DHL 1998 Annual Report Download - page 19

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15
Statement of capital flows
Deutsche Post provided convincing proof of its financial strength again in
1998. Its cash flow calculated using the DVFA/SG formula improved sub-
stantially once again and now accounts for a sizable ten per cent of total
revenue.
Cash flow increased to DM 2,771 million, topping 1997’s level (DM 2,374
million) by DM 397 million.
All in all, cash and cash equivalents diminished by DM 821 million and
now represent 5.6 per cent of the balance sheet total.
Increased balance-sheet total
The group balance sheet total rose by 10.6 percent to DM 24.7 billion dur-
ing the 1998 business year. Changes in current assets were a major factor
in this development. Here, other assets grew primarily due to increased
receivables from Deutsche Post Pensions-Service e.V. (DPPS), which is
responsible for the pensions and benefit entitlements of retired civil
servants. This entailed an advance payment which was charged at the
beginning of 1999. Other marketable securities reflect the first stage of
our planned acquisition of the Swiss logistics group DANZAS. The disposal
of land, buildings and housing promotion loans had a reductive effect on
non-current assets.
Obligations for pensions and similar obligations which had been reported
in the Notes in years past were carried as liabilities again in 1998, with
DM 2.0 billion being allocated for this item. However, corresponding
obligations vis-à-vis active and retired white collar staff members and
employees falling under collective pay agreements which were not carried
as liabilities declined by only DM 1.1 billion. This was due primarily to the
issue of new life expectancy tables which have increased Deutsche Post’s
pension obligations. Obligations to the Deutsche Post Betriebsrenten-
Service e.V. company pension service were the main reason for the increase
in other obligations.
As part of its activities to internationalize its business, Deutsche Post com-
pleted a number of important acquisitions (such as DHL) and initiated
several more during the 1998 business year. The goodwill acquired in the
process was offset against the capital reserve and was a major factor in
reducing shareholders’ equity by DM 733 million. These costs were con-
sequently eliminated from the group’s future earnings position.
Cash flow based on the DVFA/SG formula
in DM mil.
1995 1996 1997 1998
988 2,137 2,374 2,771
3,000
2,400
1,800
1,200
600
Balance-sheet total
in DM mil.
1995 1996 1997 1998
21,476 20,455 22,374 24,747
26,000
24,000
22,000
20,000
18,000