DHL 2010 Annual Report Download - page 171

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 business, a
realistic assessment was also made at that date of the economic
environ ment likely to apply in the future to the di erent sectors
and regions in which the Group operates. In the event of develop-
ments in this general environment that diverge from the assump-
tions made, the actual amounts may di er from the estimated
amounts. In such cases, the assumptions made and, where neces-
sary, the carrying amounts of the relevant assets and liabilities are
adjusted accordingly.
At the date of preparation of the consolidated  nancial state-
ments, 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.
 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
statements, prepared in accordance with uniform accounting poli-
cies as at  December  and audited by independent auditors.
Acquisition accounting for subsidiaries included in the
consolidated  nancial statements uses the purchase method of
accounting.  e cost of the acquisition corresponds to the fair
value of the assets given up, the equity instruments issued and the
liabilities incurred or assumed at the transaction date. Acquisition-
related costs are recognised as expenses. Contingent consideration
is recognised at fair value at the date of initial consolidation.
Joint ventures are proportionately consolidated in accordance
with  . Assets and liabilities, as well as income and expenses,
of jointly controlled companies are included in the consolidated
 nan cial statements in proportion to the interest held in these
companies. Proportionate acquisition accounting as well as rec-
ognition and measurement of goodwill use the same methods as
applied to the consolidation of subsidiaries.
Companies on which the parent can exercise signi cant in-
 uence (associates) are accounted for in accordance with the equity
method using the purchase method of accounting. Any goodwill is
recognised under investments in associates.
Intra-group revenue, other operating income and expenses as
well as receivables, liabilities and provisions between consolidated
companies are eliminated. Intercompany pro ts or losses from
intra-group deliveries and services not realised by sale to third par-
ties are eliminated.
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 meas-
ured at their fair values at the date of acquisition. One of the most
important 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 independ-
ent 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, their measurement
can be based on the opinion of an independent external expert
valuer, depending on the type of intangible asset and the complex-
ity 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 annually
and also whenever there are indications that goodwill has become
impaired.  e recoverable amount of the  must then be calcu-
lated.  is amount is the higher of fair value less costs to sell and
value in use. Determining 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 .  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 as-
sessment. 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 suf-
 cient reliability.  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 a provision
is recognised for the associated risk.
Deutsche Post DHL Annual Report 
Consolidated Financial Statements
Notes
Basis of preparation
157