DHL 2008 Annual Report Download - page 149

Deutsche Post World Net Annual Report 2008
Consolidated Financial Statements
Notes
Estimates and assessments made by management
 e preparation of the consolidated  nancial statements
in accordance with  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 rec-
ognition and measurement of provisions. When determining the
provisions for pensions and other employee bene ts, the discount
rate used is an important factor that has to be estimated. It is based
on the rate of return on high-quality corporate bonds. Due to the
 nancial market crisis, the risk premiums for corporate bonds rose
markedly compared with government bonds.  e market returns on
which the calculated rate of interest is based also rose as a result. An
increase or reduction of one percentage point in the discount rate
used would result in a reduction or increase of around   million
in the pension obligations of pension plans in Germany. A similar
change in the discount rate used to measure the pension obliga-
tions of the Group companies in the  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 the Group’s bene t plans generally have
little or no e ect on the expense or the carrying amount of the pro-
visions 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 guar-
antee 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.
Goodwill is regularly reported in the Group’s balance sheet
as a consequence of business combinations. When an acquisition
is initially recognised in the consolidated  nancial statements, all
identi able assets, liabilities and contingent liabilities are measured
at their fair values at the date of acquisition. One of the most impor-
tant estimates this requires is the determination of the fair values of
these assets and liabilities at the date of acquisition. Land, buildings
and o ce equipment are generally valued by independent experts,
whilst securities for which there is an active market are recognised
at the quoted exchange price. If intangible assets are identi ed in
the course of an acquisition, then their measurement is based on the
opinion of an independent external expert valuer, depending on the
type of intangible asset and the complexity involved in determining
its fair value.  e independent expert determines the fair value using
appropriate valuation techniques, normally based on expected future
cash  ows. In addition to the assumptions about the development
of future cash  ows, these valuations are also signi cantly a ected
by the discount rates used.
Impairment testing for goodwill is based on assumptions
with respect to the future.  e Group carries out these tests annu-
ally and also whenever there are indications that goodwill may have
become impaired.  e recoverable amount of the  must then be
calculated.  is amount is the higher of fair value less costs to sell and
value in use.  e determination of value in use requires adjustments
and estimates to be made with respect to forecasted future cash  ows
and the discount rate applied. Although management believes that
the assumptions made for the purpose of calculating the recovera-
ble amount are appropriate, possible unforeseeable changes in these
assumptions – e. g. a reduction in the  margin, an increase in
the cost of capital, or a decline in the long-term growth rate – could
result in an impairment loss that could negatively a ect the Group’s
net assets,  nancial position and results of operations.
Pending legal proceedings in which the Group is involved are
disclosed in Note 54.  e outcome of these proceedings could have
a signi cant e ect on the net assets,  nancial position and results of
operations of the Group. Management regularly analyses the infor-
mation currently available about these proceedings and recognises
provisions for probable obligations including estimated legal costs.
Internal and external legal advisers participate in making this assess-
ment. In deciding on the necessity for a provision, management takes
into account the probability of an unfavourable outcome and whether
the amount of the obligation can be estimated with su cient reli-
ability.  e fact that an action has been launched or a claim asserted
against the Group, or that a legal dispute has been disclosed in the
Notes, does not necessarily mean that any provision recognised for
the associated risk is adequate.
All assumptions and estimates are based on the circum-
stances prevailing and assessments made at the balance sheet date.
For the purpose of estimating the future development of the busi-
ness, a realistic assessment was also made at that date of the eco-
nomic environment likely to apply in the future to the di erent
sectors and regions in which the Group operates. In the event of
developments in this general environment that diverge from the
assumptions made, the actual amounts may di er from the esti-
mated amounts. In such cases, the assumptions made and, where
necessary, the carrying amounts of the relevant assets and liabilities
are adjusted accordingly.
At the date of preparation of the consolidated  nancial
statements, there is no indication that any signi cant change in the
assumptions and estimates made will be required, so that on the
basis of the information currently available it is not expected that
there will be any signi cant adjustments in  nancial year  to
the carrying amounts of the assets and liabilities recognised in the
 nancial statements.
9 Consolidation methods
 e consolidated  nancial statements are based on the 
 nancial statements of Deutsche Post  and the subsidiaries, joint
ventures and associates included in the consolidated  nancial state-
ments, prepared in accordance with uniform accounting policies as
at  December  and audited by independent auditors.
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