DHL 2010 Annual Report Download - page 46

Group management
 after asset charge sees signifi cant increase
Since , Deutsche Post DHL has used  a er asset charge  as a key
performance indicator.  is calculated by subtracting a cost of capital component,
orasset charge, from reported .
By including the cost of capital in our business decisions, we encourage all divisions
to use resources e ciently and organise our operating business to sustainably increase
value and generate cash  ow. In the reporting year,  served as a key performance
indicator in addition to , which was also used as a basis to determine management
remuneration.
To calculate the asset charge, the net asset base is multiplied by the weighted average
cost of capital .  e asset charge calculation is based on unconsolidated  gures
and is performed each month so that we can also take  uctuations in the net asset base
into account during the year.
All of our divisions use a standard calculation for the net asset base.  e key com-
ponents of operating assets are intangible assets, including goodwill, property, plant and
equipment and net working capital. Provisions and operating liabilities are subtracted
and reduce the net asset base accordingly.
 e Group’s  is de ned as the weighted average net cost of interest-bearing
liabilities and equity, taking into account division-speci c risk factors in a beta factor
according to the Capital Asset Pricing Model.
In order to optimise the gearing ratio and thus decrease , two factors must be
weighed against each other:
1
Since equity investors expect higher yields than debt investors,  declines asthe
gearing ratio increases (leverage e ect).
2 If the gearing ratio is high, the company’s credit rating has a tendency to decrease
and borrowing costs to increase and negate the positive e ects of the decline
in from a certain point onwards.
In , we determined a standard  of .  across the divisions, which also
represents a minimum target for projects and investments within the Group. Although
the currently low interest rate on the capital market would allow us to reduce the ,
we le it as is in the reporting year in order to prevent our internal resource allocation
to be in uenced byshort-term  uctuations in capital market interest rates and at the
same time keep  comparable with previous years.
.  calculation
Reported 
Asset charge
= Net asset base
× Weighted average cost of capital
 after asset charge
. Net asset base calculation
Operating assets
• Intangible assets
including goodwill
• Property, plant and equipment
• Trade receivables,
other operating assets
Operating liabilities
• Operating provisions
• Trade payables,
other operating liabilities
Net asset base
Deutsche Post DHL Annual Report 
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