DHL 2013 Annual Report Download - page 159

Other provisions
Other provisions are recognised for all legal or constructive
obligations to third parties existing at the balance sheet date that
have arisen as a result of past events, that are expected to result
in an outow of future economic benets and whose amount can
be measured reliably. ey represent uncertain obligations that are
carried at the best estimate of the expenditure required to settle
the obligation. Provisions with more than one year to maturity are
discounted at market rates of interest that reect the region and
time to settlement of the obligation. e discount rates used in the
nancial year were between .  and   (previous year: . 
and . ). e eects arising from changes in interest rates are
recognised in net nancial income / net nance cost.
Provisions for restructurings are only established in accord-
ance with the aforementioned criteria for recognition if a detailed,
formal restructuring plan has been drawn up and communicated
to those aected.
e technical reserves (insurance) consist mainly of out-
standing loss reserves and  (incurred but not reported claims)
reserves. Outstanding loss reserves represent estimates of obliga-
tions in respect of actual claims or known incidents expected to give
rise to claims, which have been reported to the company but which
have yet to be nalised and presented for payment. Outstanding
loss reserves are based on individual claim valuations carried out
by the company or its ceding insurers.  reserves represent
estimates of obligations in respect of incidents taking place on or
before the balance sheet date that have not been reported to the
company. Such reserves also include provisions for potential errors
in settling outstanding loss reserves. e company carries out its
own assessment of ultimate loss liabilities using actuarial methods
and also commissions an independent actuarial study of these each
year in order to verify the reasonableness of its estimates.
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 subsequent 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.
      
e convertible bond on Deutsche Post  shares is split
into an equity and a debt component, in line with the contractual
arrangements. e debt component, less the transaction costs, is
reported under nancial liabilities (bonds), with interest added up
to the issue amount over the term of the bond using the eective
interest method (unwinding of discount). e value of the call
option, which allows Deutsche Post  to redeem the bond early
if a specied share price is reached, is attributed to the debt com-
ponent in accordance with  .. e conversion right is classi-
ed as an equity derivative and is reported in capital reserves. e
carrying amount is calculated by assigning to the conversion right
the residual value that results from deducting the amount calcu-
lated separately for the debt component from the fair value of the
instrument as a whole. e transaction costs are deducted on a
proportionate basis.
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  , deferred taxes are recognised for
temporary dierences between the carrying amounts in the 
nancial statements 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 carry-
forwards and which are likely to be realised. In compliance with
 . (b) and  . (b), deferred tax assets or liabilities were
only recognised for temporary dierences between the carrying
amounts in the  nancial statements and in the tax accounts of
Deutsche Post  where the dierences arose aer  January .
No deferred tax assets or liabilities are recognised for temporary
dierences resulting from initial dierences in the opening tax
accounts of Deutsche Post  as at  January . Further details
on deferred taxes from tax loss carryforwards can be found in
Note .
In accordance with  , deferred tax assets and liabilities
are calculated using the tax rates applicable in the individual coun-
tries at the balance sheet date or announced for the time when the
deferred tax assets and liabilities are realised. e tax rate of . 
(unchanged from the previous year) applied to German Group
companies comprises the corporation tax rate plus the solidarity
surcharge, as well as a municipal trade tax rate that is calculated
as the average of the dierent municipal trade tax rates. Foreign
Group companies use their individual income tax rates to calculate
deferred tax items. e income tax rates applied for foreign com-
panies amount to up to   (previous year:  ).
155Deutsche Post DHL 2013 Annual Report
Notes
Basis of preparation
Consolidated Financial Statements