Quarterly Report • Aug 18, 2015
Quarterly Report
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In the fi rst half of 2015, Deutsche Post dhl Group increased revenue in all divisions, in some cases signifi cantly. Positive currency effects were mainly responsible for the improvement. The German parcel business in the Post - eCommerce - Parcel division and the international business in the Express division continued to generate dynamic growth. As expected, earnings were impacted adversely by costs for turnaround measures in the Global Forwarding, Freight division and by accelerated restructuring costs in the Supply Chain division. Earnings in the Post - eCommerce - Parcel division suffered from the effects of the strike in Germany.
After accounting for the effects of the strike in the Post eCommerce - Parcel division, we now expect consolidated ebit to reach between €2.95 billion and €3.10 billion in financial year 2015. The Post - eCommerce - Parcel division is now projected to contribute at least €1.2 billion to that fi gure. Compared with the previous year, we continue to expect an additional improvement in overall earnings to €2.1 billion to €2.25 billion in the dhl divisions. As expected, eac will generally perform in line with consolidated ebit. Free cash flow is expected to at least cover the dividend payment made in May.
With the equivalent of 99.81 % of the company's share capital present, the Annual General Meeting on 27 May 2015 resolved to pay an increased dividend of €0.85 per share. This was paid on the following day.
| H 1 2014 adjusted 1 |
H 1 2015 | + / – % | Q 2 2014 adjusted 1 |
Q 2 2015 | + / – % | ||
|---|---|---|---|---|---|---|---|
| Revenue | € m | 27,264 | 29,467 | 8.1 | 13,695 | 14,700 | 7.3 |
| Profi t from operating activities (EBIT) | € m | 1,383 | 1,257 | – 9.1 | 656 | 537 | –18.1 |
| Return on sales 2 | % | 5.1 | 4.3 | – | 4.8 | 3.7 | – |
| EBIT after asset charge (EAC) | € m | 683 | 480 | –29.7 | 303 | 148 | – 51.2 |
| Consolidated net profi t for the period 3 | € m | 963 | 821 | –14.7 | 461 | 326 | –29.3 |
| Free cash fl ow | € m | –140 | –310 | < –100 | 208 | 67 | – 67.8 |
| Net debt 4 | € m | 1,499 | 2,989 | 99.4 | – | – | – |
| Earnings per share 5 | € | 0.80 | 0.68 | –15.0 | 0.38 | 0.27 | –28.9 |
| Number of employees 6 | 488,824 | 493,207 | 0.9 | – | – | – |
1 Note 4.
2 EBIT / revenue.
3 After deduction of non-controlling interests.
4 Prior-period amount as at 31 December, for the calculation page 11 of the Interim Group Management Report.
5 Basic earnings per share.
6 Including trainees. Headcount at the end of the second quarter; prior-period amount as at 31 December.
| INTERIM GROUP MANAGEMENT REPORT | 2 |
|---|---|
| General Information | 2 |
| Report on Economic Position | 2 |
| Deutsche Post Shares | 20 |
| Non-Financial Performance Indicators | 21 |
| Post-Balance-Sheet Date Events | 21 |
| Opportunities and Risks | 22 |
| Expected Developments | 23 |
| CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS | 26 | ||
|---|---|---|---|
| Income Statement | 26 | ||
| Statement of Comprehensive Income | 27 | ||
| Balance Sheet | 28 | ||
| Cash Flow Statement | 29 | ||
| Statement of Changes in Equity | 30 | ||
| Selected Explanatory Notes | 31 | ||
| Responsibility Statement | 42 | ||
| Review Report | 43 | ||
| Graphs and Tables | 44 | ||
| Financial Calendar | 44 | ||
| Contacts | II | ||
| Publication Service | II |
Websites
CONTACTS 5 August 2015
Tel.: + 49 (0) 228 182-6 36 36 First half of 2015
Fax: + 49 (0) 228 182-6 31 99 E-mail: ir @ dpdhl.com pRESS OFFICE
Tel.: + 49 (0) 228 182-99 44 Fax: + 49 (0) 228 182-98 80 E-mail: pressestelle @ dpdhl.com In recent months, we have taken considerable further steps to position our business for long-term Group success as foreseen by our Strategy 2020.
PUBLICATION SERVICE In July, we reached a sustainable wage agreement with the trade union ver.di for the more than 130,000 employees of Deutsche Post AG. The agreement gives us planning certainty until January 2018, which is a key prerequisite for continuing to expand our German parcel business.
Published on 6 August 2015. The English version of the Interim Report January to June 2015 of Deutsche Post DHL Group constitutes a translation of the original In the Global Forwarding, Freight division, the new management has initiated turnaround measures to quickly improve operating performance. In the Supply Chain division, the planned restructuring is going ahead even faster. In order to further strengthen the positive performance of the Express business over the long term, we have stepped up investments in the division's already comprehensive network.
as this does not conflict with legal provisions in other countries. Deutsche Post Corporate Language Services et al. All of these endeavours impacted our earnings in the first half of the year. We have nonetheless succeeded in increasing revenue in all divisions, in some cases significantly, despite the sluggishness of the global economy. Positive currency effects contributed to the revenue growth.
ORDERING ExTERNAL E-mail: ir @ dpdhl.com dpdhl.com/en/investors INTERNAL We have adjusted our full-year guidance for 2015: after accounting for the effects of the strike in the Post - eCommerce - Parcel division, we now expect consolidated EBIT to reach between €2.95 billion and €3.10 billion for full-year 2015. The Post - eCommerce - Parcel division is now projected to contribute at least €1.2 billion to that figure. For the DHL divisions, we continue to expect an additional improvement in overall earnings compared with the previous year to €2.1 billion to €2.25 billion. For 2016, we are reconfirming the earnings forecast that we presented in August 2014.
Mat. no. 675-602-365 We are confident that we are on the right track and we have put in place key elements of the necessary groundwork. One thing is clear, however, 2015 will remain a year of transition and of preparation for the future.
Deutsche Post DHL Group The Mail & Logistics Group PO box address Deutsche Post AG Headquarters 53250 Bonn GERMANY
Delivery address Deutsche Post AG Headquarters Charles-de-Gaulle-Str.20 53113 Bonn GERMANY
Visitor's address Deutsche Post AG Headquarters Platz der Deutschen Post 53113 Bonn GERMANY
Phone +49 228 182-0 Fax +49 228 182-7099
www.dpdhl.com
On 27 April 2015, Roger Crook stepped down from the Board of Management. Until the appointment of a new board member for the Global Forwarding, Freight division, Deutsche Post DHL Group's CEO, Dr Frank Appel, has taken over the corresponding tasks in a dual role.
As a service provider, Deutsche Post DHL Group does not engage in research and development activities in the narrower sense and therefore has no significant expenses to report in this connection.
In the first half of 2015, Deutsche Post DHL Group increased revenue in all divisions, in some cases significantly. Positive currency effects were mainly responsible for the improvement. The German parcel business in the Post - eCommerce - Parcel (PeP) division and the international business in the Express division continued to generate dynamic growth. As expected, earnings were impacted adversely by costs for turnaround measures in the Global Forwarding, Freight division and by accelerated restructuring costs in the Supply Chain division. The PeP division's earnings suffered from the effects of the strike in Germany. All in all, consolidated net profit for the period and free cash flow thus declined significantly from the prior-year level. The Board of Management continues to assess the Group's financial position as solid.
During the first half of the year, the global economy experienced cautious growth with regional variations. The economy in the industrial countries accelerated somewhat compared with the previous year, in contrast to the slowdown of growth in the emerging markets. The differences within the two groups remained substantial in light of the significant impact of low commodity prices and the strong US dollar.
Post - eCommerce - Parcel division, page 13 f.
Growth in the Asian countries was generally robust in the first half of 2015. Growth in the Chinese economy declined, however. Exports were nearly stagnant and growth in industrial production fell back significantly. Gross domestic product (GDP) rose by only 7.0% in the first half. Since the middle of June, economic data and inconsistent policymaking have led to considerable price drops in the Chinese stock market. In Japan, however, growth accelerated sharply. Demand rose on the back of low oil prices and the depreciation of the yen. Exports, capital expenditure and private consumption increased noticeably.
The United States saw only very cautious economic growth. Although the economy improved in the second quarter compared with the start of the year, momentum was weak. Exports suffered from the strong US dollar. However, the sustained upwards trend on the labour market led the unemployment rate to fall to its lowest level in seven years. The US Federal Reserve kept its key interest rate at between 0% and 0.25% in order to boost the economy and the labour market.
The eurozone economy continued to recover. Growth was due primarily to increases in private consumption, which benefitted from greater purchasing power thanks to lower oil prices and the slight upturn on the labour market. Companies increased investment in machinery and equipment. However, growth was impeded by foreign trade. Due to the significant drop in the price of oil, inflation remained at a very low level in the first half of the year. The European Central Bank kept its key interest rate at 0.05% and began an extensive bond buying programme.
Germany sustained its upwards economic trend in the first half, due largely to the significant increase in private consumption based on rapid growth in real incomes. Capital expenditure also increased. The positive economic trend had a beneficial effect on the labour market and unemployment continued to fall. However, corporate sentiment weakened due to the poor global economy and the Greek crisis. The ifo German Business Climate Index has now decreased twice consecutively.
In the first quarter of 2015 there were no events that materially affected the Group's net assets, financial position and results of operations.
| H1 2014 adjusted1 |
H1 2015 | Q2 2014 adjusted1 |
Q2 2015 | ||
|---|---|---|---|---|---|
| Revenue | €m | 27,264 | 29,467 | 13,695 | 14,700 |
| Profit from operating activities (EBIT) | €m | 1,383 | 1,257 | 656 | 537 |
| Return on sales2 | % | 5.1 | 4.3 | 4.8 | 3.7 |
| EBIT after asset charge (EAC) | €m | 683 | 480 | 303 | 148 |
| Consolidated net profit for the period3 | €m | 963 | 821 | 461 | 326 |
| Earnings per share4 | € | 0.80 | 0.68 | 0.38 | 0.27 |
1 Note 4.
2 EBIT/revenue.
3 After deduction of non-controlling interests.
4 Basic earnings per share.
Since all joint ventures, associates and other equity investments held by Deutsche Post DHL Group operate in the Group's core business, we have reported the income and expenses of these investments under profit from operating activities (EBIT) since December 2014. They had previously been included in net financial income/net finance costs. The priorperiod amounts have been adjusted.
In the second quarter of 2015, we sold shares in two property development companies in the United Kingdom, King's Cross Central Property Trust and King's Cross Central General Partner Ltd., which were held by the Supply Chain division.
In May, we sold 4.16% of our shares in Sinotrans Ltd., China, which were held by the Global Forwarding, Freight division.
At €29,467 million, consolidated revenue was up by €2,203 million in the first half of 2015; this was due mainly to positive currency effects, which increased this item by €1,841 million. The proportion of revenue generated abroad rose in line with this from 69.1% in the previous year to 71.2%. Since the portfolio did not change in the reporting period, no adjustments were necessary.
The €1,005 million rise in revenue to €14,700 million in the second quarter of 2015 was again driven to a significant extent by positive currency effects, which increased this item by €923 million.
Other operating income rose from €936 million to €1,181 million. This includes gains of €173 million on the disposal of shares in King's Cross and Sinotrans. In addition, the weak euro led to higher income from currency translation.
Materials expense rose by €1,407 million to €16,647 million. This was due in particular to an increase in transport costs, which was caused primarily by exchange rate movements.
Staff costs rose by €838 million to €9,886 million, also mainly because of exchange rate movements. In addition, there was a rise in the number of employees in the Group.
There was a significant 12.4% decrease in depreciation, amortisation and impairment losses from €736 million in the previous year to €645 million; the prior-year figure had included impairment losses on aircraft of €104 million. This position was also reduced in the reporting period by the decision taken in 2014 to extend the useful lives of some non-current assets in the PeP division, offset by currency effects.
At €2,214 million, other operating expenses were up significantly on the previous year (€1,796 million), driven in particular by currency translation expenses.
| €m | % | ||
|---|---|---|---|
| Revenue | 29,467 | 8.1 | • Growth trends in the German parcel and international express businesses remain intact • Strongly positive currency effects |
| Other operating income | 1,181 | 26.2 | • Includes gains on the sale of equity investments • Significant rise in income from currency translation |
| Materials expense | 16,647 | 9.2 | • Rise in transport costs mainly due to exchange rate movements |
| Staff costs | 9,886 | 9.3 | • Increase mainly due to exchange rate movements • Greater number of employees |
| Depreciation, amortisation and impairment losses |
645 | –12.4 | • Previous year included impairment losses on aircraft of €104 million |
| Other operating expenses | 2,214 | 23.3 | • Rise in currency translation expenses |
At €1,257 million, profit from operating activities (EBIT) in the first half of 2015 was down 9.1% on the previous year (€1,383 million). In the second quarter, EBIT decreased from €656 million to €537 million.
Net finance costs, on the other hand, improved from €177 million to €165 million, mainly because low interest rates led to a decline in finance costs.
At €1,092 million, profit before income taxes for the reporting period was down €114 million on the previous year (€1,206 million). Income taxes declined by €13 million to €180 million despite a slight rise in the tax rate.
Consolidated net profit for the period decreased from €1,013 million to €912 million in the reporting period. Of this amount, €821 million is attributable to shareholders of Deutsche Post AG and €91 million to non-controlling interest holders. Likewise, basic earnings per share declined from €0.80 to €0.68 and diluted earnings per share from €0.77 to €0.65.
EBIT after asset charge (EAC) declined from €683 million to €480 million in the first half of 2015, primarily because the imputed asset charge increased by 11.0% due to foreign exchange movements and investments.
| €m | H1 2014 adjusted1 |
H1 2015 | +/– % |
|---|---|---|---|
| EBIT | 1,383 | 1,257 | – 9.1 |
| Asset charge | –700 | –777 | –11.0 |
| EAC | 683 | 480 | –29.7 |
1 Note 4.
| €m | H1 2014 adjusted1 |
H1 2015 | Q2 2014 adjusted1 |
Q2 2015 |
|---|---|---|---|---|
| Cash and cash equivalents as at 30 June | 1,882 | 1,813 | 1,882 | 1,813 |
| Change in cash and cash equivalents | –1,408 | –1,209 | – 573 | –782 |
| Net cash from operating activities | 567 | 345 | 483 | 266 |
| Net cash used in/from investing activities | –23 | – 472 | –18 | 29 |
| Net cash used in financing activities | –1,952 | –1,082 | –1,038 | –1,077 |
1 Note 4.
The principles and aims of our financial management as presented in the 2014 Annual Report on page 50 remain valid and continue to be pursued as part of our finance strategy. The low level of net cash used in investing activities in the first half of the previous year resulted primarily from the liquidation of short-term financial investments. The high level of net cash used in financing activities in the first half of 2014 was due to the scheduled repayment of a bond in January 2014.
As expected, the FFO to debt performance metric decreased in the first half of 2015, primarily because debt increased. Along with higher operating lease obligations, the main reason for the increase in debt was the decrease in surplus cash and near-cash investments resulting from the annual pension prepayment to the Bundesanstalt für Post und Telekommunikation (German federal post and telecommunications agency) as well as the dividend paid out for financial year 2014. By contrast, the adjustment for pensions declined in the reporting period. The decrease resulted above all from the significant drop in pension obligations due to higher discount rates. The amount of interest paid decreased, mainly because we unwound interest rate swaps for bonds and therefore generated interest income.
Our credit quality as rated by Moody's Investors Service (Moody's) and Fitch Ratings (Fitch) has not changed from the ratings of "A3" and "BBB+", respectively, as described in the 2014 Annual Report beginning on page 53. The stable outlooks issued by both rating agencies are also still applicable. In view of our solid liquidity, the five-year syndicated credit facility with a total volume of €2 billion was not drawn down during the reporting period. As at 30 June 2015, the Group had cash and cash equivalents of €1.8 billion.
| €m | 1 Jan. to 31 Dec. 2014 |
1 July 2014 to 30 June 2015 |
|||
|---|---|---|---|---|---|
| Operating cash flow before changes in working capital | 3,061 | 2,611 | |||
| Interest received | 45 | 40 | |||
| Interest paid | 188 | 75 | |||
| Adjustment for operating leases | 1,283 | 1,347 | |||
| Adjustment for pensions | 122 | 306 | |||
| Non-recurring income/expenses | 74 | 115 | |||
| Funds from operations (FFO) | 4,397 | 4,344 | |||
| Reported financial liabilities1 | 5,169 | 5,278 | |||
| Financial liabilities at fair value through profit or loss1 | 145 | 152 | |||
| Adjustment for operating leases1 | 5,953 | 6,244 | |||
| Adjustment for pensions1 | 7,174 | 5,939 | |||
| Surplus cash and near-cash investments1, 2 | 2,256 | 789 | |||
| Debt | 15,895 | 16,520 | |||
| FFO to debt (%) 27.7 |
1 As at 31 December 2014 and 30 June 2015, respectively.
2 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 Group's capital expenditure (capex) was €695 million at the end of June 2015, which reflects a 36.0% increase on the prior year's figure of €511 million. Funds were used mainly to replace and expand assets as follows: €575 million was invested in property, plant and equipment and €120 million in intangible assets excluding goodwill. Investments in property, plant and equipment related to advance payments and assets under development (€367 million), IT equipment (€53 million), transport equipment (€38 million), technical equipment and machinery (€33 million), operating and office equipment (€33 million), land and buildings (€32 million) and aircraft (€19 million).
| PeP Express |
Global Forwarding, Freight Supply Chain |
Corporate Center/ | Other | Consolidation1 | Group | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2014 | 2015 | 2014 | 2015 | 2014 | 2015 | 2014 | 2015 | 2014 | 2015 | 2014 | 2015 | 2014 | 2015 | |
| Capex (€m) | 100 | 191 | 124 | 229 | 82 | 74 | 127 | 136 | 78 | 64 | 0 | 1 | 511 | 695 |
| Depreciation, amortisation and impairment losses (€m) |
177 | 154 | 282 | 185 | 43 | 44 | 128 | 149 | 106 | 114 | 0 | –1 | 736 | 645 |
| Ratio of capex to depreciation, amortisation and impairment |
||||||||||||||
| losses | 0.56 | 1.24 | 0.44 | 1.24 | 1.91 | 1.68 | 0.99 | 0.91 | 0.74 | 0.56 | – | – | 0.69 | 1.08 |
1 Including rounding.
| PeP | Express | Global Forwarding, Freight |
Corporate Center/ Supply Chain |
Other | Consolidation1 | Group | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2014 | 2015 | 2014 | 2015 | 2014 | 2015 | 2014 | 2015 | 2014 | 2015 | 2014 | 2015 | 2014 | 2015 | |
| Capex (€m) | 62 | 127 | 85 | 154 | 60 | 34 | 62 | 63 | 66 | 42 | 0 | 1 | 335 | 421 |
| Depreciation, amortisation and impairment losses (€m) |
84 | 78 | 193 | 94 | 21 | 21 | 64 | 76 | 53 | 57 | 0 | 0 | 415 | 326 |
| Ratio of capex to depreciation, amortisation and impairment losses |
0.74 | 1.63 | 0.44 | 1.64 | 2.86 | 1.62 | 0.97 | 0.83 | 1.25 | 0.74 | – | – | 0.81 | 1.29 |
1 Including rounding.
12 Capex by region
€m Germany 346 283 Europe (excluding Germany) 141 106 Americas 109 71 Asia Pacific 80 33 Other regions 19 18 H1 2015 H1 2014
Capital expenditure in the Post - eCommerce - Parcel division increased from €100 million in the prior year to €191 million in the reporting period, due mainly to an increase in production capex. Investment spending flowed predominantly into the German parcel network and the expansion of international parcel activities.
In the Express division, capital expenditure totalled €229 million in the first half of 2015 (previous year: €124 million). Our investments focused on maintaining and refurbishing our aircraft fleet as well as on continuing to expand our hubs in Leipzig, Cincinnati, Singapore and Brussels.
In the Global Forwarding, Freight division, a total of €74 million was invested in the first half of 2015 (previous year: €82 million). Of that figure, €63 million was attributable to the Global Forwarding business unit. In addition to investments in IT, we also modernised and refurbished warehouses and office buildings across all regions. A total of €11 million was invested in the Freight business unit, mainly for real estate, intangible assets and technical equipment.
In the Supply Chain division, capital expenditure amounted to €136 million in the reporting period (previous year: €127 million). Of that amount, €112 million related to the Supply Chain business unit, €11 million to Williams Lea and €13 million to central entities. Around 55% of the funds were used to support new business. The majority of the expenditure on new customer projects was in the Americas region, notably in the Consumer and Retail sectors. In the Asia Pacific and Europe regions, capital was invested in new customer projects, renewals and refurbishments, predominantly in the Retail and Automotive sectors, and on fleet replacements.
Cross-divisional capital expenditure decreased from €78 million in 2014 to €64 million in the reporting period. Lower expenses for the vehicle fleet were partly offset by higher spending on IT equipment.
At €345 million in the first half of 2015, net cash from operating activities was down €222 million on the previous year. The figure before changes in working capital was down more significantly, declining by €450 million to €1,072 million. The depreciation, amortisation and impairment losses contained in EBIT are non-cash effects and are therefore eliminated. This item decreased from €736 million to €645 million, partly because the prior-year figure had included impairment losses on aircraft. Net income from the disposal of non-current assets, which is contained in EBIT, is also eliminated. It rose by €218 million to €228 million in the reporting period, driven mainly by gains on the sale of our equity investments in Sinotrans and King's Cross. Thanks to improved working capital management, the cash outflow from changes in working capital was down significantly on the previous year, declining by €228 million to €727 million. Operating cash flow is regularly impacted in the first half of the year by the annual prepayment to the Bundesanstalt für Post und Telekommunikation; the 2015 payment was €530 million.
At €472 million, net cash used in investing activities was considerably higher than in the previous year (€23 million). A key factor in the previous year was the sale of money market funds, which led to a cash inflow of €600 million, and increased current financial assets. This compares with a cash inflow of €200 million in the reporting period from the sale of money market funds. Proceeds from the disposal of non-current assets amounted to €294 million in the reporting period (previous year: €107 million). This figure includes, amongst other items, the gains on the sale of the equity investments
described above. Cash paid to acquire property, plant and equipment and intangible assets rose from €708 million to €972 million, partly because payments for some of the investments which had been capitalised at the end of 2014 were only made in 2015.
| €m | H1 2014 adjusted1 |
H1 2015 | Q2 2014 adjusted1 |
Q2 2015 |
|---|---|---|---|---|
| Net cash from operating activities | 567 | 345 | 483 | 266 |
| Sale of property, plant and equipment and intangible assets |
72 | 64 | 25 | 25 |
| Acquisition of property, plant and equipment and intangible assets |
–708 | – 972 | –260 | – 407 |
| Cash outflow arising from change in property, plant and equipment and intangible assets |
– 636 | – 908 | –235 | –382 |
| Disposal of subsidiaries and other business units | 0 | –2 | 0 | –2 |
| Disposals of investments accounted for using the equity method and other equity investments |
0 | 221 | 0 | 221 |
| Acquisition of subsidiaries and other business units | 3 | 0 | 3 | 0 |
| Acquisition of investments accounted for using the equity method and other equity investments |
0 | 0 | 0 | 0 |
| Cash inflow arising from acquisitions/divestitures | 3 | 219 | 3 | 219 |
| Interest received | 27 | 22 | 10 | 10 |
| Interest paid | –101 | 12 | – 53 | – 46 |
| Net interest paid | –74 | 34 | – 43 | –36 |
| Free cash flow | –140 | –310 | 208 | 67 |
1 Note 4.
Free cash flow decreased from €–140 million to €–310 million in the reporting period, primarily due to the increase in cash paid to acquire property, plant and equipment and intangible assets. Conversely, cash inflows from the disposal of the equity investments had a positive impact. The fact that interest received exceeded interest paid also increased free cash flow; in the first quarter of 2015, we unwound interest rate swaps for bonds, which led to a cash inflow. The accounting treatment of these inflows is the same as for the hedged item. For this reason, we are reporting positive interest payments of €12 million in the reporting period (previous year: €–101 million).
At €1,082 million, net cash used in financing activities was €870 million lower than in the previous year (€1,952 million). In the previous year, the repayment of a bond of €926 million had made a significant contribution to the cash outflow. Conversely, in the previous year, a loan taken out with Deutsche-Post-Betriebsrenten-Service e.V. had led to a cash inflow of €120 million. At €1,030 million, the dividend paid to our shareholders was again the largest payment item.
Changes in the cash flows from the individual areas of activity saw cash and cash equivalents decline from €2,978 million as at 31 December 2014 to €1,813 million.
| 31 Dec. 2014 adjusted1 |
30 June 2015 | ||
|---|---|---|---|
| Equity ratio | % | 25.9 | 29.4 |
| Net debt | €m | 1,499 | 2,989 |
| Net interest cover2 | 18.7 | –37.0 | |
| Net gearing | % | 13.5 | 21.5 |
| FFO to debt3 | % | 27.7 | 26.3 |
1 Note 4.
2 In the first half of the year.
3 For the calculation page 7.
The Group's total assets amounted to €37,063 million as at 30 June 2015, similar to the level at 31 December 2014 (€36,979 million).
At €23,408 million, non-current assets were up on the previous year's figure of €22,902 million. Intangible assets increased by €475 million to €12,827 million, driven primarily by a rise in goodwill that was due to exchange rate movements. However, the increase in property, plant and equipment, from €7,177 million to €7,207 million, was considerably more moderate: additions and positive currency effects exceeded depreciation, impairment losses and disposals. In contrast, non-current financial assets decreased by €170 million to €1,193 million, due primarily to the sale of shares in equity investments. Other non-current assets increased by €84 million to €235 million, mainly driven by the increase in pension assets as a result of actuarial gains. Deferred tax assets increased from €1,752 million to €1,836 million.
Current assets amounted to €13,655 million as at the balance sheet date, down €422 million on the figure as at 31 December 2014. Inventories increased slightly by €11 million to €343 million. The sale of money market funds worth €200 million was the main reason for the decline in current financial assets to €179 million. Trade receivables rose by €207 million to €8,032 million. Other current assets increased sharply by €655 million to €3,070 million. This figure includes €260 million relating to the accrual of the prepaid annual contribution to the Bundesanstalt für Post und Telekommunikation for pension and assistance benefits as well as numerous other accrued expense items. Income tax assets rose by €34 million to €206 million. The reasons for the €1,165 million decrease in cash and cash equivalents to €1,813 million are described in the section entitled Financial position.
At €10,590 million, equity attributable to Deutsche Post AG shareholders was €1,214 million higher than at 31 December 2014 (€9,376 million). Positive currency effects, consolidated net profit for the period and the increased discount rate applicable to pension liabilities made a positive contribution, whereas the dividend payment for financial year 2014 reduced equity.
Page 8 f.
Non-current and current liabilities declined slightly from €16,988 million to €16,916 million. Trade payables in particular decreased sharply by €443 million to €6,479 million. In contrast, other current liabilities rose from €4,196 million to €4,453 million, due primarily to an increase in liabilities to employees. Financial liabilities also increased slightly, rising by €109 million to €5,278 million. Current and non-current provisions decreased significantly from €10,411 million to €9,260 million: actuarial gains attributable to a rise in interest rates led to a decline in provisions for pensions.
Our net debt rose from €1,499 million as at 31 December 2014 to €2,989 million as at 30 June 2015, in part because in the first half of the year we paid the annual contribution of €530 million to the Bundesanstalt für Post und Telekommunikation and distributed the dividend for financial year 2014 in the amount of €1,030 million. At 29.4%, the equity ratio was higher than at 31 December 2014 (25.9%). Net interest cover shows the extent to which net interest obligations are covered by EBIT. The indicator calculated declined from 18.7 to –37.0, due primarily to payments received from the unwinding of interest rate swaps. Net gearing was 21.5% as at 30 June 2015.
| 16 Net debt |
||
|---|---|---|
| €m | ||
| 31 Dec. 2014 | 30 June 2015 | |
| Non-current financial liabilities | 4,655 | 4,688 |
| Current financial liabilities | 425 | 493 |
| Financial liabilities | 5,080 | 5,181 |
| Cash and cash equivalents | 2,978 | 1,813 |
| Current financial assets | 351 | 179 |
| Long-term deposits1 | 60 | 65 |
| Positive fair value of non-current financial derivatives1 | 192 | 135 |
| Financial assets | 3,581 | 2,192 |
| Net debt | 1,499 | 2,989 |
1 Shown in the balance sheet under non-current financial assets.
| €m | H1 2014 adjusted |
H1 2015 | +/– % | Q2 2014 adjusted |
Q2 2015 | +/– % |
|---|---|---|---|---|---|---|
| Post - eCommerce - Parcel | ||||||
| Revenue | 7,602 | 7,813 | 2.8 | 3,642 | 3,712 | 1.9 |
| of which Post | 4,949 | 4,816 | –2.7 | 2,341 | 2,252 | –3.8 |
| eCommerce - Parcel | 2,653 | 2,997 | 13.0 | 1,301 | 1,460 | 12.2 |
| Profit from operating activities (EBIT) | 585 | 474 | –19.0 | 189 | 75 | – 60.3 |
| Return on sales (%)1 | 7.7 | 6.1 | – | 5.2 | 2.0 | – |
| Operating cash flow | 325 | 354 | 8.9 | 188 | 169 | –10.1 |
| Express | ||||||
| Revenue | 5,968 | 6,695 | 12.2 | 3,089 | 3,455 | 11.8 |
| of which Europe | 2,756 | 2,938 | 6.6 | 1,402 | 1,511 | 7.8 |
| Americas | 1,074 | 1,233 | 14.8 | 557 | 643 | 15.4 |
| Asia Pacific | 2,082 | 2,450 | 17.7 | 1,096 | 1,273 | 16.1 |
| MEA (Middle East and Africa) | 448 | 522 | 16.5 | 228 | 268 | 17.5 |
| Consolidation/Other | –392 | – 448 | –14.3 | –194 | –240 | –23.7 |
| Profit from operating activities (EBIT) | 607 | 708 | 16.6 | 331 | 376 | 13.6 |
| Return on sales (%)1 | 10.2 | 10.6 | – | 10.7 | 10.9 | – |
| Operating cash flow | 630 | 596 | – 5.4 | 345 | 262 | –24.1 |
| Global Forwarding, Freight | ||||||
| Revenue | 7,161 | 7,567 | 5.7 | 3,638 | 3,778 | 3.8 |
| of which Global Forwarding | 5,157 | 5,554 | 7.7 | 2,636 | 2,763 | 4.8 |
| Freight | 2,076 | 2,096 | 1.0 | 1,039 | 1,057 | 1.7 |
| Consolidation/Other | –72 | – 83 | –15.3 | –37 | – 42 | –13.5 |
| Profit from operating activities (EBIT) | 151 | 57 | – 62.3 | 102 | 40 | – 60.8 |
| Return on sales (%)1 | 2.1 | 0.8 | – | 2.8 | 1.1 | – |
| Operating cash flow | – 55 | –35 | 36.4 | 45 | 125 | >100 |
| Supply Chain | ||||||
| Revenue | 7,124 | 7,987 | 12.1 | 3,618 | 4,045 | 11.8 |
| of which Supply Chain | 6,463 | 7,224 | 11.8 | 3,286 | 3,667 | 11.6 |
| Williams Lea | 664 | 769 | 15.8 | 333 | 381 | 14.4 |
| Consolidation/Other | –3 | – 6 | –100.0 | –1 | –3 | <–100 |
| Profit from operating activities (EBIT) | 194 | 172 | –11.3 | 109 | 119 | 9.2 |
| Return on sales (%)1 | 2.7 | 2.2 | – | 3.0 | 2.9 | – |
| Operating cash flow | 22 | –146 | – | – 6 | –34 | <–100 |
1 EBIT/revenue.
Driven by continued strong growth in the eCommerce - Parcel business unit, revenue in the PeP division increased by 2.8% in the first half of 2015 to €7,813 million (previous year: €7,602 million). Excluding positive currency effects of €106 million, revenue growth in the first half of the year was 1.4%.
In the first half of 2015, volumes in the Post business unit dropped well below the prioryear level. By contrast, revenue declined less significantly with a decrease of 2.7% to €4,816 million (previous year: €4,949 million). Revenue in the second quarter of 2015 amounted to €2,252 million (previous year: €2,341 million).
Although the price of a standard letter increased at the beginning of the year, the additional sales revenue could not offset the decrease in revenue attributable to the overall decline in Mail Communications volumes. 2014 had seen additional mail volumes as a result of the European elections and the transition to SEPA. Moreover, the Germany-wide labour strikes called by the trade union ver.di, our collective bargaining partner, at the mail centres and for letter and parcel delivery negatively impacted our volume and revenue trend. The cross-border import/export business performed well during the reporting period. The Groß and Maxi formats in particular benefited from the fact that small-sized goods are increasingly being shipped by letter.
Revenue and sales volumes decreased in the Dialogue Marketing business, especially in addressed advertising mail. By contrast, revenue generated from unaddressed advertising mail increased. Growth in our Einkauf aktuell product exceeded the revenue decline in Postwurfsendung unaddressed items.
| €m | H1 2014 adjusted |
H1 2015 | +/– % | Q2 2014 adjusted |
Q2 2015 | +/– % |
|---|---|---|---|---|---|---|
| Mail Communication | 3,314 | 3,247 | –2.0 | 1,576 | 1,520 | –3.6 |
| Dialogue Marketing | 1,073 | 1,048 | –2.3 | 510 | 501 | –1.8 |
| Other | 562 | 521 | –7.3 | 255 | 231 | – 9.4 |
| Total | 4,949 | 4,816 | –2.7 | 2,341 | 2,252 | –3.8 |
18 Post: revenue
| Mail items (millions) | H1 2014 adjusted |
H1 2015 | +/– % | Q2 2014 adjusted |
Q2 2015 | +/– % |
|---|---|---|---|---|---|---|
| Total | 10,311 | 9,547 | –7.4 | 4,935 | 4,471 | – 9.4 |
| of which Mail Communication |
4,486 | 4,334 | –3.4 | 2,083 | 1,973 | – 5.3 |
| of which Dialogue Marketing |
4,788 | 4,251 | –11.2 | 2,305 | 2,011 | –12.8 |
Our domestic and cross-border parcel operations are consolidated in the eCommerce - Parcel business unit. In the first half of 2015, revenue increased by 13.0% to €2,997 million (previous year: €2,653 million). Second-quarter business also remained on an expansion course with a revenue increase of 12.2%.
In Germany, volumes continued to grow despite the labour strike. Driven by e-commerce, volumes rose by 9.5% to 528 million parcels. Revenue for the first half of the year also saw a substantial increase over the prior-year figure, rising from €1,853 million to €2,052 million.
In addition, our domestic and cross-border parcel business in Europe continued to see encouraging growth. We increased sales quantities in all markets and expanded our portfolio of services. Revenue increased by 6.7% in the reporting period to €350 million (previous year: €328 million).
The first-quarter upwards trend in DHL eCommerce was sustained, thanks above all to the positive development in the B2C segment in India and growth in the domestic business in the United States. Boosted by positive currency effects, revenue increased by 26.1% compared with the previous year to €595 million in the first half of 2015 (previous year: €472 million). Excluding currency effects, growth was 4.2%.
| 20 eCommerce - Parcel: revenue |
||||||
|---|---|---|---|---|---|---|
| €m | H1 2014 adjusted |
H1 2015 | +/– % | Q2 2014 adjusted |
Q2 2015 | +/– % |
| Parcel Germany | 1,853 | 2,052 | 10.7 | 906 | 990 | 9.3 |
| Parcel Europe1 | 328 | 350 | 6.7 | 163 | 177 | 8.6 |
| DHL eCommerce2 | 472 | 595 | 26.1 | 232 | 293 | 26.3 |
| Total | 2,653 | 2,997 | 13.0 | 1,301 | 1,460 | 12.2 |
1 Excluding Germany.
2 Outside Europe.
| Parcels (millions) | H1 2014 adjusted |
H1 2015 | +/– % | Q2 2014 adjusted |
Q2 2015 | +/– % |
|---|---|---|---|---|---|---|
| Total | 482 | 528 | 9.5 | 236 | 255 | 8.1 |
Although revenue rose compared with the previous year, higher material and labour costs, the continued expansion of our parcel network and in particular the impact of the strike led to a notable decrease in EBIT. Division EBIT declined from €585 million in the previous year to €474 million in the reporting period. Return on sales decreased to 6.1% (previous year: 7.7%). EBIT for the second quarter of 2015 was €75 million (previous year: €189 million).
By contrast, operating cash flow increased from €325 million to €354 million, due mainly to a significantly lower net cash outflow from working capital. Working capital decreased to €–186 million, down from €–151 million in the previous year.
Express division revenue increased by 12.2% to €6,695 million in the first half of 2015 (previous year: €5,968 million). Excluding positive currency effects of €580 million, revenue growth was 2.5%. Second-quarter revenue rose by 11.8% compared with the prior-year figure. The increase was 2.7% excluding currency effects. Due to the decrease in the price of crude oil compared with the previous year, the fuel surcharge passed on to our customers was lower in all regions.
In the Time Definite International (TDI) product line, daily revenues rose by 3.7% in the first half and per-day customer shipments increased by 7.9% compared with the prior-year period. Daily revenues for the second quarter were up by 3.8% and per-day volumes by 8.6%. Volumes rose to a much greater extent than revenues due to the decrease in the fuel surcharge.
In the Time Definite Domestic (TDD) product line, daily revenues increased by 2.7% and per-day shipment volumes by 5.5% in the first half of the year. Daily revenues for the second quarter rose by 2.6% and shipment volumes by 5.7%.
| €m per day 1 | H1 2014 adjusted |
H1 2015 | +/– % | Q2 2014 adjusted |
Q2 2015 | +/– % |
|---|---|---|---|---|---|---|
| Time Definite International (TDI) |
35.4 | 36.7 | 3.7 | 36.8 | 38.2 | 3.8 |
| Time Definite Domestic (TDD) |
3.7 | 3.8 | 2.7 | 3.8 | 3.9 | 2.6 |
1 To improve comparability, product revenues were translated at uniform exchange rates.
Those revenues are also the basis for the weighted calculation of working days.
| Thousands of items per day 1 |
H1 2014 adjusted |
H1 2015 | +/– % | Q2 2014 adjusted |
Q2 2015 | +/– % |
|---|---|---|---|---|---|---|
| Time Definite International (TDI) |
681 | 735 | 7.9 | 700 | 760 | 8.6 |
| Time Definite Domestic (TDD) |
364 | 384 | 5.5 | 369 | 390 | 5.7 |
1 To improve comparability, product revenues were translated at uniform exchange rates.
Those revenues are also the basis for the weighted calculation of working days.
Revenue in the Europe region increased by 6.6% in the first half of 2015 to €2,938 million (previous year: €2,756 million). The figure for the reporting period included positive currency effects of €54 million that relate mainly to our business activities in Switzerland and the United Kingdom. Excluding those effects, revenue growth was 4.6%. Daily revenues in the TDI product line improved by 3.8%, due primarily to the 12.3% increase in shipment volumes. Growth in the region was maintained in the second quarter of 2015, with daily international shipment revenues increasing by 5.8%, whilst shipment volumes grew significantly by 14.4%.
Revenue in the Americas region increased by 14.8% in the first half of 2015 to €1,233 million (previous year: €1,074 million). That figure included positive currency effects of €149 million, mainly as a result of our business in the United States. Excluding currency effects, revenue for the region saw a slight increase of 0.9% above the prior-year figure. In the TDI product line, we increased daily revenues by 6.2% in the first half of the year, whilst shipment volumes experienced a slight decline of 1.0%. Daily revenues for the second quarter of 2015 rose by 6.0%, whilst volumes decreased by 2.4%.
Revenue in the Asia Pacific region increased by 17.7% in the first half of 2015 to €2,450 million (previous year: €2,082 million). The figure for the reporting period included significant currency gains of €343 million that relate primarily to our business activities in China and Hong Kong as well as other countries in the region. Excluding those effects, the revenue increase was only 1.2% due to the weakening of the economy in China during the reporting period. In the TDI product line, daily revenues increased by 1.5% in the first half of the year and per-day volumes by 5.8%. Daily TDI revenues for the second quarter remained at the prior-year level and per-day international shipment volumes rose by 6.1%.
Revenue in the MEA region (Middle East and Africa) was up by 16.5%, or €522 million, in the first half of 2015 (previous year: €448 million). The figure for the reporting period included positive currency effects of €67 million that are associated mainly with our business activities in the Middle East. Excluding those effects, revenue for the region rose by 1.6%. In the TDI product line, daily revenues increased by 7.1% and per-day volumes by a substantial 10.7%. Growth in the second quarter of 2015 amounted to 7.4% for daily revenues and 9.2% for per-day volumes.
In the first half of 2015, division EBIT improved by 16.6% to €708 million (previous year: €607 million). Increased volumes and revenues as well as the higher operating profitability of our network were the main factors contributing to the growth in EBIT. Return on sales also improved, rising from 10.2% in the previous year to 10.6% in the reporting period. Second-quarter EBIT climbed by 13.6% to €376 million, which improved return on sales from 10.7% to 10.9%. The reversal of restructuring provisions in the United States in the previous year resulted in income that was offset mainly by impairment losses on aircraft.
Operating cash flow decreased by 5.4% to €596 million in the reporting period (previous year: €630 million), due mainly to the utilisation of restructuring provisions in the United States during the second quarter of 2015.
Revenue in the division increased by 5.7% to €7,567 million in the first half of 2015 (previous year: €7,161 million). Excluding positive currency effects of €367 million, revenue increased by 0.5%.
In the Global Forwarding business unit, revenue in the reporting period increased by 7.7% to €5,554 million (previous year: €5,157 million). Excluding positive currency effects of €360 million, the growth in revenue was 0.7%. Gross profit improved by 2.3% to €1,208 million (previous year: €1,181 million).
The new management is in the process of reviewing the course of transformation. Since the end of April, the goal has been to transform the organisation in a way that operating performance can be improved quickly. Measures planned to improve the division's cost structure, earnings and customer service, amongst other factors, have been initiated. The review will serve as a basis for determining the approach to be followed in future, including the future IT landscape.
Air and ocean freight revenues increased in the reporting period compared with the prior year. Ocean freight volumes remained at the previous year's level, whilst air freight volumes declined.
Our air freight volumes declined by 3.7% in the first half of 2015 compared with the prior-year period. To counteract the decrease in margins, we withdrew from some major transactions and volumes dropped accordingly. Whilst the measures we implemented in the previous year to increase profitability are in fact showing success, margins are still low when compared with the historical average. Revenue in the air freight business rose by 7.3% and gross profit by 1.1% in the first half of 2015. Revenues for the second quarter of 2015 improved by 3.1%, whilst volumes declined by 7.3% in comparison with the prior-year quarter.
Ocean freight volumes increased by 1.3% in the first half of the year, driven primarily by new business that was contracted in the previous year. Due to uncertainty on the market and a persisting oversupply of capacities, rates remained volatile on most routes. Our ocean freight revenues rose by 10.5% in the reporting period. However, gross profit decreased by 8.8% as a result of heightened price competition. Second-quarter revenues grew by 8.9%, whilst volumes stayed on a par with the prior-year quarter.
Performance of our industrial project business (Table 24, reported as part of Other) was much weaker than in the previous year given our customers' reluctance to invest in the energy sector in light of the low oil price. In the first half of 2015, the share of revenue related to industrial project business and reported under Other was 29.2% and therefore down year-on-year (previous year: 36.7%). Gross profit declined by 4.4% compared with the prior-year period.
| €m | H1 2014 adjusted |
H1 2015 | +/– % | Q2 2014 adjusted |
Q2 2015 | +/– % |
|---|---|---|---|---|---|---|
| Air freight | 2,390 | 2,565 | 7.3 | 1,237 | 1,275 | 3.1 |
| Ocean freight | 1,702 | 1,881 | 10.5 | 864 | 941 | 8.9 |
| Other | 1,065 | 1,108 | 4.0 | 535 | 547 | 2.2 |
| Total | 5,157 | 5,554 | 7.7 | 2,636 | 2,763 | 4.8 |
| Thousands | H1 2014 adjusted |
H1 2015 | +/– % | Q2 2014 adjusted |
Q2 2015 | +/– % | |
|---|---|---|---|---|---|---|---|
| Air freight | tonnes | 1,939 | 1,868 | –3.7 | 1,007 | 933 | –7.3 |
| of which exports | tonnes | 1,091 | 1,052 | –3.6 | 571 | 530 | –7.2 |
| Ocean freight | TEUs1 | 1,436 | 1,454 | 1.3 | 748 | 750 | 0.3 |
1 Twenty-foot equivalent units.
In the Freight business unit, revenue was up by 1.0% to €2,096 million in the first half of 2015 (previous year: €2,076 million). The increase was due partly to positive currency effects in the amount of €8 million. Business grew primarily in Germany, Central and Eastern Europe, Turkey, Sweden and Denmark. Gross profit increased slightly over the prior-year level to €548 million (previous year: €547 million); positive currency effects similarly contributed to the increase.
EBIT in the division declined to €57 million in the reporting period (previous year: €151 million). Costs for turnaround measures were partially offset by income from the sale of shares in Sinotrans. At the same time, gross profit margins remained at a low level due to high pressure on margins. Return on sales declined to 0.8% (previous year: 2.1%). EBIT for the second quarter of 2015 fell by 60.8% to €40 million, down from the previous year's figure of €102 million.
Net working capital improved slightly in the first half of 2015 despite higher outstanding receivables, leading to operating cash flow of €–35 million (previous year: €–55 million).
Revenue in the division increased by 12.1% to €7,987 million in the first half of 2015 (previous year: €7,124 million). Positive currency effects of €809 million contributed to this growth. Excluding currency effects, revenue growth was 0.8%. Revenue for the second quarter of 2015 increased by 11.8% year-on-year, rising from €3,618 million to €4,045 million. The second-quarter increase was likewise impacted significantly by positive currency effects.
First half-year revenue in the Supply Chain business unit was €7,224 million, an increase of 11.8% (previous year: €6,463 million). Compared with the previous year, the Life Sciences&Healthcare, Consumer and Automotive sectors represented a higher proportion of revenue, offset by a slightly lower share in the Retail sector. Revenue from our top 20 customers grew by 10.0%.
In the Americas region, we gained revenue from new business in the United States, driven predominantly by the Consumer and Automotive sectors. Our revenue in Canada was impacted negatively by the loss of a contract in the Retail sector at the end of the second quarter of 2014.
In the Asia Pacific region, we achieved substantial revenue growth across all focus sectors. Australia and China in particular contributed to this growth, which stemmed from new and additional business. Revenue growth in Australia came primarily from the Life Sciences&Healthcare, Technology and Retail sectors. In China, revenue increased significantly in the Technology and Automotive sectors. Our business in Thailand, India and Hong Kong also contributed to the increased revenue in the region.
In Europe, volumes and new business increased mainly in the Retail and Automotive sectors. Revenue in the Life Sciences&Healthcare sector improved primarily due to additional business from the UK National Health Service.
In the Williams Lea business unit, revenue grew by 15.8% to €769 million in the reporting period, driven mainly by increased volumes in Marketing Solutions and specialised Business Process Outsourcing for customers in Europe and Asia.
In the first half of 2015, the Supply Chain business unit concluded additional contracts worth around €526 million in annualised revenue with both new and existing customers. The Consumer, Life Sciences&Healthcare and Automotive sectors accounted for the majority of the gains. The annualised contract renewal rate remained at a consistently high level.
EBIT in the division was €172 million in the first half of 2015 (previous year: €194 million). The main reason for the decline in EBIT was the restructuring costs supporting our "Focus. Connect. Grow" strategic initiatives, which were offset partially by income from the sale of shares in King's Cross in the UK. New business also had a positive effect on earnings. The return on sales declined to 2.2% (previous year: 2.7%). In the second quarter of 2015, EBIT increased from €109 million to €119 million, also impacted by income from the sale of shares in King's Cross as well as accelerated restructuring costs. Net working capital worsened, due mainly to increased outstanding receivables. The decrease led to a decline in operating cash flow to €–146 million (previous year: €22 million).
1 Rebased to the closing price of Deutsche Post shares on 31 December 2014.
After a strong initial quarter in 2015, the DAX continued its upwards climb to reach a high of 12,374 on 10 April 2015. Deutsche Post shares also reached a new high of €31.08 on 12 April. However, publication of the quarterly figures on 12 May pushed our shares downwards. By 30 June, the share price had dropped to €26.21. The DAX likewise declined, ending the quarter at 10,944 points. The main reason for the drop in the DAX was uncertainty about whether Greece would remain in the eurozone.
| 31 Dec. 2014 | 30 June 2015 | ||
|---|---|---|---|
| Closing price | € | 27.05 | 26.21 |
| High1 | € | 28.43 | 31.08 |
| Low1 | € | 22.30 | 25.86 |
| Number of shares2 | millions | 1,211.2 | 1,211.2 |
| Market capitalisation | €m | 32,758 | 31,739 |
| Average trading volume per day1 | shares | 4,019,689 | 4,601,581 |
1 In 2014 and the first half of 2015.
2 Number according to the commercial register.
| 31 Dec. 2014 | 30 June 2015 | +/– % | 30 June 2014 | 30 June 2015 | +/– % | ||
|---|---|---|---|---|---|---|---|
| Deutsche Post DHL Group EUR | 27.05 | 26.21 | –3.1 | 26.41 | 26.21 | – 0.8 | |
| bpost | EUR | 20.79 | 24.64 | 18.5 | 18.45 | 24.64 | 33.6 |
| Royal Mail Group | GBp | 429.90 | 514.50 | 19.7 | 499.00 | 514.50 | 3.1 |
| FedEx | USD | 173.66 | 170.40 | –1.9 | 151.38 | 170.40 | 12.6 |
| UPS | USD | 111.17 | 96.91 | –12.8 | 102.66 | 96.91 | – 5.6 |
| Kuehne + Nagel | CHF | 135.30 | 124.10 | – 8.3 | 118.00 | 124.10 | 5.2 |
In the first half of 2015, the average number of employees (full-time equivalents) increased slightly to 445,710, a 1.1% rise compared with the previous year's average. This was due mainly to higher shipment volumes in the Express division and the growth of the German parcel business in the Post - eCommerce - Parcel division. The headcount at the end of the first half of the year was 493,207.
Our current planning foresees another slight increase in the number of employees in financial year 2015.
On 5 July 2015, Deutsche Post AG and the trade union ver.di ended their wage dispute and agreed on a comprehensive collective bargaining package. Amongst other things, each of Deutsche Post AG's more than 130,000 employees will receive a one-time payment of €400 in 2015. Salaries will increase by 2.0% effective 1 October 2016 and by another 1.7% effective 1 October 2017. The agreement has a term of 32 months, which gives the company planning security until 31 January 2018. The DHL Delivery companies will remain unchanged part of the PeP division.
Identifying opportunities and swiftly capitalising upon them and counteracting risks are important objectives for our Group. We already account for the anticipated impact of potential events and developments in our business plan. Significant potential deviations from the Group's projected earnings are reported as opportunities or risks. The Group's overall opportunity and risk situation did not change significantly in the reporting period as compared with the situation portrayed in the 2014 Annual Report. No new risks were identified that could have a significant impact on the Group's result. Based upon 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.
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 management system facilitates this aim. We describe our opportunity and risk management and the significant opportunities and risks in the forecast period in the 2014 Annual Report, beginning on page 86.
In the first six months of 2015, the opportunity and risk situation did not change significantly from that portrayed in the 2014 Annual Report, beginning on page 86.
On 5 November 2012, the Bundeskartellamt (German federal cartel office) initiated proceedings against Deutsche Post on suspicion of abusive behaviour with respect to agreements on mail transport with major customers. Based upon information from Deutsche Post AG's competitors, the authorities suspected that the company had violated the provisions of German and European antitrust law. In a decree dated 6 July 2015, the Bundeskartellamt determined that such violations had indeed taken place but also that Deutsche Post had discontinued them at the end of 2013. No fine was imposed. The company is considering whether to appeal to the Higher Regional Court in Düsseldorf.
After accounting for the effects of the strike in the Post - eCommerce - Parcel division, the Board of Management now expects consolidated EBIT to reach between €2.95 billion and €3.10 billion in financial year 2015. With respect to the global economy, we anticipate regional variations and only moderate growth on the whole. A similar development is expected for world trade. The Post - eCommerce - Parcel division is now projected to contribute at least €1.2 billion to the expected consolidated EBIT. Compared with the previous year, we continue to 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. As expected, EAC will generally perform in line with consolidated EBIT. Free cash flow is expected to at least cover the dividend payment made in May 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.
Currently, no further material changes to the Group's organisational structure are planned for the current financial year.
Economists predict that the global economy could improve somewhat over the course of 2015, although growth is likely to remain cautious. A slight revival is expected in the industrial countries which will benefit from expansive monetary policies and low commodity prices. In the emerging markets, economic performance will presumably vary widely subject to dependence on commodities and the US dollar. The International Monetary Fund (IMF) expects global economic output to grow by 3.3% and global trade by 4.1% in 2015.
In China, growth is not likely to pick up in 2015. GDP is therefore expected to increase less than in the previous year (IMF: 6.8%, Bloomberg Consensus: 6.9%). Japan is experiencing a solid upswing. However, because of an unfavourable starting point at the beginning of 2015, GDP is only likely to see moderate growth (IMF: 0.8%; Bloomberg Consensus: 1.0%; Global Insight: 1.0%).
In the United States, strong domestic demand is boosting the economy. However, foreign trade is set to slow the economy due to the strong US dollar. Following a weak start to the year, prospects have dimmed for full-year 2015. GDP growth is forecast to fall below the previous year's figure (IMF: 2.5%; Bloomberg Consensus: 2.3%; Global Insight: 2.2%).
The economy in the eurozone is on course for continued recovery, with private consumption expected to provide much of the momentum. Gross fixed capital formation is also expected to rise. Exports are likely to see stronger growth than in the previous year due to the weak euro. On balance, however, foreign trade is not expected to drive growth. In contrast to previous years, all of the large member states are expected to achieve positive growth. Indeed, growth for 2015 as a whole is forecast to increase (IMF: 1.5%; ECB 1.5%; Global Insight: 1.5%).
Early indicators suggest that the positive economic trend in Germany will continue, with domestic demand providing the momentum. Private consumption, gross fixed capital formation and government spending are all expected to rise markedly. However, foreign trade is not likely to make a notable contribution to GDP growth. On the whole, growth is anticipated to accelerate only slightly at best in 2015 (IMF: 1.6%, Sachverständigenrat: 1.8%; Global Insight: 1.7%).
As described on page 100f. of our 2014 Annual Report, 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 anticipated to reflect our strategic focus on business driven by e-commerce and on emerging economies evidencing strong structural growth.
After accounting for the effects of the strike in the Post - eCommerce - Parcel division, we now expect consolidated EBIT to reach between €2.95 billion and €3.10 billion in financial year 2015. The Post - eCommerce - Parcel division is now projected to contribute at least €1.2 billion to that figure. Compared with the previous year, we continue to 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 earnings 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 reconfirming 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.
In light of the earnings forecast for 2015, we expect the FFO to debt performance metric to remain stable on the whole. The metric will be impacted strongly by persistently fluctuating discount rates for pension obligations. We expect the rating agencies to continue to rank our credit quality as adequate or even good.
Our operating liquidity situation will improve towards the end of the year due to the usual upturn in our business activities in the second half of the year.
As described on page 101f. of our 2014 Annual Report, capital expenditure of around €2.0 billion is planned for 2015. We shall focus on technical equipment and machinery, aircraft and transport equipment.
As expected, EAC will generally perform in line with consolidated EBIT. Divisional EAC will be subject to the same influences as laid out in the EBIT outlook. However, as our investing activities and currency effects continue and the net asset base increases as a result, the EAC trend may be more moderate than the trend in EBIT. Free cash flow is expected to at least cover the dividend payment for financial year 2014 made in May 2015.
Any internet sites referred to in the Interim Report by the Board of Management do not form part of the report.
This Interim Report contains forward-looking statements that relate to the business, financial performance and results of operations 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 upon 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 Interim Report.
1 January to 30 June
| €m | H1 2014 adjusted1 |
H1 2015 | Q2 2014 adjusted1 |
Q2 2015 |
|---|---|---|---|---|
| Revenue | 27,264 | 29,467 | 13,695 | 14,700 |
| Other operating income | 936 | 1,181 | 547 | 592 |
| Total operating income | 28,200 | 30,648 | 14,242 | 15,292 |
| Materials expense | –15,240 | –16,647 | –7,711 | – 8,326 |
| Staff costs | – 9,048 | – 9,886 | – 4,511 | – 4,972 |
| Depreciation, amortisation and impairment losses | –736 | – 645 | – 415 | –326 |
| Other operating expenses | –1,796 | –2,214 | – 951 | –1,132 |
| Total operating expenses | –26,820 | –29,392 | –13,588 | –14,756 |
| Net income from investments accounted for using the equity method | 3 | 1 | 2 | 1 |
| Profit from operating activities (EBIT) | 1,383 | 1,257 | 656 | 537 |
| Financial income | 42 | 45 | 17 | 19 |
| Finance costs | –204 | –196 | –103 | –103 |
| Foreign currency result | –15 | –14 | –11 | –17 |
| Net finance costs | –177 | –165 | – 97 | –101 |
| Profit before income taxes | 1,206 | 1,092 | 559 | 436 |
| Income taxes | –193 | –180 | –70 | – 65 |
| Consolidated net profit for the period | 1,013 | 912 | 489 | 371 |
| attributable to Deutsche Post AG shareholders | 963 | 821 | 461 | 326 |
| attributable to non-controlling interests | 50 | 91 | 28 | 45 |
| Basic earnings per share (€) | 0.80 | 0.68 | 0.38 | 0.27 |
| Diluted earnings per share (€) | 0.77 | 0.65 | 0.37 | 0.26 |
1 Note 4.
1 January to 30 June
| €m |
|---|
| H1 2014 | H1 2015 | Q2 2014 | Q2 2015 | |
|---|---|---|---|---|
| Consolidated net profit for the period | 1,013 | 912 | 489 | 371 |
| Items that will not be reclassified to profit or loss | ||||
| Change due to remeasurements of net pension provisions | –1,169 | 1,024 | – 652 | 2,550 |
| IFRS 3 revaluation reserve | –1 | 0 | –1 | 0 |
| Other changes in retained earnings | 1 | 0 | 1 | 0 |
| Income taxes relating to components of other comprehensive income | 60 | – 55 | 12 | – 97 |
| Share of other comprehensive income of investments accounted for using the equity method (after tax) | 0 | 0 | 0 | 0 |
| Total (after tax) | –1,109 | 969 | – 640 | 2,453 |
| Items that may be subsequently reclassified to profit or loss | ||||
| IAS 39 revaluation reserve | ||||
| Changes from unrealised gains and losses | 94 | 61 | 76 | 28 |
| Changes from realised gains and losses | 0 | –172 | 0 | –172 |
| IAS 39 hedging reserve | ||||
| Changes from unrealised gains and losses | – 60 | –122 | – 48 | 43 |
| Changes from realised gains and losses | –26 | 63 | – 9 | 35 |
| Currency translation reserve | ||||
| Changes from unrealised gains and losses | 29 | 602 | 38 | –230 |
| Changes from realised gains and losses | 0 | 0 | 0 | 0 |
| Income taxes relating to components of other comprehensive income | 15 | 25 | 7 | – 8 |
| Share of other comprehensive income of investments accounted for using the equity method (after tax) | 0 | 2 | 0 | 1 |
| Total (after tax) | 52 | 459 | 64 | –303 |
| Other comprehensive income (after tax) | –1,057 | 1,428 | – 576 | 2,150 |
| Total comprehensive income | – 44 | 2,340 | – 87 | 2,521 |
| attributable to Deutsche Post AG shareholders | – 94 | 2,239 | –118 | 2,494 |
| attributable to non-controlling interests | 50 | 101 | 31 | 27 |
| €m | ||
|---|---|---|
| 31 Dec. 2014 | 30 June 2015 | |
| ASSETS | ||
| Intangible assets | 12,352 | 12,827 |
| Property, plant and equipment | 7,177 | 7,207 |
| Investment property | 32 | 33 |
| Investments accounted for using the equity method | 75 | 77 |
| Non-current financial assets | 1,363 | 1,193 |
| Other non-current assets | 151 | 235 |
| Deferred tax assets | 1,752 | 1,836 |
| Non-current assets | 22,902 | 23,408 |
| Inventories | 332 | 343 |
| Current financial assets | 351 | 179 |
| Trade receivables | 7,825 | 8,032 |
| Other current assets | 2,415 | 3,070 |
| Income tax assets | 172 | 206 |
| Cash and cash equivalents | 2,978 | 1,813 |
| Assets held for sale | 4 | 12 |
| Current assets | 14,077 | 13,655 |
| Total assets | 36,979 | 37,063 |
| EQUITY AND LIABILITIES | ||
| Issued capital | 1,210 | 1,211 |
| Capital reserves | 2,339 | 2,326 |
| Other reserves | –341 | 103 |
| Retained earnings | 6,168 | 6,950 |
| Equity attributable to Deutsche Post AG shareholders | 9,376 | 10,590 |
| Non-controlling interests | 204 | 297 |
| Equity | 9,580 | 10,887 |
| Provisions for pensions and similar obligations | 7,226 | 6,065 |
| Deferred tax liabilities | 84 | 119 |
| Other non-current provisions | 1,556 | 1,623 |
| Non-current provisions | 8,866 | 7,807 |
| Non-current financial liabilities | 4,683 | 4,725 |
| Other non-current liabilities | 255 | 253 |
| Non-current liabilities | 4,938 | 4,978 |
| Non-current provisions and liabilities | 13,804 | 12,785 |
| Current provisions | 1,545 | 1,453 |
| Current financial liabilities | 486 | 553 |
| Trade payables | 6,922 | 6,479 |
| Other current liabilities | 4,196 | 4,453 |
| Income tax liabilities | 446 | 453 |
| Liabilities associated with assets held for sale | 0 | 0 |
| Current liabilities | 12,050 | 11,938 |
| Current provisions and liabilities | 13,595 | 13,391 |
| Total equity and liabilities |
36,979 | 37,063 |
| €m | H1 2014 adjusted1 |
H1 2015 | Q2 2014 adjusted1 |
Q2 2015 |
|---|---|---|---|---|
| Consolidated net profit for the period attributable to Deutsche Post AG shareholders | 963 | 821 | 461 | 326 |
| Consolidated net profit for the period attributable to non-controlling interests | 50 | 91 | 28 | 45 |
| Income taxes | 193 | 180 | 70 | 65 |
| Net finance costs | 177 | 165 | 97 | 101 |
| Profit from operating activities (EBIT) | 1,383 | 1,257 | 656 | 537 |
| Depreciation, amortisation and impairment losses | 736 | 645 | 415 | 326 |
| Net income from disposal of non-current assets | –10 | –228 | –1 | –197 |
| Non-cash income and expense | 9 | 45 | – 5 | 20 |
| Change in provisions | –331 | –358 | –184 | –218 |
| Change in other non-current assets and liabilities | – 5 | –12 | –18 | –3 |
| Dividend received | 0 | 0 | 0 | 0 |
| Income taxes paid | –260 | –277 | –134 | –130 |
| Net cash from operating activities before changes in working capital | 1,522 | 1,072 | 729 | 335 |
| Changes in working capital Inventories |
11 | 8 | 6 | –2 |
| Receivables and other current assets | – 949 | – 542 | –125 | 89 |
| Liabilities and other items | –17 | –193 | –127 | –156 |
| Net cash from operating activities | 567 | 345 | 483 | 266 |
| Subsidiaries and other business units | 0 | –2 | 0 | –2 |
| Property, plant and equipment and intangible assets | 72 | 64 | 25 | 25 |
| Investments accounted for using the equity method and other investments | 0 | 221 | 0 | 221 |
| Other non-current financial assets | 35 | 11 | 19 | 5 |
| Proceeds from disposal of non-current assets | 107 | 294 | 44 | 249 |
| Subsidiaries and other business units | 3 | 0 | 3 | 0 |
| Property, plant and equipment and intangible assets | –708 | – 972 | –260 | – 407 |
| Investments accounted for using the equity method and other investments | 0 | 0 | 0 | 0 |
| Other non-current financial assets | – 45 | –37 | – 5 | – 8 |
| Cash paid to acquire non-current assets | –750 | –1,009 | –262 | – 415 |
| Interest received | 27 | 22 | 10 | 10 |
| Current financial assets | 593 | 221 | 190 | 185 |
| Net cash used in/from investing activities | –23 | – 472 | –18 | 29 |
| Proceeds from issuance of non-current financial liabilities | 9 | 6 | 1 | 2 |
| Repayments of non-current financial liabilities | – 939 | –17 | – 5 | – 8 |
| Change in current financial liabilities | 117 | 35 | 74 | 44 |
| Other financing activities | 45 | – 45 | 25 | –18 |
| Proceeds from transactions with non-controlling interests | 0 | 0 | 0 | 0 |
| Cash paid for transactions with non-controlling interests | 0 | – 6 | 0 | – 6 |
| Dividend paid to Deutsche Post AG shareholders | – 968 | –1,030 | – 968 | –1,030 |
| Dividend paid to non-controlling interest holders | – 87 | – 6 | – 84 | – 6 |
| Purchase of treasury shares | – 45 | –31 | –28 | – 9 |
| Proceeds from issuing shares or other equity instruments | 17 | 0 | 0 | 0 |
| Interest paid | –101 | 12 | – 53 | – 46 |
| Net cash used in financing activities | –1,952 | –1,082 | –1,038 | –1,077 |
| Net change in cash and cash equivalents | –1,408 | –1,209 | – 573 | –782 |
| Effect of changes in exchange rates on cash and cash equivalents | –124 | 44 | –115 | – 51 |
| Changes in cash and cash equivalents associated with assets held for sale | 0 | 0 | 0 | 0 |
| Changes in cash and cash equivalents due to changes in consolidated group | 0 | 0 | 0 | 0 |
| Cash and cash equivalents at beginning of reporting period | 3,414 | 2,978 | 2,570 | 2,646 |
| Cash and cash equivalents at end of reporting period | 1,882 | 1,813 | 1,882 | 1,813 |
1 Note 4.
1 January to 30 June
| €m | Other reserves | Equity | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Issued capital |
Capital reserves |
IFRS 3 revaluation reserve |
IAS 39 revaluation reserve |
IAS 39 hedging reserve |
Currency translation reserve |
Retained earnings |
attributable to Deutsche Post AG shareholders |
Non controlling |
interests Total equity | |
| Balance at 1 January 2014 | 1,209 | 2,269 | 2 | 68 | 37 | – 924 | 7,183 | 9,844 | 190 | 10,034 |
| Capital transactions with owner Dividend |
0 | 0 | 0 | 0 | 0 | 0 | – 968 | – 968 | – 86 | –1,054 |
| Transactions with non-controlling interests |
0 | 0 | 0 | 0 | 0 | 0 | 9 | 9 | – 9 | 0 |
| Changes in non-controlling interests due to changes in consolidated group |
0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 2 | 2 |
| Issue of shares or other equity instruments |
1 | 16 | 0 | 0 | 0 | 0 | 0 | 17 | 5 | 22 |
| Purchase of treasury shares | –2 | 0 | 0 | 0 | 0 | 0 | – 43 | – 45 | 0 | – 45 |
| Share-based payment schemes (issuance) |
0 | 31 | 0 | 0 | 0 | 0 | 0 | 31 | 0 | 31 |
| Share-based payment schemes (exercise) |
2 | –31 | 0 | 0 | 0 | 0 | 29 | 0 | 0 | 0 |
| – 956 | – 88 | –1,044 | ||||||||
| Total comprehensive income Consolidated net profit for the period |
0 | 0 | 0 | 0 | 0 | 0 | 963 | 963 | 50 | 1,013 |
| Currency translation differences | 0 | 0 | 0 | 0 | 0 | 29 | 0 | 29 | 0 | 29 |
| Change due to remeasurements | ||||||||||
| of net pension provisions | 0 | 0 | 0 | 0 | 0 | 0 | –1,109 | –1,109 | 0 | –1,109 |
| Other changes | 0 | 0 | –1 | 84 | – 61 | 0 | 1 | 23 | 0 | 23 |
| – 94 | 50 | – 44 | ||||||||
| Balance at 30 June 2014 | 1,210 | 2,285 | 1 | 152 | –24 | – 895 | 6,065 | 8,794 | 152 | 8,946 |
| Balance at 1 January 2015 | 1,210 | 2,339 | 0 | 170 | –28 | – 483 | 6,168 | 9,376 | 204 | 9,580 |
| Capital transactions with owner Dividend |
0 | 0 | 0 | 0 | 0 | 0 | –1,030 | –1,030 | –7 | –1,037 |
| Transactions with non-controlling interests |
0 | 0 | 0 | 0 | 0 | 0 | 1 | 1 | –1 | 0 |
| Changes in non-controlling interests due to changes in consolidated group |
0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Issue of shares or other equity instruments |
0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Purchase of treasury shares | –1 | 0 | 0 | 0 | 0 | 0 | –30 | –31 | 0 | –31 |
| Share-based payment schemes (issuance) |
0 | 35 | 0 | 0 | 0 | 0 | 0 | 35 | 0 | 35 |
| Share-based payment schemes (exercise) |
2 | – 48 | 0 | 0 | 0 | 0 | 46 | 0 | 0 | 0 |
| –1,025 | – 8 | –1,033 | ||||||||
| Total comprehensive income Consolidated net profit for the period |
0 | 0 | 0 | 0 | 0 | 0 | 821 | 821 | 91 | 912 |
| Currency translation differences | 0 | 0 | 0 | 0 | 0 | 589 | 0 | 589 | 15 | 604 |
| Change due to remeasurements | ||||||||||
| of net pension provisions | 0 | 0 | 0 | 0 | 0 | 0 | 974 | 974 | – 5 | 969 |
| Other changes | 0 | 0 | 0 | –104 | – 41 | 0 | 0 | –145 | 0 | –145 |
| 2,239 | 101 | 2,340 | ||||||||
| Balance at 30 June 2015 | 1,211 | 2,326 | 0 | 66 | – 69 | 106 | 6,950 | 10,590 | 297 | 10,887 |
Deutsche Post AG is a listed corporation domiciled in Bonn, Germany. The condensed consolidated interim financial statements of Deutsche Post AG and its subsidiaries cover the period from 1 January to 30 June 2015 and have been reviewed.
The accompanying condensed consolidated interim financial statements as at 30 June 2015 were prepared in accordance with section 37w of the Wertpapierhandelsgesetz (WpHG – German Securities Trading Act) and the International Financial Reporting Standards (IFRSs) and related interpretations issued by the International Accounting Standards Board (IASB) for interim financial reporting, as adopted by the European Union. These interim financial statements thus include all information and disclosures required by IFRSs to be presented in condensed interim financial statements.
Preparation of the condensed consolidated interim financial statements for interim financial reporting in accordance with IAS 34 requires the Board of Management to exercise judgement and make estimates and assumptions that affect the application of accounting policies in the Group and the presentation of assets, liabilities, income and expenses. Actual amounts may differ from these estimates. The results obtained thus far in financial year 2015 are not necessarily an indication of how business will develop in the future.
The accounting policies applied to the condensed consolidated interim financial statements are generally based on the same accounting policies used in the consolidated financial statements for financial year 2014.
The assumptions made in connection with the Group's defined benefit retirement plans have changed as of the beginning of 2015. These changes relate to refinements in the determination of discount rates.
Firstly, separate discount rates were introduced in principle for calculating the present value of the defined benefit obligations and the current service cost. This reflects any differences in the terms of these parameters, where applicable. Secondly, generation of the yield curve for the eurozone, which is based on the yields of AA-rated corporate bonds, was enhanced. This led to minor changes in extrapolation. Furthermore, the derivation of the discount rates for the UK shifted to take the duration into account. The first two changes did not have any significant overall impact on Deutsche Post DHL Group as at 30 June 2015. The third change reduced the present value of the Group's defined benefit obligations as at 30 June 2015 by approximately €250 million and lifted other comprehensive income (before tax) by the same amount – in contrast, this would not have had any impact as at 31 December 2014.
The income tax expense for the reporting period was deferred on the basis of the tax rate expected to apply to the full financial year.
For further information on the accounting policies applied, please refer to the consolidated financial statements for the year ended 31 December 2014, on which these interim financial statements are based.
Departures from the accounting policies applied in financial year 2014 consist of the new or amended international accounting pronouncements under IFRSs required to be applied for the first time since financial year 2015.
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.
The annual improvement process refers to the following standards: IFRS 1, IFRS 3, IFRS 13 and IAS 40. The amendments do not have a significant influence on the consolidated financial statements.
Detailed explanations on the newly applicable accounting standards can be found in the 2014 Annual Report, Note 5 "New developments in international accounting under IFRSs".
The consolidated group includes all companies controlled by Deutsche Post AG. Control exists if Deutsche Post AG has decisionmaking 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 exercise control.
The companies listed in the table below are consolidated in addition to the parent company Deutsche Post AG.
| 31 Dec. 2014 | 30 June 2015 | |
|---|---|---|
| Number of fully consolidated companies (subsidiaries) | ||
| German | 90 | 138 |
| Foreign | 685 | 673 |
| Number of joint operations | ||
| German | 1 | 1 |
| Foreign | 1 | 1 |
| Number of investments accounted for using the equity method | ||
| German | 1 | 1 |
| Foreign | 14 | 15 |
At the start of financial year 2015, Deutsche Post DHL Group formed 49 regional companies under the umbrella of DHL Delivery GmbH in order to accommodate the increased demand for labour in the parcel business, which is experiencing consistent growth.
No acquisitions were made in the first six months of 2015. No payments were made in the first half of 2015 for companies acquired in previous years.
In the prior-year period, DHL Global Forwarding & Co. LLC (DHL Oman), Oman, which was previously accounted for using the equity method, was consolidated starting in May 2014 due to contractual changes.
| Name | Country | Segment | Interest % |
Date of acquisition |
|---|---|---|---|---|
| DHL Global Forwarding & Co. LLC (DHL Oman), |
Global Forwarding, |
|||
| Muscat | Oman | Freight | 40 | 7 May 2014 |
| €m | Carrying | ||
|---|---|---|---|
| 1 January to 30 June | amount | Adjustment | Fair value |
| ASSETS | |||
| Non-current assets | 0 | – | 0 |
| Current assets | 5 | – | 5 |
| Cash and cash equivalents | 4 | – | 4 |
| 9 | – | 9 | |
| LIABILITIES | |||
| Current liabilities and provisions | 4 | – | 4 |
| 4 | – | 4 | |
| Net assets | 5 | ||
The calculation of goodwill is presented in the following table:
| €m | |
|---|---|
| Fair value | |
| Fair value of the existing equity interest | 2 |
| Less net assets | 5 |
| Difference | –3 |
| Plus non-controlling interests1 | 3 |
| Goodwill | 0 |
1 Non-controlling interests are recognised at their carrying amount.
Payments for companies acquired in previous years amounted to less than €1 million in the first six months of 2014.
There were no disposal and deconsolidation effects in the first six months of 2015 or 2014.
In the first half of 2015, 4.16% of the shares in Sinotrans Ltd., China, and shares in the property development companies King's Cross Central Property Trust and King's Cross Central General Partner Ltd., UK, were sold. Current measurement of the shares, and disposal gains recognised in income, resulted in a €–104 million change in the IAS 39 revaluation reserve. The gains on the disposal of the shares are reported in other operating income; Note 5.
The net income from investments accounted for using the equity method item in the income statement was reclassified from net finance costs to profit from operating activities (EBIT) in the fourth quarter of 2014. The figures for the prior-year period were adjusted in the presentation. Further information can be found in the 2014 Annual Report, Note 4.
| €m | H1 2014 | Adjustment | H1 2014 adjusted |
|---|---|---|---|
| Net income from investments accounted for using the equity method |
– | 3 | 3 |
| Profit from operating activities (EBIT) | 1,380 | 3 | 1,383 |
| Net income from investments accounted for using the equity method |
3 | –3 | – |
| Net finance costs | –174 | –3 | –177 |
| Gains on disposal of non-current assets Income from currency translation Income from the reversal of provisions Insurance income |
H1 2014 30 52 200 92 |
H1 2015 244 148 125 |
|---|---|---|
| 89 | ||
| Commission income | 68 | 72 |
| Income from fees and reimbursements | 68 | 68 |
| Income from work performed and capitalised | 47 | 63 |
| Rental and lease income | 62 | 59 |
| Reversals of impairment losses on receivables and other assets |
47 | 51 |
| Income from the remeasurement of liabilities | 38 | 28 |
| Income from derivatives | 42 | 16 |
| Income from the derecognition of liabilities | 16 | 16 |
| Income from prior-period billings | 17 | 14 |
| Income from loss compensation | 12 | 13 |
| Recoveries on receivables previously written off | 4 | 4 |
| Subsidies | 4 | 3 |
| Miscellaneous | 137 | 168 |
| Total | 936 | 1,181 |
Of the gains on the disposal of non-current assets, €99 million relates to the sale of 4.16% of the shares held in Sinotrans Ltd., China, and €74 million to the sale of shares in King's Cross Central Property Trust and King's Cross Central General Partner Ltd., UK.
The increase in income from currency translation is largely due to the change in the exchange rate for the euro.
Income from the reversal of provisions in the reporting period related, amongst other things, to a reduction in a provision for HR-related risks and the reassessment of the probability that a tax obligation in Asia would occur. The latter fell to a level that allowed the relevant provision to be reversed. In the previous year, the main factor influencing income from the reversal of provisions was a change in the estimated settlement payment obligations assumed in the context of the restructuring measures in the USA.
Miscellaneous other operating income includes a large number of smaller individual items.
| €m | ||
|---|---|---|
| H1 2014 | H1 2015 | |
| Depreciation, amortisation and impairment losses | 736 | 645 |
Depreciation, amortisation and impairment losses decreased by €91 million as no impairment losses were incurred in the first half of the year, and the useful lives of some non-current assets in the PeP segment were extended, which reduced this expense item. Currency effects resulted in an increase in depreciation, amortisation and impairment losses.
In the prior-year period, impairment losses amounted to €105 million; these can be broken down at the segment level as follows:
| €m | ||
|---|---|---|
| H1 2014 | H1 2015 | |
| Express | ||
| Property, plant and equipment | 104 | 0 |
| Supply Chain | ||
| Property, plant and equipment | 1 | 0 |
| Impairment losses | 105 | 0 |
The impairment losses recorded in the Express segment related exclusively to aircraft and aircraft parts.
| €m | ||
|---|---|---|
| H1 2014 | H1 2015 | |
| Expenses for advertising and public relations | 155 | 195 |
| Cost of purchased cleaning and security services | 157 | 179 |
| Travel and training costs | 150 | 170 |
| Insurance costs | 129 | 164 |
| Currency translation expenses | 46 | 143 |
| Warranty expenses, refunds and compensation payments |
124 | 127 |
| Write-downs of current assets | 101 | 126 |
| Telecommunication costs | 105 | 119 |
| Other business taxes | 117 | 115 |
| Consulting costs (including tax advice) | 66 | 97 |
| Office supplies | 85 | 91 |
| Entertainment and corporate hospitality expenses | 64 | 74 |
| Expenses from derivatives | 15 | 72 |
| Services provided by Bundesanstalt für Post und Telekommunikation (German federal post |
||
| and telecommunications agency) | 37 | 55 |
| Customs clearance-related charges | 41 | 51 |
| Contributions and fees | 42 | 48 |
| Voluntary social benefits | 39 | 42 |
| Legal costs | 33 | 30 |
| Commissions paid | 31 | 30 |
| Monetary transaction costs | 19 | 24 |
| Audit costs | 13 | 16 |
| Losses on disposal of assets | 20 | 15 |
| Donations | 11 | 13 |
| Prior-period operating expenses | 6 | 8 |
| Miscellaneous | 190 | 210 |
| Total | 1,796 | 2,214 |
The increase in currency translation expenses is primarily due to the change in the exchange rate for the euro.
Miscellaneous other operating expenses include a large number of smaller individual items.
| €m | ||
|---|---|---|
| H1 2014 | H1 2015 | |
| Net income from associates | 3 | 1 |
| Net income from joint ventures | 0 | 0 |
| Net income from investments accounted for using the equity method |
3 | 1 |
Basic earnings per share in the reporting period were €0.68 (previous year: €0.80).
| H1 2014 | H1 2015 | ||
|---|---|---|---|
| Consolidated net profit for the period attributable to Deutsche Post AG shareholders |
€m | 963 | 821 |
| Weighted average number of shares | |||
| outstanding | shares | 1,209,343,037 | 1,210,055,169 |
| Basic earnings per share | € | 0.80 | 0.68 |
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 executives' rights to shares under the share-based payment systems (as at 30 June 2015: 6,234,123 shares) 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 bond.
Diluted earnings per share in the reporting period were €0.65 (previous year: €0.77).
| H1 2014 | H1 2015 | ||
|---|---|---|---|
| Consolidated net profit for the period attributable to Deutsche Post AG |
|||
| shareholders | €m | 963 | 821 |
| Plus interest expense on convertible bond |
€m | 3 | 2 |
| Less income taxes | €m | 01 | 01 |
| Adjusted consolidated net profit for the period attributable to |
|||
| Deutsche Post AG shareholders | €m | 966 | 823 |
| Weighted average number of shares outstanding |
shares | 1,209,343,037 | 1,210,055,169 |
| Potentially dilutive shares | shares | 52,249,222 | 53,024,591 |
| Weighted average number of shares for diluted earnings |
shares | 1,261,592,259 | 1,263,079,760 |
| Diluted earnings per share | € | 0.77 | 0.65 |
1 Rounded below €1 million.
Investments in intangible assets (not including goodwill) and property, plant and equipment amounted to €695 million in the first six months of 2015 (previous year: €511 million).
| €m | ||
|---|---|---|
| 30 June 2014 | 30 June 2015 | |
| Intangible assets (not including goodwill) | 116 | 120 |
| Property, plant and equipment | ||
| Land and buildings (incl. leasehold improvements) | 29 | 32 |
| Technical equipment and machinery | 27 | 33 |
| Transport equipment | 60 | 38 |
| Aircraft | 15 | 19 |
| IT equipment | 27 | 53 |
| Operating and office equipment | 21 | 33 |
| Advance payments and assets under development | 216 | 367 |
| 395 | 575 | |
| Total | 511 | 695 |
Goodwill changed as follows in the reporting period:
Change in goodwill
| 2014 | 2015 | |
|---|---|---|
| Cost | ||
| Balance at 1 January | 11,770 | 12,247 |
| Additions from business combinations | 2 | 0 |
| Disposals | –2 | 0 |
| Currency translation differences | 477 | 472 |
| Balance at 31 December/30 June | 12,247 | 12,719 |
| Depreciation, amortisation and impairment losses | ||
| Balance at 1 January | 1,097 | 1,138 |
| Disposals | 0 | 0 |
| Currency translation differences | 41 | 40 |
| Balance at 31 December/30 June | 1,138 | 1,178 |
| Carrying amount at 31 December/30 June | 11,109 | 11,541 |
Investments accounted for using the equity method changed as follows:
| €m | Associates | Joint ventures | Total | ||||
|---|---|---|---|---|---|---|---|
| 2014 | 2015 | 2014 | 2015 | 2014 | 2015 | ||
| Balance at 1 January | 62 | 69 | 6 | 6 | 68 | 75 | |
| Disposals | –2 | 0 | 0 | 0 | –2 | 0 | |
| Changes in Group's share of equity Changes recognised in profit or loss |
5 | 1 | 0 | 0 | 5 | 1 | |
| Profit distributions | 0 | –1 | 0 | 0 | 0 | –1 | |
| Changes recognised in other comprehensive income | 4 | 2 | 0 | 0 | 4 | 2 | |
| Carrying amount at 31 December/30 June | 69 | 71 | 6 | 6 | 75 | 77 | |
The amounts reported under this balance sheet item mainly relate to the following:
| €m | Assets | Liabilities | |||
|---|---|---|---|---|---|
| 31 Dec. 2014 | 30 June 2015 | 31 Dec. 2014 | 30 June 2015 | ||
| DHL Supply Chain Limited, UK – real estate (Supply Chain segment) | 0 | 7 | 0 | 0 | |
| Exel Inc., USA – real estate (Supply Chain segment) | 4 | 5 | 0 | 0 | |
| DHL Aviation (Netherlands) B.V., Netherlands – aircraft (Express segment) | 0 | 0 | 0 | 0 | |
| Assets held for sale and liabilities associated with assets held for sale | 4 | 12 | 0 | 0 |
The sale of the shares of King's Cross Central Property Trust and King's Cross Central General Partner Ltd., UK, held by the Supply Chain division, was legally completed in April 2015. The shares had been classified as held for sale as at 31 March 2015.
The company plans to sell properties under a sale and leaseback transaction. The most recent measurement prior to reclassification did not indicate any impairment.
The company plans to sell properties. The most recent measurement prior to reclassification in financial year 2014 did not indicate any impairment.
As part of early fleet renewal activities, DHL Aviation (Netherlands) B.V. plans to reduce its legacy aircraft fleet by eleven aircraft. The most recent measurement prior to reclassification led to an impairment loss of €102 million in financial year 2014.
In the period between the balance sheet date and the preparation of the consolidated interim financial statements by the Board of Management, the requirements for classifying an asset as held for sale in accordance with IFRS 5 were met for the German company IntelliAd Media GmbH, Munich, which is part of the PeP division.
KfW Bankengruppe (KfW) held a 21% interest in the share capital of Deutsche Post AG as at 30 June 2015. The remaining 79% of the shares are in free float. KfW holds the shares in trust for the Federal Republic of Germany.
| € | ||
|---|---|---|
| 2014 | 2015 | |
| Balance at 1 January | 1,209,015,874 | 1,209,672,789 |
| Addition due to capital increases | 2,164,388 | 0 |
| Addition due to contingent capital increase (convertible bond) |
0 | 4,832 |
| Treasury shares acquired | –3,158,717 | –1,044,990 |
| Treasury shares issued | 1,651,244 | 2,552,463 |
| Balance at 31 December/30 June | 1,209,672,789 | 1,211,185,094 |
The issued capital is composed of 1,211,185,094 no-par value registered shares (ordinary shares) with a notional interest in the share capital of €1.00 per share, and is fully paid up.
At the beginning of April 2015, 4,832 new shares were created as a result of conversion rights under the convertible bond 2012 being exercised and were transferred to the bond creditors.
Deutsche Post AG acquired treasury shares in the amount of €31 million at an average purchase price of €29.42 per share in order to settle the 2014 tranche of the Share Matching Scheme.
The company increased its share capital in 2014 to settle claims to matching shares under the 2010 tranche.
The treasury shares were issued to the executives concerned in April 2015.
In addition, a further 7,155 shares were acquired at a price of €26.86 to settle claims to matching shares and issued to persons who have since left the Group.
Deutsche Post AG held no treasury shares as at 30 June 2015.
An amount of €35 million was added to the capital reserves in the period up to 30 June 2015. Of this amount, €31 million was attributable to the Share Matching Scheme and €4 million to the Performance Share Plan.
The exercise of the rights to shares under the 2010 and 2014 tranches reduced the capital reserves by €48 million (as at 31 December 2014: €31 million) due to the issuance of treasury shares in this amount to the executives.
Changes in retained earnings are presented in the statement of changes in equity.
| €m | ||
|---|---|---|
| 2014 | 2015 | |
| Retained earnings at 1 January | 7,183 | 6,168 |
| Dividend payment | – 968 | –1,030 |
| Consolidated net profit for the period | 2,071 | 821 |
| Change due to remeasurements of net pension provisions |
–2,061 | 974 |
| Transactions with non-controlling interests | – 6 | 1 |
| Miscellaneous other changes | – 51 | 16 |
| Retained earnings at 31 December/30 June | 6,168 | 6,950 |
The dividend payment to Deutsche Post AG shareholders of €1,030 million was made in May 2015. This corresponded to a dividend of €0.85 per share.
| €m | Global Forwarding, | Corporate Center/ | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| PeP | Express | Freight | Supply Chain | Other | Consolidation1 | Group | ||||||||
| 1 Jan. to 30 June | 2014 | 2015 | 2014 | 2015 | 2014 | 2015 | 2014 | 2015 | 2014 | 2015 | 2014 | 2015 | 2014 | 2015 |
| External revenue | 7,534 | 7,743 | 5,787 | 6,512 | 6,822 | 7,230 | 7,082 | 7,938 | 39 | 44 | 0 | 0 | 27,264 | 29,467 |
| Internal revenue | 68 | 70 | 181 | 183 | 339 | 337 | 42 | 49 | 579 | 583 | –1,209 | –1,222 | 0 | 0 |
| Total revenue | 7,602 | 7,813 | 5,968 | 6,695 | 7,161 | 7,567 | 7,124 | 7,987 | 618 | 627 | –1,209 | –1,222 | 27,264 | 29,467 |
| Profit/loss from operating activities (EBIT)2 |
585 | 474 | 607 | 708 | 151 | 57 | 194 | 172 | –154 | –153 | 0 | –1 | 1,383 | 1,257 |
| of which net income from investments accounted for using |
||||||||||||||
| the equity method | 0 | 0 | 0 | 0 | 2 | 0 | 1 | 1 | 0 | 0 | 0 | 0 | 3 | 1 |
| Segment assets3 | 5,384 | 5,642 | 8,644 | 8,893 | 8,488 | 8,744 | 6,401 | 7,037 | 1,630 | 1,626 | –200 | –191 | 30,347 | 31,751 |
| of which invest ments accounted for using the equity method3 |
6 | 6 | 43 | 45 | 24 | 24 | 2 | 3 | 0 | 0 | 0 | –1 | 75 | 77 |
| Segment liabilities 3, 4 |
2,611 | 2,728 | 2,985 | 2,726 | 3,188 | 3,044 | 3,132 | 3,203 | 1,007 | 917 | –166 | –154 | 12,757 | 12,464 |
| Capex | 100 | 191 | 124 | 229 | 82 | 74 | 127 | 136 | 78 | 64 | 0 | 1 | 511 | 695 |
| Depreciation and amortisation |
177 | 154 | 178 | 185 | 43 | 44 | 127 | 149 | 106 | 114 | 0 | –1 | 631 | 645 |
| Impairment losses |
0 | 0 | 104 | 0 | 0 | 0 | 1 | 0 | 0 | 0 | 0 | 0 | 105 | 0 |
| Total depreciation, amortisation and impairment losses |
177 | 154 | 282 | 185 | 43 | 44 | 128 | 149 | 106 | 114 | 0 | –1 | 736 | 645 |
| Other non-cash expenses |
93 | 106 | 94 | 71 | 42 | 80 | 41 | 92 | 40 | 19 | 0 | 0 | 310 | 368 |
| Employees5 | 164,582 | 166,191 | 73,009 | 77,569 | 44,311 | 45,030 | 146,400 | 146,222 | 12,507 | 10,698 | 0 | 0 | 440,809 | 445,710 |
| Q2 | ||||||||||||||
| External revenue | 3,609 | 3,677 | 2,999 | 3,366 | 3,471 | 3,615 | 3,597 | 4,019 | 19 | 23 | 0 | 0 | 13,695 | 14,700 |
| Internal revenue | 33 | 35 | 90 | 89 | 167 | 163 | 21 | 26 | 295 | 292 | – 606 | – 605 | 0 | 0 |
| Total revenue | 3,642 | 3,712 | 3,089 | 3,455 | 3,638 | 3,778 | 3,618 | 4,045 | 314 | 315 | – 606 | – 605 | 13,695 | 14,700 |
| Profit/loss from operating activities (EBIT)2 |
189 | 75 | 331 | 376 | 102 | 40 | 109 | 119 | –74 | –72 | –1 | –1 | 656 | 537 |
| of which net income from investments accounted for using |
||||||||||||||
| the equity method | 0 | 0 | 0 | 0 | 2 | 0 | 0 | 1 | 0 | 0 | 0 | 0 | 2 | 1 |
| Capex Depreciation |
62 | 127 | 85 | 154 | 60 | 34 | 62 | 63 | 66 | 42 | 0 | 1 | 335 | 421 |
| and amortisation | 84 | 78 | 89 | 94 | 21 | 21 | 63 | 76 | 53 | 57 | 0 | 0 | 310 | 326 |
| Impairment losses |
0 | 0 | 104 | 0 | 0 | 0 | 1 | 0 | 0 | 0 | 0 | 0 | 105 | 0 |
| Total depreciation, amortisation and impairment losses |
84 | 78 | 193 | 94 | 21 | 21 | 64 | 76 | 53 | 57 | 0 | 0 | 415 | 326 |
| Other non-cash | ||||||||||||||
| expenses | 46 | 50 | 51 | 43 | 21 | 66 | 20 | 63 | 16 | 6 | 0 | –2 | 154 | 226 |
1 Including rounding.
2 Note 4.
3 As at 31 December 2014 and 30 June 2015.
4 Including non-interest-bearing provisions. 5 Average FTEs; prior-period amount corresponds to that of financial year 2014.
| €m | Europe | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Germany | (excluding Germany) | Americas | Asia Pacific | Other regions | Group | |||||||
| 1 Jan. to 30 June | 2014 | 2015 | 2014 | 2015 | 2014 | 2015 | 2014 | 2015 | 2014 | 2015 | 2014 | 2015 |
| External revenue | 8,422 | 8,498 | 8,954 | 9,609 | 4,537 | 5,134 | 4,264 | 5,026 | 1,087 | 1,200 | 27,264 | 29,467 |
| Non-current assets1 | 5,532 | 5,461 | 6,915 | 7,091 | 3,515 | 3,702 | 3,289 | 3,499 | 373 | 388 | 19,624 | 20,141 |
| Capex | 283 | 346 | 106 | 141 | 71 | 109 | 33 | 80 | 18 | 19 | 511 | 695 |
| Q2 | ||||||||||||
| External revenue | 4,058 | 4,051 | 4,542 | 4,899 | 2,320 | 2,597 | 2,218 | 2,553 | 557 | 600 | 13,695 | 14,700 |
| Capex | 207 | 217 | 58 | 96 | 38 | 48 | 21 | 49 | 11 | 11 | 335 | 421 |
1 As at 31 December 2014 and 30 June 2015.
Deutsche Post DHL Group reports four operating segments; these are managed independently by the responsible segment management 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.
As part of the central management of currency risk, fluctuations between projected and actual exchange rates are fully or partially absorbed centrally by Corporate Treasury on the basis of division-specific agreements.
The Consolidation and Corporate Center/Other columns are reported separately. Corporate Center/Other comprises the activities of Global Business Services (GBS), the Corporate Center, non-operating activities and other business activities. The profit/ loss generated by GBS is allocated to the operating segments, whilst its assets and liabilities remain with GBS (asymmetrical allocation).
The profitability of the Group's operating divisions is measured as profit from operating activities (EBIT).
The main geographical areas in which the Group is active are Germany, Europe (excluding Germany), the Americas, Asia Pacific and Other regions. External revenue, non-current assets and capital expenditure (capex) are disclosed for these regions.
Revenue, assets and capex are allocated to the individual regions on the basis of the domicile of the reporting entity. Noncurrent assets primarily comprise intangible assets, property, plant and equipment and other non-current assets.
| €m | H1 2014 adjusted1 |
H1 2015 |
|---|---|---|
| Total income of reportable segments | 1,537 | 1,411 |
| Corporate Center/Other | –154 | –153 |
| Reconciliation to Group/Consolidation | 0 | –1 |
| Profit from operating activities (EBIT) | 1,383 | 1,257 |
| Net finance costs | –177 | –165 |
| Profit before income taxes | 1,206 | 1,092 |
| Income taxes | –193 | –180 |
| Consolidated net profit for the period | 1,013 | 912 |
1 Note 4.
Under the share-based payment system for executives (Share Matching Scheme), certain executives receive part of their variable remuneration in the form of shares of Deutsche Post AG. More detailed information on this payment system is contained in the 2014 Annual Report, Note 54. The Board of Management will decide in the fourth quarter of 2015 on whether the Share Matching Scheme will be offered in 2016.
| 2010 tranche | 2011 tranche | 2012 tranche | 2013 tranche | 2014 tranche | ||
|---|---|---|---|---|---|---|
| Grant date of incentive shares and associated matching shares | 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 April 2011 | 1 April 2012 | 1 April 2013 | 1 April 2014 | 1 April 2015 | |
| Term | months | 63 | 63 | 63 | 63 | 63 |
| End of term | March 2015 | March 2016 | March 2017 | March 2018 | March 2019 | |
| Share price at grant date (fair value) | ||||||
| Incentive shares and associated matching shares | € | 13.98 | 12.90 | 12.13 | 17.02 | 25.91 |
| Matching shares awarded for investment shares | € | 12.91 | 14.83 | 18.22 | 27.18 | 29.12 |
The claims to the matching shares under the 2010 tranche were settled in April 2015. In financial year 2014, the Group increased its share capital for this purpose. It also acquired treasury shares in the first half of 2015 in preparation for settling the 2014 tranche (investment and incentive shares). A total of 2.5 million treasury shares was issued to the executives concerned to settle the two tranches.
The Annual General Meeting on 27 May 2014 resolved to introduce the Performance Share Plan (PSP) for executives. This plan replaces the share-based payment system (SAR Plan) for selected executives that existed until 2014. Under the PSP, shares are issued to participants at the end of the waiting period. More detailed information on this payment system is contained in the 2014 Annual Report, Note 54.
| 2014 tranche | ||
|---|---|---|
| Grant date | 1 Sept. 2014 | |
| Term | months | 48 |
| End of term | 31 Aug. 2018 |
From July 2006 to August 2013, selected executives received annual tranches of SARs under the SAR Plan. SARs have not been issued to executives since 2014. All earlier tranches issued under the old
€m
an active market and which therefore have to be measured at cost.
SAR Plan remain valid. The Long-Term Incentive Plan (LTIP 2006) for Board of Management members continues to apply. The SAR provisions amounted to €289 million as at 30 June 2015 (31 December 2014: €271 million).
Interest rate swaps for Deutsche Post AG and Deutsche Post Finance B.V. bonds were unwound in the first quarter of 2015; this led to a cash inflow. Under IAS 7.16, these inflows are treated in the same way as the underlying hedged transaction. As a result, positive interest payments of €12 million were recognised in the first six months of 2015.
Eight properties were contributed to Deutsche Post Pensions-Treuhand GmbH & Co. KG in the first six months of 2015. Although income was recognised as a result of the contribution, no cash or cash equivalents were received. In accordance with IAS 7.43 and 7.44, they are therefore not included in the cash flow statement.
The following table presents financial instruments recognised at fair value and financial instruments whose fair value is required to be disclosed, both presented by the level in the fair value hierarchy to which they are assigned.
The simplification option under IFRS 7.29a 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 investments in equity instruments for which there is no quoted price in
| Class | Level 11 | Level 22 | Level 33 | Total |
|---|---|---|---|---|
| 30 June 2015 | ||||
| Financial assets | ||||
| Non-current financial assets | 156 | 948 | 78 | 1,182 |
| Current financial assets | 21 | 117 | 0 | 138 |
| Total | 177 | 1,065 | 78 | 1,320 |
| Financial liabilities | ||||
| Non-current liabilities | 4,874 | 440 | 0 | 5,314 |
| Current liabilities | 0 | 136 | 0 | 136 |
| Total | 4,874 | 576 | 0 | 5,450 |
| 31 Dec. 2014 | ||||
| Financial assets | ||||
| Non-current financial assets | 246 | 961 | 132 | 1,339 |
| Current financial assets | 208 | 75 | 0 | 283 |
| Total | 454 | 1,036 | 132 | 1,622 |
| Financial liabilities | ||||
| Non-current liabilities | 5,004 | 409 | 0 | 5,413 |
| Current liabilities | 0 | 132 | 1 | 133 |
| Total | 5,004 | 541 | 1 | 5,546 |
1 Quoted prices for identical instruments in active markets.
2 Inputs other than quoted market prices that are directly or indirectly observable for instruments.
3 Inputs not based on observable market data.
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 measured at amortised cost, commodity, interest rate and currency derivatives are reported under Level 2. The fair values of the derivatives 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 significant inputs used to measure derivatives are observable on the market.
Level 3 mainly comprises the fair values of equity investments and derivatives 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 have been transferred between levels in the current financial year.
The table below shows the effect on net gains and losses of the financial instruments categorised within Level 3 as at 30 June 2015:
| €m | 2014 | 2015 | |||||
|---|---|---|---|---|---|---|---|
| Assets | Liabilities | Assets | Liabilities | ||||
| Equity instruments |
Debt instruments |
Derivatives, of which equity derivatives |
Equity instruments |
Debt instruments |
Derivatives, of which equity derivatives |
||
| Balance at 1 January | 93 | 0 | 2 | 132 | 0 | 1 | |
| Gains and losses (recognised in profit and loss)1 | 0 | 0 | –1 | 0 | 0 | –1 | |
| Gains and losses (recognised in OCI) 2 |
45 | 0 | 0 | 30 | 0 | 0 | |
| Additions | 0 | 0 | 0 | 0 | 0 | 0 | |
| Disposals | –14 | 0 | 0 | – 95 | 0 | 0 | |
| Currency translation effects | 8 | 0 | 0 | 11 | 0 | 0 | |
| Balance at 31 December/30 June | 132 | 0 | 1 | 78 | 0 | 0 |
1 Fair value losses were recognised in finance costs, fair value gains in financial income.
2 Unrealised gains and losses were recognised in the IAS 39 revaluation reserve.
Available-for-sale financial assets include shares in partnerships and corporations in the amount of €11 million (31 December 2014: €24 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. There are no plans to sell or derecognise significant shares classified as available-for-sale financial assets recognised as at 30 June 2015 in the near future. As in the previous year, no significant shares in partnerships and corporations that are measured at cost have been sold in the current financial year.
The following tables show the impact of netting agreements based on master netting arrangements or similar agreements on the presentation of financial assets and financial liabilities as at the reporting date:
| €m | 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 |
Total | |
| Assets at 30 June 2015 Derivative financial assets1 |
122 | 0 | 122 | 122 | 0 | 0 |
| Trade receivables | 8,202 | 170 | 8,032 | 0 | 0 | 8,032 |
| Assets at 31 December 2014 Trade receivables1 |
153 | 0 | 153 | 145 | 0 | 8 |
| Trade receivables | 7,954 | 129 | 7,825 | 0 | 0 | 7,825 |
1 Excluding derivatives from M&A transactions.
| €m | Financial assets and liabilities not set off in the balance sheet |
|||||
|---|---|---|---|---|---|---|
| Gross amount of financial liabilities recognised at the reporting date |
Gross amount of financial assets set off |
Net amount of financial liabilities set off in the balance sheet |
Financial assets subject to a legally enforceable netting agreement that do not meet offsetting criteria |
Collateral provided |
Total | |
| Liabilities at 30 June 2015 Derivative financial liabilities1 |
150 | 0 | 150 | 122 | 0 | 28 |
| Trade payables | 6,649 | 170 | 6,479 | 0 | 0 | 6,479 |
| Liabilities at 31 December 2014 Derivative financial liabilities1 |
145 | 0 | 145 | 145 | 0 | 0 |
| Trade payables | 7,051 | 129 | 6,922 | 0 | 0 | 6,922 |
1 Excluding derivatives from M&A transactions.
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.
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 transactions. 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 specified contractual arrangements. Imports and exports between two parties to the agreement during a calendar year are offset 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.
The Group's contingent liabilities have not changed significantly compared with 31 December 2014. The other financial obligations increased due to currency translation effects and to new leases signed, amongst other factors.
On 27 April 2015, Roger Crook stepped down from the Board of Management. Until the appointment of a new board member for the Global Forwarding, Freight division, Deutsche Post DHL Group's CEO, Dr Frank Appel, has taken over the corresponding tasks in a dual role. There were no other significant changes in related party disclosures as against 31 December 2014.
The amendment to the Post-Entgeltregulierungsverordnung (PEntgV – German Regulation Governing the Regulation of Postal Rates) came into force on 6 June 2015. This specifies that, in future postal rate regulation procedures, Deutsche Post AG must be permitted an appropriate profit margin oriented on the returns on sales generated by European postal operators. Consequently, on 8 June 2015, Deutsche Post AG applied to the Bundesnetzagentur (BNetzA – the German federal network agency) to reopen the 2013 procedure for defining rate regulation benchmarks, with the aim of increasing the current leeway for setting prices (inflation rate minus 0.2%) for individual letter mailings and (domestic and export) special services. On 15 June 2015, the BNetzA resolved, on the basis of Deutsche Post AG's application, to reopen the procedure which could result in Deutsche Post AG having greater leeway to set prices than was previously the case. A decision by the BNetzA is not expected before the end of September 2015.
At the beginning of July 2015, Deutsche Post AG and the trade union ver.di arrived at a comprehensive collective agreement. Amongst other things, the overall package that has been agreed comprises protection against redundancy and dismissal with the option of altered conditions of employment for operational reasons until the end of 2019. Mail deliveries and combined mail and parcel deliveries are guaranteed to remain at Deutsche Post AG until the end of 2018. Employees will receive a one-time payment of €400 in October 2015. A further pay rise of 2.0% will be made in 2016 and of 1.7% in 2017. The DHL Delivery companies will remain a part of the Post - eCommerce - Parcel division.
On 5 November 2012, the Bundeskartellamt (German federal 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, the authorities suspected that the company had violated the provisions of German and European antitrust law. In a decree dated 6 July 2015, the Bundeskartellamt determined that such violations had indeed taken place, but also that Deutsche Post had discontinued them at the end of 2013. No fine was imposed. The company is considering whether to appeal to the Higher Regional Court in Düsseldorf.
To the best of our knowledge, and in accordance with the applicable reporting principles for interim financial reporting, the consolidated interim financial statements give a true and fair view of the assets, liabilities, financial position and profit or loss of the Group in accordance with German accepted accounting principles, and the interim 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 description of the material opportunities and risks associated with the expected development of the Group for the remaining months of the financial year.
Bonn, 5 August 2015
Deutsche Post AG The Board of Management
Dr Frank Appel Ken Allen
Jürgen Gerdes John Gilbert
Melanie Kreis Lawrence Rosen
We have reviewed the condensed consolidated interim financial statements – comprising the income statement and statement of comprehensive income, balance sheet, cash flow statement, statement of changes in equity and selected explanatory notes – and the interim group management report of Deutsche Post AG, Bonn, for the period from 1 January to 30 June 2015, which are part of the half-yearly financial report pursuant to section 37w of the Wertpapierhandelsgesetz (WpHG – German Securities Trading Act). The preparation of the condensed consolidated interim financial statements in accordance with the IFRSs applicable to interim financial reporting, as adopted by the EU, and of the interim group management report in accordance with the provisions of the German Securities Trading Act applicable to interim group management reports is the responsibility of the company's Board of Management. Our responsibility is to issue a review report on the condensed consolidated interim financial statements and on the interim group management report based on our review.
We conducted our review of the condensed consolidated interim financial statements and the interim group management report in accordance with German generally accepted standards for the review of financial statements promulgated by the Institut der Wirtschaftsprüfer (IDW – Institute of Public Auditors in Germany) and additionally observed the International Standard on Review Engagements "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" (ISRE 2410). Those standards require that we plan and perform the review so that we
can preclude through critical evaluation, with moderate assurance, that the condensed consolidated interim financial statements have not been prepared, in all material respects, in accordance with the IFRSs applicable to interim financial reporting, as adopted by the EU, and that the interim group management report has not been prepared, in all material respects, in accordance with the provisions of the German Securities Trading Act applicable to interim group management reports. A review is limited primarily to inquiries of company personnel and analytical procedures and therefore does not provide the assurance attainable in a financial statement audit. Since, in accordance with our engagement, we have not performed a financial statement audit, we cannot express an audit opinion.
Based on our review, no matters have come to our attention that cause us to presume that the condensed consolidated interim financial statements have not been prepared, in all material respects, in accordance with the IFRSs applicable to interim financial reporting, as adopted by the EU, nor that the interim group management report has not been prepared, in all material respects, in accordance with the provisions of the German Securities Trading Act applicable to interim group management reports.
Düsseldorf, 5 August 2015
PricewaterhouseCoopers Aktiengesellschaft Wirtschaftsprüfungsgesellschaft
Gerd Eggemann Dietmar Prümm Wirtschaftsprüfer Wirtschaftsprüfer
(German public auditor) (German public auditor)
| 01 | Selected Key Figures | I | ||
|---|---|---|---|---|
| INTERIM GROUP MANAGEMENT | ||||
| REPORT | ||||
| Report on Economic Position | 2 | |||
| 02 | Selected indicators for results | |||
| of operations | 3 | |||
| 03 | Consolidated revenue | 4 | ||
| 04 | Revenue by region | 4 | ||
| 05 | Changes in revenue, other operating | |||
| income and operating expenses, H1 2015 | 5 | |||
| 06 | Consolidated EBIT | 5 | ||
| 07 | EBIT after asset charge (EAC) | 5 | ||
| 08 | Selected cash flow indicators | 6 | ||
| 09 | FFO to debt | 7 |
| 10 | Capex and depreciation, amortisation and impairment losses, H1 |
7 |
|---|---|---|
| 11 | Capex and depreciation, amortisation and impairment losses, Q2 |
7 |
| 12 | Capex by region | 8 |
| 13 | Operating cash flow by division, H1 2015 | 8 |
| 14 | Calculation of free cash flow | 9 |
| 15 | Selected indicators for net assets | 10 |
| 16 | Net debt | 11 |
| 17 | Key figures by operating division | 12 |
| 18 | Post: revenue | 13 |
| 19 | Post: volumes | 13 |
| 20 | eCommerce - Parcel: revenue | 14 |
| 21 | Parcel Germany: volumes | 14 |
| 22 | EXPRESS: revenue by product | 15 |
| 23 | EXPRESS: volumes by product | 15 |
| 24 | Global Forwarding: revenue | 18 |
| 25 | Global Forwarding: volumes | 18 |
| 31 | Income Statement | 26 |
|---|---|---|
| 32 | Statement of Comprehensive Income | 27 |
| 33 | Balance Sheet | 28 |
| 34 | Cash Flow Statement | 29 |
| 35 | Statement of Changes in Equity | 30 |
Further dates, updates as well as information on live webcasts: dpdhl.com/en/investors.
Tel.: + 49 (0) 228 182-6 36 36 Fax: + 49 (0) 228 182-6 31 99 E-mail: ir @ dpdhl.com
Tel.: + 49 (0) 228 182-99 44 Fax: + 49 (0) 228 182-98 80 E-mail: pressestelle @ dpdhl.com
Published on 6 August 2015.
The English version of the Interim Report January to June 2015 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.
E-mail: ir @ dpdhl.com dpdhl.com/en/investors
INTERNAL GeT and DHL Webshop
Deutsche Post AG Headquarters Investor Relations 53250 Bonn Germany
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