primarily to computer equipment and low-value and other assets. 19 Non-current financial assets Changes in non-current financial assets are presented in Annex 1 (Statement of changes in non-current assets). The list of shareholdings is contained in Annex 5. Non-current financial assets are composed of the following items : Non-current financial assets m 31 Dec Dec Investments in affiliated companies 6,953 6,968 Loans to affiliated companies 7,877 6,655 Housing promotion loans Other loans ,845 13,947 10

11 The loans to affiliated companies mainly relate to Deutsche Post Beteiligungen Holding GmbH ( 6,403 million). The decrease in loans to affiliated companies is primarily due to repayments made by DZ Specialties B.V. ( 997 million) and Exel Limited ( 298 million). The non-interest-bearing loans have not been discounted in view of the measurement of the overall exposure to Deutsche Post Beteiligungen Holding GmbH. In addition to the long-term loans, the equity investment recognised in an amount of around 6,655 million was taken into account in particular, with the result that the absence of interest payments on the loan is reflected in a corresponding increase in income from equity investments. The item also includes a recovery claim amounting to 298 million including interest as at the reporting date. This relates to the European Commission s state aid ruling. In coordination with the Federal Government of Germany the amount was deposited by DP AG in a trust account. 20 Inventories Inventories m 31 Dec Dec Consumables and supplies Goods purchased and held for resale Among other things, the inventories item consumables and supplies contains office materials, supplies, spare parts and other maintenance materials. Goods purchased and held for resale include philatelic materials and other goods. 11

12 21 Receivables and other assets Receivables and other assets m 31 Dec Dec Trade receivables Receivables from affiliated companies thereof trade receivables: 158 (previous year: 158) Receivables from other equity thereof trade receivables: 0 (previous year: 8) 8,148 8, Other assets ,143 9,869 3,540 million (previous year 5,517 million) of receivables from affiliated companies relates to receivables from intragroup in-house banking and 730 million (previous year 385 million) relates to receivables from profit transfer agreements. In addition, short-term loan receivables from affiliated companies increased to 4,554 million (previous year 2,086 million). Other assets include 120 million in cash deposits which serve as collateral in connection with the sale of residential building loans. 22 Securities Securities m 31 Dec Dec Other securities 4, The change in this item is due to the disposal of all of the shares that were held by Deutsche Post AG in Deutsche Postbank AG until February 2012 (carrying amount as at : 4,229 million). 23 Cash and cash equivalents Cash and cash equivalents m 31 Dec Dec Bank balances 1, Cash-in-hand/cheques/cash-in-transit ,003 1,088 12

13 The amount reported under bank balances relates to current accounts, shortterm money-market investments (overnight and one-month money) and cash clearing items. 740 million (previous year 1,664 million) of the total amount is attributable to short-term money market investments with other banks. Cash flow statement The cash flow statement (Annex 3 to the Notes) discloses the company s cash flows and their application. The cash and cash equivalents presented in the cash flow statement include all the cash items presented in the balance sheet. Net income before changes in working capital/cash flow I (cash flow from operating activities) rose by 59 million to 912 million. Provisions declined by 2,280 million, mainly due to the funding of pension provisions. Taking into account the increase in working capital and prepaid expenses, and the decrease in liabilities and deferred income, net cash used in operating activities amounted to -2,356 million (previous year 225 million in net cash from operating activities). The decline in net cash from investing activities is due to proceeds from and cash paid in relation to interest-bearing receivables from affiliated companies ( -1,484 million). This amount was largely offset by proceeds from the repayment of loans extended to affiliated companies ( 1,392 million). The amount of cash paid for the repayment of state aid also had an impact ( -298 million). Net cash from financing activities in the amount of 835 million is largely attributable to the issue of bonds ( 1,996 million). The dividend payment to shareholders reduced the net cash inflow from financing activities by 846 million. Cash and cash equivalents as at 31 December 2012 amounted to 1,088 million (previous year 2,003 million). 13

14 Disclosures on equity and liabilities 24 Equity Equity m 31 Dec Dec Issued capital 1,209 1,209 Capital reserves 3,349 3,434 Revenue reserves Other revenue reserves 5,250 5,250 Net retained profit 1,520 1,314 11,328 11,207 Equity at 31 December 2012 decreased by 121 million year-on-year. Changes are presented in the statement of changes in equity (Annex 4). Further details on equity are given in the following sections. 25 Issued capital Share capital The share capital was unchanged year-on-year and was composed of 1,209,015,874 (no-par value) registered shares. As at 31 December 2012, the shareholder structure was as follows: 900,738,516 shares (74.5 %; previous year 69.5 %) were in free float following the sale of 60 million shares by Kreditanstalt für Wiederaufbau to institutional investors around the world in September Kreditanstalt für Wiederaufbau now holds 308,277,358 shares (25.5 %; previous year 30.5 %). Share ownership as at December 2012 Shareholders Headquarters, country Share of voting rights Exceeding of the reporting threshold of 3% published KfW Bankengruppe Frankfurt, Germany 308,277, BlackRock Financial Management, Inc. BlackRock Holdco 2, Inc. New York, USA 37,504, Wilmington, USA 37,504, BlackRock, Inc. New York, USA 38,412, Voting rights notifications in accordance with section 26(1) et seq. of the Wertpapierhandelsgesetz (WpHG German Securities Trading Act) dated 13 September 2012: 14

15 On September 12, 2012, the Federal Republic of Germany, as represented by the Ministry of Finance, Berlin, Federal Republic of Germany, notified us in accordance with section 21(1) WpHG that, via its shares, its voting rights in respect of Deutsche Post AG, Charles-de-Gaulle-Str. 20, Bonn, Federal Republic of Germany, ISIN: DE , fell below the 30 % threshold for voting rights on 11 September 2012 and that they amounted to % of the voting rights (308,277,358 voting rights) on that day. According to section 22(1) sentence 1 no. 1 and no. 2 WpHG in conjunction with section 22(1) sentence 2 WpHG, % of the voting rights (308,277,358 voting rights) are attributable to the Federal Republic of Germany. On September 11, 2012, KfW, Frankfurt, Germany, notified us in accordance with section 21(1) WpHG that, via its shares, its voting rights in respect of Deutsche Post AG, Charles-de-Gaulle-Str. 20, Bonn, Germany, ISIN: DE , fell below the 30 % threshold for voting rights on 11 September 2012 and that they amounted to % of the voting rights (308,277,358 voting rights) on that day. Voting rights notification in accordance with section 26(1) WpHG dated 17 December 2009: By letter dated 15 December 2009, the announcing entities BlackRock Financial Management, Inc., New York, USA, BlackRock Holdco 2, Inc., New York, USA, and BlackRock, Inc., New York, USA, notified us, Deutsche Post AG, Bonn, Germany, as the issuer, pursuant to section 21(1) and section 24 WpHG as follows: 1. The percentage holding (voting rights) of BlackRock Financial Management, Inc. in Deutsche Post AG exceeded the threshold of 3 % on 1 December 2009 and amounted to 3.10 % (37,504,854 voting shares) on that day. All of the voting rights are attributable to BlackRock Financial Management, Inc. pursuant to section 22(1) sentence 1 no 6 in conjunction with sentence 2 WpHG. 2. The percentage holding (voting rights) of BlackRock Holdco 2, Inc.in Deutsche Post AG exceeded the threshold of 3 % on 1 December 2009 and amounted to 3.10 % (37,504,854 voting shares) on that day. All of the voting rights are attributable to BlackRock Holdco 2, Inc. pursuant to section 22(1) sentence 1 no 6 in conjunction with sentence 2 WpHG. 3. The percentage holding (voting rights) of BlackRock, Inc. in Deutsche Post AG exceeded the threshold of 3 % on 1 December 2009 and amounted to 3.18 % (38,412,752 voting shares) on that day. All of the voting rights are attributable to BlackRock, Inc. pursuant to section 22(1) sentence 1 no 6 in conjunction with sentence 2 WpHG. 15

16 Authorised capital As resolved by the Annual General Meeting on 21 April 2009, the Board of Management is authorised, subject to the approval of the Supervisory Board, to increase the company s share capital up to 20 April 2014 by issuing up to 240 million no-par value registered shares against cash and/or non-cash contributions. In principle, shareholders have pre-emptive subscription rights. To date, the Board of Management has not made use of such authorisation. Contingent capital On 25 May 2011, the Annual General Meeting resolved to contingently increase the share capital by up to 75 million until 24 May The purpose of the contingent capital is to grant option or conversion rights or to settle conversion obligations to the holders of bonds with warrants, convertible bonds and/or income bonds, as well as profit participation certificates. Based on this authorisation, Deutsche Post AG issued a 1,000 million convertible bond on 6 December A total of 10,000 rights to convert the bonds into up to 48 million Deutsche Post AG shares were issued after the capital increase. The contingent capital increase will only be implemented to the extent that the convertible bondholders exercise their conversion right and/or option. Based on this authorisation, Deutsche Post AG issued a convertible bond with a volume of 1,000 million in December The convertible bond was distributed among two components: a conversion right ( 74 million) and a liability. The liability was recognised at the settlement amount as a liability from bonds. The difference of 74 million from the conversion right was recognised as a prepaid expense in the balance sheet. The conversion right was recognised in the capital reserves. Authorisation to acquire treasury shares By way of a resolution adopted by the Annual General Meeting on 28 April 2010, the company is authorised to acquire treasury shares in the period to 27 April 2015 of up to 10 % of the share capital existing when the resolution was adopted. The authorisation permits the Board of Management to exercise it for every purpose permitted by law, and in particular to pursue the goals mentioned in the resolution by the Annual General Meeting. At the Annual General Meeting on 9 May 2012, the authorisation to acquire treasury shares was supplemented. In future, treasury shares acquired on the basis of the authorisation, with shareholders pre-emptive rights disapplied, may also be used for the purposes of listing on a stock exchange outside Germany. In addition, the Board of Management is authorised to acquire treasury shares using derivatives. As on 31 December 2011, Deutsche Post AG did not hold any treasury shares on 31 December

17 26 Reserves Capital reserves Under the terms of the Share Matching Scheme introduced in 2009, a portion of the short-term variable remuneration component (annual bonus) for executives is paid in the form of shares of Deutsche Post AG (incentive shares). All Group executives can specify an increased equity component individually by converting a further portion of their variable remuneration for the financial year (investment shares). If certain conditions are met, the executive will again be awarded the same number of Deutsche Post AG shares four years later (matching shares). In March 2012, 1,768,421 treasury shares were acquired and transferred to the eligible executives to settle the portion of the 2011 annual bonus paid in shares. An additional 2,082 shares to be issued to those participants in the Share Matching Scheme who have left the company were acquired in several tranches. The average acquisition price paid for the treasury shares amounted to In April 2012, the treasury shares were transferred to the executives at a value of per share in accordance with the Scheme s rules. The capital reserves increased by 0.7 million due to the measurement difference between the average acquisition price paid for the shares and the value at the date of transfer to the executives. An aggregate amount of 4 million was added to the capital reserves for the matching shares granted in financial years 2009 to The lock-up period for these rights is four years in each case. Capital reserves were additionally increased by 7 million for the incentive shares granted in the current financial year. These rights will be settled using treasury shares in April of the following year. The conversion right relating to the convertible bond issued in December 2012 was recognised in the capital reserves at an amount of 74 million. 27 Net retained profit On 9 May 2012, the Annual General Meeting resolved to distribute 846 million of the net retained profit for financial year 2011 and to carry forward 674 million to new account. The dividend was paid out in financial year Amounts subject to restrictions on distribution Equity as at 31 December 2012 includes 23 million (previous year 9 million) subject to restrictions on distribution. 29 Provisions The provisions are composed of provisions for pensions, provisions for taxes and other provisions. 17

18 30 Provisions for pensions and similar obligations The provisions for direct or indirect pension obligations totalled 2,968 million as at 31 December Provisions for pensions and similar obligations m Provisions for pensions 31 Dec Utilisation Addition Addition/ Unwinding 31 Dec ,743 2, ,968 The provisions for pensions relate firstly to benefit commitments to salaried employees and hourly workers that substantiate a direct benefit claim against Deutsche Post AG, and secondly to indirect pension obligations to employees covered by collective wage agreements. An addition of 507 million was calculated for the remeasurement of the pension provisions as at 1 January 2010 due to the introduction of the BilMoG on the basis of an actuarial report (projected unit credit method; Heubeck 2005 G mortality tables). 280 million of this amount was attributable to direct benefit obligations and 227 million to indirect benefit obligations. In accordance with Art. 67(1) of the Einführungsgesetz zum Handelsgesetzbuch (EGHGB Introductory Act to the German Commercial Code), Deutsche Post AG is allocating this addition over 15 years. The annual addition amounts to 34 million and is reported in the extraordinary result. 19 million of this amount is attributable to direct benefit obligations and 15 million to indirect benefit obligations. The indirect pension obligations are granted and funded by Versorgungsanstalt der Deutschen Bundespost (VAP), by Unterstützungskasse Deutsche Post Betriebsrenten-Service e.v. (DPRS), and by DP Pensionsfonds AG. There are indirect benefit obligations of 1,956 million as at 31 December Of the 227 million required to be added and eligible for allocation as at 1 January 2010 in accordance with Art 67(1) of the EGHGB, 15 million has been added every year since financial year A total of 182 million remains to be added. The provisions for indirect obligations thus amounted to 1,774 million (previous year 1,649 million) as at 31 December Sufficient provisions were recognised at the balance sheet date for indirect benefit obligations to hourly workers and salaried employees funded via VAP Abrechnungsverband 2 (VAP account group 2) and DPRS. No provisions needed to be recognised as at the reporting date for the obligations funded via VAP Abrechnungsverband 3 (VAP account group 3) and DP Pensionsfonds AG, since the assets are in excess of the liabilities. As part of the reorganisation of its occupational pension plans, Deutsche Post AG assumed direct payment obligations of VAP by way of parallel obligations (Article 77 of the VAP statutes) effective 1 January 2000, 1 July 2000, 1 January 2001, and 1 August

19 Other direct benefit obligations include commitments to management employees and commitments in accordance with collective wage agreement No. 15 on occupational pensions (Post occupational pension) for all employees subject to collective wage agreements recruited after 30 April 1997, and for employees subject to collective wage agreements whose employment contracts were entered into in eastern Germany (the former GDR). There are direct benefit obligations of 3,286 million as at 31 December Of the 280 million required to be added and eligible for allocation as at 1 January 2010 in accordance with Art 67(1) of the EGHGB, 19 million has been added every year since financial year A total of 223 million remains to be added. In December 2012, Deutsche Post AG issued three bonds with a total principal amount of 2,000 million to fund a further portion of its pension obligations on a long-term basis. Due to the increase in plan assets, at the reporting date, assets as defined by section 246(2) of the HGB existed for the first time. As a result, these assets have to be netted against the respective obligations. Plan assets totalling 1,869 million were deducted from the relevant provision as at 31 December The acquisition costs of the plan assets correspond to their fair value. Interest expenses amounted to 195 million as at the balance sheet date. The interest income from the plan assets was insignificant as at that date. Including other utilisations and additions, the provisions for direct pension obligations amounted to 1,194 million (previous year 3,090 million) as at 31 December The pension provisions are discounted using the discount rate published by the Deutsche Bundesbank for a remaining maturity of 15 years. The discount rate at the measurement date is 5.06 %. The pension provisions were based on the following assumptions: annual wage and salary increases: 1.45 % to 2.5 % annual pension increases: 1.0 % to 2.5 % A mean staff turnover rate of 1 % was assumed for the calculations. 19

20 31 Provisions for taxes and other provisions Provisions for taxes and other provisions m 31 Dec Utilisation Reversals Additions Addition/discount unwinding 31 Dec Provisions for taxes Other provisions a) Provisions for staff costs Restructuring SARs (stock options) Vacation claims Overtime claims Bonuses Variable salaries and wages Other claims for time off Postal Civil Service Health Insurance Fund Jubilee payments Assistance benefits Supplementary insurance Miscellaneous b) Miscellaneous other provisions Postage stamps Property Interest on backpayments of taxes Derivatives Outstanding supplier invoices Litigation costs Miscellaneous Subtotal 2,328 1, , ,121 Total of 1 and 2 2,821 1, , ,460 Provisions for taxes relate to tax expenses for the current year and potential arrears of taxes payable due to ongoing external tax audits. The additional VAT payment (backpayment) made by Deutsche Post AG in financial year 2012 was partially covered by provisions. The addition to the provision for stock appreciation rights (SARs) amounts to 143 million. The SARs issued are measured using an option pricing model. The provision for restructuring expenses mainly includes expenses for redundancies (severance pay, transitional allowances, partial retirement, etc.). The provision for postage stamps relates to postage stamps that have been sold by the reporting date but for which no services have yet been performed. The figure is based on an investigation by a market research company into postage stamps held by customers. 20

21 Long-term provisions were discounted using the relevant discount rate published by the Deutsche Bundesbank for the average maturity of the obligations. 32 Liabilities Liabilities m 31 Dec Dec Bonds thereof convertible bond: 1,000 (previous year: 0) 0 2,000 Due to banks 4, Trade payables Liabilities to affiliated companies thereof trade payables: 79 (previous year: 53) Liabilities to other equity investments thereof trade payables: 0 (previous year: 9) Other liabilities thereof taxes: 232 (previous year: 258) thereof social security: 2 (previous year: 7) 7,706 7, ,961 11,013 The maturity structure of the liabilities is presented in the Maturity structure of liabilities table (Annex 2). No loans were secured by mortgage charges as at 31 December In December 2012, Deutsche Post AG issued three long-term bonds at a total principal amount of 2,000 million, among them two conventional bonds with a volume of 300 million and 700 million, a term of 8 and 12 years (due 2020 and 2024) and an interest rate of % and %, respectively. The difference between the issue price and the amount at which the bonds are settled (discount) is recognised as a prepaid expense ( 4.6 million). In addition to the conventional bonds, a convertible bond was issued with a volume of 1,000 million and a term of seven years. It carries interest at a rate of 0.6 %. Deutsche Post AG made use of the corresponding authorisation by the AGM in 2011 to issue the convertible bond for which pre-emptive subscription rights have been disapplied. The conversion right was recognised in the capital reserves at an amount of 74 million. 21

22 The discount in the amount of 74 million was recognised as a prepaid expense and will be written down over the remaining term of the bond. Since 16 January 2013, the bond creditors have been entitled to convert the bonds into shares of DPAG in the nominal amount of 100 thousand each. The conversion price is for one share, i.e. the creditor is entitled to receive 4, shares for each bond. The bond has a term until 6 December 2019: Starting 6 December 2017, DPAG will be entitled to repay early the bond, provided the price sustainably exceeds the conversion price by more than 30 %. The amounts due to banks declined due to the completion of the sale of Deutsche Postbank AG. The remaining shares in Deutsche Postbank AG were transferred to meet the liabilities to Deutsche Bank AG ( 4,371 million) which fell due in February The liabilities to affiliated companies mainly comprise liabilities from Group cash management (in-house banking) in the amount of 7,351 million (previous year 7,276 million). 33 Prepaid expenses and deferred income The prepaid expenses of 241 million at the reporting date primarily relate to advance payments of civil servants emoluments of 119 million. In the previous year, 167 million was reported in this item, including advance payments of civil servants emoluments also amounting to 118 million. This item also includes the discounts on the bonds issued in the financial year. For the conventional bonds with a total principal amount of 1,000 million the difference between the issue amount and the settlement amount is 4.6 million. A 74 million discount was recognised for the convertible bond with a principal amount of 1,000 million. Deferred income relates to investment subsidies of Deutsche Postbank AG, which are reversed over the expected useful life of the respective assets. 22

23 Income statement disclosures 34 Revenue MAIL division Revenue by business units m Mail Communication* 5,336 5,181 Dialogue Marketing 2,507 2,390 Parcel Germany 2,772 3,045 Global Mail 1, Press Service Business Processes* Retail Outlets Pension Service ,669 12,608 * New Business Processes business unit introduced in 2012, prior-year figures were adjusted Revenue by geographical regions m Germany 12,179 12,125 EU excl. Germany Europe excl. EU Americas Asia/Pacific Rest of world ,669 12, Other capitalised services Other capitalised services is reported in the amount of 26 million (previous year 12 million). This relates primarily to services in conjunction with the recognition of internally generated intangible assets permitted for the first time from 1 January

24 36 Other operating income Other operating income m Exchange rate gains Provision of personnel Income from the reversal of provisions Rental and lease income Service level agreements Tax refunds VAT 0 43 Write-up of non-current financial assets Gains on disposal of non-current assets Income from prior-period billings Income from derivatives Write-down reversals Miscellaneous ,777 1,343 The reported other operating income relates primarily to exchange rate gains ( 477 million). The decline in other operating income is largely attributable to the decrease ( -186 million) in write-ups of non-current financial assets. Write-ups of noncurrent financial assets related to DHL Distribution Holdings (UK) Limited, Hounslow, in the previous year. In addition to write-ups of non-current financial assets, the reversal of writedowns also decreased ( -103 million) year-on-year as at 31 December Reversals of provisions in 2012 relate in particular to the provisions for staff restructuring ( 28 million) and outstanding supplier invoices ( 24 million). Among other things, the miscellaneous sub-item relates to income from compensation payments and the derecognition of liabilities. 37 Materials expense The materials expense is composed of the cost of consumables, supplies and goods purchased and held for resale, and the cost of purchased services. 24

25 Cost of consumables, supplies and goods purchased and held for resale m Fuel and heating material Office materials and other operating supplies Goods purchased and held for resale Spare parts and repair materials Cost of purchased services m Transportation costs 1,472 1,525 Rental and lease expenses (incl. additional property expenses) Retail outlet agency agreement Commissions Purchased IT services Maintenance expenses Proprietary software development Miscellaneous ,126 3,877 The miscellaneous sub-item mostly comprises the costs of agency agreements with affiliated companies. 38 Staff costs/ Employees Staff costs/employees m Wages, salaries and emoluments 5,448 5,590 Social security contributions, retirement benefit expenses and assistance benefits thereof for retirement benefit expenses: 676 (previous year: 684) 1,558 1,562 7,006 7,152 25

26 Staff costs increased by 146 million year-on-year. Since financial year 2000, Deutsche Post AG has been legally required to contribute 33% of the pensionable gross emoluments of active civil servants and the notional pensionable gross emoluments of civil servants on leave of absence to the special pension fund. In accordance with sections 15(1) and 16(1) of the Postpersonalrechtsgesetz (PostPersRG German Postal Employees Act), Bundes-Pension-Service für Post und Telekommunikation e.v. is the special pension fund responsible for paying pensions and other assistance benefits to retired civil servants. In the year under review, contributions to Bundes-Pensions-Service für Post und Telekommunikation e.v. amounted to 543 million (previous year 531 million). The German federal government guarantees that the special pension fund is always in a position to meet its obligations to the funding companies. The average number of employees classified by employee groups in the period under review was as follows: Employee Groups m 31 Dec Dec Salaried employees and hourly workers 126, ,440 Civil servants 44,421 42, , ,901 The number of full-time equivalents at the reporting date was 142,433 (previous year 144,145). The number of salaried employees and hourly workers increased by 653 during the financial year, and the number of civil servants decreased by 1,960. Since January 1, 1995, new employees no longer qualify for civil servant status. Employees with this status at the reporting date are permanent civil servants subject to the provisions of civil service law. 26

27 39 Amortisation of intangible assets and depreciation of property, plant and equipment Amortisation m Amortisation of intangible assets Depreciation of property, plant and equipment Land and buildings Technical equipment and machinery Other equipment, operating and office equipment Impairment losses of 8 million were recognised on land and buildings in the reporting year (previous year 0). 40 Other operating expenses Other operating expenses m Exchange rate losses Other business taxes Service level agreement DP Fleet GmbH Public relations expenses Travel and training costs; entertainment expenses Legal advice, consulting and auditing costs Expenses for the Bundesanstalt Miscellaneous ,794 1,977 The primary reason for the increase in other operating expenses is the rise in other business taxes. Following an extensive review of complex tax-related issues, Deutsche Post AG was required to make an additional VAT payment for the period from 1998 to 30 June 2010 in the third quarter of Provisions had already been recognised in previous years for the majority of this amount. Among other things, the miscellaneous sub-item includes insurance contributions, telecommunications expenses, losses on asset disposals and social benefits. Other operating expenses include additional prior-period expenses in the amount of 16 million (previous year 4 million). 27

28 41 Financial result The change in the financial result is mainly due to the 345 million increase in income from profit transfer agreements. Financial result m Income from investments thereof from affiliated companies: 1 (previous year: 51) Write-downs of non-current financial assets and securities classified as current assets Income from profit transfer agreements thereof from affiliated companies: 730 (previous year: 385) Cost of loss absorption thereof from affiliated companies: 15 (previous year: 2) Net investment income Other interest and similar income thereof from affiliated companies:189 (previous year: 182) Income from long-term loans thereof from affiliated companies: 22 (previous year: 28) Interest and similar expenses thereof to affiliated companies: 110 (previous year 135) thereof from accumulation: 383 (previous year: 350) Net interest result Financial result Extraordinary result There was no extraordinary income to report as at 31 December Extraordinary expenses amounted to 34 million as in the previous year. They are attributable to the pro-rata allocation of additions to pension provisions required since the BilMoG was introduced on 1 January

29 43 Taxes on income Income tax expenses of 50 million were incurred in the year under review. After offsetting deferred tax assets and liabilities (net presentation method), there were net deferred tax assets at the balance sheet date. The company does not exercise the recognition option set out in section 274(1) sentence 2 of the HGB, and consequently no deferred tax assets are recognised on the balance sheet. Deferred tax assets result primarily from differences between the carrying amounts of pension provisions, other provisions and liabilities in the financial statements and their tax base. Deferred tax assets were also recognised in respect of tax loss carryforwards that will reverse within the next five years in accordance with the company s projections. Deferred taxes are calculated on the basis of a tax rate of 29.8%. 44 Retained profits brought forward Retained profits brought forward amount to 674 million. 45 Appropriation of net profit The following overview shows the appropriation of net retained profit from the previous year, as resolved by the Annual General Meeting (AGM): Net retained profit m 31 Dec Dec Net retained profit, previous year 1,502 1,520 Dividend distribution Retained profits brought forward

30 Other disclosures 46 Off-balance sheet items Trust activities Trust activities as at 31 December 2012 relate to loan administration for housing construction promotion and to the responsibilities agreed in accordance with section 119 of Book 6 of the Sozialgesetzbuch (SGB German Social Security Code) relating to cash benefit payments by pension insurance funds (Postal Pension Service). The trust assets for the Postal Pension Service as at 31 December 2012 amounted to 33 million (previous year 44 million), and the trust assets for housing construction promotion were 208 million (previous year 290 million). The factoring agreement concerning the sale of receivables in the postal agency area was terminated with effect from 31 March No further receivables were sold after this date. As at 31 December 2012, Deutsche Post AG still administered trust assets of 151 million (previous year 123 million) for Postbank Factoring GmbH due to the receivables from REIMS II that Deutsche Post had sold. These transactions do not result in significant future benefits or risks for Deutsche Post AG. Other financial obligations Other financial obligations amounted to 2,669 million at the balance sheet date. Of this figure, 2,119 million is attributable to affiliated companies. In the previous year, other financial obligations amounted to 2,588 million, including obligations of 2,059 million to affiliated companies. The following overview shows the remaining maturities of the other financial obligations: Other financial obligations m Total 2,669 of which with remaining maturity Total up to 1 year more than 1 year up to 5 years more than 5 years 716 thereof to affiliated companies 2, Other financial obligations are primarily the result of long-term rental agreements and leases. In keeping with the Group leasing model, all Deutsche Post AG properties are leased from Deutsche Post Immobilien GmbH, which acts as the Group s centralised property leasing company. 30

31 47 Contingencies Deutsche Post AG has assumed a large number of comfort letters, sureties and guarantees to secure loan, lease, supplier, delivery and service agreements to be entered into by Group companies, associates and joint ventures. This enabled the Group to obtain better contract terms locally. The obligations to third parties from these security arrangements entered into were not required to be recognised as liabilities because the underlying liabilities are expected to be settled by the companies and no claims against Deutsche Post AG are therefore expected. Guarantee liabilities pursuant to section 765 of the Bürgerliches Gesetzbuch (BGB German Civil Code), which were solely to affiliated companies, amounted to 180 million (previous year 171 million). Liabilities for guarantees issued amounted to 6,073 million (previous year 5,242 million) and comfort letters amounted to 277 million (previous year 986 million). Of these, liabilities for guarantees were issued for affiliated companies in the amount of 5,972 million (previous year 5,127 million) and comfort letters were issued for affiliated companies in the amount of 273 million (previous year 981 million). In addition to the contingent liabilities referred to above, Deutsche Post AG has issued declarations of joint and several liability (section 403 Verklaringen under Dutch law) for its Netherlands subsidiaries in order to dispense with disclosing the financial statements. 48 Hedging policy and derivatives As an international company, Deutsche Post AG is inevitably exposed to financial risks from movements in exchange rates, interest rates and commodity prices. As part of the centralised risk management system, Deutsche Post AG additionally assumes the role of in-house bank within Deutsche Post DHL. As part of this function, external hedging transactions are entered into with banks and transferred in part internally to Group companies in order to hedge the Group s risks. Primary and derivative financial instruments are used to offset risks from exchange rate, interest rate and commodity price movements. The following table provides an overview of the derivative financial instruments employed and their notional amounts and fair values as at 31 December 2012: 31