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Notes Consolidated Financial Statements
Deutsche Post World Net Annual Report 2007
5 Currency translation
e nancial statements of consolidated companies prepared in foreign
currencies are translated into euros (€) in accordance with IAS using
the functional currency method. e functional currency of foreign
companies is determined by the primary economic environment in
which they mainly generate and use cash. Within Deutsche Post World
Net, the functional currency is predominantly the local currency. In
the consolidated nancial statements, assets and liabilities are therefore
translated at the closing rates, whilst income and expenses are generally
translated at the monthly closing rates. e resulting currency trans-
lation di erences are taken directly to equity. In nancial year 0,
currency translation di erences amounting to million (previous
year: million) were recognised directly in equity (see also the state-
ment of changes in equity).
Goodwill arising from business combinations a er January is
treated as an asset of the acquired company and carried in the functional
currency of the acquired company accordingly.
e following exchange rates were generally applied to foreign currency
translation in the Group:
Currency Country Closing rates Average rates
2006
EUR 1 = 2007
EUR 1 = 2006
EUR 1 = 2007
EUR 1 =
USD USA 1.3175 1.4708 1.25586 1.37145
CHF Switzerland 1.60735 1.65708 1.57308 1.64364
GBP UK 0.67101 0.73558 0.68182 0.68441
SEK Sweden 9.0391 9.41621 9.25353 9.25393
e carrying amounts of non-monetary assets recognised in the case of
consolidated companies operating in hyperin ationary economies are
generally indexed in accordance with IAS and thus re ect the current
purchasing power at the balance sheet date.
In accordance with IAS , receivables and liabilities in the single-entity
nancial statements of consolidated companies that have been prepared
in local currencies are translated at the closing rate as at the balance
sheet date. Currency translation di erences are recognised in other
operating income and expenses in the income statement. In nancial
year 0, income of million (previous year: million) and
expenses of million (previous year: million) resulted from
currency translation di erences. In contrast, currency translation dif-
ferences relating to net investments in a foreign operation are recognised
in equity.
6 Accounting policies
e consolidated nancial statements are prepared on the basis of his-
torical costs, with the exception of available-for-sale nancial assets as
well as nancial assets and nancial liabilities at fair value through pro t
or loss (especially derivative nancial instruments).
Overriding principle
e overriding principle was applied in respect of a transaction relat-
ing to nancial years 00 and . On July , Deutsche Post
AG as the debtor exercised its option under the terms and conditions
of the bond to call the exchangeable bond on Postbank shares prior to
maturity e ective July . Following this transaction, Deutsche
Post AG holds an interest in the Deutsche Postbank Group of plus
one share. e million gain on disposal of the Postbank shares
based on the conversion right was reported in other operating income.
Of this amount, million represented income from the reversal of a
liability recognised in connection with the measurement of the conver-
sion right. e conversion right was measured on the basis of Postbank’s
retained earnings. Deutsche Post AG deviated from measurement of the
conversion right based on market data in accordance with IAS . in
conjunction with IAS .(a), citing IAS .. If Deutsche Post AG had
measured the conversion right in accordance with IAS as a derivative
liability, an additional liability totalling million chargeable as an
expense would have had to be recognised in nancial year 00. is
liability would have had to be reversed to the income statement in -
nancial year 00. e net disposal gain would thus have increased by
million.
Revenue and expense recognition
Revenue and income from banking transactions, as well as other
operating income, is generally recognised when services are rendered,
the amount of revenue and income can be reliably measured and in all
probability the economic bene ts from the transactions will ow to the
Group. Operating expenses are recognised in the income statement
when the service is utilised or when the expenses are incurred.
Intangible assets
Intangible assets are measured at amortised cost. Intangible assets re-
ported include internally generated and purchased intangible assets and
purchased goodwill.
Internally generated intangible assets are capitalised at cost, if it is prob-
able that their production will generate an in ow of future economic
bene ts and the costs can be reliably measured. At Deutsche Post World
Net, this concerns internally developed so ware. If the criteria for capi-
talisation are not met, the expenses are recognised immediately in the
income statement in the year in which they are incurred. In addition to
direct costs, the production cost of internally developed so ware in-
cludes an appropriate share of allocable production overhead costs. Any
Restated consolidated balance sheet
as at 31 December
€m 2006 Adjustments
2006
restated Notes
Tax receivables
(new term: income tax assets) 670 –389 281 Reclassifi cation of other tax receivables
Receivables and other assets 8,917 389 9,306 Reclassifi cation of other tax receivables
Tax liabilities
(new term: income tax liabilities) 875 –774 101 Reclassifi cation of other tax liabilities
Other liabilities 4,164 774 4,938 Reclassifi cation of other tax liabilities
Tax provisions
(new term: income tax provisions) 460 –223 237 Reclassifi cation of other tax provisions
Other provisions 1,433 223 1,656 Reclassifi cation of other tax provisions
Non-current fi nancial liabilities 3,495 5,048 8,543 Reclassifi cation of subordinated debt
Other non-current liabilities 5,285 –5,048 237 Reclassifi cation of subordinated debt