Deutsche Post AG Annual Report 2014

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FY2014 Annual Report · Deutsche Post AG

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2014 annual report

WHEN YOU
THINK OF
LOGISTICS

Deutsche Post AG

Headquarters

Investor relations

53250 Bonn

Germany

dpdhl.com

WE WANT YOU

TO THINK

OF US.

2 — 11

THINK DEUTSCHE POST DHL

WE WANT YOU
TO THINK
OF US.

2 — 11
THINK DEUTSCHE POST DHL

Contents

THINK

DEUTSCHE POST DHL

Wherever, whatever, whenever and however you want
to send or receive an item.

2 — 11

12 — 15

TO OUR SHAREHOLDERS
“Ten reasons why
I’m proud of
Deutsche Post DHL
Group.”

Dr Frank Appel
Chief Executive Officer

BOARD OF MANAGEMENT

16 — 17

OUR BUSINESS

I — II

The postal service for Germany.
The logistics company for the world.

SELECTED KEY FIGURES

Cross-references

Websites

Deutsche Post DHL Group — 2014 Annual Report

GROUP MANAGEMENT REPORT 19 — 102

21 General Information
42 Report on Economic Position
70 Deutsche Post Shares
73 Non-Financial Figures
85 Post-Balance-Sheet Date Events
86 Opportunities and Risks
97 Expected Developments

CORPORATE GOVERNANCE

105 Report of the Supervisory Board
109 Supervisory Board
110 Mandates
111 Corporate Governance Report

CONSOLIDATED
FINANCIAL STATEMENTS

133 Income Statement
134 Statement of Comprehensive Income
135 Balance Sheet
136 Cash Flow Statement
137 Statement of Changes in Equity
138
213 Responsibility Statement
214 Independent Auditor’s Report

Notes to the Consolidated Financial Statements

103 — 130

131 — 214

FURTHER INFORMATION

215 — 224

217
Index
218 Glossary
219 Graphs and Tables
220 Locations
222 Multi-Year Review
224 Contacts
224 Publication Service
224 Financial Calendar

NO MATTER
HOW MUCH
YOU WANT

Online shoppers look forward to
receiving their new purchases quickly.
That’s why DHL delivers orders six
days a week. Once collected from the
retailer, DHL processes the items
directly. Parcels sent via DHL generally
arrive at your door on the very next
workday.

Deutsche Post DHL Group — 2014 Annual Report

AND WHAT
INTERESTS YOU

The Track & Trace service, available via
the DHL app or website, allows you
to check the status of your item at any
time, and with our parcel notification
and preferred-day services you can
receive free notification of the delivery
date via text message or e-mail and
select the day on which you wish to
receive your parcel.

THINK

ONLINE

Deutsche Post DHL Group — 2014 Annual Report

WHERE
YOU ARE

In Germany, people can send and
receive parcels day and night at
2,750 Packstations in over 1,600 cities
and communities – that’s more than
280,000 parcel compartments. The first
Packstations are also already being
installed in other European countries.

THINK

FLEXIBLE

Deutsche Post DHL Group — 2014 Annual Report

AND WHEN
YOU HAVE TIME

The online supermarket Allyouneed.com
allows you to shop conveniently online
and have fresh groceries delivered to
your door. At no extra charge, you can
choose to have DHL’s courier service
deliver your order right away or in
selectable time slots in the evening
on the same day.

Deutsche Post DHL Group — 2014 Annual Report

ON WHOM
YOU CAN RELY

DHL is the Official Logistics Partner of
Canada-based Cirque du Soleil, globally
known for its spectacular and breath-
taking live performances. DHL provides
event logistics support for the world-
touring live shows, assisting with trans-
port between event locations as well
as many other requirements.

Deutsche Post DHL Group — 2014 Annual Report

THINK

SPECIALISED

AND WHICH
GOALS YOU ARE
PURSUING

Formula E stands for sustainable
techno logies, teamwork and innovation.
DHL not only transports the electric
racing cars, its environmentally friendly
logistics solutions also take care of all
the associated equipment. The series is
made up of nine races over ten months.

Deutsche Post DHL Group — 2014 Annual Report

THINK

GLOBAL

WHETHER
YOU LOVE
THE COUNTRY

Deutsche Post DHL Group operates in
more than 220 countries and territories,
and more than 480,000 employees work
for us around the world. This global
network offers you customised logistics
solutions no matter where you are in
the world.

Deutsche Post DHL Group — 2014 Annual Report

OR CALL
A MEGACITY
HOME

Growing cities and emerging markets
require new logistics solutions. DHL
is investing constantly in the network,
adding, for instance, new facilities in
the Middle East and North Africa region.

Deutsche Post DHL Group — 2014 Annual Report

10
10

NO MATTER
HOW URGENT IT
MIGHT BE

DHL is looking into ways to deliver urgent
items quickly and reliably in inner cities.
In New York, Los Angeles and London,
we offer a helicopter service to deliver
time-critical documents, primarily for
bank customers.

Deutsche Post DHL Group — 2014 Annual Report

11
11

THINK

INNOVATIVE

AND WHAT
THE FUTURE
MIGHT BRING

In the autumn of 2014, on the island
of Juist which lies off the North Sea
coast of Germany, DHL launched a
globally unique test project. The DHL
Parcelcopter is the first unmanned
aircraft to take flight in line operations,
delivering parcels from the mainland
to a chemist on the island as part of an
express and emergency supply service.

Deutsche Post DHL Group — 2014 Annual Report

DR FRANK APPEL
Chief Executive Officer

Deutsche Post DHL Group — 2014 Annual Report

To our Shareholders

“Ten reasons why
I’m proud of
Deutsche Post DHL
Group.”

DR FRANK APPEL

1 WE CAN LOOK BACK PROUDLY OVER A RICH HISTORY. The first postal services in Germany
were introduced 525 years ago. With DHL Express we created the international express business
nearly 50 years ago. Around 200 years ago Danzas − which became DHL Global Forwarding,
Freight − laid the cornerstone of the modern freight forwarding business. Moreover, our DHL Supply
Chain division has redefined logistics and developed innovative approaches for supply chains time
and again. This history not only demonstrates that we have tradition of which we can be proud, but
also that we rise to new challenges – often assuming the role of the initiator of change ourselves.

2 WE HAVE THE COURAGE TO DO THE RIGHT THING AT THE RIGHT TIME. Change demands
strength and can sometimes also be painful. I remember our retraction from the US domestic
express business in 2009 only too well. Today, we continue to face many challenges. For years, our
Mail business has been experiencing a structural shift towards digital communication. Falling mail
volumes and rising costs require new solutions. Our Supply Chain business is being reorganised
to take better advantage of our size. In our Global Forwarding business unit, we are in the midst
of a fundamental transformation. With our strategic project, New Forwarding Environment,
we are redefining how we work – and are, once again, more than ready to do what has to be done
to secure our competitiveness and profitability for the long term.

3 WE HAVE A SOUND CORPORATE STRATEGY. The title of this annual report is intrinsic to our
strategy: when people think logistics, we want them to think Deutsche Post DHL Group. It’s an
ambitious goal. Our “Strategy 2020: Focus.Connect.Grow.” underscores our goal of becoming the
company that defines the logistics industry. In recent years we have made enormous strides as we
work towards becoming the provider of choice for customers, the employer of choice for our staff
and an attractive investment for shareholders. We aim to build on these successes and continue
to grow. Increasing digitalisation, booming e-commerce and momentum in the emerging countries
number amongst the most important drivers of our business.

Deutsche Post DHL Group — 2014 Annual Report

4 WE HAVE UNPARALLELED CAPABILITIES. We are the number one provider of mail and parcel
services in Germany and among the top providers for leading air and ocean freight logistics. DHL
Express is the world’s most international business, while our Supply Chain business is the largest
provider of third-party logistics solutions globally. We are who we are as a result of our dedication
and commitment.

5 WE HAVE A GREAT CUSTOMER VALUE PROPOSITION. We invest in our network and expand it
where transport volumes are increasing. Our aim is to be internationally renowned not only as a
highly customer-centric company but also as leaders in quality. The fact that customer satisfaction
with our products and services is continuously rising in all divisions shows that we are achieving
this goal. Our mail transit times and parcel business are amongst the best in Europe. Furthermore,
the Net Promoter Approach allows DHL customers to rate our services immediately, which, in turn,
makes it possible for us to continuously turn feedback into improvements.

6 WE HAVE PIONEERING IDEAS. Another strength of Deutsche Post DHL Group is our tremendous
willingness to innovate. In the Post - eCommerce - Parcel division, this is evident in our E-POST
products, parcel recipient services, our own online shopping portal and the parcelcopter. In the
Express division, we have developed the Certified International Specialist training programme for
our employees − and will now launch the initiative throughout the Group. In the Global Forwarding,
Freight division, we expanded our portfolio of multimodal and temperature-controlled transport,
whilst in the Supply Chain division, our focus remains on developing innovative services for key
sectors such as Life Sciences & Healthcare. Our innovations are more than just new ideas. To us,
innovation is also about being willing to change things and continuously improve the way we work.

7 WE ARE CONSTANTLY IMPROVING. For years now, establishing the First Choice methodology
of continuous improvement within our organisation has been part of corporate strategy. Beyond
its tools and methodologies, the First Choice Way epitomises our ambitious goal of striving for
improvement every day.

8 WE DELIVER GOOD RESULTS. Deutsche Post DHL Group reached the targets it had set for
financial year 2014. Although the global economy only registered cautious growth overall, the
Group’s revenue, EBIT and operating cash flow all increased. The German parcel business and the
inter national express business continued to generate dynamic growth. Earnings in the Supply
Chain division likewise benefited from a high level of new business and continuing restructuring

Deutsche Post DHL Group — 2014 Annual Report

To our Shareholders

programmes, whereas margin pressure and transformation costs had a noticeable impact on the
Global Forwarding, Freight division. Overall, we achieved positive results and our shareholders
should benefit from this. At the Annual General Meeting we shall propose a dividend of €0.85
per share for 2014. Forecasts for 2015 indicate that the global economy will continue to experience
regional variations and only demonstrate moderate growth on the whole. We expect consolidated
EBIT to reach €3.05 billion to €3.20 billion in financial year 2015. The Post - eCommerce - Parcel
division is likely to contribute at least €1.3 billion to this figure. Compared with the previous year,
we expect an additional improvement in overall earnings to €2.1 billion to €2.25 billion in the DHL
divisions. The Corporate Center / Other result is projected to remain at around €−0.35 billion.
The earnings forecast that we presented for 2016 remains unchanged.

“We reached the targets
we set for 2014.”
9 WE HAVE COMMITTED PEOPLE. More than 480,000 people work for Deutsche Post DHL
Group around the world. That makes us one of the largest employers and trainers – a responsibility
of which I am more than conscious. For this reason, I am all the more pleased that it’s not only
our customers who are increasingly satisfied with our performance, it’s also our employees. We
systematically survey our employees across the entire Group on an annual basis. During the past
six years, favourable answers to the key performance indicator, Employee Engagement, has risen
from 61 % to 72 %. Our employees are not only committed to their workplace, but to their commu-
nities as well. The high number of participants in our annual Global Volunteer Day demonstrates
their deep commitment to voluntary work. It is also wonderful to see our employees donate to
help their colleagues in need.

10 WE SERVE A GREATER PURPOSE. Everything we do brings people closer together − through
mail and parcel deliveries, express shipments, goods transported by road, rail, air and ocean,
and the warehouses we operate. We connect people, and in doing so, improve their lives. This is
our commitment – no more and no less. Indeed, it’s one of the many reasons why I’m proud of
Deutsche Post DHL Group.

Deutsche Post DHL Group — 2014 Annual Report

From left to right:

KEN ALLEN
Express

Born in 1955
Member since February 2009
Appointed until February 2017

JÜRGEN GERDES
Post - eCommerce - Parcel

Born in 1964
Member since July 2007
Appointed until June 2020

MELANIE KREIS
Human Resources

Born in 1971
Member since October 2014
Appointed until October 2017

JOHN GILBERT
Supply Chain

Born in 1963
Member since March 2014
Appointed until March 2017

DR FRANK APPEL
Chief Executive Officer
(from 2 July 2014
until 30 October 2014
additionally in charge
of Human Resources)

Born in 1961
Member since November 2002,
CEO since February 2008
Appointed until October 2017

LAWRENCE ROSEN
Finance,
Global Business Services

Born in 1957
Member since September 2009
Appointed until August 2017

ROGER CROOK
Global Forwarding,
Freight

Born in 1957
Member since March 2011
Appointed until March 2019

Left the company
during the reporting year:

BRUCE EDWARDS
Supply Chain

Born in 1955
Member from March 2008 until 10 March 2014

ANGELA TITZRATH
Human Resources

Born in 1966
Member from May 2012 until 1 July 2014

Deutsche Post DHL Group — 2014 Annual Report

Board of Management

Deutsche Post DHL Group — 2014 Annual Report

OUR BUSINESS

Deutsche Post is Europe’s largest mail services operator and market leader in the German mail and parcel market.
Its port folio ranges from mail and parcel delivery to secure electronic communication and dialogue marketing for private
and business customers.

The postal service for Germany.

Post - eCommerce - Parcel

BUSINESS UNITS
AND PRODUCTS

Post
Mail products
Advertising mail
Press products
Import/export
Philately
Postbus

eCommerce - Parcel
Domestic parcel services
Cross-border shipment of goods
Fulfilment services
Special services

CUSTOMERS
40.6 million households
3.7 million business customers
2.0 million retail outlet customers
per day

NETWORK
IN GERMANY
82 mail centres
33 parcel centres
2,750 Packstations
Around 29,000 retail outlets /
points of sale
About 64 million letters
per working day
More than 3.4 million parcels
per working day

OUR APPS
A large number of the services we offer in Germany
and, to some extent, in other domestic markets, are
also accessible via mobile devices.

Post Mobil

E-POST

SIMSme

MEIN
PAKET
Das Magazin

DHL Paket

Mein Paket

Allyouneed

The coach service
for Germany
In the first year of oper-
ation, around 60 Postbus
coaches have travelled
more than 12.4 million
kilometres. They connect
over 60 destinations across
Germany. We rely primarily
on quality, convenience
and safety as well as on
an attractive line network.

Tägliche Post
digital empfangen

Rechnungen
mit zwei Klicks
bezahlen

Sich im Internet
ausweisen

„Verbindet, was mein
Leben einfacher
macht.“

Sicher online
kommunizieren

Online auf
Dokumente zugreifen
und organisieren

Nutzen Sie epost.de

E-Post organisiert, denkt mit, erledigt.

Vereinfacht Ihr Leben, damit mehr Zeit
für die wirklich wichtigen Dinge bleibt.

Jetzt registrieren unter epost.de.

NEW CAMPAIGN FOR E-POST
With E-POST, communication processes become digital, easier, faster and more cost
efficient – personally and professionally. Together E-POSTBRIEF, digitisation solutions,
end-to-end encryption, hybrid delivery and value-added services optimally cover
the requirements of all customer groups.

OUR BUSINESS

DHL is the leading global brand in the logistics industry. DHL’s family of divisions offer an unrivalled portfolio of logistics services
ranging from national and international parcel delivery, international express, road, air and ocean transport to industrial supply
chain management.

The logistics company for the world.

Express

PRODUCTS
Time Definite
Same Day
Day Definite

REGIONS
Europe
Americas
Asia Pacific
MEA (Middle East and Africa)

NETWORK
More than 220 countries and territories
More than 500 airports
3 main global hubs
More than 45,000 Service Points
More than 250 dedicated aeroplanes
32,800 vehicles
2.5 million customers

LOGISTICS
NEWSROOM

www.logistics-newsroom.com

Global Forwarding,
Freight

Supply Chain

BUSINESS UNITS
AND PRODUCTS

Global Forwarding
Air freight
Ocean freight
Industrial projects

Freight
Full truckload
Part truckload
Less than truckload
Intermodal transport

REGIONS

Global Forwarding
More than 150 countries
and territories

Freight
More than 50 countries in
Europe, the CIS, the Middle East,
North Africa and the USA

LOCATIONS

Global Forwarding
More than 850 branches

Freight
More than 180 branches

BUSINESS UNITS
AND PRODUCTS

Supply Chain
Warehousing
Distribution
Managed transport
Value-added services
Supply Chain management
and consulting

Williams Lea
Marketing Solutions
Office Document Solutions
Customer Correspondence
Management

REGIONS
North America
Latin America
Asia Pacific
United Kingdom & Ireland
Mainland Europe, Middle East,
Africa

DHL BLOG

www.delivering-
tomorrow.com

Deutsche Post DHL Group — 2014 Annual Report

01 SELECTED KEY FIGURES

EBIT

+3.5%

Profit from operating activities.
2014: €2,965 million
(previous year, adjusted: €2,865 million)

CONSOLIDATED NET PROFIT
FOR THE PERIOD
2014

2013

€2,071 million

€2,091 million

After deduction of non-controlling interests.

EARNINGS PER SHARE
2014

2013

Basic earnings per share.

€ 1.71

€ 1.73

DIVIDEND PER SHARE
2014

€0.85 1

€0.80

2013

1 Proposal.

Revenue

Profit from operating activities (EBIT)

Return on sales 2

EBIT after asset charge (EAC)

Consolidated net profit for the period 3

Free cash flow

Net debt 4

Return on equity before taxes

Earnings per share 5

Dividend per share

Number of employees 7

1
Note 4.
2 EBIT / revenue.
3 After deduction of non-controlling interests.
4 Calculation
5 Basic earnings per share.
6 Proposal.
7 Headcount at the end of the year, including trainees.

Group Management Report, page 60.

EMPLOYEES

488,824

Headcount at the end of 2014.
(Previous year, adjusted: 479,690)

REVENUE 2014

€56,630 MILLIOn

(Previous year, adjusted: €54,912 million)

RETURN ON SALES 2014

5.2%

(Previous year: 5.2%)

2013
adjusted 1

2014

+ / – %

Q 4 2013
adjusted 1

Q 4 2014

+ / – %

€ m

€

54,912

56,630

2,865

2,965

5.2

1,501

2,091

1,669

1,499

26.7

1.73

0.80

5.2

1,551

2,071

1,345

1,499

26.3

1.71

0.85 6

479,690

488,824

3.1

3.5

–

3.3

–1.0

–19.4

0.0

–

14,450

15,365

888

6.1

–

772

905

5.9

–

640

1,128

1,114

–

6.3

1.9

–

–17.1

–1.2

–

–1.2

0.64

0.53

–17.2

6.3

1.9

–

19 — 102

GROUP MANAGEMENT
REPORT

AA GROUP MANAGEMENT REPORTGROUP MANAGEMENT REPORT

21 GENERAL INFORMATION
Business model and organisation
21
24
Business units and market positions
30 Objectives and strategies
35
Group management
37 Disclosures required by takeover law
41
41

Remuneration of the Board of Management and the Supervisory Board
Research and development

42 REPORT ON ECONOMIC POSITION
42 Overall Board of Management assessment of the economic position
42
43
47
47
50
59 Net assets
61

Forecast / actual comparison
Economic parameters
Significant events
Results of operations
Financial position

Business performance in the divisions

70 DEUTSCHE POST SHARES

73 NON-FINANCIAL FIGURES
73
77
78
80
81
84

Employees
Health and safety
Corporate responsibility
Procurement
Customers and quality
Brands

85 POST-BALANCE-SHEET DATE EVENTS

86 OPPORTUNITIES AND RISKS
86 Overall Board of Management assessment of opportunity and risk situation
86 Opportunity and risk management processes
Categories of opportunities and risks
90

97 EXPECTED DEVELOPMENTS
97 Overall Board of Management assessment of the future economic position
97
97
98
100
101
102 Development of further indicators relevant for internal management

Forecast period
Future organisation
Future economic parameters
Revenue and earnings forecast
Expected financial position

AGroup Management Report — GeneraL InForMa TIon — Business model and organisation

GENERAL INFORMATION

Deutsche Post DHL Group is the world’s leading mail and logistics services provider. The
Deutsche Post and DHL corporate brands represent a one-of-a-kind portfolio of logistics
(DHL) and communications (Deutsche Post) services. We provide our customers with both
easy-to-use standardised products as well as innovative and tailored solutions ranging
from dialogue marketing to industrial supply chains. More than 480,000 employees in over
220 countries and territories form a global network focused on service, quality and sustain-
ability. With programmes in the areas of environmental protection, disaster management
and education, we are committed to social responsibility.

Business model and organisation

Four operating divisions

Deutsche Post AG is a listed corporation domiciled in Bonn, Germany. The Group is
organised into four operating divisions, each of which is under the control of its own
divisional headquarters and subdivided into business units for reporting purposes.

We are the only provider of universal postal services in Germany. Our Post -
eCommerce - Parcel division handles both domestic and international mail and we are
specialists in dialogue marketing, nationwide press distribution services and all the elec-
tronic services associated with mail delivery. Outside Germany, we also offer domestic
parcel services in other markets and we are constantly expanding our portfolio of
cross-border parcel and goods shipping services.

Our Express division offers time-definite courier and express services to business
and private customers in more than 220 countries and territories, the most compre-
hensive network in the world.

Our Global Forwarding, Freight division handles the transport of goods by rail,
road, air and sea, with services extending from standardised container transport to
highly specialised end-to-end solutions for industrial projects and solutions tailored
to specific sectors.

Our Supply Chain division delivers customised logistics solutions to its customers
based on globally standardised modular components including warehousing, transport
and value-added services. Moreover, through Williams Lea, we offer specialised Busi-
ness Process Outsourcing (BPO) and marketing communications solutions tailored to
customers’ needs.

We consolidate the internal services that support the entire Group, including
Finance, IT, Procurement and Legal, in our Global Business Services (GBS). This allows
us to make even more efficient use of our resources whilst reacting flexibly to the rapidly
changing demands of our business and our customers.

Group management functions are centralised in the Corporate Center.

Glossary, page 218

Deutsche Post DHL Group — 2014 Annual Report

A.01 organisational structure of Deutsche Post DHL Group

Corporate Center

Finance, Global
Business Services
Board member
• Lawrence Rosen

Functions
• Corporate

Accounting &
Controlling

• Corporate Finance
• Global Business
Services: Procure-
ment, Real Estate,
Finance Operations,
Legal Services etc.
• Investor Relations
• Corporate Audit &

Security

• Taxes

Human resources
Board member
• Melanie Kreis

Post -
eCommerce -
Parcel
Board member
• Jürgen Gerdes

Functions
• Corporate HR Germany
• Corporate HR

Business units
• Post
• eCommerce -

Standards & Programs

Parcel

• Corporate HR
International

• HR Post - eCommerce -

Parcel

• HR Express
• HR Global Forwarding,

Freight

• HR Supply Chain
• HR Finance, GBS, CSI, CC

CEO
Board member
• Dr Frank Appel

Functions
• Board Services
• Corporate First Choice
• Corporate Legal
• Customer Solutions &

Innovation

• Corporate Office
• Corporate

Development

• Corporate Executives
• Corporate Heritage &
Industry Associations

• Corporate

Communications &
Responsibility
• Corporate Public

Policy & Regulation
Management

Divisions

Global
Forwarding,
Freight
Board member
• Roger Crook

Business units
• Global

Forwarding

• Freight

Supply Chain
Board member
• John Gilbert

Business units
• Supply Chain
• Williams Lea

express
Board member
• Ken Allen

regions
• Europe
• Americas
• Asia Pacific
• MEA (Middle
East and
Africa)

Changes in Board of Management

On 11 March 2014, the Supervisory Board appointed John Gilbert as Board Member
responsible for the Supply Chain division. He succeeded Bruce Edwards, who stepped
down from the Board of Management on 10 March 2014 but continued to act in an
advisory capacity for the company until his retirement on 30 September 2014.

Angela Titzrath resigned from the Board of Management on 2 July 2014. On 31 Oc-
tober 2014, Melanie Kreis was appointed as Board Member for Human Resources and
as Labour Director. In the interim period, Chief Executive Officer Dr Frank Appel
assumed the corresponding responsibilities in a dual role.

organisation in the board departments for Post - eCommerce - Parcel
and Human resources adjusted

At the beginning of 2014, parts of the domestic parcel business outside Germany were
consolidated in the Mail division, which was renamed Post - eCommerce - Parcel (PeP)
as part of the Group’s strategic development. This business was previously part of the
Express and Global Forwarding, Freight divisions.

The Human Resources board department was reorganised effective 1 October 2014
in line with Strategy 2020. It now comprises the following corporate departments:
Corporate HR Germany, Corporate HR Standards & Programs and Corporate HR
Inter national. The divisional HR functions and the HR Finance, GBS, CSI and CC func-
tion continue to report to the Board member for Human Resources. The Corporate
Executives corporate department was assigned to the board department of the Chief
Executive Officer.

Deutsche Post DHL Group — 2014 Annual Report

Group Management Report — GeneraL InForMa TIon — Business model and organisation

a presence that spans the globe
Deutsche Post DHL Group operates around the world. The map shows our most import-
ant locations.

Table A.02 provides an overview of market volumes in key regions. Our market

Further information, page 220 f.

shares are detailed in the business units and market positions chapter.

Page 24 ff.

A.02 Market volumes 1

Global

Air freight (2013): 25m tonnes 2

Ocean freight (2013): 34m TEU s 3

Contract logistics (2013): €168bn 4

International express market (2013): €20bn 5

Germany

Mail communication (2014): €4.6bn 6

Dialogue marketing (2014): €17.0bn 6

Parcel (2014): €8.8bn 6

americas

europe

Middle east / africa

asia Pacific

Air freight
(2013): 6.4m tonnes 2

Ocean freight
(2013): 6.2m TEU s 3

Contract logistics
(2013): €49.7bn 4

International
express market
(2013): €7.2bn 5

Air freight
(2013): 4.5m tonnes 2

Air freight
(2013): 1.4m tonnes 2

Ocean freight
(2013): 2.7m TEU s 3

Contract logistics
(2013): €4.8bn 4

Ocean freight
(2013): 5.1m TEU s 3

Contract logistics
(2013): €61.7bn 4

International
express market
(2013): €6.0bn 5

Road transport
(2013): €165bn 7

Air freight
(2013): 12.4m tonnes 2

Ocean freight (2013):
19.9m TEU s 3

Contract logistics
(2013): €51.9bn 4

International
express market
(2013): €6.5bn 5

1 Regional volumes do not add up to global volumes due to rounding.
2 Data based solely on export freight tonnes. Source: Copyright © IHS, 2014. All rights reserved.
3 Twenty-foot equivalent units; estimated part of overall market controlled by forwarders.

4 Source: Transport Intelligence.
5 Includes express product Time Definite International. Country base: America, Europe, Asia Pacific, AE, SA, ZA (Global);

BR, CA, CL, CO, CR, GT, MX, PA, PE, US (Americas); AT, DE, DK, ES, FR, IT, nL, RU, TR, UK (Europe); Cn, HK, In, JP, KR, SG (Asia Pacific).
Source: Market Intelligence, 2014, annual reports and desk research.

6 Company estimates.
7 Country base: AT, BE, CZ, DE, DK, ES, FI, FR, HU, IT, nL, nO, PL, PT, SE, SI, SK, UK.

Source: MI Study DHL 2014 (based upon Eurostat, financial publications, IHS Global Insight.

Deutsche Post DHL Group — 2014 Annual Report

A.03 Domestic mail communication
market, business customers, 2014

Market volume: €4.6 billion

35.5 % Competition

Business units and market positions

POST - ECOMMERCE - PARCEL DIVISION

The postal service for Germany

As Europe’s largest postal company, we deliver about 64 million letters every working
day in Germany. We offer all types of products and services to both private and business
customers, ranging from physical, hybrid and electronic letters and merchandise to
special services such as cash on delivery, registered mail and insured items. Our E-POST
product provides a secure, confidential and reliable platform for electronic communi-
cation. It allows companies, public authorities and private individuals to send secure
communications whilst reducing processing costs.

In the reporting year, the domestic market for business communications was
approx imately €4.6 billion (previous year: €4.5 billion). In order to accurately reflect
actual market conditions, we look at the competition-relevant business customer mar-
ket and include those companies that provide services to business customers, i. e., both
competitors with end customers as well as consolidators who offer partial services. At
64.5 %, our market share declined slightly compared with the prior year (64.7 %). As at
1 January 2014, we raised the price of standard letters from €0.58 to €0.60. The prices
for registered and forwarded mail were also increased.

64.5 % Deutsche Post

Targeted and cross-media advertising

Source: company estimate.

A.04 Domestic dialogue
marketing market, 2014

Market volume: €17.0 billion

13.0 % Deutsche Post

87.0 % Competition

Source: company estimate.

Our portfolio of dialogue marketing products allows advertisers to reach specific cus-
tomer target groups. We offer end-to-end services – from address management to
conception and creation, to print, shipment, response management and performance
evaluation. Dialogue marketing is cross-media, personalised and automated. Dialogue
campaigns can be managed entirely automatically so that digital and physical items
reach recipients during the same period of time. Our digital services allow companies to
determine their target groups by analysing the visitors to their websites or online shops.
The German dialogue marketing market comprises advertising mail along with
telephone and e-mail marketing. In 2014, this market shrank by 1 % to a volume of
€17.0 billion. Advertisers in industries such as retail have decreased or restructured their
expenditures. The insolvencies of the publishing house Weltbild and the do-it-yourself
chain Max Bahr were also felt. Our share of this highly fragmented market increased
slightly to 13.0 % (previous year: 12.8 %). In the reporting year, we raised the price of our
Infopost product for the first time in 18 years.

Deutsche Post DHL Group — 2014 Annual Report

Group Management Report — GeneraL InForMa TIon — Business units and market positions

A.05 International mail market
(outbound), 2014

Market volume: €6.4 billion

15.1 % DHL

84.9 % Competition

Source: company estimate.

A.06 Domestic parcel market, 2014

Market volume: €8.8 billion

43.0 % DHL

57.0 % Competition

Source: company estimate.

Sending mail and parcels internationally

We carry mail and lightweight merchandise shipments across borders and provide in-
ternational dialogue marketing services. We offer international shipping services for
business customers in key European mail markets and by offering innovative products
we set ourselves apart from the competition. For example, we are developing inter-
national shipping solutions for consumers (B2C) in the growing e-commerce sector.
Our port folio also comprises consulting and services for all physical and digital dia-
logue marketing needs. Furthermore, we offer physical, hybrid and electronic written
communications for international business customers. Customers outside Germany
benefit from our expertise and experience in order to do business successfully in the
German market.

The global market volume for outbound international mail was approximately
€6.4 billion in 2014 (previous year: €6.7 billion). The decline in lightweight letters and
press products could only be compensated for in part by the increase in heavier items.
Our market share declined to 15.1 % compared with the previous year.

Worldwide portfolio of parcel and e-commerce services

At around 29,000 parcel acceptance points in Germany, we offer many innovative par-
cel services via over 13,000 retail outlets, 12,000 Paketshops, 2,750 Packstations and
around 1,000 Paketboxes. Our customers can choose whether they wish to receive their
parcels in the evening, on the same day or even as soon as possible. The new parcel
boxes allow parcels to be securely sent and received from home around the clock. We
help our business customers to grow their online retail businesses. Our shopping por-
tal, MeinPaket.de, provides small and medium-sized retailers with an additional sales
channel. On request, we can even cover the entire logistics chain through to returns
management. We are developing the online food retailing segment at our online super-
market, Allyouneed.com, and our 2-Man-Handling offers a solution for delivering
furniture ordered online.

The German parcel market volume totalled around €8.8 billion in 2014 (previous

year: €8.2 billion). We expanded our market share to 43.0 % (previous year: 42.3 %).

In the future, we intend to offer the experience we have gained in e-commerce in
Germany to many important markets around the world. In Europe, we have, to this end,
already connected more than 1,000 Paketshops, planned Packstations and introduced
six-day delivery in the Netherlands. Outside Europe, the well-established business of
Blue Dart Express in India will provide a foundation for further e-commerce services
in Asia. In the United States, we are increasingly developing into a service provider for
the e-commerce industry. We have expanded the existing shipping routes in and out
of the most important international markets, for example, from Germany, the United
Kingdom and the United States to China.

Deutsche Post DHL Group — 2014 Annual Report

Glossary, page 218

EXPRESS DIVISION

Leading provider of international express services

In the Express division, we transport urgent documents and goods reliably and on time
from door to door. Our network spans more than 220 countries and territories, in which
some 80,000 employees provide services to more than 2.5 million customers. As a
global network operator that applies standardised processes, we are constantly optimis-
ing our service to keep our customer commitments and respond specifically to custom-
ers’ wishes. All of this makes us the leading provider of international express services.

International time-definite shipments are our core business

Our main product is Time Definite International (TDI), which offers pre-defined deliv-
ery services. We also provide industry-specific services to complement this product. Our
Medical Express transport solution, which is tailored specifically to customers in the
Life Sciences & Healthcare sector, for example, offers various types of thermal packaging
for temperature-controlled, chilled and frozen content. These shipments are specially
monitored due to their sensitive nature. Collect and Return is used predominantly by
customers in high-tech industries. Technical products are collected from the user, taken
in for repairs and then returned.

our virtual airline

As an express service provider, we operate a global network consisting of several airlines,
some of which we own 100 %. With an annual average of 3.4 million transported tonnes,
our virtual airline is one of the leading international air freight carriers.

The combination of our own and purchased capacities, which include varied terms
of contract, allows us to respond flexibly to fluctuating demand. We do not enter into
long-term capacity obligations until our demand for cargo space exceeds the existing
offering. We use the available cargo space for our main product TDI for long-term freight
contracts – block space agreements – and we sell temporary excess capacity on the air
freight market. The largest buyer of this is the DHL Global Forwarding business unit.

In the reporting year we launched further initiatives to renew our fleet. In Europe
and the United States in particular, we are replacing aircraft that have reached the end
of their life cycle with newer aircraft which are more efficient and have higher capacity.

Market leadership in international express business extended

We succeeded again in extending our leading market position in the international
express business: at 34 % (previous year: 33 %), we were well ahead of the competition
in 2013. In financial year 2014, the international express business continued to benefit
from e-commerce and the growing importance of small and medium-sized enterprises
in international trade.

Deutsche Post DHL Group — 2014 Annual Report

Group Management Report — GeneraL InForMa TIon — Business units and market positions

expanding the network in the europe region

With a market share of 41 % (previous year: 40 %) in 2013, we were the leading provider
of international express shipments in the Europe region. In the reporting year, we com-
pleted the first construction stage of the expansion of our hub in Leipzig. We are also
investing in our network in the UK: by 2016 we plan to expand our East Midlands hub
as well as locations in Manchester and Heathrow, amongst others.

Strengthening market presence in the americas region

In the Americas region, we succeeded in strengthening our market presence. In 2013,
our market share rose one percentage point to 18 %. This positive development vali-
dates our decision to continue investing in the expansion and automation of our hub
in Cincinnati. We have also expanded our business in Mexico and strengthened our
position as the leading logistics service provider in the region with additional invest-
ments in our main hubs and locations.

Supporting growth in asia

With a market share of 44 % (previous year: 42 %) in the Asia Pacific region, we were able
to further expand our leading position in the international express market in 2013. In
response to rising demand, the second half of 2014 saw us break ground for our fourth
gateway in Tokyo, which will increase our capacity and enhance the standard of our
services. In addition, since November 2014 we have offered new intra-Asian flights that
connect Thailand, Vietnam, Malaysia and Hong Kong. In doing so, we are responding to
the growing business needs of our customers in these areas and reducing delivery times.

reliable partner in the MEA region

Business in the MEA (Middle East and Africa) region developed positively in the
reporting year. The political unrest in the Middle East, central and eastern Africa and
the Ebola outbreak present on-going challenges. Whilst ensuring the safety of our
employees and adhering to legal requirements, we nevertheless maintained our opera-
tions and proved ourselves to be a reliable partner to our customers.

Volume growth requires continued investment in our network. New facilities in
Saudi Arabia doubled our capacity to serve the region. In Dubai we completed the
region’s largest express service centre. This supports the expansion of trade relations
between both Saudi Arabia and the United Arab Emirates and their most important
partners such as China, Japan and the United States. In Egypt, we shall be offering
customs clearance services for the first time. In the Sub-Saharan Africa region we
increased our presence in the reporting year to well over 3,500 service points. Our
position there as an established logistics service provider is also evident in the fact that
relief organisations are repeatedly using us as a partner for transport to crisis areas.

A.07 european international
express market, 2013:1, 2 top 4

Market volume: €6.0 billion

10 % FedEx

12 % TnT

25 % UPS

41 % DHL

1 Includes the TDI express product.
2 Country base: AT, DE, DK, ES, FR, IT, nL, RU, TR, UK.

Source: Market Intelligence 2014, annual reports
and desk research.

A.08 americas international
express market, 2013:1, 2 top 4

Market volume: €7.2 billion

1 % TnT

18 % DHL

32 % UPS

46 % FedEx

1 Includes the TDI express product.
2 Country base: BR, CA, CL, CO, CR, GT, MX, PA, PE, US.

Source: Market Intelligence 2014, annual reports
and desk research.

A.09 asia Pacific international
express market, 2013:1, 2 top 4

Market volume: €6.5 billion

4 % TnT

11 % UPS

20 % FedEx

44 % DHL

1 Includes the TDI express product.
2 Country base: Cn, HK, In, JP, KR, SG.

Source: Market Intelligence 2014, annual reports
and desk research.

Deutsche Post DHL Group — 2014 Annual Report

GLOBAL FORWARDING, FREIGHT DIVISION

A.10 air freight market, 2013: top 4

The air, ocean and road freight forwarder

The Global Forwarding and Freight business units are responsible for air, ocean and road
freight transport within the Group. Our freight forwarding services not only include
standardised transports but also multimodal and sector-specific solutions as well as
individualised industrial projects.

Our business model is very asset-light, as it is based on the brokerage of transport
services between our customers and freight carriers. Our global presence ensures net-
work optimisation and the ability to meet the increasing demand for efficient routing
and multimodal transports.

The leader in a revived air freight market

The global air freight market grew in 2014, whereby volumes increased more signifi-
cantly than capacities. According to IATA, the global airline industry association, world-
wide freight tonne kilometres flown during the reporting year increased by 4.5 %. As
airlines brought more wide-body passenger aircraft into service, air freight rates saw
a decline in the first half of the year. In contrast, freighter capacities as a proportion of
overall capacities decreased to 37.6 % in the reporting year (previous year: 38.5 %), as
major freight carriers deployed their freighter aircraft more carefully. This situation, in
conjunction with a strong increase in demand, resulted in increased pressure on capacity
buying rates in the second half of the year. After transporting 2.2 million export freight
tonnes in the previous year, we remained the air freight market leader in 2014.

ocean freight market experiences surplus capacities and volatile freight rates

In the international ocean freight market, ocean carriers have put many new, larger
vessels into operation in recent years. Nevertheless, freight carriers have successfully
limited the effective supply increase – either by adjusting travel speeds, blank sailings
or capacity reallocations. Although ocean carriers have implemented higher freight
rates, they were unable to improve their profitability. As a result, market freight rates
remained very volatile, above all on the important container routes between Asia and
Europe. After transporting 2.8 million twenty-foot equivalent units in the previous year,
we remained the second-largest provider of ocean freight services in the reporting year.

Slight growth in european road freight market

The European road freight market grew slightly in 2014, with estimates between around
0.5 % and 2.5 % (previous year: –1 % to 1 %). The primary reason for this development
was above all the stabilised macroeconomic environment in Europe in the first half of
the year. Nevertheless, the market remains highly competitive. Due to our successful
service portfolio, DHL was able to slightly outperform market growth in the Freight
business unit.

Thousand tonnes 1

825 Panalpina

1,092 DB Schenker

1,134 Kuehne + Nagel

2,215 DHL

1 Data based solely on export freight tonnes.

Source: annual reports, publications
and company estimates.

A.11 ocean freight market, 2013: top 4

Thousand TEU s 1

1,495 Panalpina

1,891 DB Schenker

2,807 DHL

3,578 Kuehne + Nagel

1 Twenty-foot equivalent units.

Source: annual reports, publications
and company estimates.

A.12 european road transport
market, 2013: top 5

Market volume: €165 billion 1, 2

1.2 % Kuehne + Nagel

1.8 % Dachser

1.9 % DSV

2.6 % DHL

3.6 % DB Schenker

1 Country base: total for 18 European countries,

excluding bulk and specialities transport.
2 2012 and 2013 figures have been adjusted
with respect to the MI study 2013 using
current price information.

Source: MI Study DHL 2014 (based on Eurostat,
financial publications, IHS Global Insight).

Deutsche Post DHL Group — 2014 Annual Report

Group Management Report — GeneraL InForMa TIon — Business units and market positions

SUPPLY CHAIN DIVISION

Customer-centric outsourcing solutions in two business units

The Supply Chain division comprises the two business units Supply Chain and
Williams Lea. As the world’s leading contract logistics provider, DHL creates a
competitive advantage for its customers in the supply chain business by delivering
customised logistics solutions based on globally standardised modular components
including warehousing, transportation and value-added services. In the Williams Lea
business unit, we offer solutions for digital and document workflow, business support
services, communications and publishing, brand and marketing services as well as
optimised flow of information.

Contract logistics for a complex global marketplace

A highly complex, intertwined and rapidly changing global marketplace is the source
of unprecedented change for the supply chain industry and its customers. Stand-alone
warehousing and transportation operations cannot adequately respond to the fast pace
of business change and growing interconnectedness created by global commerce. Our
core business in Supply Chain comprises increasingly integrated logistics solutions that
combine value-added and management services with traditional fulfilment and dis-
tribution offerings. Planning, sourcing, vendor management, production, packaging,
repairs, returns and recycling are the new norm in contract logistics solutions. Through
the global standardisation and innovation of offerings such as service logistics, DHL’s
Supply Chain business will further solidify its already strong leadership position in
global contract logistics.

A.13 Logistics and value-added services along the entire supply chain

raw
materials

Inbound
transport

Production
flows

outbound
transport

Warehousing

Distribution

returns

DHL Supply Chain Services

1 Plan – Laying the foundation
for an efficient supply chain

3 Make – Supporting product

5 Deliver – Getting it where it

manufacturing

needs to be

A.14 Contract logistics market, 2013:
top 10

2 Source – Getting the materials

4 Store & Customise – Getting it

6 return – Bringing it back for repair

Market volume: €168 billion

at the time required

ready to sell

or when it’s not needed

Strategic market growth for increased market share

DHL remains the global market leader in contract logistics, with a market share of 8 %
(2013) and operations in more than 50 countries. The market is highly fragmented: the
top ten players only account for around 21 % of an estimated €168 billion market. We
lead the market in our key regions of North America, Europe and Asia Pacific and also
enjoy a very strong position in rapidly growing markets such as Brazil, India, China and
Mexico. We continue to make significant investments into infrastructure and talent in
these four key markets, strengthening local capabilities for growth.

1 % Sankyu Inc
1 % DB Schenker Logistics
1 % UPS
1 % Norbert Dentressangle
1 % Rhenus AG
1 % SnCF Geodis
2 % Hitachi
2 % CEVA
2 % Kuehne + Nagel

8 % DHL

Source: Transport Intelligence; figures estimated for
Rhenus AG and UPS; exchange rates: as at July 2014.

Deutsche Post DHL Group — 2014 Annual Report

Glossary, page 218

Emerging markets increasingly offer growth opportunities for more advanced
integrated logistics solutions as a result of growing consumerism and an increasing
demand for complex logistics solutions, above all for global e-commerce. Our global
scale, standardised value-added services and local knowledge give us a strong position
in emerging markets.

Industry expertise in key sectors

Customers value the innovation derived from our breadth of experience and depth of
knowledge in Automotive, Life Sciences & Healthcare, Technology, Consumer, Retail,
Engineering & Manufacturing, Energy and Chemicals.

Specialised sector solutions with a global focus on Life Sciences & Healthcare, Tech-
nology and Automotive will allow us to capitalise on market opportunities and accel-
erate growth.

The Life Sciences & Healthcare sector is increasingly outsourcing components of its
supply chains in response to cost and consolidation pressure. To meet our customers’
demands, we have developed solutions to comply with the high regulatory requirements
of this growth industry including direct and temperature-controlled transport. Demand
for service logistics and a variety of value-added services is increasing in the Technology
sector, creating business opportunities in both mature and emerging markets. In our
Automotive focus sector, production is shifting increasingly to emerging markets such as
China, India and Brazil, in which we already have a strong presence and targeted invest-
ment plans. Management services such as lead logistics provider (LLP) provide sustainable
growth opportunities in this highly competitive outsourcing sector.

Objectives and strategies

CORPORATE STRATEGY

Strategy 2015 implemented successfully

Customers and quality, page 81 ff.

Employees, page 73

Earnings, page 47 ff.

Since 2009, our Strategy 2015 has formed the Group-wide framework within which
we pursue three goals: we want to become the provider of choice for customers, the
employer of choice for our staff and an attractive investment for shareholders. Further-
more, we are committed to social responsibility. In the reporting year, we again made
important progress towards these goals. This is also reflected in customer satisfaction
rates, the results of our annual Employee Opinion Survey as well as the development of key
financial figures. Therefore, we feel it is the right time to set the course for future growth
and set the stage for further long-term success.

Deutsche Post DHL Group — 2014 Annual Report

Group Management Report — GeneraL InForMa TIon — Business units and market positions — Objectives and strategies

Introducing Strategy 2020: Focus.Connect.Grow.

Announced in April 2014, “Strategy 2020: Focus.Connect.Grow.” underscores
Deutsche Post DHL Group’s goal of becoming the company that defines the logistics
industry. We have outlined our strategic priorities for the coming years, providing fresh
impetus and at the same time continuing on the path we forged with Strategy 2015. We
aim to build on these successes and further accelerate our growth.

As a result of the timely preparations we undertook to accommodate changes in the
markets and customer needs, our company is equipped to benefit from the numerous
opportunities that exist. Some of the most important factors for our business in the
future will be increasing digitalisation, accelerated growth in the e-commerce segment
and the momentum in developing and emerging countries. Strategy 2020 sets priorities
for our investments and actions:

Focus: We concentrate on our core mail and logistics business and continue to
pursue our goal of being the provider, employer and investment of choice. We view
Deutsche Post DHL Group as a family of divisions, each focused on a well defined market
segment. All the while, these divisions are unified through a common understanding of
customer needs and linked by Group-wide service units. The divisions work together
where it makes sense.

Connect: We are further increasing connectivity within our organisation in order to
deliver consistent, first-class service to our customers. A central component of this is
Certified, our Group-wide initiative that enables all employees to gain specific skills and
knowledge relevant to their roles. It builds upon the Certified International Specialist
programme developed by our Express division and aims to certify each and every one
of our employees. In addition, we are developing Group-wide co-operation platforms
and processes, for example, operational processes and resources, increased digitalisation
and leadership development.

Grow: Our Grow pillar encompasses our growth plans, most specifically in e-com-
merce and emerging markets. We aim to expand our successful parcel business
in Germany and to export its successful model to other countries, both in terms of
domestic parcel delivery as well as in other e-commerce-related services. Emerging
markets also represent a priority focus. Our general aim is to increase our presence
where the long-term growth potential is greatest. By 2020 we shall significantly increase
our presence in emerging markets, with the goal of 30 % of Group revenue coming from
these economies by the year 2020. During the coming years we shall develop and assess
further initiatives intended to accelerate our company’s organic growth.

Our strategy is designed to establish a unique market presence by the year 2020 – both
geographically and in terms of our portfolios’ performance. Our aim is to be internationally
renowned not only as a highly customer-centric company but also as quality leaders. When
people think logistics, we want them to think Deutsche Post DHL Group.

Deutsche Post DHL Group — 2014 Annual Report

STRATEGY AND GOALS OF THE DIVISIONS

Strategic priorities of the divisions

The priorities of the operating divisions are anchored in the divisional business strategies.
Here, too, our focus is on strengthening our profitability.

A.15 Strategic priorities by division

Post - eCommerce -
Parcel

Moderately increase EBIT through improved
efficiency and investments in the growing parcel
business.

Mail and parcel strategy

express

Growing continuously with the TDI product
and improving service, whilst optimally utilising
the network and increasing yield.

Focus

Global Forwarding,
Freight

Introducing an optimised operating model
and growing sustainably in the difficult market
environment.

Good to Great

Supply Chain

Define the industry globally through standardised,
cost-efficient, high-quality and innovative solutions.

Focus.Connect.Grow.

Post - eCommerce - Parcel division

In line with Strategy 2020, we see four main drivers for the future success of our business.
Designing a market-based cost structure: To achieve this goal, we are adapting our
networks to changing market conditions and shipment structures. We are also cutting
costs wherever possible and sensible, whilst investing in innovation and growth areas.
Furthermore, we want to further increase the quality of our products and protect the
environment in the process. Our Parcel 2012 Production Concept has made our sorting
and transport more efficient and thereby lowered costs.

Providing the highest quality to our customers: We want to offer our customers the best
service at all times, at the highest level of quality and at reasonable prices. To this end,
we are modernising the sorting equipment and IT architecture in our mail network on
an on-going basis. We are investing in our parcel network and continually adapting it
to increasing volumes. Our goal is to also deliver 95 % of all parcels sent in Germany to
customers the next day. We not only operate by far the largest network of fixed- location
retail outlets in Germany, we also offer recipient services that make it considerably easier
for our customers to ship and receive parcels. Furthermore, we are expanding our suc-
cessful co-operation with retailers, particularly by way of our Paketshops.

Motivating our workforce and keeping them informed: The key to high quality and high
performance is happy and dedicated employees. That’s why we not only equip our work-
force with state-of-the-art tools, provide mail carriers with e-bikes and e-trikes, offer
counselling on health issues and, at some locations, make childcare available – we also
offer wages that are clearly above those paid by our competitors. Furthermore, we have
succeeded in creating more jobs. Dialogue with our employees is particularly import-
ant, which is why management regularly holds a variety of events to personally inform
around 18,000 employees about the current priorities and drivers of our business.

Deutsche Post DHL Group — 2014 Annual Report

Group Management Report — GeneraL InForMa TIon — Objectives and strategies

Tapping into new online and offline markets: We are taking advantage of our expertise
in physical communications to offer effective digital communications. The internet is
making it increasingly easy for customers to access our services, allowing them to cal-
culate and purchase postage and also locate retail outlets and Packstations online and
by mobile device. We are also investing in future growth areas in all our businesses:
beyond our E-POST product, we are a leading provider of target-group marketing in
digital media, provide advertisers with consistent, cross-media targeting and are the first
parcel delivery service in Germany to operate its own shopping portals. By acquiring
Allyouneed.com we have established an online supermarket, where together with retail
customers we are now piloting same-day food delivery. At MeinPaket.de we offer one
of the largest online marketplaces in Germany and we have also taken our expertise in
transport and network management into the recently deregulated German coach market
with the Postbus. As part of our Strategy 2020, we are working intensively to inter-
nationalise the eCommerce - Parcel business unit. In a number of new markets, we in-
tend to go beyond delivery services to offer domestic value-added e-commerce services.

EXPRESS division

In line with our strategic programme “Focus”, we have expanded our business, increased
our market share and strengthened our margins in recent years. In the reporting year,
our focus was on merging all areas to respond more flexibly and effectively to customer
requirements and changing economic parameters in the future. This will save costs and
enable a more rapid exchange of best practices.

Managing revenue and costs: Our return on sales rises when growing volumes lead
to economies of scale in the network, innovation and automation improve productiv-
ity and costs are strictly managed. We minimise indirect costs through simplified and
standardised processes. For example, we are streamlining our IT system architecture
step-by-step whilst paying particular attention to adherence to global standards and
quality requirements.

Structuring sales and prices: Using global campaigns, we specifically target small
and medium-sized businesses, which could benefit the most from increasing export.
We concentrate upon items whose size and weight optimally match our network and
thereby create economies of scale. In terms of our pricing policy, we encourage global
co- ordination and discipline. At the same time we also work to continuously improve
our customer approach. Our Insanely Customer Centric Culture programme is intended to
resolve problems more quickly and meet customer expectations more effectively.

Managing the network: Most of our costs are attributable to the air and ground net-
work. We replace aeroplanes with newer, more efficient, and thus more cost-effective air-
craft. We sell available cargo space to freight and forwarding companies, especially DHL
Global Forwarding, improving our network utilisation and reducing costs in the process.
On the ground, we are automating and standardising processes. For example, vehicles
are equipped by default with shelves and can be loaded directly from the conveyor belt.
We also plan our pickup and delivery routes to maximise time and cost savings.

Deutsche Post DHL Group — 2014 Annual Report

Customers and quality, page 82

Motivating our workforce: Our proven Certified International Specialist (CIS) train-
ing programme ensures that our employees have the requisite knowledge of the inter-
national express business at their disposal. Training is carried out in each function as
well as on a cross-functional basis delivered by our own employees, some of whom are
executives. This adds to mutual understanding whilst reinforcing a team atmosphere
and loyalty within the division. The modules under the Certified International Manager
(CIM) umbrella are for managers and are intended to strengthen the unified leadership
culture within the division. We want to sustainedly motivate our employees around the
world. Systematic and continuous recognition of outstanding performance is one way
of contributing to this.

GLOBAL FORWARDING, FREIGHT division

With our global product offering in air and ocean freight as well as in overland transport,
we aim to achieve growth that exceeds the market average and consolidate our leading
position. To achieve this goal, we are continuously expanding our product and service
portfolio and improving our internal processes.

expanding product and service portfolio: In the Global Forwarding business unit,
we are expanding the geographical coverage of our multimodal transport services, for
example, in Asia. Our offering covers the production and commercial centres of Shang-
hai and Suzhou in northern China, and the western city of Chengdu, which is one of
the main distribution centres and a hub for the high-tech sector and the automobile
industry. Since the beginning of 2014, we have offered the first temperature-controlled
rail service between China and Europe. Our new Railconnect service allows companies
of all sizes to better manage their inventory flows by dispatching shipments in smaller
consignments. In the overland transport business, our daily Eurapid service provides
fast, reliable and day-definite deliveries to Europe’s major markets. The number of par-
ticipating terminals doubled in the reporting year from 25 to 50.

Simplifying and standardising processes: With our strategic project New Forwarding
Environ ment (NFE), we are gradually introducing a forward-looking operating model
with efficient processes and state-of-the-art IT systems, which is intended to under-
pin our position as industry leader. NFE will allow us to manage our processes better,
standardise products and offer modular services. In future we intend to have a globally
harmonised and unified organisation with dedicated customer service, which will
allow customers to benefit from shorter response times. The new structure is also better
tailored to the needs of our customers’ products and ultimately delivers targeted, item-
specific information. We are increasing the transparency and quality of data for sales
volumes, customer figures, capacities, operations and freight. In the reporting year, NFE
was put into operation in additional countries. We intend to implement it throughout
the entire Global Forwarding business unit.

SUPPLY CHAIN division

We intend to define our industry globally through standardised, cost-efficient, high-
quality and innovative solutions. To achieve this whilst increasing our profitability, we
reviewed our business in the reporting year and defined a strategic framework with nine
initiatives and four supporting activities. In line with our Group strategy, our approach
is built on the three pillars of “Focus”, “Connect” and “Grow”.

Deutsche Post DHL Group — 2014 Annual Report

Group Management Report — GeneraL InForMa TIon — Objectives and strategies — Group management

Our Focus agenda is aimed at increasing our efficiency and quality through stand-
ardisation and reducing complexity. We intend to adopt best-in-class operating stand-
ards and roll them out worldwide. We also aim to establish a globally harmonised
process to enable innovative and customer-centric solutions. By applying First Choice
methodology and our best-practice solutions, we expect to improve our operational
performance.

The Connect pillar is about connecting our people and processes to achieve
efficiency gains on a global scale. A lean management structure and the use of shared
service centres will improve our cost structure and establish industry-wide best-in-class
functions. To accompany these organisational changes, we are training our staff using
the Certified Supply Chain Specialist (CSCS) programme which is based upon a proven
approach that was applied successfully by the Express division.

Finally, the Grow pillar focuses on shifting our portfolio to address those market
segments that offer the most potential for higher profitability and stronger growth. The
inclusion of more value-added services in our portfolio will help drive this shift. Likewise,
a pivot towards global business models for key sectors, such as Life Science & Healthcare,
will help accelerate future growth.

Group management

FINANCIAL PERFORMANCE INDICATORS

Impact on management compensation

Deutsche Post DHL Group uses both financial and non-financial performance indicators
in its management of the Group. The monthly, quarterly and annual changes in these
indicators are compared with the data from the prior year as well as the data indicated
in the plan to assist in making management decisions. The year-to-year changes in
financial and non-financial performance metrics portrayed here are also relevant for
calculating management remuneration.

The Group’s financial performance indicators are intended to preserve a balance
between profitability, efficient use of resources and sufficient liquidity. The performance
of these indicators in the reporting year is described in the Report on economic position.

Page 42 ff.

Profit from operating activities measures earnings power

A.16 EBIT calculation

The profitability of the Group’s operating divisions is measured as profit from operat-
ing activities (EBIT). EBIT is calculated as revenue and other operating income minus
materials expense and staff costs, depreciation, amortisation and impairment losses as
well as other operating expenses and adding net income from investments accounted
for using the equity method. Interest and other finance costs/other financial income are
deducted from or added to net financial income/net finance costs. To be able to compare
divisions, the return on sales is calculated as the ratio of EBIT to revenue.

Revenue

Other operating income

Materials expense

Staff costs

Depreciation, amortisation

and impairment losses

Other operating expenses

Net income from investments

accounted for using the equity method

Profit from operating activities (EBIT)

Deutsche Post DHL Group — 2014 Annual Report

A.17 EAC calculation

EBIT after asset charge promotes efficient use of resources

Since 2008, the Group has used EBIT after asset charge (EAC) as an additional key per-
formance indicator. EAC is calculated by subtracting the cost of capital component, or
asset charge, from EBIT. Making the asset charge a part of business decisions encourages
all divisions to use resources efficiently and ensures that the operating business is geared
towards increasing value sustainably whilst generating increasing cash flow.

To calculate the asset charge, the net asset base is multiplied by the weighted average
cost of capital (WACC). The asset charge calculation is performed each month so that
fluctuations in the net asset base can also be taken into account during the year.

All of our divisions use a standard calculation for the net asset base. The key com-
ponents of operating assets are intangible assets, including goodwill, property, plant and
equipment and net working capital. Operating provisions and operating liabilities are
subtracted from operating assets.

The Group’s WACC is defined as the weighted average net cost of interest-bearing
liabilities and equity, taking into account company-specific risk factors in accordance
with the Capital Asset Pricing Model.

A standard WACC of 8.5 % is applied across the divisions and this figure also repre-
sents the minimum target for projects and investments within the Group. The WACC is
generally reviewed once annually using the current situation on the financial markets.
However, the goal is not to match every short-term change but to reflect long-term
trends. To ensure better comparability with previous years, the WACC was maintained
at a constant level in 2014, compared to the previous years.

ensuring sufficient liquidity

Along with EBIT and EAC, cash flow is a further main performance metric used by
the Group management. This performance metric is targeted at maintaining sufficient
liquidity to cover all of the Group’s financial obligations from debt repayment and
dividends, in addition to operating payment commitments and investments.

Cash flow is calculated using the cash flow statement. Operating cash flow (OCF)
includes items that are related directly to operating value creation. It is calculated by
adjusting EBIT for changes in non-current assets (depreciation, amortisation and (rever-
sals of) impair ment losses, net income/loss from disposals), other non-cash income and
expense, dividends received, taxes paid, changes in provisions and other non-current
assets and liabilities. Net working capital remains a driver for OCF. Effective manage-
ment of net working capital is an important way for the Group to improve cash flow
in the short to medium term. Free cash flow (FCF) is calculated on the basis of OCF by
adding / subtracting the cash flows from capital expenditure, acquisitions and divesti-
tures as well as net interest paid. Free cash flow is considered to be an indicator of how
much cash is available to the company for dividend payments or the repayment of debt.
Given its higher relevance for the Group’s management and other stakeholders, we shall
use the Group FCF instead of OCF as financial Performance indicator from 2015 onwards.

EBIT

Asset charge

= Net asset base
× Weighted average cost of capital

(WACC)

EBIT after asset charge (EAC)

A.18 net asset base calculation

Operating assets

• Intangible assets
• Property, plant and equipment
• Goodwill
• Trade receivables

( included in net working capital)
• Other non-current operating assets

Operating liabilities

• Operating provisions

(not including provisions for
pensions and similar obligations)

• Trade payables

( included in net working capital)

• Other non-current operating liabilities

net asset base

A.19 Calculation of free cash flow

EBIT

Depreciation, amortisation

and impairment losses

Net income / loss from disposal

of non-current assets

Non-cash income and expense

Change in provisions

Change in other non-current assets

and liabilities

Dividends received

Income taxes paid

operating cash flow before
changes in working capital
(net working capital)

Changes in net working capital

net cash from /used in operating

activities (operating cash flow – OCF)

Cash inflow /outflow arising from
change in property, plant and
equipment and intangible assets

Cash inflow /outflow arising from
acquisitions /divestitures

Net interest paid

Free cash flow (FCF)

Deutsche Post DHL Group — 2014 Annual Report

Group Management Report — GeneraL InForMa TIon — Group management — Disclosures required by takeover law

NON-FINANCIAL PERFORMANCE INDICATOR

employee opinion Survey result as a management indicator

Our annual worldwide Employee Opinion Survey shows us how we are perceived as a
group from the perspective of our employees. We place particular significance on the
survey’s indication of Employee Engagement and of how employees rate the leader-
ship behaviour of their superiors. The Active Leadership indicator is thus used in the
calculation of bonuses for our executives. The results of the Employee Opinion Survey
carried out in the reporting year can be found in the Employees section.

Page 73

Disclosures required by takeover law

Disclosures required under sections 289 (4) and 315 (4) of the Handelsgesetzbuch (HGB –
German Commercial Code) and explanatory report

Composition of issued capital, voting rights and transfer of shares

As at 31 December 2014, the company’s share capital totalled €1,211,180,262 and was
composed of the same number of no-par value registered shares. Each share carries the
same statutory rights and obligations and entitles the holder to one vote at the Annual
General Meeting (AGM). No individual shareholder or group of shareholders is entitled
to special rights, particularly rights granting powers of control.

The exercise of voting rights and the transfer of shares are based on the general legal
requirements and the company’s Articles of Association, which do not restrict either of
these activities. Article 19 of the Articles of Association sets out the requirements that
must be met in order to attend the AGM as a shareholder and exercise a voting right. Only
persons entered in the share register shall be recognised as shareholders by the company.
The Board of Management is not aware of any agreements between shareholders that
would limit voting rights or the transfer of shares.

Members of the Board of Management receive stock appreciation rights (SAR s)
each year as a long-term remuneration component under the Long-Term Incentive Plan
provided that they invest in each tranche of the plan, preferably in Deutsche Post AG
shares but alternatively in cash. If a Board of Management member sells the shares
included in their personal investment for the tranche or disposes of their personal cash
investment before the scheduled waiting period of four years has expired, all SAR s from
that tranche will be forfeited.

As part of the Share Matching Scheme, participating Group executives are obligated
to use a portion of their annual bonus to purchase shares in the company. According
to the underlying terms, shares acquired under the scheme are subject to a four-year
lock-up period.

Shareholdings exceeding 10 % of voting rights

KfW Bankengruppe (KfW), Frankfurt am Main, is our largest shareholder, holding
around 21.0 % of the share capital. The Federal Republic of Germany holds an indirect
stake in Deutsche Post AG via KfW. According to the notifications we have received pur-
suant to sections 21 et seq. of the Wertpapierhandelsgesetz (WpHG – German Securities
Trading Act), KfW and the Federal Republic of Germany are the only shareholders that
own more than 10 % of the share capital, either directly or indirectly.

Deutsche Post DHL Group — 2014 Annual Report

appointment and replacement of members of the Board of Management

The members of the Board of Management are appointed and replaced in accordance
with the relevant legal provisions (sections 84 and 85 of the Aktiengesetz (AktG – German
Stock Corporation Act) and section 31 of the Mitbestimmungsgesetz (MitbestG – German
Co-determination Act)). In accordance with section 84 of the AktG and section 31 of the
MitbestG, appointments by the Supervisory Board shall be for a maximum term of five
years. Re-appointment or extension of the term of office is permitted for a maximum of
five years in each case. Article 6 of the Articles of Association stipulates that the Board
of Management must have at least two members. Beyond that, the number of board
members is determined by the Supervisory Board, which may also appoint a chairman
and deputy chairman of the Board of Management.

amendments to the articles of association

In accordance with section 119 (1), number 5 and section 179 (1), sentence 1 of the AktG,
amendments to the Articles of Association are adopted by resolution of the AGM. In
accordance with article 21 (2) of the Articles of Association in conjunction with sections
179 (2) and 133 (1) of the AktG, such amendments generally require a simple majority
of the votes cast and a simple majority of the share capital represented on the date of
the resolution. In such instances where the law requires a greater majority for amend-
ments to the Articles of Association, that majority is decisive. Under article 14 (7) of the
Articles of Association, the Supervisory Board has the authority to resolve amendments
to the Articles of Association in cases where the amendments affect only the wording.

Board of Management authorisation, particularly regarding issue and buy-back of shares

The Board of Management is authorised, subject to the consent of the Supervisory Board,
to issue up to 237,835,612 new, no-par value registered shares on or before 28 May 2018
in exchange for cash and/or non-cash contributions and thereby increase the company’s
share capital by up to €237,835,612.00 (Authorised Capital 2013, article 5 (2) of the
Articles of Association). When new shares are issued on the basis of Authorised Capital
2013, the shareholders are entitled in principle to subscription rights. Such rights may
only be disapplied subject to the requirements specified in article 5 (2) of the Articles of
Association and subject to the consent of the Supervisory Board. Details may be found
in article 5 (2) of the Articles of Association of the company.

Authorised Capital 2013 is a financing and acquisition instrument in accordance
with international standards that allows the company to increase equity quickly, flexibly
and cost-effectively. The authorised capital is equivalent to less than 20 % of the share
capital. Authorised Capital 2013, which originally amounted to €240 million, was used
once in the amount of €656,915.00 and once in the amount of €1,507,473.00 in financial
year 2014.

An AGM resolution was passed on 25 May 2011 authorising the Board of Manage-
ment, subject to the consent of the Supervisory Board, to issue bonds with warrants,
convertible bonds and/or income bonds as well as profit participation certificates, or
a combination thereof, in an aggregate principal amount of up to €1 billion, on one or
more occasions until 24 May 2016, thereby granting options or conversion rights for up
to 75 million shares having a total share in the share capital not to exceed €75 million.
The aforementioned authorisation was utilised in the full amount in December 2012 by
issuing a convertible bond in the aggregate principal amount of €1 billion.

No shares were issued to the bond holders in financial year 2014. As at 31 Decem-
ber 2014, the share capital was still increased on a contingent basis by up to €75 million

Deutsche Post DHL Group — 2014 Annual Report

Group Management Report — GeneraL InForMa TIon — Disclosures required by takeover law

in order to grant shares to the holders or creditors of the options, conversion rights
or conversion obligations arising from the resolution of 25 May 2011 after exercise of
their rights for the purpose of settling the entitlements related to the options or rights
or fulfilling the conversion obligations (Contingent Capital 2011, article 5 (3) of the
Articles of Association).

An AGM resolution was passed on 29 May 2013 authorising the Board of Manage-
ment, subject to the consent of the Supervisory Board, to issue bonds with warrants,
convertible bonds and/or income bonds as well as profit participation certificates, or a
combination thereof (hereinafter referred to collectively as “bonds”), in an aggregate
principal amount of up to €1.5 billion, on one or more occasions until 28 May 2018,
thereby granting options or conversion rights for up to 75 million shares with a total
share in the share capital not exceeding €75 million. The bond conditions may also
stipulate an obligation to exercise options or conversion rights or may entitle the com-
pany to grant the bond holders or creditors shares in the company in lieu of payment of
all or part of the sum of money owed, either at the time of maturity of the bonds or at
another time. The share capital is increased on a contingent basis by up to €75 million
in order to grant shares to the holders or creditors of the bonds after exercise of their
options or conversion rights or to fulfil their option or conversion obligations, or to
grant them shares in lieu of monetary payment (Contingent Capital 2013, article 5 (4)
of the Articles of Association). When issuing bonds, subscription rights may only be
disapplied subject to the terms of the aforementioned resolution and subject to the
consent of the Supervisory Board. Further details may be found in the motion adopted
by the AGM under agenda item 7 of the AGM of 29 May 2013.

Authorisation to issue bonds is standard practice amongst publicly listed companies.
This allows the company to finance its activities flexibly and promptly and gives it the
financial leeway necessary to take advantage of favourable market conditions at short
notice, for example by offering bonds with options or conversion rights, or conversion
obligations on shares in the company as a consideration within the context of company
mergers, and when acquiring companies or shareholdings in companies. To date, the
Board of Management has not exercised this authority.

An AGM resolution was passed on 27 May 2014 authorising the Board of Manage-
ment to issue up to 40 million performance share units with pre-emptive subscription
rights to a total of up to 40 million shares with a total share in the share capital not
exceeding €40 million, subject to the provisions of the authorisation resolution, on or
before 26 May 2019 to members of the management of entities in which the company
is the majority shareholder and to executives of the company and the entities in which
it is a majority shareholder. The performance share units may also be issued by entities
in which the company is the majority shareholder with the consent of the Board of
Management. The issue of shares arising from the subscription rights associated with
the performance share units depends upon certain performance targets being met after
expiry of a four-year waiting period, with it being possible to issue up to four shares for
every six subscription rights granted, if and insofar as performance targets for the share
price, which have been specified in detail, are met, and up to two shares if and insofar
as certain outperformance targets based on the percentage change of the STOXX Europe
600 Index are met. The share capital is increased on a contingent basis by up to €40 mil-
lion in order to grant shares in the company to the executives entitled to subscription
rights, in accordance with the provisions of the authorisation resolution (Contingent
Capital 2014, article 5 (5) of the Articles of Association). Further details may be found
in the motion adopted by the AGM under agenda item 8 of the AGM of 27 May 2014.

Deutsche Post DHL Group — 2014 Annual Report

The Performance Share Plan is intended to replace the programme established in
2006 to provide long-term incentive to executives by issuing stock appreciation rights
(SAR s).

Finally, the AGM of 27 May 2014 authorised the company to buy back shares on or
before 26 May 2019 up to an amount not to exceed 10 % of the share capital existing as
at the date of the resolution. Such authorisation is subject to the proviso that at no time
should the shares thus acquired, together with the shares already held by the company,
account for more than 10 % of the share capital. The shares may be purchased through
the stock market, a public offer, a public call for offers of sale from the company’s share-
holders or by some other means in accordance with section 53 a of the AktG. The shares
purchased may be used for any legally permissible purpose. In addition to a sale via the
stock exchange or by public offer to all shareholders, it is permitted in particular to use
the shares with pre-emptive shareholder subscription rights disapplied in accordance
with the provisions of the authorisation resolution or to call in the shares without an
additional resolution of the Annual General Meeting. Further details may be found in
the motion adopted by the AGM under agenda item 6 of the AGM of 27 May 2014.

In addition to this, the AGM of 27 May 2014 also authorised the Board of Manage-
ment, within the scope specified in agenda item 6, to acquire treasury shares, including
through the use of derivatives. This is to occur by servicing options that, upon their
exercise, require the company to acquire treasury shares (put options), by exercising
options that, upon their exercise, grant the company the right to acquire treasury shares
(call options), as a result of purchase agreements where there are more than two trading
days between conclusion of the purchase agreement for Deutsche Post shares and ser-
vicing by way of the delivery of Deutsche Post shares (forward purchases) or by servicing
or exercising a combination of put options, call options and/or forward purchases. All
share acquisitions using the aforementioned derivatives are limited to a maximum of
5 % of the share capital existing on the date of the resolution. The term of the individual
derivatives may not exceed 18 months, must expire by no later than 26 May 2019 and
be selected such that treasury shares may not be acquired by exercising the derivatives
after 26 May 2019. Further details may be found in the motion adopted by the AGM
under agenda item 7 of the AGM of 27 May 2014.

It is standard business practice amongst publicly listed companies in Germany for
the AGM to authorise the company to buy back shares. The authorisation to repurchase
shares using derivatives is merely intended to supplement share buy-back as a tool and
give the company the opportunity to structure share repurchase in an advantageous
manner.

Any public offer to acquire shares in the company is governed solely by law and the
Articles of Association, including the provisions of the Wertpapiererwerbs- und Über-
nahmegesetz (WpÜG – German Securities Acquisition and Takeover Act). The AGM
has not authorised the Board of Management to undertake actions within its sphere of
competence to block possible takeover bids.

Significant agreements that are conditional upon a change of control
following a takeover bid and agreements with members of the Board of Management
or employees providing for compensation in the event of a change of control

Deutsche Post AG took out a syndicated credit facility with a volume of €2 billion from
a consortium of banks. If a change of control within the meaning of the contract occurs,
each member of the bank consortium is entitled under certain conditions to cancel its
share of the credit line as well as its share of outstanding loans and request repayment.

Deutsche Post DHL Group — 2014 Annual Report

Group Management Report — GeneraL InForMa TIon — Disclosures required by takeover law —
Remuneration of the Board of Management and the Supervisory Board — Research and development

The terms and conditions of the bonds issued under the Debt Issuance Programme
established in March 2012 and of the convertible bond issued in December 2012 also
contain change of control clauses. In case of a change of control within the meaning of
the terms and conditions, creditors are, under certain conditions, granted the right to
demand early redemption of the respective bonds. Furthermore, a framework agree-
ment exists concerning the supply of fuel, based on which fuel in the value of a high
double-digit million amount was obtained in the reporting year and which, in case of
a change of control, grants the supplier the right to bring the business relationship to a
close without notice.

In the event of a change in control, any member of the Board of Management is
entitled to resign their office for good cause within a period of six months following the
change in control, after giving three months’ notice at the end of a given month, and
to terminate their Board of Management contract (right to early termination). In the
event the right to early termination is exercised or a Board of Management contract is
terminated by mutual consent within nine months of the change of control, the Board
of Management member is entitled to payment to compensate the remaining term of
their Board of Management contract. Such payment is limited to the cap pursuant to
the recommendation of No. 4.2.3 of the German Corporate Governance Code, with
the specification outlined in the remuneration report. With respect to options from
the Long-Term Incentive Plan, the Board of Management member will be treated as if
the waiting period for all options had already expired upon cessation of the Board of
Management contract. The options eligible for exercise may then be exercised within
six months of cessation of the contract. With regard to the Share Matching Scheme for
executives, the holding period for the shares will become invalid with immediate effect
in the event of a change of control of the company. In any such case, the employer will
be responsible for any tax disadvantages resulting from reduction of the holding period.
Exempt from this are taxes normally incurred after the holding period.

Remuneration of the Board of Management
and the Supervisory Board

The basic features of the remuneration system for the Board of Management and the
Super visory Board are described in the Corporate Governance Report under Remuner-
ation report. The latter also forms part of the Group Management Report.

Corporate Governance, page 117 ff.

Research and development

As a service provider, the Group does not engage in research and development activ-
ities in the narrower sense and therefore has no significant expenses to report in this
connection.

Deutsche Post DHL Group — 2014 Annual Report

REPORT ON ECONOMIC POSITION

Overall Board of Management assessment
of the economic position

Group achieves annual targets

Deutsche Post DHL Group reached the targets it had set for financial year 2014: the
Group’s revenue, EBIT and operating cash flow all increased. The German parcel busi-
ness in the Post - eCommerce - Parcel (PeP) division and the international business in
the Express division continued to generate dynamic growth. Earnings in the Supply
Chain division likewise benefited from a high level of new business and continuing
restructuring programmes, whereas margin pressure and transformation costs had a
noticeable impact on the Global Forwarding, Freight division. Capital expenditure in-
creased to around €1.9 billion as planned. Operating cash flow registered a positive
trend. The Group’s financial position remains solid on the whole in the opinion of the
Board of Management.

Forecast / actual comparison

A.20 Forecast /actual comparison

Targets 2014

results 2014

Targets 2015

EBIT
• Group: €2.9 billion to €3.1 billion.
• PeP division: around €1.3 billion 1.
• DHL divisions: €2.0 billion to €2.2 billion 2.
• Corporate Center /Other: better than €–0.4 billion.

EBIT
• Group: €2.97 billion.
• PeP division: €1.30 billion.
• DHL divisions: €2.02 billion.
• Corporate Center /Other: €–0.35 billion.

EBIT
• Group: €3.05 billion to €3.20 billion.
• PeP division: at least €1.3 billion.
• DHL divisions: €2.1 billion to €2.25 billion.
• Corporate Center /Other: around €–0.35 billion.

EAC
Will continue to develop positively and
increase slightly.

EAC
€1,551 million (previous year: €1,501 million) 3.

EAC
Will continue to develop positively and
increase slightly.

Cash flow
Net cash from operating activities will continue
to develop positively and increase slightly.

Cash flow
Net cash from operating activities:
€3,040 million (previous year: €2,989 million).

Cash flow
Free cash flow to cover at least dividend payment
in May 2015.

Capital expenditure (capex)
Increase investments to around €1.9 billion.

Capital expenditure (capex)
Invested: €1.88 billion.

Capital expenditure (capex)
Increase investments to around €2.0 billion.

Dividend distribution
Pay out 40 % to 60 % of the net profit as dividend.

Dividend distribution
Proposal: pay out 49.7 % of net profit as dividend.

Dividend distribution
Pay out 40 % to 60 % of the net profit as dividend.

employee opinion Survey 4
Increase approval rating of key performance
indicator Active Leadership to 71 %.

employee opinion Survey 4
Key performance indicator Active Leadership
achieves an approval rating of 71 %.

employee opinion Survey 4
Increase approval rating of key performance
indicator Active Leadership to 72 %.

1 Forecast increased over the course of the year.
2 Forecast narrowed over the course of the year.
3 Prior-period amounts adjusted due to a revised calculation basis.
4 Explanation
Group management, page 37.

Deutsche Post DHL Group — 2014 Annual Report

Group Management Report — rePor T on eConoMIC PoSITIon — Overall Board of Management assessment
of the economic position — Forecast / actual comparison — Economic parameters

Economic parameters

Global economy records irregular growth

The global economy registered cautious growth in 2014. Whereas the economic situation
in industrial countries improved with average GDP growth of approximately 0.5 per-
centage points, growth in the emerging markets dropped below the previous year’s level.
A number of major emerging economies – Russia in particular but also Brazil – saw an
economic downturn as a result of international conflict and falling commodities prices.
Total global economic output grew by 3.3 % in 2014 after adjustment for purchasing
power, as in the prior year. Global trade saw a similar increase (IMF: 3.1 %; OECD: 3.0 %).

A.21 Global economy: growth indicators in 2014

China

Japan

USA

Euro zone

Germany

Data estimated in some cases, as at 2 February 2015.
Source: Postbank research, national statistics.

Gross domestic
product (GDP)

Exports

Domestic
demand

7.4

0.3

2.4

0.8

1.5

6.1

8.0

3.1

3.7

n / a

0.2

2.6

0.8

1.2

Asia again generated the strongest economic momentum, with GDP increasing by 6.5 %
(previous year: 6.6 %). In China, exports weakened. The government’s efforts to stimulate
consumer demand failed to fully offset the declining export trend. GDP growth declined
to 7.4 % (previous year: 7.7 %), the lowest figure since the early 1990s. The Japanese econ-
omy was shaped by the hefty increase in value added tax in the spring. Although the year
started out strongly due to purchases being brought forward, a sharp decline ensued in
the second quarter before the economy began accelerating again towards the end of the
year. On the whole, private consumption suffered whilst exports rose significantly and
GDP increased by 0.3 % (previous year: 1.6 %).

In the United States, the upswing held firm. After a weak start to 2014 due to weather
conditions, the economy gained considerable momentum as the year progressed. Invest-
ments in machinery and equipment as well as construction increased quite significantly.
Consumer spending by private households also rose steadily. The growth trend remained
unaffected by both foreign trade and – as in the previous years – declining government
spending. GDP increased by 2.4 % (previous year: 2.2 %), which also benefited the labour
market in the form of a substantial decline in the unemployment rate.

In the euro zone, economic recovery was steady but sluggish. Private consumption
increased slightly by 0.8 %. Government spending also rose to a comparable extent.
Gross fixed capital formation increased by approximately 0.5 % and domestic demand
by 0.8 %. Foreign trade was also revitalised. All in all, this led to GDP growth of 0.8 %
(previous year: –0.5 %). Whereas the economic situation improved notably in some EU
member states, in others the recession persisted. The situation on the labour market
improved slightly. However, at an average of 11.6 % the unemployment rate remained
at a very high level.

Deutsche Post DHL Group — 2014 Annual Report

The German economy had a positive start to 2014. However, it then began to falter
primarily in light of on-going international political conflicts. Economic output largely
stagnated from the start of the second quarter. Nonetheless, overall GDP increased by
1.5 % (previous year: 0.1 %). Despite slumps in individual countries, growth in exports
slightly exceeded that in imports to reach nearly 4 %. Gross fixed capital formation in
fact expanded considerably by around 3 % on an annual average. Private consumption
increased by 1.1 % (previous year: 0.8 %). The labour market developed positively, with
the average annual number of employed workers increasing to 42.7 million (previous
year: 42.3 million).

Crude oil prices fall sharply

At the end of 2014, a barrel of Brent Crude was US$54.76 (previous year: US$111.49).
The price of oil fell by approximately 9 % on the previous year to just under US$99 per
barrel on average for the year. Over the course of the year, oil prices fluctuated massively
between US$54 and US$116. From the middle of 2014, the price of oil was in constant
decline as a result of a notable increase in global supply – not least due to rising oil
production in the US – in combination with only moderate demand. Moreover, OPEC
was not able to agree upon reduced production quotas.

A.22 Brent Crude spot price and euro / US dollar exchange rate in 2014

140

120

100

1.55

1.50

1.45

1.40

1.35

1.30

1.25

1.20

1.15

1.10

1.05

January

March

June

September

December

Brent Crude spot price per barrel in US dollars

Euro / US dollar exchange rate

Central bank’s expansive monetary policies weaken the euro

The sharply declining rate of inflation in the euro zone in conjunction with the weak
economy induced the European Central Bank (ECB) to lower its key interest rate by 0.10
percentage points in both June and September to reach 0.05 %. At the same time, the ECB
reduced its deposit rate by a total of 0.20 percentage points to reach –0.20 %. This means
that banks are obliged to pay penalty interest in that amount on their deposits with the
ECB. In addition, the central bank decided in September to buy covered bonds and asset-
backed securities. At the beginning of 2015 it then decided to purchase bonds in the
amount of €60 billion every month from March 2015 until at least September 2016. The
US Federal Reserve maintained its key interest rate at between 0 % and 0.25 % throughout
2014. However, it gradually reduced the volume of purchases of government bonds and
mortgage-backed securities and discontinued buying altogether in October.

Deutsche Post DHL Group — 2014 Annual Report

Group Management Report — rePor T on eConoMIC PoSITIon — Economic parameters

These differing monetary policy strategies had a substantial impact on the EUR-USD
exchange rate. The euro came under devaluation pressure in the middle of 2014 after
having traded at a range of between US$1.35 and over US$1.39 during the first half of
the year. By the end of the year, it had fallen 12.2 % to approximately US$1.21. Measured
against the pound sterling, the euro posted a loss of 6.7 %.

Low risk premiums for corporate bonds

The euro zone bond markets were shaped by significant declines in the rate of inflation
and expansive monetary policy in 2014. Added to this were increased expectations at
the end of the year that the ECB might start buying up government bonds at the be-
ginning of 2015, which led to a massive drop in capital market interest rates. Yields on
ten-year German government bonds declined to 0.54 % by the end of the year (previous
year: 1.93 %). Yields on long-term US government bonds also experienced significant
decreases. However, the market was propped up by the fact that demand for government
bonds did not weaken perceptibly despite the reduced and ultimately halted bond-buy-
ing behaviour of the US Federal Reserve. By the end of the year, yields on ten-year US
government bonds had fallen by 0.86 percentage points year-on-year to 2.17 %. Risk
premiums for corporate bonds fluctuated at a low level during the reporting year.

International trade continues to grow in emerging markets

Global trade recovered somewhat in 2014. Trade volumes (transported quantity in
tonnes) thus increased by 2.4 % in the reporting year. Exports from North America and
the Asia Pacific region rose at a greater rate than in other regions.

A.23 Trade volumes: compound annual growth rate 2013 to 2014

Exports

Asia Pacific

Europe

Latin America

MEA (Middle East and Africa)

North America

Imports

MEA
(Middle East

Asia Pacific

Europe

Latin America

and Africa) North America

5.9

5.3

1.5

3.6

9.6

3.8

–1.1

0.1

–2.2

3.9

2.4

–7.9

–1.8

–1.6

8.1

4.2

– 0.4

0.6

4.9

0.1

7.5

–1.1

0.4

– 8.0

0.6

Deutsche Post DHL Group — 2014 Annual Report

A.24 Major trade flows: 2014 volumes 1

Million tonnes

europe

2,729

MEA

295

asia Pacific

3,249

north america

439

Latin america

210

Intra-regional

More than 300

300 to 100

Less than 100

north america
Exports

364

162

241

Imports

168

159

129

293

832

749

Latin america
Exports

586

Imports

241

europe
Exports

Imports

324

507

648

242

293

445

1,208

1,161

129

1,264

353

162

242

MEA (Middle east /africa)
Exports

1,515

Imports

249

324

asia Pacific
Exports

725

855

249

353

159

Imports

1,515

507

168

2,240

648

364

586

3,113

MEA

Asia Pacific

Europe

North America

Latin America

1 Including raw materials.
Source: Copyright © IHS, 2014. All rights reserved, as at 31 December 2014.

Note 53

Legal environment

In view of our leading market position, a large number of our services are subject to
sector-specific regulation under the Postgesetz (PostG – German Postal Act). Further
information on this issue and legal risk is contained in the Notes to the consolidated
financial statements.

Deutsche Post DHL Group — 2014 Annual Report

Group Management Report — rePor T on eConoMIC PoSITIon — Economic parameters — Significant events —
Results of operations

Significant events

no significant events

There were no events with material effects on the Group’s net assets, financial position
and results of operations in financial year 2014.

Results of operations

A.25 Selected indicators for results of operations

Revenue

Profit from operating activities (EBIT)

Return on sales 2

EBIT after asset charge (EAC)

Consolidated net profit for the period 3

Earnings per share 4

Dividend per share

1
Note 4.
2 EBIT / revenue.
3 After deduction of non-controlling interests.
4 Basic earnings per share.
5 Proposal.

2013
adjusted 1

54,912

2,865

5.2

1,501

2,091

1.73

0.80

2014

56,630

2,965

5.2

1,551

2,071

1.71

0.85 5

€ m

€

Note 4

Changes in reporting and portfolio

The amendments to IFRS 10 (Consolidated Financial Statements) and IFRS 11 (Joint
Arrangements) have been required to be applied since 1 January 2014. This had a minor
overall impact on a number of items in the balance sheet and income statement. Detailed
information can be found in the Notes.

Since all joint ventures, associates and other equity investments held by
Deutsche Post DHL Group operate in the Group’s core business, we now report the
income and expenses of these investments under profit from operating activities (EBIT).
They had previously been included in net financial income/net finance costs.

Our domestic parcel business in Belgium, the Czech Republic, India, the Nether-
lands and Poland was consolidated in the Post - eCommerce - Parcel division at the
beginning of the year. This business was previously part of the Express and Global
Forwarding, Freight divisions.

In addition, the US company Sky Courier Inc. was reassigned from the Express

division to the Global Forwarding, Freight division in the first quarter.

The Belgian company Speedpack NV was transferred from the Global Forwarding,

Freight division to the PeP division effective 1 April 2014.

The prior-period amounts have been adjusted. We have not drawn attention to this

again in the following explanations to the Group management report.

DHL Global Forwarding & Co. LLC, Oman, was consolidated in May 2014 due to
contractual changes. The company had previously been accounted for using the equity
method.

Deutsche Post DHL Group — 2014 Annual Report

In the Global Forwarding, Freight division, we sold the activities of Hull Blyth
Angola Ltd. not belonging to the core business and Hull Blyth Angola Viagens e Turismo
Lda. effective 31 July. All of the company’s assets and liabilities had previously been
reclassified as held for sale.

Effective 18 December, we acquired StreetScooter GmbH, Aachen. The company
assists us in further improving the CO2 efficiency of our vehicle fleet by developing
cost-effective electric vehicles for us.

A.26 Consolidated revenue

Consolidated revenue up 3.1 %

€ m

2014

17,367

39,263

2013 adjusted

16,983

37,929

56,630

54,912

Germany

Abroad

Consolidated revenue rose by 3.1 % to €56,630 million in financial year 2014, although
negative currency effects reduced revenue by €407 million. The proportion of rev-
enue generated abroad remained stable year-on-year at 69.3 % (previous year: 69.1 %).
Changes in the portfolio reduced revenue by €152 million. At €15,365 million, rev enue
was up by €915 million in the fourth quarter of 2014; positive currency effects increased
this item by €322 million.

Other operating income rose from €1,962 million in the previous year to €2,016 mil-
lion. It increased by €101 million in the reporting year due to a change in the assess-
ment of settlement payment obligations assumed in the context of restructuring the US
express business, and other factors.

Higher transportation costs

Materials expense rose by €1,004 million to €32,042 million, especially due to higher
transportation costs and the increase in goods purchased and held for resale for the
business with the UK National Health Service in the Supply Chain division.

Staff costs rose by 2.3 % to €18,189 million. This was mainly attributable to the
increase in the number of employees in the Supply Chain division and higher labour
costs in the PeP division.

Depreciation, amortisation and impairment losses increased from €1,337 million to
€1,381 million, due mainly to impairment losses on aircraft and aircraft parts amounting
to €106 million.

At €4,074 million, other operating expenses were €211 million higher than in the
previous year (€3,863 million). The increase was attributable to a large number of
smaller factors.

A.27 Development of revenue, other operating income and operating expenses

Revenue

€m

56,630

+ / – %

3.1

• Growth trends in the German parcel and international

express businesses remain intact.

• Currency effects reduce consolidated revenue by

€407 million.

Other operating income

2,016

2.8 • Restructuring provisions for the US express business

Materials expense

32,042

reversed.

3.2

• Higher transportation costs.
• Higher cost of goods purchased and held for resale

in the Supply Chain division.

Staff costs

18,189

2.3

• Increased number of staff, mostly in the Supply Chain

division.

• Higher labour costs in the PeP division.

Depreciation, amortisation
and impairment losses

1,381

3.3 • Includes impairment losses on aircraft of €106 million.

Other operating expenses

4,074

5.5 • Large number of smaller factors.

Deutsche Post DHL Group — 2014 Annual Report

Group Management Report — rePor T on eConoMIC PoSITIon — Results of operations

Consolidated EBIT improves by 3.5 %

A.28 Consolidated EBIT

Profit from operating activities (EBIT) improved year-on-year, rising by 3.5 % to
€2,965 million in the reporting year. In the fourth quarter of 2014, it rose by 1.9 % to
€905 million.

€m

2014

By contrast, net finance costs widened from €293 million to €388 million due in
particular to lower interest income. The prior-year figure included interest income from
the reversal of a provision for interest on tax liabilities.

At €2,577 million, the reporting year’s profit before income taxes was up slightly on
the previous year (€2,572 million). Income taxes also increased, rising by €39 million
to €400 million. The effective tax rate was 15.5 %.

2013 adjusted

2,965

2,865

A.29 Total dividend and dividend
per no-par value share

€m

1,087

903

836

846

786

725 725

0.90

0.75

0.70

0.70 0.70

0.65

0.60 0.60

1,030

968

0.85

0.80

05 06 07 08 09

14 1

Dividend per no-par value share (€)

1 Proposal.

net profit and earnings per share down

Consolidated net profit for the period declined from €2,211 million to €2,177 million.
Of this amount, €2,071 million is attributable to shareholders of Deutsche Post AG and
€106 million to non-controlling interest holders. Earnings per share also decreased,
with basic earnings per share down from €1.73 to €1.71 and diluted earnings per share
declining from €1.66 to €1.64.

Dividend of €0.85 per share proposed

Our finance strategy calls for a payout of 40 % to 60 % of net profits as dividends as a
general rule. At the Annual General Meeting on 27 May 2015, the Board of Manage-
ment and the Supervisory Board will therefore propose a dividend of €0.85 per share
for finan cial year 2014 (previous year: €0.80) to shareholders. The distribution ratio
based on the consolidated net profit for the period attributable to Deutsche Post AG
shareholders amounts to 49.7%. The net dividend yield based on the year-end closing
price of our shares is 3.1%. The dividend will be distributed on 28 May 2015 and is tax-
free for shareholders resident in Germany. It does not entitle recipients to a tax refund
or a tax credit.

EBIT after asset charge increases

EAC improved from €1,501 million to €1,551 million in 2014, due primarily to the im-
proved profitability of the Express division. The asset charge rose by 3.7 %, which was
attributable predominantly to increased capital expenditure in the DHL divisions as well
as to the changes in net working capital of the Post - eCommerce - Parcel and Global
Forwarding, Freight divisions.

A.30 EBIT after asset charge (EAC)

€ m

EBIT

Asset charge

EAC

1 Prior-period amounts adjusted due to a revised calculation basis.

2013
adjusted 1

2,865

–1,364

1,501

2014

+ / – %

2,965

–1,414

1,551

3.5

–3.7

3.3

The net asset base increased by €1,185 million to €16,515 million in the reporting year.
Invest ments in IT systems, the purchase of freight aircraft and replacement and expan-
sion investments in warehouses, sorting systems and the vehicle fleet increased year-on-
year, as did intangible assets. Changes in net working capital additionally contributed
to the rising trend.

Deutsche Post DHL Group — 2014 Annual Report

The decline in operating provisions is due to the reversal of restructuring provisions
in the Express division, amongst other factors. The increase in other non-current assets
and liabilities contributed to the rise in the net asset base.

A.31 net asset base (non-consolidated)

€ m

Intangible assets and property, plant and equipment

Net working capital

Operating provisions (excluding provisions for pensions

and similar obligations)

Other non-current assets and liabilities

net asset base

1 Prior-period amounts adjusted due to a revised calculation basis.

31 Dec. 2013
adjusted 1

31 Dec. 2014

+ / – %

18,681

– 681

–2,654

–16

15,330

19,540

– 512

–2,505

– 8

16,515

4.6

–24.8

– 5.6

– 50.0

7.7

Financial position

A.32 Selected cash flow indicators

€ m

Cash and cash equivalents as at 31 December

Change in cash and cash equivalents

Net cash from operating activities

Net cash used in investing activities

Net cash used in financing activities

Note 4.

2013
adjusted 1

3,414

1,114

2,989

–1,765

–110

2014

2,978

–395

3,040

–1,087

–2,348

Financial management is a centralised function in the Group

The Group’s financial management activities include managing cash and liquidity; hedg-
ing interest rate, currency and commodity price risk; arranging Group financing; issuing
guarantees and letters of comfort and liaising with rating agencies. We steer processes
centrally, which allows us to work efficiently and successfully manage risk.

Responsibility for these activities rests with Corporate Finance at Group headquar-
ters in Bonn, which is supported by three Regional Treasury Centres in Bonn (Germany),
Weston (USA) and Singapore. These act as interfaces between headquarters and the
operating companies, advise the companies on all financial management issues and
ensure compliance with Group-wide requirements.

Corporate Finance’s main task is to minimise financial risk and the cost of capital,
whilst preserving the Group’s continuous financial stability and flexibility. In order to
maintain its unrestricted access to the capital markets, the Group continues to aim for a
credit rating appropriate to the sector. We therefore monitor the ratio of our operating
cash flow to our adjusted debt particularly closely. Adjusted debt refers to the Group’s net
debt, allowing for unfunded pension obligations and liabilities under operating leases.

Deutsche Post DHL Group — 2014 Annual Report

Group Management Report — rePor T on eConoMIC PoSITIon — Results of operations — Financial position

Maintaining financial flexibility and low cost of capital

The Group’s finance strategy builds upon the principles and aims of financial manage-
ment. In addition to the interests of shareholders, the strategy also takes creditor require-
ments into account. The goal is for the Group to maintain its financial flexibility and low
cost of capital by ensuring a high degree of continuity and predictability for investors.
A key component of this strategy is a target rating of “BBB+”, which is managed
via a dynamic performance metric known as funds from operations to debt (FFO to
debt). Our strategy additionally includes a sustained dividend policy and clear priorities
regarding the use of excess liquidity, which is to be used to gradually increase plan assets
of our German pension plans as well as paying special dividends or buying back shares.

A.33 Finance strategy

Credit rating

Investors

• Reliable and consistent information

from the company.

• Predictability of expected returns.

Group

• Preserve financial and strategic flexibility.
• Assure low cost of capital (WACC) 1.

• Maintain “BBB+” and “Baa1” ratings, respectively.
• FFO to debt used as dynamic performance metric.

Dividend policy

• Pay out 40 % to 60 % of net profit.
• Consider cash flows and continuity.

excess liquidity

• Increase plan assets of German pension plans.
• Pay out special dividends or execute share buy-back

programme.

Debt portfolio

• Syndicated credit facility taken out as liquidity reserve.
• Debt Issuance Programme established for issuing bonds.
• Issue bonds to cover long-term capital requirements.

1 Weighted average cost of capital

Group management, page 36.

Funds from operations (FFO) represents operating cash flow before changes in working
capital plus interest received less interest paid and adjusted for operating leases, pen-
sions and non-recurring income or expenses, as shown in the following calculation. In
addition to financial liabilities and surplus cash and near-cash investments, the figure
for debt also includes operating lease liabilities as well as unfunded pension liabilities.

Deutsche Post DHL Group — 2014 Annual Report

Note 44

A.34 FFO to debt

€ m

Operating cash flow before changes in working capital

Interest received 2

Interest paid

Adjustment for operating leases

Adjustment for pensions

Non-recurring income / expenses

Funds from operations (FFO)

Reported financial liabilities

Financial liabilities at fair value through profit or loss

Adjustment for operating leases

Adjustment for pensions

Surplus cash and near-cash investments 3

Debt

FFO to debt (%)

2013
adjusted 1

3,078

166

1,240

144

4,424

5,954

5,099

4,940

3,082

2014

3,061

188

1,283

122

4,397

5,169

145

5,953

7,174

2,256

12,871

15,895

34.4

27.7

Note 4.

1
2 The dividends received previously shown under this item have been included in operating cash flow before changes
in working capital as at 31 December 2014. To improve comparability, the figures for 2013 take the new presentation
into account.

3 Surplus cash and near-cash investments are defined as cash and cash equivalents and investment funds callable at sight,

less cash needed for operations.

The “FFO to debt” dynamic performance metric declined significantly in the reporting
year compared with the prior year primarily due to an increase in debt.

Funds from operations decreased slightly by €27 million to a total of €4,397 million,
due to the nominal decline in operating cash flow before changes in working capi-
tal, amongst other factors. The amount of interest paid increased, mainly because we
had to pay interest on the two bonds issued in 2013 for the first time. Operating re-
structuring payments in the amount of €74 million were recognised as non-recurring
income / expenses in the reporting year.

Debt increased by €3,024 million year-on-year to €15,895 million in financial year
2014. The increase was attributable mainly to the increase in the adjustment for pensions,
which resulted above all from the significant increase in pension obligations due to lower
discount rates. Further information on pensions is contained in the Notes. Another
factor contributing to the increase was the rise in lease obligations, which are reported
under adjustment for operating leases.

Cash and liquidity managed centrally

The cash and liquidity of our globally operating subsidiaries is managed centrally by
Corporate Treasury. More than 80 % of the Group’s external revenue is consolidated in
cash pools and used to balance internal liquidity needs. In countries where this practice
is ruled out for legal reasons, internal and external borrowing and investment are man-
aged centrally by Corporate Treasury. In this context, we observe a balanced banking
policy in order to remain independent of individual banks. Our subsidiaries’ intra-group
revenue is also pooled and managed by our in-house bank in order to avoid exter-
nal bank charges and margins through intercompany clearing. Payment trans actions
are executed in accordance with uniform guidelines using standardised processes and
IT systems. Many Group companies pool their external payment transactions in the
Group’s Payment Factory, which executes payments in the name of the respective com-
panies via Deutsche Post AG’s central bank accounts.

Deutsche Post DHL Group — 2014 Annual Report

Group Management Report — rePor T on eConoMIC PoSITIon — Financial position

Limiting market risk

The Group uses both primary and derivative financial instruments to limit market risk.
Interest rate risk is managed exclusively via swaps. Currency risk is hedged additionally
using forward transactions, cross-currency swaps and options. We pass on most of the
risk arising from commodity fluctuations to our customers and, to some extent, use
commodity swaps to manage the remaining risk. The parameters, responsibilities and
controls governing the use of derivatives are laid down in internal guidelines.

Flexible and stable financing

The Group covers its long-term financing requirements by means of equity and liabil-
ities. This ensures our financial stability and also provides adequate flexibility. Our most
important source of funds is net cash from operating activities.

We also have a syndicated credit facility in a total volume of €2 billion that guaran-
tees us favourable market conditions and acts as a secure, long-term liquidity reserve.
The facility was extended in 2013 and renewed in the reporting year by one year and now
runs until 2019. Moreover, there is an option to renew it for another year. The syndicated
credit facility does not contain any covenants concerning the Group’s financial indica-
tors. In view of our solid liquidity, it was not drawn down during the year under review.
As part of our banking policy, we spread our business volume widely and maintain
long-term relationships with the financial institutions we entrust with our business. In
addition to credit lines, we meet our borrowing requirements through other independ-
ent sources of financing, such as bonds and operating leases. Most debt is taken out
centrally in order to leverage economies of scale and specialisation benefits and hence
minimise borrowing costs.

No bonds were issued in the reporting year and a bond falling due in January 2014

was repaid. Further information on the existing bonds is contained in the Notes.

Note 46

Group issues sureties, letters of comfort and guarantees

Deutsche Post AG provides security for the loan agreements, leases and supplier con-
tracts entered into by Group companies, associates or joint ventures by issuing letters
of comfort, sureties or guarantees as needed. This practice allows better conditions to
be negotiated locally. The sureties are provided and monitored centrally.

Group’s credit rating improved

Credit ratings represent an independent and current assessment of a company’s credit
standing. Ratings are based upon a quantitative analysis and measurement of the an-
nual report and appropriate planning data. Qualitative factors, such as industry-specific
features and the company’s market position and range of products and services, are also
taken into account.

Deutsche Post DHL Group — 2014 Annual Report

In September 2014, Moody’s Investors Service (Moody’s) raised our credit rating
from “Baa1” to “A3” with a stable outlook. The decision was based upon the improved
profitability of our Group. For 2015, Moody’s continues to forecast slight economic
growth and is projecting a sustained improvement in the operating environment and
a further increase in profitability for Deutsche Post DHL Group. Our credit quality as
rated by Fitch Ratings has not changed from the rating of “BBB+” with a stable outlook.
Deutsche Post DHL Group remains well positioned in the transport and logistics
sector with these ratings. The following table shows the ratings as at the reporting date
and the underlying factors. The complete and current analyses by the rating agencies
and the rating categories can be found on our website.

dpdhl.com/en/investors

A.35 agency ratings

Fitch ratings

Long-term: BBB+
Short-term: F2
Outlook: stable

Moody’s Investors
Service

Long-term: A3
Short-term: P – 2
Outlook: stable

rating factors

• Well-integrated business profile.
• Dominant position in the domestic

mail and parcel market.

• Exposure to regulatory and litigation

risks (i. e., EU antitrust and state
aid investigations).

• Strong global footprint in the Express,

• Structural volume decline in the

Mail division due to secular changes
in the industry (i. e., competition
from electronic communication and
digitalisation).

• High exposure to global market

volatility through the DHL divisions.

• Exposure to global macroeconomic
trends in the logistics businesses.

• Structural decline of traditional

postal services.

Global Forwarding, Freight and
Supply Chain businesses.

• Improvements in the financial profile

after the completion of the sale
of Postbank shares.

• Recovery of the express business’s
profits and market share, offsetting
the challenging macroeconomic
environment.

• Scale and global presence as the
world’s largest logistics company.

• Large and robust mail business

in Germany.

• Success in restoring profitability

levels in the logistics activities and
its mail business.

• Moderate financial metrics,

conservative financial policy and
sound liquidity profile.

Liquidity and sources of funds

As at the balance sheet date, the Group had cash and cash equivalents in the amount of
€3.0 billion (previous year: €3.4 billion) at its disposal. A large portion of this is held
directly by Deutsche Post AG. Most of the cash is invested centrally on the money mar-
ket. These central short-term money market investments had a volume of €1.6 billion
as at the balance sheet date. Another €0.2 billion was invested in short-term money
market funds.

Deutsche Post DHL Group — 2014 Annual Report

Group Management Report — rePor T on eConoMIC PoSITIon — Financial position

The financial liabilities reported in our balance sheet break down as follows:

A.36 Financial liabilities

€ m

Bonds

Due to banks

Finance lease liabilities

Liabilities to Group companies

Financial liabilities at fair value though profit or loss

Other financial liabilities

Note 4.

2013
adjusted 1

5,088

198

213

325

5,954

2014

4,290

184

210

145

317

5,169

The decrease in financial liabilities is primarily the result of the bond in the amount of
€0.9 billion that was repaid in January 2014. Further information on recognised finan-
cial liabilities is contained in the Notes.

Operating leases remain an important source of funding for the Group. We mainly
use operating leases to finance real estate, although we also finance aircraft, vehicle fleets
and IT equipment.

Note 46

A.37 operating lease liabilities by asset class

€ m

Land and buildings

Aircraft

Transport equipment

Technical equipment and machinery

Other equipment, operating and office equipment, miscellaneous

2013

4,966

524

512

2014

5,375

1,083

576

6,129

7,155

Operating lease obligations increased significantly year-on-year to €7.2 billion, with new
long-term agreements – primarily for aircraft but also real estate – overcompensating
considerably for the reduction in the remaining terms of legacy agreements.

A.38 Capex by region

€m

Germany

Capital expenditure above prior-year level

The Group’s capital expenditure (capex) was €1,876 million at the end of December 2014,
7.4 % above the prior year’s figure of €1,747 million. Funds were used mainly to replace
and expand assets as follows: €1,576 million was invested in property, plant and equip-
ment and €300 million in intangible assets excluding goodwill. Investments in prop-
erty, plant and equipment related to advance payments and assets under development
(€790 million), transport equipment (€358 million), land and buildings (€138 mil-
lion), technical equipment and machinery (€100 million), IT equipment (€79 million),
operating and office equipment (€76 million) as well as aircraft (€35 million). In regional
terms, we invested mainly in Europe and the Americas as well as in Asia.

1,092

1,128

Europe (excluding Germany)

300

227

Americas 1

223

172

Asia Pacific

191

165

Other regions

2014

2013

1 Prior-period amount adjusted.

Deutsche Post DHL Group — 2014 Annual Report

A.39 Capex and depreciation, amortisation and impairment losses, full year

PeP

2014

2013
adjusted

Express

2014

2013
adjusted

Global Forwarding,
Freight

Supply Chain

Corporate Center /
Other

Consolidation 1

2013
adjusted

2014

2013

2014

2013

2014

2013

2014

Group

2014

2013
adjusted

Capex (€ m)

452

415

484

571

127

207

277

304

407

380

Depreciation,
amortisation and
impairment losses
(€ m)

Ratio of capex
to depreciation,
amortisation and
impairment losses

1 Including rounding.

384

340

380

462

270

268

213

224

1.18

1.22

1.27

1.24

1.41

2.35

1.03

1.13

1.91

1.70

–

–1

1,747

1,876

–1

1,337

1,381

–

1.31

1.36

A.40 Capex and depreciation, amortisation and impairment losses, Q 4

PeP

2014

2013
adjusted

Express

2014

2013
adjusted

Global Forwarding,
Freight

Supply Chain

Corporate Center /
Other

Consolidation 1

2013
adjusted

2014

2013

2014

2013

2014

2013

2014

Group

2014

2013
adjusted

Capex (€ m)

266

208

223

296

108

217

181

Depreciation,
amortisation and
impairment losses
(€ m)

Ratio of capex
to depreciation,
amortisation and
impairment losses

1 Including rounding.

114

2.33

2.42

2.53

3.08

2.55

3.43

1.38

1.52

3.74

3.12

–

–1

852

871

–1

347

333

–

2.46

2.62

A.41 Capex by segment

Post - eCommerce - Parcel expands parcel network

€m

PeP

Express

Capital expenditure in the Post - eCommerce - Parcel division decreased, falling from
€452 million in the prior year to €415 million. The largest capex portion continued to
be attributable to the Parcel 2012 Production Concept, which is designed to adapt our
network capacities to cater to increasing shipment volumes. The international parcel
network was also expanded. Additional investments focused on other operating and
office equipment and enhancing IT performance.

415

452

571

484

Global Forwarding, Freight

207

127

Supply Chain

304

277

Corporate Center /Others

380

407

2014

2013 adjusted

express investments driven by markets with rising customer demand

In the Express division, capital expenditure amounted to €571 million in the reporting
year (previous year: €484 million). Investments focused primarily upon our global and
regional hubs in Leipzig, Cincinnati, Singapore and Dubai in order to meet growing cus-
tomer demand. In addition, a substantial portion of capital expenditure was attributable
to selected markets such as the UK, the USA and China. We also continued to invest in
our fleet of aircraft, albeit less than in the previous year.

Global Forwarding, Freight continues to expand IT

In the Global Forwarding, Freight division, capital expenditure rose from €127 million
in the prior year to €207 million in 2014. Of that figure, €182 million was attributable to
the Global Forwarding business unit where we continued to improve our IT, particularly
as part of the New Forwarding Environment project. We also modernised and fitted out
warehouses and office buildings across all regions. A total of €25 million was invested
in the Freight business unit, mainly for real estate, operational and technical equipment
and machinery and software.

Deutsche Post DHL Group — 2014 Annual Report

Group Management Report — rePor T on eConoMIC PoSITIon — Financial position

Supply Chain invests in new business

In the Supply Chain division, capital expenditure amounted to €304 million in the
reporting year (previous year: €277 million). Of this amount, €263 million related to
the Supply Chain business unit, €26 million to Williams Lea and €15 million to central
entities. Approximately 50 % of the funds were used to support new business globally. In
the Americas and Asia Pacific regions, investments focused primarily on new business in
the Consumer, Retail and Automotive sectors. In Europe, the majority of capital expend-
iture was used for customer projects in the UK Consumer sector and the Retail sector in
Germany. Investments were also made to renew the fleet in the UK and in Africa. In the
Williams Lea business unit, the main focus of our investments was on IT infrastructure.

Cross-divisional investments decline

Cross-divisional capital expenditure fell from €407 million in the prior year to €380 mil-
lion in 2014, due predominantly to lower expenditure for real estate. By contrast, invest-
ments in vehicles and IT equipment increased year-on-year.

Higher operating cash flow

A.42 operating cash flow by division, 2014

€m

PeP

Express

1,085

1,689

Global Forwarding, Freight

181

Supply Chain

673

Net cash from operating activities amounted to €3,040 million in financial year 2014,
up €51 million on the previous year. The improved EBIT contributed €100 million to
this increase. The depreciation, amortisation and impairment losses contained in EBIT
are non-cash effects and are therefore eliminated. They increased by €44 million, mainly
due to impairment losses recognised on aircraft. The change in provisions rose from
€–500 million to €–698 million, partially due to the reversal of restructuring provisions
in the Express division. At €3,061 million, net cash from operating activities before
changes in working capital was €17 million down on the previous year. Thanks to better
working capital management, the changes in working capital led to a lower cash outflow
of €21 million, compared with a cash outflow of €89 million in the previous year.

Cash paid to acquire property, plant and equipment and intangible assets increased
considerably during the reporting year from €1,381 million to €1,750 million. By con-
trast, the changes in current financial assets in particular led to a significant net cash
inflow of €405 million: the sale of money market funds at the beginning of the year
resulted in a cash inflow of €600 million, whilst towards the end of the year we reinvested
surplus liquid funds of €200 million on the capital market on a short-term basis. In the
previous year, the investment of short-term liquidity had led to a net cash outflow of
€575 million. In total, at €1,087 million, net cash used in investing activities was signifi-
cantly lower than in the previous year (€1,765 million).

Deutsche Post DHL Group — 2014 Annual Report

Note 38

A.43 Calculation of free cash flow

€ m

net cash from operating activities

2013
adjusted 1

2,989

2014

Q 4 2013
adjusted 1

Q 4 2014

3,040

1,562

1,659

Sale of property, plant and equipment and intangible assets

177

200

Acquisition of property, plant and equipment and intangible assets

–1,381

–1,750

– 457

– 560

Cash outflow arising from change in property, plant
and equipment and intangible assets

–1,204

–1,550

–398

– 476

Disposal of subsidiaries and other business units

Disposal of investments accounted for using the equity method
and other investments

Acquisition of subsidiaries and other business units

Acquisition of investments accounted for using the equity method
and other investments

Cash outflow/inflow arising from acquisitions / divestitures

Interest received

Interest paid

net interest paid

Free cash flow

Note 4.

–37

– 5

–166

–111

– 5

–1

–2

–188

–143

– 45

–37

– 6

–1

– 6

–71

– 63

1,669

1,345

1,128

1,114

Free cash flow declined by €324 million year-on-year to €1,345 million, primarily due
to the increase in cash paid to acquire property, plant and equipment and intangible
assets. At €1,114 million, free cash flow was also below the prior-year amount in the
fourth quarter of 2014.

At €2,348 million, net cash used in financing activities was €2,238 million higher
than in the previous year. In particular, the repayment of a bond of €926 million in Janu-
ary 2014 made a significant contribution towards repayments of non-current financial
liabilities in the amount of €1,030 million. In the previous year, by contrast, the issue of
two bonds with a five-year and ten-year term resulted in a cash inflow of €495 million
for each bond. At €968 million, the dividend paid to our shareholders was another large
payment item, increasing by €122 million year-on-year. Payments to acquire treasury
shares amounted to €85 million in the reporting year, a significant increase on the prior-
year figure of €23 million.

As a result of the aforementioned items, cash and cash equivalents declined from

€3,414 million as at 31 December 2013 to €2,978 million.

Deutsche Post DHL Group — 2014 Annual Report

Group Management Report — rePor T on eConoMIC PoSITIon — Financial position — Net assets

Net assets

A.44 Selected indicators for net assets

Equity ratio

Net debt

Net interest cover

Net gearing

FFO to debt 2

Note 4.

1
2 Calculation

Financial position, page 52.

31 Dec. 2013
adjusted 1

31 Dec. 2014

€ m

28.3

1,499

25.8

13.0

34.4

25.9

1,499

20.7

13.5

27.7

Consolidated total assets increased

The Group’s total assets amounted to €36,979 million as at 31 December 2014, €1,518 mil-
lion higher than at 31 December 2013 (€35,461 million).

At €22,902 million, non-current assets were up on the previous year, increasing
markedly by €1,532 million. Intangible assets rose by €520 million to €12,352 million:
in addition to advance payments for the NFE project, this item increased primarily due
to the impact of foreign currency effects on goodwill. Property, plant and equipment
also rose by €377 million to €7,177 million, driven primarily by investments in the DHL
divisions. Non-current financial assets rose from €1,123 million to €1,363 million, due
mainly to an increase in loans and receivables.

At €14,077 million, current assets were on a par with the previous year (€14,091 mil-
lion). Inventories declined by €70 million to €332 million. Current financial assets
decreased significantly by €470 million to €351 million, largely because we liquidated
short-term investments in money market funds and used them in part to repay a bond.
Trade receivables rose by €803 million to €7,825 million, driven to a significant extent
by revenue growth and currency effects. Other current assets also increased, rising by
€192 million to €2,415 million. The reasons for the €436 million decline in cash and
cash equivalents to €2,978 million are described in the section entitled Financial position.
Assets held for sale declined by €38 million to €4 million, mainly due to the completion
of the sale of a number of properties in Germany.

At €9,376 million, equity attributable to Deutsche Post AG shareholders was
€468 million lower than at 31 December 2013 (€9,844 million). Although consolidated
net profit for the period made a positive contribution, actuarial losses on pension
obligations and the dividend payment to our shareholders in particular led to a decrease
in equity.

Page 57 f.

Deutsche Post DHL Group — 2014 Annual Report

At €16,988 million, current and non-current liabilities were on a par with the
previous year (€16,946 million). Financial liabilities decreased by €785 million to
€5,169 million, mainly as a result of the repayment in January of a bond in the amount
of €926 million. Trade payables, on the other hand, increased significantly by €564 mil-
lion to €6,922 million. Higher customs and duties, amongst other factors, led to a rise in
other current liabilities from €3,978 million to €4,196 million. At €10,411 million, cur-
rent and non-current provisions were significantly higher than as at 31 December 2013
(€8,481 million): a decline in discount rates led in particular to the recognition of addi-
tional provisions for pensions.

net debt unchanged at €1,499 million

As at 31 December 2014, our net debt of €1,499 million was exactly at the prior- year
level. The equity ratio declined from 28.3 % in the previous year to 25.9 % as at the
reporting date.

The dynamic gearing ratio is an indicator of internal financing capacity and ex-
presses the average number of years a company would require to pay off its outstanding
debt using the cash flow generated from operating activities. It amounted to 0.5 years
in financial year 2014.

Net interest cover shows the extent to which net interest obligations are covered by
EBIT. This indicator declined from 25.8 to 20.7. Net gearing expresses the ratio of net
debt to the total of equity and net debt. This amounted to 13.5 % at 31 December 2014.

A.45 net debt

€ m

Non-current financial liabilities

Current financial liabilities

Financial liabilities

Cash and cash equivalents

Current financial assets

Long-term deposits 2

Positive fair value of non-current financial derivatives 2

Financial assets

net debt

Note 4.

1
2 Reported in non-current financial liabilities in the balance sheet.

31 Dec. 2013
adjusted 1

31 Dec. 2014

4,599

1,297

5,896

3,414

821

107

4,397

1,499

4,655

425

5,080

2,978

351

192

3,581

1,499

Deutsche Post DHL Group — 2014 Annual Report

Group Management Report — rePor T on eConoMIC PoSITIon — Net assets — Business performance in the divisions

Business performance in the divisions

2014

+ / – %

Q 4 2013
adjusted

Q 4 2014

+ / – %

2013
adjusted

15,291

9,975

5,316

1,286

8.4

1,038

15,686

10,026

5,660

1,298

8.3

1,085

11,821

12,491

5,432

2,207

4,069

924

– 811

1,083

9.2

1,379

14,787

10,813

4,117

–143

478

3.2

641

14,227

12,889

1,345

–7

441

3.1

635

5,670

2,259

4,456

924

– 818

1,260

10.1

1,689

14,924

10,892

4,180

–148

293

2.0

181

14,737

13,329

1,407

465

3.2

673

2.6

0.5

6.5

0.9

–

4.5

5.7

4.4

2.4

9.5

0.0

– 0.9

16.3

–

22.5

0.9

0.7

1.5

–3.5

–38.7

–

–71.8

3.6

3.4

4.6

–

5.4

–

6.0

4,183

2,665

1,518

374

8.9

366

3,100

1,444

579

1,063

229

–215

312

10.1

556

3,774

2,754

1,059

–39

138

3.7

372

3,699

3,329

371

–1

178

4.8

376

4,353

2,693

1,660

425

9.8

478

3,411

1,528

627

1,237

246

–227

348

10.2

578

3,960

2,918

1,082

– 40

1.8

205

3,953

3,564

383

161

4.1

436

4.1

1.1

9.4

13.6

–

30.6

10.0

5.8

8.3

16.4

7.4

– 5.6

11.5

–

4.0

4.9

6.0

2.2

–2.6

– 48.6

–

– 44.9

6.9

7.1

3.2

–

– 9.6

–

16.0

OVERVIEW

A.46 Key figures by operating division

€ m

Post - eCommerce - Parcel
Revenue

of which Post

eCommerce - Parcel

Profit from operating activities (EBIT)

Return on sales (%) 1

Operating cash flow

express
Revenue

of which Europe

Americas

Asia Pacific

MEA (Middle East and Africa)

Consolidation/Other

Profit from operating activities (EBIT)

Return on sales (%) 1

Operating cash flow

Global Forwarding, Freight
Revenue

of which Global Forwarding

Freight

Consolidation/Other

Profit from operating activities (EBIT)

Return on sales (%) 1

Operating cash flow

Supply Chain
Revenue

of which Supply Chain

Williams Lea

Consolidation/Other

Profit from operating activities (EBIT)

Return on sales (%) 1

Operating cash flow

1 EBIT / revenue.

Deutsche Post DHL Group — 2014 Annual Report

POST - ECOMMERCE - PARCEL DIVISION

revenue increases by 2.6 %

In the reporting year, with 0.3 additional working days in Germany, revenue in the
division was €15,686 million, 2.6 % above the prior- year figure of €15,291 million.
Operations in both business units performed well, with our international and domestic
parcel business, predominantly in Germany, accounting for most of the gain. Negative
currency effects of €6 million were recorded.

Mail business increases revenue as volume declines

In the Post business unit, revenue was €10,026 million, slightly above the prior-year
figure of €9,975 million. This is attributable primarily to the price increases for both
a standard letter and our Infopost product since overall volumes continued to decline.
Revenue in the fourth quarter of 2014 was €2,693 million (previous year: €2,665 million).
The domestic mail business performed well mainly as a result of the price increases.
Volumes were slightly below the prior-year level. This decline can be attributed to the
additional mail correspondence seen in advance of the SEPA migration in 2013 in
addition to the general market trend and other factors. Revenue in the international
import / export business in the reporting year declined noticeably compared to the prior-
year level due to changes in the mix.

In the Dialogue Marketing business, we were able to increase revenue despite
declining volumes compared with the previous year. The prices for the Standard,
Kompakt and Maxi formats of our Infopost product were raised by three cents on
1 July 2014. In addition, we accelerated our advertising activities with regard to retail
and mail-order businesses. Both revenue and sales in unaddressed advertising mail
decreased slightly. We generated growth through new customers and by expanding the
delivery area for our unaddressed product Einkauf aktuell; however, this growth did not
offset the declines in Postwurfsendung items.

A.47 Post: volumes

Mail items (millions)

Total

of which Mail
Communication

of which Dialogue
Marketing

2013
adjusted

20,804

8,958

9,716

2014

+ / – %

20,498

8,891

9,523

–1.5

– 0.7

–2.0

Q 4 2013
adjusted

5,724

2,390

2,765

Q 4 2014

+ / – %

5,433

2,309

2,561

– 5.1

–3.4

–7.4

eCommerce - Parcel business unit continues to grow

Worldwide online retailing continues to have a positive impact on our parcel business.
By expanding our portfolio and improving our services, we are laying the logistical
foundation around the world to ensure that the strong growth in this market is sustained.
In the reporting year, revenue in the eCommerce - Parcel business unit was €5,660 mil-
lion, exceeding the prior-year figure of €5,316 million by 6.5 %.

The volume in the German parcel business rose sharply again in 2014, surpassing
the prior-year figure by 7.0 %. We extended our product portfolio again and significantly
expanded our services. Revenue exceeded the prior-year figure by an even wider margin
due to changes in the mix. In the fourth quarter of 2014, the positive trend accelerated
further.

Deutsche Post DHL Group — 2014 Annual Report

Group Management Report — rePor T on eConoMIC PoSITIon — Business performance in the divisions

Our other domestic parcel business in Europe performed just as well. Since we
consolidated this business into the Post - eCommerce - Parcel division, revenue and sales
have increased considerably compared with the prior year.

Our worldwide e-commerce activities also continue to perform well. Revenue in-
creased in the reporting year due to solid growth in the Americas and India. In contrast,
volumes remained below the prior-year figure because we began to reassess our cus-
tomer portfolio, particularly in the USA.

A.48 Parcel Germany: volumes

Parcels (millions)

2013
adjusted

2014

+ / – %

Parcel Germany

965

1,033

7.0

Q 4 2013
adjusted

285

Q 4 2014

+ / – %

309

8.4

Increased costs slow earnings growth

Although revenue rose significantly compared with the previous year, EBIT improved
only slightly to €1,298 million (previous year: €1,286 million). Increased material and
labour costs, in particular, as well as the continued expansion of our parcel network,
noticeably slowed the improvement in earnings. The return on sales was 8.3 % (previ-
ous year: 8.4 %). In the fourth quarter of 2014, EBIT was €425 million (previous year:
€374 million), which improved return on sales from 8.9 % to 9.8 % quarter-on-quarter.

Operating cash flow in the reporting year was €1,085 million, exceeding the prior-
year figure of €1,038 million by 4.5 %, which is mainly a result of lower net cash outflow
from working capital. At €–278 million, working capital was significantly less favorable
than the prior-year level (€–457 million).

Deutsche Post DHL Group — 2014 Annual Report

EXPRESS DIVISION

revenue in time-definite business grows at a high level

Revenue in the division increased by 5.7 % to €12,491 million in the reporting year (previ-
ous year: €11,821 million). Our business continued to grow: excluding negative currency
effects of €193 million and the effect from the sale of the domestic express business in
Romania in the first quarter of 2013, revenue in the reporting year increased by 7.3 %.
In the fourth quarter of 2014, revenue climbed year-on-year by 10.0 %.

In the Time Definite International (TDI) product line, both per-day shipment vol-
umes and daily revenues rose by 7.8 % compared with the prior year. An increase of 7.8 %
in the final quarter affirmed the growth in per-day volumes.

In the Time Definite Domestic (TDD) business, our customers sent 1.7 % more ship-
ments each day year-on-year in 2014. Daily revenues in the reporting year remained
at the prior-year level. In the fourth quarter of 2014, daily shipment volumes went up
by 3.9 %.

Effective 1 January 2014, we transferred the Indian subsidiary Blue Dart as well
as the domestic express business in the Netherlands, Belgium and Poland to the PeP
division. Since then our focus in the Express division in these countries has been on our
core competence, international business. The subsidiary Sky Courier Inc. in the United
States was transferred to the Global Forwarding, Freight division.

A.49 EXPRESS: revenue by product

€ m per day 1

Time Definite
International (TDI)

Time Definite
Domestic (TDD)

2013
adjusted

34.7

3.9

2014

+ / – %

37.4

3.9

7.8

0.0

1 To improve comparability, product revenues were translated at uniform exchange rates.

These revenues are also the basis for the weighted calculation of working days.

A.50 EXPRESS: volumes by product

Thousands of items
per day 1

Time Definite
International (TDI)

Time Definite
Domestic (TDD)

2013
adjusted

643

361

2014

+ / – %

693

367

7.8

1.7

1 To improve comparability, product revenues were translated at uniform exchange rates.

These revenues are also the basis for the weighted calculation of working days.

Q 4 2013
adjusted

37.5

4.1

Q 4 2013
adjusted

694

380

Q 4 2014

+ / – %

40.0

4.3

6.7

4.9

Q 4 2014

+ / – %

748

395

7.8

3.9

TDI volumes in europe region see final-quarter double-digit increases

Revenue in the Europe region was €5,670 million, 4.4 % above the prior year’s figure of
€5,432 million. The figure for the reporting year included negative currency effects of
€37 million, which related mainly to our business activities in Russia and Turkey. Exclud-
ing these effects and the effect from the sale of the domestic express business in Romania
in the first quarter of 2013, revenue growth in 2014 was 5.2 %. Daily revenues in the TDI
product line grew by 4.6 %, due primarily to the 6.0 % increase in daily shipment volumes.
In the fourth quarter of 2014, daily revenues in international shipments increased by
4.5 % compared with the prior-year quarter; shipment volumes were even up by 10.2 %.

Deutsche Post DHL Group — 2014 Annual Report

Group Management Report — rePor T on eConoMIC PoSITIon — Business performance in the divisions

Business growth stable in the americas region

Revenue in the Americas region increased by 2.4 % in the reporting year to €2,259 mil-
lion (previous year: €2,207 million). The figure for the reporting year included major
negative currency effects of €99 million, which related mainly to our business activities
in South America – above all Venezuela and Argentina. Excluding these effects, revenue
in the region rose by 6.8 % in the reporting year. In the TDI product line, daily revenues
and per-day volumes increased by 6.8 % and 7.0 %, respectively. In the fourth quarter of
2014, daily shipment volumes slightly exceeded the prior-year level by 0.5 %.

Performance in asia Pacific region remains dynamic

In the Asia Pacific region, we increased revenue by 9.5 % to €4,456 million (previous year:
€4,069 million). The figure for the reporting year included negative currency effects of
€41 million. Excluding these effects, the revenue increase was a strong 10.5 %. Daily rev-
enues in the TDI product line were up by 11.3 % in 2014, due primarily to the 9.6 % rise
in daily shipment volumes. The encouraging growth was also maintained in the fourth
quarter: revenues in daily international shipments increased by 11.1 % whilst shipment
volumes grew by 8.0 %.

Time-definite shipments rise in the MEA region

In the MEA region (Middle East and Africa), revenue in the reporting year was €924 mil-
lion and thus at the prior-year level. Excluding negative currency effects of €11 million,
revenue grew by 1.2 % in the reporting year. In the TDI product line, daily revenues
increased by 8.7 % and per-day volumes by 10.5 %. In the fourth quarter of 2014 daily
revenues in international shipments increased by 8.8 %, and shipment volumes by 10.0 %,
compared with the previous quarter.

EBIT exceeds high prior-year figure again

In the reporting year, EBIT in the division increased year-on-year by 16.3 % to €1,260 mil-
lion (previous year: €1,083 million). Increased revenues, the higher operating profitabil-
ity of our network and strict cost management in particular contributed to this improve-
ment. The EBIT figure for the previous year included a €12 million deconsolidation
gain on the divestment of the domestic express business in Romania. The reversal of
restructuring provisions in the United States resulted in income that was offset mainly
by impairment losses on aircraft. Return on sales in the reporting year rose from 9.2 %
to 10.1 %. In the final quarter, EBIT climbed by 11.5 % to €348 million, which improved
return on sales from 10.1 % to 10.2 %.

As a result of the improved operating profit, operating cash flow increased in the

reporting year by 22.5 % to €1,689 million (previous year: €1,379 million).

Deutsche Post DHL Group — 2014 Annual Report

GLOBAL FORWARDING, FREIGHT DIVISION

Freight forwarding volumes recovered slightly during the year

Revenue in the division increased by 0.9 % to €14,924 million in the reporting year
(previous year: €14,787 million). Excluding negative currency effects of €339 million,
revenue was 3.2 % above the previous year. After declining in the first half of the year,
the freight forwarding business recovered slightly over the course of the year. In the
fourth quarter, revenue was up year-on-year by 4.9 % to €3,960 million (previous year:
€3,774 million). The fourth-quarter figure included positive currency effects of €15 mil-
lion. Excluding currency effects, revenue saw a 4.5 % year-on-year increase. Our rev enue
continued to be impacted by reduced prices.

In the Global Forwarding business unit, revenue in the reporting year increased
slightly by 0.7 % to €10,892 million (previous year: €10,813 million). Excluding negative
currency effects of €281 million, the increase was 3.3 %. Gross profit declined by 4.9 % to
€2,403 million (previous year: €2,526 million).

Implementation of our NFE strategic project is on-going.

Volume rise in air and ocean freight confirmed

Revenues and volumes in air and ocean freight increased year-on-year in the reporting
year.

Our air freight volumes grew in financial year 2014 by 2.4 % compared with the
previous year. Margin pressure continued to rise over the course of the year. In light
of the falling oil price, major customers engaged in aggressive competitive bidding in
the second half of the year. Furthermore, airlines reduced their capacities, in particular
along the very busy routes from Asia. Our revenue in the reporting period grew by 2.2 %;
however, gross profit declined by 8.9 %. In the fourth quarter, volumes were 2.7 % and
revenue 6.6 % above the prior-year quarter.

Ocean freight volumes for 2014 as a whole were up by 4.6 % year-on-year, driven
mainly by newly acquired customers and increased volumes from existing customers.
Asia remains the largest growth engine. Despite the fact that new, larger vessels are being
put into operation, ocean carriers continued to reduce effective capacity and therefore
maintain the balance between supply and demand. At the same time, rates were in-
creased, which added pressure to the margins. Our ocean freight revenue increased by
1.3 % in the reporting year. Although we implemented strict operational cost control
measures, gross profit declined by 4.1 %. In the fourth quarter, volumes were 3.4 % and
revenue 9.3 % above the prior-year quarter.

Our industrial project business (in table A.51, reported as part of Other in the Global
Forwarding business unit) saw weaker performance compared with the prior year. In the
reporting year, the share of revenue related to industrial project business and reported
under Other was 34.7 % and therefore down year-on-year (previous year: 37.1 %). Gross
profit therefore declined by 10.8 % compared with the prior-year period.

Deutsche Post DHL Group — 2014 Annual Report

Group Management Report — rePor T on eConoMIC PoSITIon — Business performance in the divisions

A.51 Global Forwarding: revenue

€ m

Air freight

Ocean freight

Other

Total

2013
adjusted

5,006

3,532

2,275

2014

+ / – %

5,114

3,578

2,200

2.2

1.3

–3.3

0.7

10,813

10,892

A.52 Global Forwarding: volumes

Thousands

Air freight

tonnes

of which exports

tonnes

Ocean freight

TEUS 1

1 Twenty-foot equivalent units.

2013
adjusted

3,953

2,215

2,807

2014

+ / – %

4,048

2,272

2,935

2.4

2.6

4.6

Q 4 2013
adjusted

1,324

848

582

2,754

Q 4 2013
adjusted

1,047

591

707

Q 4 2014

+ / – %

1,411

927

580

2,918

6.6

9.3

– 0.3

6.0

Q 4 2014

+ / – %

1,075

600

731

2.7

1.5

3.4

revenue in european overland transport business grows steadily

In the Freight business unit, revenue was up by 1.5 % to €4,180 million in financial year
2014 (previous year: €4,117 million) despite negative currency effects of €59 million.
Business grew primarily in Central and Eastern Europe, Germany, Turkey, Sweden and
France. Gross profit declined by 1.6 % to €1,079 million in the reporting year (previous
year: €1,097 million), due primarily to negative currency effects.

EBIT includes high NFE expenses

EBIT in the division was €293 million in the reporting year and therefore significantly
below the prior-year level of €478 million. The impact of high NFE expenses continues
to be felt. At the same time, gross profit margins remained at a historically low level
due to higher pressure on margins, despite strict cost management. The return on sales
declined to 2.0 % (previous year: 3.2 %). In the fourth quarter of 2014, EBIT fell year-on-
year, from €138 million to €71 million.

Moreover, net working capital in the reporting year worsened due to increased
outstanding receivables, leading to an operating cash flow of €181 million (previous
year: €641 million).

Deutsche Post DHL Group — 2014 Annual Report

A.53 SUPPLY CHAIN:
revenue by sector, 2014

Total revenue: €14,737 million

3 % Energy
4 % Supply Chain Others

10 % Williams Lea

10 % Automotive
10 % Technology

19 % Consumer
20 % Life Sciences &
Healthcare

24 % Retail

A.54 SUPPLY CHAIN:
revenue by region, 2014

Total revenue: €14,737 million

14 % Asia Pacific /

Middle East/Africa

26 % Americas

60 % Europe/Other /
Consolidation

SUPPLY CHAIN DIVISION

Positive revenue performance

Revenue in the division increased in the reporting year by 3.6 % to €14,737 million (pre-
vious year: €14,227 million). Positive currency effects of €132 million almost offset the
loss of revenue from prior-year disposals of €147 million. Excluding these effects, rev-
enue growth was 3.7 %. In the fourth quarter of 2014, revenue increased year-on-year
by 6.9 % from €3,699 million to €3,953 million. Excluding the positive currency effects,
revenue grew by 1.9 %.

Revenue in the Supply Chain business unit was €13,329 million in 2014, an increase
of 3.4 % (previous year: €12,889 million). Excluding business disposals and positive cur-
rency effects, growth was 3.8 %. On this basis, growth in the emerging markets was
better than that of the business unit as a whole. Compared with the previous year, the
Automotive and Life Sciences & Healthcare sectors represented a higher proportion of
revenue, offset by a slightly lower share in the Retail sector. Revenue from the top 20
customers increased by 1.5 %.

In the Americas region, revenue no longer includes Exel Direct in the United States,
which we disposed of in the second quarter of 2013. Our revenue in Canada was im-
pacted negatively by the loss of a contract in the Retail sector at the end of the second
quarter of 2014. We generated the highest revenue growth in the USA and Brazil, pre-
dominantly from new business in the Consumer and Energy sectors.

In the Asia Pacific region, we achieved substantial revenue growth from additional
volumes and new business, particularly in Japan, Australia and China. In Japan, we bene-
fited from new business in the Technology sector that was gained in the second half of
2013. Revenue growth in Australia came primarily from the Life Sciences & Healthcare
sector. In China, revenue increased significantly due to new business and higher volumes
in the Automotive and Consumer sectors. However, the overall rise in revenue in the
region was offset partly by negative currency effects, due primarily to the Japanese yen.
In Europe, volumes in the Automotive and Retail sectors increased as a result of
higher end-customer demand. Revenue in the Life Sciences & Healthcare sector im-
proved due to additional business with the UK National Health Service. Prior-year dis-
posals and the strong pound sterling also affected revenue growth.

In the Williams Lea business unit, revenue grew by 4.6 % to €1,407 million in the
reporting period, driven mainly by higher volumes in the public sector in the UK and
the new Marketing Solutions sourcing business in Asia.

Deutsche Post DHL Group — 2014 Annual Report

Group Management Report — rePor T on eConoMIC PoSITIon — Business performance in the divisions

new business worth around €1,220 million secured

In the reporting year, the Supply Chain business unit concluded additional contracts
worth around €1,220 million in annualised revenue with both new and existing custom-
ers in the reporting year. The Consumer, Retail, Automotive, Life Sciences & Healthcare
and Technology sectors accounted for the majority of the gains. The annualised contract
renewal rate remained at a consistently high level.

EBIT further improved in the reporting year

EBIT in the division was €465 million in the reporting year (previous year: €441 million).
The previous year included a gain of €50 million from the adjustment of pension plans
as well as charges of €30 million for restructuring, charges associated with the Chapter 11
insolvency filing of a major customer and expenses arising from business disposals. The
improved EBIT can be attributed both to the high level of new business and to continuing
restructuring programmes. The return on sales was 3.2 % (previous year: 3.1 %). In the
fourth quarter of 2014, EBIT decreased from €178 million to €161 million, reflecting pri-
marily the prior- year net gain from the pension plan adjustment and restructuring costs.
Operating cash flow for the reporting year increased to €673 million, from €635 mil-

lion in the previous year.

Deutsche Post DHL Group — 2014 Annual Report

DEUTSCHE POST SHARES

Highly volatile equities markets

The stock markets were extremely volatile in 2014. The DAX saw high levels of fluctuation
between its annual low of 8,571 points on 15 October and its high of 10,087 points on
5 December. Volatility was similarly high on the EURO STOXX 50 as a result of geopolit-
ical and monetary policy factors that gave rise to nervousness amongst investors. The
stock markets registered significant price declines on a regular basis, above all due to the
Russia-Ukraine conflict, Middle East trouble spots and concerns regarding economic
performance in the emerging economies. Falling oil prices and the EUR-USD exchange
rate also contributed to uncertainty on the financial markets. Central banks all over
the world attempted to counteract these trends by adopting expansive monetary pol-
icies. Thanks in particular to improved US economic indicators and hopes of additional
stimulus from the European Central Bank, equities prices increased somewhat more
significantly at the end of the year, which at least allowed the European stock markets
to close the year with slight gains. The DAX ended the year 2014 at 9,805 points, a gain
of 2.7 %. The EURO STOXX 50 registered growth of 1.2 % year-on-year.

A.55 Deutsche Post shares: multi-year review

Year-end closing price

High

Low

Number of shares

Market capitalisation as at 31 December

€

millions

€ m

2008

11.91

24.18

7.18

1,209.0

14,399

2009

13.49

13.79

6.65

1,209.0

16,309

2010

12.70

14.46

11.18

1,209.0

15,354

2011

11.88

13.83

9.13

1,209.0

14,363

2012

16.60

16.66

11.88

1,209.0

20,069

2013

26.50

26.71

16.51

1,209.0

32,039

2014

27.05

28.43

22.30

1,211.2 1

32,758

Average trading volume per day

7,738,509

5,446,920

5,329,779

4,898,924

4,052,323

4,114,460

4,019,689

Annual performance including dividends

Annual performance excluding dividends

Beta factor 2

Earnings per share 3

Cash flow per share 4

Price-to-earnings ratio 5

Price-to-cash flow ratio 4, 6

Dividend

Payout ratio

Dividend per share

Dividend yield

€

€ m

€

– 45.5

– 49.3

0.81

–1.40

1.60

– 8.5

7.4

725

–

0.60

5.0

18.3

13.3

0.91

0.53

– 0.48

25.5

–28.1

725

112.6

0.60

4.4

–1.4

– 5.9

0.95

2.10

1.59

6.0

8.0

786

30.9

0.65

5.1

–1.3

– 6.5

1.19

0.96

1.96

12.4

6.1

846

72.7

0.70

5.9

45.6

39.7

0.88

1.36 7

– 0.17

12.2 7

– 97.6

846

51.6

0.70

4.2

63.9

59.6

0.86

1.73

2.47

15.3

10.7

968

46.3

0.80

3.0

5.1

2.1

0.94

1.71

2.51

15.8

10.8

1,030 8

49.7 8

0.85 8

3.1

1 Increase due to the operation of a bonus programme for executives
2 Three-year beta; Source: Bloomberg.
3 Based on consolidated net profit after deduction of non-controlling interests
4 Cash flow from operating activities.
5 Year-end closing price / earnings per share.
6 Year-end closing price / cash flow per share.
7 Adjusted to reflect the application of IAS 19 R.
8 Proposal.

Note 38.

Note 22.

Deutsche Post DHL Group — 2014 Annual Report

Group Management Report — DeuTSCHe PoST SHareS

A.56 Peer group comparison: closing prices

30 Sep.
2014

25.39

3.42

5.01

161.45

98.29

120.60

31 Dec.
2014

27.05

3.10

5.54

173.66

111.17

135.30

+ / – %

6.5

– 9.4

10.6

7.6

13.1

12.2

31 Dec.
2013

26.50

4.15

6.75

143.77

105.08

117.10

31 Dec.
2014

27.05

3.10

5.54

173.66

111.17

135.30

EUR

USD

CHF

+ / – %

2.1

–25.3

–17.9

20.8

5.8

15.5

Deutsche Post DHL

PostNL

TnT Express

FedEx

UPS

Kuehne + Nagel

A.57 Share price performance

€

Closing price: €27.05

31 December 2013

31 March 2014

30 June 2014

30 September 2014

31 December 2014

Deutsche Post

EURO STOXX 50 1

DAX 1

1 Rebased to the closing price of Deutsche Post shares on 31 December 2013.

Deutsche Post shares register positive trend

Despite the uncertainties on the equities markets, Deutsche Post shares closed 2014 with
an overall gain. The shares recorded their greatest price increase at the start of the year
after publication of the figures for 2013. On 2 April, the shares benefited from the posi-
tive response to presentation of our Strategy 2020 to reach a new all-time high of €28.43.
However, the share price could not withstand the generally negative market trend as the
year progressed. From the middle of the year Deutsche Post shares declined, reaching
an annual low of €22.30 on 15 October 2014. In view of the sound third-quarter figures
and an overall positive market trend, however, the shares subsequently made up for
most of that loss. Price levels were impacted positively by Moody’s credit rating upgrade
from “Baa1” to “A3” in September. With a closing price of €27.05, our shares ended the
year up 2.1 % year-on-year, thus charting similar progress to the DAX (up 2.7 %) and the
EURO STOXX 50 (up 1.2 %). The shares generated a gain of 5.1 % on a total return basis,
i. e., including the dividend per share. Average daily Xetra trading volumes remained
just below the prior-year level at 4.0 million shares.

Deutsche Post DHL Group — 2014 Annual Report

Majority of analysts give shares a “buy” rating

At the close of 2014, 19 analysts issued a “buy” recommendation on our shares, which is
one more than the year before. The number of “hold” ratings remained the same, how-
ever, at 14. Four analysts gave a “sell” recommendation – one more than in the prior year.
The average price target increased from €26.13 to €26.92 during the year.

A.58 Shareholder structure 1

Free float remains the same

21.0 % KfW Bankengruppe

79.0 % Free float

65.6 % Institutional

investors

13.4 % Private investors

The investment share of our largest investor – KfW Bankengruppe – remains at 21.0 %
(previous year: 21.0 %). As a result, the free float also remained unchanged at 79.0 %. The
share of our stock held by private investors rose to 13.4 % (previous year: 11.2 %). In terms
of the regional distribution of identified institutional investors, the highest percentage
of shares (16.3 %) continues to be held in the UK (previous year: 14.8 %). The share of US
investors decreased to 13.7 % (previous year: 13.8 %) and that of institutional investors
in Germany to 10.8 % (previous year: 12.3 %). Our 25 largest institutional investors hold
a total of 36.6 % of all issued shares (previous year: 30.5 %).

1 As at 31 December 2014.

A.59 Shareholder structure by region 1

13.7 % USA

16.3 % UK

24.8 % Other

45.2 % Germany

1 As at 31 December 2014.

recognition for investor relations work

We held a total of 474 individual and group meetings with more than 700 investors
at conferences and road shows during the reporting year. In addition to maintaining
close contact with institutional investors on the global financial markets, we also took
advantage of numerous local investor events to cultivate our base of private investors in
Germany. Key topics of discussion in the Post - eCommerce - Parcel division revolved
around medium-term strategic issues and the growth potential of e-commerce activities.
In the Express division, focus was upon the strong performance of volumes and margins.
Investor talks relating to the Global Forwarding, Freight division concentrated on the
fluctuating market conditions and the strategic NFE project. At the Group level, cash
flow was an important topic for our investors.

We presented our Strategy 2020 at a Capital Markets Day in April and in November
we held a Capital Market Tutorial Workshop in London at which the focus of attention
was the Supply Chain division. This event was dedicated specifically to implementing
Group strategy at the divisional level. We plan to continue holding tutorial workshops
in the future to give investors a closer look at our daily activities as well as the strategic
projects being carried out by the individual divisions.

Our investor relations activities received several awards from the renowned IR
Magazine in the reporting year. In a survey of 700 analysts and fund managers from 23
countries, our IR team was ranked 18th in the Global Top 50 and 8th in the European
Top 100. In addition, our IR activities were regarded as the Best in Sector.

Deutsche Post DHL Group — 2014 Annual Report

Group Management Report — DeuTSCHe PoST SHareS — non-FInanCIaL FIGureS — Employees

NON-FINANCIAL FIGURES

Deutsche Post DHL Group not only wants to be an attractive investment for shareholders, it
also wants to become the employer of choice for employees and the provider of choice for
customers. our performance in the areas of HR, diversity, health management, occupational
safety, service and quality play a key role in this endeavour. With programmes in the areas of
environmental protection, disaster management and education, the Group is also committed
to social responsibility.

Employees

Human resources supports corporate strategy
In accordance with Strategy 2020, Human Resources is focusing its activities even more
intensely on our core business. We want to secure the best team at competitive costs.
To do so, we have to find the right talent based upon the specific needs of our busi-
ness units, build relationships with them and tailor their professional development.
Our Group-wide Certified initiative, which was extended to also cover our Human
Resources staff in the reporting year, plays a key role in these efforts. As at the end of
2014, 3,565 participants had undergone courses taught exclusively by our own staff.

employee opinion Survey sees positive trend continue
The results of our annual Group-wide Employee Opinion Survey are indicators relevant
for internal management that help us to foster employee engagement with appropriate
activities. As in the previous year, 77 % of our employees participated. The trend
remained positive for the majority of the areas evaluated. Particular attention is always
paid to Employee Engagement and to how employees evaluate their managers under the
key performance indicator Active Leadership, which is tied to management bonuses. In
keeping with the spirit of our GoGreen environmental protection programme, the survey
was largely conducted electronically: 55 % of the questionnaires were completed online.

A.60 Selected results from the employee opinion Survey

Response rate

KPI Active Leadership

KPI Employee Engagement

2013

2014

Objectives and strategies, page 31

Group management, page 37

Corporate responsibility, page 78

Deutsche Post DHL Group — 2014 Annual Report

another slight increase in number of employees

As at 31 December 2014, we employed 443,784 full-time equivalents in more than
220 countries and territories, 2.0 % more than in the previous year.

A.61 number of employees

at year-end
Headcount 1

Full-time equivalents 2

of which Post - eCommerce - Parcel

Express

Global Forwarding, Freight

Supply Chain

Corporate Center/Other

of which Germany

Europe (excluding Germany)

Americas

Asia Pacific

Other regions

average for the year
Headcount

of which hourly workers and salaried employees

Civil servants

Trainees

Full-time equivalents

1 Including trainees.
2 Excluding trainees.

2014

+ / – %

2013
adjusted

479,690

434,974

163,195

71,290

42,825

145,152

12,512

168,854

105,006

76,966

66,840

17,308

478,903

433,647

40,321

4,935

488,824

443,784

166,342

75,185

44,059

146,220

11,978

170,596

108,890

74,573

71,216

18,509

484,025

440,973

37,963

5,089

435,218

440,809

1.9

2.0

1.9

5.5

2.9

0.7

– 4.3

1.0

3.7

–3.1

6.5

6.9

1.1

1.7

– 5.8

3.1

1.3

A.62 employees by region 1

4 % Other

16 % Asia Pacific

17 % Americas

25 % Europe

(excluding Germany)

38 % Germany

1 As at 31 December 2014; full-time equivalents.

In the Post - eCommerce - Parcel division, we hired new employees mainly to accommo-
date the sustained growth in the parcel business in Germany. The number of employees
in the Express division increased compared with the previous year. This was necessary
primarily in operations due to increased shipment volumes. In the Global Forwarding,
Freight division, our workforce grew, due primarily to the new customers we won in
Asia. In the Supply Chain division, growth in new and existing business led to a 0.7 %
increase in the workforce, which was tempered by the loss of a contract in the Retail
sector in Canada. Excluding this effect, employment rose by 3.4 %.

From a geographic perspective, the loss of the contract in Supply Chain more than
compensated for the increase in our workforce in the Americas. Our staff levels were
up in all other regions. We continue to employ the highest number of our personnel
in Germany.

Our current planning foresees further slight growth in the number of employees

in financial year 2015.

Deutsche Post DHL Group — 2014 Annual Report

Group Management Report — non-FInanCIaL FIGureS — Employees

Staff costs exceed prior-year level

At €18,189 million, staff costs exceeded the adjusted prior-year level (€17,776 million).

A.63 Staff costs and social security benefits

€ m

Wages, salaries and compensation

Social security contributions

Retirement benefit expenses

Expenses for other employee benefits

Expenses for severance payments

Staff costs

Note 4.

2013
adjusted 1

14,300

2,110

883

356

127

2014

14,583

2,164

965

344

133

17,776

18,189

Compensation is performance-based

We offer our employees compensation that is based upon responsibilities and per-
formance, is in line with our corporate objectives and creates long-term incentives.
Compensation always depends upon national laws, local market conditions and, where
applicable, existing collective agreements. We aim to offer competitive pay to our staff
in all fields. Moreover, we provide defined benefit or defined contribution retirement
plans in many countries.

In order to ensure a fair and balanced compensation structure within our company,
we have introduced systems to rate positions in a number of areas. The rating is based
upon job category and responsibilities – and is not tied to the personal traits of the
employee.

Forward-looking Human resources activities making a difference

The Generations Pact, concluded between Deutsche Post AG and the trade unions in 2011,
continues to be well received by our workforce. As at the end of 2014, 2,323 employees
had gone into partial retirement and 18,788 had set up a working-time account. Legisla-
tors are currently laying the necessary foundations so that we can offer our civil servants
a comparable instrument for age-based working solutions.

With strategic workforce management, we aim to accurately meet our staff
requirements for the long term. To this end, we developed an analysis and planning
instrument as early as 2011 that gives our company units specific recommendations for
implementing their business objectives. This methodology was developed further in the
reporting year to allow more flexible use. With the help of this instrument, we were able
to establish a Talent Roadmap for Supply Chain in Latin America, for example, which will
play a significant role in the achievement of our ambitious growth targets in this region.

Deutsche Post DHL Group — 2014 Annual Report

Objectives and strategies, page 31

A.64 Group apprenticeship schemes
Deutsche Post DHL Group, worldwide 1

5.5 % Warehousing

logistics specialists
5.6 % Duale Hochschule
students
6.8 % Forwarding and
logistics services
specialists

32.8 % Other apprentice-

ships

49.3 % Courier, express

and postal services
specialists

1 Number of apprentices, annual average: 5,089.

A.65 Gender distribution
in management 1, 2014

19.3 % Women

80.7 % Men

1 Based on upper and middle management.

Developing and fostering in stages

We have established a training system to develop and foster our employees at all levels.
As part of cross-functional and cross-divisional programmes, our executives discuss how
they can use their management style to contribute even more towards implementing
our Group strategy. As at the end of 2014, 1,557 executives had taken part in the first
generation of the training course. In the reporting year, 62 top executives completed the
second generation of our leadership programme and the next executive levels will follow
in 2015 and 2016. Further training and talent management are having a positive effect
on the internal placement rate for upper and middle management, which was 93.9 % in
the reporting year (previous year: 90.3 %). Of these, 11.8 % (previous year: 11.0 %) were
cross-divisional.

Our now Group-wide Certified initiative is based upon the Express division’s Certified
International Specialist programme and will now be extended out to all employees
across the Group. The course programme is modular in nature and widely diversified so
that all employees can receive training and certification based upon their specific needs.
This is just one way in which we encourage employee engagement and cultural change.
Deutsche Post DHL Group is one of the companies that provides the most oppor-
tunities for apprentices in Germany. We develop and qualify our junior employees in
more than 20 state-accredited apprenticeship schemes and dual-study programmes.
In the reporting year, we offered 1,913 junior employees an apprenticeship or study
opportunity; in 2015, we will increase this offer to 2,375.

Diversity as a success factor

Diversity is not only integral to our corporate values, it is also considered as a factor
for success and a competitive advantage. In 2014, our Diversity Council took up its
mandate. Made up of senior executives, the Council discusses the further alignment of
Diversity Management within the Group and introduces the topic in their departments.
Furthermore, we held, amongst other things, a global Diversity Day and trained a large
number of executives. In 2015, we shall offer training as e-learning modules in multiple
languages on our company-wide training platform.

As at 31 December 2014, the proportion of women in executive positions worldwide
was 19.3 % (previous year: 19.6 %). In order to increase the proportion of women in
manage ment positions we have undertaken various measures, which include a system
of key indicators, professional development programmes for female junior employees,
a variety of women’s networks and options to improve work-family balance.

A.66 Work-family balance 1

Headcount

State-regulated parental leave

of which men

of which women

Unpaid holiday for family reasons

Part-time employees 2

Share of part-time employees (%) 3

1 Includes employees of Deutsche Post AG.
2 Excludes employees in the release phase of partial retirement.
3 Prior-period amount adjusted due to a change in the basis for calculation.

2013

1,579

146

1,433

1,966

63,169

36.1

2014

1,431

148

1,283

1,797

64,511

36.6

Deutsche Post DHL Group — 2014 Annual Report

Group Management Report — non-FInanCIaL FIGureS — Employees — Health and safety

The average annual employment rate of people with disabilities was 9.1 % at
Deutsche Post AG in 2014, again well above the national average in the German private
sector (4.1 % in 2012, source: Bundesagentur für Arbeit (German federal employment
agency)).

A.67 employees with disabilities 1

Employees with disabilities 2

Employment rate

1 Deutsche Post AG employees.
2 In accordance with section 80 of German Social Code IX.

Health and safety

Comprehensive health concept

Headcount

2012

13,740

8.6

2013

14,170

8.7

2014

14,741

9.1

A.68 Illness rate 1

The World Health Organization (WHO) defines health as mental, physical and social
well-being. In accordance with this definition, our health and safety strategy aims to
strengthen the health of our staff primarily through prevention. It also involves work-
place design, corporate culture and supporting the entire community.

2014

2013

1 All organisational units in Germany.

In 2014, we analysed prevention requirements in several projects and consolidated
our international co-operation in the field of health promotion. Notable Group health
initiatives were recognised again with awards – in Germany alone, up to 40,000 such
initiatives take place in our facilities every year. At 8.6 % the illness rate in Germany for
2014 was up slightly on the prior-year figure (8.4 %).

occupational safety in focus

We rely on training and prevention, both to avoid risks and to design a safe and healthy
working environment for our employees. To this end, we have developed and intro-
duced activities to increase road safety and prevent accidents. Employees are made
aware of common safety hazards through practical exercises such as driving vehicles
or climbing stairs.

A.69 occupational safety 1

Number of workplace accidents 2

Accident rate (number of accidents per 1,000 employees per year)

Number of working days lost due to accidents (calendar days)

Working days lost per accident

Number of fatalities due to workplace accidents

1 Includes employees of Deutsche Post AG. As at 8 January 2015. Subject to change if later reports received.
2 Accidents when at least one working day is lost, including accidents on the way to and from work.

2013
adjusted

15,823

2014

15,808

359,781

349,364

22.7

22.1

8.6 %

8.4 %

Deutsche Post DHL Group — 2014 Annual Report

lbg-online.net

A.70 CO2e emissions, 2014

Total: 5.67 million tonnes 1

13 % Real estate

20 % Road transport

67 % Air transport

1 Scopes 1 and 2.

Corporate responsibility

Linking profitability to sustainability

Corporate responsibility is a key element of our Group’s strategy. It is codified in our
Code of Conduct, which is guided by the principles of the Universal Declaration of
Human Rights, the United Nations (UN) Global Compact, the International Labour
Organisation (ILO) convention and the OECD guidelines for multinational companies.
We wish to run our business responsibly, develop sustainable solutions for our custom-
ers and also leverage our logistics expertise as well as our global presence to address
social transformation.

In a Group-wide network relating to issues of Responsible Business Practice, we
co-ordinate the on-going dialogue with our stakeholders, which we strengthened in
the reporting year. This dialogue ensures that our stakeholders’ requirements as regards
social and environmental issues are taken into account appropriately and that our busi-
ness is systematically aligned accordingly. The goal is to link profitability to sustainability.
As part of our Corporate Citizenship efforts we also transfer our expertise in trans-
port and logistics to our social commitment. We are committed to educational and
professional development, provide logistical support in the wake of natural disasters
and support local environmental protection and aid projects. In the reporting year,
we evaluated all Corporate Citizenship-related investments in accordance with the
LBG model for the first time and are thus fulfilling the assessment base for corporate
community investment.

Our Group-wide environmental management is based upon the value proposition of
shared value. With measures to increase CO 2 efficiency as well as environmentally friendly
GoGreen products we fulfil our responsibility towards the environment and society, and
create added value for our customers whilst strengthening our market position.

Greenhouse gas emissions almost constant
We aim to reduce our dependency upon fossil fuels, improve our CO2 efficiency and
lower costs. We have anchored these goals throughout the entire Group with our
GoGreen environmental protection programme. Our “green” products and services
also help customers achieve their own environmental targets whilst concurrently open-
ing up new business opportunities for the company. By the year 2020, we intend to
improve the CO2 efficiency of our own operations and those of our subcontractors by
30 % compared with 2007.

We quantify our greenhouse gas emissions based upon the GHG Protocol Corporate
Standard and DIN EN 16258; those for our European air freight activities are also
calculated in accordance with the requirements of the European Union Emissions
Trading System (EU ETS). Pursuant to DIN EN 16258, all gases that are harmful to the
environment must be disclosed in the form of CO2 equivalents (CO2e). In 2014, our
direct (Scope 1) and indirect (Scope 2) greenhouse gas emissions amounted to 5.67 mil-
lion tonnes of CO2e (previous year, adjusted: 5.62 million tonnes of CO2e). This figure
reflects the fuel consumption of our fleet and energy consumption in our buildings. The
increase in emissions from the above-average performance in our Express division was
offset largely by lower emissions in the other divisions. Overall, emissions increased
slightly by 0.9 %. As in the previous year, we avoided 0.45 million tonnes of CO2e by
using electricity from renewable sources. At the same time, energy consumption in our
buildings and facilities fell by 4.3 %.

Deutsche Post DHL Group — 2014 Annual Report

Group Management Report — non-FInanCIaL FIGureS — Corporate responsibility

A.71 Fuel and energy consumption

Consumption by fleet

Air transport (jet fuel)

million kilograms

1,150.7

1,187.9

Road transport (petrol, biodiesel, diesel, bio-ethanol, LPG)

Road transport (biogas, CnG)

million litres

million kilograms

Energy for buildings and facilities (including electric vehicles)

million kilowatt hours

450.2

3.2

3,393

445.8

4.4

3,247

2013
adjusted

2014

Changes in the consolidated group and an improved method of calculation for road
and air transport in the Express division necessitated the adjustment of the prior-year
figures. The basis for calculating our CO2 emissions, the changes in our CO2 efficiency
and detailed consumption data are available in the Corporate Responsibility Report.

Note 2

dpdhl.com/cr-report2014

using our expertise and network to serve the community

As part of a public-private partnership, we support the UN in disaster management free
of charge through our GoHelp Group programme. Our logistics experts hold multi-day
workshops known as Get Airports Ready for Disaster (GARD) to train the personnel
at airports selected in conjunction with the UN. The workshops include an on-site risk
analysis as well as the development of action plans to increase the capacity and efficiency
of the airports in the event of disasters. In 2014, seven workshops were held at airports
in the Dominican Republic, Jordan, Peru, the Philippines and Sri Lanka. Two refresher
courses took place in Armenia and Peru.

Our Disaster Response Teams provide on-site, emergency assistance when disaster
strikes. The teams are part of a worldwide network of more than 400 volunteer logis-
tics specialists who can be deployed to a disaster area within 72 hours of receiving the
call from the UN. Once on-site, they support relief organisations by taking over airport
logistics. In the reporting year, teams were deployed to Chile and Panama.

As one of the world’s largest employers, we want to improve the education and
employability of socially disadvantaged children and young people. To this end, we
co- operate with two global partners – Teach For All and SOS Children’s Villages – as
part of our GoTeach Group programme. In the reporting year, we supported organ-
isations in 31 countries in Africa, Asia, Europe and Latin America. We entered into
new partnerships with SOS Children’s Villages in the Dominican Republic, El Salvador,
Haiti, Indonesia, Columbia, Lithuania, Mauritius, Paraguay, Swaziland and Thailand.
Our co-operation with this organisation was extended for three years in 2014. We are
also now involved with Teach For All in Ecuador.

We foster the voluntary work of our employees with Global Volunteer Day, in which
around 108,000 employees (previous year: around 100,000) took part during the
reporting year, and the Living Responsibility Fund. The We Help Each Other (WHEO)
relief fund enables employees to donate money for colleagues in need.

Deutsche Post DHL Group — 2014 Annual Report

dpdhl.com/cr-report2014

Significant improvement in sustainability ratings

Investors and analysts on international capital markets monitor and evaluate how sus-
tainable a company’s business is. In the reporting year, we improved significantly in the
most well-known ratings. Our most important achievements were our readmission to
the DJSI World and DJSI Europe indices, being awarded the RobecoSAM Bronze Class
and our inclusion in the STOXX Global ESG Leaders index. In addition, our sustainability
was validated in the FTSE4Good and MSCI indices, receiving the top “AAA” ranking
from MSCI. We were ranked third amongst 134 companies by the leading sustainability
research company Sustainalytics. Moreover, we received another very good ranking
in the CDP Global 500 Climate Disclosure Leadership Index. Please see our Corporate
Responsibility Report for additional results.

Procurement

A.72 Procurement expenses, 2014

Group’s procurement expenditure increased

Volume: €10.3 billion

6 % Network supplies
7 % Production systems
9 % Transport services
9 % Real estate

12 % IT and communications

15 % Ground fleet

21 % Air fleet

21 % Services

In the year under review, the Group centrally purchased goods and services with a
total value of around €10.3 billion (previous year: €9.4 billion). Procurement helps the
divisions to reduce expenditure and make cost-effective investments.

For the Express division, a global tender was put out again for divisional kerosene
requirements in the area of aviation. The result equated to savings of around €1 million
in the reporting year. The maintenance costs for A300-600 aircraft were also reduced.
Furthermore, Corporate Procurement purchases the necessary sorting equipment for
the construction and expansion of hubs and gateways.

In order to expand capacities in the parcel network in Germany, Procurement sup-
ported the Post - eCommerce - Parcel division with the selection and order placement of
sorting solutions at 34 locations. Furthermore, sorting system components were retro-
fitted and replaced. New maintenance and spare parts supply contracts were drawn up
for 33 parcel centres, which will allow us to save costs, increase transparency and work
more efficiently in the future.

In several regions, telecommunications services were again put out to tender,
thus facilitating considerable cost savings and increasing quality. In North America,
we are consolidating our data centres, the tender process for which was supported by
Procure ment. The financing and payment model Supplier Finance, which is in place in
many parts of Europe, Asia and the United States, was extended to more countries and
business units during the reporting year. The programme co-ordinated by Corporate
Finance and Procurement supports the divisions in improving their working capital and
suppliers to benefit from favourable financing conditions.

Procurement organisation works closely together

Procurement is a centralised function in the Group. Corporate Category Management
comprises three Global Sourcing departments which work closely with the four pro-
curement regions. All functions report to the head of Corporate Procurement. Our pur-
chasing operations are pooled in regional centres at six locations. In Asia, we outsourced
the catalogue-based ordering system to an external provider.

Deutsche Post DHL Group — 2014 Annual Report

Group Management Report — non-FInanCIaL FIGureS — Corporate responsibility — Procurement — Customers and quality

Corporate responsibility, page 78

dpdhl.com/cr-report2014

Procurement considers environmental aspects

When purchasing products and services, Procurement works closely together with those
responsible for the various product categories and regions in order to take environ-
mental aspects into consideration. Deutsche Post DHL Group obtains up to 60 % of its
electricity from renewable sources and works closely with its business partners to help
them achieve their environmental targets. This includes the use of energy efficient light-
ing, digital measuring devices, co-generation heat and power plants and heat-reflective
wall paints. In the reporting year, we also modernised our operational vehicle fleet. A
total of 11,682 emissions-efficient Euro class 5 and 6 vehicles were put into operation in
Germany and 1,864 company cars were ordered in these two Euro classes. In addition,
we purchased 60 electric vehicles, which are currently being tested on delivery routes.
Individual projects are described in our Corporate Responsibility Report.

Procurement systems further expanded

The use of IT applications to procure goods and services more efficiently increased
again in the reporting year. For instance, our electronic ordering system “GeT” is now
available in the 48 countries with the highest procurement rates and further roll-out in
other countries is also planned. The IT systems used for purchasing are currently being
updated and positioned on a standardised platform. This ensures that all information
about a supplier is stored in one place – from determining demand quantities to auto-
mated tenders and supplier ratings.

Simplifying and standardising supplier management

We continuously review whether our suppliers comply with the ethical and environ-
mental standards set forth in our Code of Conduct. In the reporting year, we simplified
and standardised these procedures in line with the criteria in the anti-corruption and
competition compliance policy. Consequently, the self-assessment process for suppliers,
business partners, subcontractors, joint venture partners, representatives, agents and
consultants was updated in close co-operation with the Corporate Compliance Office
and all associated units. In addition to the self-assessment initiative, we now require
additional evidence which gives us objective, verifiable supplier ratings.

Customers and quality

Innovative technology translates into competitive advantage
in the mail and parcel business

We operate a first-class, efficient and environmentally friendly nationwide transport and
delivery network in Germany consisting of 82 mail centres and 33 parcel centres that
process about 64 million letters and in excess of 3.4 million parcels each working day.
In the reporting year, the high level of automation in our mail business, which exceeds
90 %, saw a further slight increase. In our parcel network, we have increased our overall
sorting capacity by 50 % since the launch of our Parcel 2012 Production Concept by
upgrading existing facilities. Additional parcel centres are currently under construction.
Our customers rate the quality of our services based on whether posted items reach
their destinations quickly, reliably and undamaged. We again achieved excellent results
in letter transit times within Germany: according to surveys conducted by Quotas, a
quality research institute, 94 % of the letters posted during our daily opening hours or
before final collection are delivered to their recipients the next day. This places us far

Deutsche Post DHL Group — 2014 Annual Report

above the legal requirement of 80 %. In order to ensure this level of quality in the long
term, our quality management is based on a system that is certified each year by TÜV
NORD, a recognised certification and testing organisation. Transit times for international
letters are determined by the International Post Corporation. Here, we rank amongst
the top postal companies.

In the parcel business, items usually reach their recipients the next working day.
This is based on parcels that were collected from business customers and then delivered
the next day. Our internal system for measuring parcel transit times has been certified
by TÜV Rheinland since 2008. The German consumer organisation Stiftung Warentest
declared DHL the winner of its parcel delivery services test on account of our outstand-
ing transit time, damage-free deliveries, fair working conditions and compliance with
environmental standards.

E-POST has established itself in the digital communication market, and in 2014 we
expanded its portfolio. Companies of all sizes can send items directly from their own
company software either digitally or by conventional post. Private customers can receive
their mail digitally on their computers or mobile devices, are able to securely store their
documents and pay invoices online.

The average weekly opening time of our 29,000-plus sales points was 55 hours in the
reporting year (previous year: 55 hours). The annual survey conducted by Kunden monitor
Deutschland, the largest consumer study in Germany, also showed a high acceptance of
our exclusively partner-operated retail outlets: 91 % of customers were satisfied with our
quality and service (previous year: 91 %). In addition, impartial mystery shoppers from
TNS Infratest tested the postal outlets in retail stores around 38,000 times over the year.
The results showed that 94.5 % of customers were served within three minutes.

Another central characteristic of the quality of our products is environmental pro-
tection. We employ a TÜV NORD-certified environmental management system in our
mail and parcel businesses in Germany. Our GoGreen products offer private and busi-
ness customers climate-neutral shipping options. Moreover, we operate one of the largest
electric vehicle fleets in the world, comprising over 200 vehicles. Furthermore, we use
innovative technologies in our buildings and operating facilities, such as LED s, and we
have also increased our use of renewable energies.

Service quality translates into competitive advantage in the express business

We want to offer our customers the best possible service quality all around the world
and thus place high demands on our products, processes, infrastructure and employees.
Therefore, we keep a constant eye on the changing requirements of our customers, for
example, through our Insanely Customer Centric Culture (ICCC) programme. When-
ever our employees – as couriers, in customer service or in sales – are in contact with
a customer, their feedback is documented, evaluated and made available to all respon-
sible departments within the company. As part of the Net Promoter Approach, our
managers talk specifically to dissatisfied customers personally in order to find out the
root causes of their dissatisfaction. In this way we are able to continuously turn feedback
into improve ments.

Deutsche Post DHL Group — 2014 Annual Report

Group Management Report — non-FInanCIaL FIGureS — Customers and quality

Online, we provide the MyDHL portal as well as the Small Business Solutions
section of our website. These portals make it easier for, above all, small and medium-
sized business customers to send their shipments. They also receive comprehensive
information on the topic of shipping. In Europe, we can provide our global customers
with a central point of contact with our European Key Account Support. The staff of this
service team speak several languages, are available every weekday and co-ordinate the
services of various DHL business units in multiple countries. Upon request, shipment
information can even be updated directly in the customer’s systems.

We use quality control centres to track shipments worldwide and adjust our pro-
cesses as required. Should unforeseen events occur, flight and shipment routes can be
altered immediately. All our premium products are tracked by default – for example,
Medical Express shipments – until they are delivered. In the case of sensitive shipments,
we also immediately take all necessary measures to ensure that they reach the recipient
at the agreed time and in the agreed quality. In the reporting year, we substantially in-
creased the number of staff in our quality control centres. As a result, we are able to track
shipments precisely, even when volumes go up, and respond rapidly when necessary.

Our operational safety, compliance with standards and the quality of service at
our facilities are reviewed regularly in co-operation with government authorities. More
than 250 locations – over 100 of which are in Europe – have been certified by the
Transported Asset Protection Association (TAPA), one of the world’s most renowned
safety associations, making us the leader in this area. In 2010, we began recording all
certification processes in a standardised system and managing them globally. Our sites
have had global ISO 9001:2008 certification since 2013, thus validating our policy of
harmonising quality standards. In Europe, our facilities are also certified to ISO 14001.

Continuous improvement translates into competitive advantage
in the freight forwarding business

We strive to use customer feedback to systematically improve our offering. To this end,
we survey our customers annually to determine their level of satisfaction with our ser-
vices. As part of our Net Promoter Approach, customers rate us directly after interacting
with us. The knowledge gained is used to adapt local services where necessary and im-
prove internal processes. We currently use this approach in more than a dozen countries.
Over the reporting year, more than 10,000 customers were asked to rate our services.

Our top priority is always the interests of our customers, and the benefits of this are
clear. As part of our new Customer Improvement Programme, for example, we were
able to achieve further improvements with selected customers. Since the programme
began in April 2014, it has seen the launch of over 30 projects – over half of which
have already been completed successfully. We are stabilising our operational processes
through continuous improvement methods. Moreover, by 2014, over 5,400 employees
had been trained in First Choice methodology and more than 1,000 improvements were
made during the reporting year. Aside from our operational service performance, we
are also continuously improving our cost structure and thus those of our customers, for
example, through worldwide optimised routing. Our efforts are not going unnoticed by
our customers – as in 2014, they again honoured us with multiple awards.

Deutsche Post DHL Group — 2014 Annual Report

Objectives and strategies, page 30 f.

Quality translates into competitive advantage in the supply chain business
In line with our Group strategy, we also want to be the provider of choice in the Supply
Chain division. We therefore implement practices and methodologies that provide our
customers with the highest level of service and the most added value. We use globally
tested processes to offer our customers comparable solutions and uniformly high service
standards.

In order to measure and monitor the quality of our service, we have defined a num-
ber of key performance indicators (KPI s) for the division. These include safety, produc-
tivity and inventory accuracy. We consistently perform at high levels in all categories,
achieving more than 95 % against relevant KPI s worldwide. In 2014 eight out of ten
customers surveyed confirmed that DHL is their provider of choice in the supply chain
business.

Brands

A.73 Brand architecture

Group

Divisions

Brands

Post - eCommerce - Parcel

express

Global Forwarding,
Freight

Supply Chain

Brand architecture updated

As of the publication of this report, we begin operating under the name Deutsche Post DHL
Group. This change is intended to better distinguish our brands, Deutsche Post and DHL,
from our Group name and to elevate the structure of our various divisions and brands.
As part of renaming the Post - eCommerce - Parcel division, we have also adjusted the
brand architecture. The brands referred to in graph A.73 are just some of those belonging
to the Group.

A.74 Marketing expenditures, 2014

DHL’s brand value rising sharply

Volume: around €391 million

5.9 % Corporate wear

14.3 % Other

18.1 % Public & customer
relations

61.7 % Product devel-

opment and
communication

According to independent studies, the strength of our brand continued to grow in the
reporting year. The market research institute Millward Brown, for example, which pub-
lishes the BrandZ™ Top 100 Most Valuable Global Brands each year, valued DHL’s brand
at US$13.7 billion (previous year: US$8.9 billion), moving the company up 25 places to
73rd on the list. The study looks at financial figures as well as market and consumer
research data. Interbrand, an international brand consultancy, listed DHL in its Best
Global Brands ranking for the first time. We were ranked 81st out of 100 companies
with a brand value of US$5.1 billion, making us the highest ranking newcomer in 2014.
In total, we invested around €391 million (previous year: €341 million) into building

and expanding our brands internationally in the reporting year.

Deutsche Post DHL Group — 2014 Annual Report

Group Management Report — non-FInanCIaL FIGureS — Customers and quality — Brands —
PoST-BaLanCe-SHeeT Da Te eVenTS

Deutsche Post is the brand of the football world champions

Sports sponsorships strengthen people’s emotional ties with the Deutsche Post brand,
which is why we are involved with the DFB cup and the German national teams in
partner ship with the Deutsche Fußball-Bund (DFB – German football federation).
During the 2014 FIFA World Cup Brazil™, we ran an attention-grabbing multimedia
brand campaign. Furthermore, in co-operation with the DFB, we have been co-provid-
ers of a new national amateur football platform – www.fussball.de – since mid-2014.
We have also con tinued our sponsorship of the Deutsche Tourenwagen Masters (DTM –
German Touring Car Masters) race series as well as our partnership with FC Bayern
Munich’s federal league basketball team. Since the end of 2014, we have increased our
brand presence in winter sports as well: the sleds and suits of the athletes of the Bob- und
Schlittenverbands (German bobsleigh, luge and skeleton federation) are now designed to
incorporate the Deutsche Post brand. Furthermore, on 15 October 2014, the well-known
Königssee bobsleigh, luge, and skeleton track became Deutsche Post Eisarena Königssee.

DHL showcases a new brand look

We want our customers to associate more strongly with the DHL brand and have carefully
developed our corporate design with that goal in mind. Our new look is more dynamic
and versatile; optimised for online channels it refrains from graphically highlighting
the DHL brand areas.

International events rely on DHL logistics

As the global logistics partner of Formula 1™, the Formula E Championship, IMG Fashion
Weeks, Manchester United as well as other events, we have showcased the DHL brand to
the public and the media in connection with 328 events in 44 countries in the reporting
year. At the beginning of 2014, DHL also began handling event logistics for the world
touring live show of Canada’s Cirque du Soleil. Moreover, since August 2014, DHL has
been a platinum sponsor of FC Bayern Munich football club.

POST-BALANCE-SHEET DATE EVENTS

DHL Delivery GmbH creates new jobs

In order to secure the increased demand for labour as a result of continued sustained
growth in the parcel business, Deutsche Post DHL Group has founded numerous regional
companies under the umbrella of DHL Delivery GmbH. The goal is to create up to 10,000
new positions by 2020. Staff working in the new companies shall be employed in line
with the regionally applicable collective terms and conditions for the forwarding and
logistics sector.

Shares held in King’s Cross to be reduced

The requirements for classifying an asset as held for sale in accordance with IFRS 5 were
met in the period between the balance sheet date and the preparation of the consolidated
financial statements by the Board of Management so that the shares held in King’s Cross
Central Property Trust, UK, and in King’s Cross Central General Partner Ltd., UK, can
be reduced as planned.

Deutsche Post DHL Group — 2014 Annual Report

Financial position, page 53 f.

OPPORTUNITIES AND RISKS

Overall Board of Management assessment
of opportunity and risk situation

no foreseeable risk to the Group

Identifying opportunities and risks – and swiftly capitalising upon or counteracting
them – is an important objective for our Group. This is why we already account for
the anticipated impact of potential events and developments in our current business
plan. The opportunities and risks reported here represent additional potential deviations
from the Group’s projected earnings. In consideration of our current business plan, the
Group’s overall opportunity and risk situation has not changed significantly compared
with last year. No new risks have been identified that could have a potentially critical
impact on the Group’s result. Based on the Group’s early warning system and in the
estimation of its Board of Management, there were no identifiable risks for the Group
in the current forecast period which, individually or collectively, cast doubt upon the
Group’s ability to continue as a going concern. Nor are any such risks apparent in the
foreseeable future. The assessment of a stable to positive outlook is moreover reflected
in the Group’s credit ratings.

Opportunity and risk management processes

uniform reporting standards for opportunity and risk management

As an internationally operating logistics company, we are faced with numerous changes.
Our aim is to identify the resulting opportunities and risks at an early stage and take the
necessary measures in the specific areas affected in due time to ensure that we achieve a
sustained increase in enterprise value. Our Group-wide opportunity and risk manage-
ment system facilitates this aim. Each quarter, managers estimate the impact of future
scenarios, evaluate opportunities and risks in their departments and present planned
measures as well as those already taken. Queries are made and approvals given on a
hierarchical basis to ensure that different managerial levels are involved in the process.
Opportunities and risks can also be reported at any time on an ad hoc basis.

Our early identification process links the Group’s opportunity and risk management
with uniform reporting standards. We continuously improve the IT application used
for this purpose. Furthermore, we use a Monte Carlo simulation for the purpose of
aggregating opportunities and risks in standard evaluations.

This stochastic model takes the probability of occurrence of the underlying risks
and opportunities into consideration and is based on the law of large numbers. From
the distribution function of each individual opportunity and risk one million randomly
selected scenarios – one for each opportunity and risk – are combined. The resulting
totals are shown in a graph of frequency of occurrence. The following graph shows an
example of such a simulation:

Deutsche Post DHL Group — 2014 Annual Report

Group Management Report — oPPorTunITIeS anD rISKS — Overall Board of Management assessment of opportunity
and risk situation — Opportunity and risk management processes

A.75 Monte Carlo simulation

Frequency of occurrence
in one million simulation steps (incidence density)

Bandwidth with 95 % probability

– aa € m

+ bb € m

+ zz € m

Deviation from planned EBIT

Planned EBIT
“Worse than expected”

“Better than expected”

Most common value in one million simulation steps (“mode”)

A.76 opportunity and risk management process

1 Identify and assess
Assess

Define measures

Analyse

Identify

5 Control
Review results

Review measures

Monitor early warning indicators

Internal
auditors
review
processes

2 aggregate and report
Review

Supplement and change

Aggregate

Report

3 overall strategy / risk
management / compliance
Determine
Manage

4 operating measures
Plan

Implement

Divisions

Opportunity and risk-controlling processes

Board of Management

Internal auditors

The most important steps in our opportunity and risk management process are:
1

Identify and assess: Opportunities and risks are defined as potential deviations from
projected earnings. Managers in all divisions and regions provide an estimate of
our opportunities and risks on a quarterly basis and document respective actions.
They use scenarios to assess best, expected and worst cases. Each identified risk is
assigned to one or more managers, who assess it, monitor it, specify possible pro-
cedures for going forwards and then file a report. The same applies to opportunities.
The results are compiled in a database.

2 aggregate and report: The controlling units responsible collect the results, evaluate
them and review them for plausibility. If individual financial effects overlap, they
are noted in our database and taken into account when compiling them. After being
approved by the department head, all results are passed on to the next level in the
hierarchy. The last step is complete when Corporate Controlling reports to the
Group’s Board of Management on significant opportunities and risks as well as

Deutsche Post DHL Group — 2014 Annual Report

on the potential overall impact each division might experience. For this purpose,
opportunities and risks are aggregated for key organisational levels. We use two
methods for this. In the first method, we calculate a possible spectrum of results
for the divisions and add the respective scenarios together. The totals for “worst
case” and “best case” indicate the total spectrum of results for the respective div-
ision. Within these extremes, the total “expected cases” shows current expectations.
The second method makes use of a Monte Carlo simulation, the divisional results
of which are regularly included in the opportunity and risk reports to the Board of
Management.

3 overall strategy: The Group Board of Management decides on the methodology that
will be used to analyse and report on opportunities and risks. The reports created
by Corporate Controlling provide an additional regular source of information to
the Board of Management for the overall steering of the Group.

4 operating measures: The measures to be used to take advantage of opportunities and
manage risks are determined within the individual organisational units. They use
cost-benefit analyses to assess whether risks can be avoided, mitigated or transferred
to third parties.

5 Control: For key opportunities and risks, early warning indicators have been defined
that are monitored constantly by those responsible. Corporate Internal Audit has
the task of ensuring that the Board of Management’s specifications are adhered to.
It also reviews the quality of the entire opportunity and risk management operation.
The control units regularly analyse all parts of the process as well as the reports from
Internal Audit and the independent auditors with the goal of identifying potential
for improvement and making adjustments where necessary.

Internal accounting control and risk management system

(Disclosures required under section 315 (2), number 5 of the Handelsgesetzbuch (HGB –
German Commercial Code) and explanatory report)
Deutsche Post DHL Group uses an internal accounting control system to ensure that
Group accounting adheres to generally accepted accounting principles. This system is
intended to make sure that statutory provisions are complied with and that both internal
and external accounting provide a valid depiction of business processes in figures. All
figures are to be entered and processed accurately and completely. Accounting mistakes
are to be avoided in principle and significant assessment errors uncovered promptly.

The control system design comprises organisational and technical measures that
extend to all companies in the Group. Centrally standardised accounting guidelines
govern the reconciliation of the single-entity financial statements and ensure that in-
ternational financial reporting standards (EU IFRS s) are applied in a uniform manner
throughout the Group. All Group companies are required to use a standard chart of
accounts. We immediately assess new developments in international accounting for rele-
vance and announce their implementation in a timely manner, for example, in monthly
newsletters. Often, accounting processes are pooled in a shared services centre in order
to centralise and standardise them. The IFRS financial statements of the separate Group
companies are recorded in a standard, SAP-based system and then processed at a central
location where one-step consolidation is performed. Other components of our control
system include automatic plausibility reviews and system validations of the accounting
data. In addition, manual checks are carried out regularly at a decentralised level by those
responsible locally (by a chief financial officer, for example) and at a central level by Cor-
porate Accounting & Controlling, Taxes and Corporate Finance at the Corporate Center.

Deutsche Post DHL Group — 2014 Annual Report

Group Management Report — oPPorTunITIeS anD rISKS — Opportunity and risk management processes

Over and above the aforementioned internal accounting control system and risk
management structures, Corporate Internal Audit is an essential component of the
Group’s controlling and monitoring system. Using risk-based auditing procedures,
Corporate Internal Audit regularly examines the processes related to financial report-
ing and reports its results to the Board of Management. Upstream and downstream
checks and analyses of the reported data are performed under chronological aspects.
If necessary, we call in outside experts, for instance in the case of pension provisions.
Finally, the Group’s standardised process for preparing financial statements using a cen-
trally administered financial statements calendar guarantees a structured and efficient
accounting process.

reporting opportunities and risks

Identifying opportunities and risks – and swiftly capitalising upon or counteracting
them – is a key objective for our Group. This is why we account for the anticipated
impact of potential events and developments in our current business plan as well as
in our revenue and earnings projection. In the following we primarily report those
risks and opportunities which, from the current standpoint, could have an additional
significant, potentially positive or negative, impact during the current forecast period.
We assess opportunities and risks based on their probability of occurrence and
impact. Subsequently, we distinguish between opportunities and risks of low, medium
and high relevance. We characterise opportunities and risks of medium and high rele-
vance as significant.

The opportunities and risks described here are not necessarily the only ones the
Group faces or is exposed to. Our business activities could also be influenced by add-
itional factors of which we are currently unaware or which we do not yet consider to
be material.

Opportunities and risks are identified and assessed decentrally at Deutsche Post DHL
Group. Reporting on possible deviations from projections, including latent opportun-
ities and risks, occurs primarily at the country or regional level. In view of the degree of
detail provided in the internal reports, decentrally reported opportunities and risks are
combined into categories below for the purposes of this report. It should be noted that
the underlying individual reports – with the exception of those on the world economy
and global economic output – usually exhibit a zero to minimal correlation. It is rather
unlikely that a number of major opportunities or risks in a single category or across
categories would occur systematically at the same time.

Unless otherwise specified, a low relevance is attached to individual opportunities
and risks within the respective categories and in the forecast period under observation
(2015). With respect to opportunities and risks arising from possible legal proceedings
or those already underway, we generally refrain from making an assessment to avoid
affecting our position in the proceedings. The opportunities and risks generally apply
for all divisions, unless indicated otherwise.

Deutsche Post DHL Group — 2014 Annual Report

Glossary, page 218

Categories of opportunities and risks

opportunities and risks arising from political, regulatory or legal conditions

Some risks arise primarily from the fact that the Group provides some of its services
in a regulated market. A large number of postal services rendered by Deutsche Post AG
and its subsidiaries (particularly the Post - eCommerce - Parcel division) are subject to
sector-specific regulation by the Bundesnetzagentur (German federal network agency) pur-
suant to the Postgesetz (PostG – German Postal Act). The Bundesnetzagentur approves or
reviews prices, formulates the terms of downstream access and has special supervisory
powers to combat market abuse.

On 25 January 2012, the European Commission issued a ruling on the formal in-
vestigation regarding state aid that it had initiated on 12 September 2007. In its review,
the European Commission determined that Deutsche Post AG was not overcompen-
sated for providing universal services between 1989 and 2007 using state resources. It
also did not find fault with the state guarantees for legacy liabilities. By contrast, in its
review of funding for civil servants’ pensions, the European Commission concluded
that illegal state aid had, in part, been received. It said that the pension relief granted
to Deutsche Post AG by the Bundesnetzagentur during the price approval process led
to Deutsche Post AG receiving a benefit, which it must repay to the Federal Republic of
Germany; in addition, it must also be ensured that no benefits are received in the future
which could be considered illegal state aid. The Commission furthermore stated that
the precise amount to be repaid was to be calculated by the Federal Republic. In a press
release, the European Commission had referred to an amount of between €500 mil-
lion and €1 billion. Deutsche Post AG is of the opinion that the Commission’s state aid
decision of 25 January 2012 cannot withstand legal review and has filed an appeal with
the European Court of Justice in Luxembourg. The Federal Republic of Germany has
similarly appealed the decision.

To implement the state aid ruling, the federal government called upon
Deutsche Post AG on 29 May 2012 to make a payment of €298 million, including interest.
Deutsche Post AG paid this amount to a trustee on 1 June 2012 and appealed the recovery
order to the Administrative Court. The appeal, however, has been suspended pending a
ruling from the European Court. The company made additional payments of €19.4 mil-
lion, €15.6 million and €20.2 million to the trustee on 2 January 2013, 2 January 2014
and 2 January 2015, respectively. The payments made were reported in the balance sheet
under non- current assets; the earnings position remained unaffected. The European
Commission has not expressed its final acceptance of the calculation of the state aid to
be repaid. On 17 December 2013, it initiated proceedings against the Federal Republic
of Germany with the European Court of Justice to effect a higher repayment amount.

If the appeals issued by Deutsche Post AG or the federal government against the state
aid ruling are successful, the opportunity exists that the payment of €298 million and the
payments of €19.4 million, €15.6 million and €20.2 million made in addition – as well as
the additional annual payments of around €19 million to be made in the future – will be
returned. A repayment would only affect the liquidity of Deutsche Post AG; the earnings
position would remain unaffected.

Deutsche Post DHL Group — 2014 Annual Report

Group Management Report — oPPorTunITIeS anD rISKS — Categories of opportunities and risks

Note 53

Glossary, page 218

On the other hand, although Deutsche Post AG and the federal government are of
the opinion that the state aid decision cannot withstand legal review, it cannot be ruled
out that Deutsche Post AG will ultimately be required to make a potentially higher pay-
ment, which could have an adverse effect on earnings. More information about the state
aid investigation is provided in the Notes.

On 14 November 2013, the Bundesnetzagentur determined the conditions for
regulating certain mail prices requiring approval under the price-cap procedure
from January 2014 to December 2018. The general rate of inflation less the produc-
tivity growth rate stipulated by the regulatory authority (X-factor) in the amount of
0.2 % p. a. constitutes the key factor applicable to the price trend for these products. This
would necessitate price reductions if the inflation rate in the reference period is lower
than the productivity growth rate specified and permit price increases if the inflation
rate in the reference period is higher than the productivity growth rate specified. On
15 October 2014, the Bundesnetzagentur approved a 1.0 % increase in the average price
of all price-capped products.

On 8 June 2013, the Bundesnetzagentur initiated market abuse proceedings against
Deutsche Post InHaus Services GmbH, citing discriminatory access conditions for
sorting and consolidation services following a complaint by one of the company’s
competitors. The party filing the complaint accused the company in particular of offer-
ing other postal services providers better conditions for posting and collection than it
itself had been offered. Deutsche Post InHaus Services GmbH considers the accusations
to be unfounded. On 18 November 2014, the Bundesnetzagentur suspended the market
abuse proceedings. It is currently unknown whether the complainant will appeal the
suspension of the proceedings.

Since 1 July 2010, as a result of the revision of the relevant tax exemption provisions,
the VAT exemption has only applied to those specific universal services in Germany
that are not subject to individually negotiated agreements or provided on special terms
(discounts etc.). Deutsche Post AG does not believe that the legislative amendment fully
complies with the applicable provisions of European Community law. Due to the legal
uncertainty resulting from the new legislation, Deutsche Post AG is endeavouring to
clarify certain key issues with the tax authorities. Although Deutsche Post AG is imple-
menting the required measures to a large extent, the differing legal opinions on the part
of Deutsche Post AG and the tax authorities will be judicially clarified.

In light of the announced legal proceedings, we have not undertaken a risk

classification.

In addition to the opportunities and risks arising from sector-specific regulation
pursuant to the Postgesetz (PostG – German Postal Act), the company is subject to additional
opportunities and risks arising from legal conditions.

On 5 November 2012, the Bundeskartellamt (German federal cartel office) initi-
ated proceedings against Deutsche Post based on suspicion of abusive behaviour with
respect to agreements on mail transport with major customers. Based upon information
from Deutsche Post AG’s competitors and customer surveys, the authorities suspect
that the company had violated the provisions of German and European antitrust law.
Deutsche Post AG does not share this opinion. However, should the authorities find
their suspicions confirmed, they may require Deutsche Post AG to refrain from certain
practices or impose fines. Due to the on-going legal proceedings, we are not providing
a risk assessment at present.

Deutsche Post DHL Group — 2014 Annual Report

Glossary, page 218

On 30 June 2014, DHL Express France received a Statement of Objections from the
French Competition Authority alleging anti-competitive conduct in the domestic express
business; a business which we had divested in June 2010. We are currently co-operating
with the French authorities regarding the issues raised in the Statement of Objections.
Due to the on-going legal proceedings, we are not providing a risk assessment.

Macroeconomic and industry-specific opportunities and risks

Risks arising from macroeconomic and sector-specific conditions are a key factor in
determining the success of our business. For this reason we pay close attention to eco-
nomic trends in the individual regions. Despite the volatile economic climate, demand
for logistics services rose in 2014, as did the related revenues.

A variety of external factors offer us numerous opportunities, indeed we believe
that the global market will continue to grow. Advancing globalisation means that the
logistics industry will continue to grow at least as fast as or faster than the world econ-
omy as a whole. This is especially true for Asia, where trade flows to other regions and
in particular within the continent will continue to increase. As the market leader, our
DHL divisions can generate above-average benefits from this. This also applies to regions
such as South America and the Middle East, which continue to see robust growth. We
are similarly well positioned in the emerging economies of Brazil, Russia, India, China
and Mexico (BRIC+M) and will take advantage of opportunities arising in these markets.
Whether and to what extent the logistics market will grow is dependent on a num-
ber of factors. The trend towards outsourcing business processes continues. As a result,
supply chains are becoming more complex and more international but are also more
prone to disruption. For this reason, customers want stable, integrated logistics solutions,
which is what we provide with our broad-based service portfolio. We continue to see
growth opportunities in this area, in particular in the Supply Chain division and as a
result of closer co-operation between all our divisions.

The booming online marketplace represents another opportunity for us in that it is
creating demand for transporting documents and goods. The B2C market is experiencing
double-digit growth, particularly due to the rapid rise in digital retail trade. This has
created high growth potential for the national and international parcel business, which
we intend to tap into by expanding our parcel network.

On the other hand, we are nonetheless unable to rule out the possibility of an eco-
nomic downturn in specific regions and a stagnation or decrease in transport quantities.
However, this would not reduce demand for our services in all business units. Indeed,
the opposite effect could arise in the parcel business, for example, as a result of an in-
crease in online purchasing amongst consumers. Companies might also be forced to out-
source transport services in order to lower costs. Cyclical risks can affect our divisions
differently with respect to magnitude as well as point in time, which may mitigate the
total effect. Therefore, we consider these risks to be medium at best. Moreover, we have
taken measures in recent years to make costs more flexible and to allow us to respond
quickly to a change in market demand.

Deutsche Post DHL Group — 2014 Annual Report

Group Management Report — oPPorTunITIeS anD rISKS — Categories of opportunities and risks

Deutsche Post and DHL are in competition with other providers. Such competition
can significantly impact our customer base as well as the levels of prices and margins
in our markets. In the mail and logistics business, the key factors for success are quality,
customer confidence and competitive prices. Thanks to our high quality along with the
cost savings we have generated in recent years, we believe that we shall be able to remain
competitive and keep any negative effects at a low level.

Financial opportunities and risks

As a global operator, Deutsche Post DHL Group is inevitably exposed to financial op-
portunities and risks. These are mainly opportunities or risks arising from fluctuating
exchange rates, interest rates and commodity prices and the Group’s capital require-
ments. Using operational and financial measures, we try to reduce the volatility of our
financial performance due to financial risk.

Opportunities and risks with respect to currencies may result from scheduled or
planned future foreign currency transactions. Significant currency risks from planned
transactions are quantified as a net position over a rolling 24-month period. Highly cor-
related currencies are consolidated in blocks. The identified risks are partly hedged using
derivatives. The most important planned net surpluses at the Group level are in pound
sterling, Japanese yen and Indian rupee, whilst the Czech crown is the only currency
with a considerable net deficit. By offsetting the net deficit in US dollars with surpluses
in other highly correlated currencies, the net risk in the “US dollar block” at the Group
level is relatively balanced and thus not actively managed. The average hedging level for
the year 2015 was approximately 55 % as at the reporting date.

A potential general devaluation of the euro presents an opportunity for the Group’s
earnings position. Based on current macroeconomic estimates, we consider this oppor-
tunity to be of low relevance.

The main risk to the Group’s earnings position would be a general appreciation of
the euro. The significance of this is considered low when considering the individual risks
arising from the performance of the respective currencies.

As a logistics group, our biggest commodity price risks result from changes in fuel
prices (kerosene, diesel and marine diesel). In the DHL divisions, most of these risks
are passed on to customers via operating measures (fuel surcharges). We only have
noteworthy hedging instruments for the purchase of diesel in the Post - eCommerce -
Parcel (PeP) division.

The key control parameters for liquidity management are the centrally available
liquidity reserves. Deutsche Post DHL Group had central liquidity reserves of €3.8 bil-
lion as at the reporting date, consisting of central finan cial investments amounting to
€1.8 billion plus a syndicated credit line of €2 billion. Therefore, the Group’s liquidity is
sound in the short and medium term. Moreover, the Group enjoys open access to the
capital markets on account of its good ratings within the industry, and is well positioned
to secure long-term capital requirements.

The Group’s net debt amounted to €1.5 billion at the end of 2014. Given our existing
interest rate hedging instruments, the share of financial liabilities with short-term
interest lock-ins in total financial liabilities in the amount of €5.2 billion is approxi-
mately 35%. The fact that the European Central bank is likely to keep short-term interest
rates at a low level during 2015 and beyond favourably impacts the risk assessment.

Deutsche Post DHL Group — 2014 Annual Report

Note 50

Further information on the financial position and finance strategy of the Group
as well as on the management of financial risks is found in the report on the economic
position and in the Notes.

opportunities and risks arising from environmental protection

Our Group-wide opportunity and risk management also considers environmental
develop ments.

Our customers want to improve their carbon efficiency and be supplied with infor-
mation on their CO2 emissions, which we regard as a positive trend. Such an increase
in environmental awareness presents new business potential: with our mail, parcel
and express products as well as air and ocean freight transport, we not only lead our
industry in the areas of energy-efficient transport, transparent emissions reports and
climate- neutral products, but we also offer customer-specific solutions to reduce carbon
emissions.

opportunities and risks arising from corporate strategy

Over the past years, the Group has ensured that its business activities are well positioned
in the world’s fastest growing regions and markets. We are also constantly working to
create efficient structures in all areas to enable us to flexibly adapt capacities and costs to
demand – a prerequisite for lasting, profitable business success. With respect to strategic
orientation, we are focusing on our core competencies in the mail and logistics busi-
nesses with an eye towards growing organically and simplifying our processes for the
benefit of our customers. Our earnings projections regularly take account of develop-
ment opportunities arising from our strategic orientation. In the specified period under
consideration, risks arising from the current corporate strategy, which extends over a
long-term period, are considered to have a low relevance for the Group. In addition, the
divisions face the following special situations:

In the PeP division, we are responding to the challenges presented by the structural
change from a physical to a digital business. We are counteracting the risk arising from
changing demand by expanding our range of services. Due to the e-commerce boom,
we expect our parcel business to continue growing robustly in the coming years and are
therefore extending our parcel network. We are also expanding our range of electronic
communications services, securing our standing as the quality leader and, where pos-
sible, making our transport and delivery costs more flexible. We follow developments
in the market very closely and take these into account in our earnings projections. For
the specified forecast period, we do not see these developments as having a significant
potential to result in a negative impact.

In the Express division, our future success depends above all on general factors such
as trends in the competitive environment, costs and quantities transported. After having
spent recent years successfully restructuring our business and substantially improv-
ing cost structures, we are focusing on fostering growth in our international business.
We expect a further increase in shipment volumes. Based on this assumption, we are
investing in our network, our services, our employees and the DHL brand. Against the
backdrop of the past trend and the overall outlook, we do not see any significant strate-
gic opportunities or risks for the Express division beyond those reported in the section
entitled “Opportunities and risks arising from macroeconomic and industry-specific
conditions”.

Deutsche Post DHL Group — 2014 Annual Report

Group Management Report — oPPorTunITIeS anD rISKS — Categories of opportunities and risks

In the Global Forwarding, Freight division we purchase transport services from
airlines, shipping companies and freight carriers rather than providing them ourselves.
Under favourable circumstances, we succeed in purchasing transport services on a
cost-effective basis. We thus have the opportunity of generating higher margins. When
circumstances are not favourable, we bear the risk of not being able to pass on all price
increases to our customers. The extent of the opportunities and risks essentially depends
on trends in the supply, demand and price of transport services as well as the duration
of our contracts. Comprehensive knowledge in the area of brokering transport services
helps us to capitalise on opportunities and minimise risk.

Our Supply Chain division provides customers in a variety of industries with solu-
tions along the entire logistics chain. Our success is highly dependent on our customers’
business success. Since we offer customers a widely diversified range of products in
different sectors all over the world, we can diversify our risk portfolio and thus counter-
act the incumbent risks. Moreover, our future success also depends on our ability to
continuously improve our existing business and to grow in our most important markets
and customer segments. We do not see any significant strategic opportunities or risks for
the Supply Chain division beyond those reported in the section entitled “Opportunities
and risks arising from macroeconomic and industry-specific conditions”.

opportunities and risks arising from internal processes

For us to render our services, a number of internal processes need to be integrated. In
addition to fundamental operating processes, these include supporting functions such
as sales and purchasing as well as corresponding management. Should we succeed in
aligning our internal processes to meet customer needs whilst simultaneously lowering
costs, this could lead to positive deviations from current projections. We are steadily
improving internal processes with the help of our First Choice initiatives. This improves
customer satisfaction whilst reducing our costs. Our earnings projection already incor-
porates expected cost savings.

Logistics services are generally provided in bulk and require a complex oper ational
infrastructure with high quality standards. To consistently guarantee reliability and
punctual delivery, processes must be organised so as to proceed smoothly with no
technical or personnel-related glitches. Any weaknesses with regard to posting and
collection, sorting, transport, warehousing or delivery could seriously compromise
our competitive position. We therefore adapt all processes to current circumstances as
needed. We also take preventive measures to guard against disruptions or malfunctions
in our operational processes. Should disruptions nonetheless occur, contingency plans
will come into effect to minimise the consequences. Some risks from business inter-
ruptions are also partly protected by our insurance policies.

opportunities and risks arising from information technology

The security of our information systems is particularly important to us. The goal is to en-
sure continuous IT system operation and prevent unauthorised access to our systems and
databases. To fulfil this responsibility, the Information Security Committee, a sub-com-
mittee of the IT Board, has defined guidelines and procedures based on ISO 27002, the
international standard for information security management. In addition, Group Risk
Management, IT Audit, Data Protection and Corporate Security monitor and assess IT
risk on an on-going basis. For our processes to run smoothly at all times, the essential
IT systems must be constantly available. We ensure this by designing our systems to

Deutsche Post DHL Group — 2014 Annual Report

Employees, page 75

Health and safety, page 77

protect against complete system failures. In addition to third-party data centres, we
operate central data centres in the Czech Republic, Malaysia and the United States. Our
systems are thus geographically separate and can be replicated locally.

We limit access to our systems and data so employees can only access the data they
need to do their jobs. All systems and data are backed up on a regular basis and critical
data are replicated across data centres.

All of our software is updated regularly to address bugs, close potential gaps in
security and increase functionality. We employ a patch management process – a defined
procedure for managing software upgrades – to control risks that could arise from out-
dated software or from software upgrades.

Based on the measures described above, we estimate the probability of experien cing

a significant IT incident with serious consequences as very unlikely.

Our E-POST products – first and foremost E-Postbrief – come with our pledge of
security and data protection. In 2014, the associated platform was re-certified by the
German Federal Office for Information Security in accordance with its standards for
IT-Grundschutz in a seamless continuation of the previous certification. In addition,
the 2013 certification from TÜV Informationstechnik GmbH pursuant to the criteria
for trusted site privacy is still valid. This confirms compliance with the legal standards
and applicable data protection regulations.

opportunities and risks arising from human resources

As a mail and logistics services group, it is particularly important that we have qualified
and motivated employees in order to achieve long-term success. However, demographic
change could lead to a decrease in the pool of available talent in various markets. To
minimise the risk of failing to acquire a sufficient number of qualified employees, we
have implemented various measures designed to motivate, commit, develop and pro-
mote our employees.

We use Strategic Resource Management to address the risks arising from an aging
population and the capacity shortages that may result from changing age and social
structures. The experience gained is used to continuously improve this analysis and
planning instrument. The Generations Pact agreed with trade unions in Germany also
contributes to taking advantage of the career experience of employees for as long as
possible whilst at the same time offering young people a career perspective.

Possible increases in both chronic and acute disease pose another risk to sustain-
ing business operations. For example, an infectious disease such as Ebola that initially
strikes only locally can quickly have a global impact when spreading via networked trade
routes and global traffic flows. We are responding to this risk with a systematic health
management programme and cross-divisional co-operation.

Deutsche Post DHL Group — 2014 Annual Report

Group Management Report — oPPorTunITIeS anD rISKS — Categories of opportunities and risks —
exPeCTeD DeVeL oPMenTS — Overall Board of Management assessment of the future economic position —
Forecast period — Future organisation

EXPECTED DEVELOPMENTS

Overall Board of Management assessment
of the future economic position

Consolidated EBIT of €3.05 billion to €3.20 billion expected

We expect the global economy to continue to experience regional variations in 2015
and to demonstrate only moderate growth on the whole. A similar development is
anticipated for world trade. Our strong position as market leader in the German mail
and parcel business and in nearly all of our international logistics activities is the best
possible basis for further growth. Our strategic focus on business driven by e-commerce
and emerging economies that exhibit strong structural growth are the main factors we
see as supporting the long-term performance of our business. The Board of Manage-
ment expects consolidated EBIT to reach €3.05 billion to €3.20 billion in financial year
2015. The Post - eCommerce - Parcel division is likely to contribute at least €1.3 billion
to this figure. Compared with the previous year, we expect an additional improvement
in overall earnings to €2.1 billion to €2.25 billion in the DHL divisions. Within the DHL
divisions we expect a further increase in earnings for Express, whilst the transformation
in the Global Forwarding, Freight division and investments in the Supply Chain division
will dampen those divisions’ earnings. The Corporate Center / Other result is projected
to remain at around €–0.35 billion. Due in particular to the forecast increase in EBIT,
we also expect EAC to grow in financial year 2015. Free cash flow is expected to at least
cover the dividend payment for financial year 2014 projected to be paid in May 2015.

Forecast period

outlook generally refers to 2015

The information contained in the report on expected developments generally refers to
financial year 2015. However, in some instances we have chosen to extend the scope.

Future organisation

no material changes to the organisational structure planned

No material changes to the Group’s organisational structure are planned for financial
year 2015.

Deutsche Post DHL Group — 2014 Annual Report

Future economic parameters

Good prospects for slightly accelerated global growth

Prospects for slightly accelerated global growth are favourable in 2015. The economic up-
swing is expected to grow stronger, especially in the industrial countries. Low oil prices
are likely to spur domestic demand. Moreover, fiscal consolidation pressure has abated.
Monetary policy is likely to remain expansive and continue to support growth. In the
emerging markets, economic performance is projected to vary greatly with the effects
of existing negative factors likely to persist or even grow. This could become a problem,
especially for countries that rely on commodities exports. Risks to global growth could
emanate from geopolitical conflicts in particular. It is furthermore impossible to rule
out that the sovereign debt crisis will flare up again in the euro zone as a consequence
of conflicts of interest on the part of policymakers.

A.77 Global economy: growth forecast

World trade volumes

real gross domestic product
World

Industrial countries

Emerging markets

Central and Eastern Europe

CIS countries

Emerging markets in Asia

Middle East and North Africa

Latin America and the Caribbean

Sub-Saharan Africa

2014

3.1

3.3

1.8

4.4

2.7

0.9

6.5

2.8

1.2

4.8

2015

3.8

3.5

2.4

4.3

2.9

–1.4

6.4

3.3

1.3

4.9

Source: International Monetary Fund (IMF) World Economic Outlook, Update January 2015.
Growth rates calculated on the basis of purchasing power parity.

In China, the economy is expected to revive over the course of the year. Exports are set
to rise thanks to growing demand from the industrial countries. It is also possible that
the government will enact fiscal measures to boost growth. GDP growth is nonetheless
expected to soften over the year as a whole (IMF: 6.8 %, OECD: 7.1 %). The Japanese
economy is forecast to recover from the economic setback. However, there are no signs
of a strong upswing. Private consumption is likely to rise slightly. By contrast, export
momentum is expected to slow. GDP growth will likely see only moderate growth overall
(IMF: 0.6 %, OECD: 0.8 %; Global Insight: 1.0 %).

In the United States, the economic upturn could accelerate appreciably. Private
consumption is likely to benefit from a further drop in the unemployment rate and low
energy prices. Strong momentum is also expected to come from corporate investment
and residential construction spending. Although foreign trade will presumably have a
negative impact on growth, GDP is likely to see stronger growth on the whole than in
the previous year (IMF: 3.6 %; OECD: 3.1 %; Global Insight: 3.1 %).

Deutsche Post DHL Group — 2014 Annual Report

Group Management Report — exPeCTeD DeVeL oPMenTS — Future economic parameters

In the euro zone, the economy is forecast to recover gradually. Private consumption
is likely to rise. Gross fixed capital formation is also expected to expand from its cur-
rently very low level. Government spending, however, is projected to rise only slightly.
No notable growth momentum is expected from foreign trade. All in all, GDP growth is
projected to increase somewhat but still remain modest (IMF: 1.2 %; ECB: 1.0 %; Global
Insight: 1.4 %).

Early indicators suggest that the German economy will revive gradually. Exports are
expected to register strong growth and companies to gradually expand capital expend-
iture. Private consumption could turn into the most important driver of growth. The
number of employed people is likely to rise again on the annual average. Due to the weak
starting position, however, it is nonetheless questionable whether GDP growth will be as
strong as in the prior year (IMF: 1.3 %, Sachverständigenrat: 1.0 %; Global Insight: 1.6 %).
The expected revival of the global economy is likely to increase demand for crude
oil. Since it is improbable that the supply will rise significantly in light of the low prices,
it is more likely than not that prices will rise again in 2015.

The ECB will very probably maintain its key interest rate at the current level for some
time and implement the decisions taken at the start of 2015. By contrast, the US Federal
Reserve could raise its key interest rate slightly in 2015, which could lead to a moderate
increase in capital market interest rates.

World trade grows, thanks especially to asia

The emerging markets in Asia are expected to play a significant role in the growth of
global trade again in 2015. At 3.0 %, growth in global trade volumes (transported quan-
tity in tonnes) is forecast to be overall slightly higher in 2015 compared with 2014 due
to the slight improvement in the economic climate in the industrial countries.

The mail and parcel business in the digital age

The market for paper-based mail communication continues to decline in Germany,
though more moderately than in other European countries. Mail volumes are decreasing,
primarily because people are increasingly communicating digitally rather than physic-
ally. With E-POST, we have developed a portfolio of digital products that are gaining
traction in the German market. At the beginning of 2014, we increased postage for a
standard domestic letter slightly in accordance with the price-cap procedure. Although
prices were subject to a further slight increase at the beginning of 2015, they are still
below the European average.

The German advertising market saw a nominal increase in revenues in 2014. Mod-
erate growth is also expected in 2015. Similar to the mail business, advertising budgets
are increasingly being shifted to digital media. The trend is towards personalised, cross-
media campaigns. We intend to consolidate our position in the market for paper-based
advertising. Furthermore, we want to tap into new fields by developing new technologies
for online marketing and cross-media campaigns.

Glossary, page 218

Deutsche Post DHL Group — 2014 Annual Report

100

Brands, page 85

The parcel market will continue to grow both in Germany and internationally. We
shall drive this development with our high-quality shipping and delivery services as
well as the associated infrastructure for new markets. By offering logistics services
specifically for the e-commerce segment, we shall also further expand our international
market position. This will also have a positive impact on the international mail business
– a market that is likely to see slight growth, particularly due to increasing merchandise
shipping.

International express business to remain stable

Experience shows that growth in the international express market is highly dependent
upon the economy. The volume trend and the growth in our international business
market share suggest that the express market will continue to develop stably in 2015.

By implementing further initiatives to increase profitability and quality, we shall
continue to improve our result. We are confident that we shall remain on course for
growth and defend our leading market position. Our global DHL brand campaign and
logistics partnerships will also contribute to this.

Market trends in freight forwarding business likely to continue

In 2015, we anticipate growth in the air freight market to follow a similar trend as in
the reporting year.

Ocean freight capacities are expected to increase further as a result of new vessels
being put into operation; however, ocean carriers will continue to limit capacities. At
the same time, demand is likely to remain stable or rise slightly.

Should the moderate growth observed in the global and European economies in
the reporting year continue in 2015, the European overland transport market is likely
to see a positive trend similar to that of 2014.

outlook for Supply Chain market remains optimistic

The trend towards outsourcing warehouse and distribution services continues. For this
reason, projections indicate that the market for contract logistics will continue to ex-
perience continuous growth of more than 6 %. Many companies prefer to outsource their
logistics due to market challenges such as high cost pressure and increasingly complex
supply chains. Demand for supply chain services is expected to see particularly strong
growth in emerging markets such as China, India, Brazil and Mexico, where we benefit
from a strong market position. Although the economic environment remains uncertain,
we are well positioned in the Supply Chain division to deliver consistent growth.

Revenue and earnings forecast

Consolidated EBIT of €3.05 billion to €3.20 billion expected

The world economy again registered below-average growth in the reporting year. We
expect the global economy to continue to experience regional variations in 2015 and to
grow only moderately on the whole. The global trading volumes relevant to our business
are likely to perform similarly. Revenue performance is expected to reflect our strategic
focus on business driven by e-commerce and emerging economies evidencing strong
structural growth.

Deutsche Post DHL Group — 2014 Annual Report

Group Management Report — exPeCTeD DeVeL oPMenTS — Future economic parameters — Revenue and earnings forecast —
Expected financial position

101

Against this backdrop, we expect consolidated EBIT to reach €3.05 billion to
€3.20 billion in financial year 2015. The Post - eCommerce - Parcel division is likely to
contribute at least €1.3 billion to this figure. Compared with the previous year, we expect
an additional improvement in overall earnings to €2.1 billion to €2.25 billion in the
DHL divisions. Within the DHL divisions, Express is expected to show continued earn-
ings growth, whereas transformation in Global Forwarding, Freight and investments in
Supply Chain will dampen EBIT growth in the latter divisions. The Corporate Center /
Other result is projected to remain at around €–0.35 billion.

In line with our Group strategy, we are targeting organic growth and anticipate only

a few small acquisitions in 2015, as in the previous year.

We are reiterating the earnings forecast for 2016 that we presented in August 2014:
consolidated EBIT is expected to reach between €3.4 billion and €3.7 billion in 2016.
The PeP division is likely to account for more than €1.3 billion of this and the earnings
contribution of the DHL divisions is forecast to range from €2.45 billion to €2.75 billion.
Our finance strategy calls for a payout of 40 % to 60 % of net profits as dividends as
a general rule. At the Annual General Meeting on 27 May 2015, we intend to propose
to the shareholders that a dividend per share of €0.85 be paid for financial year 2014
(previous year: €0.80).

Expected financial position

no change in the Group’s credit rating

In light of the earnings forecast for 2015, we expect the “FFO to debt” indicator to remain
stable on the whole and do not expect the rating agencies to change our credit rating
from the present level.

Liquidity to remain solid

We anticipate a deterioration in our liquidity in the first half of 2015 as a result of the
annual pension prepayment due to Bundesanstalt für Post und Telekommunikation as
well as the dividend payment for financial year 2014 in May 2015. However, our oper-
ating liquidity situation will improve again significantly towards the end of the year due
to the upturn in business that is normal in the second half.

Investments of around €2.0 billion expected

In 2015, we plan to increase capital expenditure to around €2.0 billion to support the
goals of our Strategy 2020. The focus of investment will be upon technical equipment
and machinery, aircraft, transport and operating equipment as well as IT.

In the Post - eCommerce - Parcel division, we shall further expand our domestic and
international parcel network. Moreover, we plan to optimise our IT, particularly in the
growth sector of eCommerce - Parcel and to expand delivery options, such as the parcel
box or Packstation. In the Express division, we expect investment spending in 2015 to
considerably exceed that of the previous year. We shall continue to invest in global and
regional hubs and in continually renewing our aircraft fleet. In the Global Forwarding,
Freight division, we envisage lower investments in 2015, although we shall expand our
IT, in particular for the NFE project. In the Supply Chain division, capital expenditure

Deutsche Post DHL Group — 2014 Annual Report

102

in 2015 is expected to be slightly above that of the reporting year. New business projects
will continue to be the main focus of investments. We shall also be investing in strategic
initiatives and business expansion.

Cross-divisional investments in 2015 will be lower than in the reporting year.

Development of further indicators relevant
for internal management

EAC increases slightly

As a result of the projected growth in EBIT, we expect that EAC will also grow in 2015.
The divisions will be under the same impact with regard to EAC as laid out in the EBIT
outlook. However, as our investing activities continue and the net base will increase as a
result, the rise in EBIT after asset charge may fall slightly short of EBIT growth. Free cash
flow is expected to at least cover the dividend payment for financial year 2014 projected
to be made in May 2015.

employee opinion Survey results again positive

We intend to keep up the positive results that our Employee Opinion Survey achieved in
the reporting year. For 2015, we expect to see an increase to 72 % in the approval rating
for the key performance indicator Active Leadership.

Transparent presentation of greenhouse gas efficiency

We intend to increase transparency in our greenhouse gas efficiency because it is the
target of our GoGreen environmental protection programme. It will be measured using
a CO2 Efficiency Index (CEX), which is based upon division and business unit-specific
emission intensity figures that show the ratio of the respective emissions to a matching
performance indicator. Our goal therefore remains to consider CEX as a non-financial
indicator relevant for internal management in the Group.

This Annual Report contains forward-looking statements that relate to the business, financial performance and results of oper-
ations of Deutsche Post AG. Forward-looking statements are not historical facts and may be identified by words such as “believes”,
“ expects”, “predicts”, “intends”, “projects”, “plans”, “estimates”, “aims”, “foresees”, “anticipates”, “targets” and similar expressions.
As these statements are based on current plans, estimates and projections, they are subject to risks and uncertainties that could
cause actual results to be materially different from the future development, performance or results expressly or implicitly assumed
in the forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which
apply only as at the date of this presentation. Deutsche Post AG does not intend or assume any obligation to update these forward-
looking statements to reflect events or circumstances after the date of this Annual Report.

Any internet sites referred to in the Group Management Report do not form part of the report.

Deutsche Post DHL Group — 2014 Annual Report

103 — 130

CORPORATE GOVERNANCEB

B CORPORATE GOVERNANCEB

CORPORATE GOVERNANCE

105 REPORT OF THE SUPERVISORY BOARD

109 SUPERVISORY BOARD
109 Members of the Supervisory Board
109

Committees of the Supervisory Board

110 MANDATES
110 Mandates held by the Board of Management
110 Mandates held by the Supervisory Board

111 CORPORATE GOVERNANCE REPORT
117

Remuneration report

Corporate Governance — rePor T oF THe SuPerVISory BoarD

105

REPORT OF THE SUPERVISORY BOARD

WULF VON SCHIMMELMANN
Chairman

DEAR SHAREHOLDERS,

In financial year 2014, Deutsche Post DHL Group continued to perform well as an attractive investment
and the provider and employer of choice in the Group’s market despite a consistently challenging eco-
nomic environment. Building on Strategy 2015, the Group took steps early on to ensure that growth would
remain positive beyond the current planning horizon. “Strategy 2020: Focus.Connect.Grow.” under-
scores Deutsche Post DHL Group’s aim of becoming the world leader in logistics and sets out the strategic
priorities for the coming years.

advising and monitoring the Board of Management

During 2014, the Supervisory Board closely examined the implementation of both Strategy 2015 and its
successor Strategy 2020 as well as the Group and divisional results in the context of the global economic
situation. To this end, the Board of Management provided the Supervisory Board with detailed, up-to-
date information on the Group’s financial position and performance, strategic initiatives, key business
transactions, the progress of acquisitions, compliance and compliance management, risk exposure and
risk management and all material planning and related implementation issues. The Chairman of the
Supervisory Board was also kept abreast of developments between meetings. Measures requiring the con-
sent of the Supervisory Board were subject to detailed discussion in advance by the relevant committees.

eight meetings during the reporting year

The Supervisory Board met four times in each half of the financial year. All members attended at least
half of the meetings. The overall attendance rate exceeded 95 %.

Deutsche Post DHL Group — 2014 Annual Report

106

The annual and consolidated financial statements and the management reports for 2013 were dis-
cussed in detail and approved at the financial statements meeting on 11 March 2014. The meeting was
also attended by the auditors. After a thorough review, we endorsed the Board of Management’s proposal
for the appropriation of the net retained profit for financial year 2013. We also approved a share capital
increase in order to finance a share buy-back to settle share-based payments due to executives in 2014.
The financial statements meeting approved the Supervisory Board’s proposed resolutions for the Annual
General Meeting (AGM). The meeting also discussed variable remuneration components, with a particular
emphasis on the performance targets achieved. In addition, we examined the findings of the efficiency
review of the work of the Supervisory Board. The Supervisory Board noted and accepted Bruce Edwards’
resignation from the Board of Management. Mr Edwards’ successor, John Gilbert, was appointed to the
Board of Management for a three-year term.

In an extraordinary meeting of the Supervisory Board on 26 March 2014, the Board of Manage-
ment gave a detailed presentation setting out the principles of “Strategy 2020: Focus.Connect.Grow.”.
Another extraordinary meeting was held immediately after the Deutsche Post AG AGM on 27 May 2014
to determine the composition of the Supervisory Board committees. Hero Brahms stepped down from
the Supervisory Board at the end of the AGM as he had reached the upper age limit for Supervisory Board
members. The members of the Supervisory Board elected Stefan Schulte as the new chair of the Finance
and Audit Committee. Details of the current members of the Supervisory Board committees can be
found on page 109.

At the Supervisory Board meeting on 27 June 2014, we discussed the Group’s IT strategy. We also con-
sidered the impending mandate renewals and new appointments relevant to the Board of Management.
At the start of July, the Supervisory Board accepted Angela Titzrath’s resignation from the Board of
Management using the written procedure. The Supervisory Board approved the renewal of Jürgen Gerdes’
mandate and contract for a further five years at an extraordinary meeting on 8 July 2014.

The Supervisory Board held one ordinary meeting and one closed meeting on 22 and 23 Septem-
ber 2014. The main focus of the Supervisory Board meeting was the question of whether Board of Manage-
ment remuneration was appropriate. The Supervisory Board decided to transfer responsibility for M & A
activities from the Finance and Audit Committee to the Strategy Committee. During the closed meeting,
presentations by external speakers describing the customers’ and investors’ point of view, as well as con-
tributions from other speakers on social sustainability in logistics companies and management culture,
formed the basis for lively debate in the plenary meeting. The discussions focused on implementing
Strategy 2015 and integrating Strategy 2020 into Group and divisional activities. As part of the on-going
training and support recommended for Supervisory Board members in the German Corporate Govern-
ance Code (DCGK), the meeting was followed by a Directors’ Day, with presentations by selected speakers.
At the extraordinary Supervisory Board meeting on 31 October 2014, we appointed Melanie Kreis as

member of the Board of Management and Labour Director.

On 10 December, at the last meeting of the Supervisory Board in 2014, we approved the 2015 busi-
ness plan after extensive discussions and set the Board of Management’s performance targets for 2015.
In addition, a share capital increase was resolved upon for the purpose of financing a share buy-back to
settle share-based payments due to executives in 2015. We also reiterated our unqualified Declaration of
Conformity with the German Corporate Governance Code.

Hard work by the committees

The Executive Committee met five times during the year under review. The main agenda items were
matters regarding the Board of Management and preparations for the various Supervisory Board meetings.
The Personnel Committee met four times. The topics discussed included women in executive
positions, personnel development measures, the Group-wide Certified programme which promotes
employee commitment and changes in corporate culture, and the annual Employee Opinion Survey.

Deutsche Post DHL Group — 2014 Annual Report

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107

The Finance and Audit Committee met seven times. Following Hero Brahms’ resignation, both Stefan
Schulte, Chair of the Finance and Audit Committee since 27 May 2014, and Simone Menne, also a mem-
ber of the Finance and Audit Committee since 27 May 2014, have the accounting and auditing expertise
required under the Aktiengesetz (AktG – German Stock Corporation Act). At the March meeting, the
Committee examined the annual and consolidated financial statements for 2013 and recommended that
the Supervisory Board approve the statements. The auditors attended the meeting and gave a detailed
presentation on their findings regarding the key audit priorities for 2013 as defined by the Committee
and made specific recommendations based on their findings. Following the AGM, the Finance and Audit
Committee engaged the auditors to audit the 2014 annual and consolidated financial statements and the
interim financial report for the first half of the year. The Committee also defined the key audit priorities.
The Committee discussed the reviewed quarterly and half-year interim reports together with the Board
of Management and the auditors prior to publication. The March meeting also examined recommen-
dations to the Supervisory Board regarding the agenda of the AGM and its proposed resolutions. Key
Group risk management factors were also examined during the meeting as planned. At the Finance and
Audit Committee meeting on 18 June 2014, the Committee listened to a presentation on the findings of
internal audits and discussed measures to implement the auditors’ recommendations on the key audit
priorities. At the Finance and Audit Committee meeting on 16 September 2014, the Chief Compliance
Officer presented a detailed report on compliance. The report focused primarily on enhancing com pliance
organisation and management. The Finance and Audit Committee advised the Super visory Board to
transfer responsibility for M & A activities to the Strategy Committee. The Committee also examined the
investment strategy for pension assets. On 3 December 2014, the Finance and Audit Committee meet-
ing concentrated on the Group business plan for 2015 and recommended that the Supervisory Board
approve the plan. The Committee discussed the Group’s performance and the internal control and risk
management system at regular inter vals during the year. The Committee discussed the appropriateness
of the Group’s accounting system with the auditors.

The Strategy Committee met twice in 2014 and focused primarily on the progress made on imple-

menting Strategy 2015, as well as how to develop and implement Strategy 2020.

The Nomination Committee met once in 2014 to discuss nominations for the 2014 AGM and approve
the recommendations made to the Supervisory Board. Here, discussions covered the re-election of
Henning Kagermann, Ulrich Schröder and Stefan Schulte and the nomination of Simone Menne for
membership of the Supervisory Board.

The Mediation Committee formed pursuant to section 27 (3) of the Mitbestimmungsgesetz (German

Co-determination Act) met once in 2014.

The chairs of the committees reported on the committees’ deliberations in the subsequent Supervisory

Board meeting.

Changes to the composition of the Supervisory Board and Board of Management

Having reached the upper age limit for office, Hero Brahms stepped down as a member of the Super-
visory Board at the end of the AGM on 27 May 2014. The AGM elected Simone Menne as a shareholder
representative on the Supervisory Board. At the extraordinary meeting held immediately after the AGM,
the Supervisory Board voted to appoint Stefan Schulte as chair and Simone Menne as a member of the
Finance and Audit Committee. Details of the current members of the Supervisory Board committees can
be found on page 109. With regard to the employee representatives, Heinrich Josef Busch, the execu -
tive management representative, resigned from the Supervisory Board as of 30 November 2014, on the
grounds that he would reach retirement age at the end of the year. Jörg von Dosky was appointed by the
court as his successor on the Supervisory Board on 9 December 2014. The composition of the Board of
Management changed as follows during the year under review: Bruce Edwards stepped down from the
Board of Management on 10 March 2014. He was replaced by John Gilbert, who became a member of the
Board of Management on 11 March 2014. Angela Titzrath stepped down from the Board of Management

Deutsche Post DHL Group — 2014 Annual Report

108

as of 2 July 2014. Melanie Kreis was appointed as a member of the Board of Management and Labour
Director on 31 October 2014. In the interim period, the Chief Executive Officer Frank Appel also took
on responsibility for the Human Resources board department.

Managing conflicts of interest

None of the Supervisory Board members holds positions on the governing bodies of or provides con
sultancy services to the Group’s main competitors. The Supervisory Board has not been informed of any
conflicts of interest affecting individual members during the year under review.

Full compliance with the recommendations of the German Corporate Governance Code

In December 2014, the Board of Management and the Supervisory Board issued an unqualified Declar
ation of Conformity pursuant to section 161 of the AktG, which was also published on the company’s
website. The declarations from previous years are also available on the website. In financial year 2014,
Deutsche Post AG complied with all recommendations of the Government Commission for the German
Corporate Governance Code, as amended on 13 May 2013 and 24 June 2014. The company also intends
to continue to comply with all recommendations contained in the Code as amended on 24 June 2014.
The Corporate Governance Report (page 111 ff.) contains more information about corporate governance
within the company and the remuneration report.

Annual and consolidated financial statements audited

The auditors appointed by the AGM, PricewaterhouseCoopers Aktiengesellschaft Wirtschaftsprüfungs
gesellschaft (PwC), Düsseldorf, conducted an audit of the annual and consolidated financial statements for
financial year 2014, including the respective management reports, and issued unqualified audit opinions.
PwC also reviewed the quarterly financial reports and the interim report for the first half of the year.

Following a detailed preliminary assessment by the Finance and Audit Committee, the Supervisory
Board reviewed the 2014 annual and consolidated financial statements and the management reports,
including the appropriation of the net retained profit as proposed by the Board of Management, at the
financial statements meeting held on 10 March 2015. The auditors’ reports were made available to all
Supervisory Board members and were discussed in detail with the Board of Management in the presence
of the auditors. The Supervisory Board concurred with the results of the audit and approved the annual
and consolidated financial statements for financial year 2014, as recommended by the Finance and Audit
Committee. No objections were raised on the basis of the final outcome of the examination by the Super
visory Board and the Finance and Audit Committee of the annual and consolidated financial statements,
the management reports and the proposal for the appropriation of the net retained profit. The Supervisory
Board endorses the Board of Management’s proposal for the appropriation of the net retained profit and
the payment of a dividend of €0.85 per share.

We would like to thank the Board of Management and all employees for their genuine commitment
and all their hard work in a challenging economic climate. You have all made an important contribution
to the company’s success.

Bonn, 10 March 2015
The Supervisory Board

Wulf von Schimmelmann
Chairman

Deutsche Post DHL Group — 2014 Annual Report

Corporate Governance — rePorT oF THe SuPerVISory BoarD — SuPerVISory BoarD —
Members of the Supervisory Board — Committees of the Supervisory Board

109

SUPERVISORY BOARD

B.01 Members of the Supervisory Board

B.02 Committees of the Supervisory Board

Shareholder representatives

employee representatives

executive Committee

Prof. Dr Wulf von Schimmelmann (Chair)
Former CEO of Deutsche Postbank AG

Hero Brahms (until 27 May 2014)
Management consultant

Werner Gatzer
State Secretary, Federal Ministry of Finance

Prof. Dr Henning Kagermann
Former CEO of SAP AG

Thomas Kunz
CEO of Danone Dairy, member of the
Executive Committee of Danone S. A.,
France

Simone Menne (since 27 May 2014)
Member of the Executive Board,
Deutsche Lufthansa AG

roland oetker
Managing Partner, ROI Verwaltungs-
gesellschaft mbH

Dr ulrich Schröder
CEO of KfW Bankengruppe

Dr Stefan Schulte
Chair of the Executive Board of Fraport AG

elmar Toime
Managing Director, E Toime Consulting Ltd.

Prof. Dr-Ing. Katja Windt
Bernd Rogge Chair of Global Production
Logistics

President / Member of the Executive Board
of Jacobs University Bremen gGmbH

andrea Kocsis (Deputy Chair)
Deputy Chair of ver.di National Executive
Board and Head of Postal Services,
Forwarding Companies and Logistics
on the ver.di National Executive Board

rolf Bauermeister
Head of Postal Services, Co-determination
and Youth and Head of National Postal
Services Group at ver.di national adminis-
tration

Heinrich Josef Busch
(until 30 November 2014)
Chair of the Group and Company Executive
Representation Committee, Deutsche Post AG

Jörg von Dosky (since 9 December 2014)
Chair of the Group and Company Executive
Representation Committee, Deutsche Post AG

Thomas Koczelnik
Chair of the Group Works Council,
Deutsche Post AG

anke Kufalt
Member of the Works Council, DHL Global
Forwarding GmbH, Hamburg
( until 26 May 2014)

Chair of the Works Council, DHL Global
Forwarding GmbH, Hamburg
(since 27 May 2014)

andreas Schädler
Chair of the Central Works Council,
Deutsche Post AG

Sabine Schielmann
Member of the Executive Board of the
Central Works Council, Deutsche Post AG

Stephan Teuscher
Head of wage, civil servant and social
policies in the Postal Services, Forwarding
Companies and Logistics department
ver.di national administration

Helga Thiel
Deputy Chair of the Central Works Council,
Deutsche Post AG

Stefanie Weckesser
Deputy Chair of the Works Council,
Deutsche Post AG, MAIL Branch, Augsburg

Prof. Dr Wulf von Schimmelmann (Chair)

Andrea Kocsis (Deputy Chair)

Rolf Bauermeister

Werner Gatzer

Roland Oetker

Stefanie Weckesser

Finance and audit Committee

Dr Stefan Schulte (Chair) (since 27 May 2014)

Hero Brahms (Chair) (until 27 May 2014)

Stephan Teuscher (Deputy Chair)

Werner Gatzer

Thomas Koczelnik

Simone Menne (since 27 May 2014)

Helga Thiel

Personnel Committee

Andrea Kocsis (Chair)

Prof. Dr Wulf von Schimmelmann
(Deputy Chair)

Thomas Koczelnik

Roland Oetker

Mediation Committee
(pursuant to section 27 (3) of the German
Co-determination act)

Prof. Dr Wulf von Schimmelmann (Chair)

Andrea Kocsis (Deputy Chair)

Rolf Bauermeister

Roland Oetker

nomination Committee

Prof. Dr Wulf von Schimmelmann (Chair)

Werner Gatzer

Roland Oetker

Strategy Committee

Prof. Dr Wulf von Schimmelmann (Chair)

Andrea Kocsis (Deputy Chair)

Rolf Bauermeister

Prof. Dr Henning Kagermann

Thomas Koczelnik

Dr Ulrich Schröder

Deutsche Post DHL Group — 2014 Annual Report

110

MANDATES

B.03 Mandates held by the Board of Management

Membership of supervisory boards
required by law

Membership of
comparable bodies

Lawrence rosen
Deutsche Postbank AG

Ken allen
DHL-Sinotrans International Air Courier Ltd,
China (Board of Directors) 1

Bruce edwards (until 10 March 2014)
Ashtead plc, UK (Board of Directors)

Greif, Inc., USA (Board of Directors)

roger Crook
DHL Global Forwarding Management
(Asia Pacific) Pte Ltd, Singapore
(Board of Directors) 1

Williams Lea Group Limited, UK
(Board of Directors) 1

Williams Lea Holdings PLC, UK
(Board of Directors, Chair) 1

Lawrence rosen
Qiagen n. V. (Supervisory Board)

1 Group mandate.

B.04 Mandates held by the Supervisory Board

Shareholder representatives

employee representatives

Membership of supervisory boards
required by law

Membership of
comparable bodies

Membership of supervisory boards
required by law

Prof. Dr Wulf von Schimmelmann (Chair)
Allianz Deutschland AG

Prof. Dr Wulf von Schimmelmann (Chair)
Accenture Corp., Ireland (Board of Directors)

rolf Bauermeister
Deutsche Postbank AG

andreas Schädler
PSD Bank Köln eG (Chair)

Stephan Teuscher
DHL Hub Leipzig GmbH
(Supervisory Board, Deputy Chair)

Helga Thiel
PSD Bank Köln eG (Deputy Chair)

Maxingvest AG

Hero Brahms (until 27 May 2014)
Georgsmarienhütte Holding GmbH
(Deputy Chair)

Krauss-Maffei-Wegmann GmbH & Co. KG

Live Holding AG (Chair)
(until 15 January 2014)

Werner Gatzer
Bundesdruckerei GmbH

Flughafen Berlin Brandenburg GmbH

Partnerschaften Deutschland ÖPP
Deutschland AG (since 10 October 2014)

Prof. Dr Henning Kagermann
BMW AG

Deutsche Bank AG

Franz Haniel & Cie. GmbH

Münchener Rückversicherungs-
Gesellschaft AG

Simone Menne (since 27 May 2104)
Delvag Luftfahrtversicherungs-AG,
Germany (Chair) 1

LSG Lufthansa Service Holding AG,
Germany (Chair) 1

Lufthansa Cargo AG, Germany 1

Lufthansa Systems AG, Germany (Chair) 1

Lufthansa Technik AG, Germany 1

roland oetker
Evotec AG (until 16 June 2014)

Dr ulrich Schröder
Deutsche Telekom AG

Prof. Dr-Ing. Katja Windt
Fraport AG

1 Group mandates, Deutsche Lufthansa.

Thomson Reuters Corp., Canada
(Board of Directors)

Western Union Company, USA
(Board of Directors) (until 16 May 2014)

Hero Brahms (until 27 May 2014)
Zumtobel AG, Austria (Supervisory Board,
Deputy Chair)

Prof. Dr Henning Kagermann
Nokia Corporation, Finland
(Board of Directors) (until 17 June 2014)

Wipro Ltd., India (Board of Directors)
(until 30 June 2014)

Simone Menne
Frankfurt Stock Exchange (Exchange
Council) (since 14 November 2014)

Miles & More GmbH (Advisory Council,
Chair) (since 4 September 2014) 1

roland oetker
Rheinisch-Bergische Verlagsgesellschaft
mbH (Supervisory Board)

Dr ulrich Schröder
DEG – Deutsche Investitions- und
Entwicklungsgesellschaft mbH
( Supervisory Board)

“Marguerite 2020”: European Fund for
Energy, Climate Change and Infrastructure,
Luxembourg (Supervisory Board)

elmar Toime
Postea Inc., USA (Non-Executive Chairman)

Blackbay Ltd., United Kingdom
(Non-Executive Director) (since 7 March 2014)

Qatar Postal Services Company, Qatar
(Non-Executive Director) (since 19 Novem-
ber 2014)

Deutsche Post DHL Group — 2014 Annual Report

Corporate Governance — ManDaTeS — Mandates held by the Board of Management —
Mandates held by the Supervisory Board — CorPoraTe Go VernanCe rePor T

111

CORPORATE GOVERNANCE REPORT

annual Corporate Governance Statement pursuant to section 289a
of the Handelsgesetzbuch (HGB – German Commercial Code)

This Annual Corporate Governance Statement contains information about the main compo-
nents of Deutsche Post DHL Group’s corporate governance structure. These include the
Declaration of Conformity by the Board of Management and the Supervisory Board, rele-
vant corporate governance practices that exceed legal requirements, the working methods
of the Board of Management and the Supervisory Board, the composition and working
methods of the committees, and the composition targets for the Supervisory Board.

Company in compliance with all recommendations of the German Corporate
Governance Code

In December 2014, the Board of Management and the Supervisory Board once again
issued an unqualified Declaration of Conformity pursuant to section 161 of the AktG,
which reads as follows:

“The Board of Management and the Supervisory Board of Deutsche Post AG
declare that the recommendations of the Government Commission German Corpor-
ate Governance Code in the version dated 13 May 2013 / 24 June 2014 have been com-
plied with since issuance of the Declaration of Conformity in December 2013 and that
it is intended to comply with all recommendations of the Code in the version dated
24 June 2014 in the future.”

We also intend to implement the suggestions made in the Code, with one exception:
the Annual General Meeting will only be broadcast on the internet up to the end of the
Chief Executive Officer’s address.

Specific corporate governance practices

Our guiding principle is “respect and results”: we expect our corporate governance to
rise to the challenge of achieving first-class results every day whilst also considering the
needs of our employees, customers and investors.

Accepting corporate responsibility is integral to our Group strategy. We put our
knowledge and global presence to good use so as to make a positive contribution to
the environment, society and our business. We systematically include our stakeholders’
expectations and needs in our strategic decisions, develop sustainable solutions for our
customers and use our expertise in logistics to also address social issues. We concentrate
these efforts on environmental protection, disaster management and improving educa-
tional and employment opportunities. We also support voluntary activities under taken
by our employees. Our annual Group-wide Employee Opinion Survey has again revealed
high levels of continuing positive feedback. As in 2013, 77 % of our employees partici-
pated in the survey.

Furthermore, the annual private customer survey conducted by the Kunden monitor
Deutschland independent market study confirmed that customer satisfaction remains
high at 95 %. We achieved excellent results in transit times for letters sent within Germany,
thus exceeding the statutory requirement of 80 % for next-day letter deliveries by a wide
margin. According to surveys conducted by the quality research institute Quotas, 94 % of
the letters received during our daily opening hours and before final post box collections
were delivered the next day.

Deutsche Post DHL Group — 2014 Annual Report

dpdhl.com/en/investors

Employees, page 73

112

Code of Conduct, diversity and compliance management

Our Code of Conduct remained unchanged in 2014. It has been a firm part of our cor-
porate culture since 2006 and is applicable to all regions and divisions and the basis of
guidelines within the Group. The Code of Conduct and these guidelines, together with
regional guidelines and procedures, provide the framework for ethical and environ-
mentally sound corporate conduct. The guidelines serve as a clear point of reference for
all employees, informing them of our values and principles. The guidelines are based
upon the principles set out in the Universal Declaration of Human Rights, the United
Nations (UN) Global Compact, the ILO Declaration on Fundamental Principles and
Rights at Work of 1998 and the OECD Guidelines for multinational enterprises. The Code
is available in 21 languages. Employees can attend webinars to learn about the Code.

The Code of Conduct also sets out our commitment to the health of our employees,
respect for human rights, the rejection of child and forced labour, and our position on
diversity and inclusion. The Corporate Diversity & Inclusion Statement issued in 2013
reflects our belief that diversity represents both a key factor for success and a distinct
competitive advantage. In the Statement we also undertake to promote an inclusive
working environment and express our opposition to all forms of discrimination. The
Diversity Council began work in February 2014, meeting on three occasions during
the year under review. The participants discussed the strategic direction of diversity
and exchanged views on the divisions’ various requirements of diversity management.
The Supervisory Board supports the Group’s diversity strategy, placing particular
emphasis on the target for increasing the number of women on the Board of Manage-
ment. The Supervisory Board sees efforts to increase diversity as part of long-term
succession planning, for which the Supervisory Board and Board of Management are
jointly responsible. In the opinion of the Supervisory Board, the targeted increase in
the number of women in executive positions is necessary to ensure that, overall, more
suitable female candidates are available for vacant positions on the Board of Manage-
ment. As at 31 December 2014 the proportion of women in management around the
world remained almost stable at 19.3 % (previous year: 19.6 %). The international compo-
sition of the Board of Management already clearly reflects the company’s international
activities.

In order to protect our employees from hazards and risks in the workplace, we have
created a comprehensive regulatory framework that goes far beyond statutory occupa-
tional safety requirements and minimum standards. In addition, preventive measures
were defined in the course of occupational safety information events organised around
Germany in the year under review. We seek to maintain and improve the health and
wellbeing of our employees. All measures undertaken to promote health and safety at
work are consistent with our Group-wide strategy for health, safety and wellbeing.

Within Deutsche Post DHL Group, the Chief Compliance Officer is responsible
for the compliance management system and reports directly to the Chief Financial
Officer. The Chief Compliance Officer is supported by the Global Compliance Office,
which establishes Group-wide compliance management standards and supports the
implementation of related activities within the divisions. Each of the four operating
divisions has a Compliance Officer, who regularly presents a report to the Board of
Management member for the respective division. These reports are incorporated into
the Chief Compliance Officer’s report to the Board of Management and to the Finance
and Audit Committee of the Supervisory Board.

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The main compliance management activities within Deutsche Post DHL Group
include creating a system for identifying potential compliance risks, evaluating business
partner compliance, and developing and organising compliance-related training and
communications. Our compliance hotline is a key factor in reporting breaches of the law
or our guidelines. The hotline is available in around 150 countries and assists employees
in reporting potential breaches of the law or the Code of Conduct within the company.
The hotline also provides a structure for addressing and resolving such breaches. The
insights gained from reported cases are used to improve the compliance management
system on an on-going basis. Group-wide communications on compliance ensure that
all employees are aware of the relevance of compliance, and provide briefings on specific
features of the Code of Conduct.

Working methods of the Board of Management and the Supervisory Board

As a German public limited company, Deutsche Post AG is required to use a dual manage-
ment system. The Board of Management is responsible for managing the company. The
Board of Management is appointed, overseen and advised by the Supervisory Board.

In addition to the board departments of the Chief Executive Officer (CEO), the
Chief Financial Officer (CFO) and the Board Member for Human Resources, the Board
of Management also includes four operating divisions: Post - eCommerce - Parcel,
Express, Global Forwarding, Freight, and Supply Chain. Group management func-
tions are centralised in the Corporate Center. The Group Strategy provides a framework
for the whole Group. It follows the goal of remaining the postal service for Germany
and becoming the logistics company for the world. The Board’s rules of procedure lay
down objectives for the basic internal structure, management and co-operation within
the Board of Management. Within this framework, each Board member manages
their depart ment independently and informs the rest of the Board about key develop-
ments at regular intervals. The Board of Management as a whole decides on matters of
particular significance for the company or the Group, including all decisions that have
to be presented to the Supervisory Board for approval, and on all tasks that cannot be
delegated by law. The entire Board of Management also decides upon matters presented
by one member of the Board of Management for decision by the Board of Management
as a whole.

When making decisions, members of the Board of Management may not act in their
own personal interest or exploit corporate business opportunities for their own benefit.
The Supervisory Board must be informed of any conflicts of interest without delay.

The Supervisory Board advises and oversees the Board of Management and also
appoints the members of the Board of Management. The Supervisory Board has estab-
lished rules of procedure that include the basic internal structure, a catalogue of Board of
Management transactions requiring Supervisory Board approval and rules for the Super-
visory Board committees. The Supervisory Board meets at least twice every six months in a
calendar year. Extraordinary Supervisory Board meetings are held whenever particular
developments or measures need to be discussed or approved promptly. In financial year
2014, the Supervisory Board met for eight plenary meetings, 20 committee meetings
and one closed meeting, as described in the Report of the Supervisory Board. All members
attended at least half of the meetings. The overall attendance rate remained high in the
year under review, at over 95 %.

Deutsche Post DHL Group — 2014 Annual Report

Members, page 16 f.,
Mandates, page 110

Objectives and strategies,

page 30 f.

Members, page 109,
Mandates, page 110

Page 109

Page 105 ff.

114

The Board of Management and the Supervisory Board engage in regular dialogue
regarding the Group’s financial position and performance, strategic initiatives, key busi-
ness transactions, the progress of acquisitions, compliance and compliance management,
risk exposure and risk management, and all material planning and related implemen-
tation issues. The Board of Management informs the Supervisory Board promptly and
in full about all issues of significance. The Chairman of the Supervisory Board and the
CEO maintain close contact and discuss current issues. The Chairman of the Supervisory
Board also has regular contact with other Board of Management members between
Supervisory Board meetings.

The Supervisory Board carries out an annual efficiency review of the work of the
Super visory Board, which includes assessing co-operation with the Board of Manage-
ment. The efficiency review for financial year 2014 concluded that the Supervisory Board
had performed its monitoring and advisory duties efficiently and effectively.

All Supervisory Board decisions, particularly those concerning transactions that
require Supervisory Board approval, are discussed in detail in advance by the relevant
committees. Each Supervisory Board plenary meeting includes a detailed report on the
committees’ work and decisions taken.

None of the Supervisory Board members holds positions on the governing bodies
of, or provides consultancy services to, the Group’s main competitors. The Supervisory
Board has not been informed of any conflicts of interest affecting individual members
during the year under review.

executive committees and Supervisory Board committees

Executive committees prepare the decisions to be made by the entire Board of Manage-
ment and take decisions on matters delegated to them. The duties of the executive
committees include preparing and/or approving investments and transactions in the
various divisions. The Deutsche Post Executive Committee is responsible for the Post -
eCommerce - Parcel division; the cross-divisional DHL Executive Committee is in
charge of the Express, Global Forwarding, Freight, and Supply Chain divisions; the
CC & GBS Executive Committee covers the Corporate Center (CC) and Global Business
Services (GBS). The CEO, the CFO and the Board Member for Human Resources have
permanent representation on the committees, whilst the Board members responsible
for the divisions are represented on the committees in matters relating to their div-
isions. First-tier executives from the level immediately below the Board of Management
also attend executive committee meetings that cover topics relevant to their field. For
example, Accounting & Controlling, Corporate Finance, Corporate Development and
Legal Services will be invited to take part in discussions on acquisitions. The Deutsche
Post Executive Committee and the DHL Executive Committee each meet at least once a
month; the CC & GBS Executive Committee usually meets every quarter.

Business review meetings also take place once a quarter. These meetings are part
of the strategic performance dialogue between the divisions, the CEO and the CFO.
The business review meetings discuss strategic initiatives, operational matters and the
budgetary situation of the divisions.

For details of the members of the Board of Management, see the sections on the

Pages 16 f. and 110

Board of Management and Mandates held by the Board of Management.

The Supervisory Board has formed six committees to ensure the efficient discharge
of its duties. In particular, these committees prepare the resolutions for the Supervisory
Board plenary meetings. The Supervisory Board delegates the final decisions on certain
topics to the individual committees.

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The Executive Committee’s duties include arranging the appointment of members
of the Board of Management and determining the Board of Management remuneration
for approval by the Supervisory Board plenary meeting. The members of the Executive
Committee are Wulf von Schimmelmann (Chair), Andrea Kocsis (Deputy Chair), Rolf
Bauermeister, Werner Gatzer, Roland Oetker and Stefanie Weckesser.

The Finance and Audit Committee oversees the accounting process, the effective-
ness of the internal control system, the risk management and internal auditing systems,
and the audit of the financial statements. It examines corporate compliance issues and
discusses the half-yearly and quarterly financial reports with the Board of Management
before publication. Based upon its own preliminary assessment, the Committee submits
proposals for approval of the annual and consolidated financial statements by the Super-
visory Board. The members of the Finance and Audit Committee are Stefan Schulte
(Chair), Stephan Teuscher (Deputy Chair), Werner Gatzer, Thomas Koczelnik, Simone
Menne and Helga Thiel. The Chair of the Finance and Audit Committee, Stefan Schulte,
is a financial expert as defined in sections 100 (5) and 107 (4) of the AktG.

The Personnel Committee discusses human resources principles for the Group. The
members of the Personnel Committee are Andrea Kocsis (Chair), Wulf von Schimmel-
mann (Deputy Chair), Thomas Koczelnik and Roland Oetker.

The Mediation Committee carries out the duties assigned to it pursuant to the
Mitbestimmungsgesetz (MitbestG – German Co-determination Act). The members of
the Mediation Committee are Wulf von Schimmelmann (Chair), Andrea Kocsis ( Deputy
Chair), Rolf Bauermeister and Roland Oetker.

The Nomination Committee presents the shareholder representatives of the Super-
visory Board with recommendations for shareholder candidates for election to the
Super visory Board at the AGM. The members of the Nomination Committee are Wulf
von Schimmelmann (Chair), Werner Gatzer and Roland Oetker.

The Strategy Committee prepares material for strategy discussions in the Super visory
Board and for resolutions on corporate acquisitions and disposals requiring approval by
the plenary meeting of the Supervisory Board. The Committee also regularly discusses
the competitive position of the company and the individual divisions. The members of
the Strategy Committee are Wulf von Schimmelmann (Chair), Andrea Kocsis (Deputy
Chair), Rolf Bauermeister, Henning Kagermann, Thomas Koczelnik and Ulrich Schröder.
Information about the work of the Supervisory Board and its committees in finan cial
year 2014 is also contained in the Report of the Supervisory Board. Details of the members
of the Supervisory Board and the composition of the Supervisory Board committees can
be found in the sections on the Supervisory Board and Mandates held by the Supervisory Board.

Targets for the composition of the Supervisory Board

The Supervisory Board set specific targets for its composition in December 2010. In
2012, the Supervisory Board added a target for the number of independent Supervisory
Board members. During the year under review, the Supervisory Board resolved to pur-
sue the goal of 30 % of its members being women beyond 2015.
1 The candidates proposed by the Supervisory Board to the AGM for election as Super-
visory Board members must be made purely in the interests of the company. Subject
to this requirement, the Supervisory Board aims to ensure that the independent
Supervisory Board members as defined in number 5.4.2 of the German Corporate
Governance Code comprise at least 75 % of the Supervisory Board and that at least
30 % of the Supervisory Board members are women.

Deutsche Post DHL Group — 2014 Annual Report

Page 105 ff.

Members, page 109,
Mandates, page 110

116

2 The company’s international activities are already adequately reflected in the com-
position of the Supervisory Board. The Supervisory Board aims to maintain this
and will therefore, in future proposals to the AGM, consider candidates whose origin,
education or professional experience equip them with international knowledge and
experience.

3 Conflicts of interest affecting Supervisory Board members are an obstacle to provid-
ing independent and efficient advice to, and supervision of, the Board of Manage-
ment. The Supervisory Board will decide how to deal with potential or actual con-
flicts of interest on a case-by-case basis, in accordance with the law and giving due
consideration to the German Corporate Governance Code.

4 In accordance with the age limit adopted by the Supervisory Board and laid down
in the rules of procedure for the Supervisory Board, proposals for the election of
Super visory Board members must ensure that the term of office ends no later than
the close of the Annual General Meeting after the Supervisory Board member
reaches the age of 72.

The current composition of the Supervisory Board meets all these targets. Simone
Menne was elected as a member of the Supervisory Board by the 2014 AGM. She has
worked for Lufthansa AG for many years, which has given her a great deal of busi-
ness experience and an excellent understanding of the industry. Simone Menne will
also be able to support the Supervisory Board as an additional financial expert. With
regard to the employee representatives, Heinrich Josef Busch, the executive manage-
ment representative, resigned from the Supervisory Board as of 30 November 2014, after
many years of service. He was succeeded by Jörg von Dosky, who was appointed by the
court as a Supervisory Board member on 9 December 2014. Having been a manager
with the company for many years, Jörg von Dosky has a sound understanding of the
management perspective. At present, 35 % of Supervisory Board members are female,
which is above our target. The number of independent members of the Supervisory
Board also currently exceeds the target. All members of the Supervisory Board are in-
dependent members as defined by the German Corporate Governance Code. In view of
the European Commission’s recommendation on independent non-executive directors,
the wide-ranging protection against summary dismissal and the ban on discrimination
contained in the Betriebsverfassungsgesetz (German Works Constitution Act) and Mit-
bestimmungsgesetz (German Co-Determination Act), it must be assumed that being
an employee is consistent with the requirement for independence as defined by the
Code. The largest shareholder in the company, KfW Bankengruppe, currently holds
approximately 21 % of shares in Deutsche Post AG. There are therefore no controlling
shareholders as defined in the Code with whom relationships might exist that could
call into question the Supervisory Board’s independence. The international nature of
the company’s business is also appropriately reflected in the extensive international
experience of many Supervisory Board members.

Deutsche Post DHL Group — 2014 Annual Report

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117

Remuneration report

The remuneration report also forms part of the Group Management Report.

remuneration structure of the Group Board of Management in financial year 2014

The remuneration paid to individual Board of Management members for financial year
2014 was determined by the Supervisory Board, which held consultations to resolve on
the total remuneration to be paid to the individual members of the Board of Manage-
ment, including the main contractual elements. In so doing it obtained advice from an
independent remuneration consultant.

The Board of Management remuneration reflects the size and global reach of the
company, its economic and financial situation and the roles and achievements of the
individual members. It is set to ensure competitiveness with comparable German and
inter national companies, thus incentivising the Board of Management members to
deliver maximum performance and achieve results.

The remuneration paid to the Board of Management for 2014 is in line with standard
market practice, appropriate to the tasks involved and designed to reward performance;
it comprises fixed (non-performance-related) elements and variable (performance-
related) elements, which include short, medium and long-term incentives. The remu-
neration as a whole as well as its variable components have been capped.

Non-performance-related components are the annual base salary (fixed annual
remu neration), fringe benefits and pension commitments. The annual base salary is
paid in twelve equal monthly instalments retroactively at the end of each month. Fringe
benefits mainly comprise the use of company cars, supplements for insurance premiums
and special allowances and benefits for assignments outside the home country.

The variable remuneration paid to the Board of Management is almost entirely
medium and long-term based. More than half of the variable target remuneration con-
sists of a long-term incentive plan (LTIP) with a four-year calculation period; the rest
is made up of an annual bonus linked to the company’s yearly profits, with 50 % of the
annual bonus flowing into a medium-term component with a three-year calculation
period (deferral). Thus less than a quarter of the variable remuneration component is
paid out on the basis of a one-year calculation. The amount of the annual bonus is set at
the due discretion of the Supervisory Board on the basis of the company’s performance.
The individual annual bonus amounts reflect the extent to which predefined targets are
achieved, missed or exceeded. The maximum amount of the annual bonus may not
exceed 100 % of the annual base salary.

In the reporting year, the same criteria were used to calculate the amount of the an-
nual bonus as in the previous year. A key parameter for all Board of Management mem-
bers is the Group’s EBIT after asset charge performance metric, including the asset charge
on goodwill before goodwill impairment (EAC). For the Board of Management members
in charge of the Post - eCommerce - Parcel, Express, Global Forwarding, Freight and
Supply Chain divisions, the EAC of their respective division is also a key parameter.
The Group’s reported free cash flow is one of the targets applicable to all members of
the Board of Management. Furthermore, an employee-related target is agreed with all
Board of Management members based upon the annual Employee Opinion Survey, as
are additional targets.

Deutsche Post DHL Group — 2014 Annual Report

118

Achievement of the upper targets for the financial year that have been agreed based
upon demanding objectives is rewarded with the maximum annual bonus. If the tar-
gets specified for the financial year are only partially reached or completely missed, the
annual bonus will be paid on a pro-rata basis or not at all. The Supervisory Board may
also elect to award an appropriate special bonus for extraordinary achievement.

The annual bonus is not paid in full in a single instalment on the basis of having
reached the agreed targets. Instead, 50 % of the annual bonus flows into a medium-term
component with a three-year calculation period (performance phase of one year, sus-
tainability phase of two years). This medium-term component will be paid out after
expiry of the sustainability phase subject to the condition that EAC, as an indicator of
sustainability, is reached during the sustainability phase. Otherwise, payment of the
medium-term component is forfeited without compensation. This demerit system puts
greater emphasis on sustainable company development in determining management
board remuneration and sets long-term incentives.

Stock appreciation rights (SAR s) are granted as a long-term remuneration com-

ponent based upon the LTIP resolved by the Supervisory Board in 2006 (2006 LTIP).
Each SAR entitles the holder to receive a cash settlement equal to the difference
between the average closing price of Deutsche Post shares for the five trading days
preceding the exercise date and the exercise price of the SAR. In 2014, the members of
the Board of Management each made a personal financial investment consisting of 10 %
of their annual base salary. The waiting period for the stock appreciation rights is four
years from the date on which they were granted. After expiration of the waiting period,
and provided an absolute or relative performance target has been achieved, the SAR s
can be exercised wholly or partially for a period of two years. Any SAR s not exercised
during this two-year period will expire.

To determine how many, if any, of the SAR s granted can be exercised, the average
share price or the average index value for the reference period is compared with that of
the performance period. The reference period comprises the last 20 consecutive trading
days prior to the issue date. The performance period is the last 60 trading days before
the end of the waiting period. The average (closing) price is calculated as the average
closing price of Deutsche Post shares in Deutsche Börse AG’s Xetra trading system.

A maximum of four out of every six SAR s can be earned via the absolute perfor-
mance target, and a maximum of two via the relative performance target. If neither an
absolute nor a relative performance target is met by the end of the waiting period, the
SAR s attributable to the related tranche will expire without replacement or compensation.
One SAR is earned each time the closing price of Deutsche Post shares exceeds
the issue price by at least 10, 15, 20 or 25 %. The relative performance target is tied
to the performance of the shares in relation to the STOXX Europe 600 Index (SXXP,
ISIN EU0009658202). It is met if the share price equals the index performance or if it
outperforms the index by at least 10 %.

The proceeds from stock appreciation rights are limited to a maximum amount. The
individual amount limits for the 2014 tranche can be seen in tables B.05 and B.06. The
remuneration from stock appreciation rights may be limited by the Supervisory Board
in the event of extraordinary circumstances.

Deutsche Post DHL Group — 2014 Annual Report

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119

Provisions to cap severance payments pursuant to the Corporate Governance Code
recommendation, change-of-control provisions and post-contractual non-compete clauses

In accordance with the recommendation of the German Corporate Governance Code,
Board of Management contracts contain a provision stipulating that in the event of pre-
mature termination of a Board of Management member’s contract, the severance pay-
ment may compensate no more than the remaining term of the contract. The severance
payment is limited to a maximum amount of two years’ remuneration including fringe
benefits (severance payment cap). The severance payment cap is calculated without any
special remuneration or the value of rights allocated from LTIP s.

The contractual provisions stipulate that a change of control exists if a shareholder
has acquired control within the meaning of section 29 (2) of the Wertpapiererwerbs-
und Übernahmegesetz (WpÜG – German Securities Acquisition and Takeover Act) via
possession of at least 30 % of the voting rights, including the voting rights attribut able
to such shareholder by virtue of acting in concert with other shareholders as set forth in
section 30 of the WpÜG or if a control agreement has been concluded with the company
as a dependent entity in accordance with section 291 of the AktG and such agreement
has taken effect or if the company has merged with another legal entity outside of the
Group pursuant to section 2 of the Umwandlungsgesetz (UmwG – German Reorganisa-
tion and Transformation Act), unless the value of such other legal entity, as determined
by the agreed conversion rate, is less than 50 % of the value of the company.

In the event that the right to early termination is exercised or a Board of Manage-
ment contract is terminated by mutual consent within nine months of the change of
control, the Board of Management member is entitled to payment to compensate the
remaining term of their Board of Management contract. Such payment is limited to
150 % of the severance payment cap pursuant to the recommendation of the German
Corporate Governance Code. The amount of the payment is reduced by 25 % if the Board
of Manage ment member has not reached the age of 60 upon leaving the company. If
the remaining term of the Board of Management contract is less than two years and the
Board of Management member has not reached the age of 62 upon leaving the company,
the payment will correspond to the severance payment cap. The same applies if a Board
of Management contract expires prior to the Board of Management member’s reaching
the age of 62 because less than nine months remained on the term of the contract at the
time of the change of control and the contract was not renewed.

Board of Management members are also subject to a non-compete clause, taking
effect on the cessation of their contracts. During the one-year non-compete period,
former Board of Management members receive 100 % of their last contractually stipulated
annual base salary on a pro-rata basis as compensation each month. Any other income
earned during the non-compete period is subtracted from the compensation paid. The
amount of the compensation payment itself is deducted from any severance payments or
pension payments. Prior to, or concurrent with, cessation of the Board of Management
contract, the company may declare its waiver of adherence to the non-compete clause.
In such a case, the company will be released from the obligation to pay compensation
due to a restraint on competition six months after receipt of such declaration.

Apart from the aforementioned arrangements, no member of the Board of Manage-

ment has been promised any further benefits after leaving the company.

Deutsche Post DHL Group — 2014 Annual Report

120

other provisions

Bruce Edwards went into retirement at the end of 30 September 2014. In the period
between leaving his seat on the Board of Management on 10 March 2014 and going
into retirement he was active in a consultative capacity for the company. Mr Edwards
received total remuneration of €1,080,346 for that period.

Angela Titzrath left her position as member of the company’s Board of Management
on 2 July 2014 and left the company at the expiry of 31 July 2014. She received a payment
in the amount of €1,392,589 to settle the claims arising from her employment agreement.

amount of remuneration paid to members of the Group Board of Management
in financial year 2014

The remuneration paid to members of the Board of Management in financial year
2014 totalled €13.61 million (previous year: €13.21 million) in accordance with the
applicable international accounting standards. This amount comprised €7.62 million
in non- performance- related components (previous year: €7.84 million) and €5.99 mil-
lion in the performance-related component paid out (previous year: €5.37 million). An
additional €3.22 million of the performance-related component was transferred to the
medium-term component and will be paid out in 2017 subject to the condition that the
required EAC, as an indicator of sustainability, be reached.

The members of the Board of Management were granted a total of 1,591,332 SAR s in
financial year 2014 for a total value of €7.30 million (previous year: €7.30 million) at the
time of issue (1 September 2014). The total remuneration of the Board of Management
members is presented individually in the tables below. In addition to the applicable
accounting principles, the new recommendations of the German Corporate Governance
Code were also taken into account.

In accordance with the recommendations, the “target remuneration” tables (B.05
and B.06, or “benefits granted” in the language of the German Corporate Governance
Code) do not show any actual payments of performance-based remuneration. By con-
trast with the statement of the payment amount, the target amount for the one-year
variable remuneration and the portion of the one-year variable remuneration to be
deferred (deferral) that was granted for financial year 2014 or for the previous year is
stated (i. e., the amount when achieving 100 % of the target). In addition, the long-term
remuneration (LTIP with a four-year waiting period) granted in the reporting year or
in the previous year is reported at the fair value at the time granted. With respect to
pension commitments, the pension expense, i. e., the service cost in accordance with
IAS 19, is presented. The presentation is supplemented by the minimum and maximum
values that can be achieved.

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121

B.05 Target remuneration for the Board of Management members active as at 31 December 2014

€

a) non-performance-related remuneration

Base salary

Fringe benefits

Total (lit. a)

b) Performance-related remuneration
One-year variable remuneration

Multi-year variable remuneration

LTIP with four-year waiting period

Deferral with three-year waiting period

Total (lit. a and b)

c) Pension expense (service cost)

Total DCGK remuneration (lit. a to c)

d) Variable cash remuneration pursuant

to DRS 17
One-year variable remuneration
(payment amount)

Payout from medium-term component

Total remuneration (cash components)
pursuant to DRS 17 (lit. a and d)

Dr Frank Appel
Chairman

2013

2014

Min. 2014

Max. 2014

1,962,556

49,122

2,011,678

802,179

2,813,857

1,962,556

49,122

2,011,678

981,278

5,887,668

4,906,390

981,278

8,880,624

802,179

9,682,803

1,962,556

30,093

1,992,649

785,022

2,747,581

1,962,559

785,022

5,525,252

823,857

6,349,109

834,086

436,268

1,962,556

49,122

2,011,678

785,022

2,747,605

1,962,583

785,022

5,544,305

802,179

6,346,484

928,682

519,194

3,263,003

3,459,554

Ken Allen
Express

Roger Crook
Global Forwarding, Freight

2013

2014

Min. 2014

Max. 2014

2013

2014

Min. 2014

Max. 2014

a) non-performance-related remuneration

Base salary

Fringe benefits

Total (lit. a)

930,000

97,403

930,000

106,274

930,000

106,274

930,000

106,274

860,000

203,918

912,500

210,096

912,500

210,096

912,500

210,096

1,027,403

1,036,274

1,063,918

1,122,596

b) Performance-related remuneration
One-year variable remuneration

372,000

Multi-year variable remuneration

1,302,010

1,302,026

LTIP with four-year waiting period

Deferral with three-year waiting period

930,010

372,000

930,026

372,000

465,000

344,000

365,000

4,185,000

1,204,016

1,295,026

3,720,000

465,000

860,016

344,000

930,026

365,000

456,250

4,176,250

3,720,000

456,250

Total (lit. a and b)

2,701,413

2,710,300

1,036,274

5,686,274

2,611,934

2,782,622

1,122,596

5,755,096

c) Pension expense (service cost)

318,826

321,620

298,666

301,904

Total DCGK remuneration (lit. a to c)

3,020,239

3,031,920

1,357,894

6,007,894

2,910,600

3,084,526

1,424,500

6,057,000

d) Variable cash remuneration pursuant

to DRS 17
One-year variable remuneration
(payment amount)

Payout from medium-term component

Total remuneration (cash components)
pursuant to DRS 17 (lit. a and d)

453,375

208,708

447,935

419,100

384,678

290,228

336,849

407,756

1,689,486

1,903,309

1,738,824

1,867,201

Deutsche Post DHL Group — 2014 Annual Report

122

Jürgen Gerdes
Post - eCommerce - Parcel

John Gilbert
Supply Chain
(since 11 March 2014)

2013

2014

Min. 2014

Max. 2014

2013

2014

Min. 2014

Max. 2014

a) non-performance-related remuneration

Base salary

Fringe benefits

Total (lit. a)

953,250

23,858

976,500

31,479

976,500

31,479

976,500

31,479

977,108

1,007,979

b) Performance-related remuneration
One-year variable remuneration

381,300

390,600

Multi-year variable remuneration

1,357,810

1,367,113

LTIP with four-year waiting period

Deferral with three-year waiting period

976,510

381,300

976,513

390,600

488,250

4,394,250

3,906,000

488,250

Total (lit. a and b)

2,716,218

2,765,692

1,007,979

5,890,479

c) Pension expense (service cost)

244,254

239,548

Total DCGK remuneration (lit. a to c)

2,960,472

3,005,240

1,247,527

6,130,027

d) Variable cash remuneration pursuant

to DRS 17
One-year variable remuneration
(payment amount)

Payout from medium-term component

Total remuneration (cash components)
pursuant to DRS 17 (lit. a and d)

457,274

465,000

470,331

448,725

1,899,382

1,927,035

–

576,613

75,044

651,657

230,645

945,666

715,021

230,645

576,613

75,044

651,657

576,613

75,044

651,657

288,307

3,148,307

2,860,000

288,307

1,827,968

651,657

4,088,271

–

1,827,968

651,657

4,088,271

277,726

–

929,383

Melanie Kreis
Human Resources
(since 31 October 2014)

Lawrence Rosen
Finance, Global Business Services

2013

2014

Min. 2014

Max. 2014

2013

2014

Min. 2014

Max. 2014

a) non-performance-related remuneration

Base salary

Fringe benefits

Total (lit. a)

b) Performance-related remuneration
One-year variable remuneration

Multi-year variable remuneration

LTIP with four-year waiting period

Deferral with three-year waiting period

Total (lit. a and b)

c) Pension expense (service cost)

Total DCGK remuneration (lit. a to c)

d) Variable cash remuneration pursuant

to DRS 17
One-year variable remuneration
(payment amount)

Payout from medium-term component

Total remuneration (cash components)
pursuant to DRS 17 (lit. a and d)

–

121,089

3,849

121,089

3,849

121,089

3,849

124,938

930,000

20,220

950,220

930,000

29,476

959,476

930,000

29,476

959,476

930,000

29,476

959,476

48,436

221,810

60,545

372,000

1,302,010

1,302,026

930,010

372,000

930,026

372,000

465,000

4,185,000

3,720,000

465,000

124,938

246,028

2,624,230

2,633,502

959,476

5,609,476

–

321,414

325,451

221,810

124,938

246,028

2,945,644

2,958,953

1,284,927

5,934,927

58,056

–

182,994

453,375

215,000

434,264

295,350

1,618,595

1,689,090

Deutsche Post DHL Group — 2014 Annual Report

Corporate Governance — CorPoraTe GoVernanCe rePor T — Remuneration report

123

B.06 Target remuneration for the Board of Management members who left the company in financial year 2014

€

a) non-performance-related remuneration

Base salary

Fringe benefits

Total (lit. a)

b) Performance-related remuneration
One-year variable remuneration

Multi-year variable remuneration

LTIP with four-year waiting period

Deferral with three-year waiting period

Total (lit. a and b)

c) Pension expense (service cost)

Total DCGK remuneration (lit. a to c)

d) Variable cash remuneration pursuant

to DRS 17
One-year variable remuneration
(payment amount)

Payout from medium-term component

Total remuneration (cash components)
pursuant to DRS 17 (lit. a and d)

Bruce Edwards
Supply Chain
(until 10 March 2014)

Angela Titzrath
Human Resources
(until 1 July 2014)

2013

2014

Min. 2014

Max. 2014

2013

2014

Min. 2014

Max. 2014

930,000

124,884

1,054,884

372,000

1,302,010

930,010

372,000

2,728,894

327,236

3,056,130

180,000

52,423

232,423

72,000

376,423

325,446

701,869

180,000

52,423

232,423

180,000

52,423

232,423

90,000

715,000

61,234

776,234

390,020

77,294

467,314

390,020

77,294

467,314

390,020

77,294

467,314

286,000

156,008

1,001,017

1,016,027

715,017

286,000

860,019

156,008

195,010

3,635,010

3,440,000

195,010

232,423

412,423

2,063,251

1,639,349

467,314

4,297,334

325,446

557,869

325,446

737,869

239,711

246,742

2,302,962

1,886,091

246,742

714,056

246,742

4,544,076

446,493

421,317

86,697

443,610

303,875

–

174,807

235,950

1,922,694

762,730

1,080,109

878,071

The “payments” tables (B.07 and B.08) below include the same figures for fixed
remuneration and fringe benefits as in the “target remuneration” tables (B.05 and B.06).
By contrast with the presentation in the target remuneration tables, the one-year variable
remuneration paid in financial year 2014 or in the previous year (the payment amount)
is stated; the presentation therefore does not include the share of the annual bonus trans-
ferred to the medium-term component. With regard to the medium-term component
(deferral), the payment amounts of the deferral whose calculation period ended upon
expiry of the reporting year or the previous year is reported. The tables also reflect the
amount paid (payment amount) from the tranches of the long-term components that
were exercised in financial year 2014 or in the previous year. In addition, the pension
expense ( service cost in accordance with IAS 19) is stated pursuant to the recommenda-
tions of the German Corporate Governance Code. Although the pension expense does
not represent an actual payment per se, it is included in the presentation for the purpose
of illustrating the total remuneration.

Deutsche Post DHL Group — 2014 Annual Report

124

B.07 Payments made to the Board of Management members active as at 31 December 2014

€

Payments
Base salary

Fringe benefits

Total

One-year variable remuneration

Multi-year variable remuneration

Medium-term component (2011)

Medium-term component (2012)

LTIP (2009 tranche)

LTIP (2010 tranche)

Miscellaneous

Total

Pension expense (service cost)

Total

Payments
Base salary

Fringe benefits

Total

One-year variable remuneration

Multi-year variable remuneration

Medium-term component (2011)

Medium-term component (2012)

LTIP (2009 tranche)

LTIP (2010 tranche)

Miscellaneous

Total

Pension expense (service cost)

Total

Payments
Base salary

Fringe benefits

Total

One-year variable remuneration

Multi-year variable remuneration

Medium-term component (2011)

Medium-term component (2012)

LTIP (2009 tranche)

LTIP (2010 tranche)

Miscellaneous

Total

Pension expense (service cost)

Total

Dr Frank Appel
Chairman

2013

1,962,556

30,093

1,992,649

834,086

4,221,236

436,268

–

3,784,968

–

7,047,971

823,857

7,871,828

2014

1,962,556

49,122

2,011,678

928,682

5,845,059

–

519,194

–

5,325,865

–

8,785,419

802,179

9,587,598

Ken Allen
Express

Roger Crook
Global Forwarding, Freight

Jürgen Gerdes
Post - eCommerce - Parcel

2013

2014

2013

2014

2013

2014

930,000

97,403

930,000

106,274

860,000

203,918

912,500

210,096

1,027,403

1,036,274

1,063,918

1,122,596

453,375

447,935

2,730,482

4,015,170

208,708

–

419,100

2,521,774

–

3,596,070

–

384,678

290,228

–

953,250

23,858

977,108

457,274

976,500

31,479

1,007,979

470,331

2,976,610

4,141,942

336,849

407,756

–

465,000

–

407,756

–

448,725

–

2,511,610

–

3,693,217

–

4,211,260

5,499,379

1,738,824

1,867,201

4,410,992

5,620,252

318,826

321,620

298,666

301,904

244,254

239,548

4,530,086

5,820,999

2,037,490

2,169,105

4,655,246

5,859,800

John Gilbert
Supply Chain
(since 11 March 2014)

Melanie Kreis
Human Resources
(since 31 October 2014)

Lawrence Rosen
Finance, Global Business
Services

2013

2014

2013

2014

2013

2014

–

576,613

75,044

651,657

277,726

–

929,383

–

929,383

–

121,089

3,849

124,938

58,056

–

930,000

20,220

950,220

453,375

930,000

29,476

959,476

434,264

2,774,610

3,994,924

215,000

–

295,350

2,559,610

–

3,699,574

–

182,994

4,178,205

5,388,664

–

321,414

325,451

182,994

4,499,619

5,714,115

Deutsche Post DHL Group — 2014 Annual Report

Corporate Governance — CorPoraTe GoVernanCe rePor T — Remuneration report

125

B.08 Payments made to the Board of Management members who left the company in financial year 2014

€

Payments
Base salary

Fringe benefits

Total

One-year variable remuneration

Multi-year variable remuneration

Medium-term component (2011)

Medium-term component (2012)

LTIP (2009 tranche)

LTIP (2010 tranche)

Miscellaneous

Total

Pension expense (service cost)

Total

Bruce Edwards
Supply Chain
(until 10 March 2014)

Angela Titzrath
Human Resources
(until 1 July 2014)

2013

2014

2013

2014

930,000

124,884

1,054,884

446,493

2,979,000

421,317

–

2,557,683

–

4,480,377

327,236

4,807,613

180,000

52,423

232,423

86,697

4,143,184

–

443,610

–

3,699,574

–

4,462,304

325,446

4,787,750

715,000

61,234

776,234

303,875

–

1,080,109

239,711

1,319,820

390,020

77,294

467,314

174,809

235,950

–

235,950

–

1,392,589

2,270,660

246,742

2,517,402

B.09 Share-based component with long-term incentive effect

number of shares

Dr Frank Appel, Chairman

Ken Allen

Roger Crook

Bruce Edwards (until 10 March 2014)

Jürgen Gerdes

John Gilbert (since 11 March 2014)

Melanie Kreis (since 31 October 2014)

Lawrence Rosen

Angela Titzrath (until 1 July 2014)

Number
of SAR s
2013 tranche

Number
of SAR s
2014 tranche

533,304

252,720

233,700

252,720

265,356

–

252,720

194,298

427,578

202,620

–

212,748

155,778

–

202,620

187,368

Pension commitments under the previous system

Dr Frank Appel and Jürgen Gerdes have direct, final-salary-based pension commitments
on the basis of their individual contracts, providing for benefits in case of permanent
disability, death or retirement. If the contract of a member ends after at least five years
of service on the Board of Management, the entitlements they have acquired will vest
in full. Members become entitled to benefits due to permanent disability after at least
five years of service. Eligibility for retirement benefits begins at the earliest at the age of
55, or at the age of 62 in the case of Jürgen Gerdes. The pensions are generally geared
towards annuity payments. However, the members of the Board of Management have
the option of choosing a lump sum payment instead of the annuity payment. The benefit
amount depends on the pensionable income and the pension level derived from the
years of service.

Deutsche Post DHL Group — 2014 Annual Report

126

Pensionable income consists of the annual base salary (fixed annual remuneration)
computed on the basis of the average salary over the last twelve calendar months of
employment. Members of the Board of Management attain a pension level of 25 % after
five years of service. The maximum pension level of 50 % is attained after ten years of
service. Subsequent pension benefits increase or decrease to reflect changes in the con-
sumer price index in Germany.

B.10

Individual breakdown of pension commitments under the previous system

Pension commitments

Pension
level on
31 Dec. 2013
%

Pension
level on
31 Dec. 2014
%

Maximum
pension level
%

Present value
(DBO) as at
31 Dec. 2013
€

Present value
(DBO) as at
31 Dec. 2014
€

11,083,250

17,206,903

4,749,766

7,248,450

15,833,016

24,455,353

Dr Frank Appel, Chairman

Jürgen Gerdes

Total

The increase in the present value (DBO) as at 31 December 2014 compared with 31 De-
cember 2013 was due primarily to the significant reduction in the IAS discount rate.
Since the pension commitments under the old system normally involve payment of a
pension and thus a provision of benefits over a very long period, they are – by contrast
with lump-sum commitments – subject to a high degree of interest rate risk, which is
reflected directly in the amount of the DBO. For that reason, around 80 % of the DBO
increase is attributable to the interest rate risk.

Pension commitments under the new system

Since 4 March 2008, newly appointed Board of Management members have received
pension commitments based upon a defined contribution plan rather than the previous
commitments, which were based upon the final salary. Under the defined contribution
pension plan, the company credits an annual amount of 35 % of the annual base salary
to a virtual pension account for the Board of Management member concerned. The
maximum contribution period is 15 years. The pension capital accrues interest at an
annual rate equal to the “iBoxx Corporates AA 10+ Annual Yield” rate, or at an annual
rate of 2.25 % at minimum, and will continue to do so until the pension benefits fall due.
The pension benefits are paid out in a lump sum in the amount of the value accumulated
in the pension account. The benefits fall due when the Board of Management member
reaches the age of 62 or in the case of invalidity or death whilst in office. In the event
of benefits falling due, the pension beneficiary may opt to receive an annuity payment
in lieu of a lump sum payment. If this option is exercised, the capital is converted to an
annuity payment, taking into account the average “iBoxx Corporates AA 10+ Annual
Yield” for the past ten full calendar years as well as the individual data of the surviving
dependents and a future pension increase of 1 % per year.

Deutsche Post DHL Group — 2014 Annual Report

Corporate Governance — CorPoraTe GoVernanCe rePor T — Remuneration report

127

B.11

Individual breakdown of Board of Management pension commitments under the new system

€

Ken Allen

Roger Crook

Bruce Edwards (until 10 March 2014)

John Gilbert (since 11 March 2014)

Melanie Kreis (since 31 October 2014)

Lawrence Rosen

Angela Titzrath (until 1 July 2014)

Total

Total
contribution
for 2013

Total
contribution
for 2014

Present value
(DBO) as at
31 Dec. 2013

Present value
(DBO) as at
31 Dec. 2014

325,500

301,000

325,500

–

325,500

250,250

325,500

301,000

1,397,841

1,758,438

783,308

1,112,203

54,250

1,852,506

1,978,493

187,688

454,639 1

325,500

250,250

–

196,163

789,731

2,396,295

2,847,639

461,924

1,171,010

1,527,750

1,898,827

6,891,874

9,853,677

1 Including settlement of the benefits resulting from previous pension commitments in the amount of €412,931. With respect to invalidity

benefits and surviving dependents’ benefits, the minimum benefit is based upon the previous pension commitment.

Benefits for former Board of Management members

Benefits paid to former members of the Board of Management or their surviving
dependents amounted to €6.0 million in financial year 2014 (previous year: €4.4 mil-
lion). The defined benefit obligation (DBO) for current pensions calculated under IFRS s
amounted to €104 million (previous year: €72 million). The increase was due mainly
to a significant reduction in the IAS discount rate compared with the previous year as
well as an increase in the number of pensioners whose pension benefits fell due; no
additional obligations were thus incurred. Without these special effects in the amount of
€33.1 million, the defined benefit obligation would have decreased by around €1 million
to around €71 million compared with the previous year.

Supervisory Board remuneration

The Annual General Meeting on 29 May 2013 decided on the remuneration payable
to the members of the Supervisory Board. It is regulated by article 17 of the Articles
of Association of Deutsche Post AG. Unlike in previous years (fixed remuneration of
€40,000 plus variable, profit-related bonus) Supervisory Board members will receive
only fixed annual remuneration in the amount of €70,000.

The Supervisory Board chairman and the Supervisory Board committee chairs
receive an additional 100 % of the remuneration, and the Supervisory Board deputy
chair and committee members receive an additional 50 %. This does not apply to the
Mediation or Nomination Committees. Those who only serve on the Supervisory Board
or its committees, or act as chair or deputy chair, for part of the year are remunerated
on a pro-rata basis.

As in the previous year, Supervisory Board members receive an attendance allow-
ance of €1,000 for each plenary meeting of the Supervisory Board or committee meeting
that they attend. They are entitled to the reimbursement of out-of-pocket cash expenses
incurred in the exercise of their office. Any value added tax charged on Supervisory
Board remuneration or out-of-pocket expenses is reimbursed.

Deutsche Post DHL Group — 2014 Annual Report

128

The remuneration for 2014 totalled €2,671,000 (previous year: €1,416,833 plus a
vari able amount for 2013 to be paid in 2016). The following table shows the remuner-
ation paid to each Supervisory Board member:

B.12 remuneration paid to Supervisory Board members for 2014

€

Board members

Prof. Dr Wulf von Schimmelmann (Chair)

Andrea Kocsis (Deputy Chair)

Rolf Bauermeister

Hero Brahms (until 27 May 2014)

Heinrich Josef Busch (until 30 November 2014)

Jörg von Dosky (since 9 December 2014)

Werner Gatzer

Prof. Dr Henning Kagermann

Thomas Koczelnik

Anke Kufalt

Thomas Kunz

Simone Menne (since 27 May 2014)

Roland Oetker

Andreas Schädler

Sabine Schielmann

Dr Ulrich Schröder

Dr Stefan Schulte

Stephan Teuscher

Helga Thiel

Elmar Toime

Stefanie Weckesser

Prof. Dr-Ing. Katja Windt

Fixed
component

Attendance
allowance

315,000

245,000

140,000

52,500

64,167

5,833

140,000

105,000

175,000

70,000

65,625

140,000

70,000

105,000

126,875

105,000

70,000

105,000

70,000

23,000

19,000

16,000

4,000

7,000

1,000

19,000

8,000

21,000

8,000

6,000

9,000

Total

338,000

264,000

156,000

56,500

71,167

6,833

159,000

113,000

196,000

78,000

76,000

74,625

18,000

158,000

8,000

9,000

15,000

14,000

8,000

13,000

7,000

78,000

114,000

141,875

120,000

119,000

78,000

118,000

77,000

Deutsche Post DHL Group — 2014 Annual Report

Corporate Governance — CorPoraTe GoVernanCe rePor T — Remuneration report

129

The following table shows the fixed remuneration paid to each Supervisory Board mem-
ber for the previous year (2013):

B.13 remuneration paid to Supervisory Board members for 2013

€

Board members

Prof. Dr Wulf von Schimmelmann (Chair)

Andrea Kocsis (Deputy Chair)

Rolf Bauermeister

Hero Brahms (until 27 May 2014)

Heinrich Josef Busch (until 30 November 2014)

Werner Gatzer

Prof. Dr Henning Kagermann

Thomas Koczelnik

Anke Kufalt

Thomas Kunz

Roland Oetker

Andreas Schädler

Sabine Schielmann

Dr Ulrich Schröder

Dr Stefan Schulte

Stephan Teuscher

Helga Thiel

Elmar Toime

Stefanie Weckesser

Prof. Dr-Ing. Katja Windt

Fixed
component

Attendance
allowance

141,667

120,833

60,833

80,000

40,000

80,000

40,833

80,833

40,000

80,000

40,000

40,833

60,000

40,000

60,000

40,000

16,000

13,000

9,000

12,000

4,000

12,000

3,000

16,000

5,000

4,000

14,000

5,000

4,000

10,000

12,000

9,000

5,000

9,000

4,000

Maximum
variable
remuneration
(cap) 1

70,833

60,416

30,416

40,000

20,000

40,000

20,416

40,416

20,000

40,000

20,000

20,416

30,000

20,000

30,000

20,000

Total

157,667

133,833

69,833

92,000

44,000

92,000

43,833

96,833

45,000

44,000

94,000

45,000

44,833

70,000

72,000

69,000

45,000

69,000

44,000

1 This variable remuneration component will fall due for payment as at the end of the 2016 AGM after determination

of the consolidated net profit per share for financial year 2015.

Deutsche Post DHL Group — 2014 Annual Report

130

The variable remuneration for financial year 2012 falls due for payment as at the end of
the 2015 AGM. It will amount to €1,000 for each €0.02 by which the consolidated net
profit per share for financial year 2014 exceeds the consolidated net profit per share for
financial year 2011. The remuneration cap takes effect for financial year 2012, meaning
that the variable remuneration component will be limited to 50 % of the fixed compo-
nent. The total amount of the variable remuneration of financial year 2012 amounts to
€616,250. Of that amount, €21,250 is attributable to one Supervisory Board member
who has meanwhile left the company and €595,000 to active Supervisory Board mem-
bers, as broken down by member in the following table:

B.14 Variable remuneration paid to Supervisory Board members for 2012

€

Active Board members

Prof. Dr Wulf von Schimmelmann (Chair)

Andrea Kocsis (Deputy Chair)

Rolf Bauermeister

Hero Brahms (until 27 May 2014)

Heinrich Josef Busch (until 30 November 2014)

Jörg von Dosky (since 9 December 2014) 1

Werner Gatzer

Prof. Dr Henning Kagermann

Thomas Koczelnik

Anke Kufalt

Thomas Kunz

Simone Menne (since 27 May 2014) 1

Roland Oetker

Andreas Schädler

Sabine Schielmann

Dr Ulrich Schröder

Dr Stefan Schulte

Stephan Teuscher

Helga Thiel

Elmar Toime

Stefanie Weckesser

Prof. Dr-Ing. Katja Windt

1 Not a Board member in financial year 2012.

Variable
remuneration
(cap)

70,000

60,000

30,000

40,000

20,000

–

40,000

20,000

40,000

20,000

–

40,000

20,000

30,000

5,000

30,000

20,000

30,000

20,000

No variable remuneration for financial year 2011 was paid out in the previous year
(2013) as the requirements had not been met.

Deutsche Post DHL Group — 2014 Annual Report

131 — 214

CONSOLIDATED
FINANCIAL STATEMENTS

C CONSOLIDATED FINANCIAL STATEMENTSC

CONSOLIDATED FINANCIAL STATEMENTS

133

INCOME STATEMENT

134 STATEMENT OF COMPREHENSIVE INCOME

135 BALANCE SHEET

136 CASH FLOW STATEMENT

137 STATEMENT OF CHANGES IN EQUITY

138 NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS OF DEUTSCHE POST AG

138 BASIS OF PREPARATION

138
138
142
142
144
146
147
154
155

1 – Basis of accounting
2 – Consolidated group
3 – Significant transactions
4 – Adjustment of prior-period amounts
5 – New developments in international accounting under IFRS s
6 – Currency translation
7 – Accounting policies
8 – Exercise of judgement in applying the accounting policies
9 – Consolidation methods

156 SEGMENT REPORTING

156

10 – Segment reporting

159

INCOME STATEMENT DISCLOSURES

159
159
159
160
160
161
161

161
161
163
163
163
163

11 – Revenue
12 – Other operating income
13 – Materials expense
14 – Staff costs / employees
15 – Depreciation, amortisation and impairment losses
16 – Other operating expenses
17 – Net income from investments accounted for

using the equity method

18 – Net finance costs
19 – Income taxes
20 – Consolidated net profit for the period
21 – Non-controlling interests
22 – Earnings per share
23 – Dividend per share

164 BALANCE SHEET DISCLOSURES

164
166
167
168
169
169
169
170
170
170
170
170
171
171

172
174
174
176
176
176
178
186
187
189
190

24 – Intangible assets
25 – Property, plant and equipment
26 – Investment property
27 – Investments accounted for using the equity method
28 – Non-current financial assets
29 – Other non-current assets
30 – Deferred taxes
31 – Inventories
32 – Current financial assets
33 – Trade receivables
34 – Other current assets
35 – Income tax assets and liabilities
36 – Cash and cash equivalents
37 – Assets held for sale and liabilities associated

with assets held for sale

38 – Issued capital and purchase of treasury shares
39 – Capital reserves
40 – Other reserves
41 – Retained earnings
42 – Equity attributable to Deutsche Post AG shareholders
43 – Non-controlling interests
44 – Provisions for pensions and similar obligations
45 – Other provisions
46 – Financial liabilities
47 – Other liabilities
48 – Trade payables

190 CASH FLOW DISCLOSURES

190

49 – Cash flow disclosures

192 OTHER DISCLOSURES

192
205
205
205
206
209
212
212
213

50 – Risks and financial instruments of the Group
51 – Contingent liabilities
52 – Other financial obligations
53 – Litigation
54 – Share-based payment
55 – Related party disclosures
56 – Auditor’s fees
57 – Exemptions under the HGB and local foreign legislation
58 – Declaration of Conformity with the German Corporate

Governance Code

213

59 – Significant events after the reporting date

213 RESPONSIBILITY STATEMENT

214

INDEPENDENT AUDITOR’S REPORT

133

2014

56,630

2,016

58,646

–32,042

–18,189

–1,381

– 4,074

– 55,686

2,965

– 423

–39

–388

2,577

– 400

2,177

2,071

106

1.71

1.64

Note

2013
adjusted 1

54,912

1,962

56,874

–31,038

–17,776

–1,337

–3,863

– 54,014

2,865

182

– 432

– 43

–293

2,572

–361

2,211

2,091

120

1.73

1.66

Consolidated Financial Statements — InCoMe STaTeMenT

C.01 INCOME STATEMENT

1 January to 31 December

€ m

Revenue

Other operating income

Total operating income

Materials expense

Staff costs

Depreciation, amortisation and impairment losses

Other operating expenses

Total operating expenses

Net income from investments accounted for using the equity method

Profit from operating activities (EBIT)

Financial income

Finance costs

Foreign currency result

net finance costs

Profit before income taxes

Income taxes

Consolidated net profit for the period

attributable to Deutsche Post AG shareholders

attributable to non-controlling interests

Basic earnings per share (€)

Diluted earnings per share (€)

Note 4.

Deutsche Post DHL Group — 2014 Annual Report

134

C.02 STATEMENT OF COMPREHENSIVE INCOME

1 January to 31 December

€ m

Consolidated net profit for the period

Items that will not be reclassified to profit or loss
Change due to remeasurements of net pension provisions

IFRS 3 revaluation reserve

Other changes in retained earnings

Income taxes relating to components of other comprehensive income

Share of other comprehensive income of investments accounted for using the equity method (after tax)

Total (after tax)

Items that may be subsequently reclassified to profit or loss
IAS 39 revaluation reserve
Changes from unrealised gains and losses

Changes from realised gains and losses

IAS 39 hedging reserve
Changes from unrealised gains and losses

Changes from realised gains and losses

Currency translation reserve
Changes from unrealised gains and losses

Changes from realised gains and losses

Income taxes relating to components of other comprehensive income

Share of other comprehensive income of investments accounted for using the equity method (after tax)

Total (after tax)

other comprehensive income (after tax)

Total comprehensive income

attributable to Deutsche Post AG shareholders

attributable to non-controlling interests

Note 4.

Note

2013
adjusted 1

2,211

2014

2,177

– 50

–2,350

–1

–2

285

–14

–2,065

111

– 49

– 461

–26

–1

–348

–362

1,849

1,739

110

112

–73

–19

454

495

–1,570

607

488

119

Deutsche Post DHL Group — 2014 Annual Report

Consolidated Financial Statements — STaTeMenT oF C oMPreHenSIVe InC oMe — BaL anCe SHeeT

135

C.03 BALANCE SHEET

€ m

ASSETS
Intangible assets

Property, plant and equipment

Investment property

Investments accounted for using the equity method

Non-current financial assets

Other non-current assets

Deferred tax assets

non-current assets

Inventories

Current financial assets

Trade receivables

Other current assets

Income tax assets

Cash and cash equivalents

Assets held for sale

Current assets

Total ASSETS

EQUITY AND LIABILITIES
Issued capital

Capital reserves

Other reserves

Retained earnings

Equity attributable to Deutsche Post AG shareholders

Non-controlling interests

equity

Provisions for pensions and similar obligations

Deferred tax liabilities

Other non-current provisions

Non-current provisions

Non-current financial liabilities

Other non-current liabilities

Non-current liabilities

non-current provisions and liabilities

Current provisions

Current financial liabilities

Trade payables

Other current liabilities

Income tax liabilities

Liabilities associated with assets held for sale

Current liabilities

Current provisions and liabilities

Total EQUITY AND LIABILITIES

Note 4.

Deutsche Post DHL Group — 2014 Annual Report

Note

1 Jan. 2013
adjusted 1

31 Dec. 2013
adjusted 1

31 Dec. 2014

12,146

6,652

1,038

301

1,328

11,832

6,800

1,123

187

1,327

12,352

7,177

1,363

151

1,752

21,574

21,370

22,902

321

252

6,940

2,155

127

2,395

12,266

33,840

1,209

2,254

– 474

6,017

9,006

207

9,213

5,216

156

1,954

7,326

4,421

276

4,697

402

821

7,022

2,223

167

3,414

14,091

35,461

1,209

2,269

– 817

7,183

9,844

190

10,034

5,016

124

1,589

6,729

4,619

227

4,846

332

351

7,825

2,415

172

2,978

14,077

36,979

1,210

2,339

–341

6,168

9,376

204

9,580

7,226

1,556

8,866

4,683

255

4,938

12,023

11,575

13,804

1,667

410

5,960

4,003

534

10,937

12,604

33,840

1,752

1,335

6,358

3,978

429

12,100

13,852

35,461

1,545

486

6,922

4,196

446

12,050

13,595

36,979

136

C.04 CASH FLOW STATEMENT

1 January to 31 December

€ m

Consolidated net profit for the period attributable to Deutsche Post AG shareholders

Consolidated net profit for the period attributable to non-controlling interests

Income taxes

Net finance costs

Profit from operating activities (EBIT)

Depreciation, amortisation and impairment losses

Net income from disposal of non-current assets

Non-cash income and expense

Change in provisions

Change in other non-current assets and liabilities

Dividend received

Income taxes paid

net cash from operating activities before changes in working capital

Changes in working capital
Inventories

Receivables and other current assets

Liabilities and other items

net cash from operating activities

Subsidiaries and other business units

Property, plant and equipment and intangible assets

Investments accounted for using the equity method and other investments

Other non-current financial assets

Proceeds from disposal of non-current assets

Subsidiaries and other business units

Property, plant and equipment and intangible assets

Investments accounted for using the equity method and other investments

Other non-current financial assets

Cash paid to acquire non-current assets

Interest received

Current financial assets

net cash used in investing activities

Proceeds from issuance of non-current financial liabilities

Repayments of non-current financial liabilities

Change in current financial liabilities

Other financing activities

Proceeds from transactions with non-controlling interests

Cash paid for transactions with non-controlling interests

Dividend paid to Deutsche Post AG shareholders

Dividend paid to non-controlling interest holders

Purchase of treasury shares

Proceeds from issuing shares or other equity instruments

Interest paid

net cash used in financing activities

net change in cash and cash equivalents

Effect of changes in exchange rates on cash and cash equivalents

Changes in cash and cash equivalents associated with assets held for sale

Changes in cash and cash equivalents due to changes in consolidated group

Cash and cash equivalents at beginning of reporting period

Cash and cash equivalents at end of reporting period

Note 4.

Note

2013
adjusted 1

2,091

120

361

293

2,865

1,337

–22

– 500

– 53

– 561

3,078

–104

– 670

685

2,989

177

241

–37

–1,381

– 68

–1,486

– 575

–1,765

1,010

–34

–21

– 846

–109

–23

–166

–110

1,114

–102

2,395

3,414

49.1

49.2

49.3

49.4

2014

2,071

106

400

388

2,965

1,381

–11

– 4

– 698

–25

– 548

3,061

106

– 814

687

3,040

200

118

322

– 5

–1,750

–1

–103

–1,859

405

–1,087

–1,030

– 53

– 5

–34

– 968

– 90

– 85

–188

–2,348

–395

– 42

3,414

2,978

Deutsche Post DHL Group — 2014 Annual Report

Consolidated Financial Statements — CaSH FLoW STaTeMenT — ST aTeMenT oF CHanGeS In eQuIT y

137

C.05 STATEMENT OF CHANGES IN EQUITY

Other reserves

Issued
capital

Capital
reserves

IFRS 3
revaluation
reserve

IAS 39
revaluation
reserve

IAS 39
hedging
reserve

Currency
translation
reserve

Retained
earnings

40.2

–1

40.3

–7

1 January to 31 December

€ m

Note

Balance at 1 January 2013

Adjustment 1

Balance at 1 January 2013, adjusted

Capital transactions with owner
Dividend

Transactions with non-controlling
interests

Changes in non-controlling interests
due to changes in consolidated group

Issue of shares or other equity
instruments

Purchase of treasury shares

Share-based payment (issuance)

Share-based payment (exercise)

Total comprehensive income
Consolidated net profit for the period

Currency translation differences

Change due to remeasurements
of net pension provisions

Other changes

Balance at 31 December 2013,
adjusted 1

Balance at 1 January 2014

Capital transactions with owner
Dividend

Transactions with non-controlling
interests

Changes in non-controlling interests
due to changes in consolidated group

Issue of shares or other equity
instruments

Purchase of treasury shares

Share-based payment (issuance)

Share-based payment (exercise)

Total comprehensive income
Consolidated net profit for the period

Currency translation differences

Change due to remeasurements
of net pension provisions

Other changes

1,209

2,254

–1

–20

1,209

2,269

–3

–31

40.1

–1

– 65

Balance at 31 December 2014

1,210

2,339

Note 4.

Deutsche Post DHL Group — 2014 Annual Report

Equity
attributable
to Deutsche
Post AG
shareholders

9,019

–13

9,006

Non-
controlling
interests

Total equity

209

–2

207

9,228

–15

9,213

– 846

–111

– 957

– 62

– 67

–18

–3

– 85

–3

–23

– 901

–127

–1,028

2,091

– 450

–15

113

1,739

9,844

120

–11

110

190

2,211

– 461

–14

113

1,849

10,034

6,031

–14

6,017

–22

2,091

–15

7,183

– 968

–101

–1,069

– 6

– 82

– 6

– 85

–15

–21

– 85

– 956

–105

–1,061

2,071

441

–2,061

488

106

– 4

119

204

2,177

458

–2,065

607

9,580

40.4

– 470

– 469

– 5

– 450

– 924

441

–2

102

170

–28

– 483

6,168

9,376

138

NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS OF
DEUTSCHE POST AG

These consolidated financial statements were authorised for
issue by a resolution of the Board of Management of Deutsche
Post AG dated 20 February 2015.

The consolidated financial statements are prepared in euros
(€). Unless otherwise stated, all amounts are given in millions of
euros (€ million, € m).

Consolidated group

2
The consolidated group includes all companies controlled by
Deutsche Post AG. Control exists if Deutsche Post AG has decision-
making powers, is exposed to, and has rights to, variable returns,
and is able to use its decision-making powers to affect the amount
of the variable returns.

The Group companies are consolidated from the date on

which Deutsche Post DHL Group is able to exer cise control.

When Deutsche Post DHL Group holds less than the majority
of voting rights, other contractual arrangements may result in the
Group controlling the investee.

DHL Sinotrans International Air Courier Ltd. (Sinotrans),
China, is a significant company that has been consolidated despite
Deutsche Post DHL Group not having a majority of voting rights.
Sinotrans provides domestic and international express delivery
and transport services and has been assigned to the Express seg-
ment. The company is fully inte grated into the global DHL network
and operates exclusively for Deutsche Post DHL Group. Due to the
arrangements in the Network Agreement, DHL is able to prevail
in decisions concerning Sinotrans’ relevant activities. Sinotrans
has therefore been consolidated fully although Deutsche Post DHL
Group holds no more than 50 % of the company’s share capital.

The complete list of the Group’s shareholdings in accordance
with section 313 (2) nos. 1 to 4 and section 313 (3) of the HGB can be
accessed online at

www.dpdhl.com/en/investors.html.

BASIS OF PREPARATION

Deutsche Post DHL Group is a global mail and logistics group. The
Deutsche Post and DHL corporate brands represent a portfolio of
logistics (DHL) and communication (Deutsche Post) services. The
financial year of Deutsche Post AG and its consolidated subsidiaries
is the calendar year. Deutsche Post AG, whose registered office is in
Bonn, Germany, is entered in the commercial register of the Bonn
Local Court.

Basis of accounting

1
As a listed company, Deutsche Post AG prepared its consolidated
financial statements in accordance with the International Financial
Reporting Standards (IFRS s), as adopted by the European Union
(EU), and the provisions of commercial law to be additionally
applied in accordance with section 315 a (1) of the Handelsgesetz-
buch (HGB – German Commercial Code).

The requirements of the Standards applied have been satisfied
in full, and the consolidated financial statements therefore provide
a true and fair view of the Group’s net assets, financial position and
results of operations.

The consolidated financial statements consist of the income
statement and the statement of comprehensive income, the balance
sheet, the cash flow statement, the statement of changes in equity
and the Notes. In order to improve the clarity of presentation, vari-
ous items in the balance sheet and in the income statement have
been combined. These items are disclosed and explained separately
in the Notes. The income statement has been classified in accord-
ance with the nature of expense method.

The accounting policies, as well as the explanations and dis-
closures in the Notes to the IFRS consolidated financial statements
for financial year 2014, are generally based on the same accounting
policies used in the 2013 consolidated financial statements. Excep-
tions to this are the changes in international financial reporting
Note 5 that have been required
under the IFRS s described in
to be applied by the Group since 1 January 2014. The accounting
policies are explained in

Note 7.

Deutsche Post DHL Group — 2014 Annual Report

Consolidated Financial Statements — noTeS — Basis of preparation

The companies listed in the following table are consolidated

in addition to the parent company Deutsche Post AG:

Consolidated group

number of fully consolidated companies (subsidiaries)
German

Foreign

number of proportionately consolidated joint ventures
German

Foreign

number of joint operations
German

Foreign

number of investments accounted for using the equity method
German

Foreign

Note 4.

139

2014

685

2013

Adjustment 1

2013
adjusted

707

–1

– 5

–1

–3

702

The changes in the consolidation requirements resulting from the
application of IFRS 10 and IFRS 11 had no significant effects on the
Group’s net assets, financial position and results of operations. The
prior-period amounts were adjusted accordingly. The relevant in-
Note 4 “Adjustment of prior-period
formation can be found in
amounts”.

2.1 acquisitions

acquisitions in 2014

The following acquisitions were made in 2014:

Insignificant acquisitions, 2014

€ m

1 January to 31 December

Non-current assets

Current assets

Cash and cash equivalents

ASSETS

Current provisions and liabilities

EQUITY AND LIABILITIES

net assets

Carrying
amount

Adjustment

Fair value

–

The calculation of goodwill is presented in the following table:

acquisitions, 2014

Name

Country

Segment

Interest
%

Date of
acquisition

Goodwill, 2014

€ m

DHL Global
Forwarding & Co.
LLC (DHL Oman),
Muscat

StreetScooter,
Aachen

Global
Forwarding,
Freight

Oman

Contractual consideration

7 May 2014

Fair value of the existing equity interest 1

Cost

Germany

PeP 1

100

18 Dec. 2014

Less net assets

1 Post - eCommerce - Parcel, formerly the Mail segment.

Freight forwarding, transport and logistics service provider DHL
Global Forwarding & Co. LLC (DHL Oman), Oman, which was
previously accounted for using the equity method, has been con-
solidated since May 2014 due to contractual changes. In Decem-
ber 2014, Deutsche Post DHL Group acquired StreetScooter GmbH.
The company develops electric vehicles. As a result of the acquisi-
tion, Deutsche Post DHL Group has also acquired the development
and production rights to the vehicles.

Difference

Plus non-controlling interests 2

Goodwill

1 Gain on the change in the method of consolidation is recognised

under other operating income.

2 Non-controlling interests are recognised at their carrying amounts.

Fair value

–1

Deutsche Post DHL Group — 2014 Annual Report

140

Since their consolidation, the companies have contributed €17 mil-
lion to consolidated revenue and €2 million to consolidated EBIT.
If the companies had already been acquired as at 1 January 2014,
they would have contributed an additional €8 million to consoli-
dated revenue and €1 million to consolidated EBIT.

Transaction costs amounted to less than €1 million and are

reported in other operating expenses.

€7 million was paid for the companies acquired in financial
year 2014, and €3 million was paid for companies acquired in pre-
vious years. The purchase price for the companies acquired was
paid by transferring cash funds.

acquisitions in 2013

In the period up to 31 December 2013, Deutsche Post DHL Group
acquired companies that did not materially affect the Group’s net
assets, financial position and results of operations, either individu-
ally or in the aggregate:

held for sale and liabilities associated with assets held for sale in
accordance with IFRS 5. In the third quarter of 2013, the Board of
Management announced that it no longer intended to resell the
company. Initial consolidation resulted in goodwill of €5 million.
The company was accounted for in the third quarter of 2013. The
income statement presentation was not adjusted retrospectively
due to the immateriality of the amounts involved.

Insignificant acquisitions, 2013

€ m

1 January to 31 December

Non-current assets

Current assets

Cash and cash equivalents

ASSETS

Current liabilities and provisions

EQUITY AND LIABILITIES

net assets

Carrying
amount

Adjustment

Fair value

–

Fair value

acquisitions, 2013

Name

Country

Segment

Compador
Technologies
GmbH, Berlin

Germany

optivo GmbH, Berlin Germany

RISER ID Services
GmbH, Berlin

Germany

PeP

Interest
%

Date of
acquisition

15 January
2013

100

28 June 2013

The calculation of goodwill is presented in the following table:

Goodwill, 2013

€ m

100

31 July 2013

Fair value of existing equity interest 1

Contractual consideration

Cost

Less net assets

In January 2013, Deutsche Post DHL Group acquired 49 % of the
shares of Compador Technologies GmbH (Compador), Berlin,
which specialises in the development and manufacture of sorting
machines and software solutions. The company is consolidated
because of existing potential voting rights.

In addition, optivo GmbH, Berlin, was acquired in June 2013.
optivo provides technical e-mail marketing services. The software
and services offered by the company make it possible to reach out
to existing customers by automatically sending campaign e-mails.

At the end of July 2013, all of the shares of RISER ID
Services GmbH, Berlin, were acquired via a subsidiary in which
Deutsche Post DHL Group holds a 51 % interest. The company is a
service provider offering electronic address information from pub-
lic resident registers.

Less cost attributable to non-controlling interests

Difference

Plus non-controlling interests 2

Goodwill

1 Gain on the change in the method of consolidation is recognised

under other operating income.

2 Non-controlling interests are recognised at their carrying amount.

In financial year 2013, the companies contributed €8 million to
consolidated revenue and €–2 million to consolidated EBIT follow-
ing consolidation. If the companies had already been acquired as at
1 January 2013, they would have contributed an additional €9 mil-
lion to consolidated revenue and €1 million to consolidated EBIT.

Transaction costs amounted to less than €1 million and are

reported in other operating expenses.

In financial year 2012, Deutsche Post DHL Group increased
its stake in All you need GmbH, Berlin, a mobile commerce super-
market. The step acquisition of the company was carried out with
a view to resale. The company was therefore classified under assets

€34 million was paid for the companies acquired in financial
year 2013 and €5 million was paid for companies acquired in previ-
ous years. The purchase price for the companies acquired was paid
by transferring cash funds.

Deutsche Post DHL Group — 2014 Annual Report

Consolidated Financial Statements — noTeS — Basis of preparation

141

2.2 Contingent consideration

Variable purchase prices, which are presented in the following table,
were agreed for the acquisitions in previous financial years:

Contingent consideration

Basis

Revenue and EBITDA 1

Revenue and sales margin

Period for financial years
from / to

2011 to 2013

2012 to 2014

Results range from

€0 to €3 million

€0 to €9 million

Fair value
of total obligation

€0 million

€3 million

Remaining
payment obligation
at 31 Dec. 2013

Remaining
payment obligation
at 31 Dec. 2014

€1 million

€0 million

1 Change in the fair value of the total and remaining payment obligation due to differences between actual and estimated amounts.

2.3 Disposal and deconsolidation effects

Gains are shown under other operating income; losses are reported
under other operating expenses.

Disposal and deconsolidation effects, 2014

The disposal and deconsolidation effects in financial year 2014
were as follows:

Disposal and deconsolidation effects, 2014

€ m

1 January to 31 December

Non-current assets

Current assets

Cash and cash equivalents

ASSETS

Non-current provisions and liabilities

Current provisions and liabilities

EQUITY AND LIABILITIES

net assets

Total consideration received

Income from the currency translation reserve

Non-controlling interests

Deconsolidation gain (+) / loss (–)

Digital
Solutions
Business

Compador
Technologies

Hull Blyth

– 5

– 4

–1

Total

–2

POST - EC OMMERCE - PARCEL SEGMENT

GLOBAL FORWARDING, FREIGHT SEGMENT

Compador Technologies, Berlin, was sold and deconsolidated in
December 2014.

SUPPLY CHAIN SEGMENT

In December 2014, DHL Supply Chain Limited, UK, sold its Digital
Solutions Business by way of an asset deal.

In July 2014, activities not forming part of the core business of
Hull Blyth (Angola) Ltd., Angola, including the related non- current
assets and the company Hull Blyth Angola Viagens e Turismo Lda.,
Angola, were sold. During the course of the year, the assets and
liabilities were reclassified as assets held for sale and liabilities asso-
ciated with assets held for sale in accordance with IFRS 5. The most
recent measurement of the assets prior to reclassification did not
indicate any impairment.

Deutsche Post DHL Group — 2014 Annual Report

142

Disposal and deconsolidation effects in 2013

€ m

1 January to 31 December

Non-current assets

Current assets

Cash and cash equivalents

ASSETS

Current provisions and liabilities

EQUITY AND LIABILITIES

net assets

Total consideration received

Losses from the currency translation reserve

Deconsolidation gain (+) / loss (–)

Cargus
International

DHL Fashion
(France)

ITG Group

Exel Direct DHL Express UK

–23

–2

Total

116

–2

EXPRESS SEGMENT

2.4

Joint operations

The sale of the Romanian domestic express business of Cargus
Inter national S. R. L. was completed in the first quarter of 2013. The
assets and liabilities had previously been reclassified as assets held
for sale and liabilities associated with assets held for sale in accord-
ance with IFRS 5. The most recent measurement of the assets prior
to their reclassification did not indicate any impairment.

The sale of the Domestic Same Day business of DHL Express UK
Limited, UK, closed at the end of October 2013. The relevant assets
and liabilities had previously been reclassified as assets held for sale
and liabilities associated with assets held for sale in accordance with
IFRS 5. The most recent measurement of the assets and liabilities
prior to their reclassification did not indicate any impairment.

SUPPLY CHAIN SEGMENT

Deutsche Post DHL Group completed the sale of the fashion logis-
tics business of DHL Fashion (France) SAS, France, in April 2013.
The most recent measurement of the assets and liabilities prior to
their reclassification as assets held for sale and liabilities associated
with assets held for sale resulted in an impairment loss of €1 mil-
lion in 2012, which was reported in depreciation, amortisation and
impairment losses.

In addition, ITG GmbH Internationale Spedition und Logistik,
Germany, was sold together with its subsidiaries in June 2013. The
companies’ assets and liabilities were reclassified as assets held for
sale and liabilities associated with assets held for sale in accordance
with IFRS 5. The most recent measurement of the assets prior to
their reclassification did not indicate any impairment.

The sale of US company Exel Direct Inc. including its Can-
adian branch was completed in May 2013. The most recent meas-
urement of the assets prior to their reclassification did not indicate
any impairment.

US warehousing specialist Llano Logistics Inc. was sold and
deconsolidated in May 2013. Since all of the amounts involved
were lower than €1 million, they are not shown in the table.

Joint operations are consolidated in accordance with IFRS 11, based
on the interest held.

A significant joint operation is Aerologic GmbH (Aerologic),
Germany, a cargo airline domiciled in Leipzig. The company has
been allocated to the Express segment. It was jointly established by
Deutsche Lufthansa AG and Deutsche Post Beteiligungen Holding
GmbH, which each hold 50 % of its capital and voting rights.
Aerologic’s shareholders are simultaneously its customers, giving
them access to its freight aircraft capacity. Aerologic serves the
DHL Express network exclusively from Monday to Friday, whilst
it flies for the Lufthansa Cargo network at weekends. In contrast
to its capital and voting rights, the company’s assets and liabilities,
as well as its income and expenses, are allocated based on this user
relationship.

Significant transactions

Capital increases

Deutsche Post AG increased its capital in March and Decem-
ber 2014 by issuing new shares and performing a share buy-back;

Note 38.

There were no other significant transactions to report.

adjustment of prior-period amounts

4
As the amended IFRS 10 and IFRS 11 came into force on 1 Jan-
uary 2014 and were applied retrospectively, the prior-period
amounts of the relevant balance sheet and income statement items
were adjusted accordingly. During this transition process, further
insignificant adjustments were made to the inclusion method and
the equity interest included.

The investments in associates balance sheet item was re-
named investments accounted for using the equity method as it
now also includes the joint ventures to be accounted for using the
equity method. Accordingly, the net income from associates item
in the income statement was changed to net income from invest-
ments accounted for using the equity method.

Deutsche Post DHL Group — 2014 Annual Report

Consolidated Financial Statements — noTeS — Basis of preparation

143

An analysis of Deutsche Post DHL Group’s investment port-
folio revealed that it only held investments in companies that are
active in the Group’s core business area. This means that reporting
the income and expenses from these investments under operating
profit (EBIT) gives a better view of operating performance. As a

result, the net income from investments accounted for using the
equity method item and those effects from available-for-sale finan-
cial assets relating to equity investments have been reclassified
from net finance costs to profit from operating activities. This item
has been reclassified retrospectively.

Balance sheet adjustments at 1 January 2013 and 31 December 2013

€ m

ASSETS
Intangible assets

Property, plant and equipment

Investments in associates

Investments accounted for using the equity method

Non-current financial assets

Other non-current assets

Inventories

Trade receivables

Other current assets

Income tax assets

Cash and cash equivalents

Total ASSETS

EQUITY AND LIABILITIES
Other reserves

Retained earnings

Non-controlling interests

Provisions for pensions and similar obligations

Other non-current provisions

Non-current financial liabilities

Current provisions

Current financial liabilities

Trade payables

Other current liabilities

Income tax liabilities

Total EQUITY AND LIABILITIES

Income statement adjustments 1 January to 31 December 2013

€ m

Revenue

Other operating income

Materials expense

Staff costs

Depreciation, amortisation and impairment losses

Other operating expenses

Net income from investments accounted for using the equity method

Profit from operating activities (EBIT)

Net income from associates

Net finance costs

1 Jan. 2013

Adjustment

1 Jan. 2013
adjusted

31 Dec. 2013

Adjustment

31 Dec. 2013
adjusted

12,151

6,663

–

1,039

298

322

6,959

2,153

127

2,400

33,857

– 475

6,031

209

5,216

1,943

4,413

1,663

403

5,991

4,004

534

33,857

– 5

–11

– 46

–1

–19

– 5

–17

–14

–2

–31

–1

–17

12,146

6,652

–

1,038

301

321

6,940

2,155

127

2,395

11,836

6,814

–

1,124

184

403

7,040

2,221

168

3,417

33,840

35,478

– 474

6,017

207

5,216

1,954

4,421

1,667

410

5,960

4,003

534

– 819

7,198

191

5,017

1,574

4,612

1,745

1,328

6,392

3,981

430

33,840

35,478

– 4

–14

– 48

–1

–18

–1

–3

–17

–15

–1

–34

–3

–1

–17

2013

Adjustment

55,085

1,961

–31,212

–17,785

–1,341

–3,847

–

2,861

–289

–173

174

–16

–2

– 4

11,832

6,800

–

1,123

187

402

7,022

2,223

167

3,414

35,461

– 817

7,183

190

5,016

1,589

4,619

1,752

1,335

6,358

3,978

429

35,461

2013
adjusted

54,912

1,962

–31,038

–17,776

–1,337

–3,863

2,865

–

–293

Deutsche Post DHL Group — 2014 Annual Report

144

new developments in international accounting under IFRS s

new Standards required to be applied in financial year 2014

The following Standards, changes to Standards and Interpretations
are required to be applied on or after 1 January 2014:

Effective for
financial years
beginning
on or after Subject matter and significance

1 January 2014

Standard

IFRS 10 (Consolidated
Financial Statements)
including transitional
provisions

IFRS 11 (Joint Arrangements)
including transitional
provisions

1 January 2014

This new standard introduces a uniform definition of control for all entities that are to be included in the consolidated
financial statements. IFRS 10 supersedes IAS 27 (Consolidated and Separate Financial Statements) and SIC -12 ( Consolidation –
Special Purpose Entities). Special purpose entities previously consolidated in accordance with SIC-12 are now subject
to IFRS 10. Retrospective application of the standard only resulted in insignificant changes for financial year 2013;
and 4. Pro forma disclosure: non-application of the standard in financial year 2014 would not have resulted in significant
changes to EBIT or consolidated net profit.

Notes 2

IFRS 11 supersedes IAS 31 (Interests in Joint Ventures) and abolishes the option to proportionately consolidate joint ventures.
However, IFRS 11 does not require all entities that were previously subject to proportionate consolidation to be accounted for
using the equity method. IFRS 11 provides a uniform definition of the term “joint arrangements” and distinguishes between
joint operations and joint ventures. The interest in a joint operation is recognised on the basis of direct rights and obligations,
whereas the interest in the profit or loss of a joint venture must be accounted for using the equity method. Application of
the equity method to joint ventures will follow the requirements of the revised IAS 28 (Investments in Associates and Joint
Ventures). Retrospective application of the standard only resulted in insignificant changes for financial year 2013;
and 4. Pro forma disclosure: non-application of the standard in financial year 2014 would not have resulted in significant
changes to EBIT or consolidated net profit.

Notes 2

IFRS 12 (Disclosures
of Interests in Other
Entities) including
transitional provisions

IAS 27 (Separate Financial
Statements) (revised 2011)

IAS 28 (Investments
in Associates and Joint
Ventures) (revised 2011)

Amendments to IAS 32
(Financial Instruments:
Presentation – Offsetting
Financial Assets and
Financial Liabilities)

Amendments to IAS 36
( Impairment of Assets –
Recoverable Amount
Disclosures for Non-
Financial Assets)

Amendments to IAS 39
(Novation of Derivatives
and Continuation of
Hedge Accounting)

1 January 2014

IFRS 12 combines the disclosure requirements for all interests in subsidiaries, joint ventures, associates and unconsolidated
structured entities into a single standard. An entity is required to provide quantitative and qualitative disclosures about the
types of risks and financial effects associated with the entity’s interests in other entities. The disclosures required by IFRS 12
are presented in the Notes to the consolidated financial statements for the year ending on 31 December 2014.

1 January 2014

The existing standard IAS 27 (Consolidated and Separate Financial Statements) was revised in conjunction with the new
standards IFRS 10, IFRS 11 and IFRS 12 and renamed IAS 27 (Separate Financial Statements) (revised 2011). The revised
standard now only contains requirements applicable to separate financial statements. The amendment does not affect
the financial statements.

1 January 2014

The existing standard IAS 28 (Investments in Associates) was revised by the standards IFRS 10, IFRS 11 and IFRS 12 and renamed
IAS 28 (Investments in Associates and Joint Ventures) (revised 2011). Its scope was extended to include accounting for joint
ventures using the equity method. The previous requirements of SIC-13 (Jointly Controlled Entities – Non-Monetary Contribu-
tions by Venturers) have been incorporated into IAS 28. The amendment has no significant effect on the financial statements.

1 January 2014

These amendments have provided clarification on the conditions for offsetting financial assets and liabilities in the balance
sheet. They have no significant effect on the presentation of the financial statements. In individual cases, additional
disclosures are required.

1 January 2014

The amendment clarifies that disclosures regarding the recoverable amount of non-financial assets are only required
if an impairment loss has been recognised or reversed in the current reporting period. In addition, the disclosures required
when the recoverable amount is determined based on fair value less costs of disposal have been amended. The standard
was applied early in financial year 2013.

1 January 2014

Under this amendment, subject to certain conditions, novation of a hedging instrument to a central counterparty as
a consequence of laws or regulations does not give rise to termination of a hedging relationship. The amendment has
no significant effect on the presentation of the financial statements.

The following are not relevant for the consolidated financial statements:
amendments to IFRS 10, IFRS 12 and IAS 27 (Investment Entities), effective for financial years beginning on or after 1 January 2014.

Deutsche Post DHL Group — 2014 Annual Report

Consolidated Financial Statements — noTeS — Basis of preparation

145

new accounting pronouncements adopted by the EU
but only required to be applied in future periods

The following Standards, changes to Standards and Interpretations
have already been endorsed by the EU. However, they will only be
required to be applied in future periods.

Standard
(Issue date)

IFRIC 21 (Levies)
(20 May 2013)

Amendments to IAS 19
( Defined Benefit Plans:
Employee Contributions)
(21 November 2013)

Annual Improvements
to IFRS s 2010–2012 Cycle
(12 December 2013)

Annual Improvements
to IFRS s 2011–2013 Cycle
(12 December 2013)

Effective for
financial years
beginning
on or after Subject matter and significance

17 June 2014 1

This Interpretation provides guidance on when to recognise a liability for a levy imposed by a government. It covers the
recognition of levies imposed in accordance with laws or regulations. It does not include taxes, fines and other outflows
that fall within the scope of other standards. The effects of this Interpretation on the consolidated financial statements
are immaterial.

1 February 2015 1

The amendments apply to the recognition of employee contributions to defined benefit retirement plans. Their objective
is to simplify accounting for employee contributions that are independent of the number of years of service. In such cases,
the service cost in the period in which the corresponding service is rendered may be reduced. The new requirements must
be applied retrospectively. Application will not lead to any significant effects.

1 February 2015 1

The annual improvement process refers to the following standards: IFRS 2, IFRS 3, IFRS 8, IFRS 13, IAS 16, IAS 24, IAS 37, IAS 38
and IAS 39. The amendments will not have a significant influence on the consolidated financial statements.

1 January 2015 1 The annual improvement process refers to the following standards: IFRS 1, IFRS 3, IFRS 13 and IAS 40. The amendments will

not have a significant influence on the consolidated financial statements.

1 The effective date was amended for companies within the EU. This is a departure from the original standard.

new accounting requirements not yet adopted by the EU
( endorsement procedure)

The IASB and the IFRIC issued further Standards, amendments to
Standards and Interpretations in financial year 2014 and in previ-
ous years whose application is not yet mandatory for financial year
2014. The application of these IFRS s is dependent on their adoption
by the EU.

Effective for
financial years
beginning
on or after Subject matter and significance

1 January 2018

Standard
(Issue date)

IFRS 9 (Consolidated
Financial Statements)
(24 July 2014)

IFRS 9 was issued in 2009 as part of the project to replace IAS 39 and contains rules on the recognition and measurement of
financial instruments, derecognition and hedge accounting. The fourth and final version of IFRS 9 now issued supersedes
all previous versions. IFRS 9 changes the previous requirements applicable for the classification and measurement of finan-
cial assets, including the requirements regarding impairment, and supplements the new hedge accounting requirements
published in 2013. A new fair value through other comprehensive income measurement category was introduced for business
models where assets are both held for sale and held to collect contractual cash flows. The new requirements for deter-
mining impairment (impairment losses, particularly allowances for losses on loans and advances) include a new expected
loss model, under which losses are recognised earlier, with both incurred and expected future losses taken into account.
By contrast, IFRS 9 results in little change to the classification and measurement requirements for financial liabilities. For
financial liabilities designated as at fair value, changes to their fair value attributable to changes in the credit risk of the
entity must in future be presented in other comprehensive income (OCI), as opposed to profit and loss. The revision of hedge
accounting places greater focus on an entity’s economic risk management. Extensive new disclosure requirements were
added as an amendment to IFRS 7. Application of IFRS 9 is required for reporting periods beginning on or after 1 January 2018.
Voluntary early application is permitted subject to local requirements. Initial application must in principle be retrospective,
although various simplification options are permitted. The Group is currently reviewing the effects on the consolidated
financial statements.

This standard will in future replace the existing requirements governing revenue recognition under IAS 18 (Revenue) and
IAS 11 (Construction Contracts). The new standard establishes uniform requirements regarding the timing and amount of
revenue recognition, which are applicable for all sectors and for all categories of revenue transaction. The standard provides
a principle-based five-step model that must be applied to all contracts with customers. It also introduces extensive dis-
closure requirements. IFRS 15 must be applied for reporting periods beginning on or after 1 January 2017. The requirements
must in principle be applied retrospectively. Its effects on the consolidated financial statements are currently being reviewed.

IFRS 15 (Revenue from
Contracts with Customers)
(28 May 2014)

1 January 2017

Deutsche Post DHL Group — 2014 Annual Report

146

Standard
(Issue date)

Amendments to IFRS 11
(Joint Arrangements –
Acquisition of Interests
in Joint Operations)
(6 May 2014)

Amendments to IAS 16
(Property, Plant and
Equipment) and IAS 38
( Intangible Assets):
Clarification of Acceptable
Methods of Depreciation
and Amortisation
(12 May 2014)

Annual Improvements
to IFRS s 2012–2014 Cycle
(25 September 2014)

Amendments to IAS 1
(Presentation of Financial
Statements)
(18 December 2014)

Effective for
financial years
beginning
on or after Subject matter and significance

1 January 2016

The amendment clarifies that the acquisition and additional acquisition of interests in joint operations in which the activity
constitutes a business, as defined in IFRS 3 (Business Combinations), must be recognised in accordance with the principles
governing business combinations accounting in IFRS 3 and other IFRS s, with the exception of those principles that conflict
with the requirements of IFRS 11. The amendments do not apply if the reporting entity and the other parties involved are
under the common control of the same ultimate controlling party. The new requirements are applicable prospectively
for interests acquired in reporting periods beginning on or after 1 January 2014. Voluntary earlier application is permitted.
The effects on the Group are currently being reviewed.

The amendments expand the existing requirements relating to the permitted depreciation and amortisation methods for
intangible assets and for property, plant and equipment. The amendments specify that revenue-based depreciation and
amortisation methods are not permitted for property, plant and equipment and may only be used for intangible assets in
certain exceptional circumstances. In addition, the amendments clarify that a reduction in the selling price of goods and
services could signal obsolescence, which could in turn reflect a reduction in the economic benefits available from the asset.
The requirements are applicable prospectively. Voluntary early application is permitted. The effects on the consolidated
financial statements are currently being reviewed.

1 January 2016

The annual improvement process refers to the following standards: IFRS 5, IFRS 7, IAS 19, IAS 34. Application of the new
requirements is mandatory for reporting periods beginning on or after 1 January 2016. The amendments will not have
a significant influence on the consolidated financial statements.

1 January 2016

The changes comprise clarifications relating to the materiality of the items presented in the balance sheet, the statement
of comprehensive income, the cash flow statement, the statement of changes in equity and the disclosures in the notes.
Information that is not material need not be presented. This applies even if disclosure is explicitly required in other standards.
In addition, the revised version of IAS 1 includes new rules or clarifications of existing requirements concerning the presenta-
tion of subtotals, the structure of the notes and the disclosures on accounting policies. The presentation of the interest in
equity-accounted investments in other comprehensive income is also clarified. The amendments will not have a significant
effect on the financial statements.

The following are not relevant for the consolidated financial statements:
IFRS 14 (Regulatory Deferral Accounts), issued on 30 January 2014 and effective for financial years beginning on or after 1 January 2016; amendments to IAS 16 ( Property,
Plant and Equipment) and IAS 41 (Agriculture): Bearer Plants, issued on 30 June 2014 and effective for financial years beginning on or after 1 January 2016; amendments
to IAS 27 (Equity Method in Separate Financial Statements), issued on 12 August 2014 and effective for financial years beginning on or after 1 January 2016; amendments
to IFRS 10 ( Consolidated Financial Statements) and IAS 28 (Investments in Associates and Joint Ventures), issued on 11 September 2014 and effective for financial years
beginning on or after 1 January 2016. Amendments to IFRS 10, IFRS 12 and IAS 28, Investment Entities: Applying the Consolidation Exception, issued on 18 December 2014
and effective for financial years beginning on or after 1 January 2016.

Currency translation

6
The financial statements of consolidated companies prepared in
foreign currencies are translated into euros (€) in accordance with
IAS 21 using the functional currency method. The functional cur-
rency of foreign companies is determined by the primary economic
environment in which they mainly generate and use cash. Within
the Group, the functional currency is predominantly the local cur-
rency. In the consolidated financial statements, assets and liabil-
ities are therefore translated at the closing rates, whilst periodic in-
come and expenses are generally translated at the monthly closing
rates. The resulting currency translation differences are recognised
in other comprehensive income. In financial year 2014, currency
translation differences amounting to €441 million (previous year,
adjusted: €–450 million) were recognised in other comprehensive
income (see the statement of comprehensive income and statement
of changes in equity).

Goodwill arising from business combinations after 1 Janu-
ary 2005 is treated as an asset of the acquired company and there-
fore carried in the functional currency of the acquired company.

The exchange rates for the currencies that are significant for

the Group were as follows:

Closing rates

Average rates

2013
EUR 1 =

2014
EUR 1 =

2013
EUR 1 =

2014
EUR 1 =

1.5408

8.3411

0.8332

1.4823

7.5389

0.7789

1.3769

8.1670

0.8492

1.4729

8.1891

0.8064

144.6070

145.1930

129.6521

140.3815

Country

Australia

China

Japan

Sweden

Switzerland

USA

8.8682

1.2269

1.3778

9.3797

1.2025

1.2148

8.6511

1.2308

1.3284

9.1000

1.2146

1.3291

Currency

AUD

CnY

GBP

JPY

SEK

CHF

USD

Deutsche Post DHL Group — 2014 Annual Report

Consolidated Financial Statements — noTeS — Basis of preparation

147

Intangible assets

Intangible assets are measured at amortised cost. Intangible assets
comprise internally generated and purchased intangible assets and
purchased goodwill.

Internally generated intangible assets are capitalised at cost
if it is probable that their production will generate an inflow of
future economic benefits and the costs can be reliably measured.
In the Group, this concerns internally developed software. If the
criteria for capitalisation are not met, the expenses are recognised
immediately in income in the year in which they are incurred. In
addition to direct costs, the production cost of internally devel-
oped software includes an appropriate share of allocable produc-
tion overhead costs. Any borrowing costs incurred for qualifying
assets are included in the production cost. Value added tax arising
in conjunction with the acquisition or production of intangible
assets is included in the cost if it cannot be deducted as input tax.
Capitalised software is amortised over its useful life.

Intangible assets are amortised using the straight-line
method over their useful lives. Impairment losses are recognised
in accordance with the principles described in the section headed
Impairment. The useful lives of significant intangible assets are pre-
sented in the table below.

useful lives

Internally developed software

Purchased software

Licences

Customer relationships

Years 1

up to 10

up to 5

term of agreement

up to 20

1 The useful lives indicated represent maximum amounts specified by the Group.
The actual useful lives may be shorter due to contractual arrangements or other
specific factors such as time and location.

Intangible assets that are not affected by legal, economic, con-
tractual, or other factors that might restrict their useful lives are
considered to have indefinite useful lives. They are not amortised
but are tested for impairment annually or whenever there are indi-
cations of impairment. They generally include brand names from
business combinations, for example. Impairment testing is carried
out in accordance with the principles described in the section
headed Impairment.

The carrying amounts of non-monetary assets recognised at con-
solidated companies operating in hyperinflationary economies are
generally indexed in accordance with IAS 29 and thus reflect the
current purchasing power at the balance sheet date.

In accordance with IAS 21, receivables and liabilities in the
financial statements of consolidated companies that have been
prepared in local currencies are translated at the closing rate as at
the balance sheet date. Currency translation differences are recog-
nised in other operating income and expenses in the income state-
ment. In financial year 2014, income of €171 million (previous year,
adjusted: €157 million) and expenses of €170 million ( previous
year, adjusted: €157 million) resulted from currency translation
differences. In contrast, currency translation differences relating
to net investments in a foreign operation are recognised in other
comprehensive income.

The company’s business in Venezuela is subject to exchange
controls. The Venezuelan currency, the bolívar fuerte, is not freely
convertible. In March 2014, a new exchange rate system known
as SICAD II (Sistema Complementario de Administración de
Divisas) was introduced and the state-set exchange rate adjusted.
Deutsche Post DHL Group began using this system in the second
quarter of 2014 and modified the conversion rate on this basis.
Due to currency effects, the cash and cash equivalents of the com-
panies affected decreased by €130 million and non-current assets
by €27 million as at the date of the change. Other current assets
declined by €56 million and current provisions and liabilities by
€103 million. The corresponding contra entries are included in the
currency translation reserve in equity. Cash and cash equivalents
amounted to €23 million as at 31 December 2014.

accounting policies

7
Uniform accounting policies are applied to the annual financial
statements of the entities that have been included in the consoli-
dated financial statements. The consolidated financial statements
are prepared under the historical cost convention, except where
items are required to be recognised at their fair value.

revenue and expense recognition

Deutsche Post DHL Group’s normal business operations consist
of the provision of logistics services. All income relating to nor-
mal business operations is recognised as revenue in the income
statement. All other income is reported as other operating income.
Revenue and other operating income is generally recognised when
services are rendered, the amount of revenue and income can be
reliably measured and, in all probability, the economic benefits
from the transactions will flow to the Group. Operating expenses
are recognised in income when the service is utilised or when the
expenses are incurred.

Deutsche Post DHL Group — 2014 Annual Report

148

Property, plant and equipment

Property, plant and equipment is carried at cost, reduced by
accumu lated depreciation and valuation allowances. In addition
to direct costs, production cost includes an appropriate share of
allocable production overhead costs. Borrowing costs that can be
allocated directly to the purchase, construction or manufacture
of property, plant and equipment are capitalised. Value added tax
arising in conjunction with the acquisition or production of items
of property, plant or equipment is included in the cost if it can-
not be deducted as input tax. Depreciation is charged using the
straight-line method. The estimated useful lives applied to the
major asset classes are presented in the table below:

useful lives

Buildings

Technical equipment and machinery

Aircraft

IT systems

Transport equipment and vehicle fleet

Other operating and office equipment

Years 1

20 to 50

10 to 20

15 to 20

4 to 5

4 to 18

8 to 10

Useful lives for letter sorting systems were extended from ten to
20 years and those for parcel sorting systems from 15 to 20 years
in financial year 2014, based on an improved estimate. A stand-
ard adjustment to 50 years was made for operational and admin-
istrative buildings. The useful lives were adjusted prospectively
as a change in accounting estimates; they have not been adjusted
retrospectively for prior periods. Application of the adjusted use-
ful lives caused depreciation to decrease by €42 million in finan-
cial year 2014. It is expected that depreciation will be reduced by
€68 million for finan cial year 2015 and by €66 million for financial
year 2016.

If there are indications of impairment, an impairment test
section headed Impairment.

must be carried out;

Impairment

At each balance sheet date, the carrying amounts of intangible
assets, property, plant and equipment and investment property
are reviewed for indications of impairment. If there are any such
indications, an impairment test must be carried out. This is done
by determining the recoverable amount of the relevant asset and
comparing it with the carrying amount.

In accordance with IAS 36, the recoverable amount is the
asset’s fair value less costs to sell or its value in use, whichever is
higher. The value in use is the present value of the pre-tax free cash
flows expected to be derived from the asset in future. The discount
rate used is a pre-tax rate of interest reflecting current market
conditions. If the recoverable amount cannot be determined for
an individual asset, the recoverable amount is determined for the
smallest identifiable group of assets to which the asset in question
can be allocated and which generates independent cash flows (cash
generating unit – CGU). If the recoverable amount of an asset is

lower than its carrying amount, an impairment loss is recognised
immediately in respect of the asset. If, after an impairment loss has
been recognised, a higher recoverable amount is determined for
the asset or the CGU at a later date, the impairment loss is reversed
up to a carrying amount that does not exceed the recoverable
amount. The increased carrying amount attributable to the rever-
sal of the impairment loss is limited to the carrying amount that
would have been determined (net of amortisation or depreciation)
if no impairment loss had been recognised in the past. The rever-
sal of the impairment loss is recognised in the income statement.
Impairment losses recognised in respect of goodwill may not be
reversed.

Since January 2005, goodwill has been accounted for using
the impairment-only approach in accordance with IFRS 3. This
stipulates that goodwill must be subsequently measured at cost,
less any cumulative adjustments from impairment losses. Pur-
chased goodwill is therefore no longer amortised and instead is
tested for impairment annually in accordance with IAS 36, regard-
less of whether any indication of possible impairment exists, as in
the case of intangible assets with an indefinite useful life. In addi-
tion, the obligation remains to conduct an impairment test if there
is any indication of impairment. Goodwill resulting from company
acquisitions is allocated to the identifiable groups of assets (CGU s
or groups of CGU s) that are expected to benefit from the synergies
of the acquisition. These groups represent the lowest reporting level
at which the goodwill is monitored for internal management pur-
poses. The carrying amount of a CGU to which goodwill has been
allocated is tested for impairment annually and whenever there is
an indication that the unit may be impaired. Where impairment
losses are recognised in connection with a CGU to which goodwill
has been allocated, the existing carrying amount of the goodwill
is reduced first. If the amount of the impairment loss exceeds the
carrying amount of the goodwill, the difference is allocated to the
remaining non-current assets in the CGU.

Finance leases

A lease financing transaction is an agreement in which the lessor
conveys to the lessee the right to use an asset for a specified period
in return for a payment or a number of payments. In accordance
with IAS 17, beneficial ownership of leased assets is attributed to
the lessee if the lessee substantially bears all risks and rewards inci-
dent to ownership of the leased asset. To the extent that beneficial
ownership is attributable to the Group as the lessee, the asset is
capitalised at the date on which use starts, either at fair value or at
the present value of the minimum lease payments if this is less than
the fair value. A lease liability in the same amount is recognised
under non-current liabilities. The lease is subsequently measured
at amortised cost using the effective interest method. The depre-
ciation methods and estimated useful lives correspond to those of
comparable purchased assets.

Deutsche Post DHL Group — 2014 Annual Report

Consolidated Financial Statements — noTeS — Basis of preparation

149

operating leases

AvAILABLE-FOR-SALE FINANCIAL ASSETS

For operating leases, the Group reports the leased asset at amor-
tised cost as an asset under property, plant and equipment where
it is the lessor. The lease payments recognised in the period are
shown under other operating income. Where the Group is the
lessee, the lease payments made are recognised as lease expenses
under materials expense. Lease expenses and income are recog-
nised using the straight-line method.

Investments accounted for using the equity method

Investments accounted for using the equity method cover asso-
ciates and joint ventures. These are recognised using the equity
method in accordance with IAS 28 (Investments in Associates
and Joint Ventures). Based on the cost of acquisition at the time
of purchase of the investments, the carrying amount of the invest-
ment is increased or reduced annually to reflect the share of earn-
ings, dividends distributed and other changes in the equity of the
associates and joint ventures attributable to the investments of
Deutsche Post AG or its consolidated subsidiaries. The goodwill
contained in the carrying amounts of the investments is accounted
for in accordance with IFRS 3. Investments accounted for using the
equity method are impaired if the recoverable amount falls below
the carrying amount. Gains and losses from the disposal of invest-
ments accounted for using the equity method, as well as impair-
ment losses and their reversals, are recognised in other operating
income or other operating expenses;

Note 4.

Financial instruments

A financial instrument is any contract that gives rise to a financial
asset of one entity and a financial liability or equity instrument of
another entity. Financial assets include in particular cash and cash
equivalents, trade receivables, originated loans and receivables,
and derivative financial assets held for trading. Financial liabilities
include contractual obligations to deliver cash or another financial
asset to another entity. These mainly comprise trade payables, li-
abilities to banks, liabilities arising from bonds and finance leases,
and derivative financial liabilities.

Fair value option

Under the fair value option, financial assets or financial liabilities
may be measured at fair value through profit or loss on initial rec-
ognition if this eliminates or significantly reduces a measurement
or recognition inconsistency (accounting mismatch). The Group
makes use of the option in order to avoid accounting mismatches.

Financial assets

Financial assets are accounted for in accordance with the pro-
visions of IAS 39, which distinguishes between four categories of
finan cial instruments.

These financial instruments are non-derivative financial assets
and are carried at their fair value, where this can be measured
reli ably. If a fair value cannot be determined, they are carried at
cost. Changes in fair value between reporting dates are generally
recognised in other comprehensive income (revaluation reserve).
The reserve is reversed to income either upon disposal or if the fair
value falls below cost more than temporarily. If, at a subsequent
balance sheet date, the fair value of a debt instrument has increased
objectively as a result of events occurring after the impairment loss
was recognised, the impairment loss is reversed in the appropriate
amount. Impairment losses recognised in respect of equity instru-
ments may not be reversed to income. If equity instruments are
recognised at fair value, any reversals must be recognised in other
comprehensive income. No reversals may be made in the case of
equity instruments that were recognised at cost. Available-for-sale
financial instruments are allocated to non-current assets unless
the intention is to dispose of them within 12 months of the bal-
ance sheet date. In particular, investments in unconsolidated sub-
sidiaries, marketable securities and other equity investments are
reported in this category.

HELD-TO-MATURITY FINANCIAL ASSETS

Financial instruments are assigned to this category if there is an
intention to hold the instrument to maturity and the economic
conditions for doing so are met. These financial instruments are
non-derivative financial assets that are measured at amortised cost
using the effective interest method.

LOANS AND RECEIv ABLES

These are non-derivative financial assets with fixed or determin-
able payments that are not quoted on an active market. Unless
held for trading, they are recognised at cost or amortised cost at
the balance sheet date. The carrying amounts of money market
receiv ables correspond approximately to their fair values due to
their short maturity. Loans and receivables are considered current
assets if they mature not more than 12 months after the balance
sheet date; otherwise, they are recognised as non-current assets. If
the recoverability of receivables is in doubt, they are recognised
at amortised cost, less appropriate specific or collective valuation
allowances. A write-down on trade receivables is recognised if
there are objective indications that the amount of the outstanding
receivable cannot be collected in full. The write-down is recognised
in the income statement via a valuation account.

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150

FINANCIAL ASSETS AT FAIR v ALUE THROUGH PROFIT OR LOSS

All financial instruments held for trading and derivatives that do
not satisfy the criteria for hedge accounting are assigned to this cat-
egory. They are generally measured at fair value. All changes in fair
value are recognised in income. All financial instruments in this
category are accounted for at the trade date. Assets in this category
are recognised as current assets if they are either held for trading
or will likely be realised within 12 months of the balance sheet date.
To avoid variations in earnings resulting from changes in the
fair value of derivative financial instruments, hedge accounting is
applied where possible and economically useful. Gains and losses
from the derivative and the related hedged item are recognised in
income simultaneously. Depending on the hedged item and the risk
to be hedged, the Group uses fair value hedges and cash flow hedges.
The carrying amounts of financial assets not carried at fair
value through profit or loss are tested for impairment at each bal-
ance sheet date and whenever there are indications of impairment.
The amount of any impairment loss is determined by comparing
the carrying amount and the fair value. If there are objective in-
dications of impairment, an impairment loss is recognised in the
income statement under other operating expenses or net financial
income / net finance costs. Impairment losses are reversed if there
are objective reasons arising after the balance sheet date indicat-
ing that the reasons for impairment no longer exist. The increased
carry ing amount resulting from the reversal of the impairment loss
may not exceed the carrying amount that would have been deter-
mined (net of amortisation or depreciation) if the impairment loss
had not been recognised. Impairment losses are recognised within
the Group if the debtor is experiencing significant financial diffi-
culties, it is highly probable that the debtor will be the subject of
bankruptcy proceedings, there are material changes in the issuer’s
technological, economic, legal or market environment, or the fair
value of a financial instrument falls below its amortised cost for a
prolonged period.

A fair value hedge hedges the fair value of recognised assets
and liabilities. Changes in the fair value of both the derivatives and
the hedged item are recognised in income simultaneously.

A cash flow hedge hedges the fluctuations in future cash flows
from recognised assets and liabilities (in the case of interest rate
risks), highly probable forecast transactions as well as unrecog-
nised firm commitments that entail a currency risk. The effective
portion of a cash flow hedge is recognised in the hedging reserve in
equity. Ineffective portions resulting from changes in the fair value
of the hedging instrument are recognised directly in income. The
gains and losses generated by the hedging transactions are initially
recognised in equity and are then reclassified to profit or loss in
the period in which the asset acquired or liability assumed affects
profit or loss. If a hedge of a firm commitment subsequently results
in the recognition of a non-financial asset, the gains and losses
recognised directly in equity are included in the initial carrying
amount of the asset (basis adjustment).

Net investment hedges in foreign entities are treated in the
same way as cash flow hedges. The gain or loss from the effective
portion of the hedge is recognised in other comprehensive income,
whilst the gain or loss attributable to the ineffective portion is rec-
ognised directly in income. The gains or losses recognised in other
comprehensive income remain there until the disposal or partial
disposal of the net investment. Detailed information on hedging
transactions can be found in

Note 50.2.
Regular way purchases and sales of financial assets are recog-
nised at the settlement date, with the exception of held-for-trading
instruments, particularly derivatives. A financial asset is derecog-
nised if the rights to receive the cash flows from the asset have ex-
pired. Upon transfer of a financial asset, a review is made under the
requirements of IAS 39 governing disposal as to whether the asset
should be derecognised. A disposal gain / loss arises upon disposal.
The remeasurement gains / losses recognised in other comprehen-
sive income in prior periods must be reversed as at the disposal
date. Financial liabilities are derecognised if the payment obliga-
tions arising from them have expired.

Investment property

In accordance with IAS 40, investment property is property held
to earn rentals or for capital appreciation or both, rather than for
use in the supply of services, for administrative purposes, or for
sale in the normal course of the company’s business. It is meas-
ured in accordance with the cost model. Depreciable investment
property is depreciated over a period of between 20 and 50 years
using the straight-line method. The fair value is determined on
the basis of expert opinions. Impairment losses are recognised in
accordance with the principles described under the section headed
Impairment.

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Consolidated Financial Statements — noTeS — Basis of preparation

151

Inventories

Cash and cash equivalents

Inventories are assets that are held for sale in the ordinary course of
business, are in the process of production, or are consumed in the
production process or in the rendering of services. They are meas-
ured at the lower of cost or net realisable value. Valuation allow-
ances are charged for obsolete inventories and slow-moving goods.

Cash and cash equivalents comprise cash, demand deposits and
other short-term liquid financial assets with an original maturity
of up to three months and are carried at their principal amount.
Overdraft facilities used are recognised in the balance sheet as
amounts due to banks.

Government grants

non-controlling interests

In accordance with IAS 20, government grants are recognised at
their fair value only when there is reasonable assurance that the
conditions attaching to them will be complied with and that the
grants will be received. The grants are reported in the income
statement and are generally recognised as income over the periods
in which the costs they are intended to compensate are incurred.
Where the grants relate to the purchase or production of assets,
they are reported as deferred income and recognised in the income
statement over the useful lives of the assets.

assets held for sale and liabilities associated with assets held for sale

Assets held for sale are assets available for sale in their present con-
dition and whose sale is highly probable. The sale must be expected
to qualify for recognition as a completed sale within one year of the
date of classification. Assets held for sale may consist of individual
non-current assets, groups of assets (disposal groups), components
of an entity or a subsidiary acquired exclusively for resale (discon-
tinued operations). Liabilities intended to be disposed of together
with the assets in a single transaction form part of the disposal
group or discontinued operation and are also reported separately
as liabilities associated with assets held for sale. Assets held for sale
are no longer depreciated or amortised, but are recognised at the
lower of their fair value less costs to sell and the carrying amount.
Gains and losses arising from the remeasurement of individual
non-current assets or disposal groups classified as held for sale are
reported in profit or loss from continuing operations until the final
date of disposal. Gains and losses arising from the measurement at
fair value less costs to sell of discontinued operations classified as
held for sale are reported in profit or loss from discontinued oper-
ations. This also applies to the profit or loss from operations and
the gain or loss on disposal of these components of an entity.

Non-controlling interests are the proportionate minority interests
in the equity of subsidiaries and are recognised at their carrying
amount. If an interest is acquired from, or sold to, other share-
holders without this impacting the existing control relationship,
this is presented as an equity transaction. The difference between
the proportionate net assets acquired from, or sold to, another
shareholder / other shareholders and the purchase price is recog-
nised in other comprehensive income. If non-controlling interests
are increased by the proportionate net assets, no goodwill is allo-
cated to the proportionate net assets.

Share-based payments to executives

Equity-settled share-based payment transactions are measured
at fair value at the grant date. The fair value of the obligation is
recognised in staff costs over the vesting period. The fair value of
equity- settled share-based payment transactions is determined
using inter nationally recognised valuation techniques.

Stock appreciation rights are measured on the basis of an
option pricing model in accordance with IFRS 2. The stock appre-
ciation rights are measured on each reporting date and on the settle-
ment date. The amount determined for stock appre ciation rights
that will probably be exercised is recognised pro rata in income
under staff costs to reflect the services rendered as consideration
during the vesting period (lock-up period). A provision is recog-
nised for the same amount.

retirement plans

There are arrangements in many countries under which the Group
grants post-employment benefits to its employees. These benefits
include pensions, lump-sum payments on retirement and other
post-employment benefits and are referred to as retirement bene-
fits, pensions and similar benefits, or simply pensions, in these
disclosures. A distinction must be made between defined benefit
and defined contribution plans.

Deutsche Post DHL Group — 2014 Annual Report

152

THE GROUP’ S DEFINED BENEFIT RETIREMENT PLANS

Defined benefit obligations are measured using the projected unit
credit method prescribed by IAS 19. This involves making certain
actuarial assumptions. Most of the defined benefit retirement plans
are at least partly funded via external plan assets. The remaining
net obligations are funded by provisions for pensions and similar
obligations; net assets are presented separately as pension assets.
Where necessary, an asset ceiling must be applied when recognis-
ing pension assets. With regard to the cost components, the service
cost is recognised in staff costs, the net interest cost in net financial
income /net finance costs and any remeasurement outside profit
and loss in other comprehensive income.

DEFINED CONTRIBUTION RETIREMENT PLANS
FOR CIvIL SERv ANT EMPLOYEES IN GERMANY

In accordance with statutory provisions, Deutsche Post AG pays
contributions to retirement plans in Germany which are defined
contribution retirement plans for the company. These contribu-
tions are recognised in staff costs.

Under the provisions of the Gesetz zum Personalrecht der
Beschäftigten der früheren Deutschen Bundespost (PostPersRG –
Former Deutsche Bundespost Employees Act), introduced as
article 4 of the Gesetz zur Neuordnung des Postwesens und der Tele-
kommunikation (PTNeuOG – German Posts and Telecommunica-
tions Reorganisation Act), Deutsche Post AG provides benefit and
assistance payments through the Bundes-Pensions-Service für Post
und Telekommunikation e. V. (BPS-PT), a special pension fund
for postal civil servants operated jointly, since early 2001, by the
Deutsche Bundespost successor companies, to retired employees or
their surviving dependants who are entitled to benefits on the basis
of a civil service appointment. At the beginning of 2013, Bundes-
anstalt für Post und Telekommunikation ( BAnstPT – Federal Posts
and Telecommunications Agency) assumed the rights and obliga-
tions of the BPS-PT. It has undertaken the tasks of the pension fund
for postal civil servants since that time. The amount of Deutsche
Post AG’s payment obligations is governed by section 16 of the Post-
PersRG. Since 2000, this Act has obliged Deutsche Post AG to pay
into the postal civil servant pension fund an annual contribution
of 33 % of the gross compensation of its active civil servants and the
notional gross compensation of civil servants on leave of absence
who are eligible for a pension.

Under section 16 of the PostPersRG, the federal government
makes good the difference between the current payment obliga-
tions of the postal civil servant pension fund on the one hand, and
the funding companies’ current contributions or other return on
assets on the other, and guarantees that the postal civil ser vant
pension fund is able at all times to meet the obligations it has
assumed in respect of its funding companies. Insofar as the federal
government makes payments to the postal civil servant pension
fund under the terms of this guarantee, it cannot claim reimburse-
ment from Deutsche Post AG.

DEFINED CONTRIBUTION RETIREMENT PLANS
FOR THE GROUP’ S HOURLY WORKERS AND SALARIED EMPLOYEES

Contributions to defined contribution retirement plans for the
Group’s hourly workers and salaried employees are also reported
under staff costs.

This also includes contributions to certain multi-employer
plans which are basically defined benefit plans, especially in the
USA and the Netherlands. However, the relevant institutions do not
provide the participating companies with sufficient information to
use defined benefit accounting. The plans are therefore accounted
for as if they were defined contribution plans.

Regarding these multi-employer plans in the USA, contribu-
tions are made based on collective bargaining agreements between
the employer and the local union. There is no employer liability to
any of the plans beyond the normal bargained contribution rates
except in the event of a withdrawal meeting specified criteria or
in the event of liability for other entities' obligations as governed
by US federal law. The expected employer contributions to the
funds for 2015 are €26 million (actual employer contributions in
the reporting year: €25 million, in the previous year: €23 million).
Some of the plans in which Deutsche Post DHL Group participates
are underfunded according to information provided by the funds.
There is no information from the plans that would indicate any
change from the contribution rates set by current collective bar-
gaining agreements. Currently, Deutsche Post DHL Group does not
represent a significant level to any fund in terms of contributions,
with the exception of one fund where the Group represents the
largest employer in terms of contributions.

Regarding one multi-employer plan in the Netherlands, cost
coverage-based contribution rates are set annually by the board
of the pension fund with the involvement of the Central Bank
of the Netherlands, and these rates are equal for all participating
employers and employees. There is no liability for the employer
towards the fund beyond the contributions set, even in the case
of withdrawal or obligations not met by other entities. Any sub-
sequent underfunding ultimately results in the rights of mem-
bers being cut and /or no indexation of their rights. The expected
employer contributions to the funds for 2015 are €21 million
(actual employer contributions in the reporting year: €21 mil-
lion, in the previous year: €21 million). Currently, the plan is not
underfunded according to information provided by the fund.
Deutsche Post DHL Group does not represent a significant portion
of the fund in terms of contributions.

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Consolidated Financial Statements — noTeS — Basis of preparation

153

other provisions

Other provisions are recognised for all legal or constructive obli-
gations 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
outflow of future economic benefits and whose amount can be
measured reliably. They 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 reflect the region and
time to settlement of the obligation. The discount rates used in the
financial year were between 0 % and 12 % (previous year: 0.25 % and
11 %). The effects arising from changes in interest rates are recog-
nised in net financial income / net finance 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 affected.

The technical reserves (insurance) consist mainly of outstand-
ing loss reserves and IBNR (incurred but not reported claims) re-
serves. Outstanding loss reserves represent estimates of obligations
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 finalised and presented for payment. Outstanding
loss reserves are based on individual claim valuations carried out
by the company or its ceding insurers. IBNR 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. The 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, financial liabilities are carried at fair value
less transaction costs. The price determined on a price-efficient
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 financial liabilities are measured
at amortised cost. Any differences between the amount received
and the amount repayable are recognised in income over the term
of the loan using the effective interest method.

CONvERTIBLE BOND ON DEUTSCHE POST AG SHARES

The convertible bond on Deutsche Post AG shares is split into an
equity and a debt component, in line with the contractual arrange-
ments. The debt component, less the transaction costs, is reported
under financial liabilities (bonds), with interest added up to the
issue amount over the term of the bond using the effective inter-
est method (unwinding of discount). The value of the call option,
which allows Deutsche Post AG to redeem the bond early if a speci-
fied share price is reached, is attributed to the debt component in
accordance with IAS 32.31. The conversion right is classified as an
equity derivative and is reported in capital reserves. The carry-
ing amount is calculated by assigning to the conversion right the
residual value that results from deducting the amount calculated
separately for the debt component from the fair value of the in-
strument as a whole. The transaction costs are deducted on a pro-
portionate basis.

Liabilities

Trade payables and other liabilities are carried at amortised cost.
The fair value of the liabilities corresponds more or less to their
carrying amount.

Deferred taxes

In accordance with IAS 12, deferred taxes are recognised for tem-
porary differences between the carrying amounts in the IFRS
finan cial 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. The recoverability of
the tax reduction claims is assessed on the basis of each entity’s
earnings projections which are derived from the Group projections
and take any tax adjustments into account. The planning horizon
is five years.

In compliance with IAS 12.24 (b) and IAS 12.15 (b), deferred
tax assets or liabilities were only recognised for temporary differ-
ences between the carrying amounts in the IFRS financial state-
ments and in the tax accounts of Deutsche Post AG where the
differences arose after 1 January 1995. No deferred tax assets or
liabilities are recognised for temporary differences resulting from
initial differences in the opening tax accounts of Deutsche Post AG
as at 1 January 1995. Further details on deferred taxes from tax loss
carryforwards can be found in

Note 30.
In accordance with IAS 12, deferred tax assets and liabil-
ities are calculated 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. The tax rate
applied to German Group companies was raised by 0.4 % to 30.2 %,
based on an improved estimate in the trade tax area. It 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
different municipal trade tax rates. Foreign Group companies use
their individual income tax rates to calculate deferred tax items.
The income tax rates applied for foreign companies amount to up
to 40 % (previous year: 38 %).

Deutsche Post DHL Group — 2014 Annual Report

154

Income taxes

Income tax assets and liabilities are measured at the amounts for
which repayments from or payments to the tax authorities are
expected to be received or made. Tax-related fines are recognised
in income taxes if they are included in the calculation of income
tax liabilities, due to their inclusion in the tax base and /or tax rate.

Contingent liabilities

Contingent liabilities represent possible obligations whose exist-
ence will be confirmed only by the occurrence or non-occurrence
of one or more uncertain future events not wholly within the con-
trol of the enterprise. Contingent liabilities also include certain
obligations that will probably not lead to an outflow of resources
embodying economic benefits, or where the amount of the outflow
of resources embodying economic benefits cannot be measured
with sufficient reliability. In accordance with IAS 37, contingent li-
abilities are not recognised as liabilities;

Note 51.

exercise of judgement in applying the accounting policies

8
The preparation of IFRS-compliant consolidated financial state-
ments requires the exercise of judgement by management. All esti-
mates are reassessed on an ongoing basis and are based on histor-
ical experience and expectations with regard to future events that
appear reasonable under the given circumstances. For example, this
applies to assets held for sale. In this case, it must be determined
whether the assets are available for sale in their present condition
and whether their sale is highly probable. If this is the case, the
assets and the associated liabilities are reported and measured as
assets held for sale and liabilities associated with assets held for sale.

estimates and assessments made by management

The preparation of the consolidated financial statements in accord-
ance with IFRS s requires management to make certain assump-
tions and estimates that may affect 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.
Examples of the main areas where assumptions, estimates and the
exercise of management judgement occur are the recognition of
provisions for pensions and similar obligations, the calculation of
discounted cash flows for impairment testing and purchase price
allocations, taxes and legal proceedings.

Disclosures regarding the assumptions made in connection
with the Group’s defined benefit retirement plans can be found in

Note 44.

The 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 in the
relevant countries. Although management believes that it has made
a reasonable estimate relating to tax matters that are inherently un-
certain, there can be no guarantee that the actual outcome of these
uncertain tax matters will correspond exactly to the original esti-
mate made. Any difference between actual events and the estimate
made could have an effect on tax liabilities and deferred taxes in
the period in which the matter is finally decided. The amount rec-
ognised for deferred tax assets could be reduced if the estimates of
planned taxable income or the tax benefits 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
benefits 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 financial statements, all
identifiable 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 office 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 identified 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. The independent expert
determines the fair value using appropriate valuation techniques,
normally based on expected future cash flows. In addition to the
assumptions about the development of future cash flows, these
valuations are also significantly affected by the discount rates used.
Impairment testing for goodwill is based on assumptions
with respect to the future. The Group carries out these tests
annually and also whenever there are indications that goodwill has
become impaired. The recoverable amount of the CGU must then
be calculated. This amount is the higher of fair value less costs to
sell and value in use. Determining value in use requires adjust-
ments and estimates to be made with respect to forecasted future
cash flows and the discount rate applied. Although management
believes that the assumptions made for the purpose of calculating
the recoverable amount are appropriate, possible unforeseeable
changes in these assumptions – e.g., a reduction in the EBIT mar-
gin, an increase in the cost of capital or a decline in the long-term
growth rate – could result in an impairment loss that could neg-
atively affect the Group’s net assets, financial position and results
of operations.

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Consolidated Financial Statements — noTeS — Basis of preparation

155

Pending legal proceedings in which the Group is involved are
Note 53. The outcome of these proceedings could
disclosed in
have a significant effect on the net assets, financial position and
results of operations of the Group. Management regularly analyses
the information currently available about these proceedings and
recognises provisions for probable obligations including estimated
legal costs. Internal and external legal advisers participate in mak-
ing this assessment. 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 esti-
mated with sufficient reliability. The fact that an action has been
launched or a claim asserted against the Group, or that a legal dis-
pute has been disclosed in the Notes, does not necessarily mean
that a provision is recognised for the associated risk.

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 different
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 differ from the esti-
mated amounts. In such cases, the assumptions made and, where
necessary, the carrying amounts of the relevant assets and liabil-
ities are adjusted accordingly.

At the date of preparation of the consolidated financial state-
ments, there is no indication that any significant 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 significant adjustments in financial year 2015 to the
carrying amounts of the assets and liabilities recognised in the
finan cial statements.

Consolidation methods

9
The consolidated financial statements are based on the IFRS
finan cial statements of Deutsche Post AG and the subsidiaries,
joint operations and investments accounted for using the equity
method included in the consolidated financial statements and
prepared in accordance with uniform accounting policies as at
31 December 2014.

Acquisition accounting for subsidiaries included in the
consolidated financial statements uses the purchase method of
accounting. The cost of the acquisition corresponds to the fair
value of the assets given up, the equity instruments issued and
the liabilities assumed at the transaction date. Acquisition-related
costs are recognised as expenses. Contingent consideration is rec-
ognised at fair value at the date of initial consolidation.

The assets and liabilities, as well as income and expenses, of
joint operations are included in the consolidated financial state-
ments in proportion to the interest held in these operations, in
accordance with IFRS 11. Accounting for the joint operators’ share
of the assets and liabilities, as well as recognition and measurement
of goodwill, use the same methods as applied to the consolidation
of subsidiaries.

In accordance with IAS 28, joint ventures and companies on
which the parent can exercise significant influence (associates) are
accounted for in accordance with the equity method using the
purchase method of accounting. Any goodwill is recognised under
invest ments accounted for using the equity method.

In the case of step acquisitions, the equity portion previ-
ously held is remeasured at the fair value applicable on the date
of acquisition and the resulting gain or loss recognised in profit
or loss.

Intra-group revenue, other operating income, and expenses
as well as receivables, liabilities and provisions between companies
that are consolidated fully or on a proportionate basis are elimin-
ated. Intercompany profits or losses from intra-group deliveries
and services not realised by sale to third parties are eliminated.
Unrealised gains and losses from business transactions with invest-
ments accounted for using the equity method are eliminated on a
proportionate basis.

Deutsche Post DHL Group — 2014 Annual Report

156

SEGMENT REPORTING

10 Segment reporting

Segments by division

€ m

PeP

Express

Global Forwarding,
Freight

Supply Chain

Corporate
Center / Other

Consolidation 1

Group

1 Jan. to 31 Dec.

2013 2

2014

2013 2

2014

2013 2

2014

2013 2

2014

External revenue

15,146

15,546

11,471

12,116

14,087

14,201

14,137

14,627

Internal revenue

145

140

350

375

700

723

110

Total revenue

15,291

15,686

11,821

12,491

14,787

14,924

14,227

14,737

2013

1,180

1,251

2014

140

1,203

1,343

2013 2

2014

2013 2

2014

54,912

56,630

–2,465

–2,551

–2,465

–2,551

54,912

56,630

Profit / loss from
operating activities
(EBIT)

of which net income
from investments
accounted for using
the equity method

1,286

1,298

1,083

1,260

478

293

441

465

– 421

–352

–2

2,865

2,965

Segment assets

5,210

5,384

8,286

8,644

7,608

8,488

5,969

6,401

1,491

1,630

–118

–200

28,446

30,347

of which invest-
ments accounted
for using the equity
method

Segment liabilities

Capex

Depreciation
and amortisation

Impairment
losses

Total depreciation,
amortisation and
impairment losses

Other non-cash
expenses

2,645

452

2,611

415

2,763

484

2,985

571

2,916

127

3,188

207

2,900

277

3,132

304

372

335

358

384

282

340

280

380

246

355

107

462

177

121

270

267

270

107

268

845

407

209

213

115

1,007

380

217

224

Employees

164,537

164,582

70,462

73,009

43,588

44,311

143,724

146,400

12,907

12,507

1 Including rounding.
2 Prior-period amounts adjusted,

Note 4.

–123

–166

11,946

12,757

–1

1,747

1,876

1,299

1,261

120

–1

1,337

1,381

838

749

435,218

440,809

The segment liabilities include the non-interest bearing provisions.
The employee numbers are expressed as average numbers of FTEs.

Information about geographical regions

€ m

1 Jan. to 31 Dec.

External revenue

Non-current assets

Capex

1 Prior-period amounts adjusted,

Note 4.

Germany

Europe
(excluding Germany)

Americas

Asia Pacific

Other regions

Group

2013 1

2014

2013 1

2014

2013 1

16,983

17,367

17,633

18,501

5,129

1,128

5,532

1,092

7,015

227

6,915

300

9,526

3,226

172

2014

9,375

3,515

223

2013 1

8,526

3,024

165

2014

9,143

3,289

191

2013 1

2,244

332

2014

2,244

373

2013 1

2014

54,912

18,726

1,747

56,630

19,624

1,876

10.1 Segment reporting disclosures

Deutsche Post DHL Group reports four operating segments; these
are managed independently by the responsible segment manage-
ment bodies in line with the products and services offered and
the brands, distribution channels and customer profiles involved.
Components of the entity are defined as a segment on the basis of
the existence of segment managers with bottom-line responsibility
who report directly to Deutsche Post DHL Group’s top management.

External revenue is the revenue generated by the divisions
from non-Group third parties. Internal revenue is revenue gen-
erated with other divisions. If comparable external market prices
exist for services or products offered internally within the Group,
these market prices or market-oriented prices are used as transfer
prices (arm’s length principle). The transfer prices for services for
which no external market exists are generally based on incremen-
tal costs.

Deutsche Post DHL Group — 2014 Annual Report

Consolidated Financial Statements — noTeS — Segment reporting

157

The expenses for IT services provided in the IT service centres
are allocated to the divisions by their origin. The additional costs
resulting from Deutsche Post AG’s universal postal service obliga-
tion (nationwide retail outlet network, delivery every working day),
and from its obligation to assume the compensation structure as
the legal successor to Deutsche Bundespost, are allocated to the
PeP division.

As part of the central management of currency risk, fluctu-
ations between projected and actual exchange rates are fully or
partially absorbed centrally by Corporate Treasury on the basis of
division-specific agreements.

In keeping with internal reporting, capital expenditure
(capex) is disclosed. Additions to intangible assets net of goodwill
and to property, plant and equipment are reported in the capex
figure. Depreciation, amortisation and impairment losses relate to
the segment assets allocated to the individual divisions. Other non-
cash expenses relate primarily to expenses from the recognition of
provisions.

The profitability of the Group’s operating areas is measured as

profit from operating activities (EBIT).

ADjUSTMENT OF PRIOR-PERIOD AMOUNTS

Prior-period amounts were adjusted due to the initial application
of IFRS 10 and IFRS 11 ( Note 4) and the reallocation of companies
between the segments in the first and second quarters of 2014. The
domestic parcel business in Belgium, the Czech Republic, India,
the Netherlands and Poland was consolidated in the PeP division
effective 1 January 2014. This business was previously part of the
Express and Global Forwarding, Freight divisions. In addition, the
US company Sky Courier Inc. was reallocated from the Express div-
ision to the Global Forwarding, Freight division. The prior-period
amounts have been adjusted accordingly.

Reflecting the Group’s predominant organisational structure,
the primary reporting format is based on the divisions. The Group
distinguishes between the following divisions:

10.2 Segments by division

Post - eCommerce - Parcel

The Mail division was renamed Post - eCommerce - Parcel (PeP)
as part of the Group’s ongoing strategic development. The Post -
eCommerce - Parcel division handles both domestic and inter-
national mail and is a specialist in dialogue marketing, nationwide
press distribution services and all the electronic services associated
with mail delivery. In addition to Germany, it also offers domes-
tic parcel services in other markets. It is divided into two business
units: Post, and eCommerce - Parcel.

EXPRESS

The Express division offers time-definite courier and express ser-
vices to business and private customers. The division comprises
the Express Europe, Express Americas, Express Asia Pacific and
Express MEA (Middle East and Africa) business units.

GLOBAL FORWARDING, FREIGHT

The activities of the Global Forwarding, Freight division comprise
the transportation of goods by rail, road, air and sea. The division’s
business units are Global Forwarding and Freight.

SUPPLY CHAIN

The Supply Chain division delivers customised logistics solutions
to its customers based on globally standardised modular compo-
nents including warehousing, transport and value-added services.
In addition, it offers specialised Business Process Outsourcing
(BPO) and marketing communications solutions tailored to cus-
tomers’ needs. The division’s business units are Supply Chain and
Williams Lea.

In addition to the reportable segments given above, segment re-
porting comprises the following categories:

Corporate Center / other

Corporate Center / Other comprises Global Business Services (GBS),
the Corporate Center, non-operating activities and other busi-
ness activities. The profit / loss generated by GBS is allocated to the
operating segments, whilst its assets and liabilities remain with GBS
(asymmetrical allocation).

Consolidation

The data for the divisions are presented following consolidation
of interdivisional transactions. The transactions between the div-
isions are eliminated in the Consolidation column.

10.3

Information about geographical regions

The main geographical regions in which the Group is active are
Germany, Europe, the Americas, Asia Pacific and Other regions.
External revenue, non-current assets and capex are disclosed for
these regions. Revenue, assets and capex are allocated to the indi-
vidual regions on the basis of the domicile of the reporting entity.
Non-current assets primarily comprise intangible assets, property,
plant and equipment and other non-current assets.

Deutsche Post DHL Group — 2014 Annual Report

158

10.4 reconciliation of segment amounts

reconciliation of segment amounts to consolidated amounts

reconciliation

€ m

External revenue

Internal revenue

Total revenue

Other operating income

Materials expense

Staff costs

Depreciation, amortisation and impairment
losses

Other operating expenses

Net income from investments accounted
for using the equity method

Profit / loss from operating activities (EBIT)

Net finance costs

Profit before income taxes

Income taxes

Consolidated net profit for the period

of which attributable to

Deutsche Post AG shareholders

Non-controlling interests

1 Including rounding.
2 Prior-period amounts adjusted,

Note 4.

Total for reportable segments

Corporate Center / Other

Reconciliation to Group /
Consolidation 1

Consolidated amount

2013 2

54,841

1,285

56,126

1,846

–32,352

–16,802

–1,124

– 4,411

3,288

–

2014

56,490

1,348

57,838

1,915

–33,420

–17,247

–1,158

– 4,617

3,316

–

2013

1,180

1,251

1,358

–1,308

– 983

–213

– 526

– 421

–

2014

140

1,203

1,343

1,318

–1,304

– 951

–224

– 534

–352

–

2013 2

–2,465

–1,242

2,622

2014

–2,551

–1,217

2,682

1,074

1,077

–2

–

2013 2

54,912

1,962

–31,038

–17,776

–1,337

–3,863

2,865

–293

2,572

–361

2,211

2,091

120

2014

56,630

2,016

–32,042

–18,189

–1,381

– 4,074

2,965

–388

2,577

– 400

2,177

2,071

106

The following table shows the reconciliation of Deutsche Post DHL
Group’s total assets to the segment assets. Financial assets, income
tax assets, deferred taxes, cash and cash equivalents as well as add-
itional interest-bearing asset components are deducted.

The following table shows the reconciliation of Deutsche Post DHL
Group’s total liabilities to the segment liabilities. The interest-bear-
ing components of the provisions and liabilities as well as income
tax liabilities and deferred taxes are deducted.

reconciliation of segment assets

reconciliation of segment liabilities

€ m

Total assets

Investment property

Non-current financial assets

Other non-current assets

Deferred tax assets

Income tax assets

Receivables and other current assets

Current financial assets

Cash and cash equivalents

Segment assets

of which Corporate Center / Other

Total for reportable segments

Consolidation 2

Note 4.

1
2 Including rounding.

2013
adjusted 1

35,461

–33

–1,123

–125

–1,327

–167

–7

– 819

–3,414

28,446

1,491

27,073

–118

2014

€ m

36,979

–32

–1,265

Total equity and liabilities

Equity

Consolidated liabilities

– 88

Non-current provisions

–1,752

Non-current liabilities

–172

–1

–344

–2,978

30,347

1,630

28,917

–200

Current provisions

Current liabilities

Segment liabilities

of which Corporate Center / Other

Total for reportable segments

Consolidation 2

Note 4.

1
2 Including rounding.

2013
adjusted 1

35,461

–10,034

25,427

– 6,729

– 4,846

–143

–1,763

11,946

845

11,224

–123

2014

36,979

– 9,580

27,399

– 8,866

– 4,910

–1

– 865

12,757

1,007

11,916

–166

Deutsche Post DHL Group — 2014 Annual Report

Consolidated Financial Statements — noTeS — Segment reporting — Income statement disclosures

159

INCOME STATEMENT DISCLOSURES

11 revenue

€ m

Revenue

Note 4.

2013
adjusted 1

54,912

2014

56,630

Revenue rose by €1,718 million (3 %) year-on-year to €56,630 mil-
lion. The increase was due to the following factors:

Income from the reversal of provisions increased mainly because
of a change in the assessment of settlement payment obligations
assumed in the context of the restructuring measures in the USA.
The probability that this obligation will occur has declined to the
point where the provision was reversed. A contingent liability in
the amount of €129 million as at the balance sheet date has been
recognised for the potential obligation;

Note 51.

Subsidies relate to grants for the purchase or production of
assets. The grants are reported as deferred income and recognised
in the income statement over the useful lives of the assets.

Miscellaneous other operating income includes a large num-

Factors affecting revenue increase

€ m

Organic growth

Portfolio changes

Currency translation effects

Total

ber of smaller individual items.

13 Materials expense

€ m

Cost of raw materials, consumables and supplies,
and of goods purchased and held for resale
Goods purchased and held for resale

2014

2,277

–152

– 407

1,718

As in the prior period, there was no revenue in financial year 2014
that was generated on the basis of barter transactions.

The further classification of revenue by division and the al-
location of revenue to geographical regions are presented in the
segment reporting.

2013
adjusted 1

2014

1,828

1,342

848

363

121

4,655

18,222

2,005

1,708

969

603

549

466

409

261

1,191

26,383

31,038

2,052

1,338

817

354

112

4,831

18,814

2,124

1,845

1,016

617

478

462

410

265

1,180

27,211

32,042

2013
adjusted 1

2014

Cost of temporary staff

Expenses from non-cancellable leases

Aircraft fuel

Fuel

Packaging material

Spare parts and repair materials

Office supplies

Other expenses

Cost of purchased services
Transportation costs

Maintenance costs

IT services

Expenses from cancellable leases

Commissions paid

Expenses for the use of Postbank branches

Other lease expenses (incidental expenses)

Other purchased services

Materials expense

Note 4.

206

157

191

133

100

105

136

112

308

171

168

159

128

126

124

431

1,962

338

2,016

The increase in the materials expense is mainly due to higher trans-
portation costs and increased expenses related to goods purchased
and held for resale for the business with the UK National Health
Service in the Supply Chain division.

Other expenses include a large number of individual items.

12 other operating income

€ m

Income from the reversal of provisions

Income from currency translation differences

Insurance income

Income from fees and reimbursements

Income from work performed and capitalised

Income from the remeasurement of liabilities

Commission income

Rental and lease income

Reversals of impairment losses on receivables
and other assets

Income from derivatives

Gains on disposal of non-current assets

Income from the derecognition of liabilities

Income from prior-period billings

Income from loss compensation

Subsidies

Recoveries on receivables previously written off

Miscellaneous

other operating income

Note 4.

Deutsche Post DHL Group — 2014 Annual Report

160

14 Staff costs / employees

€ m

Wages, salaries and compensation

of which expenses under Share Matching
Scheme 2

of which expenses under Performance Share
Plan 3

of which expenses under 2006 SAR Plan / LTIP 4

Social security contributions

Retirement benefit expenses

Expenses for other employee benefits

Expenses for severance payments

Staff costs

Note 4.

1
2 Settlement by equity instruments and cash payments.
3 Settlement by equity instruments.
4 Cash payments.

2013
adjusted 1

14,300

2014

14,583

202

105

2,110

2,164

883

356

127

965

344

133

17,776

18,189

€55 million of the expenses under the Share Matching Scheme
(previous year: €62 million) is attributable to cash-settled share-
based payments. This amount corresponds to the obligation at the
balance sheet date. In addition, expenses of €27 million (previous
year: €20 million) were incurred for equity-settled share-based
payments.

Staff costs relate mainly to wages, salaries and compensation,
as well as all other benefits paid to employees of the Group for their
services in the year under review. Social security contributions
relate in particular to statutory social security contributions paid
by employers.

Retirement benefit expenses include the service cost related
to the defined benefit retirement plans. Detailed information can
Note 44. These expenses also include contributions
be found in
to defined contribution retirement plans for civil servants in Ger-
many in the amount of €531 million (previous year: €538 million),
as well as for the Group’s hourly workers and salaried employees –
particularly in the UK, the USA and the Netherlands – in the
amount of €276 million (previous year: €286 million).

The average number of Group employees in the year under

review, broken down by employee group, was as follows:

employees (annual average)

Headcount

Hourly workers and salaried employees

Civil servants

Trainees

employees

Note 4.

2013
adjusted 1

433,647

40,321

4,935

478,903

2014

440,973

37,963

5,089

484,025

The employees of companies acquired or disposed of during the
year under review were included rateably. Calculated as full-time
equivalents, the number of employees as at 31 December 2014
amounted to 443,784 (31 December 2013, adjusted: 434,974). The
number of employees at joint operations included in the consoli-
dated financial statements amounted to 202 on a proportionate
basis (previous year, adjusted: 187).

15 Depreciation, amortisation and impairment losses

€ m

Amortisation of and impairment losses on intangible
assets, excluding impairment of goodwill

Depreciation of and impairment losses on property,
plant and equipment

Land and buildings
(including leasehold improvements)

Technical equipment and machinery

Other equipment, operating and office equipment

Vehicle fleet, transport equipment

Aircraft

Impairment losses on investment property

Impairment of goodwill

Depreciation, amortisation and impairment losses

Note 4.

2013
adjusted 1

2014

290

271

173

252

206

203

212

1,046

1,337

174

235

204

216

281

1,110

1,381

Depreciation, amortisation and impairment losses increased by
€44 million year-on-year to €1,381 million. This figure includes im-
pairment losses of €120 million (previous year: €38 million) that
are attributable to the segments as follows:

Impairment losses

€ m

PeP
Software

express
Property, plant and equipment

Supply Chain
Property, plant and equipment

Corporate Center / other
Software

Property, plant and equipment

Investment property

Impairment losses

2013

2014

107

120

As in the previous year, the impairment losses in the Express
segment resulted exclusively from aircraft and aircraft parts.

Deutsche Post DHL Group — 2014 Annual Report

Consolidated Financial Statements — noTeS — Income statement disclosures

161

16 other operating expenses

18 net finance costs

€ m

2013
adjusted 1

2014

€ m

2013
adjusted 1

2014

Expenses for advertising and public relations

Travel and training costs

Cost of purchased cleaning and security services

Insurance costs

Write-downs of current assets

Warranty expenses, refunds and compensation
payments

Telecommunication costs

Other business taxes

Office supplies

Consulting costs (including tax advice)

Currency translation expenses

Entertainment and corporate hospitality expenses

Services provided by Bundesanstalt für Post
und Telekommunikation (German federal post
and telecommunications agency)

Customs clearance-related charges

Contributions and fees

Voluntary social benefits

Commissions paid

Legal costs

Losses on disposal of assets

Expenses from derivatives

Monetary transaction costs

Audit costs

Expenses from prior-period billings

Donations

Miscellaneous

other operating expenses

Note 4.

341

316

320

272

226

259

219

226

180

177

157

147

391

334

319

268

249

245

223

219

178

170

151

100

329

3,863

452

4,074

Taxes other than income taxes are either recognised under the
related expense item or, if no specific allocation is possible, under
other operating expenses.

Financial income
Interest income

Income from other equity investments
and financial assets

Other financial income

Finance costs
Interest expenses

of which unwinding of discounts for net
pension provisions and other provisions

Other finance costs

Foreign currency result

net finance costs

Note 4.

182

–365

–187

– 67

– 432

– 43

–293

–358

–221

– 65

– 423

–39

–388

The €–95 million change in net finance costs to €388 million is pri-
marily due to interest income from the reversal of a provision for
interest on tax liabilities, as included in the prior-year figure.

Net finance costs include interest income of €43 million (pre-
vious year: €92 million) as well as interest expenses of €358 million
(previous year: €365 million). These result from financial assets
and liabilities that were not measured at fair value through profit
or loss.

Information on the unwinding of discounted net pension

provisions can be found in

Note 44.6.

Income taxes

€ m

2013

– 604

198

– 406

– 87

132

–361

2014

– 604

– 548

– 53

201

148

– 400

Miscellaneous other operating expenses include a large num-

Current income tax expense

ber of smaller individual items.

Current recoverable income tax

17 net income from investments accounted for

using the equity method

€ m

Net income from associates

Net income from joint ventures

net income from investments accounted for
using the equity method

Note 4.

2013
adjusted 1

2014

Deferred tax expense from temporary differences

Deferred tax income from tax loss carryforwards

Income taxes

Deutsche Post DHL Group — 2014 Annual Report

242

346

nents of other comprehensive income:

162

The reconciliation to the effective income tax expense is shown
below, based on consolidated net profit before income taxes and
the expected income tax expense:

reconciliation

€ m

Profit before income taxes

Expected income taxes

Deferred tax assets not recognised for initial
differences

Deferred tax assets of German Group companies
not recognised for tax loss carryforwards and
temporary differences

Deferred tax assets of foreign Group companies
not recognised for tax loss carryforwards and
temporary differences

Effect of current taxes from previous years

Tax-exempt income and non-deductible expenses

Differences in tax rates at foreign companies

Income taxes

2013

2,572

–766

2014

2,577

–778

113

– 87

–361

–117

– 400

The difference from deferred tax assets not recognised for initial
differences is due to temporary differences between the carrying
amounts in the IFRS financial statements and in the tax accounts of
Deutsche Post AG that result from initial differences in the opening
tax accounts as at 1 January 1995. In accordance with IAS 12.15 (b)
and IAS 12.24 (b), the Group did not recognise any deferred tax
assets in respect of these temporary differences, which related
mainly to property, plant and equipment as well as to provisions
for pensions and similar obligations. The remaining temporary dif-
ferences between the carrying amounts in the IFRS financial state-
ments and in the opening tax accounts amounted to €319 million
as at 31 December 2014 (previous year: €366 million).

The effects from deferred tax assets of German Group com-
panies not recognised for tax loss carryforwards and temporary
differences relate primarily to Deutsche Post AG and members
of its consolidated tax group. Effects from deferred tax assets of
foreign companies not recognised for tax loss carryforwards and
temporary differences relate primarily to the Americas region.

€123 million (previous year: €106 million) of the effects from
deferred tax assets not recognised for tax loss carryforwards and
temporary differences relates to the reduction of the effective
income tax expense due to the utilisation of tax loss carryforwards
and temporary differences, for which deferred tax assets had previ-
ously not been recognised. In addition, the recognition of deferred
taxes previously not recognised for tax loss carryforwards and of
deductible temporary differences from a prior period reduced the
deferred tax expense by €317 million (previous year: €208 mil-
lion). Effects from unrecognised deferred tax assets amounting to
€4 million (previous year: €10 million, write-down) were due to
a valuation allowance recognised for a deferred tax asset. Other
effects from unrecognised deferred tax assets primarily relate to
tax loss carryforwards for which no deferred taxes were recognised.

A deferred tax asset in the amount of €17 million (previous
year: €7 million) was recognised in the balance sheet for companies
that reported a loss in the previous year or in the current period as,
based on tax planning, realisation of the tax asset is probable.

In financial year 2014, a change in the tax rate had an insig-
nificant effect on German Group companies. The change in the
tax rate in some foreign tax jurisdictions did not lead to any sig-
nificant effects.

The effective income tax expense includes prior-period tax
expenses from German and foreign companies in the amount of
€4 million (tax income) (previous year: income of €113 million).

The following table presents the tax effects on the compo-

other comprehensive income

€ m

2014
Change due to remeasurements
of net pension provisions

IFRS 3 revaluation reserve

IAS 39 revaluation reserve

IAS 39 hedging reserve

Currency translation reserve

Other changes in retained earnings

Share of other comprehensive
income of investments accounted
for using the equity method

Before taxes

Income taxes

After taxes

–2,350

–2

112

– 92

454

285

–10

–2,065

–2

102

– 65

454

other comprehensive income

–1,872

302

–1,570

2013, adjusted 1
Change due to remeasurements
of net pension provisions

IFRS 3 revaluation reserve

IAS 39 revaluation reserve

IAS 39 hedging reserve

Currency translation reserve

Other changes in retained earnings

Share of other comprehensive
income of investments accounted
for using the equity method

other comprehensive income

Note 4.

– 50

–1

– 460

–1

–372

– 8

–18

–14

–1

– 460

–1

–362

The procedure for calculating the recoverable portion of the de-
ferred tax asset potential relating to pensions was refined during
the financial year. This led to recognition of a positive tax effect
in the amount of €221 million in other comprehensive income. As
regards future effects, it is very difficult to make an estimation be-
cause those effects depend crucially on the change in pension pro-
visions associated with the differences between the IFRS financial
statements and the tax accounts.

Deutsche Post DHL Group — 2014 Annual Report

Consolidated Financial Statements — noTeS — Income statement disclosures

163

Diluted earnings per share in the reporting period were €1.64

(previous year: €1.66).

Diluted earnings per share

Consolidated net profit for the
period attributable to Deutsche
Post AG shareholders

Plus interest expense on the
convertible bond

Less income taxes

Adjusted consolidated net profit
for the period attributable to
Deutsche Post AG shareholders

Weighted average number
of shares outstanding

2013

2014

2,091

2,071

2,096

2,076

€ m

number 1,208,910,457 1,209,507,913

Potentially dilutive shares

number

52,944,097

53,243,204

Weighted average number
of shares for diluted earnings

Diluted earnings per share

number 1,261,854,554 1,262,751,117

€

1.66

1.64

23 Dividend per share
A dividend per share of €0.85 is being proposed for financial year
2014. Based on the 1,211,180,262 shares recorded in the commer-
cial register as at 31 December 2014, this corresponds to a dividend
distribution of €1,030 million. In the previous year the dividend
amounted to €0.80 per share. Further details on the dividend dis-
tribution can be found in

Note 42.

20 Consolidated net profit for the period
In financial year 2014, the Group generated consolidated net profit
for the period of €2,177 million (previous year: €2,211 million).
Of this figure, €2,071 million (previous year: €2,091 million) was
attributable to Deutsche Post AG shareholders.

21 non-controlling interests
The net profit attributable to non-controlling interests decreased
by €14 million from €120 million to €106 million.

22 earnings per share
Basic earnings per share are computed in accordance with IAS 33
(Earnings per Share) by dividing consolidated net profit by the
average number of shares. Basic earnings per share for financial
year 2014 were €1.71 (previous year: €1.73).

Basic earnings per share

Consolidated net profit for the
period attributable to Deutsche
Post AG shareholders

Weighted average number of shares
outstanding

2013

2014

€ m

2,091

2,071

number 1,208,910,457 1,209,507,913

Basic earnings per share

€

1.73

1.71

To compute diluted earnings per share, the average number of
shares outstanding is adjusted for the number of all potentially
dilutive shares. This item includes the executives’ rights to shares
under the Performance Share Plan and Share Matching Scheme
share-based payment systems (as at 31 December 2014: 6,745,501
shares; previous year: 5,992,349) and the maximum number of
ordinary shares that can be issued on exercise of the conversion
rights under the convertible bond issued on 6 December 2012.
Consolidated net profit for the period attributable to Deutsche
Post AG shareholders was increased by the amounts spent for the
convertible bonds.

Deutsche Post DHL Group — 2014 Annual Report

164

BALANCE SHEET DISCLOSURES

Intangible assets

24.1 overview

€ m

Cost
Balance at 1 January 2013
adjusted 1

Additions from business combinations

Additions

Reclassifications

Disposals

Currency translation differences

Balance at 31 December 2013 / 1 January 2014

Additions from business combinations

Additions

Reclassifications

Disposals

Currency translation differences

Balance at 31 December 2014

amortisation and impairment losses
Balance at 1 January 2013
adjusted 1

Additions from business combinations

Amortisation

Impairment losses

Reclassifications

Reversals of impairment losses

Disposals

Currency translation differences

Balance at 31 December 2013 / 1 January 2014

Additions from business combinations

Amortisation

Impairment losses

Reclassifications

Reversals of impairment losses

Disposals

Currency translation differences

Balance at 31 December 2014

Carrying amount at 31 December 2014

Carrying amount at 31 December 2013

Note 4.

Internally
generated
intangible
assets

Purchased
brand names

Purchased
customer lists

Other
purchased
intangible
assets

Advance
payments and
intangible
assets under
development

Goodwill

1,083

502

944

1,497

12,056

–30

–3

1,113

–30

1,151

821

–28

–2

893

–24

979

172

220

–12

490

544

457

–10

447

478

–36

908

975

560

–26

592

690

285

316

– 90

–33

1,479

– 53

1,534

–22

–295

11,770

–2

477

12,247

1,093

1,138

118

–1

– 81

–25

1,121

120

–13

– 43

1,204

330

358

– 5

–36

1,097

1,138

11,109

10,673

134

126

–36

–1

222

212

–39

– 4

392

390

222

Total

16,216

244

–143

–380

15,982

300

– 89

607

16,843

4,069

275

–114

– 99

4,150

261

– 67

136

4,491

12,352

11,832

Purchased software, concessions, industrial rights, licences and
similar rights and assets are reported under purchased intangible
assets. Internally generated intangible assets relate to development
costs for internally developed software.

Other than goodwill, only brand names that are acquired in

their entirety are considered to have indefinite useful lives.

Deutsche Post DHL Group — 2014 Annual Report

Consolidated Financial Statements — noTeS — Balance sheet disclosures

165

For the purposes of annual impairment testing in accordance with
IAS 36, the Group determines the recoverable amount of a CGU on
the basis of its value in use. This calculation is based on projections
of free cash flows that are initially discounted at a rate correspond-
ing to the post-tax cost of capital. Pre-tax discount rates are then
determined iteratively.

The cash flow projections are based on the detailed planning
for EBIT, depreciation / amortisation and investment planning
adopted by management, as well as changes in net working capital,
and take both internal historical data and external macroeconomic
data into account. From a methodological perspective, the detailed
planning phase covers a three-year planning horizon from 2015 to
2017. It is supplemented by a perpetual annuity representing the
value added from 2018 onwards. This is calculated using a long-
term growth rate, which is determined for each CGU separately
and which is shown in the table below. The growth rates applied
are based on long-term real growth figures for the relevant econ-
omies, growth expectations for the relevant sectors and long-term
inflation forecasts for the countries in which the CGU s operate. The
cash flow forecasts are based both on past experience and on the
effects of the anticipated future general market trend. In addition,
the forecasts take into account growth in the respective geograph-
ical submarkets and in global trade, and the ongoing trend towards
outsourcing logistics activities. Cost trend forecasts for the trans-
portation network and services also have an impact on value in use.
The pre-tax cost of capital is based on the weighted average
cost of capital. The (pre-tax) discount rates for the individual CGU s
and the growth rates assumed in each case for the perpetual annu-
ity are shown in the following table:

Discount rates

Growth rates

2013

2014

2013

2014

9.3

9.1

9.4

9.2

8.8

9.5

8.4

7.8

8.6

8.3

9.3

2.5

2.0

2.5

0.5

2.0

2.5

2.0

2.5

0.5

2.0

On the basis of these assumptions and the impairment tests car-
ried out for the individual CGU s to which goodwill was allocated, it
was established that the recoverable amounts for all CGU s exceed
their carrying amounts. No impairment losses were recognised on
goodwill in any of the CGU s as at 31 December 2014.

When performing the impairment test, Deutsche Post DHL
Group conducted sensitivity analyses as required by IAS 36.134.
These analyses did not reveal any risk of impairment to goodwill.

The additions to goodwill of €2 million relate to StreetScooter
GmbH. Of the disposals of goodwill, €1 million relates to Hull
Blyth Angola Viagens and €1 million to the Digital Solutions Busi-
ness;

Note 2.

24.2 allocation of goodwill to CGU s

2013
adjusted 1

2014

10,673

11,109

877

3,890

3,662

273

1,560

411

906

3,918

3,919

275

1,645

446

€ m

Total goodwill

Post - eCommerce - Parcel

express

Global Forwarding, Freight
DHL Global Forwarding

DHL Freight

Supply Chain
DHL Supply Chain

Williams Lea

Note 4.

Supply Chain
DHL Supply Chain

Williams Lea

Global Forwarding, Freight
DHL Freight

DHL Global Forwarding

Post - eCommerce - Parcel

express

Deutsche Post DHL Group — 2014 Annual Report

166

25 Property, plant and equipment

25.1 overview

€ m

Cost
Balance at 1 January 2013
adjusted 1

Additions from business combinations

Additions

Reclassifications

Disposals

Currency translation differences

Balance at 31 December 2013 / 1 January 2014

Additions from business combinations

Additions

Reclassifications

Disposals

Currency translation differences

Balance at 31 December 2014

Depreciation and impairment losses
Balance at 1 January 2013
adjusted 1

Additions from business combinations

Depreciation

Impairment losses

Reclassifications

Reversals of impairment losses

Disposals

Currency translation differences

Balance at 31 December 2013 / 1 January 2014

Additions from business combinations

Depreciation

Impairment losses

Reclassifications

Reversals of impairment losses

Disposals

Currency translation differences

Balance at 31 December 2014

Carrying amount at 31 December 2014

Carrying amount at 31 December 2013

Note 4.

Land
and buildings

Technical
equipment
and machinery

Other
equipment,
operating
and office
equipment

Vehicle fleet
and transport
equipment

Advance
payments and
assets under
development

Aircraft

4,532

4,004

2,517

2,054

2,114

214

–155

– 96

4,569

138

–172

4,676

2,172

173

– 93

– 55

2,198

171

–106

2,325

2,351

2,371

150

177

–197

– 88

4,059

100

361

–206

4,403

2,730

249

–1

–151

– 53

2,789

235

–190

2,942

1,461

1,270

189

–180

– 86

2,487

155

–30

–200

2,474

1,945

206

–166

– 66

1,922

203

– 50

–192

1,932

542

565

228

–150

–16

2,143

116

– 465

1,853

885

193

–1

–125

–7

964

175

106

– 446

809

1,044

1,179

283

–238

–30

2,158

358

–261

2,326

1,097

203

–206

–18

1,080

216

–229

1,079

1,247

1,078

262

640

– 548

–10

– 6

338

790

– 589

–17

533

532

337

Total

15,483

1,503

–1

– 930

–322

15,754

1,576

–39

–1,321

293

16,265

8,830

1,024

–1

–741

–199

8,954

1,000

110

–1,163

187

9,088

7,177

6,800

Advance payments relate only to advance payments on items of
property, plant and equipment for which the Group has paid ad-
vances in connection with uncompleted transactions. Assets under
development relate to items of property, plant and equipment in
progress at the balance sheet date for whose production internal or
third-party costs have already been incurred.

Deutsche Post DHL Group — 2014 Annual Report

Consolidated Financial Statements — noTeS — Balance sheet disclosures

167

25.2 Finance leases

Investment property

The following assets are carried as non-current assets resulting
from finance leases:

26.1 overview

€ m

Land and buildings

Technical equipment and machinery

Other equipment, operating and office equipment

Aircraft

Vehicle fleet and transport equipment

Finance leases

2013

155

160

330

2014

142

242

€ m

Cost
At 1 January

Additions

Reclassifications

Disposals

Currency translation differences

The reduction in aircraft is attributable to impairment losses, as
part of the aircraft fleet was taken out of service earlier than ex-
pected. Information on the corresponding liabilities can be found
Note 46.4.
under financial liabilities;

at 31 December

Depreciation
At 1 January

Additions

Impairment losses

Disposals

Reclassifications

at 31 December

Carrying amount at 31 December

2013

2014

– 8

– 4

–2

–1

– 8

The investment property largely comprises leased property encum-
bered by heritable building rights, and developed and undeveloped
land in Germany, the USA, Iran and Angola. The term property
also covers undeveloped land.

The additions mainly relate to a new property in Angola. The
disposals are attributable to the sale of a property in the USA and
the reclassification of a property as held for sale.

Rental income for investment property amounted to €3 mil-
lion (previous year: €1 million), whilst the related expenses were
€1 million (previous year: less than €1 million). The fair value
amounted to €65 million (previous year: €74 million).

26.2 Fair value measurement under IFRS 13

The following table shows the fair value of the investment property
measured by valuation technique.

Carrying
amount

Fair value

Level 1 1

Level 2 2

Level 3 3

–

Investment property

€ m

31 December 2014
Property – Germany

Property – Angola

Property – USA

Property – Iran

Total

31 December 2013
Property – Germany

Property – Angola

Property – USA

Total

1 Quoted prices (unadjusted) in active markets for identical assets or liabilities.
2 Quoted market prices that are observable directly (as a price) or indirectly (derived from the price).
3 Inputs that are not based on observable market data.

Deutsche Post DHL Group — 2014 Annual Report

168

Fair value is determined using the comparison, investment and
discounted cash flow (DCF) methods. Valuations are based on
external and /or internal expert opinions as well as offered quotes.
In some cases, inputs are based on criteria such as the size, age
and condition of the land and buildings, the local economy and
comparable prices, and are adjusted accordingly. Important inputs
include the price per square metre or acre, or the expected rental
income.

There were no transfers between levels in financial years 2013

and 2014.

Investments accounted for using the equity method

Investments accounted for using the equity method changed

as follows:

€ m

Balance at 1 January

Disposals

Changes in Group’s share of equity

Changes recognised in profit or loss

Profit distributions

Changes recognised in other comprehensive income

Balance at 31 December

Note 4.

Associates

2014

Joint ventures

2014

2013
adjusted 1

–2

–1

–2

–1

Total

2014

–2

The complete list of investments in associates and joint ventures
can be found in the list of the Group’s shareholdings in accordance
with section 313 (2) nos. 1 to 4 and section 313 (3) of the HGB at

www.dpdhl.com/en/investors.html.

27.1

Investments in associates

The following table gives an aggregated overview of the carrying
amount in the consolidated financial statements and selected
finan cial data (adjusted for the interest held) for those associates
which, both individually and in the aggregate, are not of material
significance for the Group.

aggregate financial data for associates

€ m

Carrying amount in the consolidated financial
statements

Profit / loss before income taxes

Profit / loss after income taxes

Other comprehensive income

Total comprehensive income

2013

2014

–1

27.2

Joint ventures

The carrying amounts of the companies that were previously pro-
portionately consolidated and are now accounted for using the
equity method are lower than €1 million.

The following table presents in aggregated form the carrying
amount and selected financial data of all interests in all joint ven-
tures which, both individually and in the aggregate, are immaterial.
The figures represent the Group’s interests.

aggregate financial data for joint ventures

€ m

Carrying amount in the consolidated financial
statements

Profit / loss before income taxes

Profit / loss after income taxes

Other comprehensive income

Total comprehensive income

2013

2014

Deutsche Post DHL Group — 2014 Annual Report

Consolidated Financial Statements — noTeS — Balance sheet disclosures

169

28 non-current financial assets

€ m

Available-for-sale financial assets

Loans and receivables

Assets at fair value through profit
or loss

Lease receivables

1 Jan. 2013
adjusted 1

2013
adjusted 1

162

736

115

256

728

107

2014

288

834

192

non-current financial assets

1,038

1,123

1,363

Note 4.

30 Deferred taxes

30.1 overview

€ m

Deferred tax assets

Deferred tax liabilities

2013

1,327

124

2014

1,752

Write-downs of non-current financial assets amounting to €8 mil-
lion (previous year: €4 million) were recognised in the income
statement as the value of the assets had decreased. As in the pre-
vious year, the entire amount is attributable to assets at fair value
through profit or loss.

Compared with the market rates of interest prevailing at
31 December 2014 for comparable non-current financial assets,
most of the housing promotion loans are low-interest or interest-
free loans. They are recognised in the balance sheet at a present value
of €12 million (previous year: €20 million). The principal amount
of these loans totals €13 million (previous year: €22 million).
Details on restraints on disposal are contained in

Note 50.2.

29 other non-current assets

€ m

Pension assets

Miscellaneous

other non-current assets

Note 4.

1 Jan. 2013
adjusted 1

2013
adjusted 1

198

103

301

120

187

2014

151

Information on pension assets can be found in

Note 44.

30.2 Breakdown by balance sheet item

€ m

Intangible assets

Property, plant and
equipment

Non-current financial assets

Other non-current assets

Other current assets

Provisions

Financial liabilities

Other liabilities

Tax loss carryforwards

Gross amount

Netting

Carrying amount

2013

2014

Assets

Liabilities

Assets

Liabilities

110

358

150

839

1,639

–312

1,327

171

–

436

–312

124

117

649

154

1,048

2,109

–357

1,752

156

–

441

–357

€948 million (previous year: €738 million) of the deferred taxes on
tax loss carryforwards relates to tax loss carryforwards in Germany
and €100 million (previous year: €101 million) to foreign tax loss
carryforwards.

No deferred tax assets were recognised for tax loss carry-
forwards of around €10.2 billion (previous year: €11.2 billion) and
for temporary differences of around €5,082 million (previous year:
€4,113 million), as it can be assumed that the Group will probably
not be able to use these tax loss carryforwards and temporary dif-
ferences in its tax planning.

Most of the tax loss carryforwards are attributable to Deutsche
Post AG. It will be possible to utilise them for an indefinite period
of time. In the case of the foreign companies, the significant tax
loss carryforwards will not lapse before 2023.

Deferred taxes have not been recognised for temporary dif-
ferences of €726 million (previous year: €631 million) relating to
earnings of German and foreign subsidiaries because these tempor-
ary differences will probably not reverse in the foreseeable future.

Deutsche Post DHL Group — 2014 Annual Report

170

30.3 Maturity structure

€ m

2014
Deferred tax assets

Deferred tax
liabilities

2013
Deferred tax assets

Deferred tax
liabilities

33 Trade receivables

€ m

Short-term

Long-term

Netting

Total

308

106

486

169

1,801

335

1,153

267

–357

–312

Trade receivables

Deferred revenue

1,752

Receivables from Group companies

Trade receivables

Note 4.

1,327

124

34 other current assets

Inventories

31
Standard costs for inventories of postage stamps and spare parts
in freight centres amounted to €15 million (previous year: €15 mil-
lion). There was no requirement to charge significant valuation
allowances on these inventories.

€ m

Prepaid expenses

Current tax receivables

Receivables from private postal
agencies

Income from cost absorption

Creditors with debit balances

1 Jan. 2013
adjusted 1

2013
adjusted 1

2014

Receivables from loss compensation
(recourse claims)

€ m

Raw materials, consumables
and supplies

Finished goods and goods
purchased and held for resale

Work in progress

Advance payments

Inventories

Note 4.

32 Current financial assets

€ m

208

321

Available-for-sale financial assets

Financial assets at fair value through profit or loss

Loans and receivables

Lease receivables

Current financial assets

203

126

402

2013

611

140

821

233

332

2014

208

351

The change in current financial assets is primarily attributable to
the liquidation of short-term investments in money market funds.
Of the available-for-sale financial assets, €208 million (pre-
vious year: €611 million) was measured at fair value. Details on
restraints on disposal are contained in

Note 50.2.

1 Jan. 2013
adjusted 1

2013
adjusted 1

6,400

534

6,940

6,490

528

7,022

2014

7,227

596

7,825

1 Jan. 2013
adjusted 1

2013
adjusted 1

2014

680

491

148

636

490

157

687

541

147

657

2,155

755

2,223

792

2,415

Receivables from employees

Receivables from insurance business

Receivables from sale of assets

Receivables from cash-on-delivery

Miscellaneous other assets

other current assets

Note 4.

Of the tax receivables, €396 million (previous year: €366 million)
relates to VAT, €101 million (previous year: €83 million) to customs
and duties, and €44 million (previous year: €41 million) to other
tax receivables. Miscellaneous other assets include a large number
of individual items.

35 Income tax assets and liabilities

€ m

Income tax assets

Income tax liabilities

Note 4.

1 Jan. 2013

127

– 534

2013
adjusted 1

167

– 429

2014

172

– 446

All income tax assets and liabilities are current and have maturities
of less than one year.

Deutsche Post DHL Group — 2014 Annual Report

Consolidated Financial Statements — noTeS — Balance sheet disclosures

171

36 Cash and cash equivalents

€ m

Cash equivalents

Bank balances / cash in transit

Cash

Other cash and cash equivalents

Cash and cash equivalents

Note 4.

1 Jan. 2013
adjusted 1

2013
adjusted 1

883

1,395

103

2,395

2,077

1,199

116

3,414

2014

1,686

1,226

2,978

Of the €2,978 million in cash and cash equivalents, €770 million
was not available for general use by the Group as at the balance
sheet date. Of this amount, €680 million was attributable to
countries where exchange controls or other legal restrictions apply
(mostly China, India and Pakistan) and €90 million to companies
with non-controlling interest holders as well as to cash funds
administered on a trust basis.

37 assets held for sale and liabilities associated

with assets held for sale

37.1 overview

The amounts reported under this item mainly relate to the follow-
ing items:

€ m

Exel Inc., USA – property (Supply Chain segment)

Deutsche Post DHL Corporate Real Estate Management GmbH Co. Logistikzentren KG, Germany –
property (Corporate Center / Other)

Deutsche Post AG – property (Corporate Center / Other)

DHL Aviation (Netherlands) B.V., the Netherlands – aircraft (Express segment)

assets held for sale and liabilities associated with assets held for sale

The term property also covers undeveloped land.

DEUTSCHE POST AG

Assets

2014

Liabilities

2013

2014

2013

The planned sale of two properties by Deutsche Post AG, which
was announced in financial year 2013, has been completed. The
most recent appraisal of the assets prior to reclassification did not
indicate any impairment.

DHL AvIATION (NETHERLANDS) B. v.

As part of early fleet renewal activities, DHL Aviation (Nether-
lands) B.V. plans to reduce its legacy aircraft fleet by 11 aircraft. The
most recent measurement prior to reclassification led to an impair-
ment loss of €102 million.

EXEL INC.

Of the properties held for sale in the previous year, one was sold
in the course of the financial year and one was reclassified as in-
vestment property, as it is no longer intended to be sold. Another
property was reclassified from investment property to assets held
for sale as it is planned to be sold. The most recent appraisal of the
assets prior to reclassification did not indicate any impairment.

DEUTSCHE POST DHL C ORPORATE REAL ESTATE MANAGEMENT
GMBH & C O. LOGISTIKzENTREN KG

The planned sale of a property announced in financial year 2013
was completed in the fourth quarter of 2014. The most recent
appraisal of the assets prior to reclassification as assets held for sale
and liabilities associated with assets held for sale did not result in
any impairment.

Deutsche Post DHL Group — 2014 Annual Report

172

37.2 Fair value measurement under IFRS 13

In accordance with IFRS 5, assets held for sale and liabilities asso-
ciated with assets held for sale are no longer depreciated or amor-
tised, but are recognised at the lower of their fair value less costs to
sell and their carrying amount.

The following table shows how the fair values were measured

on a non-recurring basis using different inputs.

38 Issued capital and purchase of treasury shares

38.1 Share capital

As in the previous year, KfW Bankengruppe (KfW) held a 21 %
interest in the share capital of Deutsche Post AG as at 31 Decem-
ber 2014. The remaining 79 % of the shares were in free float. KfW
holds the shares in trust for the Federal Republic of Germany.

non-recurring fair value measurements

38.2

Issued capital and purchase of treasury shares

€ m

31 December 2014
USA – property

Netherlands – aircraft

31 December 2013
Germany – property

USA – property

Level 1 1

Level 2 2

Level 3 3

–

1 Quoted prices (unadjusted) in active markets for identical assets or liabilities.
2 Quoted market prices that are observable directly (as a price) or indirectly

(derived from the price).

3 Inputs that are not based on observable market data.

As in the previous year, external expert appraisals are used to de-
termine the fair value of the property held for sale in the USA. The
comparison method is used to determine fair value. The inputs that
are assigned to level 2 are partly based on criteria such as the size,
age and condition of the land and buildings, the local economic
situation and comparable prices, and are adjusted accordingly. The
principal input is the price per acre.

The fair value of the aircraft held for sale is determined based
on an analysis of the market and the purchase offer by a potential
buyer.

The fair values of the properties held for sale by Deutsche
Post AG and Deutsche Post DHL Corporate Real Estate Manage-
ment GmbH & Co. Logistikzentren KG classified under level 3 in
the previous year were determined based on the purchase offers by
potential buyers.

There were no transfers between levels in financial year 2014.

The issued capital amounts to €1,211 million. It is composed of
1,211,180,262 no-par value registered shares (ordinary shares) with
a notional interest in the share capital of €1 per share and is fully
paid up.

Changes in issued capital

€

Balance at 1 January

Addition due to 1st capital increase

Addition due to 2nd capital increase

2013

2014

1,209,015,874

656,915

1,507,473

Issued capital pursuant to the commercial register

1,209,015,874

1,211,180,262

Treasury shares acquired

Treasury shares issued

Balance at 31 December

–1,313,727

–3,158,717

1,313,727

1,651,244

1,209,015,874

1,209,672,789

As at 31 December 2014, Deutsche Post AG held 1,507,473 treasury
shares (previous year: no treasury shares). Changes in treasury
shares are presented in the statement of changes in equity.

authorised / contingent capital at 31 December 2014

Authorised Capital 2009

Authorised Capital 2013

Contingent Capital 2011

Contingent Capital 2013

Contingent Capital 2014

Amount

€ m Purpose

Increase in share capital
against cash / non-cash contri-
butions (until 20 April 2014)

240

Increase in share capital
against cash / non-cash contri-
butions (until 28 May 2018)

Issue of options / conversion
rights (24 May 2016)

Issue of options / conversion
rights (28 May 2018)

Issue of subscription rights
to executives (26 May 2019)

Deutsche Post DHL Group — 2014 Annual Report

Consolidated Financial Statements — noTeS — Balance sheet disclosures

173

authorised Capital 2009

Contingent Capital 2011

As resolved by the Annual General Meeting on 21 April 2009, the
Board of Management was authorised, subject to the consent of the
Supervisory Board, to issue up to 240 million new, no-par value
registered shares until 20 April 2014 in exchange for cash and /or
non-cash contributions and thereby increase the company’s share
capital. Shareholders generally have subscription rights. The Board
of Management has not made use of such authorisation. Since this
authorisation lapsed on 20 April 2014, the Annual General Meet-
ing on 29 May 2013 resolved to replace it with a new authorisation
for the same amount (Authorised Capital 2013).

authorised Capital 2013

As resolved by the Annual General Meeting on 29 May 2013, the
Board of Management is authorised, subject to the consent of the
Supervisory Board, to issue up to 240 million new, no-par value
registered shares until 28 May 2018 in exchange for cash and /or
non-cash contributions and thereby increase the company’s share
capital. Shareholders generally have subscription rights. However,
subject to the approval of the Supervisory Board, the Board of
Management may disapply the shareholders’ subscription rights to
the shares covered by the authorisation.

Deutsche Post AG’s Board of Management resolved, with
the consent of the Supervisory Board, to make partial use of the
authorisation granted to it by the Annual General Meeting on
29 May 2013 in accordance with article 5 (2) of the Articles of
Association of Deutsche Post AG (Authorised Capital 2013), to in-
crease Deutsche Post AG’s share capital by €656,915.00 by issuing
656,915 new no-par value registered shares with a notional interest
in the share capital of €1.00 per share in exchange for cash contri-
butions. The capital increase was entered in the commercial regis-
ter of the Bonn Local Court on 12 March 2014. The shares partici-
pated in the consolidated net profit for 2013.

The Board of Management resolved, with the consent of the
Supervisory Board, to make further partial use of the authorisa-
tion granted to it by the Annual General Meeting on 29 May 2013
in accordance with article 5 (2) of the Articles of Association of
Deutsche Post AG ( Authorised Capital 2013), to increase Deutsche
Post AG’s share capital by €1,507,473.00 by issuing 1,507,473 new
no-par value registered shares with a notional interest in the share
capital of €1.00 per share in exchange for cash contributions. The
capital increase was entered in the commercial register of the Bonn
Local Court on 11 December 2014. The shares participate in the
consolidated net profit for 2014.

Implementation of the capital increases entailed transaction

costs of €0.7 million.

In its resolution dated 25 May 2011, the Annual General Meeting
authorised the Board of Management, subject to the consent of
the Supervisory Board, to issue bonds with warrants, convertible
bonds and /or income bonds as well as profit participation certifi-
cates, or a combination thereof, in an aggregate principal amount
of up to €1 billion, on one or more occasions until 24 May 2016,
thereby granting options or conversion rights for up to 75 million
shares with a proportionate interest in the share capital not to
exceed €75 million.

Based on this authorisation, Deutsche Post AG issued a €1 bil-
lion convertible bond on 6 December 2012, allowing holders to
convert the bond into up to 48 million Deutsche Post AG shares.
Full use was made of the authorisation by issuing the bond. The
share capital is increased on a contingent basis by up to €75 million.

Contingent Capital 2013

In its resolution dated 29 May 2013, the Annual General Meeting
authorised the Board of Management, subject to the consent of
the Supervisory Board, to issue bonds with warrants, convertible
bonds and /or income bonds as well as profit participation certifi-
cates, or a combination thereof, in an aggregate principal amount
of up to €1.5 billion, on one or more occasions until 28 May 2018,
thereby granting options or conversion rights for up to 75 million
shares with a proportionate interest in the share capital not to
exceed €75 million. The share capital is increased on a contingent
basis by up to €75 million. No use was made of the authorisation
in the reporting year.

Contingent Capital 2014

On 27 May 2014, the Annual General Meeting of Deutsche Post AG
resolved to authorise the Board of Management to contingently
increase the share capital by up to €40 million through the issue
of up to 40 million new no-par value registered shares. The contin-
gent capital increase serves to grant subscription rights to selected
Group executives. The subscription rights may only be issued
based on the aforementioned Annual General Meeting resolution
of 27 May 2014. The contingent capital increase will only be im-
plemented to the extent that shares are issued based on the sub-
scription rights granted and the company does not settle the sub-
scription rights by cash payment or delivery of treasury shares. The
new shares participate in profit from the beginning of the finan cial
year in which they are issued. The share capital is increased on a
contingent basis by up to €40 million.

Deutsche Post DHL Group — 2014 Annual Report

174

38.3 authorisation to acquire treasury shares

In financial year 2014, use was made of the authorisation to acquire
treasury shares granted until 27 April 2015 by the Annual General
Meeting on 28 April 2010 and extended on 9 May 2012. The
Annual General Meeting on 27 May 2014 resolved to revoke the
authorisation as of the effective date of the new authorisation. By
way of a resolution adopted by the Annual General Meeting on
27 May 2014, the company continues to be authorised to acquire
treasury shares in the period to 26 May 2019 of up to 10 % of
the share capital existing when the resolution was adopted. The
author isation permits the Board of Management to exercise it for
every purpose permitted by law, and in particular to pursue the
goals mentioned in the resolution by the Annual General Meeting.
Treasury shares acquired on the basis of the authorisation,
with shareholders’ subscription rights disapplied, may continue
to be used for the purposes of listing on a stock exchange outside
Germany. In addition, the Board of Management remains author-
ised to acquire treasury shares using derivatives.

As part of the Share Matching Scheme, Deutsche Post AG
issued a total of 1,651,244 shares to executives in the current finan-
cial year. To this end, 656,915 shares were acquired on the market
for a total of €17 million in the first quarter of 2014. The average
purchase price per share was €25.83. A further 990,269 shares were
acquired for a total of €28 million and an average purchase price
per share of €28.10 in the second and third quarter. Furthermore,
4,060 shares that were required in addition, were bought for a pur-
chase price per share of €25.08 in the fourth quarter.

The treasury shares acquired to settle the 2010 tranche of the
Share Matching Scheme for executives due in 2015 (shares allo-
cated to participating executives) were purchased for a total price
of €40 million. The average purchase price per share was €26.59.

As at 31 December 2014, Deutsche Post AG held 1,507,473

treasury shares.

38.4 Disclosures on corporate capital

The equity ratio was 25.9 % in financial year 2014 (previous year:
28.3 %). The company’s capital is monitored using the net gearing
ratio, which is defined as net debt divided by the total of equity and
net debt.

39 Capital reserves
An amount of €101 million was transferred to the capital reserves
in the period up to 31 December 2014. Of this amount, €44 mil-
lion was attributable to the Share Matching Scheme (31 Decem-
ber 2013: €35 million), €3 million to the Performance Share Plan
Note 38.
and €16 million and €38 million to the capital increases;

Capital reserves

€ m

At 1 January

addition / issue of rights under Share Matching
Scheme

2013

2,254

2014

2,269

2009 tranche

2010 tranche

2011 tranche

2012 tranche

2013 tranche

2014 tranche

Total additions

exercise of rights under Share Matching Scheme

2009 tranche – matching shares

2012 tranche – investment and incentive shares

2013 tranche – investment and incentive shares

Total exercised

Total for Share Matching Scheme

addition / issue of rights under Performance Share
Plan

2014 tranche

Capital increases

–20

– 8

–23

–31

Capital reserves at 31 December

2,269

2,339

The exercise of the rights to shares under the 2009 and 2013
tranches reduced the capital reserves by €31 million (previous year:
€20 million for the 2012 tranche) due to the issuance of treasury
shares in this amount to the executives.

On issue of the convertible bond on Deutsche Post AG shares,
the conversion right in the amount of €74 million was recognised
in capital reserves;

Note 46.

40 other reserves

Corporate capital

€ m

Total financial liabilities

Less cash and cash equivalents

Less current financial assets

Less long-term deposits

Less non-current derivative financial instruments

net debt

Plus total equity

Total capital

Net gearing ratio (%)

2013

5,896

–3,414

– 821

– 55

–107

1,499

10,034

11,533

13.0

€ m

2014

5,080

IFRS 3 revaluation reserve

–2,978

IAS 39 revaluation reserve

IAS 39 hedging reserve

Currency translation reserve

other reserves

Note 4.

–351

– 60

–192

1,499

9,580

11,079

13.5

1 Jan. 2013
adjusted 1

2013
adjusted 1

–1

–7

– 469

– 474

– 924

– 817

2014

170

–28

– 483

–341

Deutsche Post DHL Group — 2014 Annual Report

Consolidated Financial Statements — noTeS — Balance sheet disclosures

175

40.1

IFRS 3 revaluation reserve

40.3

IAS 39 hedging reserve

€ m

At 1 January

Changes recognised in other comprehensive income

IFRS 3 revaluation reserve at 31 December

–1

–2

€ m

2013

2014

The hedging reserve is adjusted by the effective portion of a cash
flow hedge. The hedging reserve is reversed to profit or loss when
the hedged item is settled.

The IFRS 3 revaluation reserve includes the hidden reserves of DHL
Logistics Co. Ltd., China, from purchase price allocation. These
are attributable to the customer relationships contained in the 50 %
interest held previously and to adjustments to deferred taxes.

At 1 January

Comprehensive income

Changes from unrealised gains and losses

Changes from realised gains and losses

IAS 39 hedging reserve at 31 December before tax

Deferred taxes

IAS 39 hedging reserve at 31 December after tax

2013

–3

111

– 49

–22

2014

–73

–19

–33

–28

40.2

IAS 39 revaluation reserve

€ m

At 1 January

Currency translation differences

Comprehensive income

Changes from unrealised gains and losses

Changes from realised gains and losses

IAS 39 revaluation reserve at 31 December
before tax

Deferred taxes

IAS 39 revaluation reserve at 31 December
after tax

2013

– 9

2014

107

190

–20

170

The revaluation reserve comprises gains and losses from changes
in the fair value of available-for-sale financial assets that have
been recognised in other comprehensive income. This reserve is
reversed to profit or loss either when the assets are sold or other-
wise disposed of, or if their value is significantly or permanently
impaired.

The change in the hedging reserve is mainly the result of the
recognition of previously unrealised gains and losses from hedging
future operating currency transactions. In the financial year,
realised gains of €70 million and realised losses of €51 million were
recognised in other comprehensive income (previous year: realised
losses of €26 million and realised gains of €75 million). Deferred
taxes have been recognised in respect of the hedging reserve.

40.4 Currency translation reserve

€ m

At 1 January

Transactions with non-controlling interests

Comprehensive income

Changes from unrealised gains and losses

Changes from realised gains and losses

Currency translation reserve at 31 December

Note 4.

2013
adjusted 1

– 469

– 5

– 451

– 924

2014

– 924

441

– 483

Deutsche Post DHL Group — 2014 Annual Report

176

41 retained earnings
As well as the undistributed consolidated profits generated in prior
periods, retained earnings also contain the effects from trans-
actions with non-controlling interests.

€ m

At 1 January

Dividend payment

Consolidated net profit for the period

Change due to remeasurements of net pension
provisions

Transactions with non-controlling interests

Miscellaneous other changes

retained earnings at 31 December

Note 4.

2013
adjusted 1

6,017

– 846

2,091

–15

– 62

–2

7,183

2014

7,183

– 968

2,071

–2,061

– 6

– 51

6,168

distribution is considered as a repayment of contributions from the
capital contribution account and – in the opinion of the tax author-
ities – serves to reduce the cost of acquiring the shares.

43 non-controlling interests

€ m

Non-controlling interests

Note 4.

1 Jan. 2013
adjusted 1

207

2013
adjusted 1

190

2014

204

This balance sheet item includes adjustments for the interests of
non-Group shareholders in the consolidated equity from acquisi-
tion accounting, as well as their interests in profit or loss.

The following table shows the companies to which the ma-

terial non-controlling interests relate:

The dividend payment to Deutsche Post AG shareholders of
€968 million was made in May 2014. This corresponds to a divi-
dend of €0.80 per share.

€ m

For information on the change due to remeasurements of net

pension provisions, see

Note 44.6.

Changes in treasury shares are presented in the statement of

changes in equity.

42 equity attributable to Deutsche Post AG shareholders
The equity attributable to Deutsche Post AG shareholders in finan-
cial year 2014 amounted to €9,376 million (1 January 2013, adjusted:
€9,006 million; 31 December 2013, adjusted: €9,844 million).

Dividends

Dividends paid to the shareholders of Deutsche Post AG are based
on the net retained profit of €1,645 million reported in Deutsche
Post AG’s annual financial statements in accordance with the
Handels gesetzbuch (HGB – German Commercial Code). The
amount of €615 million remaining after deduction of the planned
total dividend of €1,030 million (which corresponds to €0.85 per
share) will be carried forward.

Dividend distributed in financial year 2014
for the year 2013

Dividend distributed in financial year 2013
for the year 2012

Total dividend
€ m

968

846

Dividend
per share
€

0.80

0.70

As the dividend is paid in full from the tax-specific capital
contribution account (steuerliches Einlagekonto as defined by sec-
tion 27 of the Körperschaftssteuergesetz (KStG – German Corpor-
ation Tax Act)) (contributions not made to subscribed capital),
payment will be made without the deduction of capital gains
tax or the solidarity surcharge. The dividend is tax exempt for
share holders resident in Germany. It does not entitle recipients
to a tax refund or a tax credit. In terms of taxation, the dividend

DHL Sinotrans International
Air Courier Ltd., China

Blue Dart Express Limited, India

Exel Saudia LLC, Saudi Arabia

Tradeteam Limited, UK

Other companies

non-controlling interests

Note 4.

1 Jan. 2013
adjusted 1

2013
adjusted 1

2014

107

207

115

190

143

204

The following two companies hold material non-controlling
interests:

international express delivery and

DHL Sinotrans International Air Courier Ltd., China, which
has been assigned to the Express segment, provides domestic
and
transport services.
Deutsche Post DHL Group holds a 50 % share in the company.
Blue Dart Express Limited (Blue Dart), India, is a courier service
provider which has been assigned to the PeP segment. Deutsche
Post AG holds a share of 75 % in Blue Dart.

Deutsche Post DHL Group — 2014 Annual Report

Consolidated Financial Statements — noTeS — Balance sheet disclosures

177

The following table gives an overview of aggregated financial data
for material non-controlling interests:

Financial data for material non-controlling interests

€ m

Balance sheet

ASSETS
Non-current assets

Current assets

Total ASSETS

EQUITY AND LIABILITIES
Non-current provisions and liabilities

Current provisions and liabilities

Total EQUITY AND LIABILITIES

net assets

Non-controlling interests

Income statement
Revenue

Profit before income taxes

Income taxes

Profit / loss after income taxes

Other comprehensive income

Total comprehensive income

attributable to non-controlling interests

Dividend distributed to non-controlling interests

Consolidated net profit attributable to non-controlling interests

Cash flow statement
Net cash from operating activities

Net cash used in / from investing activities

Net cash used in financing activities

Net change in cash and cash equivalents

Cash and cash equivalents at 1 January

Effect of changes in exchange rates on cash and cash equivalents

Cash and cash equivalents at 31 December

Sinotrans

Blue Dart

2013

2014

2013

2014

139

310

449

218

219

230

115

978

218

163

–1

162

156

–19

–163

–26

196

173

124

365

489

194

202

287

143

1,163

260

194

213

106

109

–15

–156

– 62

173

145

132

239

–18

– 4

–1

–21

–1

145

272

–14

Deutsche Post DHL Group — 2014 Annual Report

178

The portion of other comprehensive income attributable to
non-controlling interests largely relates to the currency translation
reserve. The changes are shown in the following table:

€ m

Balance at 1 January

Transactions with non-controlling interests

Comprehensive income

Changes from unrealised gains and losses

Changes from realised gains and losses

Currency translation reserve at 31 December

2013

– 5

–11

2014

–11

The changes in transactions with non-controlling interests without
change of control are presented in the following table:

Transactions with non-controlling interests

€ m

Giorgio Gori Group, Italy

Tradeteam Limited, UK

Blue Dart Express Limited, India

Other

Total

Currency
translation
reserve

– 4

–1

– 5

2013

Retained
earnings

– 62

–10

– 62

Currency
translation
reserve

Total

– 62

–11

– 67

2014

Retained
earnings

–10

–12

– 6

Total

–10

–12

– 6

44 Provisions for pensions and similar obligations

€ m

Provisions for pensions and similar
obligations

Note 4.

1 Jan. 2013
adjusted 1

2013
adjusted 1

2014

5,216

5,016

7,226

The Group’s substantial defined benefit retirement plans are in
Germany and the UK.

In Germany, Deutsche Post AG has occupational retirement
arrangements dating back to 1997 based on a collective agreement,
which are open to new hourly workers and salaried employees.
These arrangements are based on fixed benefit amounts and pro-
vide for monthly payments as from the statutory retirement age,
depending on length of service and the wage / salary level achieved.
Annual increases in the fixed amounts during the service period
and in the pension payments are linked to agreed percentages, i.e.,
1.45 % for active hourly workers and salaried employees and 1.00 %
for retirees. The plan also provides for invalidity benefits and surviv-
ing dependents’ benefits. Negative past service cost was recognised
in the previous year due to an internal change in the conditions for
access to certain invalidity benefits. Retirement arrange ments with
a similar structure are available to executives below the manage-
ment board level and to specific employee groups who can make
use of deferred compensation.

The large majority of Deutsche Post AG’s obligations relates to
the vested entitlements of hourly workers and salaried employees
on the transition date in 1997 and to legacy pension commitments
towards former hourly workers and salaried employees who
had left or retired from the company by the transition date. The
amounts individually determined for the vested entitlements of
the active hourly workers and salaried employees are subject to an
annual rate of increase of 1.45 %.

Deutsche Post AG’s overall pension plan is based on the
Betriebsrentengesetz (BetrAVG – German Occupational Pension
Act), in addition to collective agreements and other relevant docu-
ments. The prime source of external funding is a captive trust
that also services a support fund and a pension fund. The trust
is funded on a case-by-case basis in line with the Group’s finance
strategy and, in the case of the support fund, on an ongoing basis
in line with tax law options. In the case of the pension fund the
super visory funding requirements can, in principle, be met with-
out additional employer contributions. The support fund’s govern-
ing bodies include both Deutsche Post AG employees and former
employees. Part of the plan assets is invested in real estate that is
leased out to the Group on a long-term basis. In addition, some
of the legacy pension commitments use Versorgungsanstalt der
Deutschen Bundespost (VAP), a joint pension fund operated by the
Deutsche Bundespost successor companies.

Deutsche Post DHL Group — 2014 Annual Report

Consolidated Financial Statements — noTeS — Balance sheet disclosures

179

Individual subsidiaries in Germany have retirement plans
that were acquired in the context of acquisitions and transfers of
operations and that are closed to new entrants.

In the UK, the Group’s defined benefit pension arrangements
have largely been closed to new entrants for a number of years. In
addition, Deutsche Post DHL Group committed itself to a change
in its pension strategy in the UK on 26 November 2013, and these
arrange ments are now also largely closed for further service accrual,
with effect from 1 April 2014. As a result, negative past service cost
was recognised in the prior year (shown in the tables below before
closure costs and transitional payments). Since 1 April 2014, the
employees affected have been able to participate in a defined con-
tribution arrangement.

Currently, one single defined benefit pension arrangement
of the Group in the UK remains open to existing employees, who
have not yet chosen to join, or to new employees as a result of a
business transfer from the UK government. It provides for monthly
payments from retirement, depending on length of service and
final salary. In addition, a pension commencement lump sum is
payable. Indexation of pension payments is linked to inflation.
This arrangement also includes invalidity benefits and surviving
dependents’ benefits.

The majority of the Group’s (defined benefit) arrangements
in the UK have been consolidated into a group plan with different
sections for the participating divisions. These are largely funded
via a group trust. The amount of the employer contributions must
be negotiated with the trustee in the course of funding valuations.
The trustee’s directors are Group employees, former employees and
non-Group third parties, all of whom are required to be independ-
ent. Employee beneficiaries make their own funding contributions
in the case of the remaining open defined benefit arrangement. The
group plan is mainly governed by the corresponding trust deed
and rules and the UK Pensions Acts.

A wide variety of other defined benefit retirement plans in
the Group are to be found in the Netherlands, Switzerland, the USA
and a large number of other countries.

In the Netherlands, collective agreements require that those
employees who are not covered by a sector-specific plan participate
in a dedicated defined benefit retirement plan. Following a change
in the plan in the year under review, the benefit plan is no longer
based on final salary, but exclusively provides for annual accruals
from 1 January 2015. In addition, a new pensionable salary cap is
applied in accordance with the relevant Dutch laws. Consequently,
negative past service cost had to be recognised in the year under
review. The dedicated defined benefit retirement plan provides for
monthly benefit payments that increase in line with the agreed
wage and salary increases on the one hand and the funds available
for such increases on the other.

In Switzerland, employees receive an occupational pension
in line with statutory requirements, depending on the contribu-
tions paid, an interest rate that is fixed each year, certain annuity
factors and any pension increases specified. On 9 December 2014,
a change in the plan was resolved which will lead to a change, from
1 January 2015, in the annuity factors in particular. Consequently,
negative past service cost was recognised in the year under review.
In the USA, the companies’ defined benefit plans have been
closed to new entrants and accrued entitlements have been frozen.
The Group companies in these three countries primarily use
joint funding institutions within the Group. In the Netherlands
and in Switzerland, both employers and employees contribute to
plan funding. In the USA no contributions are currently made to
the companies’ defined benefit plans. In the year under review,
there were no material amendments, curtailments or settlements
affecting the Group’s defined benefit plans in the Other area, be-
yond the two plan changes in the Netherlands and Switzerland
mentioned above.

Various risks arise in the context of defined benefit plans. Of
these risks, the interest rate risk and investment risk in particular
are still deemed to be significant.

The information below on pension obligations is broken

down into the following areas: Germany, UK and Other.

Deutsche Post DHL Group — 2014 Annual Report

180

44.1 Calculation of the balance sheet items

The balance sheet items were calculated as follows:

€ m

31 December 2014
Present value of defined benefit obligations at 31 December

Fair value of plan assets at 31 December

Surplus (–) / deficit (+) at 31 December

Effect of asset ceilings at 31 December

net pension provisions at 31 December

reported separately

Pension assets at 31 December

Provisions for pensions and similar obligations at 31 December

31 December 2013
Present value of defined benefit obligations at 31 December

Fair value of plan assets at 31 December

Surplus (–) / deficit (+) at 31 December

Effect of asset ceilings at 31 December

net pension provisions at 31 December

reported separately

Pension assets at 31 December

Provisions for pensions and similar obligations at 31 December

In the Other area, the Netherlands, Switzerland and the USA
account for a share in the corresponding present value of the
defined benefit obligations of 43 %, 22 % and 13 %, respectively
(31 December 2013: 42 %, 24 % and 11 %).

Additionally, rights to reimbursement from former Group
companies existed in the Group in Germany in the amount of
around €17 million (31 December 2013: €14 million) which are re-
ported separately. Consequently, benefit payments are being made
directly by the former Group companies.

Germany

Other

Total

10,453

– 4,228

6,225

8,438

– 4,119

4,319

5,247

– 4,750

2,399

–1,986

18,099

–10,964

497

498

501

413

415

500

4,395

– 4,034

1,963

–1,752

361

362

380

211

215

102

317

7,135

7,138

7,226

14,796

– 9,905

4,891

4,896

120

5,016

Deutsche Post DHL Group — 2014 Annual Report

Consolidated Financial Statements — noTeS — Balance sheet disclosures

181

44.2 Present value of defined benefit obligations

The present value of defined benefit obligations changed as follows:

€ m

2014
Present value of defined benefit obligations at 1 January

Current service cost, excluding employee contributions

Interest cost on defined benefit obligations

Actuarial gains (–) / losses (+) – changes in demographic assumptions

Actuarial gains (–) / losses (+) – changes in financial assumptions

Actuarial gains (–) / losses (+) – experience adjustments

Past service cost

Settlement gains (–) / losses (+)

Employee contributions

Benefit payments

Settlement payments

Transfers

Acquisitions / divestitures

Currency translation effects

Present value of defined benefit obligations at 31 December

2013
Present value of defined benefit obligations at 1 January

Current service cost, excluding employee contributions

Interest cost on defined benefit obligations

Actuarial gains (–) / losses (+) – changes in demographic assumptions

Actuarial gains (–) / losses (+) – changes in financial assumptions

Actuarial gains (–) / losses (+) – experience adjustments

Past service cost

Settlement gains (–) / losses (+)

Employee contributions

Benefit payments

Settlement payments

Transfers

Acquisitions / divestitures

Currency translation effects

Present value of defined benefit obligations at 31 December

The significant financial assumptions are as follows:

31 December 2014
Discount rate

Expected annual rate of future salary increase

Expected annual rate of future pension increase

31 December 2013
Discount rate

Expected annual rate of future salary increase

Expected annual rate of future pension increase

Deutsche Post DHL Group — 2014 Annual Report

Germany

Other

Total

8,438

4,395

1,963

14,796

110

312

2,057

–12

202

– 88

627

–26

– 469

–189

10,453

308

5,247

375

– 5

–20

– 94

163

583

–73

3,059

– 43

–14

–752

2,399

349

18,099

8,608

4,116

2,051

14,775

111

314

–33

– 68

– 58

– 471

–3

8,438

176

237

156

–75

–173

– 87

4,395

–103

–3

–77

–2

–1

–33

1,963

186

556

209

–15

–136

–721

–2

– 4

–120

14,796

Germany

Other

Total

2.25

2.50

2.00

3.75

2.50

2.00

3.50

3.00

2.59

4.50

2.96

2.33

2.05

0.92

3.48

2.12

1.06

2.62

2.43

2.07

3.94

3.06

2.20

182

The discount rates for defined benefit obligations in the euro zone
and the UK were each derived from an individual yield curve
comprising the yields of AA-rated corporate bonds. Membership-
related factors were taken into account. For other countries, the
discount rate was determined in a similar way, provided there was
a deep market for AA-rated (or, to some extent, AA and AAA-rated)
corporate bonds. By contrast, government bond yields were used
for countries without a deep market for such corporate bonds.

For the annual pension increase in Germany, agreed rates in
particular must be taken into account in addition to the assump-
tions shown. The effective weighted average therefore amounts to
1.00 % (2013: 1.00 %).

The significant demographic assumptions made relate to life
expectancy and mortality. For the German Group companies, they
were calculated using the Richttafeln 2005 G mortality tables pub-
lished by Klaus Heubeck. Life expectancy for the British retirement
plans was based on the S1PMA / S1PFA tables of the Continuous
Mortality Investigation of the Institute and Faculty of Actuaries
adjusted to reflect plan-specific mortality. Other countries used
their own, current standard mortality tables.

If one of the significant financial assumptions were to change,
the present value of the defined benefit obligations would change
as follows:

31 December 2014
Discount rate

Expected annual rate of future salary increase

Expected annual rate of future pension increase

31 December 2013
Discount rate

Expected annual rate of future salary increase

Expected annual rate of future pension increase

These are effective weighted changes in the present value of the var-
ious defined benefit obligations, e.g., taking into account the largely
fixed nature of the pension increase for Germany.

A one-year increase in life expectancy for a 65-year-old bene-
ficiary would increase the present value of the defined benefit obli-
gations by 4.64 % in Germany (previous year: 4.63 %) and by 3.80 %
in the UK (previous year: 3.53 %). The corresponding increase for
other countries would be 2.08 % (previous year: 2.40 %), for a total
increase of 4.06 % (previous year: 4.01 %).

When determining the sensitivity disclosures, the present
values were calculated using the same methodology used to cal-
culate the present values at the reporting date. The presentation
does not take into account interdependencies between the assump-
tions; rather, it supposes that the assumptions change in isolation.
This would be unusual in practice, since assumptions are often
correlated.

Change in
assumption

Change in present value
of defined benefit obligations

Germany

Other

Total

+1.00
–1.00

+0.50
– 0.50

+1.00
–1.00

+0.50
– 0.50

–13.57
17.85

0.18
– 0.17

0.41
– 0.37

–12.31
15.63

0.17
– 0.15

0.30
– 0.27

–16.06
19.78

0.11
– 0.10

5.07
–3.18

–16.14
19.58

1.06
–1.21

4.09
– 4.08

–14.43
18.75

1.17
–1.10

6.13
– 4.37

–13.41
17.20

1.44
–1.30

5.81
– 4.14

–14.40
18.53

0.29
– 0.27

2.51
–1.71

–13.59
17.01

0.60
– 0.62

2.15
–1.91

The weighted average duration of the Group’s defined bene-
fit obligations at 31 December 2014 was 15.9 years in Germany
(31 December 2013: 14.3 years) and 18.2 years in the UK (31 Decem-
ber 2013: 18.5 years). In the other countries it was 16.8 years (31 De-
cember 2013: 15.5 years), and in total it was 16.7 years (31 Decem-
ber 2013: 15.7 years).

A total of 30.8 % (31 December 2013: 27.6 %) of the present
value of the defined benefit obligations was attributable to active
beneficiaries, 16.8 % (31 December 2013: 16.2 %) to terminated
bene ficiaries and 52.4 % (31 December 2013: 56.2 %) to retirees.

Deutsche Post DHL Group — 2014 Annual Report

Consolidated Financial Statements — noTeS — Balance sheet disclosures

183

44.3 Fair value of plan assets

The fair value of the plan assets changed as follows:

€ m

2014
Fair value of plan assets at 1 January

Interest income on plan assets

Return on plan assets excluding interest income

Other administration costs in accordance with IAS 19.130

Employer contributions

Employee contributions

Benefit payments

Settlement payments

Transfers

Acquisitions / divestitures

Currency translation effects

Fair value of plan assets at 31 December

2013
Fair value of plan assets at 1 January

Interest income on plan assets

Return on plan assets excluding interest income

Other administration costs in accordance with IAS 19.130

Employer contributions

Employee contributions

Benefit payments

Settlement payments

Transfers

Acquisitions / divestitures

Currency translation effects

Fair value of plan assets at 31 December

The fair value of the plan assets can be broken down as follows:

€ m

31 December 2014
Equities

Fixed income securities

Real estate

Alternatives

Insurances

Cash

Other

Fair value of plan assets

31 December 2013
Equities

Fixed income securities

Real estate

Alternatives

Insurances

Cash

Other

Germany

Other

Total

4,119

153

194

4,034

186

369

– 6

–278

–189

– 5

4,228

4,129

153

143

283

4,750

3,936

168

– 6

–337

–173

4,119

– 81

4,034

1,752

177

–3

– 84

1,986

9,905

399

591

– 9

290

– 551

– 4

324

10,964

1,693

9,758

–3

– 66

–2

–26

1,752

375

176

– 9

263

– 576

–2

–107

9,905

Germany

Other

Total

785

1,402

1,121

299

576

1,000

3,072

175

449

694

845

203

108

2,479

5,319

1,499

787

684

101

4,228

4,750

1,986

10,964

622

1,227

1,030

314

582

205

139

872

2,488

150

469

632

658

193

2,126

4,373

1,373

836

674

252

271

Fair value of plan assets

4,119

4,034

1,752

9,905

Deutsche Post DHL Group — 2014 Annual Report

184

Quoted prices in an active market exist for around 81 % (previ-
ous year: 80 %) of the total fair values of plan assets. Most of the
remain ing assets for which no such quoted market prices exist are
attributable as follows: 12 % (previous year: 12 %) to real estate, 6 %
(previous year: 6 %) to insurances, 1 % (previous year: 1 %) to alter-
natives and 0 % (previous year: 1 %) to other. The majority of the
investments on the active markets are globally diversified, with
country-specific focus areas.

Real estate with a fair value of €1,106 million (previous year:
€1,016 million) is used by Deutsche Post AG itself. Otherwise, as
in the previous year, no plan assets were used by the Group and
no transferable own financial instruments were held as plan assets.

Asset-liability studies are performed at regular intervals
in Germany, the UK and, amongst other places, the Netherlands,
Switzer land and the USA to examine the match between assets and
liabilities; the strategic allocation of plan assets is adjusted in line
with this.

44.4 effect of asset ceilings

In the UK and Switzerland, the plan rules for one retirement plan
in each case required a surplus to be capped to a certain extent to
reach the level of the present value of the benefits (asset ceiling).
Apart from this, asset ceilings had no effect as at 31 December 2014,
Note 44.1 for amounts
as in the previous year. See the table under
and changes compared with the previous year.

44.5 net pension provisions

Net pension provisions changed as follows:

€ m

2014
Net pension provisions at 1 January

Service cost 1

Net interest cost

Remeasurements

Employer contributions

Employee contributions

Benefit payments

Settlement payments

Transfers

Acquisitions / divestitures

Currency translation effects

net pension provisions at 31 December

2013
Net pension provisions at 1 January

Service cost 1

Net interest cost

Remeasurements

Employer contributions

Employee contributions

Benefit payments

Settlement payments

Transfers

Acquisitions / divestitures

Currency translation effects

net pension provisions at 31 December

1 Including administration costs in accordance with IAS 19.130 from plan assets.

Payments amounting to €453 million are expected with regard to
net pension provisions in 2015. Of this amount, €199 million is
attributable to the Group’s expected direct benefit payments and
€254 million to expected employer contributions to pension funds.

Germany

Other

Total

4,319

116

159

2,000

–194

–191

6,225

4,479

161

–106

–143

–134

–3

4,319

362

144

– 69

498

181

–35

297

– 83

– 6

362

215

206

–27

–10

415

358

–141

–37

–11

–1

–7

215

4,896

158

184

2,350

–290

–201

7,138

5,018

181

–263

–145

– 4

–13

4,896

Deutsche Post DHL Group — 2014 Annual Report

Consolidated Financial Statements — noTeS — Balance sheet disclosures

185

44.6 Components of defined benefit cost

The components of defined benefit cost are as follows:

€ m

2014
Current service cost, excluding employee contributions

Past service cost

Settlement gains (–) / losses (+)

Other administration costs in accordance with IAS 19.130

Service cost 1

Interest cost on defined benefit obligations

Interest income on plan assets

Interest on the effect of asset ceilings

net interest cost

Actuarial gains (–) / losses (+) – total

Return on plan assets excluding interest income

Change in effect of asset ceilings excluding interest

remeasurements

Cost of defined benefit plans

2013
Current service cost, excluding employee contributions

Past service cost

Settlement gains (–) / losses (+)

Other administration costs in accordance with IAS 19.130

Service cost 1

Interest cost on defined benefit obligations

Interest income on plan assets

Interest on the effect of asset ceilings

net interest cost

Actuarial gains (–) / losses (+) – total

Return on plan assets excluding interest income

Change in effect of asset ceilings excluding interest

remeasurements

Cost of defined benefit plans

1 Including administration costs in accordance with IAS 19.130 from plan assets.

€158 million of the cost of defined benefit plans (previous year:
€59 million) related to staff costs, €184 million (previous year:
€181 million) to net other finance costs and €2,350 million (previ-
ous year: €50 million) to other comprehensive income.

44.7 risk

A number of risks that are material to the company and the plans
exist in relation to the defined benefit plans. Opportunities for risk
mitigation are used in line with the specifics of the plans concerned.

INTEREST RATE RISK

A decrease (increase) in the discount rate would lead to an increase
(decrease) in the present value of the total obligation and would
in principle be accompanied by an increase (decrease) in the fair
value of the fixed income securities contained in the plan assets.
Other hedges are made, in some cases using derivatives.

Deutsche Post DHL Group — 2014 Annual Report

Germany

110

116

312

–153

159

2,045

– 45

2,000

2,275

111

– 58

314

–153

161

–76

–30

–106

108

202

–186

513

–369

144

180

–75

–35

176

–168

393

– 96

297

270

Other

Total

–20

– 60

385

–177

–2

206

237

–3

– 54

– 95

– 50

–141

– 88

163

–14

158

583

–399

184

2,943

– 591

–2

2,350

2,692

186

–136

556

–375

181

222

–176

290

INFLATION RISK

Pension obligations – especially final salary schemes or schemes
involving increases during the pension payment phase – can be
linked directly or indirectly to inflation. The risk of rates of infla-
tion increasing to the present value of the defined benefit obliga-
tions has been mitigated in the case of Germany, for example, by
switching to an arrangement involving fixed benefit amounts. In
the case of the UK, the risk has been mitigated by largely closing the
defined benefit arrangements and setting a fixed rate of increase or,
to some extent, by capping increases or providing for lump sum
payments in some cases. Additionally, there is a positive correl-
ation with interest.

186

INvESTMENT RISK

The investment is in principle subject to a large number of risks; in
particular, it is exposed to the risk that market prices may change.
This is managed primarily by ensuring broad diversification and
using risk overlays.

LONGEvITY RISK

Longevity risk may arise in connection with the benefits payable in
the future due to a future increase in life expectancy. This is miti-
gated in particular by using current standard mortality tables when
calculating the present value of the defined benefit obligations. The
mortality tables used in Germany and the UK, for example, include
an allowance for expected future increases in life expectancy.

45 other provisions

45.1 overview

€ m

Other non-current provisions

Other current provisions

other provisions

Note 4.

1 Jan. 2013
adjusted 1

2013
adjusted 1

1,954

1,667

3,621

1,589

1,752

3,341

2014

1,556

1,545

3,101

Other provisions break down into the following main types of
provision:

€ m

Other employee benefits

Restructuring provisions

Technical reserves (insurance)

Postage stamps

Tax provisions

Miscellaneous provisions

other provisions

Note 4.

45.2 Changes in other provisions

€ m

At 1 January 2014

Changes in consolidated group

Utilisation

Currency translation differences

Reversal

Unwinding of discount / changes in discount rate

Reclassification

Additions

at 31 December 2014

Non-current

2014

705

435

323

1,556

2013
adjusted 1

745

109

402

333

1,589

2013
adjusted 1

311

425

203

400

116

297

Current

2014

278

209

211

350

399

2013
adjusted 1

1,056

534

605

400

116

630

Total

2014

983

302

646

350

722

1,752

1,545

3,341

3,101

Other
employee
benefits

Restructuring
provisions

Technical
reserves
(insurance)

1,056

– 476

–22

361

983

534

–157

–174

– 5

302

605

– 55

–24

646

Postage
stamps

400

– 400

350

Tax provisions

Miscellaneous
provisions

116

– 55

–20

630

–251

– 67

390

722

Total

3,341

–1,394

113

–307

1,312

3,101

Deutsche Post DHL Group — 2014 Annual Report

Consolidated Financial Statements — noTeS — Balance sheet disclosures

187

The provision for other employee benefits primarily covers work-
force reduction expenses (severance payments, transitional bene-
fits, partial retirement, etc.), stock appreciation rights (SAR s) and
jubilee payments.

Of the tax provisions, €31 million (previous year: €35 mil-
lion) relates to VAT, €4 million (previous year: €5 million) to cus-
toms and duties, and €63 million (previous year: €76 million) to
other tax provisions.

The restructuring provisions comprise all expenses resulting
from the restructuring measures within the US express business as
well as in other areas of the Group. These measures relate primarily
to settlement payment obligations assumed in the USA, rentals for
idle plant, termination benefits for employees (partial retirement
programmes, transitional benefits), litigation risks and expenses
from the closure of terminals, for example.

Technical reserves (insurance) mainly consist of outstand-
ing loss reserves and IBNR reserves; further details can be found
in

Note 7.
The provision for postage stamps covers outstanding obli-
gations to customers for letter and parcel deliveries from postage
stamps sold but still unused by customers, and is based on studies
by market research companies and internal calculations. It is meas-
ured at the nominal value of the stamps issued.

45.3 Miscellaneous provisions

The miscellaneous provisions break down as follows:

€ m

Litigation costs

Risks from business activities

Aircraft maintenance

Miscellaneous other provisions

Miscellaneous provisions

Note 4.

1 Jan. 2013
adjusted 1

2013
adjusted 1

115

105

414

692

369

630

2014

177

404

722

Miscellaneous other provisions include a large number of individ-
ual items.

45.4 Maturity structure

The maturity structure of the provisions recognised in financial
year 2014 is as follows:

€ m

2014
Other employee benefits

Restructuring provisions

Technical reserves (insurance)

Postage stamps

Tax provisions

Miscellaneous provisions

Total

46 Financial liabilities

46.1 overview

€ m

Non-current financial liabilities

Current financial liabilities

Financial liabilities

Note 4.

Less
than 1 year

More
than 1 year
to 2 years

More
than 2 years
to 3 years

More
than 3 years
to 4 years

More
than 4 years
to 5 years

More
than 5 years

278

209

211

350

399

1,545

212

180

114

524

130

272

163

127

234

117

470

Total

983

302

646

350

722

3,101

1 Jan. 2013
adjusted 1

2013
adjusted 1

4,421

410

4,831

4,619

1,335

5,954

2014

4,683

486

5,169

The decline in financial liabilities is largely attributable to the
repay ment of a bond in the amount of €0.9 billion in January 2014.

Deutsche Post DHL Group — 2014 Annual Report

188

€ m

Bonds

Amounts due to banks

Finance lease liabilities

Liabilities to Group companies

Financial liabilities at fair value through profit or loss

Other financial liabilities

Financial liabilities

Note 4.

46.2 Bonds

Non-current

2014

4,290

191

189

4,683

2013
adjusted 1

4,164

194

192

4,619

2013
adjusted 1

924

198

133

1,335

Current

2014

183

133

128

486

2013
adjusted 1

5,088

198

213

325

5,954

Total

2014

4,290

184

210

145

317

5,169

The following table contains further details on the company’s most
significant bonds. The bonds issued by Deutsche Post Finance B. V.
are fully guaranteed by Deutsche Post AG.

Significant bonds

Bond 2003 / 2014

Bond 2012 / 2017

Bond 2012 / 2022

Bond 2012 / 2020

Bond 2012 / 2024

Bond 2013 / 2018

Bond 2013 / 2023

Convertible bond 2012 / 2019 1

Nominal
coupon
%

4.875

1.875

2.950

1.875

2.875

1.5

2.75

0.600

Issue volume

Issuer

€926 million Deutsche Post Finance B. V.

€750 million Deutsche Post Finance B. V.

€500 million Deutsche Post Finance B. V.

€300 million Deutsche Post AG

€700 million Deutsche Post AG

€500 million Deutsche Post AG

€1 billion Deutsche Post AG

2013

2014

Carrying
amount
€ m

924

745

496

295

696

491

495

931

Fair value

€ m

929

767

516

296

706

499

501

928

Carrying
amount
€ m

Fair value
€ m

747

496

297

697

496

495

942

780

575

323

806

522

570

1,006

1 This relates to the debt component of the convertible bond; the equity component is recognised in the capital reserves.
The fair value of the listed convertible bond as at the balance sheet date was €1,384 million (previous year: €1,353 million).

The €1 billion convertible bond issued on 6 December 2012 has a
conversion right, which allows holders to convert the bond into
a predetermined number of Deutsche Post AG shares if Deutsche
Post AG’s share price more than temporarily exceeds 130 % of the
conversion price applicable at that time. The conversion right may
be exercised between 16 January 2013 and 21 November 2019. On
issue, the conversion price was set at €20.74. It was required to be
adjusted to €20.69 due to the dividend payment of €0.80 per share
for financial year 2013. In addition, Deutsche Post AG was granted
a call option allowing it to repay the bond early at face value plus
accrued interest if Deutsche Post AG’s share price more than tem-
porarily exceeds 130 % of the conversion price applicable at that
time. The option can be exercised between 6 December 2017 and
16 November 2019. For contractual reasons, the convertible bond
was split into a debt component and an equity component. The
equity instrument in the amount of €74 million is reported under
capital reserves. The value of the debt component on the issue date

calculated in accordance with IFRS 32.31 amounted to €920 mil-
lion, including transaction costs and the call option granted. Trans-
action costs of €0.5 million and €5.8 million are included in the
aforementioned amounts. In subsequent years, interest will be
added to the carrying amount of the bond, up to the issue amount,
using the effective interest method (unwinding of discount) and
recognised in profit or loss.

46.3 amounts due to banks

The liabilities mainly comprise current overdraft facilities due to
various banks.

€ m

Amounts due to banks

Note 4.

1 Jan. 2013
adjusted 1

136

2013
adjusted 1

198

2014

184

Deutsche Post DHL Group — 2014 Annual Report

Consolidated Financial Statements — noTeS — Balance sheet disclosures

46.4 Finance lease liabilities

Finance lease liabilities mainly relate to the following items:

Leasing partner

Interest rate
%

End of term Asset

Deutsche Post Immobilien GmbH, Germany

Various leasing partners

4.75

2023 / 2028 Real estate

DHL Express (Austria) GmbH, Austria

DHL Logistics GmbH, Germany

Deutsche Post AG, Germany

Deutsche Post Immobilien GmbH, Germany

Raiffeisen Impuls Immobilien
GmbH

Fittila GmbH

T-Systems International GmbH

Lorac Investment Management
Sarl

3.62

4.2

6.5

6.0

2019 Real estate

2016 Real estate

2015 IT equipment

2016 Real estate

2013
€ m

114

189

2014
€ m

109

The leased assets are recognised in property, plant and equipment
at carrying amounts of €242 million (previous year: €330 million).
The difference between the carrying amounts of the assets and the
liabilities results from longer useful lives of the assets compared
with a shorter repayment period for the lease instalments and un-
scheduled repayments of lease obligations. The notional amount of
the minimum lease payments totals €256 million (previous year:
€255 million).

Maturity structure

€ m

Less than 1 year

More than 1 year to 5 years

More than 5 years

Total

Present value
(finance lease liabilities)

Minimum lease payments
(notional amount)

2013

2014

2013

2014

101

213

109

210

116

115

255

131

256

46.6 other financial liabilities

€ m

Put option related to the acquisition
of the remaining interest in Giorgio
Gori Group

Loan notes related to the
acquisition of TAG Group

Loan notes related to the early
termination of a finance lease

Miscellaneous financial liabilities

other financial liabilities

Note 4.

1 Jan. 2013
adjusted 1

2013
adjusted 1

2014

163

220

190

325

214

317

The other financial liabilities relate to a large number of individual
items.

47 other liabilities

46.5 Financial liabilities at fair value through profit or loss

47.1 overview

The amounts reported under this item relate to the negative fair
values of derivative financial instruments.

€ m

Financial liabilities at fair value through profit
or loss

2013

2014

145

Other non-current liabilities

Other current liabilities

other liabilities

Note 4.

1 Jan. 2013
adjusted 1

2013
adjusted 1

276

4,003

4,279

227

3,978

4,205

2014

255

4,196

4,451

Deutsche Post DHL Group — 2014 Annual Report

190

47.2 Breakdown of other liabilities

€ m

Tax liabilities

Incentive bonuses

Deferred income, of which
non-current: 89 (previous year: 61)

Wages, salaries, severance
payments

Compensated absences

Payables to employees and
members of executive bodies

Social security liabilities

Debtors with credit balances

Liabilities from the sale
of residential building loans,
of which non-current: 160
(previous year: 140)

Overtime claims

COD liabilities

Liabilities from cheques issued

Insurance liabilities

Accrued rentals

Other compensated absences

Accrued insurance premiums
for damages and similar liabilities

Liabilities from loss compensation

Miscellaneous other liabilities,
of which non-current: 6
(previous year: 26)

other liabilities

Note 4.

1 Jan. 2013
adjusted 1

2013
adjusted 1

885

576

353

286

374

177

143

149

153

110

967

560

296

334

298

172

162

147

144

105

2014

1,073

580

385

354

312

175

168

163

162

822

4,279

808

4,205

753

4,451

Of the tax liabilities, €573 million (previous year: €544 million)
relates to VAT, €340 million (previous year: €269 million) to cus-
toms and duties, and €160 million (previous year: €154 million) to
other tax liabilities.

The liabilities from the sale of residential building loans relate
to obligations of Deutsche Post AG to pay interest subsidies to bor-
rowers to offset the deterioration in borrowing terms in conjunc-
tion with the assignment of receivables in previous years, as well as
pass-through obligations from repayments of principal and inter-
est for residential building loans sold.

Miscellaneous other liabilities include a large number of in-

dividual items.

47.3 Maturity structure

€ m

Less than 1 year

More than 1 year to 2 years

More than 2 years to 3 years

More than 3 years to 4 years

More than 4 years to 5 years

More than 5 years

other liabilities

Note 4.

2013
adjusted 1

3,978

144

4,205

2014

4,196

180

4,451

There is no significant difference between the carrying amounts
and the fair values of the other liabilities due to their short matur-
ities or market interest rates. There is no significant interest rate
risk because most of these instruments bear floating rates of inter-
est at market rates.

48 Trade payables
Most of the trade payables have a maturity of less than one year.
The reported carrying amount of trade payables corresponds to
their fair value.

€ m

Trade payables

Note 4.

1 Jan. 2013
adjusted 1

5,960

2013
adjusted 1

6,358

2014

6,922

CASH FLOW DISCLOSURES

49 Cash flow disclosures
The cash flow statement is prepared in accordance with IAS 7
(Statement of Cash Flows) and discloses the cash flows in order
to present the source and application of cash and cash equivalents.
It distinguishes between cash flows from operating, investing and
financing activities. Cash and cash equivalents are composed of
cash, cheques and bank balances with a maturity of not more than
three months, and correspond to the cash and cash equivalents
reported on the balance sheet. The effects of currency translation
and changes in the consolidated group are adjusted when calculat-
ing cash and cash equivalents.

49.1 net cash from operating activities

Cash flows from operating activities are calculated by adjusting
consolidated net profit / loss for tax expenses, net financial income /
net finance costs and non-cash factors, as well as taxes paid, changes
in provisions and in other non-current assets and liabilities (net
cash from operating activities before changes in working capital).
Adjustments for changes in working capital (excluding financial
liabilities) result in net cash from or used in operating activities.

Net cash from operating activities amounted to €3,040 mil-
lion in financial year 2014 compared with €2,989 million in
the previous year. The improved EBIT made a contribution of
€100 million to this increase.

The depreciation, amortisation and impairment losses con-
tained in EBIT are non-cash effects and are therefore eliminated.
They increased from €1,337 million to €1,381 million in the report-
ing period due to the impairment losses of €106 million recognised
on aircraft and spare parts for aircraft, amongst other things. Also
adjusted were non-cash income and expenses, which increased
EBIT by €4 million, but did not lead to a cash outflow. They mainly
relate to income from the remeasurement of liabilities.

Deutsche Post DHL Group — 2014 Annual Report

Consolidated Financial Statements — noTeS — Balance sheet disclosures — Cash flow disclosures

191

The gains on the disposal of non-current assets of €11 mil-
lion are not included in net cash from operating activities in the
cash flow statement. They have therefore been adjusted in the net
income from the disposal of non-current assets and are presented
instead in the cash flows from investing activities. At €–698 mil-
lion, the change in provisions rose by €–198 million year-on-year,
particularly due to the reversal of restructuring provisions in the
Express division.

The change in current assets and liabilities led to a net cash
outflow of €21 million. In the previous year, the change in this item
resulted in an outflow of €89 million. The reduction in inventor-
ies in 2014 in particular made a significant contribution to this
development.

non-cash income and expense

€ m

Expense from remeasurement of assets

Income from remeasurement of liabilities

Income from disposal of assets

Staff costs relating to equity-settled share-based
payments

Miscellaneous

non-cash income and expense

Note 4.

2013
adjusted 1

122

–113

–11

– 6

2014

127

–161

– 4

49.2 net cash used in investing activities

Cash flows from investing activities mainly result from cash
received from disposals of non-current assets (divestitures) and
cash paid for investments in non-current assets.

Interest received from investing activities as well as cash in-

flows from changes in current financial assets are also included.

At €1,087 million, net cash used in investing activities was
€678 million lower than in the previous year. The most significant
item was the cash paid to acquire property, plant and equipment,
and intangible assets, which was up €369 million on the previous
year, at €1,750 million. The increase was attributable to the DHL
divisions, with the Express division in particular significantly
expanding its investments in regional and global hubs.

The change in current financial assets, in particular, led to a
significant net cash inflow of €405 million. The sale of money mar-
ket funds resulted in a cash inflow of €600 million at the beginning
of the year, whilst towards the end of the year excess liquidity of
€200 million was reinvested in short-term capital market instru-
ments. In the previous year, the investment of short-term liquidity
led to a cash outflow of €575 million.

The following assets were acquired and liabilities assumed as

a result of company acquisitions;

Note 2:

€ m

Non-current assets

Current assets (excluding cash and cash equivalents)

Non-current provisions and liabilities

Current provisions and liabilities

2013

2014

The following table shows the calculation of free cash flow:

Calculation of free cash flow

€ m

net cash from operating activities

Sale of property, plant and equipment
and intangible assets

Acquisition of property, plant and equipment
and intangible assets

Cash outflow arising from change in property,
plant and equipment and intangible assets

Disposals of subsidiaries and other business units

Disposals of investments accounted for using
the equity method and other equity investments

Acquisition of subsidiaries and other business units

Acquisition of investments accounted for using
the equity method and other equity investments

Cash outflow arising from acquisitions /
divestitures

Interest received

Interest paid

net interest paid

Free cash flow

Note 4.

2013
adjusted 1

2,989

177

2014

3,040

200

–1,381

–1,750

–1,204

–1,550

–37

– 5

–166

–111

1,669

– 5

–1

–2

–188

–143

1,345

Free cash flow is considered to be an indicator of how much cash is
available to the company for dividend payments or the repayment
of debt.

Free cash flow declined from €1,669 million in the previous
year to €1,345 million in the reporting period. This is primarily at-
tributable to the increase in cash paid to acquire property, plant
and equipment and intangible assets.

49.3 net cash used in financing activities

Net cash used in financing activities rose by €2,238 million to
€2,348 million.

The repayment of a bond in January made a significant con-
tribution of €926 million towards repayments of non-current
finan cial liabilities in the amount of €1,030 million. In the previous
year, in contrast, the issue of two bonds with a five-year and ten-
year term resulted in a cash inflow of €495 million for each bond.
In addition, the change in current financial liabilities led to a cash
inflow of €35 million in the previous year compared with a cash
outflow of €53 million in 2014.

Deutsche Post DHL Group — 2014 Annual Report

192

Another large payment item, the dividend payment to the
shareholders of Deutsche Post AG, was up €122 million on the pre-
vious year at €968 million. The cash paid to acquire treasury shares
also rose, up from €23 million to €85 million, mainly due to the
repurchase of shares from the two capital increases to settle our
Share Matching Scheme. At €188 million, interest payments were
€22 million higher than in the previous year, primarily because in-
terest on the bonds issued in the previous year fell due for the first
time in October.

49.4 Cash and cash equivalents

The cash inflows and outflows described above produced cash
Note 36. This represents
and cash equivalents of €2,978 million;
a year-on-year decline of €436 million.

OTHER DISCLOSURES

50 risks and financial instruments of the Group

50.1 risk management

As a result of its operating activities, the Group is exposed to finan-
cial risks that may arise from changes in exchange rates, commod-
ity prices and interest rates. Deutsche Post DHL Group manages
these risks centrally through the use of non-derivative and de-
rivative finan cial instruments. Derivatives are used exclusively to
mitigate non-derivative financial risks, and fluctuations in their
fair value should not be assessed separately from the underlying
transaction.

The Group’s internal risk guidelines govern the universe of
actions, responsibilities and necessary controls regarding the use

of derivatives. Financial transactions are recorded, assessed and
processed using proven risk management software, which also
regularly documents the effectiveness of hedging relationships.
Portfolios of derivatives are regularly reconciled with the banks
concerned.

To limit counterparty risk from financial transactions, the
Group may only enter into this type of contract with prime-rated
banks. The conditions for the counterparty limits individually
assigned to the banks are reviewed on a daily basis. The Group’s
Board of Management is informed internally at regular intervals
about existing financial risks and the hedging instruments de-
ployed to mitigate them. Financial instruments are accounted for
and measured in accordance with IAS 39.

Information on risks and risk mitigation in relation to the
Note 44.7.

Group’s defined benefit retirement plans can be found in

Liquidity management

The ultimate objective of liquidity management is to secure the sol-
vency of Deutsche Post DHL Group and all Group companies. Con-
sequently, liquidity in the Group is centralised as much as possible
in cash pools and managed in the Corporate Center.

The centrally available liquidity reserves (funding availabil-
ity), consisting of central short-term financial investments and
committed credit lines, are the key control parameter. The target is
to have at least €2 billion available in a central credit line.

The Group had central liquidity reserves of €3.8 billion (pre-
vious year: €4.6 billion) as at 31 December 2014, consisting of cen-
tral financial investments amounting to €1.8 billion plus a syndi-
cated credit line of €2 billion.

The maturity structure of non-derivative financial liabilities

within the scope of IFRS 7 based on cash flows is as follows:

Maturity structure of financial liabilities

€ m

at 31 December 2014
Non-current financial liabilities

Other non-current liabilities

non-current liabilities

Current financial liabilities

Trade payables

Other current liabilities

Current liabilities

at 31 December 2013 1
Non-current financial liabilities

Other non-current liabilities

non-current liabilities

Current financial liabilities

Trade payables

Other current liabilities

Current liabilities

1 Prior-period amounts adjusted,

Note 4.

Less
than 1 year

More
than 1 year
to 2 years

More
than 2 years
to 3 years

More
than 3 years
to 4 years

More
than 4 years
to 5 years

More
than 5 years

353

6,922

342

7,617

1,306

6,358

346

8,010

101

156

167

854

856

233

236

580

582

849

852

1,070

1,071

662

664

2,206

154

2,360

3,379

130

3,509

Deutsche Post DHL Group — 2014 Annual Report

Consolidated Financial Statements — noTeS — Cash flow disclosures — Other disclosures

193

The Group repaid the Deutsche Post Finance B. V. bond amounting
to €926 million falling due in January 2014 at the agreed date. Cur-
rent financial liabilities were reduced accordingly.

The maturity structure of the derivative financial instruments

based on cash flows is as follows:

Maturity structure of derivative financial instruments

€ m

at 31 December 2014
Derivative receivables – gross settlement
Cash outflows

Cash inflows

net settlement
Cash inflows

Derivative liabilities – gross settlement
Cash outflows

Cash inflows

net settlement
Cash outflows

at 31 December 2013
Derivative receivables – gross settlement
Cash outflows

Cash inflows

net settlement
Cash inflows

Derivative liabilities – gross settlement
Cash outflows

Cash inflows

net settlement
Cash outflows

Less
than 1 year

More
than 1 year
to 2 years

More
than 2 years
to 3 years

More
than 3 years
to 4 years

More
than 4 years
to 5 years

More
than 5 years

–1,900

1,982

–149

169

–15

–17

–14

–37

–2,429

2,321

–259

248

–30

– 6

– 5,345

5,591

–389

403

–1,821

1,776

– 411

409

– 4

–1

– 46

–33

– 41

–37

Derivative financial instruments entail both rights and obligations.
The contractual arrangement defines whether these rights and ob-
ligations can be offset against each other and therefore result in a
net settlement, or whether both parties to the contract will have to
perform their obligations in full (gross settlement).

CURRENCY RISK AND CURRENCY MANAGEMENT

The international business activities of Deutsche Post DHL Group
expose it to currency risks from recognised or planned future
transactions:

Balance sheet currency risks arise from the measurement and
settlement of items in foreign currencies that are recognised if the
exchange rate on the measurement or settlement date differs from
the rate on recognition. The resulting foreign exchange differences
directly impact profit or loss. In order to mitigate this impact as far
as possible, all significant balance sheet currency risks within the
Group are centralised at Deutsche Post AG through the in-house
bank function. The centralised risks are aggregated by Corporate
Treasury to calculate a net position per currency and hedged ex-
ternally based on value-at-risk limits. The currency- related value

at risk (95 % / one-month holding period) for the portfolio totalled
€6 million (previous year: €4 million) at the reporting date; the
current limit was a maximum of €7 million.

The notional amount of the currency forwards and currency
swaps used to manage balance sheet currency risks amounted to
€3,257 million at the reporting date (previous year: €2,409 mil-
lion); the fair value was €–35 million (previous year: €34 million).
For simplification purposes, fair value hedge accounting was not
applied to the derivatives used, which are reported as trading
derivatives instead.

Currency risks arise from planned foreign currency trans-
actions if the future foreign currency transactions are settled at
exchange rates that differ from the rates originally planned or
calculated. These currency risks are also captured centrally in
Corporate Treasury and managed on a rolling 24-month basis as
part of a hedging programme. The goal is to hedge an average of
up to 50 % of all significant currency risks over a 24-month period.
This makes it possible to plan reliably and reduce fluctuations in
earnings caused by currency movements. At the reporting date,
an average of approximately 39 % of the foreign currency risk of

Deutsche Post DHL Group — 2014 Annual Report

194

the currencies concerned was hedged for the next 24 months. The
relevant hedging transactions are recognised using cash flow hedge
accounting;

Note 50.3, cash flow hedges.

In total, currency forwards and currency swaps with a
notional amount of €5,119 million (previous year: €4,280 million)
were outstanding at the balance sheet date. The corresponding
fair value was €–53 million (previous year: €98 million). As at the
reporting date, there were no currency options or cross-currency
swaps. The cross-currency swaps still existing in the previous year
(notional amount of €163 million and fair value of €14 million)
expired as scheduled in financial year 2014.

Currency risks resulting from translating assets and liabilities
of foreign operations into the Group’s currency (translation risk)
were not hedged as at 31 December 2014.

Of the unrealised gains or losses from currency derivatives
recognised in equity as at 31 December 2014 in accordance with
IAS 39, €20 million (previous year: €69 million) is expected to be
recognised in income in the course of 2015.

IFRS 7 requires the disclosure of quantitative risk data show-
ing how profit or loss and equity are affected by changes in exchange
rates at the reporting date. The impact of these changes in exchange
rates on the portfolio of foreign currency financial instruments is
assessed by means of a value-at-risk calculation (95 % confidence /
one-month holding period). It is assumed that the portfolio as at
the reporting date is representative for the full year. Effects of hypo-
thetical changes in exchange rates on translation risk do not fall
within the scope of IFRS 7. The following assumptions are used as a
basis for the sensitivity analysis:

Primary financial instruments in foreign currencies used by
Group companies were hedged by Deutsche Post AG’s in-house
bank, with Deutsche Post AG setting and guaranteeing monthly
exchange rates. Exchange rate-related changes therefore have no
effect on the profit or loss and equity of the Group companies.
Where, in individual cases, Group companies are not permitted to
participate in in-house banking for legal reasons, their currency
risks from primary financial instruments are fully hedged locally
through the use of derivatives. They therefore have no impact on
the Group’s risk position.

Hypothetical changes in exchange rates have an effect on
the fair values of Deutsche Post AG’s external derivatives that is
reported in profit or loss; they also affect the foreign currency gains
and losses from remeasurement at the closing date of the in-house
bank balances, balances from external bank accounts as well as
internal and external loans extended by Deutsche Post AG. The
foreign currency value at risk of the foreign currency items con-
cerned was €6 million at the reporting date (previous year: €4 mil-
lion). In addition, hypothetical changes in exchange rates affect
equity and the fair values of those derivatives used to hedge unrec-
ognised firm commitments and highly probable forecast currency
transactions, which are designated as cash flow hedges. The foreign
currency value at risk of this risk position was €57 million as at
31 December 2014 (previous year: €30 million). The total foreign
currency value at risk was €56 million at the reporting date (previ-
ous year: €29 million). The total amount is lower than the sum of
the individual amounts given above, owing to interdependencies.

INTEREST RATE RISK AND INTEREST RATE MANAGEMENT

The fair value of interest rate hedging instruments was calcu-
lated on the basis of discounted expected future cash flows using
Corporate Treasury’s risk management system.

As at 31 December 2014, the Group had entered into interest
rate swaps with a notional volume of €1,300 million (previous year:
€1,126 million). The fair value of this interest rate swap position
was €68 million (previous year: €6 million). As in the previous
year, there were no interest rate options at the reporting date.

In January, the Group repaid the bond amounting to
€926 million, which fell due for payment. Some of the original
fixed-coupon bonds were swapped for variable short-term interest
rates. As a result, there was an insignificant change in the share of
instruments with short-term interest lock-ins compared with the
previous year. Taking into account existing interest rate hedging
instruments, the proportion of financial liabilities with short-term
Note 46, amounts to around 35 % (previous year:
interest lock-ins,
36 %) as at the reporting date. The effect of potential interest rate
changes on the Group’s financial position remains insignificant.

The quantitative risk data relating to interest rate risk required
by IFRS 7 is presented in the form of a sensitivity analysis. This
method determines the effects of hypothetical changes in market
interest rates on interest income, interest expense and equity as at
the reporting date. The following assumptions are used as a basis
for the sensitivity analysis:

Primary variable-rate financial instruments are subject to
interest rate risk and must therefore be included in the sensitiv-
ity analysis. Primary variable-rate financial instruments that were
transformed into fixed-income financial instruments using cash
flow hedges are not included. Changes in market interest rates for
derivative financial instruments used as a cash flow hedge affect
equity by changing fair values and must therefore be included in
the sensitivity analysis. Fixed-income financial instruments meas-
ured at amortised cost are not subject to interest rate risk.

Designated fair value hedges of interest rate risk are not in-
cluded in the analysis because the interest-related changes in fair
value of the hedged item and the hedging transaction almost fully
offset each other in profit or loss for the period. Only the variable
portion of the hedging instrument affects net financial income / net
finance costs and must be included in the sensitivity analysis.

If the market interest rate level as at 31 December 2014 had
been 100 basis points higher, net finance costs would have in-
creased by €9 million (previous year: increased by €6 million). A
market interest rate level 100 basis points lower would have had
the opposite effect. A change in the market interest rate level by
100 basis points would affect the fair values of the interest rate
derivatives recognised in equity. As in the previous year, a rise in
interest rates in this financial year would not have increased equity,
nor would a reduction have reduced equity.

Deutsche Post DHL Group — 2014 Annual Report

Consolidated Financial Statements — noTeS — Other disclosures

195

MARKET RISK

As in the previous year, most of the risks arising from commod-
ity price fluctuations, in particular fluctuating prices for kerosene
and marine diesel fuels, were passed on to customers via operat-
ing measures. However, the impact of the related fuel surcharges
is delayed by one to two months, so that earnings may be affected
temporarily if there are significant short-term fuel price variations.
In addition, a small number of commodity swaps for diesel
and marine diesel fuel were used to control residual risks. The
notional amount of these commodity swaps was €53 million (pre-
vious year: €56 million) with a fair value of €–7 million (previous
year: €0 million).

IFRS 7 requires the disclosure of a sensitivity analysis, pre-
senting the effects of hypothetical commodity price changes on
profit or loss and equity.

Changes in commodity prices would affect the fair value of
the derivatives used to hedge highly probable forecast commodity
purchases (cash flow hedges) and the hedging reserve in equity. A
10 % increase in the commodity prices underlying the derivatives
as at the balance sheet date would have increased fair values and
equity by €3 million (previous year: €5 million). A corresponding
decline in commodity prices would have had the opposite effect.

In the interests of simplicity, some of the commodity price
hedges were not recognised using cash flow hedge accounting. For
the derivatives in question, commodity price changes would affect
both the fair values of the derivatives and the income statement. As
in the previous year, if the underlying commodity prices had been
10 % higher at the reporting date, this would have increased the
fair values in question and, consequently, operating profit by less
than €1 million. A corresponding decline in the commodity prices
would have also reduced the fair values and operating profit by less
than €1 million.

CREDIT RISK

The credit risk incurred by the Group is the risk that counterparties
fail to meet their obligations arising from operating activities and
from financial transactions. To minimise credit risk from finan-
cial transactions, the Group only enters into transactions with
prime-rated counterparties. The Group’s heterogeneous customer
structure means that there is no risk concentration. Each coun-
terparty is assigned an individual limit, the utilisation of which is
regularly monitored. A test is performed at the balance sheet dates
to establish whether an impairment loss needs to be charged on
the positive fair values due to the individual counterparties’ credit
quality. This was not the case for any of the counterparties as at
31 December 2014.

Default risks are continuously monitored in the operating
business. The aggregate carrying amounts of financial assets rep-
resent the maximum default risk. Trade receivables amounting to
€7,825 million (previous year: €7,022 million) are due within one
year. The following table gives an overview of receivables that are
past due:

receivables that are past due

€ m

Carrying amount before impairment loss

Neither impaired nor due at the reporting date

Past due and not impaired at the reporting date

Up to 30 days

31 to 60 days

61 to 90 days

91 to 120 days

121 to 150 days

151 to 180 days

More than 180 days

Note 4.

Trade receivables changed as follows:

receivables

€ m

Gross receivables
At 1 January

Changes

at 31 December

Valuation allowances
At 1 January

Changes

at 31 December

Carrying amount at 31 December

Note 4.

2013
adjusted 1

7,232

5,145

750

641

270

2014

8,045

5,923

750

591

270

109

2013
adjusted 1

2014

7,157

7,232

–216

–210

7,022

7,232

813

8,045

–210

–10

–220

7,825

All other financial instruments are neither past due nor impaired.
The heterogeneous structure of the counterparties prevents risk
concentration.

Impairment losses of €22 million (previous year: €23 mil-

lion) were recognised for other assets.

Deutsche Post DHL Group — 2014 Annual Report

196

50.2 Collateral

€600 million (previous year: €545 million) of collateral is recog-
nised in non-current financial assets as at the balance sheet date.
Of this amount, €335 million relates to the restricted cash trans-
ferred to a blocked account with Commerzbank AG for any pay-
ments that may be required due to the EU state aid proceedings;
Note 53. €60 million is attributable to collateral in the context of
an M & A transaction and €125 million relates primarily to liabilities
in conjunction with the settlement of Deutsche Post AG’s residen-
tial building loans. €75 million relates to sureties paid.

Collateral of €39 million is recognised in current financial
assets (previous year: €41 million). The majority of this concerns
collateral deposited for US cross-border leases (QTE leases).

50.3 Derivative financial instruments

The following table gives an overview of the recognised derivative
financial instruments used in the Group and their fair values. De-
rivatives with amortising notional volumes are reported in the full
amount at maturity.

Derivative financial instruments

€ m

2013

2014

Assets

Liabilities

Fair values in 2014, by maturity

No-
tional
amount

Fair
value

Fair
value
of
assets

Fair
value
of
liabil-
ities

Less
than
1
year

Total
fair
value

Up
to 2
years

Up
to 3
years

Up
to 4
years

Up
to 5
years

> 5
years

Up
to 2
years

Up
to 3
years

Up
to 4
years

Up
to 5
years

> 5
years

Interest rate products
Interest rate swaps

of which cash flow
hedges

of which fair value
hedges

Currency transactions
Currency forwards

of which cash flow
hedges

1,126

163

963

1,300

–1

1,300

2,206

2,413

1,825

of which held for trading

381

Currency swaps

of which cash flow
hedges

2,074

of which held for trading

2,028

Cross-currency swaps

163

of which cash flow
hedges

163

4,443

112

1,840

573

2,706

2,684

–74

– 8

– 66

– 8

– 64

–18

– 45

5,119

–138

– 53

Commodity price
transactions
Commodity price swaps

of which cash flow
hedges

of which held for trading

–7

– 4

–3

–7

– 4

–3

Apart from those shown in the table, there were no significant
derivatives resulting from M & A transactions (previous year:
€–2 million).

Less
than
1
year

– 62

–12

– 54

–12

– 8

– 64

0 –126

–12

–7

– 4

–3

Deutsche Post DHL Group — 2014 Annual Report

Consolidated Financial Statements — noTeS — Other disclosures

197

FAIR vALUE HEDGES

New interest rate swaps with a volume of €500 million were entered
into and designated as fair value hedges in 2014 to hedge the fair
value risk of the fixed-interest euro-denominated bond falling due
in 2022. As at 31 December 2014, the interest rate swaps desig-
nated as fair value hedges amounted to a total volume of €1.3 bil-
lion. The fair value of these hedging instruments was €68 million
as at the reporting date (previous year: €–1 million). The following
table gives an overview of the gains and losses arising from the
hedged items and the respective hedging transactions:

Ineffective portion of fair value hedges

€ m

Gains (+) on hedged items

Losses (–) on hedging transactions

Balance (ineffective portion)

2013

–11

2014

–1

CASH FLOW HEDGES

The Group uses currency forwards and currency swaps to hedge
the cash flow risk from future foreign currency operating revenue
and expenses. The fair values of currency forwards and currency
swaps amounted to €–18 million at the reporting date (previous
year: €64 million). The hedged items will have an impact on cash
flow by 2016.

The synthetic cross-currency swaps existing at the 2013 re-
porting date (previous year: €21 million) expired as planned in 2014.
The risks from the purchase of diesel and marine diesel fuels,
which cannot be passed on to customers, were hedged using com-
modity swaps that will affect cash flow in 2014. The fair value of
these cash flow hedges amounted to €–4 million (previous year:
€0 million).

Deutsche Post DHL Group — 2014 Annual Report

198

50.4 additional disclosures on the financial instruments

used in the Group

The Group classifies financial instruments in line with the respec-
tive balance sheet items. Since the Group did not classify any finan-
cial instruments as held to maturity in the reporting period or in
the previous financial year, this measurement category is omitted
in the overview. The following table reconciles the classes to the
categories given in IAS 39 and their respective fair values as at the
reporting date:

reconciliation of carrying amounts in the balance sheet at 31 December 2014

€ m

Carrying amount

Carrying amount by IAS 39 measurement category

Financial assets and liabilities at fair value
through profit or loss

Available-for-sale financial assets

Trading

Fair value option

ASSETS
Non-current financial assets

at cost

at fair value

Trade receivables

at cost

Other current assets

at cost

outside IFRS 7

Current financial assets

at cost

at fair value

Cash and cash equivalents

Total ASSETS

EQUITY AND LIABILITIES
Non-current financial liabilities 1

at cost

at fair value

Other non-current liabilities

at cost

outside IFRS 7

Current financial liabilities

at cost

at fair value

Trade payables

at cost

Other current liabilities

at cost

outside IFRS 7

Total EQUITY AND LIABILITIES

1,363

907

456

7,825

2,415

1,048

1,367

351

283

2,978

14,932

4,683

4,671

255

160

486

353

133

6,922

4,196

390

3,806

16,542

114

264

208

496

1 The Deutsche Post AG and Deutsche Post Finance B. V. bonds included in current and non-current financial liabilities were partly designated as hedged items in a fair value hedge and are thus
subject to a basis adjustment. The bonds are therefore recognised neither at full fair value nor at amortised cost. Non-current financial liabilities also include the convertible bond issued
by Deutsche Post AG in December 2012. The listed bond had a fair value of €1,384 million at the balance sheet date. A fair value of €1,006 million was reported for the debt component at the
balance sheet date.

Deutsche Post DHL Group — 2014 Annual Report

Loans and receivables /

other financial liabilities

Derivatives designated

as hedging instruments

Lease receivables /

finance lease liabilities

Other financial instruments

outside the scope of IAS 39

Fair value of financial instruments

under IFRS 7

834

7,825

1,048

2,978

12,746

4,480

160

334

6,922

390

12,286

191

210

906

456

7,825

1,048

283

–

5,461

160

353

133

6,922

390

–

Consolidated Financial Statements — noTeS — Other disclosures

199

reconciliation of carrying amounts in the balance sheet at 31 December 2014

€ m

Carrying amount

Carrying amount by IAS 39 measurement category

Financial assets and liabilities at fair value

through profit or loss

Available-for-sale financial assets

Trading

Fair value option

Loans and receivables /
other financial liabilities

Derivatives designated
as hedging instruments

Lease receivables /
finance lease liabilities

Other financial instruments
outside the scope of IAS 39

Fair value of financial instruments

under IFRS 7

ASSETS

Non-current financial assets

at cost

at fair value

Trade receivables

at cost

Other current assets

at cost

outside IFRS 7

Current financial assets

at cost

at fair value

Cash and cash equivalents

Total ASSETS

EQUITY AND LIABILITIES

Non-current financial liabilities 1

Other non-current liabilities

Current financial liabilities

at cost

at fair value

at cost

outside IFRS 7

at cost

at fair value

Trade payables

at cost

Other current liabilities

at cost

outside IFRS 7

Total EQUITY AND LIABILITIES

balance sheet date.

1,363

907

456

7,825

2,415

1,048

1,367

351

283

2,978

14,932

4,683

4,671

255

160

486

353

133

6,922

4,196

390

3,806

16,542

114

264

208

496

1 The Deutsche Post AG and Deutsche Post Finance B. V. bonds included in current and non-current financial liabilities were partly designated as hedged items in a fair value hedge and are thus

subject to a basis adjustment. The bonds are therefore recognised neither at full fair value nor at amortised cost. Non-current financial liabilities also include the convertible bond issued

by Deutsche Post AG in December 2012. The listed bond had a fair value of €1,384 million at the balance sheet date. A fair value of €1,006 million was reported for the debt component at the

834

7,825

1,048

2,978

12,746

4,480

160

334

6,922

390

12,286

191

210

906

456

7,825

1,048

283

–

5,461

160

353

133

6,922

390

–

Deutsche Post DHL Group — 2014 Annual Report

200

reconciliation of carrying amounts in the balance sheet at 31 December 2013 1

€ m

Carrying amount

Carrying amount by IAS 39 measurement category

Financial assets and liabilities at fair value
through profit or loss

Available-for-sale financial assets

Trading

Fair value option

Loans and receivables /

other financial liabilities

Derivatives designated

as hedging instruments

Lease receivables /

finance lease liabilities

Other financial instruments

outside the scope of IAS 39

Fair value of financial instruments

under IFRS 7

ASSETS
Non-current financial assets

at cost

at fair value

Trade receivables

at cost

Other current assets

at cost

outside IFRS 7

Current financial assets

at cost

at fair value

Cash and cash equivalents

Total ASSETS

EQUITY AND LIABILITIES
Non-current financial liabilities 2

at cost

at fair value

Other non-current liabilities

at cost

outside IFRS 7

Current financial liabilities

at cost

at fair value

Trade payables

at cost

Other current liabilities

at cost

outside IFRS 7

1,123

857

266

7,022

2,223

956

1,267

821

751

3,414

14,603

4,619

4,608

227

147

1,335

1,306

6,358

3,978

346

3,632

Total EQUITY AND LIABILITIES

16,517

160

611

868

Note 4.

1 Prior-period amounts adjusted,
2 The Deutsche Post AG and Deutsche Post Finance B. V. bonds included in current and non-current financial liabilities were partly designated as hedged items in a fair value hedge and are thus
subject to a basis adjustment. The bonds are therefore recognised neither at full fair value nor at amortised cost. Non-current financial liabilities also include the convertible bond issued
by Deutsche Post AG in December 2012. The listed bond had a fair value of €1,353 million at the balance sheet date. A fair value of €928 million was reported for the debt component at the
balance sheet date.

728

7,022

956

3,414

12,183

4,414

147

1,287

6,358

346

12,552

100

116

194

213

846

266

7,022

956

751

3,414

–

4,664

147

1,306

6,358

346

–

Deutsche Post DHL Group — 2014 Annual Report

reconciliation of carrying amounts in the balance sheet at 31 December 2013 1

€ m

Carrying amount

Carrying amount by IAS 39 measurement category

Financial assets and liabilities at fair value

through profit or loss

Available-for-sale financial assets

Trading

Fair value option

Loans and receivables /
other financial liabilities

Derivatives designated
as hedging instruments

Lease receivables /
finance lease liabilities

Other financial instruments
outside the scope of IAS 39

Fair value of financial instruments

under IFRS 7

Consolidated Financial Statements — noTeS — Other disclosures

201

ASSETS

Non-current financial assets

at cost

at fair value

Trade receivables

at cost

Other current assets

at cost

outside IFRS 7

Current financial assets

at cost

at fair value

Cash and cash equivalents

Total ASSETS

EQUITY AND LIABILITIES

Non-current financial liabilities 2

Other non-current liabilities

at cost

at fair value

at cost

outside IFRS 7

Current financial liabilities

at cost

at fair value

Trade payables

at cost

Other current liabilities

at cost

outside IFRS 7

1,123

857

266

7,022

2,223

956

1,267

821

751

3,414

14,603

4,619

4,608

227

147

1,335

1,306

6,358

3,978

346

3,632

160

611

868

Total EQUITY AND LIABILITIES

16,517

1 Prior-period amounts adjusted,

Note 4.

2 The Deutsche Post AG and Deutsche Post Finance B. V. bonds included in current and non-current financial liabilities were partly designated as hedged items in a fair value hedge and are thus

subject to a basis adjustment. The bonds are therefore recognised neither at full fair value nor at amortised cost. Non-current financial liabilities also include the convertible bond issued

by Deutsche Post AG in December 2012. The listed bond had a fair value of €1,353 million at the balance sheet date. A fair value of €928 million was reported for the debt component at the

balance sheet date.

728

7,022

956

3,414

12,183

4,414

147

1,287

6,358

346

12,552

100

116

194

213

846

266

7,022

956

751

3,414

–

4,664

147

1,306

6,358

346

–

Deutsche Post DHL Group — 2014 Annual Report

202

If there is an active market for a financial instrument (e. g., stock
exchange), the fair value is determined by reference to the market
or quoted exchange price at the balance sheet date. If no fair value
is available in an active market, the quoted prices in an active mar-
ket for similar instruments or recognised valuation techniques are
used to determine fair value. The valuation techniques used incor-
porate the key factors determining the fair value of the financial
instruments using valuation parameters that are derived from the
market conditions as at the balance sheet date. Counterparty risk
is analysed on the basis of the current credit default swaps signed
by the counterparties. The fair values of other non-current receiv-
ables and held-to-maturity financial investments with remaining
maturities of more than one year correspond to the present values
of the payments related to the assets, taking into account current
interest rate parameters.

Cash and cash equivalents, trade receivables and other receiv-
ables have predominantly short remaining maturities. As a result,
their carrying amounts as at the reporting date are approximately
equivalent to their fair values. Trade payables and other liabilities
generally have short remaining maturities; the recognised amounts
approximately represent their fair values.

The available-for-sale financial assets measured at fair value
relate to equity and debt instruments. They include shares in
partner ships and corporations in the amount of €24 million (pre-
vious year: €97 million) for which there is no active market.

As no future cash flows can be reliably determined, the fair
values cannot be determined using valuation techniques. The
equity of partnerships and corporations that are measured at
cost was reduced by €75 million in the financial year. There are
no plans to sell or derecognise significant shares of the available-
for-sale financial assets recognised as at 31 December 2014 in the
near future.

Available-for-sale financial assets measured at fair value relate

to equity and debt instruments.

Financial assets at fair value through profit or loss include se-
curities to which the fair value option was applied, in order to avoid
accounting inconsistencies. There is an active market for these as-
sets, which are recognised at fair value.

The following table presents the financial instruments recog-
nised at fair value and those financial instruments whose fair value
is required to be disclosed; the financial instruments are presented
by the level in the fair value hierarchy to which they are assigned.

The simplification option under IFRS 7.29 a was exercised for
cash and cash equivalents, trade receivables, other assets, trade
payables and other liabilities with predominantly short maturities.
Their carrying amounts as at the reporting date are approximately
equivalent to their fair values. Not included are financial invest-
ments in equity instruments for which there is no quoted price in
an active market and which therefore have to be measured at cost.

Financial assets and liabilities

€ m

Class

31 December 2014
Financial assets
Non-current financial assets

Current financial assets

Total

Financial liabilities
Non-current liabilities

Current liabilities

Total

31 December 2013 4
Financial assets
Non-current financial assets

Current financial assets

Total

Financial liabilities
Non-current liabilities

Current liabilities

Total

1 Quoted prices for identical instruments in active markets.
2 Inputs other than quoted prices that are directly or indirectly observable for instruments.
3 Inputs not based on observable market data.
4 Prior-period amounts adjusted,

Note 4.

Level 1 1

Level 2 2

Level 3 3

Total

246

208

454

5,004

157

611

768

4,221

927

5,148

961

1,036

409

132

541

765

140

905

454

488

132

1,339

283

1,622

5,413

133

5,546

1,015

751

1,766

4,675

963

5,638

Deutsche Post DHL Group — 2014 Annual Report

Consolidated Financial Statements — NOTES — Other disclosures

203

Level 1 mainly comprises equity instruments measured at fair value
and debt instruments measured at amortised cost.

In addition to financial assets and financial liabilities meas-
ured at amortised cost, commodity, interest rate and currency
deriva tives are reported under Level 2. The fair values of the deriv-
atives are measured on the basis of discounted expected future cash
flows, taking into account forward rates for currencies, interest
rates and commodities (market approach). For this purpose, price
quotations observable on the market (exchange rates, interest rates
and commodity prices) are imported from information platforms
customary in the market into the treasury management system.
The price quotations reflect actual transactions involving similar
instruments on an active market. Any currency options used are
measured using the Black-Scholes option pricing model. All sig-
nificant inputs used to measure the derivatives are observable on
the market.

Level 3 mainly comprises the fair values of equity investments
and options associated with M & A transactions. These options are
measured using recognised valuation models, taking plausible
assumptions into account. The fair values of the derivatives depend
largely on financial ratios. Financial ratios strongly influence the
fair values of assets and liabilities. Increasing financial ratios lead to
higher fair values, whilst decreasing financial ratios result in lower
fair values.

No financial instruments were transferred between levels
in financial year 2014. The following table shows the effect on net
gains and losses of the financial instruments categorised within
level 3 as at the reporting date:

Unobservable inputs (Level 3)

€ m

Assets
Equity instruments

Liabilities
Debt instruments

Derivatives

Equity derivatives

Assets
Equity instruments

Liabilities
Debt instruments

Derivatives

Equity derivatives

1 Fair value losses were recognised in other finance costs.
2 Unrealised gains were recognised in the IAS 39 revaluation reserve.

Gains and
losses
( recognised
in profit and
loss) 1

Gains
and losses
(recognised
in OCI) 2

1 Jan. 2014

Additions

Disposals

31 Dec. 2014

–1

–14

132

Gains and
losses
( recognised
in profit and
loss) 1

Gains
and losses
(recognised
in OCI) 2

1 Jan. 2013

Additions

Disposals

31 Dec. 2013

–1

– 43

–3

Deutsche Post DHL Group — 2014 Annual Report

204

The net gains and losses on financial instruments classified in
accordance with the individual IAS 39 measurement categories are
as follows:

net gains and losses by measurement category

€ m

Loans and receivables

Financial assets and liabilities at fair value
through profit or loss

Trading

Fair value option

Other financial liabilities

2013

–107

2014

–114

The net gains and losses mainly include the effects of the fair value
measurement, impairment and disposals (disposal gains / losses)
of financial instruments. Dividends and interest are not taken
into account for the financial instruments measured at fair value
through profit or loss. Disclosures on net gains or losses on avail-
Note 40.2. Income
able-for-sale financial assets can be found in
and expenses from interest and commission agreements of the
finan cial instruments not measured at fair value through profit or
loss are explained in the income statement disclosures.

The following tables show the impact of netting agreements
based on master netting arrangements or similar agreements on
financial assets and financial liabilities as at the reporting date:

offsetting – assets

€ m

assets at 31 December 2014
Derivative financial assets 1

Trade receivables

assets at 31 December 2013 2
Derivative financial assets 1

Trade receivables

1 Excluding derivatives from M & A transactions.
2 Prior-period amounts adjusted,

Note 4.

offsetting – liabilities

€ m

Liabilities at 31 December 2014
Derivative financial liabilities 1

Trade payables

Liabilities at 31 December 2013 2
Derivative financial liabilities 1

Trade payables

1 Excluding derivatives from M & A transactions.
2 Prior-period amounts adjusted,

Note 4.

Financial assets and liabilities not set off
in the balance sheet

Gross amount
of financial
assets
recognised
at the
reporting date

Gross amount
of financial
liabilities
set off

Net amount
of financial
assets set off
in the balance
sheet

Financial liabilities subject to
a legally enforceable netting
agreement that do not meet
offsetting criteria

Collateral
received

153

7,954

156

7,189

129

167

153

7,825

156

7,022

145

Gross amount
of financial
liabilities
recognised
at the
reporting date

Net amount
of financial
liabilities set
off in the
balance sheet

Gross amount
of financial
assets set off

Financial assets and liabilities not set off
in the balance sheet

Financial assets subject to a
legally enforceable netting
agreement that do not meet
offsetting criteria

Collateral
provided

145

7,051

6,525

129

167

145

6,922

6,358

145

Total

7,825

118

7,022

Total

6,922

6,358

Financial assets and liabilities are set off on the basis of netting
agreements (master netting arrangements) only if an enforceable
right of set-off exists and settlement on a net basis is intended as at
the reporting date.

If the right of set-off is not enforceable in the normal course
of business, the financial assets and liabilities are recognised in the
balance sheet at their gross amounts as at the reporting date. The
master netting arrangement creates a conditional right of set-off
that can only be enforced by taking legal action.

Deutsche Post DHL Group — 2014 Annual Report

Consolidated Financial Statements — noTeS — Other disclosures

205

To hedge cash flow and fair value risks, Deutsche Post AG
enters into financial derivative transactions with a large number
of financial services institutions. These contracts are subject to a
standardised master agreement for financial derivative transac-
tions. This agreement provides for a conditional right of set-off,
resulting in the recognition of the gross amount of the financial
derivative transactions at the reporting date. The conditional right
of set-off is presented in the table.

Settlement processes arising from services related to postal
deliveries are subject to the Universal Postal Convention and the
REIMS Agreement. These agreements, particularly the settlement
conditions, are binding on all public postal operators for the spe-
cified contractual arrangements. Imports and exports between the
parties to the agreement during a calendar year are summarised
in an annual statement of account and presented on a net basis
in the final annual statement. Receivables and payables covered
by the Universal Postal Convention and the REIMS Agreement are
presented on a net basis at the reporting date. The tables show the
receivables and payables before and after offsetting.

51 Contingent liabilities
The Group’s contingent liabilities break down as follows:

Contingent liabilities

€ m

Guarantee obligations

Warranties

Liabilities from litigation risks

Other contingent liabilities

Total

2013

124

848

1,077

2014

183

1,428

1,780

The other contingent liabilities comprise an obligation from a for-
mal state aid investigation ( Note 53) and tax-related obligations.
They also include a potential obligation to make settlement pay-
ments in the USA;

Note 12.

52 other financial obligations
In addition to provisions, liabilities and contingent liabilities, there
are other financial obligations amounting to €7,155 million (previ-
ous year: €6,129 million) from non-cancellable operating leases as
defined by IAS 17.

The Group’s future non-cancellable payment obligations

under leases are attributable to the following asset classes:

Lease obligations

€ m

Land and buildings

Aircraft

Transport equipment

Technical equipment and machinery

Other equipment, operating and office equipment

IT equipment

Total

2013

4,966

524

512

2014

5,375

1,083

576

6,129

7,155

Deutsche Post DHL Group — 2014 Annual Report

The increase in lease obligations by €1,026 million to €7,155 mil-
lion is partly due to the expanded and extended contract with US
airline Southern Air at the start of 2014, which led to an increase in
aircraft lease obligations. Furthermore, new leases were concluded
for mechanised delivery bases.

Maturity structure of minimum lease payments

€ m

Less than 1 year

More than 1 year to 2 years

More than 2 years to 3 years

More than 3 years to 4 years

More than 4 years to 5 years

More than 5 years

Total

2013

1,465

1,109

853

651

475

1,576

6,129

2014

1,626

1,223

975

751

501

2,079

7,155

The present value of discounted minimum lease payments is
€5,827 million (previous year: €5,019 million), based on a dis-
count factor of 4.75 % which was unchanged from the previous year.
Overall, rental and lease payments amounted to €2,588 million
(previous year, adjusted: €2,518 million), of which €1,845 million
(previous year, adjusted: €1,708 million) relates to non-cancellable
leases. €2,426 million (previous year: €2,092 million) of future
lease obligations from non-cancellable leases is primarily attribut-
able to Deutsche Post Immobilien GmbH.

The purchase obligation for investments in non-current

assets amounts to €137 million (previous year: €134 million).

53 Litigation
A large number of the postal services rendered by Deutsche Post
AG and its subsidiaries are subject to sector-specific regulation by
the Bundesnetzagentur (German federal network agency) pursuant
to the Postgesetz (German Postal Act). As the regulatory authority,
the Bundesnetzagentur approves or reviews such prices, formu-
lates the terms of downstream access and has special supervisory
powers to combat market abuse. This general regulatory risk could
lead to a decline in revenue and earnings in the event of negative
decisions.

Legal risks arise, amongst other things, from pending admin-
istrative court appeals by an association against the price approvals
under the price cap procedure for 2003, 2004 and 2005 and, in ad-
dition, against the relevant decisions for 2008 and 2013. Although
the appeals against price approvals for the years 2003 to 2005 were
dismissed by the Münster Higher Administrative Court, as the
court of appeal, an appeal has been filed with the Federal Admin-
istrative Court. The Cologne Administrative Court has not yet de-
cided on the appeals against the price approvals for 2008 and 2013.
In its decision dated 14 June 2011, the Bundesnetzagentur con-
cluded that First Mail Düsseldorf GmbH, a subsidiary of Deutsche
Post AG, and Deutsche Post AG had contravened the discounting
and discrimination prohibitions under the Post gesetz. The com-
panies were instructed to remedy the breaches that had been iden-
tified. Both companies appealed against the ruling. Furthermore,
First Mail Düsseldorf GmbH filed an application to suspend the
execution of the ruling until a decision was reached in the principal

206

proceedings. The Cologne Administrative Court and the Münster
Higher Administrative Court both dismissed this application. First
Mail Düsseldorf GmbH discontinued its mail delivery operations
at the end of 2011 and retracted its appeal on 19 December 2011.
Deutsche Post AG continues to pursue its appeal against the
Bundes netzagentur ruling.

In its ruling of 30 April 2012, the Bundesnetzagentur deter-
mined that Deutsche Post AG had contravened the discrimination
provisions under the Postgesetz by charging different fees for the
transport of identical invoices and invoices containing different
amounts. Deutsche Post AG was requested to discontinue the dis-
crimination determined immediately, but no later than 31 Decem-
ber 2012. The ruling was implemented on 1 January 2013. Deutsche
Post does not share the legal opinion of the Bundesnetzagentur and
appealed the ruling.

On 25 January 2012, the European Commission issued a
ruling on the formal investigation regarding state aid that it had
initiated on 12 September 2007. The Commission determined that
Deutsche Post AG was not overcompensated, using state resources,
for the cost of providing universal services between 1989 and 2007.
It also did not find fault with the guarantees issued by the Ger-
man state for legacy liabilities. By contrast, it did find that some of
the funding arrangements for civil servants’ pensions represented
illegal state aid. It said that the pension relief granted to Deutsche
Post AG by the Bundesnetzagentur during the price approval pro-
cess led to Deutsche Post AG receiving a benefit in relation to its
services that are not rate-regulated. According to the Commission,
this must be claimed back by the German government, which
must also ensure that the granting of state aid does not in future
confer benefits with respect to non-rate-regulated services (illegal
state aid). The European Commission has left the calculation of
the precise amount to be repaid to the Federal Republic. However,
in a press release, the European Commission had referred to an
amount of between €500 million and €1 billion.

Deutsche Post AG and the federal government are of the opin-
ion that the European Commission’s state aid decision of 25 Janu-
ary 2012 cannot withstand legal review and have each submitted an
appeal to the European Court of Justice in Luxembourg.

To implement the state aid ruling, the federal government
called upon Deutsche Post AG on 29 May 2012 to make a payment
of €298 million including interest. Deutsche Post AG paid this
amount to a trustee on 1 June 2012 and appealed the recovery order
to the Administrative Court. However, this appeal has been sus-
pended pending a ruling from the European Court of Justice. The
company made additional payments of €19.4 million and €15.6 mil-
lion to the trustee on 2 January 2013 and 2 January 2014, respec-
tively, and €20.2 million on 2 January 2015. All payments made
until the reporting date were reported in the balance sheet under
non- current assets; the earnings position remained unaffected.

The European Commission has not expressed its final accept-
ance of the calculation of the state aid to be repaid. On 17 Decem-
ber 2013, it initiated proceedings against the Federal Republic of
Germany with the European Court of Justice to effect a higher
repayment amount. Although Deutsche Post AG and the federal
government are of the opinion that the European Commission’s
state aid decision of 25 January 2012 cannot withstand legal review,
it cannot be ruled out that Deutsche Post AG will ultimately be re-
quired to make a (potentially higher) payment, which could have
an adverse effect on earnings;

Note 51.
On 5 November 2012, the Bundeskartellamt (German fed-
eral cartel office) initiated proceedings against Deutsche Post AG
on suspicion of abusive behaviour with respect to agreements on
mail transport with major customers. Based on information from
Deutsche Post AG’s competitors and customer surveys, the author-
ities suspect that the company had violated the provisions of Ger-
man and European antitrust law. Deutsche Post AG does not share
this opinion. However, should the authorities find their suspicions
confirmed, they may require Deutsche Post AG to refrain from cer-
tain acts or impose fines.

Since 1 July 2010, as a result of the revision of the relevant
tax exemption provisions, the VAT exemption has only applied to
those specific universal services in Germany that are not subject to
individually negotiated agreements or provided on special terms
(discounts etc.). Deutsche Post AG does not believe that the legis-
lative amendment fully complies with the applicable provisions of
European Community law. Due to the legal uncertainty resulting
from the new legislation, Deutsche Post AG is endeavouring to clar-
ify certain key issues with the tax authorities. Although Deutsche
Post AG is implementing the required measures to a large extent,
the differing legal opinions on the part of Deutsche Post AG and the
tax authorities will be judicially clarified;

Note 51.

On 30 June 2014, DHL Express France received a statement of
objections from the French Competition Authority alleging anti-
competitive conduct in the domestic express business, which had
been divested in June 2010. The company is currently co-operating
with the French authorities regarding the issues raised in the state-
ment of objections.

In view of the ongoing or announced legal proceedings
mentioned above, no details are given on their presentation in the
finan cial statements.

54 Share-based payment
Assumptions regarding the price of Deutsche Post AG’s shares and
assumptions regarding employee fluctuation are taken into account
when measuring the value of share-based payments for executives.
All assumptions are reviewed on a quarterly basis. The staff costs
are recognised pro rata in profit or loss to reflect the services ren-
dered as consideration during the vesting period (lock-up period).

Deutsche Post DHL Group — 2014 Annual Report

Consolidated Financial Statements — noTeS — Other disclosures

207

54.1 Share-based payment for executives (Share Matching Scheme)

Under the share-based payment system for executives (Share
Matching Scheme), certain executives receive part of their variable
remuneration for the financial year in the form of shares of Deutsche
Post AG in the following year (deferred incentive shares). All Group
executives can specify an increased equity component individually
by converting a further portion of their variable remuneration for
the financial year (investment shares). After a four-year lock-up
period during which the executive must be employed by the Group,
they again receive the same number of Deutsche Post AG shares
(matching shares). Assumptions are made regarding the conver-

sion behaviour of executives with respect to their relevant bonus
portion. Share-based payment arrangements are entered into each
year, with 1 January of the respective year and 1 April of the follow-
ing year being the grant dates for each year’s tranche. Whereas in-
centive shares and matching shares are classified as equity-settled
share-based payments, investment shares are compound financial
instruments and the debt and equity components must be meas-
ured separately. However, in accordance with IFRS 2.37, only the
debt component is measured due to the provisions of the Share
Matching Scheme. The investment shares are therefore treated as
cash-settled share-based payments.

Share Matching Scheme

Grant date of incentive shares and associated matching shares

1 Nov. 2009

1 Jan. 2010

1 Jan. 2011

1 Jan. 2012

1 Jan. 2013

1 Jan. 2014

Grant date of matching shares awarded for investment shares

1 Apr. 2010

1 Apr. 2011

1 Apr. 2012

1 Apr. 2013

1 Apr. 2014

1 Apr. 2015

2009 tranche

2010 tranche

2011 tranche

2012 tranche

2013 tranche

2014 tranche

Term

End of term

Share price at grant date (fair value)

Incentive shares and associated matching shares

Matching shares awarded for investment shares

Number of deferred incentive shares

Number of matching shares expected

Deferred incentive shares

Investment shares

Matching shares issued

1 Estimated provisional amount, will be determined on 1 April 2015.
2 Expected number.

months

March 2014

March 2015

March 2016

March 2017

March 2018

March 2019

€

thousands

11.48

13.03

430

336

259

654

13.98

12.91

638

574

932

–

12.90

14.83

660

594

940

–

12.13

18.22

479

431

709

–

17.02

27.18

337

303

567

–

25.91

27.00 1

268 2

241

439

–

The rights to the matching shares under the 2009 tranche and
to the investment and deferred incentive shares under the 2013
tranche were settled in April 2014. To settle the tranches shares
were repurchased on the market;

Note 38.

In the consolidated financial statements as at 31 Decem-
ber 2014, €65 million (previous year: €52 million) was recognised
in capital reserves for the granting of variable remuneration com-
Note 39.
ponents under this system;

54.2 Long-Term Incentive Plan (2006 LTIP) for members

of the Board of Management

Since 1 July 2006, the members of the Board of Management
receive stock appreciation rights (SAR s) under the 2006 LTIP. Each
SAR under the 2006 LTIP entitles the holder to receive a cash settle-
ment equal to the difference between the average closing price of
Deutsche Post shares during the last five trading days before the
exercise date and the issue price of the SAR.

The members of the Board of Management each invest 10 %
of their fixed annual remuneration (annual base salary) as a per-
sonal financial investment every year. The number of SAR s issued
to the members of the Board of Management is determined by
the Super visory Board. Following a four-year waiting period that
begins on the issue date, the SAR s granted can be fully or partly

exercised within a period of two years provided an absolute or
relative performance target is achieved at the end of the waiting
period. Any SAR s not exercised during this two-year period will
expire. To determine how many – if any – of the granted SAR s can
be exercised, the average share price or the average index is com-
pared for the reference period and the performance period. The
reference period comprises the last 20 consecutive trading days
before the issue date. The performance period is the last 60 trading
days before the end of the waiting period. The average (closing)
price is calculated as the average closing price of Deutsche Post
shares in Deutsche Börse AG’s Xetra trading system.

The absolute performance target is met if the closing price of
Deutsche Post shares is at least 10, 15, 20, or 25 % above the issue
price. The relative performance target is tied to the performance
of the shares in relation to the STOXX Europe 600 Index (SXXP,
ISIN EU0009658202). It is met if the share price equals the index
performance or if it outperforms the index by at least 10 %.

A maximum of four out of every six SAR s can be “earned” via
the absolute performance target, and a maximum of two via the
relative performance target. If neither an absolute nor a relative
performance target is met by the end of the waiting period, the
SAR s attributable to the related tranche will expire without replace-
ment or compensation.

Deutsche Post DHL Group — 2014 Annual Report

208

2006 LTIP

SAR s

Issue date

Issue price (€)

2009 tranche

2010 tranche

2011 tranche

2012 tranche

2013 tranche

2014 tranche

1 July 2009

1 July 2010

1 July 2011

1 July 2012

1 Aug. 2013

1 Sept. 2014

9.52

12.27

12.67

13.26

20.49

24.14

Waiting period expires

30 June 2013

30 June 2014

30 June 2015

30 June 2016

31 July 2017

31 Aug. 2018

Note 55.2 for further disclosures on share-based payment for

See
members of the Board of Management.

54.3 SAR Plan for executives

From July 2006 to August 2013, selected executives received
annual tranches of SARS under the SAR Plan. This allowed them to
receive a cash payment within a defined period in the amount of
the difference between the respective price of Deutsche Post shares
and the fixed issue price if demanding performance targets are
met (see disclosures on the 2006 LTIP for members of the Board
of Management). All SAR s granted under the 2006 and 2007
tranches expired at the end of the respective waiting periods, since
the related performance targets were not met. On expiry of the
waiting period for the 2008 tranche on 30 June 2011, two-sixths
of the SAR s granted became exercisable. These SAR s were eligible
to be exercised shortly before the end of the exercise period, as the

share price performed well and exceeded the issue price of €18.40.
The exercise period for these SAR s terminated on 30 June 2013. The
waiting period for the 2009 tranche also ended on 30 June 2013.
Due to the strong share price performance since the SAR s were
issued in 2009, most of these SAR s were exercised in 2013. The
related performance targets were also met on expiry of the waiting
period for the 2010 tranche on 30 June 2014. All SAR s granted in
2010 were able to be exercised. Most executives exercised the SAR s
under this tranche as early as 2014.

Starting in 2014, SAR s were no longer issued to executives
under the SAR Plan. The Performance Share Plan (PSP) for execu-
tives replaces the SAR Plan. All earlier SAR tranches issued under
the old SAR Plan remain valid.

More details on the SAR Plan tranches are shown in the fol-

lowing table:

2009 tranche

2010 tranche

2011 tranche

2012 tranche

2013 tranche

1 July 2009

1 July 2010

1 July 2011

1 July 2012

1 Aug. 2013

9.52

12.27

12.67

13.26

20.49

30 June 2013

30 June 2014

30 June 2015

30 June 2016

31 July 2017

Performance Share Units (PSU s) were issued to selected
executives under the PSP for the first time on 1 September 2014.
It is not planned that members of the Board of Management will
partici pate in the PSP. The Long-Term Incentive Plan (2006 LTIP)
for members of the Board of Management remains unchanged.

In the consolidated financial statements as at 31 Decem-
ber 2014, a total of €3 million (previous year: €0 million) has been
added to capital reserves for the purposes of the plan;

Note 39.

The value of the PSP is measured using actuarial methods
based on option pricing models (fair value measurement). The
expense for financial year 2014 amounted to €3 million and was
recognised in staff costs.

SAR Plan

SAR s

Issue date

Issue price (€)

Waiting period expires

The fair value of the SAR Plan and the 2006 LTIP was determined
using a stochastic simulation model. As a result, an expense of
€105 million was recognised for financial year 2014 (previous year:
€202 million).

A provision for the 2006 LTIP and the SAR Plan was recog-
nised as at the balance sheet date in the amount of €271 million
(previous year: €278 million), of which €67 million (previous year:
€64 million) was attributable to the Board of Management. €6 mil-
lion of the total provision (previous year: €4 million) related to
rights exercisable at the reporting date.

54.4 Performance Share Plan for executives

The Annual General Meeting on 27 May 2014 resolved to intro-
duce the Performance Share Plan (PSP) for executives. This plan
replaces the former share-based payment system (SAR Plan) for
executives. Whereas the SAR Plan involved cash-settled share-
based payments, under the PSP shares are issued to participants at
the end of the waiting period. Under the PSP, the granting of the
shares at the end of the waiting period is linked to the achievement
of demanding performance targets. The performance targets under
the PSP are identical to the performance targets under the LTIP for
members of the Board of Management.

Deutsche Post DHL Group — 2014 Annual Report

Consolidated Financial Statements — noTeS — Other disclosures

209

Performance Share Plan

Grant date

Exercise price

Waiting period expires

Risk-free interest rate

Initial dividend yield of Deutsche Post shares

Yield volatility of Deutsche Post shares

Yield volatility of Dow Jones EURO STOXX 600 Index

Covariance of Deutsche Post shares to Dow Jones EURO STOXX 600 Index

Quantity
Rights outstanding as at 1 January 2014

Rights granted

Rights lapsed

Rights outstanding as at 31 December 2014

2014 tranche

1 Sept. 2014

€24.14

31 Aug. 2018

0.11 %

3.50 %

23.46 %

10.81 %

1.74 %

4,479,948

3,000

4,476,948

Future dividends were taken into account, based on a moderate
increase in dividend distributions over the respective measure-
ment period.

The average remaining maturity of the outstanding options as

at 31 December 2014 was 44 months.

55 related party disclosures

55.1 related party disclosures (companies and Federal republic

of Germany)

All companies classified as related parties that are controlled by the
Group or on which the Group can exercise significant influence
are recorded in the list of shareholdings, which can be accessed on
www.dpdhl.com/en/investors.html, together with infor-
the website,
mation on the equity interest held, their equity and their net profit
or loss for the period, broken down by geographical areas.

Deutsche Post AG maintains a variety of relationships with
the Federal Republic of Germany and other companies controlled
by the Federal Republic of Germany.

The Federal Republic is a customer of Deutsche Post AG and
as such uses the company’s services. Deutsche Post AG has direct
business relationships with the individual public authorities and
other government agencies as independent individual custom-
ers. The services provided for these customers are insignificant in
respect of Deutsche Post AG’s overall revenue.

RELATIONSHIPS WITH KFW

KfW supports the Federal Republic in continuing to privatise
companies such as Deutsche Post AG or Deutsche Telekom AG.
In 1997, KfW, together with the federal government, developed a
“placeholder model” as a tool to privatise government-owned com-
panies. Under this model, the federal government sells all or part
of its investments to KfW with the aim of fully privatising these
state-owned companies. On this basis, KfW has purchased shares
of Deutsche Post AG from the federal government in several stages
since 1997 and executed various capital market transactions using
these shares. KfW’s current interest in Deutsche Post AG’s share
capital is 21 %. Deutsche Post AG is thus considered to be an associ-
ate of the federal government.

Deutsche Post DHL Group — 2014 Annual Report

RELATIONSHIPS WITH BUNDESANSTALT FüR POST
UND TELEKOMMUNIKATION

Bundesanstalt für Post und Telekommunikation (BAnstPT) is a
govern ment agency and falls under the technical and legal super-
vision of the German Federal Ministry of Finance. Under the
Bundes anstalt-Reorganisationsgesetz (German Federal Agency Re-
organisation Act), which entered into force on 1 December 2005,
the federal government directly undertakes the tasks relating to
holdings in Deutsche Bundespost successor companies through
the Federal Ministry of Finance. It is therefore no longer neces-
sary for BAnstPT to perform the “tasks associated with own-
ership”. BAnstPT manages the social facilities such as the Postal
Civil Service Health Insurance Fund, the recreation programme,
Versorgungsanstalt der Deutschen Bundespost (VAP) and the wel-
fare service for Deutsche Post AG, Deutsche Postbank AG and
Deutsche Telekom AG, as well as setting the objectives for social
housing. Since 1 January 2013, BAnstPT has undertaken the tasks
of the special pension fund for postal civil servants. The fund
makes pension and assistance payments to the beneficiaries and
their surviving dependents allocated to the Deutsche Bundespost
successor companies. Further disclosures on the special pension
Notes 7
fund for postal civil servants and on VAP can be found in
and 44. The tasks are performed on the basis of agency agreements.
In 2014, Deutsche Post AG was invoiced for €71 million (previous
year: €65 million) in instalment payments relating to services pro-
vided by BAnstPT.

RELATIONSHIPS WITH THE GERMAN FEDERAL MINISTRY OF FINANCE

In financial year 2001, the German Federal Ministry of Finance
and Deutsche Post AG entered into an agreement that governs
the terms and conditions of the transfer of income received by
Deutsche Post AG from the levying of the settlement payment
under the Gesetze über den Abbau der Fehlsubventionierung im
Wohnungswesen (German Acts on the Reduction of Mis directed
Housing Subsidies) relating to housing benefits granted by
Deutsche Post AG. Deutsche Post AG transfers the amounts to the
federal government on a monthly basis.

Deutsche Post AG also entered into an agreement with the
Federal Ministry of Finance dated 30 January 2004 relating to the
transfer of civil servants to German federal authorities. Under this
agreement, civil servants are seconded with the aim of transferring
them initially for six months, and are then transferred permanently
if they successfully complete their probation. Once a permanent
transfer is completed, Deutsche Post AG contributes to the cost in-
curred by the federal government by paying a flat fee. In 2014, this
initiative resulted in 65 permanent transfers (previous year: 26) and
87 secondments with the aim of a permanent transfer in 2015 (pre-
vious year: 33).

RELATIONSHIPS WITH THE GERMAN FEDERAL EMPLOYMENT A GENCY

Deutsche Post AG and the German Federal Employment Agency
entered into an agreement dated 12 October 2009 relating to the
transfer of Deutsche Post AG civil servants to the Federal Employ-
ment Agency. In 2014, as in the previous year, this initiative
resulted in no transfers.

210

RELATIONSHIPS WITH DEUTSCHE TELEKOM AG AND ITS SUBSIDIARIES

The Federal Republic holds around 32 % of the shares of Deutsche
Telekom AG directly and indirectly (via KfW). A control rela-
tionship exists between Deutsche Telekom AG and the Federal
Republic because the Federal Republic, despite its non-controlling
interest, has a secure majority at the Annual General Meeting
due to its average presence there. Deutsche Telekom AG is there-
fore a related party of Deutsche Post AG. In financial year 2014,
Deutsche Post DHL Group provided goods and services (mainly
transport services for letters and parcels) for Deutsche Telekom
AG and purchased goods and services (such as IT products) from
Deutsche Telekom AG.

Transactions were conducted in financial year 2014 with
major related parties, resulting in the following items in the con-
solidated financial statements:

€ m

receivables

from investments accounted for using the equity
method

from unconsolidated companies

Loans

to investments accounted for using the equity
method

to unconsolidated companies

RELATIONSHIPS WITH DEUTSCHE BAHN AG AND ITS SUBSIDIARIES

receivables from in-house banking

Deutsche Bahn AG is wholly owned by the Federal Republic. Owing
to this control relationship, Deutsche Bahn AG is a related party to
Deutsche Post AG. Deutsche Post DHL Group has various business
relationships with the Deutsche Bahn Group. These mainly consist
of transport service agreements.

from investments accounted for using the equity
method

from unconsolidated companies

Financial liabilities

to investments accounted for using the equity
method

to unconsolidated companies

BUNDES-PENSIONS-SERvICE FüR POST UND TELEKOMMUNIKATION E.

Liabilities

2013
adjusted 1

2014

to investments accounted for using the equity
method

to unconsolidated companies

revenue

from investments accounted for using the equity
method

from unconsolidated companies

expenses 2

due to investments accounted for using the equity
method

due to unconsolidated companies

Note 4.

1
2 Relate to materials expense and staff costs.

Deutsche Post AG issued letters of commitment in the amount of
€79 million (previous year: €81 million) for these companies. Of
this amount, €73 million (previous year: €76 million) was attribut-
able to investments accounted for using the equity method, €2 mil-
lion (previous year: €1 million) to joint operations and €4 million
(previous year: €4 million) to unconsolidated companies.

55.2 related party disclosures (individuals)

In accordance with IAS 24, the Group also reports on transactions
between the Group and related parties or members of their fam-
ilies. Related parties are defined as the Board of Management, the
Supervisory Board and the members of their families.

There were no reportable transactions or legal transactions

involving related parties in financial year 2014.

The remuneration of key management personnel of the
Group requiring disclosure under IAS 24 comprises the remuner-
ation of the active members of the Board of Management and the
Supervisory Board.

Deutsche Post DHL Group — 2014 Annual Report

Disclosures on the Bundes-Pensions-Service für Post- und Tele-
kommunikation e. V. (BPS-PT) can be found in

Note 7.

RELATIONSHIPS WITH PENSION FUNDS

The real estate with a fair value of €1,106 million (previous year:
€1,016 million), of which Deutsche Post Betriebsrenten Service e. V.
(DPRS) and /or Deutsche Post Pensions-Treuhand GmbH & Co. KG,
Deutsche Post Betriebsrenten-Service e. V. & Co. Objekt Gronau
KG and Deutsche Post Grundstücks-Vermietungsgesellschaft beta
mbH Objekt Leipzig KG are the legal or beneficial owners, is ex-
clusively let to Deutsche Post Immobilien GmbH. Rental expense
for Deutsche Post Immobilien GmbH amounted to €69 million
in 2014 (previous year: €66 million). The rent was always paid on
time. Deutsche Post Pensions-Treuhand GmbH & Co. KG owns
100 % of Deutsche Post Pensionsfonds AG. Further disclosures on
pension funds can be found in

Notes 7 and 44.

RELATIONSHIPS WITH UNCONSOLIDATED COMPANIES, INvESTMENTS
ACCOUNTED FOR USING THE EQUITY METHOD AND jOINT OPERATIONS

In addition to the consolidated subsidiaries, the Group has direct
and indirect relationships with unconsolidated companies, invest-
ments accounted for using the equity method and joint operations
deemed to be related parties of the Group in the course of its ordin-
ary business activities. As part of these activities, all transactions
for the provision of goods and services entered into with uncon-
solidated companies were conducted on an arm’s length basis at
standard market terms and conditions.

Consolidated Financial Statements — noTeS — Other disclosures

211

The active members of the Board of Management and the

FORMER MEMBERS OF THE BOARD OF MANAGEMENT

The remuneration of former members of the Board of Management
or their surviving dependants amounted to €6.0 million in the year
under review (previous year: €4.4 million). The defined benefit ob-
ligation (DBO) for current pensions calculated under IFRS s was
€104 million (previous year: €72 million). The increase was mainly
due to a significant reduction in the IAS discount rate compared
with the previous year as well as an increase in the number of
retirees whose pension benefits fell due; no additional obligations
were incurred as a result. Without these extraordinary items in the
amount of €33.1 million, the defined benefit obligation would have
decreased by around €1 million to around €71 million compared
with the previous year.

REMUNERATION OF THE SUPERvISORY BOARD

The total remuneration of the Supervisory Board in financial year
2014 amounted to around €3.3 million (previous year: €1.4 million,
plus a variable amount for 2013 to be paid in 2016); €2.4 million of
this amount was attributable to a fixed component (previous year:
€1.2 million), €0.3 million to attendance allowances (previous year:
€0.2 million), and €0.6 million to the variable remuneration for
2012 (previous year: €0 million as the conditions for payment had
not been met). Of the variable remuneration for 2012, €21 thou-
sand was attributable to one Supervisory Board member who has
meanwhile left the company, and the remaining €595 thousand to
active Supervisory Board members.

Further information on the itemised remuneration of the Board of
Management and the Supervisory Board can be found in the Cor-
porate Governance Report. The remuneration report contained in
the Corporate Governance Report also forms part of the Group
Management Report.

SHAREHOLDINGS OF THE BOARD OF MANAGEMENT
AND SUPERvISORY BOARD

As at 31 December 2014, shares held by the Board of Management
and the Supervisory Board of Deutsche Post AG amounted to less
than 1 % of the company’s share capital.

REPORTABLE TRANSACTIONS

The transactions of Board of Management and Supervisory Board
members involving securities of the company and notified to
Deutsche Post AG in accordance with section 15 a of the Wert-
papierhandelsgesetz (WpHG – German Securities Trading Act)
www.dpdhl.com/en/
can be viewed on the company’s website at
investors.html.

Super visory Board were remunerated as follows:

€ m

Short-term employee benefits
(excluding share-based payment)

Post-employment benefits

Termination benefits

Share-based payment

Total

2013

2014

As well as the aforementioned benefits for their work on the Super-
visory Board, the employee representatives who are on the Super-
visory Board and employed by the Group also receive their normal
salaries for their work in the company. These salaries are deter-
mined at levels that are commensurate with the salary appropriate
for the function or work performed in the company.

Post-employment benefits are recognised as the service cost
resulting from the pension provisions for active members of the
Board of Management. The corresponding liability amounted to
€34 million as at the reporting date (previous year: €23 million).

The share-based payment amount relates to the relevant ex-
pense recognised for financial years 2013 and 2014. It is itemised
in the following table:

Share-based payment

Thousands of €

Dr Frank Appel, Chairman

Ken Allen

Roger Crook

Bruce Edwards 1

Jürgen Gerdes

John Gilbert 2

Melanie Kreis 3

Lawrence Rosen

Angela Titzrath 4

Share-based payment

1 Until 10 March 2014.
2 Since 11 March 2014.
3 Since 31 October 2014.
4 Until 1 July 2014.

2013
SAR s

12,894

7,322

3,460

7,610

7,428

–

7,311

1,183

47,208

2014
SAR s

6,331

3,280

2,577

6,722

3,523

–

3,304

4,071

29,868

55.3 remuneration disclosures in accordance with the HGB

BOARD OF MANAGEMENT REMUNERATION

The total remuneration paid to the active members of the Board
of Management in financial year 2014 including the components
with a long-term incentive effect totalled €20.9 million (previous
year: €20.5 million). Of this amount, €7.6 million (previous year:
€7.8 million) is attributable to non-performance-related compo-
nents (annual base salary and fringe benefits), €6.0 million (previ-
ous year: €5.4 million) to performance-related components (vari-
able components) and €7.3 million (previous year: €7.3 million) to
components with a long-term incentive effect (SAR s). The number
of SAR s was 1,591,332 (previous year: 1,984,818).

Deutsche Post DHL Group — 2014 Annual Report

212

56 auditor’s fees
The fee for the auditor of the consolidated financial statements,
PricewaterhouseCoopers Aktiengesellschaft Wirtschaftsprüfungs-
gesellschaft, amounted to €10 million in financial year 2014 and
was recognised as an expense. Of this amount, €6 million was
attribut able to the category covering audits of the financial state-
ments which includes in particular the fees for auditing the con-
solidated financial statements, as well as for auditing the annual
financial statements prepared by Deutsche Post AG and its German
subsidiaries. A further €3 million relates to the other advisory and
valuation services category. It primarily includes the fees for review-
ing the interim reports. In addition, it includes fees for voluntary
audits extending beyond the statutory audit engagement, such as
audits of the internal control system. The fee for other services
amounts to €1 million and relates to fees which cannot be allocated
to the aforementioned categories.

57 exemptions under the HGB and local foreign legislation
For financial year 2014, the following subsidiaries have exercised
the simplification options under section 264 (3) of the HGB or sec-
tion 264 b of the HGB:
• Adcloud GmbH
• Agheera GmbH
• Albert Scheid GmbH
• CSG GmbH
• CSG.TS GmbH
• Danzas Deutschland Holding GmbH
• Danzas Grundstücksverwaltung Groß-Gerau GmbH
• Deutsche Post Adress Beteiligungsgesellschaft mbH
• Deutsche Post Assekuranz Vermittlungs GmbH
• Deutsche Post Beteiligungen Holding GmbH
• Deutsche Post Com GmbH
• Deutsche Post Consult GmbH
• Deutsche Post Customer Service Center GmbH
• Deutsche Post DHL Beteiligungen GmbH
• Deutsche Post DHL Corporate Real Estate Management GmbH
• Deutsche Post DHL Corporate Real Estate Management

GmbH & Co. Logistikzentren KG

• Deutsche Post DHL Inhouse Consulting GmbH
• Deutsche Post DHL Research and Innovation GmbH
• Deutsche Post Direkt GmbH
• Deutsche Post E-Post Development GmbH
• Deutsche Post E-POST Solutions GmbH
• Deutsche Post Fleet GmbH
• Deutsche Post Immobilien GmbH
• Deutsche Post InHaus Services GmbH
• Deutsche Post Investments GmbH

• Deutsche Post IT BRIEF GmbH
• Deutsche Post IT Services GmbH
• Deutsche Post Mobility GmbH
• Deutsche Post Shop Essen GmbH
• Deutsche Post Shop Hannover GmbH
• Deutsche Post Shop München GmbH
• Deutsche Post Signtrust und DMDA GmbH
• DHL Airways GmbH
• DHL Automotive GmbH
• DHL Automotive Offenau GmbH
• DHL Delivery GmbH
• DHL Express Customer Service GmbH
• DHL Express Germany GmbH
• DHL Express Network Management GmbH
• DHL Fashion Retail Operation GmbH
• DHL Foodservices GmbH
• DHL Freight Germany Holding GmbH
• DHL Freight GmbH
• DHL Global Forwarding GmbH
• DHL Global Forwarding Management GmbH
• DHL Global Management GmbH
• DHL Home Delivery GmbH
• DHL Hub Leipzig GmbH
• DHL International GmbH
• DHL Logistics GmbH
• DHL Solutions Fashion GmbH
• DHL Solutions GmbH
• DHL Solutions Großgut GmbH
• DHL Solutions Retail GmbH
• DHL Sorting Center GmbH
• DHL Supply Chain (Leipzig) GmbH
• DHL Supply Chain Management GmbH
• DHL Supply Chain VAS GmbH
• DHL Trade Fairs & Events GmbH
• DHL Vertriebs GmbH
• DHL Verwaltungs GmbH
• Erste End of Runway Development Leipzig GmbH
• Erste Logistik Entwicklungsgesellschaft MG GmbH
• European Air Transport Leipzig GmbH
• FIRST MAIL Düsseldorf GmbH
• Gerlach Zolldienste GmbH
• interServ Gesellschaft für Personal- und Beraterdienst-

leistungen mbH

• nugg.ad AG predictive behavioral targeting
• Werbeagentur Janssen GmbH
• Williams Lea & TAG GmbH
• Zweite Logistik Entwicklungsgesellschaft MG GmbH

Deutsche Post DHL Group — 2014 Annual Report

Consolidated Financial Statements — NOTES — Other disclosures — RESPONSIBILITY STATEMENT

213

The following companies make use of the audit exemption under
section 479 A of the UK Companies Act:
• DHL Exel Supply Chain Limited
• DHL Freight & Contract Logistics (UK) Limited
• Exel Investments Limited
• Exel Overseas Limited
• Freight Indemnity & Guarantee Company Limited
• Joint Retail Logistics Limited
• Ocean Group Investments Limited
• Ocean Overseas Holdings Limited
• Power Europe Development Limited
• Power Europe Development No 3 Limited
• Power Europe Operating Limited
• Tibbett & Britten Applied Limited
• Trucks and Child Safety Limited

58 Declaration of Conformity with the German Corporate

Governance Code

The Board of Management and the Supervisory Board of Deutsche
Post AG jointly submitted the Declaration of Conformity with the
German Corporate Governance Code for financial year 2014 re
quired by section 161 of the AktG. This Declaration of Conformity
www.corporate-governance-code.de and at
can be accessed online at

www.dpdhl.com/en/investors.html.
59 Significant events after the reporting date
In order to secure the increased demand for labour as a re
sult of continued sustainable growth in the parcel business,
Deutsche Post DHL Group has founded numerous regional com
panies under the umbrella of DHL Delivery GmbH. The goal is
to create up to 10,000 new positions by 2020. Staff working in
the new companies shall be employed in line with the regionally
applicable collective terms and conditions for the forwarding and
logistics sector.

The requirements for classifying an asset as held for sale in ac
cordance with IFRS 5 were met in the period between the balance
sheet date and the preparation of the consolidated financial state
ments by the Board of Management, so that the shares held by the
Supply Chain division in King’s Cross Central Property Trust, UK,
and King’s Cross Central General Partner Ltd., UK, can be reduced
as planned.

There were no other significant events after the reporting date.

RESPONSIBILITY STATEMENT

To the best of our knowledge, and in accordance with the applic
able reporting principles, the consolidated financial statements
give a true and fair view of the assets, liabilities, financial position
and profit or loss of the Group, and the management report of the
Group includes a fair review of the development and performance
of the business and the position of the Group, together with a de
scription of the principal opportunities and risks associated with
the expected development of the Group.

Bonn, 20 February 2015

Deutsche Post AG
The Board of Management

Dr Frank Appel

Ken Allen

Roger Crook

Jürgen Gerdes

John Gilbert

Melanie Kreis

Lawrence Rosen

Deutsche Post DHL Group — 2014 Annual Report

214

INDEPENDENT AUDITOR’S
REPORT

To Deutsche Post AG

report on the Consolidated Financial Statements

We have audited the consolidated financial statements of Deutsche
Post AG, Bonn, and its subsidiaries, which comprise the income
statement and the statement of comprehensive income, the balance
sheet, the cash flow statement, the statement of changes in equity,
and the notes to the consolidated financial statements, for the busi-
ness year from 1 January to 31 December 2014.

BOARD OF MANAGEMENT ’S RESPONSIBILITY FOR CONSOLIDATED
FINANCIAL STATEMENTS

The Board of Management of Deutsche Post AG, Bonn, is respon-
sible for the preparation of these consolidated financial statements.
This responsibility includes that these consolidated financial state-
ments are prepared in accordance with the International Financial
Reporting Standards, as adopted by the EU, and the additional
requirements of German commercial law pursuant to § (Article)
315 a Abs. (paragraph) 1 HGB (“Handelsgesetzbuch”: German Com-
mercial Code) and that these consolidated financial statements
give a true and fair view of the net assets, financial position and
results of operations of the group in accordance with these require-
ments. The Board of Management is also responsible for the inter-
nal controls as the Board of Management determines are necessary
to enable the preparation of consolidated financial statements that
are free from material misstatement, whether due to fraud or error.

AUDITOR’S RESPONSIBILITY

Our responsibility is to express an opinion on these consolidated
financial statements based on our audit. We conducted our audit
in accordance with § 317 HGB and German generally accepted
standards for the audit of financial statements promulgated by the
Institut der Wirtschaftsprüfer (Institute of Public Auditors in Ger-
many) (IDW) and additionally observed the International Stand-
ards on Auditing (ISA). Accordingly, we are required to comply
with ethical requirements and plan and perform the audit to ob-
tain reasonable assurance about whether the consolidated financial
statements are free from material misstatement.

An audit involves performing audit procedures to obtain audit
evidence about the amounts and disclosures in the consolidated
finan cial statements. The selection of audit procedures depends on
the auditor’s professional judgment. This includes the assess ment
of the risks of material misstatement of the consolidated financial
statements, whether due to fraud or error. In assessing those risks,
the auditor considers the internal control system relevant to the
entity’s preparation of consolidated financial statements that give
a true and fair view. The aim of this is to plan and perform audit
procedures that are appropriate in the given circumstances, but not
for the purpose of expressing an opinion on the effectiveness of the
group’s internal control system. An audit also includes evaluating
the appropriateness of accounting policies used and the reason-

ableness of accounting estimates made by the Board of Management,
as well as evaluating the overall presentation of the consolidated
financial statements.

We believe that the audit evidence we have obtained is suffi-

cient and appropriate to provide a basis for our audit opinion.

AUDIT OPINION

According to § 322 Abs. 3 Satz (sentence) 1 HGB, we state that our
audit of the consolidated financial statements has not led to any
reservations.

In our opinion based on the findings of our audit, the con-
solidated financial statements comply, in all material respects, with
IFRS s, as adopted by the EU, and the additional requirements of
German commercial law pursuant to § 315 a Abs. 1 HGB and give
a true and fair view of the net assets and financial position of
the Group as at 31 December 2014 as well as the results of oper-
ations for the business year then ended, in accordance with these
requirements.

report on the Group Management report

We have audited the group management report of Deutsche
Post AG, Bonn, for the business year from 1 January to 31 Decem-
ber 2014. The Board of Management of Deutsche Post AG, Bonn, is
responsible for the preparation of the group management report
in accordance with the requirements of German commercial law
applicable pursuant to § 315 a Abs. 1 HGB. We conducted our audit in
accordance with § 317 Abs. 2 HGB and German generally accepted
standards for the audit of the group management report prom-
ulgated by the Institut der Wirtschaftsprüfer (Institute of Public
Auditors in Germany) (IDW). Accordingly, we are required to plan
and perform the audit of the group management report to obtain
reasonable assurance about whether the group management report
is consistent with the consolidated financial statements and the
audit findings, as a whole provides a suitable view of the Group’s
position and suitably presents the opportunities and risks of future
development.

According to § 322 Abs. 3 Satz 1 HGB we state, that our audit

of the group management report has not led to any reservations.

In our opinion based on the findings of our audit of the consol-
idated financial statements and group management report, the
group management report is consistent with the consolidated
financial statements, as a whole provides a suitable view of the
Group’s position and suitably presents the opportunities and risks
of future development.

Düsseldorf, 20 February 2015

PricewaterhouseCoopers
Aktiengesellschaft
Wirtschaftsprüfungsgesellschaft

Gerd Eggemann
Wirtschaftsprüfer
(German Public Auditor)

Dietmar Prümm
Wirtschaftsprüfer
(German Public Auditor)

Deutsche Post DHL Group — 2014 Annual Report

215 — 224

FURTHER INFORMATIOND

D FURTHER INFORMATIONDFURTHER INFORMATION

217 INDEX

218 GLOSSARY

219 GRAPHS AND TABLES

220 LOCATIONS

222 MULTI-YEAR REVIEW

224 CONTACTS

224 PUBLICATION SERVICE

224 FINANCIAL CALENDAR

Further Information — InDex

INDEX

Air freight 23, 26, 28, 66 f., 100
Annual General Meeting 37 ff., 49, 101, 106 ff., 111,
115 f., 127, 129 f., 173 f., 208, 210,
Articles of Association 37 ff., 127, 173
Auditor’s report 108, 214
Authorised capital 38, 172 f.

Finance strategy 49, 51, 94, 101, 178
First Choice 22, 35, 83, 95
Free cash flow 36, 42, 58, 97, 102, 117, 148, 165, 191
Free float 72, 172
Freight 22, 28, 56, 61, 67, 157, 165
Freight forwarding business 15, 66, 83, 100

Balance sheet 47, 55, 59 f., 90, 108, 135, 138, 140,
142 ff., 144 ff., 147 ff., 154 f., 158, 162, 164 ff., 190, 192,
195, 198 ff.
Board of Management 12 ff., 16 f., 22, 37 ff., 41 f., 49,
85 ff., 88 f., 97, 105 ff., 110, 111 ff., 117 ff., 140, 173 f., 192,
207 f., 210 f., 213 f.
Board of Management remuneration 41, 106, 115,
117 f., 120 ff., 211
Bonds 41, 44 f., 51 ff., 55, 58, 149, 153, 182, 188, 191 f.,
194, 198, 200
Brands 21, 84 f., 100, 138, 147, 156, 164

Capital expenditure 27, 31 f., 36, 42, 49, 55 ff., 59,
78, 80, 97, 101 f., 114, 136, 147, 149 f., 156 f., 165, 184, 191,
205, 222
Capital increase 142, 172 ff., 192, 212
Cash flow statement 36, 57 f., 136, 138, 177, 190 ff., 222
Change of control 41, 119
Consolidated net profit 47, 49, 59, 133, 134, 136, 137,
158, 163, 176, 190, 222
Consolidated revenue 31, 48, 133, 140, 143, 147, 156 ff.,
159, 177, 222
Contingent capital 39 f., 172 f.
Contract logistics 23, 29 f., 34 f., 68 f., 100, 157, 165
Corporate governance 41, 103 ff., 106, 108, 111 ff.,
211, 213
Cost of capital 36, 51, 165
Credit lines 53, 192
Credit rating 50 f., 53 f., 71, 86, 93, 101

Declaration of conformity 106, 108, 111, 213
Dialogue marketing 21, 23, 24 f., 62, 157
Dividend 36, 42, 47, 49, 51 f., 58 f., 70 f., 97, 101 f., 108,
136 f., 149, 163, 176 f., 188, 191 f., 204, 209, 223

Earnings per share 47, 49, 70, 133, 163, 223
EBIT after asset charge 36, 42, 47, 49, 97, 102, 117 f., 120
eCommerce - Parcel 22, 24, 33, 61, 62 f., 101, 157
Employee Opinion Survey 30, 37, 42, 73, 102, 106,
111, 117
E-POST 24, 33, 82, 96, 99
Equity ratio 59 f., 174, 223
Express 21 ff., 26 ff., 33 f., 42, 47 ff., 54, 56 f., 61, 64 f.,
72, 74, 76, 78 ff., 82 f., 84, 92, 94 f., 97, 100 f., 113 f., 117,
138, 142, 156 f., 160, 165, 191, 222

Global Business Services 21 f., 114, 157
Global economy 43 f., 89, 92, 97, 98 f., 100 f.
Global Forwarding 22, 26, 28, 33 f., 56, 61, 66 f.,
157, 165
Global Forwarding, Freight 21 f., 28, 32, 34 f., 42,
47 ff., 56 f., 61, 66 f., 72, 74, 84, 95, 97, 101 f., 113 f.,
117, 139, 156 f., 165, 222
Global trade 43, 45 f., 98 f., 165
GoGreen 73, 78 f., 82, 102
GoHelp 79
GoTeach 79
Guarantees 50, 53, 90, 206

Illness rate 77
Income statement 47, 133, 138, 140, 142 f., 147, 150,
152 f., 155, 159 ff., 169, 177, 185, 194 f., 204
Income taxes 36, 49, 133 ff., 143, 154, 158, 161 ff., 168,
170, 177, 223
Investments 27, 31 f., 36, 37, 39, 42, 47, 49, 55 ff., 58,
59, 78, 80, 97, 101 f., 114, 135 f., 136, 139, 142 ff., 146,
147, 149 f., 155, 156 f., 161, 165, 168, 184, 191, 203, 205,
209, 222

Letters of comfort 50, 53
Liquidity management 52 f., 93, 192 ff.

Mail communication 23, 24, 62, 99
Mandate 110
Market shares 23, 24 f., 27 ff., 33, 54

Net debt 59, 60, 94, 174, 223
Net gearing 59, 60, 174, 223
Net interest cover 59 f.
Net working capital 36, 50, 67, 165

Ocean freight 23, 28, 34, 66 f., 94, 100
Oil price 44, 66, 70, 98 f.
Operating cash flow 36, 42, 50, 52, 57, 61
Opportunities and risk management 86 ff., 94
Outlook 42, 86, 97 ff.

217

Parcel Germany 62
Post - eCommerce - Parcel 21 f., 24 f., 32 f., 42, 47 ff.,
56, 61 ff., 72, 74, 80, 84, 90, 93 f., 97, 101, 113 f., 117 ff.,
141, 156 f., 165, 222
Press products 21, 25, 157
Price-to-earnings ratio 70, 223
Profit from operating activities 32, 35 f., 42, 47, 49,
57, 60 f., 63, 65, 67, 69, 87, 97, 100 ff., 133, 136, 140, 143 f.,
156 ff., 165, 190 f., 222

Quality 21, 31 ff., 73, 81 ff., 93 ff., 100, 111

Rating 50 f., 53 f., 71, 80, 86, 93, 101, 182
Regulation 22, 46, 90 ff., 205 f.
Responsibility statement 213
Retail outlets 25, 33, 82, 159
Return on sales 33, 35, 47, 61, 63, 65, 67, 69, 223
Revenue 31, 33, 35, 42, 47, 48, 53, 61 ff., 89, 92, 100,
133, 140 f., 143, 147, 155 ff., 159, 177, 222
Road transport 23, 28, 78 f., 100

Segment reporting 156 ff., 159
Share capital 37 ff., 106, 172 ff., 209, 211
Shareholder structure 72
Share price 71, 188, 206 ff.
Staff costs 35, 48, 63, 75, 133, 143, 151 f., 158, 160,
185, 191, 206, 208, 223
Strategy 22, 30 ff., 71 ff., 76, 78, 84, 94 f., 101, 105 ff.,
109, 111, 113, 115
Supervisory Board 22, 38 f., 41, 49, 105 ff., 109 ff.,
127 ff., 173, 207, 210 f.
Supervisory Board committees 105 ff., 109, 111,
113 ff., 127
Supervisory Board remuneration 41, 127 ff., 211
Supply Chain 21 f., 29 f., 32, 34 f., 42, 48, 54, 56 f.,
61, 68 f., 72, 74 f., 84 f., 92, 95, 97, 100 ff., 113 f., 117,
141 f., 157, 165, 171, 213, 222

Tax rate 49, 223
Trade volumes 45 f., 98 f., 100
Training 34, 74, 76, 116, 160, 223

WACC 36, 51, 165
Williams Lea 21 f., 29, 57, 61, 68, 110, 157, 165, 223
Working capital 36, 50, 57, 63, 67, 80, 165

Deutsche Post DHL Group — 2014 Annual Report

218

GLOSSARY

Cross-border mail (outbound)
All outbound international mail.

Dialogue marketing
Market-orientated activities that apply direct
communications to selectively reach target groups
using a personal, individualised approach.

E-POST
Secure, confidential and reliable electronic
communication platform.

German federal network agency
(Bundesnetzagentur)
German national regulator for electricity, gas,
telecommunications, post and railway.

German Postal act (Postgesetz)
The purpose of the German Postal Act, which
took effect on 1 January 1998, is to promote postal
competition through regulation and ensure the
nationwide provision of appropriate and sufficient
postal services. It includes regulations on licensing,
price control and the universal service.

Packstation
Parcel machine where parcels and small packages
can be deposited and collected around the clock.

Paketbox
Parcel box for franked parcels and small packages
(maximum dimensions: 50 × 40 × 30 cm).

Price-cap procedure
Procedure whereby the German federal network
agency approves prices for certain mail products.
The agency approves prices on the basis of par-
ameters it stipulates in advance, which set the
average changes in these prices within baskets
of services defined by the agency.

Standard letter
Letter measuring a maximum of 235 × 125 × 5 mm
and weighing up to 20g.

B2C
The exchange of goods, services and information
between businesses and consumers.

Intermodal transport
Transport chain combining different modes of trans-
port, often road and rail.

Block space agreement
Freight forwarders or shippers enter into block
space agreements with airline companies which
provide them with defined freight capacities on
a regular flight against payment of a fee.

Collect and return
Goods are picked up from end users at different
addresses, transported to the predetermined repair
company, collected after repair and returned to the
end user.

Contract logistics
Complex logistics and logistics-related services
along the value chain that are performed by a
contract logistics service provider. Services are
tailored to a particular industry or customer and
are generally based on long-term contracts.

Day Definite
Delivery of shipments on a specified day.

DHL Customer Solutions & Innovation (DSI)
A unit in which we merged our key account manage -
ment, Global Customer Solutions (GCS), our innovation
unit, DHL Solutions & Innovation (DSI), and our
strategic sector management in order to deliver on
our customer promise and to bundle all cross-
divisional DHL activities.

Full truckload
Complete capacity of truck is utilised, from sender
to receiver.

Gateway
Collection point for goods intended for export
and for further distribution of goods upon import.

Hub
Collection point for transferring and connecting
international shipments from and to multiple
countries.

Inbound logistics
Supply of manufacturing and assembly locations.

Lead logistics provider
A logistics service provider who assumes the organisa-
tion of all or key logistics processes for the customer.

Less than truckload
Shipment weighing approximately three tonnes that
is smaller than a full truckload and consolidated
with other senders’ and / or receivers’ shipments into
one load for transport.

Medical express
The transport of time-critical or temperature-critical
medical shipments such as blood and tissue samples
to medical facilities, hospitals, laboratories or
research institutes, usually related to clinical trials
of new medications.

Multimodal transport
Combines a minimum of two different means of trans-
port for a shipment, such as air, sea, rail and ground.

Part truckload
Shipment that does not constitute a full truckload
but is transported from point of departure to
destination without trans-shipment.

Same Day
Delivery within 24 hours of order placement.

Supply chain
A series of connected resources and processes from
sourcing materials to delivering goods to consumers.

Time Definite
Delivery of time-critical shipments by a pre-selected
time.

Transported asset Protection association (TAPA)
A forum that unites manufacturers, logistics providers,
freight carriers, law enforcement authorities and
other stakeholders with the common aim of reducing
losses from international supply chains.

Twenty-foot equivalent unit (TEU)
Standardised container unit, 20 feet long and 8 feet
wide (6 × 2.4 metres).

Deutsche Post DHL Group — 2014 Annual Report

Further Information — GLOSSARY — GRAPhS AND TAbLES

219

GRAPHS AND TABLES

Selected Key Figures

A.34 FFO to debt

A
GROUP MANAGEMENT REPORT

General Information

A.01 Organisational structure

of Deutsche Post DHL Group

A.02 Market volumes

A.03 Domestic mail communication market,

business customers, 2014

A.35 Agency ratings

A.36 Financial liabilities

A.37 Operating lease liabilities by asset class

A.38 Capex by region

A.39 Capex and depreciation, amortisation
and impairment losses, full year

A.40 Capex and depreciation, amortisation

and impairment losses, Q 4

A.41 Capex by segment

A.42 Operating cash flow by division, 2014

A.43 Calculation of free cash flow

A.04 Domestic dialogue marketing market, 2014 24

A.44 Selected indicators for net assets

A.05 International mail market (outbound), 2014 25

A.45 Net debt

Expected Developments

A.77 Global economy: growth forecast

B
CORPORATE GOVERNANCE
B.01 Members of the Supervisory Board

B.02 Committees of the Supervisory Board

B.03 Mandates held by the Board

of Management

B.04 Mandates held by the Supervisory Board

B.05 Target remuneration for the Board

of Management members active
as at 31 December 2014

B.06 Target remuneration for the Board
of Management members who left
the company in financial year 2014

B.07 Payments made to the Board

of Management members active
as at 31 December 2014

B.08 Payments made to the Board

of Management members who left
the company in financial year 2014

B.09 Share-based component with long-term

incentive effect

B.10

B.11

Individual breakdown of pension
commitments under the previous system

Individual breakdown of Board
of Management pension commitments
under the new system

B.12 Remuneration paid to Supervisory Board

members for 2014

B.13 Remuneration paid to Supervisory Board

members for 2013

B.14 Variable remuneration paid to Supervisory

Board members for 2012

C
CONSOLIDATED FINANCIAL
STATEMENTS
C.01

Income Statement

C.02 Statement of Comprehensive Income

C.03 Balance Sheet

C.04 Cash Flow Statement

C.05 Statement of Changes in Equity

D
FURTHER INFORMATION
D.01 Deutsche Post DHL Group
around the world

D.02 Key figures 2007 to 2014

109

110

121

123

124

125

126

127

128

129

130

133

134

135

136

137

220

222

A.46 Key figures by operating division

A.47 Post: volumes

A.48 Parcel Germany: volumes

A.49 EXPRESS: revenue by product

A.50 EXPRESS: volumes by product

A.51 Global Forwarding: revenue

A.52 Global Forwarding: volumes

A.53 SUPPLY CHAIN: revenue by sector, 2014

A.54 SUPPLY CHAIN: revenue by region, 2014

Deutsche Post Shares

A.55 Deutsche Post shares: multi-year review

A.56 Peer group comparison: closing prices

A.57 Share price performance

A.58 Shareholder structure

A.59 Shareholder structure by region

Non-financial Figures

A.60 Selected results from the Employee

Opinion Survey

A.61 Number of employees

A.62 Employees by region

A.63 Staff costs and social security benefits

A.64 Group apprenticeship schemes

Deutsche Post DHL Group, worldwide

A.65 Gender distribution in management, 2014

A.66 Work-family balance

A.67 Employees with disabilities

A.68 Illness rate

A.69 Occupational safety

A.70 CO2e emissions, 2014

A.71 Fuel and energy consumption

A.72 Procurement expenses, 2014

A.73 Brand architecture

A.74 Marketing expenditures, 2014

Opportunities and Risks

A.75 Monte Carlo simulation

A.76 Opportunity and risk management process 87

A.06 Domestic parcel market, 2014

A.07 European international express market,

2013: top 4

A.08 Americas international express market,

2013: top 4

A.09 Asia Pacific international express market,

2013: top 4

A.10 Air freight market, 2013: top 4

A.11 Ocean freight market, 2013: top 4

A.12 European road transport market,

2013: top 5

A.13 Logistics and value-added services
along the entire supply chain

A.14 Contract logistics market, 2013: top 10

A.15 Strategic priorities by division

A.16 EBIT calculation

A.17 EAC calculation

A.18 Net asset base calculation

A.19 Calculation of free cash flow

Report on Economic Position

A.20 Forecast /actual comparison

A.21 Global economy: growth indicators in 2014 43

A.22 Brent Crude spot price and euro / US dollar

exchange rate in 2014

A.23 Trade volumes: compound annual

growth rate 2013 to 2014

A.24 Major trade flows: 2014 volumes

A.25 Selected indicators for results

of operations

A.26 Consolidated revenue

A.27 Development of revenue, other operating

income and operating expenses

A.28 Consolidated EBIT

A.29 Total dividend and dividend
per no-par value share

A.30 EBIT after asset charge (EAC)

A.31 Net asset base (non-consolidated)

A.32 Selected cash flow indicators

A.33 Finance strategy

Deutsche Post DHL Group — 2014 Annual Report

220

LOCATIONS

D.01 Deutsche Post DHL Group around the world 1

More than

220 countries and territories

around the world

443,784

employees around the world 2

Cincinnati hub

americas
74,573
employees 2

AMERICAS

Antigua and Barbuda

Argentina

Aruba

Bahamas

Barbados

Belize

Bermuda

Bolivia

Brazil

British Virgin Islands

Canada

Cayman Islands

Chile

Colombia

Costa Rica

Curaçao

Nicaragua

Panama

Paraguay

EUROPE

Albania

Austria

Belgium

Greece

Hungary

Iceland

Dominican Republic

Peru

Bosnia and Herzegovina

Ireland

Ecuador

El Salvador

Guadeloupe

Guatemala

Haiti

Honduras

Jamaica

Martinique

Mexico

Puerto Rico

Sint Maarten

St Lucia

Bulgaria

Croatia

Cyprus

Trinidad and Tobago

Czech Republic

Uruguay

USA

Venezuela

Denmark

Estonia

Finland

France

Germany

Italy

Latvia

Lithuania

Luxembourg

Macedonia

Malta

Netherlands

Norway

Poland

Portugal

Romania

Russia

Serbia

Slovakia

Slovenia

Spain

Sweden

Switzerland

Ukraine

United Kingdom

1 Countries according to the list of shareholdings which can be accessed on the website
2 Full-time equivalents, excluding trainees.
Main global hubs.

dpdhl.com/en/investors.

Deutsche Post DHL Group — 2014 Annual Report

LOCATIONS

D.01 Deutsche Post DHL Group around the world 1

Further Information — LoCaTIonS

221

europe
108,890
employees 2
(excluding Germany)

Leipzig hub

Germany
170,596
employees 2

Hong Kong hub

asia Pacific
71,216
employees 2

other
regions
18,509
employees 2

MIDDLE EAST AND AFRICA

Algeria

Angola

Bahrain

Benin

Botswana

Burkina Faso

Cameroon

Ghana

Guinea

Iran

Iraq

Israel

Ivory Coast

Jordan

Central African Republic

Kenya

Chad

Democratic Republic
of Congo

Egypt

Ethiopia

Gabon

Gambia

Kuwait

Lebanon

Lesotho

Liberia

Libya

Madagascar

Malawi

Deutsche Post DHL Group — 2014 Annual Report

Senegal

Sierra Leone

South Africa

Swaziland

Tanzania

Togo

Turkey

Uganda

United Arab Emirates

Yemen

Zambia

Zimbabwe

Mali

Mauretania

Mauritius

Morocco

Mozambique

Namibia

Niger

Nigeria

Oman

Qatar

Republic of Congo

Republic of Equatorial
Guinea

Réunion

Saudi Arabia

ASIA PACIFIC

Australia

Bangladesh

Malaysia

Myanmar / Burma

Brunei Darussalam

Nepal

Cambodia

China

East Timor

Fiji

French Polynesia

India

Indonesia

Japan

Kazakhstan

Laos

Macau

New Caledonia

New Zealand

Pakistan

Papua New Guinea

Philippines

Singapore

South Korea

Sri Lanka

Taiwan

Thailand

Vietnam

222

MULTI-YEAR REVIEW

D.02 Key figures 2007 to 2014

€ m

revenue
Post - eCommerce - Parcel (until 2013 Mail)

Express

Global Forwarding, Freight

Supply Chain

Divisions total

Corporate Center / Other
(2007: Corporate Center / Other and Consolidation)

Consolidation

Total (continuing operations)

Discontinued operations

Profit / loss from operating activities (EBIT)
Post - eCommerce - Parcel (until 2013 Mail)

Express

Global Forwarding, Freight

Supply Chain

Divisions total

Corporate Center / Other
(2007: Corporate Center / Other and Consolidation)

Consolidation

Total (continuing operations)

Discontinued operations

14,569

13,874

12,959

14,317

55,719

–1,676

–

54,043

10,335

1,976

–272

409

577

2,690

– 557

–

2,133

1,060

14,393

13,637

14,179

13,718

55,927

1,782

–3,235

54,474

11,226

2,179

–2,194

362

– 920

– 573

–393

– 966

– 871

Consolidated net profit / loss for the period

1,873

–1,979

Cash flow / capex / depreciation, amortisation
and impairment losses
Net cash from / used in operating activities

Net cash used in / from investing activities

Net cash used in / from financing activities

Capex (2007: including purchased goodwill)

Depreciation, amortisation and impairment losses

assets and capital structure
Non-current assets

Current assets

Equity (excluding non-controlling interests)

Non-controlling interests

Current and non-current provisions

Current and non-current liabilities 1

Total assets

5,151

–1,053

–1,787

2,742

2,196

1,939

– 441

–1,468

1,727

2,662

25,764

20,517

209,656

242,447

11,035

2,778

12,276

21,544

7,826

2,026

10,836

242,276

235,420

262,964

2007
adjusted

2008
adjusted

2009
adjusted

2010
adjusted

2011
adjusted

2012
adjusted

2013
adjusted

2014

13,912

9,917

11,243

12,183

47,255

1,527

–2,581

46,201

1,634

1,391

–790

174

–216

559

–328

231

–24

693

– 584

–2,710

1,676

1,171

1,620

22,022

12,716

8,176

9,677

16,788

34,738

13,913

11,111

14,341

13,061

52,426

1,302

–2,340

51,388

–

13,973

11,691

15,118

13,223

54,005

1,260

–2,436

52,829

–

1,120

1,107

497

383

231

916

440

362

13,972

12,778

15,666

14,340

56,756

1,203

–2,447

55,512

–

1,048

1,110

514

419

15,291

11,821

14,787

14,227

56,126

1,251

–2,465

54,912

–

1,286

1,083

478

441

15,686

12,491

14,924

14,737

57,838

1,343

–2,551

56,630

–

1,298

1,260

293

465

2,231

2,825

3,091

3,288

3,316

–395

–1

1,835

–

–389

2,436

–

– 423

–3

2,665

–

– 421

–2

2,865

–

–352

2,965

–

2,630

1,266

1,762

2,211

2,177

1,927

–1,651

1,262

1,296

24,493

13,270

10,511

185

9,427

17,640

37,763

2,371

–1,129

–1,547

1,716

1,274

21,225

17,183

11,009

190

9,008

18,201

38,408

–203

2,989

–1,697

–1,765

1,199

1,697

1,339

21,568

12,289

9,019

209

8,978

15,651

33,857

–110

1,747

1,337

21,370

14,091

9,844

190

8,481

16,946

35,461

3,040

–1,087

–2,348

1,876

1,381

22,902

14,077

9,376

204

10,411

16,988

36,979

Deutsche Post DHL Group — 2014 Annual Report

MULTI-YEAR REVIEW

Further Information — MuLTI-year reVIeW

223

employees/staff costs (continuing operations)

Number of employees 2

Full time equivalents 3

Average number of employees 2

Staff costs

Staff cost ratio 4

Key figures revenue/income/assets
and capital structure
Return on sales 5

Return on equity (ROE) before taxes 6

Return on assets 7

Tax rate 8

Equity ratio 9

Net debt (+) / net liquidity (–) 10

Net gearing 11

Dynamic gearing 12

Key stock data
Basic earnings per share 13

Diluted earnings per share 14

Cash flow per share 13, 15

Dividend distribution

Payout ratio

Dividend per share

Dividend yield

Price-to-earnings ratio 17

As at
31 Dec.

€ m

years

€

3.9

8.6

0.9

14.0

5.9

2,858

20.4

1.0

1.15

4.27

€ m

1,087

€

78.6

0.90

3.8

20.4

2007
adjusted

2008
adjusted

2009

2010

2011

2012
adjusted

2013
adjusted

2014

512,147

512,536

477,280

467,088

471,654

473,626

479,690

488,824

453,626

451,515

424,686

418,946

423,502

428,129

434,974

443,784

500,252

511,292

488,518

464,471

467,188

472,321

478,903

484,025

17,169

18,389

17,021

16,609

16,730

17,770

17,776

18,189

31.8

33.8

36.8

32.3

31.7

32.0

32.4

32.1

–1.8

– 9.0

– 0.4

–

3.7

0.5

3.0

0.2

5.4

23.8

3.6

29.8

5.1

6.9

28.3

2,466

–1,690

–1,382

23.7

0.7

–1.40

1.60

725

–

0.60

5.0

– 8.5

–25.7

–1.4

0.53

– 0.48

725

112.6

0.60

4.4

25.5

–14.8

– 0.7

2.10

1.59

786

30.9

0.65

5.1

6.0

4.6

15.2

6.4

23.7

29.2

– 938

– 9.1

– 0.4

0.96

1.96

846

72.7

0.70

5.9

12.4

4.8

23.6

7.4

20.2

27.3

1,952

17.5

– 9.6

1.36

1.30

– 0.17

846

51.6

0.70

4.2

12.2

5.2

26.7

8.3

14.0

28.3

1,499

13.0

0.5

1.73

1.66

2.47

968

46.3

0.80

3.0

15.3

5.2

26.3

8.2

15.5

25.9

1,499

13.5

0.5

1.71

1.64

2.51

1,030 16

49.7

0.85 16

3.1

15.8

Number of shares carrying dividend rights

millions

1,208.2

1,209.0

1,211.2

Year-end closing price

€

23.51

11.91

13.49

12.70

11.88

16.60

26.50

27.05

1 Excluding liabilities from financial services.
6 Profit before income taxes / average equity (including non-controlling interests).

2 Headcount including trainees.

3 Excluding trainees.

4 Staff costs / revenue.

5 EBIT / revenue.

7 EBIT / average total assets.

8 Income taxes / profit

before income taxes.
of Williams Lea. From 2008:

9 Equity (including non-controlling interests)/total assets.

10 In 2007 excluding financial liabilities to minority shareholders

Group Management Report, page 60.

11 Net debt / net debt and equity (including non-controlling interests).

12 Net debt / cash flow from operating activities.

13 The average number of shares outstanding is used for the calculation.

14 The average number

of shares outstanding is adjusted for the number of all potentially dilutive shares.

15 Cash flow from operating activities.

16 Proposal.

17 Year-end closing price / basic earnings per share.

Deutsche Post DHL Group — 2014 Annual Report

224

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PUBLICATION SERVICE

Published on 11 March 2015.

The English version of the 2014 Annual Report of Deutsche Post DHL Group constitutes
a translation of the original German version. Only the German version is legally
binding, insofar as this does not conflict with legal provisions in other countries.
Deutsche Post Corporate Language Services et al.

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12 MAY 2015
Interim Report January to March 2015

9 MARCH 2016
2015 Annual Report

27 MAY 2015
2015 Annual General Meeting
(Frankfurt am Main)

28 MAY 2015
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11 MAY 2016
Interim Report January to March 2016

18 MAY 2016
2016 Annual General Meeting
(Frankfurt am Main)

5 AUGUST 2015
Interim Report January to June 2015

19 MAY 2016
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11 NOVEMBER 2015
Interim Report January to September 2015

3 AUGUST 2016
Interim Report January to June 2016

8 NOVEMBER 2016
Interim Report January to September 2016

Deutsche Post DHL Group — 2014 Annual Report

2014 annual report

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