DHL 2014 Annual Report Download - page 159

Other provisions
Other provisions are recognised for all legal or constructive obli-
gations to third parties existing at the balance sheet date that have
arisen as a result of past events, that are expected to result in an
outow of future economic benets and whose amount can be
measured reliably. ey represent uncertain obligations that are
carried at the best estimate of the expenditure required to settle
the obligation. Provisions with more than one year to maturity are
discounted at market rates of interest that reect the region and
time to settlement of the obligation. e discount rates used in the
nancial year were between   and   (previous year: .  and
 ). e eects arising from changes in interest rates are recog-
nised in net nancial income / net nance cost.
Provisions for restructurings are only established in accord-
ance with the aforementioned criteria for recognition if a detailed,
formal restructuring plan has been drawn up and communicated
to those aected.
e technical reserves (insurance) consist mainly of outstand-
ing loss reserves and  (incurred but not reported claims) re-
serves. Outstanding loss reserves represent estimates of obligations
in respect of actual claims or known incidents expected to give rise
to claims, which have been reported to the company but which
have yet to be nalised and presented for payment. Outstanding
loss reserves are based on individual claim valuations carried out
by the company or its ceding insurers.  reserves represent
estimates of obligations in respect of incidents taking place on or
before the balance sheet date that have not been reported to the
company. Such reserves also include provisions for potential errors
in settling outstanding loss reserves. e company carries out its
own assessment of ultimate loss liabilities using actuarial methods
and also commissions an independent actuarial study of these each
year in order to verify the reasonableness of its estimates.
Financial liabilities
On initial recognition, nancial liabilities are carried at fair value
less transaction costs. e price determined on a price-ecient
and liquid market or a fair value determined using the treasury risk
management system deployed within the Group is taken as the fair
value. In subsequent periods the nancial liabilities are measured
at amortised cost. Any dierences between the amount received
and the amount repayable are recognised in income over the term
of the loan using the eective interest method.
      
e convertible bond on Deutsche Post  shares is split into an
equity and a debt component, in line with the contractual arrange-
ments. e debt component, less the transaction costs, is reported
under nancial liabilities (bonds), with interest added up to the
issue amount over the term of the bond using the eective inter-
est method (unwinding of discount). e value of the call option,
which allows Deutsche Post  to redeem the bond early if a speci-
ed share price is reached, is attributed to the debt component in
accordance with  .. e conversion right is classied as an
equity derivative and is reported in capital reserves. e carry-
ing amount is calculated by assigning to the conversion right the
residual value that results from deducting the amount calculated
separately for the debt component from the fair value of the in-
strument as a whole. e transaction costs are deducted on a pro-
portionate basis.
Liabilities
Trade payables and other liabilities are carried at amortised cost.
e fair value of the liabilities corresponds more or less to their
carrying amount.
Deferred taxes
In accordance with  , deferred taxes are recognised for tem-
porary dierences between the carrying amounts in the 
nan cial statements and the tax accounts of the individual entities.
Deferred tax assets also include tax reduction claims which arise
from the expected future utilisation of existing tax loss carry-
forwards and which are likely to be realised. e recoverability of
the tax reduction claims is assessed on the basis of each entity’s
earnings projections which are derived from the Group projections
and take any tax adjustments into account. e planning horizon
is ve years.
In compliance with  . (b) and  . (b), deferred
tax assets or liabilities were only recognised for temporary dier-
ences between the carrying amounts in the  nancial state-
ments and in the tax accounts of Deutsche Post  where the
dierences arose aer  January . No deferred tax assets or
liabilities are recognised for temporary dierences resulting from
initial dierences in the opening tax accounts of Deutsche Post 
as at  January . Further details on deferred taxes from tax loss
carryforwards can be found in Note .
In accordance with  , deferred tax assets and liabil-
ities are calculated using the tax rates applicable in the individual
countries at the balance sheet date or announced for the time
when the deferred tax assets and liabilities are realised. e tax rate
applied to German Group companies was raised by .  to . ,
based on an improved estimate in the trade tax area. It comprises
the corporation tax rate plus the solidarity surcharge, as well as
a municipal trade tax rate that is calculated as the average of the
dierent municipal trade tax rates. Foreign Group companies use
their individual income tax rates to calculate deferred tax items.
e income tax rates applied for foreign companies amount to up
to   (previous year:  ).
Deutsche Post  Group —  Annual Report
153
Consolidated Financial Statements — NOTES — Basis of preparation