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Notes Consolidated Financial Statements
Deutsche Post World Net Annual Report 2007
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 subse-
quent 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. Measurement is performed on a historical cost basis
and any premiums or discounts are accrued or deferred over the term
to maturity. e balance of issue costs and discounts on the Group’s own
bond issues is deferred over the bond term. Any discount not yet earned
or not yet paid on money market securities is accrued or deferred over
the term to maturity.
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 IAS , deferred taxes are recognised for temporary
di erences between the carrying amounts in the IFRS n a n c i a l s t a t e -
ments 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 carryforwards and which are likely to be
realised. In compliance with IAS . (b) and IAS . (b), deferred tax
assets or liabilities were only recognised for temporary di erences be-
tween the carrying amounts in the IFRS nancial statements and in the
tax accounts of Deutsche Post AG and Deutsche Postbank AG where the
di erences arose a er January . No deferred tax assets or liabilities
can be recognised for temporary di erences resulting from initial dif-
ferences in the opening tax accounts of Deutsche Post AG and Deutsche
Postbank AG as at January . Additional disclosures on deferred
taxes from tax loss carryforwards can be found in Note .
In accordance with IAS , deferred tax assets and liabilities are cal-
culated by 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 of . applied to German
Group companies comprises the corporation tax rate plus the solidarity
surcharge, as well as a municipal trade tax rate which is calculated as
the average of the di erent municipal trade tax rates. Foreign Group
companies use their individual income tax rate to calculate deferred
tax items. e income tax rates applied for foreign companies range
from to .
Contingent liabilities
Contingent liabilities represent possible obligations whose existence will
be con rmed only by the occurrence or non-occurrence of one or more
uncertain future events not wholly within the control of the enterprise.
Contingent liabilities also include certain obligations that will prob-
ably not lead to an out ow of resources embodying economic bene ts,
or where the amount of the out ow of resources embodying economic
bene ts cannot be measured with su cient reliability. In accordance
with IAS , contingent liabilities are not recognised as liabilities (see
also Note ).
The exercise of judgement in applying the accounting policies
e preparation of IFRS-compliant consolidated nancial statements
requires the exercise of judgement by management. All estimates are
reassessed on an ongoing basis and are based on historical experience
and expectations with regard to future events that appear reasonable
under the given circumstances. is applies to the following matters
in particular:
• In the case of certain contracts, a decision must be made whether they
should be accounted for as derivatives or as executory contracts.
• Financial assets are classi ed under four categories, namely, held-to-
maturity investments, loans and receivables, available-for-sale nan-
cial assets and nancial assets at fair value through pro t or loss.
• In measuring the provisions for pensions and other employee ben-
e ts, there are di erent options for recognising actuarial gains and
losses. For this purpose, Deutsche Post World Net applies the “corridor
method” in accordance with IAS . ( corridor).
• With respect to non-current assets held for sale, it must be determined
whether the assets are available for sale in their present condition and
whether their sale is highly probable. If that is the case, the assets and
the associated liabilities are reported and measured as non-current
assets held for sale and liabilities associated with non-current assets
held for sale.
Estimates and assessments made by management
e preparation of the consolidated nancial statements in accordance
with IFRSs requires assumptions and estimates to be made that a ect
the amounts of the assets and liabilities included in the balance sheet,
the amounts of income and expenses, and the disclosures relating to
contingent liabilities.
Amongst other things, these assumptions relate to the recognition and
measurement of provisions. When determining the provisions for pen-
sions and other employee bene ts, the discount rate used is an important
factor that has to be estimated. An increase or reduction of one percent-
age point in the discount rate used would result in a reduction or in-
crease of around million in the pension obligations of our pension
plans in Germany. A similar change in the discount rate used to measure
the pension obligations of the Group companies in the UK would result
in a reduction or increase of around million. Since actuarial gains
and losses are only recognised if they exceed of the higher of the
de ned bene t obligation and the fair value of the plan assets, changes
in the discount rate used for Deutsche Post World Net’s bene t plans
generally have little or no e ect on the expense or the carrying amount
of the provisions recognised in the following nancial year.
e Group has operating activities around the globe and is subject to
local tax laws. Management can exercise judgement when calculating the
amounts of current and deferred taxes. Although management believes
that it has made a reasonable estimate relating to tax matters that are
inherently uncertain, there can be no guarantee that the actual outcome
of these uncertain tax matters will correspond exactly to the original
estimate made. Any di erence between actual events and the estimate
made could have an e ect on tax liabilities and deferred taxes in the
particular period in which the matter is nally decided. e amount
recognised for deferred tax assets could be reduced if the estimates of
planned taxable income or the tax bene ts achievable as a result of tax
planning strategies are revised downwards, or in the event that changes
to current tax laws restrict the extent to which future tax bene ts can
be realised.