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Annual Report
Deutsche Post World Net on its Way to Becoming No.1 Worldwide.
1999

Table of contents

  • Page 1
    Annual Report Deutsche Post World Net on its Way to Becoming No. 1 Worldw ide. 1999

  • Page 2
    ... s of information and money. 9 Deutsche Post World Net is one of the largest logistics groups in the world.We make systematic use of the opportunities arising from globalization and digitization by providing topquality services and technologies for our customers throughout the world. Our strategy...

  • Page 3
    Brand Levels and Business Segments eBUSINESS This document or the information contained therein may not be distributed in the United States of America, Canada, Japan or Australia.

  • Page 4
    Deutsche Post World Net Financial Highlights 1999 Revenue of this international revenue Return on sales1) Profit from operations (EBIT) before amortization of goodwill Profit from operations (EBIT) after amortization of goodwill Net profit Cash flow 2) Balance sheet total of this balance sheet ...

  • Page 5
    ...2. Markets in the midst of dramatic change 3. Regulatory conditions 4. Corporate strategy 5. Business development 6. Corporate divisions 7. Risk report 8. Group development / Objectives for the year 2000 Income Statement Balance Sheet Cash Flow Statement Statement of Changes in Equity Notes Company...

  • Page 6
    ... Purchasing Retail Outlets* * Compensation Policies Personnel Administration Training Corporate Controlling Corporate Accounting Corporate Finance/ Investor Relations IT Development IT Infrastructure Taxes/ Risk Management Legal Affairs Audit * Business Unit * * Interface betw een Deutsche Post...

  • Page 7
    ... German management in 1979. Five years later he moved into worldwide management as Senior Partner. In 1985, he was appointed Board member and Chairman of the Board at Quelle Group. He has been Chairman of the Board of Management of Deutsche Bundespost POSTDIENST since 1990, and of Deutsche Post AG...

  • Page 8
    ... in 1998 to 21.6 percent. Group profit topped the EUR one billion mark for the first time and Today, the global operator Deutsche Post World Net is already Europe's leading logistics company and is forging ahead to becoming No. 1 worldwide. This positive development reflects the four pillars of our...

  • Page 9
    ... revenue. We acquired the global Danzas Group in March 1999. With the addition of Danzas to our lineup, we were able to substantially enlarge our European and global distribution network, markedly increase our range of services in the value-added logistics field and considerably expand our product...

  • Page 10
    Foreword FINANCIAL SERVICES - Integration of Postbank, Deutsche Post and DSL Bank generates largest customer base in Germany Deutsche Post World Net acquired Postbank in 1999 and DSL Bank on January 1, 2000. Our new FINANCIAL SERVICES corporate division with its balance sheet total of some EUR 61 ...

  • Page 11
    ... World Net's systematic implementation of its strategy has made it a powerful international Group. We offer our customers package solutions on a one-stop-shopping basis. Our corporate logo and the brand architecture behind it were developed to convey Deutsche Post World Net's strategy and position...

  • Page 12
    ... of information and money and commands an outstanding position in e-Commerce, the fast-growing market of the future. MAIL, EXPRESS, LOGISTICS and FINANCIAL SERVICES represent the Group's four pillars. Deutsche Post World Net was able to markedly improve its revenue and profit levels in 1999. This...

  • Page 13
    Board of Management The Board of Management Walter Scheurle Personnel Peter Wagner LOGISTICS Dr. Hans-Dieter Petram M AIL Dr. Klaus Zumw inkel Chairman of the Board of M anagement Uw e R. Dörken EXPRESS Prof. Dr. Wulf von Schimmelmann FINANCIAL SERVICES Dr. Edgar Ernst Finance 10 11

  • Page 14
    Management Report Group Management Report - Internationalization and Growth Deutsche Post World Net performed in line with our expectations in both corporate and business terms in 1999. During the year, Deutsche Post World Net took important steps toward becoming one of the world's largest ...

  • Page 15
    ... traditional corporate divisions which existed when Germany's "new post office" first began operation in 1995. Together, these two components comprise the basis for our business success and provide the ideal conditions for a future-oriented, increasingly global Deutsche Post World Net Group. 1. The...

  • Page 16
    ... these changes in the logistics markets: • Internationalization • Broad range of products, one-stop-shopping • Provision of value-added services from a single source • E-Commerce revolution Internationalization U.S.A.: ➞ Continental 74 % EU 8 % South America 5.5 % Asia 7 % Eastern Europe...

  • Page 17
    ...- known as "e-Business" - will require new kinds of services. This development is being shaped by a number of global trends: • Manufacturers are stepping up their direct sales activities. This in turn is leading to the elimination of various commercial levels in favor of end-customer commissioning...

  • Page 18
    ... personal messenger and opens up an active dialogue which binds the customer to the company on an individual basis. This increasingly calls for target group-oriented products and ser vices that offer customized solutions. Sales and consultancy strategies for specific industries, response processing...

  • Page 19
    ... of the letter mail market. Mail ser vice providers that expand their entire range of services into a single-source, international product line will be able to take advantage of this growth opportunity. EXPRESS World Net, DHL, La Poste/DPD, TPG/TNT, UPS, UK Post Office/General Parcel) account for...

  • Page 20
    ... customer behavior is currently triggering changes in the banking market. Customers are demanding higher quality from banking products and services. In addition to traditional stationary sales operations at retail outlets, customers are also taking advantage of an increasing range of other services...

  • Page 21
    ... bundle their sales channels and staff them with competent personnel and, on the other hand, offer a broad standardized product range that meets every customer's demands, at reasonable prices. 3. Regulatory conditions Only in the letter market does Deutsche Post World Net have to deal with any...

  • Page 22
    ... products and services. Deutsche Post World Net is the only company in Germany that provides comprehensive, nationwide universal service that meets the product and quality standards set out in the PUDLV. The German government implemented the provisions stipulated by the EU's Postal Service Directive...

  • Page 23
    ... times, services for ancillary flow s of information and funds) Enlarge our product range, expand value-added services Deutsche Post World Net views current global market trends as an enormous opportunity for corporate development that is marked by rapid growth and high profit levels. We have set...

  • Page 24
    ... transport area of Europe's dynamic, fast-growing logistics market. Not only does the LOGISTICS corporate division operate the largest panEuropean network and offer a correspondingly broad range of services, it has also set the stage to take over cost leadership in Europe. Danzas is the global...

  • Page 25
    ... is also a key factor for success in e-Business, Deutsche Post World Net acquired a 16-percent stake in GFT, an Internet service company that is listed on Germany's Neuer Markt stock exchange. This fast-growing company specializes in Internet software solutions. Further, we also acquired 12 percent...

  • Page 26
    ... innovative services in the areas of order and financial management. Solutions that are tailor-made for specific industries have been developed with an eye to individual customer requirements. Group revenue grew by 52.5 percent to a total of EUR 22.4 billion during the 1999 business year. Deutsche...

  • Page 27
    ...were also acquired along with these companies, particularly from Postbank. The total amount of cash and cash equivalents within the Group rose from EUR 710 million in 1998 to EUR 1,877 million as of December 31, 1999. During the 1999 business year, it was possible to increase operating profit (EBIT...

  • Page 28
    ... were important contributors to this growth. 6. Corporate divisions Deutsche Post World Net conducts its operational business through four independently managed corporate divisions, namely, MAIL, EXPRESS, LOGISTICS and FINANCIAL SERVICES. Besides being responsible for generating profit, these...

  • Page 29
    ...new nationwide sales organization with specially trained sales staff. In addition, our network of currently 40 Direct Marketing Centers offers customers personalized consultancy ser vices and the management of customized direct marketing solutions. And last but not least, our new Central Key Account...

  • Page 30
    ...227 countries around the globe. Today, express mail items received at our retail outlets are fed directly into the DHL network. Looking at the Euro Express Europe business segment, we are in the process of integrating our new acquisitions and standardizing our product range. As part of Deutsche Post...

  • Page 31
    ... letter mail volumes could stagnate as the volume of electronic communication increases. To offset this trend, we are launching growth strategies in the direct marketing field, customized full-service products and special strategies for the e-Business opportunities in the letter mail area...

  • Page 32
    ...business in the letter mail segment. • Financing the acquisition of express and logistics companies using revenues from business activities in the monopoly area and through the sale of real The Regulatory Authority for Telecommunications and Post has to authorize the prices we charge for services...

  • Page 33
    ...-divisional e-Business activities into a holding company which reports directly to the chairman of the Board of Management. The objectives targeted by this step: A. Horizontal expansion Develop and offer new, customized products and solutions that interface with the entire value-added chain. This...

  • Page 34
    ... season in the United States show just how critical high-quality logistics (back-end services) are for e-Commerce. Deutsche Post World Net has completed its transition from a purely national transport service provider to a global fulfilment service provider. Our future strategy will be to establish...

  • Page 35
    Milestones Milestones and Visions The 1999 financial year was marked by the consistent implementation of our internationalization strategy, the expansion of our basic product range, the increase in value-added services and the focus on e-Business. 34 35

  • Page 36
    ...hich foreign postal services must pay to Deutsche Post World Net under the international clearing system. Launch of Euro Express. The German and European parcel and distribution netw ork operated by Deutsche Post World Net and its partner companies goes on the market under the new name Euro Express...

  • Page 37
    ...Combining progress and stability We perceive integration as a holistic task comprising the standardization of our products, the linking of existing networks, the harmonization of IT structures, a uniform brand architecture and the integration of the management cultures of acquired companies. 38 39

  • Page 38
    ... very important in our business. In Germany, we stand for reliability and quality. Looking at Europe, we plan to build up a uniform brand in the express deliver y field and gradually retire our new acquisitions'local company names.We will market our logistics services worldwide under the Danzas name...

  • Page 39
    ... controlling organization ensures that additional measures are developed whenever unexpected problems arise in realizing planned profit potential. Going beyond the actual integration of newly acquired firms into the respective corporate division, a second integration process located at group level...

  • Page 40
    ... Deutsche Post Euro Express's new image by implementing uniform standards and a rebranding and communications strategy throughout Europe. The individual operative processes were developed to reflect our new products. This concept is built around an innovative centralized transport management system...

  • Page 41
    ... boards) and eliminating a management level in the MAIL corporate division and in the national express business. • Setting up panels of experts, councils, which will deal on a pinpointed basis with cross-divisional issues in the areas of IT, purchasing, financing and personnel. • Developing new...

  • Page 42
    ... innovation Customer orientation by the MAIL corporate division is illustrated by the following facts: Every day, Deutsche Post handles 70 million letter items, thus setting standards in terms of speed and reliability. The consistent linking of the traditional letter product with the opportunities...

  • Page 43
    ... estate division at Gustav Schickedanz KG, w here he was responsible for real estate, construction and equipment of the large mail order company Quelle. Since 1990 he has been a board member of Deutsche Bundespost POSTDIENST, and since 1995 a member of the Board of M anagement of Deutsche Post AG...

  • Page 44
    ...customers' premises, post office box and forwarding address notification services developed extremely well, posting 93-percent growth. External Revenue Group M AIL corporate division Building on its market leadership in the transport and distribution of paper-bound communication, the MAIL corporate...

  • Page 45
    ... on direct marketing will increase at above-average rates in coming years as well. The leading direct marketing tool continues to be the addressed advertising mail item. With newly developed products, we offer customers greater flexibility in this area as well.A new service module has been added to...

  • Page 46
    ...-sized businesses take their first steps in the direct marketing field. As part of these activities, we developed a program especially for this target group under the motto "DIREKT MEHR". This program consists of three equally important modules, a direct marketing catalogue, solution packages and...

  • Page 47
    ...38.6percent increase in revenue last year. It tailors its customized solutions packages to the customer's specific needs, using the modules Address Management, Database Management, "Lettershop", Telemarketing and Fulfilment. "Speed marketing", the top performance of Deutsche Post Direkt GmbH put in...

  • Page 48
    ... four areas "In Haus Post", "In Haus Logistik", "In Haus Druck" (printing services) and "In Haus Kommunikation". Today, Deutsche Post In House Service GmbH's 640 employees run the internal mail operations of more than 80 companies throughout Germany. These customers include major corporations such...

  • Page 49
    ...needs of these key accounts and set standing optimization processes into motion in 1999. Our centralized key account management activities ensure innovative solutions with customer-specific, tailor-made products Deutsche Post World Net is developing into a full-service provider for stamp collectors...

  • Page 50
    ... mailed using the old address. The outlook - Launch of new products and services and the introduction of new technologies In the Direct Marketing business segment, we plan to develop customized products on the basis of extensive customer need analyses. Special attention will be paid in the future...

  • Page 51
    Corporate Division Express Express - Meeting customer needs at an international level Deutsche Post has combined its national and international parcel and express activities in its EXPRESS corporate division, creating an efficient parcel and express network available to 420 million people in ...

  • Page 52
    Uw e R. Dörken EXPRESS Born 1959. The bank officer and graduate of the St. Gallen Business School began his career in 1986 at M cKinsey & Co., w here he focused in particular on strategic studies for global transport and logistics companies. In 1991 he moved to Deutsche Bundespost POSTDIENST, ...

  • Page 53
    ... and international parcel, express and distribution services on a one-stopshopping basis. Our range of products and services is built on our logistics, technology and sales network, a network that is unique in Europe. We are also putting this network to use in developing new market opportunities in...

  • Page 54
    ... of international mail solutions. Global Mail is now present in both Europe and America's most important markets. Strong grow th through acquisitions External Revenue EXPRESS corporate division in EUR mill. 4,000 2,000 3,000 1,000 0 3,576.3 4,593.8 + 28.5 % 1998 1999 Operating Profit (EBIT...

  • Page 55
    ... 's worldwide network ensures customers fast delivery. Deutsche Post Fulfilment GmbH develops customized logistics solutions, particularly for the mail-order trade. We are currently executing the largest contract issued in the German market in 1999, namely, for the provision of all order processing...

  • Page 56
    Using local know -how all over Europe. 62

  • Page 57
    ... of international letter items to and from Germany. Overall revenue continued to develop well in 1999, increasing by 11.5 percent over the previous year's level. This positive performance was due to the development of new products and services which are geared to the needs of special customer groups...

  • Page 58
    ... DHL's worldwide tracking and tracing system is at our disposal.We are also putting synergies in the product development field to use. Here, DHL has joined with Danzas in the integrated logistics area to form a technology team that makes it possible for us to offer our customers "one-stop-shopping...

  • Page 59
    Corporate Division Express Deutsche Post and DHL: successful synergies. 65

  • Page 60
    66

  • Page 61
    Corporate Division Express Outlook - Development of international parcel and express service markets w ith a standardized range of innovative products The Deutsche Post Euro Express business segment will continue to be a key element in achieving our strategic objective of seizing new growth ...

  • Page 62
    Corporate Division Logistics Logistics - Precision worldwide By acquiring Danzas, Nedlloyd and AGS, we have reached a top position in the fast-growing global logistics market. 68 69

  • Page 63
    ...member of the Executive Board, he became director of the finance and controlling division at Danzas Holding AG. Responsible for the European freight forwarding and transport division starting in 1995, he was appointed Chief Executive Officer one year later. In 1999, he joined the Board of Management...

  • Page 64
    ... so, helps pave their way to new markets. Besides its dense and far-reaching network of branch offices in Europe, Danzas also maintains an international IT network that ensures a rapid flow of information to and from its customers. With Danzas on board, our LOGISTICS corporate division can offer...

  • Page 65
    ... in mind. The key activities involved in this area are warehousing and distribution. They are rounded out by a broad range of value-added ser vices (commissioning, co-packing, price labeling, invoicing, order processing, sales promotion measures, financial services, returns management and the like...

  • Page 66
    ... our range of products and services. M arket position substantially stronger in EUR bn, 1999 Group revenue 22.4 Revenue generated by the LOGISTICS corporate division 4.2 Danzas joined Deutsche Post World Net in 1999. Our LOGISTICS corporate division was also set up in 1999 and proceeded to...

  • Page 67
    ... of Europe (particularly in Germany and the Benelux countries), improving market penetration for the entire Danzas Group in the process. Further, by bringing Nedlloyd ETD on board, we also added a new business unit, Nedlloyd Fashion Services. This move also expanded our product range. The companies...

  • Page 68
    ... business. Merging Danzas and AEI's global networks also led to a noticeable expansion of our range of services. Our acquisition of the logistics provider Hammond International Limited also contributed to reinforcing and expanding the Intercontinental business unit's market position. This new...

  • Page 69
    ...within Deutsche Post World Net, thanks to Deutsche Post Transport GmbH's (DPT) incorporation into Eurocargo's operations. Our formula for success - Information technology and systematic cost management tracing purposes in the European ground transport field, and a new application that supports work...

  • Page 70
    Corporate Division Logistics An important strategic objective in this context is to expand our intercontinental business. We also plan to optimize our European ground transportation operations, working from the platform offered by the dense, far-reaching network of branch offices we maintain ...

  • Page 71
    ... to everyone, everywhere As a result of its integration into the dense retail outlet network of Deutsche Post and its continuously growing business, Postbank has become a veritable multichannel bank. Its comprehensive product portfolio is attractive to both private and corporate customers. 78 79

  • Page 72
    ..., inter alia, for the international corporate customers at DG Bank from 1984 and at BHF-Bank from 1991. In 1997 he headed the holding company Regius as Managing Partner. He was appointed Chairman of the Board of Management of Postbank AG in 1999 and board member at Deutsche Post AG in that same year...

  • Page 73
    ... outlet network, call centers, the Internet, mail and self-service terminals. Within the scope of Postbank's reorientation, both expansion of the bank's traditional business and development of new business segments are envisaged. In the conventional deposit banking and savings accounts business, we...

  • Page 74
    ... product portfolio. The FINANCIAL SERVICES corporate division, which was established in early 1999, primarily consists of Postbank. Postbank is Germany's largest retail bank. Overall, it serves more than ten million customers. In our core business segments of payment transactions and deposits...

  • Page 75
    ... increase in private lending The merger with DSL Bank is opening up a broader range of products for our corporate customers. Jointly, we now provide commercial real-estate and special financing solutions for property development and leasing. Postbank also offers business loans and is developing new...

  • Page 76
    ...,948 New business unit: Commercial customers Sales netw ork enhanced In 1999, we continued optimizing our retail outlet network. Deutsche Post World Net now has some 14,000 permanent retail outlets, one of Germany's largest branch networks. This sales structure is a special competitive advantage...

  • Page 77
    ...our Saarbrücken location. This has considerably shortened processing times. Active loan management implemented The pensions service plays a special role within the corporate division. Deutsche Post World Net offers a comprehensive social security services package to all pension-paying institutions...

  • Page 78
    ... core business. In 1999, for the first time, we were able to stop a decline in private checking accounts. We are aiming for modest growth in this area in 2000. With marketoriented and customer-oriented products at favorable terms, we want to expand on our position as Germany's leading savings bank...

  • Page 79
    ...."Executive Development" activities are used to selectively foster junior managers within our Group and simultaneously attract highly qualified experts from the private sector. Investment in these areas ensures high quality and productivity levels while boosting our international competitive...

  • Page 80
    ...1952. He began his career in 1967 w ith an apprenticeship at Deutsche Post. From 1979, he held various full-time positions for the German postal workers' union, Deutsche Postgewerkschaft. He was also a member of the European Commission's Joint Committee on postal services. As a member of the Postgew...

  • Page 81
    ... occupations at Deutsche Post World Net in Germany. The types of vocational training available to the more than 6,300 new recruits range from letter and freight mail specialist to commercial or electrical engineering-related fields, all the way to specialized computer scientist or information 91

  • Page 82
    ... our work in 1999 with specialized, forwardlooking further training measures open to all Deutsche Post World Net employees. Using internal job bulletin boards in our Intranets, we have offered employees the opportunity to switch jobs within the company and move up the career ladder since 1999. This...

  • Page 83
    Personnel We translate successful personnel development into continued training and career advancement programs. 93

  • Page 84
    94

  • Page 85
    ... offer managers and employees group-level and division-related news. By incorporating our quality program into the company suggestion system, we were also able to further increase our quality activities in the personnel service area. Deutsche Post AG's company suggestion system was revamped in 1999...

  • Page 86
    Consolidated Financial Statements Consolidated Financial Statements 1999

  • Page 87
    ... KG. Here, he held the post of Director of Corporate Development at Quelle, a large mail order company. In 1990 he moved to Deutsche Bundespost, first as Head of Planning and Controlling, then as a board member. He has been a member of the Board of Management of Deutsche Post AG since 1995. 98

  • Page 88
    ...169 Deutsche Postbank Group 12.31.1999 EUR mill. 2,964 254 Deutsche Post Group 12.31.1998 EUR mill. 14,669 860 Revenue and income from banking transactions Other operating income (7) (8) Total operating income Raw materials and consumables used, and expenses for banking transactions Staff costs...

  • Page 89
    Consolidated Balance Sheet as of December 31,1999 Assets Notes Deutsche Post Group 12.31.99 EUR mill. Deutsche Postbank Group 12.31.99 EUR mill. Deutsche Post Group 12.31.98 EUR mill. Non-current assets Intangible assets Property, plant and equipment Financial assets Investments in associates ...

  • Page 90
    Consolidated Balance Sheet as of December 31,1999 Equity and liabilities Notes Deutsche Post Group 12.31.99 EUR mill. Deutsche Postbank Group 12.31.99 EUR mill. Deutsche Post Group 12.31.98 EUR mill. Shareholders' equity Issued capital Reserves Consolidated profit for the period (28) (29) 1,...

  • Page 91
    ... 176 741 0 - 53 Operating profit before w orking capital changes/cash flow I Changes in current assets and liabilities Inventories Receivables Marketable securities Receivables/liabilities and marketable securities from financial services Provisions Liabilities Other balance sheet items 1,544 - 14...

  • Page 92
    ... Consolidated Statement of Changes in Equity For the Period January 1 to December 31,1999 Reserves in EUR mill. as of 12.31.1997 Capital transactions w ith ow ner Capital contribution Dividend Issued capital 1,094 Capital reserve Retained earnings Revaluation surplus Group profit 749 Total...

  • Page 93
    ... Annual Financial Statements of Deutsche Post AG, the Income Statement, Balance Sheet and Cash Flow Statement are complemented by a separate presentation of the Deutsche Postbank Group. This presentation is to take into account the specific business activities of the FINANCIAL SERVICES corporate...

  • Page 94
    ....01.1999 07.05.1999 01.01.1999 Remarks Assoware GmbH Danzas Holding AG, Switzerland, with 90 companies Danzas Beteiligungen GmbH Deutsche Postbank AG with 10 companies Ducros Services Rapides, France, with Transportes Y Servicios Rapides Transserra, Spain (100 %) ITG GmbH Logistik und Distribution...

  • Page 95
    ... acquisition prices were paid exclusively through the transfer of cash and cash equivalents. With the 100 percent takeover of the Deutsche Postbank Group, which is primarily operating the retail market, on January 1, 1999 the Deutsche Post Group expanded its corporate division for FINANCIAL SERVICES...

  • Page 96
    ...companies, Group companies and associated companies. A full list of Deutsche Post investments is filed with the Commercial Registry of the Bonn District Court. (3) Foreign currency translation with the functional currency method, in line with IAS 21 (The Effects of Changes in Foreign Exchange Rates...

  • Page 97
    ... values. Revenue, income and expenses as well as receivables and liabilities between the consolidated companies are eliminated. Inter-group profit and losses not realized through sales to third parties are not included. (5) IAS and SIC Interpretations applied The Consolidated Financial Statements...

  • Page 98
    ... and Development Costs Events After the Balance Sheet Date Construction Contracts Income Taxes Segment Reporting Property, Plant and Equipment Leases Revenue Employee Benefits Accounting for Government Grants and Disclosure of Government Assistance The Effects of Changes in Foreign Exchange Rates...

  • Page 99
    Notes (6) Segment Reporting Primary reporting EUR mill. 1999 External revenue Internal revenue Total revenue Profit from operations (EBIT) before amortization of goodwill Profit from operations (EBIT) after amortization of goodwill Income from associates Segment assets of these: investments in ...

  • Page 100
    ...for the management of written communications, going beyond its traditional role as provider of mere transport and delivery services. EXPRESS Deutsche Post AG has combined its national and international activities on the distribution market in the EXPRESS corporate division. The international letter...

  • Page 101
    ...-current assets (intangible assets, property, plant and equipment, investments in associates) and current assets (excluding cash and cash equivalents and marketable securities), including receivables arising from financial services. Acquired goodwill is allocated to the corporate divisions. Segment...

  • Page 102
    ... financial services included: Other operating income in 1999 consisted of: EUR mill. Gains on disposal of intangible assets and properties, plant and equipment Income from reversal of negative goodwill of the Deutsche Postbank Group Income from additions to receivables and marketable securities of...

  • Page 103
    ... costs. Expenses for financial services include: EUR mill. Interest expenses Commission expenses Expenses from insurance business 1999 1,232 31 2 1998 0 0 0 Pension expenses include EUR 2,045 million (1998: EUR 2,045 million) of post-retirement contributions by Deutsche Post AG to Deutsche Post...

  • Page 104
    ... to provisions Allowances for receivable and marketable securities of the Deutsche Postbank Group PR activities Travel, training and supplementary staff costs Services provided by the Federal Post and Telecommunications Agency Taxes Disposals of non-current assets Other 1999 460 290 1998 254...

  • Page 105
    ...banking operations (see (9)). (15) Income taxes rate changes were passed for future periods, the tax rates valid on the balance sheet date are applied. The tax rate for Deutsche Post AG and all other group companies was fixed at 44.2 percent. This rate includes the corporation tax distribution rate...

  • Page 106
    .... With the same number of shares, this meant a dividend per share amounting to EUR 3.58. In accordance with IAS 33 (Basic Earnings per Share) the basic earnings per share are determined by dividing the Deutsche Post Group profit by the average number of shares. In 1999, the number of shares (42...

  • Page 107
    ... their purchase costs. Internally produced intangible assets are recognized at manufacturing costs, provided the assets criteria are met, especially if the intangible assets are expected to generate future economic benefits. Within the Group, this applies to Deutsche Post's own software developments...

  • Page 108
    ...in the 1999 financial year, intangible assets developed as follows: EUR mill. Concessions, industrial and similar rights and assets, and licenses in such rights and assets Goodw ill Prepayments Total Acquisition or manufacturing costs January 1, 1998 Changes in the consolidated Group Additions...

  • Page 109
    Notes to the Consolidated Balance Sheet (21) Property, plant and equipment With the exception of real estate, all property, plant and equipment is valued at acquisition or manufacturing costs, less scheduled depreciation on a straight-line basis (in line with IAS 16: Property, Plant and Equipment...

  • Page 110
    Notes Starting with the opening figures for the 1998 financial year - in the 1999 financial year, property, plant and equipment developed as follows: EUR mill. Land and buildings, incl. buildings on land ow ned by third parties M achinery Other equipment, furniture and fixtures and office ...

  • Page 111
    ... EUR 0 million). Property, plant and equipment pledged as security provide for a carrying amount of EUR 10 million (1998: EUR 1 million). Commitments were taken on to acquire property, plant and equipment valued at EUR 10 million (1998: EUR 0 million). (22) Financial assets Goodwill included in the...

  • Page 112
    ... financial assets developed as follows: EUR mill. Shares in affiliated companies Investments in associates Other participating interest Loans to participating interest Housing promotion loans Long-term investments Other loans Total Acquisition or manufacturing costs January 1, 1998 Changes...

  • Page 113
    ... parts for the freight mail centers. They are stated at fixed values. All other raw material and consumables used are recognized at the lower of average (moving or weighted) or year-end prices. Receivables from Deutsche Post Pensions-Service e.V. Prepaid expenses Other assets 5,250 3,555 Of the...

  • Page 114
    ... in line with the updated repayment rates. Default interest is capitalized and carried as receivables, and a respective charge is made. No amounts were set aside in respect of general banking risks according to IAS 30.50. Trade assets Debt securities and other fixed-income securities Equities...

  • Page 115
    ... Balance Sheet In the 1999 financial year, provisions for loans and advances developed as follows: EUR mill. Itemized allow ances 180 50 13 71 General allowances 52 0 0 10 Total Trading assets are carried at their fair values. Listed securities are recognized at their respective market price...

  • Page 116
    ... Federal Republic of Germany, the Bundesanstalt für Post und Telecommunikation (Federal Office for Post and Telecommunications) administers Deutsche Post AG's shares and holds a major stake in the company, in accordance with Section 16 (1) of the German Stock Corporation Act. On December 21, 1999...

  • Page 117
    ...Post Wohnbau Köln GmbH and Deutsche Post Wohnbau GmbH. For an overview of reserves during the business year, see the Consolidated Statement of Changes in Equity on page 103. (31) Retirement benefit and similar obligations Starting with the opening figures for the 1998 financial year - in the 1999...

  • Page 118
    ... German Group companies. 1999 expenses for defined benefit plans amounted to EUR 635 million (1998: EUR 541 million). The total amount includes: EUR mill. Current service costs Interest costs Expected returns on assets Amortization of actuarial losses Past service costs Effects of plan reductions...

  • Page 119
    ...Sheet Interest costs are recognized under other staff costs, together with other expenses arising from pension obligations. In line with IAS 19.92, actuarial gains/losses are recognized to the extent that they exceed 10 percent of the maximum of the defined benefit obligation and of the plan assets...

  • Page 120
    ... of Deutsche Post AG and Deutsche Postbank AG, for the first time included in 1999, to be met, together with another legal successor to the former Deutsche Bundespost. The balancing payments to the Postal Civil Service Health Insurance Fund represent so-called "other long-term employee benefits...

  • Page 121
    ... reported under staff costs, provided the provisions have to be valued in accordance with IAS 19. Otherwise they are recognized under financial income, in accordance with IAS 37. Interest cost includes: (34) Borrow ings Borrowings include all interest-bearing obligations of the Deutsche Post Group...

  • Page 122
    ... year. Their recognized values correspond essentially to the market values. Liabilities arising from financial services comprise the following: EUR mill. Amounts owed to banks payable on demand with agreed maturity or period of notice Amounts owed to customers Saving deposits with agreed notice of...

  • Page 123
    Notes to the Consolidated Balance Sheet The repayment amounts are carried as liabilities. EUR 80 million of the total amount owed are secured by mortgage. The remaining terms for amounts owed to banks and customers are as follows: Residual terms as of 12.31.1999 EUR mill. Amounts owed to banks ...

  • Page 124
    ... balance sheet. In the Group's Cash Flow Statement, inflow of cash from operating activities amounted to EUR 4,642 million in 1999, as against an outflow of cash amounting to EUR 398 million in the 1998 financial year. The main reason for this result was the decrease in receivables and other assets...

  • Page 125
    ... on the internal information updating required for the control of risks inherent in market prices and liquidity. This control function is performed by the responsible corporate division of the Deutsche Postbank Group. Minimum value-atrisk as in 1999 Maximum value-atrisk as in 1999 Average value-at...

  • Page 126
    ... Deutsche Postbank Group used derivative instruments mostly for hedging positions affecting/ not affecting the balance sheet, in order to control assets/ liabilities. Derivative instruments also served to cover fluctuations in interest rates and other market prices occurring in commercial business...

  • Page 127
    ... settlement payments. The value cannot be compared with the receivables and liabilities reported in the balance sheet. Trading: Nominal values 12.31. 1999 383 1 Replacement costs 12.31. 1999 0 0 EUR mill. Interest-rate contracts Equity contracts 12.31. 1998 99 0 12.31. 1998 0 0 Total 384 99...

  • Page 128
    ... risks, market risks, credit risks and cash flow risks are of minor importance to the primary financial instruments of the Group. M arket values (fair values) Apart from the Deutsche Postbank Group, no Deutsche Post AG unit held significant derivative financial instruments on December 31, 1999 (as...

  • Page 129
    Other Notes acquisition in an active market. From a comparison with the respective carrying amounts, the following market values result from the financial debts of the Deutsche Post Group: The Group's contingent liabilities include: EUR mill. Value guarantees Contingent liabilities arising from ...

  • Page 130
    ... subsidiary of Deutsche Post AG, has taken over DSL Bank, previously transformed from an institution under public law to an AG. DSL Bank AG is viewed as an expert for private and commercial building finance as well as for the issue of marketable securities. It complements and strengthens the product...

  • Page 131
    ..., benefits from a network of 705 branch offices in 135 countries and, besides being the oldest and largest air freight provider in the United States, is the worldwide leader in logistics, multi-modal transport, warehousing, distribution, customs clearance and IT-supported logistics services...

  • Page 132
    ....31.1998 Revenue 1999 in EUR mill. Revenue 1998 in EUR mill. Significant subsidaries Danzas Holding AG (sub-group, incl. ASG ground and Nedlloyd logistics segment) Deutsche Postbank AG Deutsche Post Transport GmbH Van Gend & Loos B.V. Ducros Services Rapides SA. Deutsche Post Express GmbH McPaper...

  • Page 133
    ...constant contact with the Chairman of the Board of Management and was informed of all important business transactions. At the meetings held by the Super visor y Board, the Board of Management gave a detailed account of the development of the business and of the income of the company and its business...

  • Page 134
    ... a new Board of Management team was appointed in the 1999 financial year. On September 30, 1999, Dr. Benno Staab, Board Member Letter Services - Marketing and Sales, and on March 31, 2000, Dr.-Ing. Günter W. Tumm, Board Member Parcel Services/Express (national), Wolfhard Bender, Board Member Letter...

  • Page 135
    ... the Consolidated Financial Statements of Deutsche Post AG, consisting of the Balance Sheet, the Income Statement and the Statements of Changes in Equity and Cash Flows as well as the Notes to the Financial Statements for the business year from Januar y 1, 1999 to December 31, 1999. The preparation...

  • Page 136
    ..., Lothar Sindel, Kathrin Engeländer, Wolfgang Mueller Concept and Layout: BBDO, Düsseldorf Produced by: Vignold, Ratingen Printed by: MOHN Media Mohndruck GmbH, Gütersloh Publication No. 675-200-647 Deutsche Post on the Internet: www.deutschepost.de This Annual Report is also published in German.

  • Page 137
    149

  • Page 138
    ... an exemption from registration. Any public offering of securities to be made in the United States must be made by means of a prospectus obtainable from the issuer or the selling security holder(s) and containing detailed information about the company and management as well as financial statements.

  • Page 139
    Deutsche Post AG Headquarters Corporate Communications 53105 Bonn Investor Relations Tel.: + 49 228 182-64 61 Fax: + 49 228 182-66 64 E-mail: [email protected] Press Office Tel.: + 49 228 182-99 88 Fax: + 49 228 182-98 80 E-mail: [email protected] Deutsche Post on the Internet: www....