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Annual Report 2004
Think Globally, Act Locally

Table of contents

  • Page 1
    Think Globally, Act Locally Annual Report 2004

  • Page 2
    ... time we can increase enterprise value for our shareholders. Financial highlights 2003 2004 Change in % Revenue thereof international revenue Profit from operating activities (EBITA) Return on sales 1) Consolidated net profit Operating cash flow (Postbank at equity) Net debt (Postbank at equity...

  • Page 3
    ...-border mail services. March DHL and Lufthansa Cargo start jointly operating five international routes. DHL thus further optimizes its global network, and customers benefit from more frequent connections between the American, Asian and European regions. July DHL Express and Nestlé Germany extend...

  • Page 4
    ... The company is one of the leading specialists in direct marketing and mail communication in France and cooperates with the French postal service in national delivery. Deutsche Post World Net can now offer its customers high-quality mail services in France. DHL forms a joint venture with the express...

  • Page 5
    ... 14 Deutsche Post Stock and Bonds 20 24 28 32 36 Corporate Strategy MAIL Corporate Division EXPRESS Corporate Division LOGISTICS Corporate Division FINANCIAL SERVICES Corporate Division The Company Group Management Report Consolidated Financial Statements 79 80 81 82 83 Income Statement Balance...

  • Page 6
    ... my employees and I know only too well that this means hard work. I would therefore like to sincerely thank all our 380,000 staff worldwide for their dedication and their achievements. Deutsche Post World Net again increased its results in 2004 and therefore fulfilled the expectations of the capital...

  • Page 7
    ... the past fiscal year. This means that we are increasing the dividend per share by 13.6% to â,¬ 0.50 and allowing you to share in the Group's positive overall development. Group Management Report The Company To our Shareholders We have again achieved excellent results in Asia. My employees and...

  • Page 8
    ..., member of the Board of Management since 2002, appointed until October 2007, responsible for the LOGISTICS Corporate Division, the STAR Project, Legal Service EXPRESS, LOGISTICS, Insurance and Risk Management, Corporate Legal, MAIL, FINANCIAL SERVICES, Corporate Procurement, Corporate Services...

  • Page 9
    ... Corporate Controlling, Corporate Accounting and Reporting, Investor Relations, Corporate Finance, Corporate Internal Audit /Security, Taxes, as well as Corporate Functions 5 John Mullen EXPRESS Americas, Asia, Emerging Markets Born in 1955, Bachelor of Science, member of the Board of Management...

  • Page 10
    ...Japan (Board of Directors) DHL Sinotrans International Air Courier Ltd. 1) , China (Board of Directors) Express Courier Ltd. 1) , New Zealand (Board of Directors) Dr. Hans-Dieter Petram Membership of supervisory boards required by law Deutsche Postbank AG 1) HDI Industrie Versicherung AG HDI Privat...

  • Page 11
    ... STAR value creation program. A further key area of its work was the progress of the integration projects in the EXPRESS Corporate Division in Europe. The relocation of the European air freight hub to Leipzig was also discussed. The EXPRESS Corporate Division's business development in the USA, and...

  • Page 12
    ...consolidated financial statements for fiscal year 2004, the respective management reports, and the business plan for 2005 were discussed in detail. In addition, the Committee prepared the Supervisory Board's resolutions on Deutsche Postbank AG's IPO and the acquisition and sale of equity investments...

  • Page 13
    ... Wendt Chair of Deutsche Post AG's General Works Council Jürgen Sengera (until July 31, 2004) Ulrike Staake (until August 15, 2004) Managing Director, Deutsche Bank AG in Hamburg Dr. Jürgen Weber Chairman of the Supervisory Board, Deutsche Lufthansa AG Group Management Report The Company

  • Page 14
    ...rttemberg (Advisory Board) L-Bank (Advisory Board) Membership of other supervisory boards required by law Deutsche Postbank AG KMS AG (Chair, from Feb. 20, 2004) MITECH AG (Chair) Membership of comparable bodies • SIREO REAL ESTATE ASSET MANAGEMENT GmbH (Advisory Board, from Oct. 5, 2004) Hero...

  • Page 15
    ... section 27 (3) Mitbestimmungsgesetz Shareholders' representatives Josef Hattig (Chair) Hero Brahms Employee representatives Rolf Büttner (Deputy Chair) Margrit Wendt Additional Information Consolidated Financial Statements Group Management Report The Company Membership of comparable bodies...

  • Page 16
    ... the Supervisory Board on Corporate Governance Deutsche Post AG's corporate governance aims to strengthen enterprise value and to promote trust in the management and supervision of the company among investors, customers, employees and the public. Finding the right balance for the division of tasks...

  • Page 17
    ... of the company or their related parties as soon as we receive them. As of December 31, 2004, there were no securities holdings that are required to be reported in accordance with section 6.6 of the German Corporate Governance Code. Risk management, accounting, auditing Deutsche Post AG has...

  • Page 18
    ... good. We increased our dividend again and intensified investor communication. Our stock data 2002 2003 2004 Change 2004 v. 2003 in % Year-end closing price High Low Price / earnings 1) Price / cash flow 2) 3) Number of shares Market capitalization Beta factor 4) Average trading volume 6) Annual...

  • Page 19
    ....75 Consolidated Financial Statements Deutsche Post stock DAX Euro STOXX 2003 2004 Change in % Group Management Report The Company In the first nine months of 2004, the stock markets continued to suffer primarily from the continuing threat of terrorism and the rising oil price. However, this...

  • Page 20
    ... since fiscal year 2000 is shown in the diagram below. As in previous years, the dividend is tax-free for shareholders resident in Germany, resulting in a net dividend yield of 3% based on the year-end closing price of â,¬ 16.90. The distribution ratio is 42.7% of Deutsche Post AG's net profit for...

  • Page 21
    ... of Germany would remain the main shareholder in Deutsche Post. For this reason, only 50% minus 26 shares were admitted to free trading at the time. The legal requirements have now changed to allow further privatization measures to be introduced: On October 22, 2004, the Frankfurt Stock Exchange...

  • Page 22
    ... with analysts and investors. In September, we dedicated a Capital Markets Day to the EXPRESS and LOGISTICS Corporate Divisions. Members of the Group's Board of Management and regional management presented the results to date and the long-term strategies of their divisions, and answered questions...

  • Page 23
    ...in the general level of interest rates therefore offset an increase in the equity portion in our capital structure - in particular due to the elimination of net debt. Group Management Report The Company You can find details of investor relation events planned for fiscal year 2005 in the financial...

  • Page 24
    ... customers. We are now concentrating on harmonizing our networks, products and quality standards under the Deutsche Post, DHL and Postbank brands, and therefore on further increasing our enterprise value. Brand architecture Group Corporate divisions MAIL EXPRESS LOGISTICS FINANCIAL SERVICES...

  • Page 25
    ... markets of the future, we have increased our international reach in our express and logistics business. As part of their long-term strategic alliance, DHL and Lufthansa Cargo started jointly operating five international routes in March 2004. We are thus optimizing our global network, and customers...

  • Page 26
    ... information technology We support our customers' business with combined flows of goods, information and finances. A strong IT infrastructure is a key factor for success here. This is why we again further strengthened our IT in 2004: as planned, DHL opened a new regional data center in Prague in...

  • Page 27
    ... it to our customers' needs, and substantially cut our costs. The individual projects can be divided into two groups: 1. Value that we create at Group level and within the MAIL and FINANCIAL SERVICES Corporate Divisions. We report on the latter in the sections on the corporate divisions on pages 27...

  • Page 28
    ...million letters throughout Germany each working day. Our one-stop value added services * and end-to-end solutions for targeting customers with advertisements make us an expert partner for business customers. We are the largest postal company in Europe and our global network is the most comprehensive...

  • Page 29
    ... Import and export of mail items to and from Germany Cross-border mail Mail services in other countries' domestic markets International value added services Consolidated Financial Statements Business divisions, key services and products Group Management Report We have bundled the MAIL Corporate...

  • Page 30
    ... in Japan, and the Mexican postal service SePoMex. Business outside Germany is becoming extremely important to us given the increasing liberalization of mail markets. In October 2004, we began bundling our international mail services outside Germany under a new umbrella brand: DHL Global Mail now...

  • Page 31
    ... of international mail markets. Group Management Report In fiscal year 2004, we reached a key stage on the path to completely automated final delivery sorting*: as part of our new automation concept, we have now centrally installed carrier sequence sorting machines in our 82 mail centers. In...

  • Page 32
    ... MAIL Corporate Divisions, we can offer a one-stop service for any transport solution via our DHL brand. EXPRESS at a glance Workforce 1) Hubs * Bases* Vehicles Countries and territories DHL in Germany Parcel centers* Packstations 1) 2004 139,944 36 4,410 72,000 over 220 33 over 400 Calculated...

  • Page 33
    ...value added services* in all three product lines, such as customs clearance and special logistics solutions for mail order companies * These terms are explained in the Glossary 29 Additional Information Consolidated Financial Statements Group Management Report In the EXPRESS Corporate Division...

  • Page 34
    ... total costs, while increasing service quality. We are using our international DHL network as a basis to tap into national markets, with Asia as a strategic focus. In 2004, we added more branches to our close-knit regional air network, and in August we commissioned our new central hub at Hong Kong...

  • Page 35
    ...we will concentrate all air transport networks on our main hub at DHL's Air Park in Wilmington, Ohio. Group Management Report DHL has been the umbrella brand for Deutsche Post World Net's express and logistics business since 2003. To achieve uniform branding on a global scale, we began harmonizing...

  • Page 36
    ...value chain. Deutsche Post World Net has the capability to do this, and successfully implements it. LOGISTICS at a glance Workforce 1) DHL Danzas Air & Ocean Air freight volume Ocean freight volume Branches Local presence DHL Solutions Warehouse space Distribution centers Local presence 1) 2) 2004...

  • Page 37
    ... right solution for every requirement Business divisions and key services DHL Danzas Air & Ocean DHL Solutions * These terms are explained in the Glossary 33 Additional Information Global air freight (timedefined products, charters) Global ocean freight (LCL / FCL *) Management of industrial...

  • Page 38
    ...a customer's "Security Award". In the DHL Danzas Air & Ocean Business Division, we have a security department and a safety program that meets international security requirements such as the C-TPAT* initiative. The secure transport and storage of valuable goods is also becoming increasingly important...

  • Page 39
    ... in the DHL Danzas Air & Ocean Business Division. We particularly want to further strengthen our position in Asia. For example we are supporting the Starbucks Coffee Company in Asia by coordinating the transport of goods and store fittings from the USA and Europe to Asia, and managing intra-Asian...

  • Page 40
    FINANCIAL SERVICES Corporate Division One-stop services Measured by the number of customers, Deutsche Postbank AG is the largest single institution in the German retail banking market. We have approximately 12 million private customers who contact us via all sales channels, where they find a ...

  • Page 41
    ... Investment of surplus of deposits in money and capital markets, risk management, asset management Consolidated Financial Statements Postbank and its business divisions Retail Outlet Group Pension Service Group Management Report Postbank uses various sales channels to serve its customers...

  • Page 42
    ... network to meet this change in demand in fiscal year 2004: we transferred the postal and Postbank business of smaller retail outlets to our partner and Post Service outlets. This has allowed us to reduce costs, and our customers profit from a wider range of one-stop shopping* products and services...

  • Page 43
    ...Consolidated Financial Statements Group Management Report Postbank intends to acquire further customers in its Retail Banking Business Division through products such as the Postbank Giro extra plus . On the one hand, we want to intensify sales of high-value products in asset advisory services, and...

  • Page 44
    ... Total return on sales MAIL Revenue EBITA Return on sales EXPRESS Revenue EBITA Return on sales LOGISTICS Revenue EBITA Return on sales FINANCIAL SERVICES Income EBITA Other key figures Earnings per share Dividend per share Net debt (Postbank at equity) Return on equity (RoE) before taxes Operating...

  • Page 45
    ... Both capital and consumer spending were up strongly year-on-year, putting the Japanese economic upturn in 2004 on a broad footing. 41 Additional Information Consolidated Financial Statements Group Management Report The global economic recovery that began after the end of the war in Iraq picked...

  • Page 46
    ... continued to enjoy increasing popularity among international investors. Foreign direct investment was up again by 14% and reached US$ 60.6 billion, a new record high. China's increasing integration into the global economy was also reflected in very strong increases in imports and exports, which...

  • Page 47
    .../04 10/29/04 11/30/04 12/30/04 43 Additional Information Consolidated Financial Statements Group Management Report The European bond markets mirrored the ups and downs on the American capital markets until the middle of the year. On balance, long-term interest rates in the euro zone saw a slight...

  • Page 48
    .... Their market share is continuing to increase at the regional level in particular, reaching 7.8% in the year under review. Our market share decreased accordingly. Market shares (volume) in mail communication in Germany in % 2003 2004 Deutsche Post Competition Source: company estimates 93...

  • Page 49
    ...) the market volume amounts to â,¬ 36.2 billion. Source: Market Research Service Center in association with GfK 2004 * These terms are explained in the Glossary 45 Additional Information Consolidated Financial Statements ≥ 70 kg Group Management Report CEP market segmentation model

  • Page 50
    ...against the previous year. Fuel surcharges, too, increased due to the oil price. On the whole, the transported volumes are likely to have increased significantly. 1) Comprising Hong Kong, South Korea, China, Japan, India, Australia, New Zealand, Singapore and Taiwan * These terms are explained in...

  • Page 51
    ... 2.9 2.7 Market shares in ocean freight Market volume for forwarding: â,¬17.2 million TEUs 1) Kühne & Nagel DHL Danzas Air & Ocean Schenker Panalpina Exel 1) 7.3 5.5 4.1 4.0 2.9 Twenty-foot equivalent units Source: Global Insight Trade Databank, annual reports/publications, company estimates...

  • Page 52
    ... share of private checking accounts was 6.3%. Postbank is a leading provider of domestic payment transaction services for corporate customers. Its share of the market for transaction banking increased in 2004 from 6% to 16% after it took over payment transactions for Dresdner Bank and Deutsche Bank...

  • Page 53
    ... accounted for in these financial statements as a financial investment carried at equity. Further details relating to the "Postbank at equity" scenario can be found under item 53 in the notes to the consolidated financial statements. Selected indicators for results of operations Deutsche Post World...

  • Page 54
    ... million); the prior-year figure included losses on the sale of the interest in DHL Airways. Profit from ordinary activities increased by 12.6% to â,¬2,156 million (previous year: â,¬1,915 million) reflecting the healthy development of the Group's operating business. The tax rate fell from 29.9% in...

  • Page 55
    ...Annual General Meeting. This corresponds to a total dividend of â,¬ 556 million, and an increase of 13.6%. MAIL maintains strong earnings performance MAIL Corporate Division 20031) 2004 Change in % Total revenue Profit from operating activities before goodwill amortization (EBITA) Return on sales...

  • Page 56
    ...) 2004 Change in % Business customer letters Private customer letters Total 1) 7,713 1,463 9,176 7,515 1,459 8,974 - 2.6 - 0.3 - 2.2 Prior-period amounts restated due to restructuring of Mail International Business Division and other product portfolio optimization measures The Direct Marketing...

  • Page 57
    ... Division and other product portfolio optimization measures EBITA / revenue Since August 1, 2003, we have reported our international mail services under the MAIL Corporate Division, and have restated the prior-year figures accordingly. Total revenue for the EXPRESS Corporate Division increased...

  • Page 58
    ... our 2003 Annual Report. The return on sales for the express business outside the Americas region was 6.4%, and for the corporate division as a whole, 2.1%. LOGISTICS improves revenue and profit LOGISTICS Corporate Division 2003 2004 Change in % Total revenue Profit from operating activities before...

  • Page 59
    ...The DHL Danzas Air & Ocean Business Division reported growth in revenue for the year under review of 17.5% to â,¬ 4,990 million (previous year: â,¬ 4,246 million), to which all regions contributed. Acquisitions were also a positive factor; for example, on July 15, 2003, we increased our shareholding...

  • Page 60
    ...product portfolio optimization measures Postbank Figure at end of reporting period According to the standards of the Bank for International Settlements (BIS) The FINANCIAL SERVICES Corporate Division consists mainly of Postbank. In addition, we report our Retail Outlet Group and the Pension Service...

  • Page 61
    ... FINANCIAL SERVICES Corporate Division expanded and modernized its IT systems. Investments in companies fell by 41.8% to â,¬ 793 million, since in the period under review they consisted only of a number of smaller acquisitions and increases in shareholdings. Outstanding DHL brand management Capital...

  • Page 62
    ... net assets and financial position relates to the consolidated balance sheet. An analysis of the most important figures relating to "Postbank at equity" can be found beginning on page 60. Total assets at the end of the year under review amounted to â,¬153,357 million. The fall of 1.0% is mainly due...

  • Page 63
    ... long term. 59 Additional Information Consolidated Financial Statements Equity was substantially strengthened by the consolidated net profit for the period of â,¬1,588 million. It was reduced by the amount of the dividend payment of â,¬ 490 million for fiscal year 2003. At the balance sheet date...

  • Page 64
    ... of 10.6. This indicator was down from the previous year's value of 18.1 as a result of higher interest payments. Changes in our balance sheet structure relate in the main to two items, as the table on the next page shows. The proportion of noncurrent financial assets at December 31, 2004, was only...

  • Page 65
    ... balance sheet items: inventories, trade receivables, other assets after deduction of trade payables and other liabilities. Selected indicators for financial position (Postbank at equity) in â,¬ m Jan. 1 to Dec. 31, 2003 Jan. 1 to Dec. 31, 2004 Change in cash and cash equivalents Net profit...

  • Page 66
    ... International Financial Reporting Standards (IFRS). The headquarters in Bonn (Corporate Center) formulates Group policy and carries out the functions of Group management. Each of the four corporate divisions is managed by a divisional headquarters. In 2004, we decided to move the EXPRESS Corporate...

  • Page 67
    ... Financial Statements In 2004, the Group again expanded its strategic positions not only through organic growth, but also by means of acquisitions. Our most significant acquisitions and investments in companies in the MAIL Corporate Division were: In January 2004, Deutsche Post Global Mail...

  • Page 68
    In November, Deutsche Post Global Mail acquired around 38% of the shares in the Spanish company Unipost. The company is the largest private provider of postal services in the Spanish mail market, and has specialized in the national transportation of business mail. Unipost has an extensive network of...

  • Page 69
    ... 2003 Dec. 31, 2004 Change in % Corporate divisions MAIL 1) EXPRESS 1) LOGISTICS 1) FINANCIAL SERVICES 1) 2) Other / Consolidation 1) Group 1) Group 3) Total workforce (headcount including trainees) As of December 31 Hourly workers and salaried employees Civil servants Trainees Average for the year...

  • Page 70
    ... to harmonize pay conditions and define targeted performance incentives within the various employee groups. Forward-looking human resources policy In terms of health management, the focus in 2004 was again on prevention and advice. Our health and safety focus program, "Accident-free However You...

  • Page 71
    ... and changes that may lead to positive and negative deviations from the plan. These are assessed on a quarterly basis by the corporate divisions using scenario modeling and reported to Corporate Controlling using a multi-level structured risk query report. Risk reporting to the Board of Management...

  • Page 72
    ... primary and derivative financial instruments to optimize financing costs and to limit interest rate risks, which help us to manage the ratio between fixed and variable interest rate terms. Controlling corporate division risks The company and a number of its subsidiaries provide their services in...

  • Page 73
    ... markets such as the USA, the UK, the Netherlands, France and Spain, in order to achieve increasing revenues for the long term in the MAIL Corporate Division. We expanded the EXPRESS Corporate Division successfully and are now active on all continents. The global organization reflects the special...

  • Page 74
    ... of Astar Air Cargo Inc. in 2003 and 2004, which had a positive outcome. External audits are currently underway at DHL Express (USA) and Airborne Inc. in line with the US unclaimed property laws. These laws state that assets with no owner must either be returned to their rightful owner or...

  • Page 75
    ... cases: In a ruling on October 20, 2004, against the Federal Republic of Germany, the European Commission found that the relevant provisions of the Postgesetz (German Postal Act) are not consistent with EU law. This ruling related to downstream access to Deutsche Post's network by mail consolidators...

  • Page 76
    ... human error. We employ an internally developed IT risk management system in this area. It guards against potential failures and reduces their impact through a variety of preventive measures. Concentrating the locations also means an increase in the demands made on network services. We are investing...

  • Page 77
    ...costs. Risks with a low probability of occurrence but that could entail high losses, such as air transportation risks, continue to be handled by external insurance companies. In this context, we either place risks directly or via third-party insurance brokers. As Deutsche Post World Net is a service...

  • Page 78
    ... the Group and put them out to tender; in the future, we will be able to procure our hardware at better terms and from fewer key suppliers. Following in-depth market analysis, we put our requirements for marketing and media services relating to external communications out to tender. We reviewed all...

  • Page 79
    ...per year, the agreement represents a total volume of â,¬ 5 billion. The purchase 75 Additional Information Consolidated Financial Statements Group Management Report A special Environmental Report outlines how Deutsche Post World Net works to protect the environment and the social responsibility...

  • Page 80
    ... 200 million. This acquisition strengthens our DHL Solutions Business Division which is taking over structures of great importance for entering the retail logistics* market: we will not only supply the department stores and mail order customers smoothly, but also operate the related procurement and...

  • Page 81
    ... Asia and Eastern Europe. Depending on oil price movements, a shift from air to ground-based transport is possible. In the US domestic market, companies will have to focus even more closely on the needs of their customers; service quality will become a crucial factor here. Group Management Report

  • Page 82
    ... volumes in Deutsche Post World Net will be working with this software. In 2005, our activities designed to optimize the Group's legal structure will be continued and completed in most countries. At DHL, we are starting to roll out our newly designed company uniforms worldwide. By the end of 2005...

  • Page 83
    ... Statements Income Statement For the period January 1 to December 31 in â,¬ m Note Deutsche Post World Net 2003 Deutsche Post World Net 2004 Revenue and income from banking transactions Other operating income Total operating income Materials expense and expenses from banking transactions Staff...

  • Page 84
    ...592 4,965 12,439 Liabilities Financial liabilities Trade payables Liabilities from financial services Other liabilities 40 41 42 43 4,749 2,755 123,317 5,274 136,095 154,933 5,240 3,285 117,026 6,539 132,090 153,357 Total equity and liabilities Downloadable spreadsheet. Online Annual Report 80

  • Page 85
    Balance Sheet - Cash Flow Statement Cash Flow Statement For the period January 1 to December 31 in â,¬ m Note Deutsche Post World Net 2003 Deutsche Post World Net 2004 Net profit before taxes Net interest income Depreciation / amortization of noncurrent assets Gains on disposal of noncurrent ...

  • Page 86
    ... earnings Dividend Other changes in equity not recognized in income Currency translation differences Other changes Changes in equity recognized in income Appropriation to retained earnings Consolidated net profit Balance at December 31, 2004 Note Downloadable spreadsheet. Online Annual Report 1,113...

  • Page 87
    ... of Deutsche Post World Net therefore provide a true and fair view of its net assets, financial position, and results of operations. The accounting policies, as well as the explanations and disclosures in the notes to the IFRS consolidated financial statements for fiscal year 2004, are generally...

  • Page 88
    ...the Greater London Area, but also transports international business mail to and from the UK. The purchase price for 100% of the shares amounted to around â,¬ 8 million. First-time consolidation resulted in goodwill of â,¬ 8 million as of December 31, 2004. In April 2004, Deutsche Post World Net paid...

  • Page 89
    ... AG in a public offering in Germany and in private placements worldwide. In the course of the transaction, the entire share capital of Deutsche Postbank AG (164,000,000 shares in total) was admitted to the official market on the German stock exchanges. By placing the shares, Deutsche Post AG reduced...

  • Page 90
    ... the Deutsche Postbank group, as from fiscal year 2005 relate to the more detailed accounting treatment for impairment losses on equities. Under IAS 39.31 sentence 2 (revised 2004), a significant or prolonged decline in the fair value of an equity instrument held by an enterprise below its cost now...

  • Page 91
    ... case in particular if future economic benefits are expected to flow from the assets. At Deutsche Post World Net, these relate to internally developed software. In addition to direct costs, the production cost of internally developed software includes an appropriate share of attributable production...

  • Page 92
    ... 28 (Accounting for Investments in Associates). Based on the cost of acquisition at the time of purchase of the investments, the carrying amount of the investments is increased or reduced to reflect changes in the equity of the associates attributable to the investments of Deutsche Post AG. Goodwill...

  • Page 93
    ... Financial Statements The stock option plan for executives is measured using investment techniques by applying option pricing models. Options are measured at their fair value on the grant date. The option price thus calculated is recognized in income under staff costs and spread over the term...

  • Page 94
    ... the EXPRESS Corporate Division Number of employees calculated as averages for fiscal years 2003 and 2004 (FTEs) Segments by region in â,¬ m Germany 2003 2004 Europe excluding Germany 2003 2004 Americas 2003 2004 Asia/Pacific 2003 2004 Other regions 2003 2004 Group 2003 2004 External revenue...

  • Page 95
    ..., Direct Marketing, Press Distribution, Value Added Services and Mail International. Since 2003, the Mail International Business Division has also included the activities of Global Mail, which used to be reported under the EXPRESS Corporate Division. Additional product portfolio optimization...

  • Page 96
    ...classification of revenue by corporate division (business segment) and the allocation of revenue and income from banking transactions to geographical regions is presented in the segment reporting (see note 9). Income from investment securities and insurance business (financial services) Income from...

  • Page 97
    ... 67 million (previous year: â,¬ 77 million) relating to contributions by Deutsche Postbank AG to Bundes-Pensions-Service für Post und Telekommunikation e. V. Further details can be found in note 37 "Provisions for pensions and other employee benefits". Staff costs relate mainly to wages, salaries...

  • Page 98
    ..., employer contributions to supplementary occupational pension plans and retirement benefit payments by employers for their employees. The average number of employees of Deutsche Post World Net in the year under review, classified by employee groups, was as follows: Employees Hourly workers and...

  • Page 99
    ... in deferred tax assets from tax loss carryforwards trans-o-flex Schnell-Lieferdienst GmbH (trans-o-flex), Germany DHL Airways Inc., USA (now ASTAR Air Cargo) Other Group companies 1 - 29 0 - 28 3 0 1 4 The net income in fiscal year 2004 was mainly due to the positive earnings contribution from...

  • Page 100
    ... 8 b of the KStG (German Corporate Income Tax Act) relate primarily to special funds, shares and equity interests of the Deutsche Postbank group. Net profit for the period before minority interest In fiscal year 2004, Deutsche Post World Net generated a net profit for the period before minority...

  • Page 101
    ... and equipment where Deutsche Post World Net has paid advances in connection with uncompleted transactions. Assets under development relate to items of property, plant and equipment in progress at the balance sheet date for whose production internal or third-party costs have already been incurred...

  • Page 102
    ... Spanish mail service provider Unipost Servicios Generales S.L., Barcelona. In November 2004, Deutsche Post World Net acquired around 38% of the shares for a purchase price of â,¬ 21 million. Compared with the market rates of interest prevailing at December 31, 2004, for comparable financial assets...

  • Page 103
    ... Deferred revenue Receivables from Group companies Net assets from defined contribution pension plans Receivables from employees and executive body members Rent receivable Receivables from sales of assets Advance payments Receivables from insurance business Receivables from loss compensation...

  • Page 104
    ... from financial services (gross of the allowance for losses on loans and advances) is as follows: Maturities in â,¬ m Less than 1 year 2003 2004 1 to 5 years 2003 2004 More than 5 years 2003 2004 Total 2003 2004 Loans and advances to other banks Loans and advances to customers Trading assets...

  • Page 105
    ... securities and the recognition of impairment losses. The Deutsche Postbank group issued letters of pledge to the European Central Bank for securities with a lending value of â,¬ 7 billion (previous year: â,¬ 2 billion) for open market operations. Open market operations at the balance sheet date...

  • Page 106
    ... be issued against non-cash contributions. Shareholders' pre-emptive subscription rights have been disapplied. The company did not exercise this authorization in fiscal year 2004. Contingent capital Issued capital Number of shares 2003 2004 Federal Republic of Germany KfW Bankengruppe (formerly...

  • Page 107
    ... stock options to members of the Board of Management and executives in Group management level two still requires eligible participants to invest in shares of Deutsche Post AG. Eligible participants in Group management levels three and four receive stock options without any requirement to buy shares...

  • Page 108
    ... in â,¬ m 2003 2004 The revaluation reserve contains gains and losses from changes in the fair values of available-for-sale financial instruments that are unlikely to be more than temporary and have been taken directly to equity. This reserve is reversed to income either when the assets are sold or...

  • Page 109
    ... of Deutsche Post AG. The dividend is tax-exempt for shareholders resident in Germany. No capital gains tax (investment income tax) will be withheld on the distribution. In addition to the state pension system operated by the statutory pension insurance funds, to which contributions for hourly...

  • Page 110
    ... special pension fund on the one hand and the current contributions of Deutsche Post AG and Deutsche Postbank AG or the return on assets on the other, and guarantees that the special pension fund is able at all times to meet the obligations it has assumed in respect of its funding companies. Where...

  • Page 111
    ... Consolidated Financial Statements Present value of total obligations at January 1 Service cost excluding employee contributions Employee contributions Interest cost Pension payments Past service cost Plan curtailments Transfers / asset transfers Acquisitions Actuarial gains / losses Currency...

  • Page 112
    ... Post AG 2004 Deutsche Postbank group 2004 EXPRESS LOGISTICS excluding excluding DPAG DPAG 2004 2004 Other Total 2003 2003 2004 2004 Fair value of plan assets at January 1 Employer contributions Employee contributions Actual return on plan assets Pension payments Transfers Acquisitions Plan...

  • Page 113
    ...). The increase relates mainly to an addition to value added tax by Deutsche Post AG that relates to the risk of repaying the input taxes already claimed on revenue from commercial freight shipments of up to 20kg. 39 Other provisions Changes in other provisions in fiscal year 2004 are presented...

  • Page 114
    ...-bearing obligations of Deutsche Post World Net not classified as liabilities from financial services. They are broken down as follows: Financial liabilities in â,¬ m Less than 1 year 2003 2004 1 to 5 years 2003 2004 More than 5 years 2003 2004 Total 2003 2004 Bonds Due to banks Finance lease...

  • Page 115
    ...399 million) relates to aircraft leases entered into by DHL Operations B. V., Netherlands, with Barclays Mercantile Business Financing Limited, London. The interest rate is 3.745%; the leases run until 2027 and 2028. Other financial liabilities are mainly attributable to Deutsche Post International...

  • Page 116
    ... the fair values and carrying amounts of the financial liabilities are therefore relatively minor. Details of existing credit lines can be found on page 59 in the Group Management Report. 41 Trade payables â,¬ 871 million (previous year: â,¬ 818 million) of trade payables relates to Deutsche Post AG...

  • Page 117
    ... payments received Insurance liabilities Conversion right for exchangeable bond 1) Other liabilities to customers Early termination fees Liabilities from checks issued Debtors with credit balances Liabilities from defined contribution pension plans Liabilities to Group companies Miscellaneous other...

  • Page 118
    ... and write-down of current assets Staff costs relating to stock option plan Non-cash income and expense of the Deutsche Postbank group Other 2 124 - 14 8 21 94 -7 228 -2 149 - 10 4 33 326 - 74 426 44.1 Net cash from operating activities 44.2 Net cash used in investing activities Cash flows from...

  • Page 119
    ... include in particular bank balances, all receivables, liabilities, securities, loans and accrued interest. Examples of derivatives include options, swaps and futures. The Deutsche Postbank group accounts for most of the financial instruments in Deutsche Post World Net. The risks and derivatives of...

  • Page 120
    ...and risk types Price risk refers to potential losses from financial transactions that may be triggered by changes in interest rates, volatility, foreign exchange rates and share prices. The changes in value are derived from daily marking-to-market, irrespective of the carrying amounts of assets and...

  • Page 121
    ...10.9 Based on internal calculations 45.1.2 Derivatives The Deutsche Postbank group uses derivatives primarily to hedge positions as part of its asset/liability management policy. Derivatives are also used for trading. The notional amounts represent the gross volume of all sales and purchases. The...

  • Page 122
    ... Deutsche Postbank group at the balance sheet date. Forward transactions and option contracts of the Deutsche Postbank group in â,¬ m Fair value Notional amount 2003 Positive fair values 2003 Negative fair values 2003 Notional amount 2004 Positive fair values 2004 Negative fair values 2004 Trading...

  • Page 123
    ...,519 19,298 16,463 80,602 19,564 119 Additional Information Consolidated Financial Statements Assets Cash reserve Loans and advances to other banks Loans and advances to customers Allowance for losses on loans and advances Investment securities 1,623 32,881 39,021 - 597 14,942 1,623 33,068 39...

  • Page 124
    ... hedged at the balance sheet date. Interest rate risk and interest rate management The global presence of the Group companies results in currency risks from planned and completed transactions in foreign currencies. At Deutsche Post World Net, foreign currency cash f lows are centralized and matched...

  • Page 125
    ... risks. In addition to these contingent liabilities, the Deutsche Postbank group has irrevocable loan commitments amounting to â,¬13,518 million (previous year: â,¬12,890 million). 47 Litigation Details of litigation can be found in the Group Management Report. 48 Other financial obligations...

  • Page 126
    ...conditions. All companies classified as related parties that are controlled by Deutsche Post World Net or on which the Group can exercise significant inf luence are recorded in the list of shareholdings together with information on the equity interest held, their equity, and their net profit or loss...

  • Page 127
    ... the total remuneration of all the members of the Supervisory Board. In fiscal year 2004, the members of the Supervisory Board are entitled to an annual performance-related remuneration with a long-term incentive effect amounting to â,¬ 300 for every 3% by which the consolidated net profit per share...

  • Page 128
    ... Deutsche Post AG or related financial instruments. In line with their duty of disclosure, the members of the company's Board of Management and Supervisory Board disclosed the purchase of 23,276 shares (previous year: 48,800 shares) of Deutsche Post AG in fiscal year 2004. The members of the Board...

  • Page 129
    ...Express (UK) Limited DHL International (UK) Ltd. DHL Express Betriebs GmbH Danzas S.p.A. DHL Danzas Air & Ocean Germany GmbH Van Gend & Loos B. V. Danzas Limited DHL International S.A. Danzas Limited DHL Freight and Contract Logistics (UK) Limited Danzas AG DHL Japan Inc. FINANCIAL SERVICES Deutsche...

  • Page 130
    ...column 3. Column 4 contains the investments in the Deutsche Postbank group reported under noncurrent financial assets and measured at equity. Column 5 contains the data for Deutsche Post World Net including Postbank at equity. The cash flow statement including Postbank at equity on page 129 is based...

  • Page 131
    ... of income and group expense and intercompany balances 2004 2004 Other Deutsche Post World Net Postbank at equity 2004 Deutsche Post World Net Postbank at equity 2003 in â,¬ m 2004 2004 Revenue Other operating income Total operating income Materials expense Staff costs Depreciation and...

  • Page 132
    ... group 2004 Consolidation of intercompany balances 2004 Other Deutsche Post World Net Postbank at equity 2004 Deutsche Post World Net Postbank at equity 2003 in â,¬ m 2004 2004 Assets Noncurrent assets Intangible assets Property, plant and equipment Noncurrent financial assets Investments...

  • Page 133
    ... rates on cash and cash equivalents Change in cash and cash equivalents due to changes in consolidated group Cash and cash equivalents at January 1 Cash and cash equivalents at December 31 Downloadable spreadsheet. Online Annual Report Bonn, March 1, 2005 Deutsche Post AG The Board of Management...

  • Page 134
    ... the consolidated financial statements of Deutsche Post AG, Bonn, 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 fiscal year from January 1 to December 31, 2004. The preparation...

  • Page 135
    Published by: Deutsche Post AG Headquarters Corporate Departments Investor Relations, Corporate Communications 53250 Bonn Germany Responsible for content: Martin Ziegenbalg Coordination /Editors: Kathrin Engeländer, Beatrice Scharrenberg, Susanne Stacklies, Susanne Balcke, Wolfgang Giehl Design and...

  • Page 136
    ... online Annual Report. You can find up-to-date news regarding the Group, our stock, bonds, investor events, as well as corporate governance on this website. It also provides you with a number of tools such as a portfolio calculator and a notification service, which informs you of important financial...

  • Page 137
    Group 8 -Year Review 1997 - 2004 Revenue MAIL EXPRESS LOGISTICS FINANCIAL SERVICES Corporate divisions total Other / Consolidation Total Profit or loss from operating activities before goodwill amortization (EBITA) MAIL EXPRESS LOGISTICS FINANCIAL SERVICES Corporate divisions total Other/...

  • Page 138
    ... / revenue Profit from ordinary activities / average equity Profit from operating activities (EBIT) / average total assets Income tax expense / profit from ordinary activities Equity / total assets Financial liabilities excluding securities, cash and cash equivalents, and long-term deposits Net debt...

  • Page 139
    ... 9, 2005 1) 2) Invest 2005 private investor fair (Stuttgart) Dresdner Kleinwort Wasserstein Business Services Conference (London) Bear Stearns Global Transportation Conference (New York) Deutsche Bank German Corporate Conference 2005 (Frankfurt am Main) Goldman Sachs Business Services Conference...

  • Page 140
    Deutsche Post AG Headquarters Investor Relations 53250 Bonn Germany