Quarterly Report • Nov 9, 2012
Quarterly Report
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| 9 M 2011 | 9 M 2012 | + / – % | Q 3 2011 | Q 3 2012 | + / – % | ||
|---|---|---|---|---|---|---|---|
| Revenue 1 | € m | 38,703 | 40,935 | 5.8 | 13,093 | 13,839 | 5.7 |
| Profi t from operating activities (EBIT) | € m | 1,837 | 1,838 | 0.1 | 646 | 604 | –6.5 |
| Return on sales 2 | % | 4.7 | 4.5 | – | 4.9 | 4.4 | – |
| Consolidated net profi t for the period 3 | € m | 988 | 1,116 | 13.0 | 385 | 382 | –0.8 |
| Operating cash fl ow | € m | 1,109 | 426 | –61.6 | 826 | 568 | –31.2 |
| Net liquidity (–)/net debt (+) 4 | € m | –938 | 977 | – | – | – | – |
| Earnings per share | € | 0.82 | 0.92 | 12.2 | 0.32 | 0.31 | –3.1 |
| Number of employees 5 | 423,348 | 426,104 | 0.7 | – | – | – |
1Prior-year amounts adjusted Note 4.
2EBIT / revenue.
3After deduction of non-controlling interests.
4Prior-year amount as at 31 December, for the calculation page 12 of the Interim Report by the Board of Management.
5Average FTE s, prior-year amount corresponds to that of fi nancial year 2011.
Our business performance was good during the fi rst nine months of 2012. We achieved encouraging revenue growth. EBIT remained only at the prior-year level, due to the additional VAT payment made. The DHL divisions continued to see dynamic growth. In the MAIL division, the previous trend for 2012 of strong growth in the parcel business and moderate declines in the mail business remained intact, although the volume development in the mail business weakened somewhat in the third quarter due to seasonal factors.
We are confi rming our forecast for fi nancial year 2012. We plan to attain consolidated EBIT of between €2.6 billion and €2.7 billion. The MAIL division is likely to contribute between €1.0 billion and €1.1 billion to this fi gure, which includes the one-time effects from the additional VAT payment. For the DHL divisions, we are maintaining our earnings forecast at around €2.0 billion.
I II
7 November 2012
First nine months of 2012
When we determined our forecast for 2012 at the beginning of the year, we already assumed that the world economy would grow at only a moderate 3% to 3.5%. The latest economic figures indicate that we are indeed at the lower end of this range.
In this difficult environment, the strength of our business model becomes apparent. Thus our very solid performance in the international time-definite express business and the German parcel business will prove to be lasting rather than short term in nature since it is based on our structural strengths.
Our overall business performance was good during the first nine months of financial year 2012. Revenue rose by 5.8% to €40.9 billion. The express and logistics business continues to see very dynamic growth. The DHL divisions achieved their best third quarter to date and I am confident that they will continue to grow in the remaining three months.
The situation in the MAIL division remains a challenge. The general trend of strong growth in the parcel business and moderate declines in the mail business remained intact, although the volume development in the mail business weakened somewhat in the third quarter due to seasonal factors. Moreover, earnings were impacted by the additional VAT payment; as a result, consolidated EBIT was €1.8 billion for the first nine months of 2012 and therefore only on par with the prior year. We expect considerable growth in the parcel business in the fourth quarter, in which our business generally performs well.
We are confirming our forecast for financial year 2012. We plan to attain consolidated EBIT of between €2.6 billion and €2.7 billion. The MAIL division is likely to contribute between €1.0 billion and €1.1 billion to this figure, which includes the effects of the additional VAT payment. For the DHL divisions, we are maintaining our earnings forecast at around €2.0 billion.
Our liquidity position was impacted by two significant one-time charges: the aforementioned additional VAT payments and the repayment of state aid. However, operating liquidity is likely to improve again in the fourth quarter. Your company Deutsche Post DHL remains well positioned financially. Nevertheless, improving EBIT and cash flow are at the top of our agenda for the rest of the year.
Yours faithfully,
Deutsche Post DHL 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.dp-dhl.com
| Key Figures | I |
|---|---|
| Review and Preview | I |
| Letter to our Shareholders | 1 |
| BUSINESS AND ENVIRONMENT | 3 |
|---|---|
| Organisation | 3 |
| Economic parameters | 3 |
| ECONOMIC POSITION | 5 |
|---|---|
| Overall assessment by the Board of Management | 5 |
| Significant events | 5 |
| Earnings | 6 |
| Financial position | 7 |
| Assets and liabilities | 11 |
| DIVISIONS | 13 |
|---|---|
| Overview | 13 |
| MAIL division | 14 |
| EXPRESS division | 16 |
| GLOBAL FORWARDING, FREIGHT division | 18 |
| SUPPLY CHAIN division | 20 |
| NON-FINANCIAL PERFORMANCE INDICATORS | 21 |
|---|---|
| Employees | 21 |
| Research and development | 21 |
| FURTHER DEVELOPMENTS | 21 |
|---|---|
| OUTLOOK | 22 |
|---|---|
| Overall assessment of expected performance | 22 |
| Opportunities and risks | 22 |
| Future organisation | 24 |
| Future economic parameters | 24 |
| Revenue and earnings forecast | 25 |
| Projected financial position | 25 |
| CONDENSED CONSOLIDATED INTERIM | |
|---|---|
| FINANCIAL STATEMENTS | 27 |
| INCOME STATEMENT | 27 |
| STATEMENT OF COMPREHENSIVE INCOME | 28 |
| BALANCE SHEET | 29 |
| CASH FLOW STATEMENT | 30 |
| STATEMENT OF CHANGES IN EQUITY | 31 |
| SELECTED EXPLANATORY NOTES | 32 |
| Basis of preparation | 32 |
| Income statement disclosures | 37 |
| Balance sheet disclosures | 38 |
| Segment reporting | 40 |
| Other disclosures | 41 |
| RESPONSIBILITY STATEMENT | 42 |
| REVIEW REPORT | 43 |
| Graphs and Tables |
44 |
| Contacts | 44 |
| Events | II |
Two new corporate departments in Personnel board department
In the third quarter of 2012, we established two new corporate departments within the Personnel board department: HR Performance&Programs and HR Development, which are given the task of managing key projects, human resources performance as well as forward looking areas such as talent and career development across the Group.
Growth in the global economy continued to weaken at the beginning of the second half of 2012. Economic performance in the industrial countries was again disappointing. In the emerging economies, the upturn continued but its pace fell further.
Growth in the Asian countries slowed considerably, although it remained high compared with the rest of the world. In China, gross domestic product (GDP) grew by only 7.4% in the third quarter compared with the previous year. The Japanese economy also suffered from weakening export demand. Industrial production saw a noticeable decline. GDP in the third quarter is likely to have increased slightly at best.
In the United States, the moderate upwards trend is expected to have continued in the third quarter. Private consumption and corporate investment provided slight impulses. There are clear signs of improvement in the housing market but they are not enough to increase economic momentum significantly. In the US labour market, the positive trend improved in the third quarter. The unemployment rate dropped but remained comparatively high for the US. To support the economy and the labour market, the US Federal Reserve maintained its key interest rate at 0% to 0.25%.
In the euro zone, the economy continued to feel the impact of the sovereign debt crisis and consolidation measures in a large number of member states. Private consumption is likely to have stagnated and gross fixed capital formation to have continued its downwards trend. Foreign trade is expected to have provided positive demand-side impulses. It is likely that third quarter GDP will have barely surpassed stagnation levels. To support the economy, the European Central Bank lowered its key interest rate in July to a record low of 0.75%.
The German economy continued to weaken in the third quarter. The ifo Business Climate Index fell again and new orders were down noticeably. It is likely that companies have further decreased their investments in machinery and equipment. At the same time private consumption saw only moderate growth. Exports provided positive impulses, with rising exports to countries outside the Economic and Monetary Union (EMU) largely outweighing weak demand from EMU member states. However, overall economic output in the third quarter is expected to have only increased slightly.
Equity markets responded positively to the European Central Bank's market support efforts, climbing sharply in the third quarter. The DAX reached a new 2012 high of 7,451 points on 21 September and closed the first nine months of the year with a 22.3% gain. The EURO STOXX 50 was up 5.9% in the same period. Our share price saw an increase after our half-year reporting, reaching a year-to-date high of €15.98 on 6 September. That day KfW Bankengruppe placed a 5% stake in Deutsche Post with investors; lowering KfW's holding to 25.5% and increasing the free float to 74.5%. Our share price closed the month of September up 27.9% since the beginning of the year, thereby performing better than the DAX.
| 30 Dec. | 30 Sept. | ||
|---|---|---|---|
| 2011 | 2012 | ||
| Closing price | € | 11.88 | 15.20 |
| High1 | € | 13.83 | 15.98 |
| Low1 | € | 9.13 | 11.88 |
| Number of shares | millions | 1,209.0 | 1,209.0 |
| Market capitalisation | €m | 14,363 | 18,377 |
| Average trading volume per day1 | shares | 4,898,924 | 4,229,383 |
1 In 2011 and in the first nine months of 2012.
| 30 Dec. | 30 Sept. | 30 Sept. | 30 Sept. | ||||
|---|---|---|---|---|---|---|---|
| 2011 | 2012 | +/–% | 2011 | 2012 | +/–% | ||
| Deutsche Post DHL | € | 11.88 | 15.20 | 27.9 | 9.63 | 15.20 | 57.8 |
| PostNL | € | 2.46 | 2.71 | 10.2 | 3.31 | 2.71 | –18.1 |
| TNT Express | € | 5.77 | 8.13 | 40.9 | 5.22 | 8.13 | 55.7 |
| FedEx | US\$ | 83.51 | 84.62 | 1.3 | 67.68 | 84.62 | 25.0 |
| UPS | US\$ | 73.19 | 71.57 | –2.2 | 63.15 | 71.57 | 13.3 |
| Kuehne + Nagel | CHF | 105.50 | 106.20 | 0.7 | 102.80 | 106.20 | 3.3 |
Our business performance was good during the first nine months of 2012. The Group achieved encouraging revenue growth. EBIT remained only at the prior-year level, due to the additional VAT payment made. The DHL divisions continued to see dynamic growth. In the MAIL division, the previous trend for 2012 of strong growth in the parcel business and moderate declines in the mail business remained intact, although the volume development in the mail business weakened somewhat in the third quarter due to seasonal factors. The Group's financial position remains solid in the opinion of the Board of Management.
Upon the maturity of the mandatory exchangeable bond and exercise of our put option in the first quarter, we transferred the remaining shares in Postbank to Deutsche Bank. Deutsche Post AG no longer holds any shares in Postbank.
Deutsche Post DHL paid the €298 million demanded by the German Federal Government under the European Commission state aid ruling on 1 June 2012. In agreement with the government, the amount has been paid into a trust account and has therefore only been recorded in the balance sheet; the Group's earnings position remained unaffected.
The additional VAT payment demanded by the German tax authorities amounted to €482 million after deducting outstanding tax refund claims and was made by the end of the third quarter. Consolidated EBIT was impacted by €–181 million and net finance costs by interest expenses of €115 million during the reporting period given that we had already recognised provisions for a large part of the payment.
A portion of the provisions recognised in connection with the restructuring of the US express business in 2009 has now been reassessed and reversed. This has had a positive impact on EBIT in the amount of €99 million in the second quarter.
Opportunities and risks, page 22
| 9M 2011 | 9M 2012 | Q3 2011 | Q3 2012 | ||
|---|---|---|---|---|---|
| Revenue1 | €m | 38,703 | 40,935 | 13,093 | 13,839 |
| Profit from operating activities (EBIT) | €m | 1,837 | 1,838 | 646 | 604 |
| Return on sales2 | % | 4.7 | 4.5 | 4.9 | 4.4 |
| Consolidated net profit for the period3 | €m | 988 | 1,116 | 385 | 382 |
| Earnings per share | € | 0.82 | 0.92 | 0.32 | 0.31 |
1 Prior-year amounts adjusted Note 4.
2 EBIT/revenue.
3 After deduction of non-controlling interests.
| 06 Consolidated revenue | |||||
|---|---|---|---|---|---|
| €m | |||||
| 9M 2012 | |||||
| 40,935 | |||||
| 12,296 | 28,639 | ||||
| 9M 2011 | |||||
| 38,703 | |||||
| 12,197 | 26,506 | ||||
| Germany | Abroad |
In the first quarter of 2012, responsibility for the less-than-truckload and part-truckload business in the Czech Republic was transferred from the EXPRESS division to the GLOBAL FORWARDING, FREIGHT division. The previous year's segment reporting figures were adjusted accordingly.
During the second quarter, we sold our shares in the joint ventures Express Couriers, New Zealand, and Parcel Direct Group, Australia, to our former partner New Zealand Post. In these markets, we are now focusing on the international express business with time-definite deliveries.
In July, we acquired intelliAd Media GmbH, a specialist in search engine advertising domiciled in Munich. The company has been assigned to the MAIL division, where it is helping us to position ourselves as a central provider of technological infrastructures for online advertising.
Consolidated revenue was up 5.8% in the first nine months of 2012 to €40,935 million (previous year, adjusted: €38,703 million). The proportion of consolidated revenue generated abroad grew from 68.5% to 70.0%, with positive currency effects accounting for €1,505 million of this increase. By contrast, changes in the portfolio reduced revenue by €182 million.
Third-quarter revenue rose by 5.7% to €13,839 million (previous year, adjusted: €13,093 million). Changes in the portfolio reduced revenue by €45 million, whilst currency effects lifted it by €639 million.
Other operating income rose by 17.7% to €1,550 million, mainly due to the reversal of surplus provisions.
Higher transport volumes, freight costs and fuel prices pushed up materials expense by €1,300 million to €23,536 million.
Staff costs also increased, rising from €12,301 million in the same period of the previous year to €13,121 million in the reporting period. In the SUPPLY CHAIN division in particular, the increase in the business volume led to a rise in staff numbers. Currency effects also pushed up costs significantly.
At €990 million, depreciation, amortisation and impairment losses were €76 million higher than in the previous year, principally as a result of investments made in the past.
| 06 Consolidated revenue | |
|---|---|
| €m | |
| 9M 2012 | |
| 12,296 | 28,639 |
| 9M 2011 | |
| 38,703 | |
| 12,197 | 26,506 |
07 Revenue by region
Other operating expenses increased by €268 million to €3 billion, mainly due to the additional VAT payment.
At €1,838 million, profit from operating activities (EBIT) was on par with the prior-year period (€1,837 million). In the third quarter, it was down €42 million yearon-year to €604 million.
Net finance costs, on the other hand, improved in the first nine months, from €–411 million to €–264 million. This was primarily attributable to the disposal gain recorded on the Postbank sale.
Profit before income taxes climbed from €1,426 million to €1,574 million. Income taxes increased by €22 million to €378 million.
Consolidated net profit for the period increased from €1,070 million to €1,196 million. €1,116 million of this is attributable to shareholders of Deutsche Post AG and €80 million to non-controlling interest holders. Both basic and diluted earnings per share rose from €0.82 to €0.92.
| €m | ||||
|---|---|---|---|---|
| 9M 2011 | 9M 2012 | Q3 2011 | Q3 2012 | |
| Cash and cash equivalents as at 30 September | 2,779 | 2,230 | 2,779 | 2,230 |
| Change in cash and cash equivalents | – 616 | – 903 | 623 | – 99 |
| Net cash from operating activities | 1,109 | 426 | 826 | 568 |
| Net cash used in investing activities | – 486 | –1,237 | –158 | – 406 |
| Net cash used in financing activities | –1,239 | – 92 | – 45 | –261 |
The principles and aims of our financial management as presented in the 2011 Annual Report remain valid and continue to be pursued, as does our finance strategy.
In the first nine months of 2012, the "FFO to debt" performance metric declined as anticipated, despite the fact that our funds from operations increased. The primary reasons for the decrease were two one-time charges impacting liquidity in the form of an additional VAT payment in the amount of €482 million and a repayment of state aid in the amount of €298 million. The decline in operating cash flow before changes in working capital and the rise in interest paid are also attributable to effects related to the additional VAT payment. Since the related effects are non-recurring, they were recorded under non-recurring income/expenses (see table 10).
dp-dhl.com/en/investors.html
Opportunities and risks, page 22 Opportunities and risks, page 23
The rating agencies Standard&Poor's and Moody's Investors Service reviewed our credit rating during the reporting period. Both confirmed their ratings of "BBB+" and "Baa1", respectively. Whereas Standard&Poor's removed its credit watch with negative implications due to the expected rise in earnings in 2012, Moody's raised its outlook from "stable" to "positive" based above all on our operating improvements.
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 September 2012, the Group had cash and cash equivalents of €2.2 billion.
| 10 FFO to debt | |
|---|---|
| €m | 1 Jan. to | 1 Oct. 2011 to |
|---|---|---|
| 31 Dec. 2011 | 30 Sept. 2012 | |
| Operating cash flow before changes in working capital | 2,234 | 1,976 |
| Interest and dividends received | 72 | 53 |
| Interest paid | 163 | 297 |
| Adjustment for operating leases | 1,104 | 1,104 |
| Adjustment for pensions | 153 | 153 |
| Non-recurring income/expenses | 208 | 707 |
| Funds from operations (FFO) | 3,608 | 3,696 |
| Reported financial liabilities1 | 7,010 | 3,671 |
| Financial liabilities related to the sale of Deutsche Postbank AG1 | 4,344 | 0 |
| Financial liabilities at fair value through profit or loss1 | 137 | 124 |
| Adjustment for operating leases2 | 5,295 | 5,295 |
| Adjustment for pensions2 | 5,639 | 5,639 |
| Surplus cash and near-cash investments1, 3 | 2,286 | 1,353 |
| Debt | 11,177 | 13,128 |
| FFO to debt (%) | 32.3 | 28.2 |
1 As at 31 December 2011 and 30 September 2012, respectively.
2 As at 31 December 2011.
3 Surplus cash and near-cash investments are defined as cash and cash equivalents and investment funds callable at sight, less cash needed for operations.
As at the end of September 2012, the Group's aggregate capital expenditure (capex) amounted to €1,135 million. This represents a year-on-year increase of 9.0% (previous year: €1,041 million). Investments were made mainly to replace and increase assets as follows: €916 million was invested in property, plant and equipment and €219 million in intangible assets excluding goodwill. Investments in property, plant and equipment related primarily to advance payments and assets under development (€473 million), transport equipment (€173 million), technical equipment and machinery (€72 million), IT equipment (€57 million) and aircraft (€52 million).
In regional terms, we continued to invest primarily in Europe and the Americas, whilst significantly increasing expenditures in Asia Pacific compared with the prior year. In Europe, investments were centred on Germany and the UK; in the Asia Pacific region we concentrated on China and Hong Kong.
| EXPRESS | GLOBAL FORWARDING, FREIGHT SUPPLY CHAIN |
Corporate Center/ Other |
Group | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2011 | 2012 | 2011 adjusted |
2012 | 2011 adjusted |
2012 | 2011 | 2012 | 2011 | 2012 | 2011 | 2012 | |
| Capex (€m) | 233 | 191 | 357 | 424 | 74 | 96 | 179 | 215 | 198 | 209 | 1,041 | 1,135 |
| Depreciation, amortisation and impairment losses (€m) |
235 | 247 | 247 | 300 | 77 | 83 | 209 | 213 | 146 | 147 | 914 | 990 |
| Ratio of capex to depre ciation, amortisation and impairment losses |
0.99 | 0.77 | 1.45 | 1.41 | 0.96 | 1.16 | 0.86 | 1.01 | 1.36 | 1.42 | 1.14 | 1.15 |
| GLOBAL FORWARDING, | Corporate Center/ | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| EXPRESS | FREIGHT | SUPPLY CHAIN | Other | Group | |||||||||
| 2011 | 2012 | 2011 adjusted |
2012 | 2011 adjusted |
2012 | 2011 | 2012 | 2011 | 2012 | 2011 | 2012 | ||
| Capex (€m) | 90 | 98 | 135 | 141 | 38 | 31 | 58 | 70 | 97 | 116 | 418 | 456 | |
| Depreciation, amortisation and impairment losses (€m) |
77 | 84 | 79 | 109 | 27 | 28 | 71 | 73 | 49 | 49 | 303 | 343 | |
| Ratio of capex to depre ciation, amortisation and impairment losses |
1.17 | 1.17 | 1.71 | 1.29 | 1.41 | 1.11 | 0.82 | 0.96 | 1.98 | 2.37 | 1.38 | 1.33 |
Capital expenditure in the MAIL division amounted to €191 million in the reporting period (previous year: €233 million). We focused mainly on expanding and improving our parcel network. In the prior-year period, we had invested mostly in modernising our mail network (mail sorting systems).
In the EXPRESS division, capex rose to €424 million in the reporting period (previous year: €357 million). We invested mostly in modernising our aircraft fleet. The majority of the investments in aviation related to aircraft and advance payments for aircraft deliveries. We also increased investments in our hubs.
In the GLOBAL FORWARDING, FREIGHT division, capital expenditure rose from €74 million in the prior year to €96 million in the reporting period. Of this figure, €80 million was attributable to the Global Forwarding business unit, where we fitted out and modernised warehouses across all regions and improved IT solutions, including those for the New Forwarding Environment project. In the Freight business unit, we invested €16 million, mainly in real estate as well as in office, operating and IT equipment.
In the SUPPLY CHAIN division, capex amounted to €215 million in the reporting period (previous year: €179 million). A total of €197 million of this related to the Supply Chain business unit, €16 million to Williams Lea and €2 million to central entities. The majority of the funds were used to support new and existing business projects in the Americas and Europe; additional investments were made in a new mega hub in Hong Kong and in customer projects in the Americas and Australia. In the Williams Lea business unit, the majority of expenditure related to IT investments.
Cross-divisional capital expenditure increased from €198 million in the first nine months of 2011 to €209 million in 2012. Most of the expenses were incurred for the purchase of vehicles and IT equipment.
14 Operating cash flow by division, 9M 2012
Page 8f.
Net cash from operating activities amounted to €426 million in the first nine months of 2012, a decrease of €683 million on the prior-year figure. The utilisation of provisions was the main factor reducing net cash from operating activities before changes in working capital, which fell by €258 million to €1,403 million. The cash outflow from changes in working capital increased by €425 million year-on-year. Liabilities and other items fell by €401 million to €–297 million, primarily because trade payables decreased. At €–676 million, the change in receivables and other current assets was up slightly on the prior-year figure (€–639 million).
Net cash used in investing activities was €751 million higher year-on-year, at €1,237 million. Investments in property, plant and equipment were the most significant item in this area, amounting to €1,097 million; these are described under capital expenditure. In addition, the recognition of the required state aid repayment as a noncurrent financial asset in the balance sheet reduced cash flow from investing activities by €298 million. In the previous year, a cash inflow of €397 million from the change in current financial assets was recorded, primarily as a result of the sale of money market funds.
| €m | ||||
|---|---|---|---|---|
| 9M 2011 | 9M 2012 | Q3 2011 | Q3 2012 | |
| Net cash from operating activities | 1,109 | 426 | 826 | 568 |
| Sale of property, plant and equipment and intangible assets |
194 | 149 | 99 | 45 |
| Acquisition of property, plant and equipment and intangible assets |
–1,070 | –1,097 | –387 | – 430 |
| Cash outflow arising from change in property, plant and equipment and intangible assets |
– 876 | – 948 | –288 | –385 |
| Disposal of subsidiaries and other business units | 59 | 40 | –7 | 1 |
| Acquisition of subsidiaries and other business units | –70 | – 56 | –35 | –21 |
| Cash outflow arising from acquisitions/divestments | –11 | –16 | – 42 | –20 |
| Interest received | 55 | 36 | 19 | 9 |
| Interest paid | –136 | –270 | –35 | –177 |
| Net interest paid | – 81 | –234 | –16 | –168 |
| Free cash flow | 141 | –772 | 480 | – 5 |
Free cash flow declined from €141 million to €–772 million, mainly because of the fall in net cash from operating activities as well as the higher interest paid.
Net cash used in financing activities fell by €1,147 million in the reporting period to €92 million. Proceeds of €1,262 million from the issuance of non-current financial liabilities are primarily attributable to two bond issues, whereas the main item in the previous year was repayments of non-current financial liabilities. The dividend paid to our shareholders was the largest payment in this area and was €60 million higher than in the previous year, at €846 million.
Compared with 31 December 2011, cash and cash equivalents fell from €3,123 million to €2,230 million due to the changes in the cash flows from the individual activities.
| 31 Dec. 2011 | 30 Sept. 2012 | ||
|---|---|---|---|
| Equity ratio | % | 29.2 | 33.6 |
| Net liquidity (–)/net debt (+) | €m | – 938 | 977 |
| Net interest cover1 | 22.7 | 7.9 | |
| Net gearing | % | – 9.1 | 7.8 |
| FFO to debt2 | % | 32.3 | 28.2 |
1 In the first nine months. 2 For calculation page 8.
The Group's total assets amounted to €34,544 million as at 30 September 2012, €3,864 million lower than at 31 December 2011 (€38,408 million).
The sale of Postbank to Deutsche Bank was completed at the end of February and all of the associated financial instruments, assets held for sale and liabilities were derecognised.
As at the reporting date, non-current assets amounted to €21,794 million, €569 million higher than at 31 December 2011. Intangible assets rose from €12,196 million to €12,286 million, mainly due to an increase in goodwill resulting from currency effects. The €76 million rise in property, plant and equipment to €6,569 million is mainly attributable to investments in vehicles and aircraft. Non-current financial assets increased by €311 million year-on-year to €1,040 million, primarily because the required state aid repayment of €298 million was recognised in the balance sheet as restricted cash. Other non-current assets rose by €61 million to €631 million, mainly due to the increase in pension assets. At €1,178 million, deferred tax assets were up €25 million on the figure as at 31 December 2011.
Current assets decreased by €4,433 million to €12,750 million as at the reporting date. Above all, the completion of the sale of all Postbank shares caused current financial assets to decline from €2,498 million to €258 million. The transfer of the remaining Postbank shares to Deutsche Bank also significantly reduced the assets held for sale, from €1,961 million to €21 million. Receivables and other current assets increased by €650 million to €9,739 million, partly due to the termination of a factoring agreement and repurchase of receivables. Cash and cash equivalents declined by €893 million to €2,230 million. The dividend payment for 2011 led to a cash outflow of €846 million. In addition, the transfer of the required state aid repayment to a trust account reduced available cash by €298 million, whilst the additional VAT payment reduced it by €482 million. However, two bond issues made a positive contribution.
At €11,442 million, equity attributable to Deutsche Post AG shareholders was higher than at 31 December 2011 (€11,009 million). Consolidated net profit for the period and positive currency effects increased equity, whilst the dividend payment to our shareholders reduced it.
Current and non-current liabilities declined by 19.6% to €14,635 million. Above all, the completion of the sale of the remaining Postbank shares reduced current financial liabilities by €4,509 million to €1,135 million. By contrast, non-current financial liabilities increased to €2,536 million as at the reporting date, mainly due to two bond issues with a total volume of €1,240 million. Overall financial liabilities were €3,339 million lower than at 31 December 2011, at €3,671 million. Trade payables were reduced by €462 million to €5,706 million. Other current liabilities rose by €270 million to €4,376 million, mainly because of an increase in liabilities to employees. Current and non-current provisions declined from €9,008 million to €8,294 million, in particular because we reassessed and utilised restructuring provisions recognised in previous years. In addition, we utilised provisions in connection with the additional VAT payment.
As at 30 September 2012, our net debt amounted to €977 million. Our net liquidity of €938 million as at 31 December 2011 was reduced in particular by the dividend payment (€846 million), the prepaid annual contribution to Bundes-Pensions-Service (€530 million), the additional VAT payment (€482 million) and the required state aid repayment that was transferred to a trust account (€298 million). The equity ratio improved by 4.4 percentage points to 33.6%, primarily due to the disposal of Postbank. Net interest cover shows the extent to which net interest obligations are covered by EBIT. This indicator fell from 22.7 to 7.9, mainly because of the interest expense from the additional VAT payment. Net gearing was 7.8% in the first nine months of 2012.
| 17 Net liquidity (–)/net debt (+) |
|
|---|---|
| -------------------------------------- | -- |
| €m | ||
|---|---|---|
| 31 Dec. 2011 | 30 Sept. 2012 | |
| Non-current financial liabilities | 1,346 | 2,522 |
| Current financial liabilities | 5,588 | 1,107 |
| Financial liabilities | 6,934 | 3,629 |
| Cash and cash equivalents | 3,123 | 2,230 |
| Current financial assets | 2,498 | 258 |
| Long-term deposits1 | 56 | 59 |
| Positive fair value of non-current financial derivatives1 | 94 | 105 |
| Financial assets | 5,771 | 2,652 |
| Financial liabilities to Williams Lea minority shareholders | 36 | 0 |
| Mandatory exchangeable bond2 | 2,926 | 0 |
| Collateral for the put option2 | 1,298 | 0 |
| Net effect from measurement of Postbank derivatives3 | 2,159 | 0 |
| Non-cash adjustments | 2,101 | 0 |
| Net liquidity (–)/net debt (+) | – 938 | 977 |
1 Reported in non-current financial assets in the balance sheet.
2 Reported in current financial liabilities in the balance sheet.
3 Reported in current financial assets and liabilities in the balance sheet.
| €m | 9M 2011 adjusted |
9M 2012 | +/–% | Q3 2011 adjusted |
Q3 2012 | +/–% |
|---|---|---|---|---|---|---|
| Revenue | 10,120 | 10,121 | 0.0 | 3,341 | 3,276 | –1.9 |
| of which Mail Communication | 3,972 | 3,855 | –2.9 | 1,303 | 1,245 | – 4.5 |
| Dialogue Marketing | 1,915 | 1,822 | – 4.9 | 627 | 578 | –7.8 |
| Press Services | 581 | 555 | – 4.5 | 187 | 173 | –7.5 |
| Value-Added Services | 172 | 172 | 0.0 | 57 | 57 | 0.0 |
| Parcel Germany | 2,207 | 2,439 | 10.5 | 748 | 798 | 6.7 |
| Retail Outlets | 596 | 621 | 4.2 | 199 | 207 | 4.0 |
| Global Mail | 1,226 | 1,216 | – 0.8 | 411 | 403 | –1.9 |
| Pension Service | 77 | 78 | 1.3 | 29 | 30 | 3.4 |
| Consolidation/Other | – 626 | – 637 | –1.8 | –220 | –215 | 2.3 |
| Profit from operating activities (EBIT) | 861 | 678 | –21.3 | 302 | 247 | –18.2 |
| Return on sales (%)1 | 8.5 | 6.7 | – | 9.0 | 7.5 | – |
| Operating cash flow | 437 | –30 | – | 407 | – 56 | – |
| EXPRESS | ||||||
| Revenue | 8,591 | 9,436 | 9.8 | 2,910 | 3,172 | 9.0 |
| of which Europe2 | 3,947 | 4,132 | 4.7 | 1,316 | 1,354 | 2.9 |
| Americas | 1,398 | 1,674 | 19.7 | 457 | 588 | 28.7 |
| Asia Pacific | 2,722 | 3,180 | 16.8 | 956 | 1,089 | 13.9 |
| MEA (Middle East and Africa)2 | 624 | 722 | 15.7 | 211 | 240 | 13.7 |
| Consolidation/Other | –100 | –272 | <–100 | –30 | – 99 | <–100 |
| Profit from operating activities (EBIT) | 672 | 829 | 23.4 | 216 | 231 | 6.9 |
| Return on sales (%)1 | 7.8 | 8.8 | – | 7.4 | 7.3 | – |
| Operating cash flow | 680 | 607 | –10.7 | 367 | 332 | – 9.5 |
| GLOBAL FORWARDING, FREIGHT | ||||||
| Revenue | 11,161 | 11,677 | 4.6 | 3,804 | 4,018 | 5.6 |
| of which Global Forwarding | 8,187 | 8,662 | 5.8 | 2,806 | 3,027 | 7.9 |
| Freight | 3,077 | 3,111 | 1.1 | 1,034 | 1,024 | –1.0 |
| Consolidation/Other | –103 | – 96 | 6.8 | –36 | –33 | 8.3 |
| Profit from operating activities (EBIT) | 310 | 346 | 11.6 | 124 | 122 | –1.6 |
| Return on sales (%)1 | 2.8 | 3.0 | – | 3.3 | 3.0 | – |
| Operating cash flow | 408 | 410 | 0.5 | 134 | 246 | 83.6 |
| SUPPLY CHAIN | ||||||
| Revenue | 9,675 | 10,607 | 9.6 | 3,323 | 3,670 | 10.4 |
| of which Supply Chain | 8,817 | 9,609 | 9.0 | 2,985 | 3,325 | 11.4 |
| Williams Lea | 858 | 1,000 | 16.6 | 336 | 344 | 2.4 |
| Consolidation/Other | 0 | –2 | – | 2 | 1 | – 50.0 |
| Profit from operating activities (EBIT) | 289 | 301 | 4.2 | 100 | 109 | 9.0 |
| Return on sales (%)1 | 3.0 | 2.8 | – | 3.0 | 3.0 | – |
| Operating cash flow | 211 | 157 | –25.6 | 86 | 217 | >100 |
1 EBIT/revenue.
2 At the beginning of 2012 we transferred some Eastern European countries from the previous EEMEA region to the Europe region and adjusted the prior-year amounts accordingly.
At €10,121 million, revenue in the first nine months of 2012 was on par with the prior year (adjusted: €10,120 million), despite the period having one less working day. The previous trend for 2012 of strong growth in the parcel business and moderate declines in the mail business remained intact, although the volume development in the mail business weakened somewhat in the third quarter due to seasonal factors. Positive currency effects amounted to €43 million in the reporting period.
In the Mail Communication business unit, we delivered fewer letters in the first nine months than in the previous year. Revenue was also slightly below the prior-year figure. Compared with the prior-year quarter, revenue was down 4.5% due to one less working day. Even though we retained and won back quality-conscious customers, some of our price-sensitive customers turned to competitors. Information on market volumes is collected each year; for the latest figures, please see page 61 of the 2011 Annual Report.
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| 19 Mail Communication: volumes | ||||
|---|---|---|---|---|
| -- | -- | -------------------------------- | -- | -- |
| mail items (millions) | ||||||
|---|---|---|---|---|---|---|
| 9M 2011 | 9M 2012 | +/–% | Q3 2011 | Q3 2012 | +/–% | |
| Business customer letters | 4,867 | 4,760 | –2.2 | 1,576 | 1,517 | –3.7 |
| Private customer letters | 883 | 834 | – 5.5 | 285 | 273 | – 4.2 |
| Total | 5,750 | 5,594 | –2.7 | 1,861 | 1,790 | –3.8 |
Traditional mail-order businesses have held back on advertising expenditure since the beginning of the year, which particularly impacts revenue and sales in addressed advertising mail. One less working day in the third quarter also had an impact; revenue and volumes declined during this period more than the annual average. The decline in unaddressed advertising mail was particularly evident at the end of the quarter. In this business unit revenue decreased by 4.9% to €1,822 million (previous year: €1,915 million) during the first nine months.
| mail items (millions) | ||||||
|---|---|---|---|---|---|---|
| 9M 2011 | 9M 2012 | +/–% | Q3 2011 | Q3 2012 | +/–% | |
| Addressed advertising |
4,463 | 4,262 | – 4.5 | 1,424 | 1,358 | – 4.6 |
| Unaddressed advertising |
2,956 | 3,039 | 2.8 | 963 | 914 | – 5.1 |
| Total | 7,419 | 7,301 | –1.6 | 2,387 | 2,272 | – 4.8 |
Revenue in the Press Services business unit totalled €555 million in the first nine months of 2012, 4.5% below the prior-year figure of €581 million; quarter-on-quarter it was down by 7.5%. The German press services market, the volume of which is described on page 62 of our 2011 Annual Report, continues to decline overall. Newspaper and magazine circulation is falling; item weights are also down slightly.
Revenue in the Value-Added Services business unit was €172 million in the reporting period, on par with the adjusted prior-year figure.
Revenue in the Parcel Germany business unit reached €2,439 million in the reporting period, improving on the previous year's high figure of €2,207 million by 10.5%. The flourishing e-commerce business is the primary reason for this sustained strong growth. Our range of products and delivery services are playing a key role in this growth. In the third quarter, growth was slightly lower at 6.7% due to one less working day.
| parcels (millions) | 9M 2011 | 9M 2012 | +/–% | Q3 2011 | Q3 2012 | +/–% |
|---|---|---|---|---|---|---|
| adjusted | adjusted | |||||
| Business customer parcels1 | 529 | 591 | 11.7 | 180 | 193 | 7.2 |
| Private customer parcels | 76 | 80 | 5.3 | 25 | 26 | 4.0 |
| Total | 605 | 671 | 10.9 | 205 | 219 | 6.8 |
1 Including intragroup sales.
Revenue generated by our approximately 20,000 retail outlets and sales points amounted to €621 million in the first nine months of 2012, a 4.2% increase over the previous year's level (€596 million).
The year-on-year decline in volumes in the Global Mail business unit was primarily the result of the sale of our bulk mail business in the Netherlands and the discontinuation of our domestic business in the UK. We were able to stabilise our operating business. Revenue was €1,216 million in the first nine months, only slightly below the prior year's figure of €1,226 million. We saw encouraging growth in international mail from the Asia Pacific region and from our US business. However, at the same time import volumes to Germany declined slightly.
| 22 Mail International: volumes | ||||||
|---|---|---|---|---|---|---|
| mail items (millions) | ||||||
| 9M 2011 | 9M 2012 | +/–% | Q3 2011 | Q3 2012 | +/–% | |
| Global Mail | 2,349 | 1,385 | – 41.0 | 621 | 455 | –26.7 |
EBIT for the division was €678 million in the reporting period, significantly below the prior-year figure of €861 million. The figure was impacted by €151 million, due to the additional VAT payment. Return on sales was 6.7%.
At €–30 million, operating cash flow was also significantly below the previous year's level of €437 million. The primary reason for this was the net outflow of working capital, the termination of a financial factoring agreement as well as the additional VAT payment. Working capital was €–489 million, above the prior-year level (€–690 million).
Opportunities and risks, page 22
Revenue for the division increased by 9.8% in the first nine months of 2012 to €9,436 million (previous year, adjusted: €8,591 million). The figure for the prior year still included revenues of €186 million related to the divested domestic express businesses in China, Canada, Australia and New Zealand. Excluding these divestments and positive currency effects of €449 million, revenue grew by 6.8% in the reporting period, mainly because of the rise in Time Definite International (TDI) shipment volumes.
These changes in the domestic express business also explain the daily revenue and volume developments for the TDD product line shown below.
In the TDI product line, our customers sent 9.1% more shipments per day compared with the previous year and weight per shipment rose by 4.2%. In the Day Definite Domestic (DDD) product line, however, daily shipment volumes declined by 17.3% due to the disposals mentioned above.
We continued to grow in the third quarter as well, despite the volatile economic environment. Daily shipment volumes in the TDI product line increased by 8.7% versus the third quarter of 2011.
| €m per day 1 | 9M 2011 | 9M 2012 | +/–% | Q3 2011 | Q3 2012 | +/–% |
|---|---|---|---|---|---|---|
| adjusted | adjusted | |||||
| Time Definite International (TDI) | 28.2 | 30.5 | 8.2 | 28.2 | 30.0 | 6.4 |
| Time Definite Domestic (TDD) | 5.0 | 4.7 | – 6.0 | 4.8 | 4.1 | –14.6 |
| Day Definite Domestic (DDD) | 3.4 | 2.8 | –17.6 | 2.9 | 2.7 | – 6.9 |
1 To assure comparability, product revenues were translated at uniform exchange rates. These revenues are also the basis for the weighted calculation of working days.
| thousands of items per day 1 | 9M 2011 adjusted |
9M 2012 | +/–% | Q3 2011 adjusted |
Q3 2012 | +/–% |
|---|---|---|---|---|---|---|
| Time Definite International (TDI) | 530 | 578 | 9.1 | 527 | 573 | 8.7 |
| Time Definite Domestic (TDD) | 685 | 737 | 7.6 | 666 | 722 | 8.4 |
| Day Definite Domestic (DDD) | 346 | 286 | –17.3 | 302 | 282 | – 6.6 |
1 To assure comparability, product revenues were translated at uniform exchange rates. These revenues are also the basis for the weighted calculation of working days.
In the Europe region, revenue increased by 4.7% in the reporting period to €4,132 million (previous year, adjusted: €3,947 million). This figure includes positive currency effects of €51 million related mainly to our business activities in Switzerland, the UK, Scandinavia, Russia and Eastern Europe. Excluding these effects, revenue growth was 3.4%. Daily shipment volumes grew by 9.0% in the TDI product line.
Revenue growth in the Americas region has risen each quarter in the current financial year. In the first nine months of 2012, revenue climbed by 19.7% to €1,674 million (previous year: €1,398 million). This figure includes the sale of our domestic express business in Canada in the amount of €97 million and positive currency effects of €148 million. Excluding these effects, the revenue increase was 16.1% in the region due to the positive business trend in the United States as well as significantly higher revenues in Mexico and South America. Daily shipment volumes in the TDI product line rose compared with the prior year. The increase was 8.6% in the Americas region and in the United States it was even higher at 12.7%.
The business trend in the Asia Pacific region remains dynamic. Revenue in the reporting period increased by 16.8% to €3,180 million (previous year: €2,722 million). In the prior year, this figure still included revenues related to the divested domestic express businesses in China, New Zealand and Australia in the amount of €89 million. Excluding these disposals and the positive currency effects, which increased to €231 million, revenue growth in the reporting period nonetheless reached 11.6% year-on-year. In the TDI product line, daily shipment volumes grew by 9.7%.
In the MEA region (Middle East and Africa), revenue rose by 15.7% in the reporting period to €722 million (previous year, adjusted: €624 million). This figure includes positive currency effects of €41 million. Excluding these effects, revenue growth was 9.1%. Daily shipment volumes grew by 7.2% in the TDI product line and by an impressive 16.7% in the TDD product line.
EBIT for the division increased by 23.4% to €829 million in the first nine months of 2012 (previous year: €672 million). The rise was driven by overall strong revenue growth as well as one-time effects in the second quarter: a portion of the restructuring provisions in the United States was reassessed and reversed, resulting in a positive impact on EBIT of €99 million. Earnings were also positively impacted by deconsolidation income of €44 million from the sale of our domestic businesses in New Zealand and Australia. The additional VAT payment in Germany for past financial years had a negative effect of €30 million on EBIT for the division. Return on sales rose from 7.8% in the previous year to 8.8%.
In the third quarter, EBIT improved by 6.9% to €231 million; return on sales was at the prior-year level.
Operating cash flow decreased to €607 million in the first nine months of 2012, 10.7% below the prior-year figure of €680 million. This figure was affected in the reporting period by the additional VAT payment in Germany as well as a one-time payment related to early termination of the co-operation agreement with ASTAR Air Cargo in the United States. Even as revenues rise, we continue to pursue our strict working capital management.
Opportunities and risks, page 22
In the division, revenue increased in the first nine months of 2012 by 4.6% to €11,677 million (previous year, adjusted: €11,161 million). This figure includes positive currency effects of €440 million. The moderate revenue growth seen in the previous quarters continued in the third quarter. Overall our business grew profitably, although prices remained low and the air freight market was sluggish. Uncertainties persist due to the macroeconomic environment.
In the Global Forwarding business unit, revenue rose by 5.8% to €8,662 million in the reporting period (previous year: €8,187 million). Excluding positive currency effects of €414 million, revenue remained on par with the prior year. Gross profit improved by 9.7% to €1,970 million (previous year: €1,796 million).
The strategic project New Forwarding Environment (NFE) progressed encouragingly. NFE aims at developing a forward-looking operating model based on efficient processes and state-of-the-art IT systems.
In the reporting period, revenue declined slightly year-on-year in the air freight business but grew noticeably in the ocean freight business. Shipping volumes mirrored this development, with air freight volumes decreasing whilst ocean freight volumes increased and outperformed the market. Air freight rates remained nearly unchanged in the third quarter, although fuel prices were up slightly. Continued surplus capacities created opportunities in the short-term spot market. These resulted from the relatively strong increase in passenger plane capacities compared with a relatively weak decrease in cargo plane capacities. Ocean freight rates remained largely stable in the third quarter.
Our air freight volumes were down by 6.0% in the first nine months compared with the previous year, resulting mainly from the decline in demand in the technology sector. Revenue declined by 0.4%; gross profit increased by 6.2%.
Volumes in our ocean freight business in the first nine months were 4.8% higher than in the prior-year period. Some of our customers continue to be driven to shift parts of their business from air freight to the more economical ocean freight option as a result of cost pressure. Revenue rose by 6.3% and gross profit improved by 6.8%.
In our industrial project business (reported as part of Other in table 25), we saw strong growth. The share of Other revenue accounted for by industrial projects increased to 38.4% (previous year: 34.2%). Our gross profit improved again compared with the previous year.
| €m | ||||||
|---|---|---|---|---|---|---|
| 9M 2011 | 9M 2012 | +/–% | Q3 2011 | Q3 2012 | +/–% | |
| Air freight | 4,137 | 4,120 | – 0.4 | 1,396 | 1,406 | 0.7 |
| Ocean freight | 2,649 | 2,817 | 6.3 | 900 | 1,034 | 14.9 |
| Other | 1,401 | 1,725 | 23.1 | 510 | 587 | 15.1 |
| Total | 8,187 | 8,662 | 5.8 | 2,806 | 3,027 | 7.9 |
| thousands | |||||||
|---|---|---|---|---|---|---|---|
| 9M 2011 | 9M 2012 | +/–% | Q3 2011 | Q3 2012 | +/–% | ||
| Air freight | tonnes | 3,273 | 3,077 | – 6.0 | 1,080 | 1,039 | –3.8 |
| of which exports |
tonnes | 1,823 | 1,721 | – 5.6 | 611 | 586 | – 4.1 |
| Ocean freight |
TEUs1 | 2,042 | 2,139 | 4.8 | 708 | 751 | 6.1 |
1 Twenty-foot equivalent units.
In the Freight business unit, revenue grew to €3,111 million (previous year, adjusted: €3,077 million) in the first nine months, a slight increase of 1.1%. Growth was seen largely in Germany and Eastern Europe. The business from Standard Forwarding in the United States contributed 1.8% to revenue in the Freight business unit in the reporting period. We acquired the company in June 2011 to develop our overland transport business outside our core market of Europe. Total revenue includes positive currency effects of €27 million. Although the pressure on margins remained, gross profit was €856 million, which exceeded the previous year by 6.6% (previous year: €803 million).
Effective 1 January 2012, responsibility for the national less-than-truckload and part-truckload business in the Czech Republic was transferred from the EXPRESS division to Freight. The previous year's segment reporting figures were adjusted accordingly.
EBIT in the division improved by 11.6% to €346 million (previous year, adjusted: €310 million) thanks to high gross profit margins and constantly increasing efficiency. Return on sales amounted to 3.0% (previous year: 2.8%).
In the third quarter, EBIT was €122 million and on par with the prior-year period. Net working capital in the first nine months declined. Operating cash flow remained at a constant level at €410 million (previous year: €408 million).
In the division, revenue for the first nine months increased by 9.6% from €9,675 million to €10,607 million. This figure includes positive currency effects of €591 million. Revenue was also impacted by the previous year's acquisition of Eurodifarm and Tag as well as the sale of Exel Transportation Services (ETS). Excluding these effects, revenue growth was 3.8%, with the Automotive and Life Sciences&Healthcare sectors providing the largest increase. In the third quarter, we saw a rise of 10.4% to €3,670 million (previous year: €3,323 million). Revenue increased 2.7% excluding positive currency effects (€258 million).
In the Supply Chain business unit, revenue grew by 9.0% year-on-year to €9,609 million in the first nine months (previous year: €8,817 million). Excluding the positive currency effects, the ETS disposal and the Eurodifarm acquisition, growth was 4.4%. Revenue from our 18 key global customers increased by 8.3%.
In the Americas region, the Consumer, Life Sciences&Healthcare and Automotive sectors continued to perform well, aided by strong revenue growth in Brazil and Mexico.
In the Asia Pacific region, the largest increase in volumes and new business revenues came from Australia, Thailand and Indonesia.
In Europe, revenue in the Life Sciences&Healthcare sector grew from additional business with the UK National Health Service boosted by an optimised mix of highervalue products. Volumes and new business also increased in Eastern Europe, the Middle East and Africa.
Williams Lea revenue was €1 billion in the first nine months, an increase of 16.6% on the previous year (€858 million). Excluding the Tag acquisition and positive currency effects, revenue declined by 2.2%.
In the Supply Chain business unit, we concluded additional contracts worth around €810 million in annualised revenue with both new and existing customers. Major gains were achieved in the Life Sciences&Healthcare, Consumer, Retail and Technology sectors. The annualised contract renewal rate remained at a constantly high level.
EBIT in the division was €301 million in the first nine months (previous year: €289 million). The prior-year figure included a €23 million net gain on the disposal of ETS. The increase in EBIT was driven by improved contract portfolio management along with continued cost efficiencies, which offset margin pressure and start-up costs. The EBIT margin remained stable at 2.8% despite the deterioration in the European economy. The previous year's EBIT margin was 3.0% and included the ETS disposal, without which it was 2.7%. EBIT for the third quarter amounted to €109 million compared with €100 million in the previous year. Operating cash flow was €157 million in the first nine months (previous year: €211 million), with the decrease largely being due to increased working capital from delayed customer payments and higher receivables.
The average number of employees (full-time equivalents) increased slightly to 426,104 in the first nine months of 2012, a 0.7% increase compared with the previous year's average. Staff numbers rose mainly in the SUPPLY CHAIN division.
Our current planning calls for increasing slightly the number of employees in financial year 2012.
As a service provider, Deutsche Post DHL does not engage in research and development activities in the narrower sense and therefore has no significant expenses to report in this connection.
On 5 November 2012 the German cartel office (Bundeskartellamt) announced that it had launched an antitrust investigation into the large customer contracts in Deutsche Post's mail business.
We assume that the world economy will grow by the lower end of the forecast range of 3% to 3.5% and that world trade will exceed this growth. Given our performance over the first nine months, we are confirming our forecast for financial year 2012: we plan to attain consolidated EBIT of between €2.6 billion and €2.7 billion. The MAIL division is likely to contribute between €1.0 billion and €1.1 billion to this figure, which also includes the one-time effects from the additional VAT payment. For the DHL divisions, we are maintaining our earnings forecast at around €2.0 billion. At around €–0.4 billion, the Corporate Center/Other result should be on par with the previous year. Consolidated net profit before effects of the Postbank transaction, the additional VAT payment and the reversal of restructuring provisions is expected to continue to improve in 2012 in line with our operating business.
In order to sustainably increase the Group's success, we have established a uniform controlling process to identify and assess opportunities and risks at an early stage. Management is systematically informed of events or changes that could significantly impact our business operations. We describe our opportunity and risk management process and the significant risks affecting our earnings, financial position and assets and liabilities in the 2011 Annual Report beginning on page 98.
For information on the Group's unchanged economic opportunities, please refer to the 2011 Annual Report beginning on page 101.
As announced in June, the German tax authorities modified certain tax assessments of Deutsche Post AG in the third quarter of 2012. The resulting additional VAT payment amounted to €482 million after deducting outstanding tax refund claims and was made by the end of the third quarter. The decision of the tax authorities resulted from an extensive audit of complex issues pertaining to tax law and related to the period from 1998 to 30 June 2010. The amended law on VAT for postal services took effect the following day. The Group had already recognised provisions for a large part of the additional VAT payment. The tax authorities also reviewed a number of postal services previously regarded as VAT exempt to determine whether they were subject to taxes retroactively. Although the matter is subject to varying interpretations, in part depending on whether EU or German VAT laws are applied, the Group has accepted the new tax assessments. This concludes all VAT matters in dispute for the period in question, provides legal certainty and avoids drawn-out legal proceedings with uncertain outcomes.
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Since 1 July 2010, as a result of the revision of the relevant tax exemption provisions, the VAT exemption has only applied to specific universal services in Germany that are not subject to individually negotiated agreements or provided on special terms (discounts etc.). Deutsche Post AG does not believe that the legislative amendment fully complies with the applicable specifications of European Community law. Due to the legal uncertainty resulting from the new legislation, Deutsche Post AG is endeavouring to clarify certain key issues with the tax authorities. Although Deutsche Post AG is implementing the required measures to a large extent, the differing legal opinions on the part of Deutsche Post AG and the tax authorities will be judicially clarified.
In order to implement the European Commission's state aid ruling of 25 January 2012, the German Federal Government on 29 May 2012 called upon Deutsche Post AG to make a payment of €298 million. Deutsche Post AG paid that amount to a trustee on 1 June 2012 and appealed the recovery order. The Federal Republic of Germany also filed an appeal. The European Commission has thus far not made a final decision regarding its acceptance of the calculation of the amount of state aid to be repaid. It cannot be ruled out that Deutsche Post AG may be required to make a higher payment. In its state aid ruling of 25 January 2012, the European Commission did not make a definitive assessment of the amount of the purported unlawful state aid. Such amount is calculated by the Federal Republic of Germany. In a press release, the European Commission named a figure of between €500 million and €1 billion. Further information regarding the state aid proceedings is provided in the 2011 Annual Report beginning on page 216.
The Bundesnetzagentur (German federal network agency) ruled on 30 April 2012 that Deutsche Post AG had violated the prohibition of discrimination pursuant to the Postgesetz (PostG – German Postal Act) by charging different fees for the transport of identical invoices and for invoices containing different invoice amounts. Deutsche Post AG was issued an immediate cease and desist order with respect to the discrimination determined, which it was called upon to implement no later than 31 December 2012. Deutsche Post does not share the legal opinion of the German federal network agency and appealed the ruling to the Cologne Administrative Court. In the event of implementation of the ruling, it can be expected that revenues and earnings would be negatively impacted.
In the first nine months of 2012, no further significant risks or changes to such risks arose beyond those presented in the 2011 Annual Report. At present, based on the Group's risk control system and in the estimation of the Board of Management of the Group, there are no identifiable risks that, individually or collectively, cast doubt upon the Group's ability to continue as a going concern.
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No material changes to the Group's organisational structure are planned for the fourth quarter of 2012.
The European sovereign debt crisis continues to create risks for the global economy. The International Monetary Fund (IMF) estimates global GDP growth will be 3.3% in 2012, provided that the crisis is gradually contained and that taxes in the United States are not increased drastically. Growth of 3.6% is expected in 2013. Global trade is predicted to increase by 3.2% in 2012 and 4.5% in 2013.
In China, growth in 2012 will be considerably weaker than in the past as a result of lower demand for exports (IMF: 7.8%). In 2013, growth is forecast to increase slightly (IMF: 8.2%). The outlook for the Japanese economy is rather moderate. Foreign trade is not expected to have a positive impact on growth. Furthermore, it is likely that any impulses from reconstruction after the earthquake will have levelled off. However, because of the positive performance in the first half of the year, Japan is projected to record solid GDP growth in 2012 (IMF: 2.2%; Postbank Research: 2.7%). This is expected to weaken considerably in 2013 (IMF: 1.2%, Postbank Research: 1.6%).
In the United States, the economy is projected to experience continued but moderate growth. Investments in machinery and equipment are likely to increase alongside investments in construction. Private consumption will grow slowly but steadily. Foreign trade is not expected to have an impact, whilst public spending is likely to slow growth for the time being. GDP growth in 2012 is projected to be moderate (IMF: 2.2%, Postbank Research: 2.3%). The outlook for 2013 remains unclear (IMF: 2.1%; Postbank Research: 2.5%).
The euro zone is showing no signs of economic recovery. The need for fiscal consolidation in particular is likely to put the brakes on the economy. Private consumption is expected to remain weak; gross fixed capital formation is anticipated to further decrease. Although foreign trade will presumably continue to prop up the economy, it will not prevent GDP from declining this year (ECB: –0.4%; Postbank Research: –0.2%). In 2013, the economy in the Economic and Monetary Union is projected to recover slightly (ECB: 0.5%; Postbank Research: 0.9%).
The economic environment in Germany has successively worsened. Impulses provided by foreign trade are likely to recede perceptibly. In addition, the sovereign debt crisis in the EMU is keeping companies from making investments. Private consumption may prove to be a pillar of growth. German GDP in 2012 is likely to perform considerably better than that of the euro zone as a whole (economic research institutes: 0.8%; Postbank Research: 1.0%). The economy is projected to recover slightly in 2013, however GDP growth will only be minimally higher than this year (economic research institutes: 1.0%; Postbank Research: 1.2%).
The global economy is expected to continue to see moderate growth in 2012 with an increase at the lower end of the forecast range of 3% to 3.5%. The international trading volumes relevant for our business are likely to exceed the projected growth of the global economy. We are therefore anticipating the corresponding revenue growth, particularly in the DHL divisions.
Given our performance over the first nine months, we are confirming our forecast for financial year 2012: we plan to attain consolidated EBIT of between €2.6 billion and €2.7 billion. The MAIL division is likely to contribute between €1.0 billion and €1.1 billion to this figure, which also includes the one-time effects from the additional VAT payment. For the DHL divisions, we are maintaining our earnings forecast at around €2.0 billion. At around €–0.4 billion, the Corporate Center/Other result should be on par with the previous year.
We plan to increase capital expenditure by approximately 6% to a maximum of €1.8 billion. We expect to remain around this level in the following year. In line with our Group strategy, we are targeting organic growth and anticipate only a few small acquisitions in 2012, as in the previous year. In 2012, operating cash flow will only be impacted to a limited extent by the restructuring measures that began in 2009.
Even in the face of an uncertain economic climate, particularly in the western economies, we believe that the Group will continue to experience good earnings momentum. The positive trend in our earnings that we are anticipating for 2012 is likely to continue into 2013. The cost reduction measures and growth programmes initiated in the MAIL division are expected to stabilise EBIT, even though letter volumes are likely to continue their slow decline due to electronic substitution. In the DHL divisions, we expect EBIT, taking the earnings contribution in 2010 as the baseline, to improve at an annual average of 13% to 15% in the period from 2011 to 2015 as trading volumes continue to recover.
Consolidated net profit before effects of the Postbank transaction, the additional VAT payment and the reversal of restructuring provisions is expected to continue to improve in 2012 in line with our operating business.
Our finance strategy calls for paying out 40% to 60% of net profits as dividends as a general rule.
As expected, our "FFO to debt" performance metric was weakened during the reporting period by the outflow of funds necessary to make the repayment of state aid and the additional VAT payment. However, due to the earnings development anticipated for 2012, we expect this ratio to improve again significantly towards the end of the year and the rating agencies to continue to rank our creditworthiness as adequate.
To repay the bond issued by Deutsche Post Finance B.V. in the amount of €0.7 billion, which fell due in October 2012, we use part of the proceeds generated from the issue of two bonds on 18 June 2012. Repayment of the bond has no impact on net debt since our cash funds decrease to the same extent as our financial liabilities.
Moreover, we expect our operating liquidity situation to improve given that our business generally performs well in the fourth quarter. By contrast, a temporary deterioration in our liquidity situation is anticipated at the start of 2013 due to the prepayment to Bundes-Pensions-Service für Post und Telekommunikation.
As described in our 2011 Annual Report, we intend to increase capital expenditure in 2012 to a maximum of €1.8 billion. The focus will remain on IT, machinery, transport equipment and aircraft.
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 on current plans, estimates and projections, they are subject to risks and uncertainties that could cause actual results to be materially different from the future development, performance or results expressly or implicitly assumed in the forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which apply only as at the date of this presentation. Deutsche Post AG does not intend or assume any obligation to update these forwardlooking statements to reflect events or circumstances after the date of this interim report.
Any internet sites referred to in the Interim Report by the Board of Management do not form part of the report.
dp-dhl.com/en/investors.html
| €m | 9M 2011 | 9M 2012 | Q3 2011 | Q3 2012 |
|---|---|---|---|---|
| adjusted1 | adjusted1 | |||
| Revenue | 38,703 | 40,935 | 13,093 | 13,839 |
| Other operating income | 1,317 | 1,550 | 436 | 411 |
| Total operating income | 40,020 | 42,485 | 13,529 | 14,250 |
| Materials expense | –22,236 | –23,536 | –7,597 | – 8,048 |
| Staff costs | –12,301 | –13,121 | – 4,016 | – 4,334 |
| Depreciation, amortisation and impairment losses | – 914 | – 990 | –303 | –343 |
| Other operating expenses | –2,732 | –3,000 | – 967 | – 921 |
| Total operating expenses | –38,183 | – 40,647 | –12,883 | –13,646 |
| Profit from operating activities (EBIT) | 1,837 | 1,838 | 646 | 604 |
| Net income from associates | 58 | 0 | 0 | 0 |
| Other financial income | 425 | 637 | 247 | 26 |
| Other finance costs | – 863 | – 863 | –323 | –122 |
| Foreign currency result | –31 | –38 | –16 | –2 |
| Net other finance costs | – 469 | –264 | – 92 | – 98 |
| Net finance costs | – 411 | –264 | – 92 | – 98 |
| Profit before income taxes | 1,426 | 1,574 | 554 | 506 |
| Income taxes | –356 | –378 | –138 | – 90 |
| Consolidated net profit for the period | 1,070 | 1,196 | 416 | 416 |
| attributable to Deutsche Post AG shareholders | 988 | 1,116 | 385 | 382 |
| attributable to non-controlling interests | 82 | 80 | 31 | 34 |
| Basic earnings per share (€) | 0.82 | 0.92 | 0.32 | 0.31 |
| Diluted earnings per share (€) | 0.82 | 0.92 | 0.32 | 0.31 |
| 1 Note 4. |
| €m | ||||
|---|---|---|---|---|
| 9M 2011 | 9M 2012 | Q3 2011 | Q3 2012 | |
| Consolidated net profit for the period | 1,070 | 1,196 | 416 | 416 |
| Currency translation reserve | ||||
| Changes from unrealised gains and losses | – 60 | 202 | 267 | – 8 |
| Changes from realised gains and losses | –26 | 2 | –1 | 0 |
| Other changes in retained earnings | ||||
| Changes from unrealised gains and losses | 1 | 1 | 0 | 0 |
| Changes from realised gains and losses | 0 | 0 | 0 | 0 |
| Hedging reserve in accordance with IAS 39 | ||||
| Changes from unrealised gains and losses | 26 | – 69 | 11 | –18 |
| Changes from realised gains and losses | 0 | 47 | 2 | 24 |
| Revaluation reserve in accordance with IAS 39 | ||||
| Changes from unrealised gains and losses | – 6 | –17 | 5 | –7 |
| Changes from realised gains and losses | 0 | 0 | 0 | 0 |
| Revaluation reserve in accordance with IFRS 3 | ||||
| Changes from unrealised gains and losses | –1 | –1 | 0 | 0 |
| Changes from realised gains and losses | 0 | 0 | 0 | 0 |
| Income taxes relating to components of other comprehensive income | – 6 | 10 | –3 | 0 |
| Share of other comprehensive income of associates (after tax) | 10 | –37 | 0 | 0 |
| Other comprehensive income (after tax) | – 62 | 138 | 281 | – 9 |
| Total comprehensive income | 1,008 | 1,334 | 697 | 407 |
| attributable to Deutsche Post AG shareholders | 933 | 1,252 | 661 | 377 |
| attributable to non-controlling interests | 75 | 82 | 36 | 30 |
| 31 Dec. 2011 30 Sept. 2012 ASSETS Intangible assets 12,196 12,286 Property, plant and equipment 6,493 6,569 Investment property 40 44 Investments in associates 44 46 Non-current financial assets 729 1,040 Other non-current assets 570 631 Deferred tax assets 1,153 1,178 Non-current assets 21,225 21,794 Inventories 273 283 Income tax assets 239 219 Receivables and other current assets 9,089 9,739 Current financial assets 2,498 258 Cash and cash equivalents 3,123 2,230 Assets held for sale 1,961 21 Current assets 17,183 12,750 Total ASSETS 38,408 34,544 EQUITY AND LIABILITIES Issued capital 1,209 1,209 Other reserves 1,714 1,852 Retained earnings 8,086 8,381 Equity attributable to Deutsche Post AG shareholders 11,009 11,442 Non-controlling interests 190 173 11,199 11,615 Equity Provisions for pensions and similar obligations 4,445 4,440 Deferred tax liabilities 255 235 Other non-current provisions 2,174 1,984 Non-current provisions 6,874 6,659 Non-current financial liabilities 1,366 2,536 Other non-current liabilities 347 285 Non-current liabilities 1,713 2,821 8,587 9,480 Non-current provisions and liabilities |
|---|
| 2,134 1,635 Current provisions |
| Current financial liabilities 5,644 1,135 |
| Trade payables 6,168 5,706 |
| Income tax liabilities 570 597 |
| Other current liabilities 4,106 4,376 |
| Liabilities associated with assets held for sale 0 0 |
| Current liabilities 16,488 11,814 |
| 18,622 13,449 Current provisions and liabilities |
| 38,408 34,544 Total EQUITY AND LIABILITIES |
| €m | ||||
|---|---|---|---|---|
| 9M 2011 | 9M 2012 | Q3 2011 | Q3 2012 | |
| Consolidated net profit for the period attributable to Deutsche Post AG shareholders | 988 | 1,116 | 385 | 382 |
| Consolidated net profit for the period attributable to non-controlling interests | 82 | 80 | 31 | 34 |
| Income taxes | 356 | 378 | 138 | 90 |
| Net other finance costs | 469 | 264 | 92 | 98 |
| Net income from associates | – 58 | 0 | 0 | 0 |
| Profit from operating activities (EBIT) | 1,837 | 1,838 | 646 | 604 |
| Depreciation, amortisation and impairment losses | 914 | 990 | 303 | 343 |
| Net income from disposal of non-current assets | – 68 | – 58 | –20 | –3 |
| Non-cash income and expense | 23 | – 6 | 12 | –2 |
| Change in provisions | – 673 | – 945 | –189 | –171 |
| Change in other non-current assets and liabilities | – 46 | – 47 | 7 | 3 |
| Income taxes paid | –326 | –369 | –124 | –142 |
| Net cash from operating activities before changes in working capital | 1,661 | 1,403 | 635 | 632 |
| Changes in working capital | ||||
| Inventories | –17 | – 4 | – 4 | 14 |
| Receivables and other current assets | – 639 | – 676 | – 59 | 310 |
| Liabilities and other items | 104 | –297 | 254 | –388 |
| Net cash from operating activities | 1,109 | 426 | 826 | 568 |
| Subsidiaries and other business units | 59 | 40 | –7 | 1 |
| Property, plant and equipment and intangible assets | 194 | 149 | 99 | 45 |
| Other non-current financial assets | 16 | 28 | 5 | 2 |
| Proceeds from disposal of non-current assets | 269 | 217 | 97 | 48 |
| Subsidiaries and other business units | –70 | – 56 | –35 | –21 |
| Property, plant and equipment and intangible assets | –1,070 | –1,097 | –387 | – 430 |
| Other non-current financial assets Cash paid to acquire non-current assets |
– 67 –1,207 |
–326 –1,479 |
– 54 – 476 |
–1 – 452 |
| Interest received | 55 | 36 | 19 | 9 |
| Dividend received | 0 | 0 | 0 | 0 |
| Current financial assets | 397 | –11 | 202 | –11 |
| Net cash used in investing activities | – 486 | –1,237 | –158 | – 406 |
| Proceeds from issuance of non-current financial liabilities | 13 | 1,262 | 6 | 15 |
| Repayments of non-current financial liabilities | –168 | – 57 | –27 | –27 |
| Change in current financial liabilities | – 41 | –34 | 26 | – 8 |
| Other financing activities | –31 | –2 | – 5 | –2 |
| Proceeds from transactions with non-controlling interests and venturers | 0 | 11 | 0 | 1 |
| Cash paid for transactions with non-controlling interests | –1 | – 60 | –1 | 0 |
| Dividend paid to Deutsche Post AG shareholders | –786 | – 846 | 0 | 0 |
| Dividend paid to non-controlling interest holders | – 68 | –70 | – 9 | – 63 |
| Purchase of treasury shares | –21 | –26 | 0 | 0 |
| Interest paid | –136 | –270 | –35 | –177 |
| Net cash used in financing activities | –1,239 | – 92 | – 45 | –261 |
| Net change in cash and cash equivalents | – 616 | – 903 | 623 | – 99 |
| Effect of changes in exchange rates on cash and cash equivalents | –20 | 10 | 28 | –11 |
| Changes in cash and cash equivalents associated with assets held for sale | 0 | 0 | 3 | 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 | 3,415 | 3,123 | 2,125 | 2,340 |
| Cash and cash equivalents at end of reporting period | 2,779 | 2,230 | 2,779 | 2,230 |
| €m | Other reserves | Equity | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Issued capital |
Capital reserves |
IAS 39 revaluation reserve1 |
IAS 39 hedging reserve1 |
IFRS 3 revaluation reserve |
Currency translation reserve |
Retained earnings |
attributable to Deutsche Post AG shareholders |
Non controlling interests |
Total equity | |
| Balance at 1 January 2011 | 1,209 | 2,158 | 86 | –33 | 6 | – 682 | 7,767 | 10,511 | 185 | 10,696 |
| Capital transactions with owner | ||||||||||
| Dividend | 0 | 0 | 0 | 0 | 0 | 0 | –786 | –786 | – 68 | – 854 |
| Transactions with non-controlling interests |
0 | 0 | 0 | 0 | 0 | 0 | –1 | –1 | 0 | –1 |
| Changes in non-controlling interests due to changes in consolidated group |
0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 3 | 3 |
| Purchase of treasury shares | –2 | 0 | 0 | 0 | 0 | 0 | –20 | –22 | 0 | –22 |
| Share Matching Scheme (issuance) |
0 | 27 | 0 | 0 | 0 | 0 | 0 | 27 | 0 | 27 |
| Share Matching Scheme (exercise) | 2 | –22 | 0 | 0 | 0 | 0 | 20 | 0 | 0 | 0 |
| –782 | – 65 | – 847 | ||||||||
| Total comprehensive income | ||||||||||
| Consolidated net profit for | ||||||||||
| the period | 0 | 0 | 0 | 0 | 0 | 0 | 988 | 988 | 82 | 1,070 |
| Currency translation differences | 0 | 0 | 0 | 0 | 0 | – 82 | 0 | – 82 | –7 | – 89 |
| Other changes | 0 | 0 | 9 | 18 | –1 | 0 | 1 | 27 | 0 | 27 |
| 933 | 75 | 1,008 | ||||||||
| Balance at 30 September 2011 | 1,209 | 2,163 | 95 | –15 | 5 | –764 | 7,969 | 10,662 | 195 | 10,857 |
| Balance at 1 January 2012 | 1,209 | 2,170 | 90 | –34 | 5 | – 517 | 8,086 | 11,009 | 190 | 11,199 |
| Capital transactions with owner | ||||||||||
| Dividend | 0 | 0 | 0 | 0 | 0 | 0 | – 846 | – 846 | –74 | – 920 |
| Transactions with non-controlling interests |
0 | 0 | 0 | 0 | 0 | –3 | 26 | 23 | –22 | 1 |
| Changes in non-controlling interests due to changes in |
||||||||||
| consolidated group | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | –3 | –3 |
| Purchase of treasury shares | –2 | 0 | 0 | 0 | 0 | 0 | –24 | –26 | 0 | –26 |
| Share Matching Scheme (issuance) |
0 | 30 | 0 | 0 | 0 | 0 | 0 | 30 | 0 | 30 |
| Share Matching Scheme (exercise) | 2 | –24 | 0 | 0 | 0 | 0 | 22 | 0 | 0 | 0 |
| – 819 | – 99 | – 918 | ||||||||
| Total comprehensive income | ||||||||||
| Consolidated net profit for the period |
0 | 0 | 0 | 0 | 0 | 0 | 1,116 | 1,116 | 80 | 1,196 |
| Currency translation differences | 0 | 0 | 0 | 0 | 0 | 246 | 0 | 246 | 2 | 248 |
| Other changes | 0 | 0 | – 96 | –14 | –1 | 0 | 1 | –110 | 0 | –110 |
| 1,252 | 82 | 1,334 | ||||||||
| Balance at 30 September 2012 | 1,209 | 2,176 | – 6 | – 48 | 4 | –274 | 8,381 | 11,442 | 173 | 11,615 |
1 The IAS 39 hedging reserve and IAS 39 revaluation reserve previously presented together in the IAS 39 reserves column are now shown separately to increase transparency.
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 September 2012 and have been reviewed.
The accompanying condensed consolidated interim financial statements as at 30 September 2012 were prepared in accordance with 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 2012 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 2011. For further information on the accounting policies applied, please refer to the consolidated financial statements for the year ended 31 December 2011, on which these interim financial statements are based.
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. The tax rate for financial year 2012 changed from 27% to 24%, due to changes in estimates.
Departures from the accounting policies applied in financial year 2011 consist of the new or amended international accounting pronouncements under IFRSs required to be applied since financial year 2012.
The changes to IFRS 7 (Financial Instruments: Disclosures) relate to additional disclosure requirements for transfers of financial assets. They are designed to provide users of financial statements with an improved understanding of the effect of the risks remaining with the entity. The amendment is effective for financial years beginning on or after 1 July 2011. It has no major effects on the consolidated financial statements.
The amendment to IAS 12 (Income Taxes: Deferred Tax: Recovery of Underlying Assets) would have been applicable to financial years beginning on or after 1 January 2012. However, since the endorsement procedure by the EU is still outstanding, it has not yet been applied.
In June 2012, the EU adopted the amendments to IAS 1 (Presentation of Financial Statements) and IAS 19 (Employee Benefits). The amendments are effective for financial years beginning on or after 1 July 2012 and 1 January 2013, respectively.
Detailed explanations can be found in the 2011 Annual Report, Note 4 "New developments in international accounting under IFRSs".
In addition to Deutsche Post AG as the Group parent, the consolidated group generally includes all German and foreign entities in which Deutsche Post AG directly or indirectly holds a majority of voting rights, or whose activities it is otherwise able to control.
The decrease in the number of equity-accounted companies is largely attributable to the derecognition of Deutsche Postbank AG and its subsidiaries.
| 31 Dec. 2011 | 30 Sept. 2012 | |
|---|---|---|
| Number of fully consolidated companies (subsidiaries) |
||
| German | 76 | 84 |
| Foreign | 754 | 748 |
| Number of proportionately consolidated joint ventures |
||
| German | 1 | 1 |
| Foreign | 13 | 4 |
| Number of equity-accounted companies (associates)1 |
||
| German | 31 | 1 |
| Foreign | 28 | 8 |
1 The equity interest in Deutsche Postbank AG was measured in accordance with IFRS 5 from March 2011 and was derecognised in February 2012.
In the period up to 30 September 2012, Deutsche Post DHL acquired companies that did not materially affect the Group's net assets, financial position and results of operations, either individually or in the aggregate. These insignificant acquisitions are as follows:
| Name | Country | Segment | Equity interest in % |
Date of acquisition |
|---|---|---|---|---|
| Tag Belgium, Brussels (formerly Dentsu Brussels SA) Belgium |
SUPPLY CHAIN | 100 | 1 February 2012 |
|
| intelliAd Media GmbH, Munich |
Germany | 100 | 9 July 2012 | |
| 2 Sisters Food Group (2SFG), Heathrow |
United Kingdom |
SUPPLY CHAIN | Asset deal | 27 July 2012 |
Tag Belgium is active in the communications sector and specialises in the design, production and localisation of print media.
intelliAd Media is a bid-management technology supplier active in the area of search engine advertising. 2SFG is active in the field of airline catering.
| €m | Carrying | ||
|---|---|---|---|
| 1 January to 30 September | amount | Adjustments | Fair value |
| ASSETS | |||
| Non-current assets | 4 | – | 4 |
| Current assets | 4 | – | 4 |
| Cash and cash equivalents | 3 | – | 3 |
| 11 | – | 11 | |
| EQUITY AND LIABILITIES | |||
| Current liabilities and provisions | 5 | – | 5 |
| 5 | – | 5 | |
| Net assets | 6 |
The calculation of goodwill is presented in the following table:
| €m | |
|---|---|
| Fair value | |
| Cost | 26 |
| Less net assets | 6 |
| Negative goodwill | –2 |
| Goodwill | 22 |
Purchase price allocation for Tag Belgium resulted in negative goodwill of €2 million, which is reported in other operating income. The negative goodwill is attributable to the coverage of potential business risks.
The effects on consolidated revenue and consolidated EBIT were insignificant.
Variable purchase prices, which are presented in the following table, were agreed for the acquisitions in financial year 2012:
Contingent consideration
| Basis | Period for | Range | Fair value |
|---|---|---|---|
| financial years | of outcomes | of payment | |
| from/to | from | obligation | |
| Revenue and sales margin | 2012 to 2014 | €0 to €9 million |
€4 million |
€22 million was expended on purchasing companies in financial year 2012. €37 million was paid for companies acquired in previous years. The purchase price for the company acquired was paid by transferring cash funds.
The following acquisitions were made in the prior-year period:
| Name | Country | Segment | Equity interest in % |
Date of acquisition |
|---|---|---|---|---|
| Adcloud GmbH (Adcloud), Cologne |
Germany | 100 | 1 April 2011 | |
| Eurodifarm srl. (Eurodifarm), Lodi |
Italy | SUPPLY CHAIN | 100 | 11 May 2011 |
| Standard Forward ing LLC (Standard Forwarding), East Moline |
USA | GLOBAL FORWARDING, FREIGHT |
100 | 1 June 2011 |
| Tag EquityCo Limited, Grand Cayman |
Cayman Islands |
SUPPLY CHAIN | 100 | 11 July 2011 |
| LifeConEx LLC, Plantation |
USA | GLOBAL FORWARDING, FREIGHT |
100 | 29 July 2011 |
In the middle of July 2011, Deutsche Post DHL acquired Tag EquityCo Limited, Cayman Islands, together with its subsidiaries. Tag Equity is an international provider of marketing execution and production services.
The customer relationships will be amortised over 20 years using the straight-line method, whilst the software will be amortised over five years. The brand name has an indefinite useful life.
| €m | |
|---|---|
| Fair value | |
| Cost | 91 |
| Less net assets | 16 |
| Goodwill | 75 |
The transaction costs for this acquisition amounted to €6 million. In addition, shareholder loans of €33 million were repaid.
The insignificant acquisitions in the period up to 30 September 2011 are presented as follows: Adcloud is a specialised provider of internet advertising space marketing and placement services. Eurodifarm is a specialist in the temperature-controlled distribution of pharmaceutical and diagnostic products. Standard Forwarding, a US company in the forwarding business, was acquired in order to expand capacity in the Freight business unit. Deutsche Post DHL acquired all of the shares of its LifeConEx LLC, USA, joint venture previously held by LCAG USA Inc., USA. The company provides end-to-end cold chain logistics services for the life sciences industry. The change in the method of consolidation resulted in a gain of €1.3 million, which is reported in other operating income.
| €m | Carrying | ||
|---|---|---|---|
| 1 January to 30 September | amount | Adjustments | Fair value |
| ASSETS | |||
| Non-current assets | 9 | – | 9 |
| Current assets | 25 | – | 25 |
| Cash and cash equivalents | 6 | – | 6 |
| 40 | – | 40 | |
| EQUITY AND LIABILITIES | |||
| Non-current liabilities and | |||
| provisions | 3 | – | 3 |
| Current liabilities and provisions | 34 | – | 34 |
| 37 | – | 37 | |
| Net assets | 3 |
| €m | |
|---|---|
| Fair value | |
| Cost | 62 |
| Less net assets | 3 |
| Plus effects from change in method of consolidation | 1 |
| Goodwill | 60 |
The variable purchase prices given in the table below were agreed for the acquisitions in the previous year:
| Basis | Period for financial years from/to |
Range of outcomes from |
Fair value of payment obligation |
|---|---|---|---|
| €0 to | |||
| Revenue and gross income1 | 2011 to 2013 | €2 million | €2 million |
| EBITDA | 2011 and 2012 | unlimited | €1 million |
| €0 to | |||
| Revenue and EBITDA | 2011 to 2013 | €3 million | €2 million |
1 Both the range and the fair value changed due to amended agreements and earnings forecasts.
€81 million was expended on purchasing subsidiaries in the period up to 30 September 2011 and €8 million for subsidiaries acquired in previous years. In addition, Deutsche Post DHL received €8 million in purchase price adjustments relating to companies acquired in previous years. The purchase prices of the acquired companies were paid in cash.
At the end of October 2012, Deutsche Post DHL acquired an additional 48% of the shares in All you need GmbH, Berlin, for €3 million. As the shares are intended to be resold, no further information has been provided.
The sales of the Express Couriers Limited (ECL), New Zealand, and Parcel Direct Group Pty Limited (PDG), Australia, joint ventures closed at the end of June 2012. The buyer is the former joint venture partner, New Zealand Post.
In the first quarter of 2012, DHL Global Forwarding&Co. LLC (DHL Oman), Oman, was deconsolidated, as the reasons for consolidation no longer existed. The company has been accounted for using the equity method since February 2012.
The effects of deconsolidation are presented in the following table:
| €m | 2011 | 2012 | |||||
|---|---|---|---|---|---|---|---|
| 1 January to 30 September | Exel Transpor tation Services |
DHL Express Canada |
Other | Total | DHL Oman | ECL, PDG | Total |
| Non-current assets | 0 | 11 | 2 | 13 | 0 | 38 | 38 |
| Current assets | 0 | 2 | 0 | 2 | 8 | 19 | 27 |
| Assets held for sale1 | 113 | 0 | 18 | 131 | 0 | 0 | 0 |
| Cash and cash equivalents | 0 | 0 | 10 | 10 | 1 | 9 | 10 |
| ASSETS | 113 | 13 | 30 | 156 | 9 | 66 | 75 |
| Non-current liabilities and provisions | 0 | 0 | 0 | 0 | 0 | 24 | 24 |
| Current liabilities and provisions | 0 | 5 | 11 | 16 | 6 | 41 | 47 |
| Liabilities associated with assets held for sale1 | 62 | 0 | 11 | 73 | 0 | 0 | 0 |
| EQUITY AND LIABILITIES | 62 | 5 | 22 | 89 | 6 | 65 | 71 |
| Net assets | 51 | 8 | 8 | 67 | 3 | 1 | 4 |
| Total consideration received | 55 | 10 | 4 | 69 | 1 | 49 | 50 |
| Income (+)/expenses (–) from the currency translation reserve | 24 | 1 | 0 | 25 | 0 | – 4 | – 4 |
| Non-controlling interests | 0 | 0 | 3 | 3 | 2 | 0 | 2 |
| Deconsolidation gain (+)/loss (–) | 28 | 3 | –1 | 30 | 0 | 44 | 44 |
1 Figures before deconsolidation.
Losses are shown under other operating expenses; gains are reported under other operating income.
In the prior-year period, Deutsche Post DHL sold the freight forwarding company Exel Transportation Services Inc., USA, including Exel Transportation Services Inc. (Canadian Branch), and the Canadian domestic express business of DHL Express Canada. The sale of four Chinese companies, of assets held by the Australian company Western Australia and of Northern Kope Parcel Express, Australia, as well as of a portion of the transport and warehousing business owned by DHL Freight Netherlands B.V., the Netherlands, is presented in the Other column.
Please see Note 3 for information on the sale of the interest in Deutsche Postbank AG.
As part of the sale of Deutsche Postbank shares, a further 27.4% interest in Deutsche Postbank AG was transferred to Deutsche Bank AG at the end of February 2012, when a mandatory exchangeable bond fell due. In addition, Deutsche Post AG exercised its put option for the remaining 12.1% of the shares it held in Postbank. Both transactions are part of a three-phase sale of shares agreed between the two companies in January 2009. Now that the second and third stages of the transaction have been completed, Deutsche Post AG no longer holds any shares in Deutsche Postbank AG. The financial instruments relating to the Postbank sale were measured for the last time in February 2012; no such measurement will be performed again in the future.
The effects of the Postbank sale for the period up to 30 September 2012 are as follows:
| €m | |
|---|---|
| February 2012 | |
| Mandatory exchangeable bond | 2,946 |
| Cash collateral | 1,305 |
| Forward | –1,265 |
| Put option | – 566 |
| Total | 2,420 |
| Less carrying amount of the investment | 1,916 |
| Total | 504 |
| Less expenses from the currency translation reserve | 44 |
| Plus income from the IAS 39 reserves | 81 |
| Disposal gain | 541 |
| Other effects of the Postbank sale | –355 |
| Total effect | 186 |
The disposal of the Postbank shares thus resulted in a total effect of €186 million, which is reported in net finance costs. The following table shows the other effects of the Postbank sale on the income statement:
| €m | ||
|---|---|---|
| 9M 2011 | 9M 2012 | |
| Interest expense on exchangeable bond | – 97 | –20 |
| Interest expense on cash collateral | –37 | – 8 |
| Net gain/loss on subsequent measurement of the forward |
37 | –228 |
| Net gain/loss on measurements of the option (tranche III) |
16 | – 99 |
| Impairment loss (–) on measurement of shares before reclassification under IFRS 5 |
– 63 | 0 |
| Impairment loss (–) on shares under IFRS 5 | –21 | 0 |
| Total | –165 | –355 |
In order to implement the European Commission's state aid ruling of 25 January 2012, the German Federal Government on 29 May 2012 called upon Deutsche Post AG to make a payment of €298 million, including interest. In agreement with the government, Deutsche Post AG paid this amount into a trust account on 1 June 2012 and appealed the recovery order. The European Commission had instituted state aid proceedings in 2007 and in its decision had come to the conclusion that the pension relief on civil servants' pensions granted by the Bundesnetzagentur (German federal network agency) during the price approval process had led to illegal state aid being granted to Deutsche Post AG. Deutsche Post AG believes that the decision cannot withstand legal review and appealed it to the European Court of Justice in Luxembourg on 4 April 2012. The Federal Republic of Germany also filed an appeal.
The European Commission has thus far not made a final decision regarding its acceptance of the calculation of the amount of state aid to be repaid. It cannot be ruled out that Deutsche Post AG may be required to make a higher payment. In its state aid ruling of 25 January 2012, the European Commission did not make a definitive assessment of the amount of the purported unlawful state aid. Such amount is calculated by the Federal Republic of Germany. The payment made was reported solely in the non-current assets item of the balance sheet; the earnings position remained unaffected. Detailed information regarding the state aid proceedings can be found in the 2011 Annual Report, Notes 51 and 57.
As announced in June 2012, the German tax authorities modified Deutsche Post AG's tax assessments in the third quarter of 2012. The decision resulted from an extensive audit of complex issues pertaining to tax law and relates to the period from 1998 to 30 June 2010. The amended law on VAT for postal services took effect on 1 July 2010. The additional VAT payment amounted to €482 million after deducting outstanding tax refund claims and was made by the end of the third quarter. A large part of the additional payment amount relates to tax matters for which the Group had in some cases already recognised provisions. As a result, the impact on EBIT up to 30 September 2012 amounts to €–181 million, whilst the interest expense is €115 million.
Two new bonds with a total notional volume of €1.25 billion were placed on the market in the middle of June 2012 under the Debt Issuance Programme (DIP). The bonds were issued by Deutsche Post Finance B.V. and are fully guaranteed by Deutsche Post AG.
| Nominal | ||
|---|---|---|
| Name | coupon | Issue volume |
| Bond 2012/2017 | 1.875% | €750 million |
| Bond 2012/2022 | 2.950% | €500 million |
The two bonds will mature on 27 June 2017 and 27 June 2022, respectively.
Income statement
| €m | 9M 2011 | Adjustments | 9M 2011 adjusted |
|---|---|---|---|
| Revenue | 38,806 | –103 | 38,703 |
| Materials expense | –22,339 | 103 | –22,236 |
Until the third quarter of 2011, part of the reduction in income attributable to customer discounts was recognised under materials expense rather than revenue. These figures have been adjusted.
| €m | ||
|---|---|---|
| 9M 2011 | 9M 2012 | |
| Income from the reversal of provisions | 186 | 297 |
| Income from currency translation differences | 127 | 159 |
| Insurance income | 124 | 131 |
| Income from fees and reimbursements | 104 | 109 |
| Rental and lease income | 125 | 108 |
| Gains on disposal of non-current assets | 106 | 85 |
| Income from the remeasurement of liabilities | 44 | 85 |
| Commission income | 65 | 82 |
| Income from work performed and capitalised | 73 | 71 |
| Reversals of impairment losses on receivables | ||
| and other assets | 39 | 59 |
| Income from prior-period billings | 40 | 28 |
| Income from loss compensation | 16 | 18 |
| Income from the derecognition of liabilities | 20 | 11 |
| Recoveries on receivables previously written off | 15 | 10 |
| Income from derivatives | 9 | 10 |
| Subsidies | 6 | 6 |
| Miscellaneous | 218 | 281 |
| Total | 1,317 | 1,550 |
The income from the reversal of provisions primarily reflects changes in the assessment of 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 | ||
|---|---|---|
| 9M 2011 | 9M 2012 | |
| Other business taxes | 222 | 469 |
| Travel and training costs | 246 | 255 |
| Cost of purchased cleaning, transport and security | ||
| services | 212 | 234 |
| Expenses for advertising and public relations | 242 | 223 |
| Insurance costs | 147 | 183 |
| Warranty expenses, refunds and compensation payments |
186 | 176 |
| Telecommunication costs | 175 | 169 |
| Expenses from currency translation differences | 130 | 161 |
| Consulting costs (including tax advice) | 131 | 142 |
| Write-downs of current assets | 129 | 139 |
| Office supplies | 124 | 130 |
| Entertainment and corporate hospitality expenses | 101 | 104 |
| Services provided by the Federal Posts | ||
| and Telecommunications Agency | 88 | 60 |
| Voluntary social benefits | 62 | 60 |
| Contributions and fees | 49 | 53 |
| Legal costs | 45 | 51 |
| Commissions paid | 45 | 50 |
| Expenses from derivatives | 21 | 42 |
| Monetary transaction costs | 23 | 31 |
| Losses on disposal of assets | 39 | 29 |
| Audit costs | 21 | 22 |
| Prior-period other operating expenses | 19 | 20 |
| Donations | 15 | 17 |
| Additions to provisions | 3 | 3 |
| Miscellaneous | 257 | 177 |
| Total | 2,732 | 3,000 |
The increase in other business taxes relates to the additional VAT payment for the period from 1998 to 30 June 2010; Note 3.
Miscellaneous other operating expenses include a large number of smaller individual items.
Depreciation, amortisation and impairment losses rose by €76 million year-on-year, from €914 million to €990 million. This item includes impairment losses of €17 million (previous year: €12 million), which are attributable to the segments as follows:
| €m | ||
|---|---|---|
| 9M 2011 | 9M 2012 | |
| EXPRESS | ||
| Property, plant and equipment | 4 | 17 |
| SUPPLY CHAIN | ||
| Property, plant and equipment | 8 | 0 |
| Impairment losses | 12 | 17 |
The impairment losses result mainly from changes to the useful lives of aircraft.
The impairment losses for the previous year are attributable to land and buildings, technical equipment and machinery, IT equipment and transport equipment.
Investments in companies on which a significant influence can be exercised and which are accounted for using the equity method contributed €0 million (previous year: €58 million) to net finance costs. This item decreased as a result of the disposal of Deutsche Postbank AG.
The net other finance costs of €264 million (previous year: €469 million) are largely due to the effects of the Postbank sale, which was completed in February 2012, as well as to the interest expense on the additional VAT payment; Note 3.
Basic earnings per share in the period under review were €0.92.
| 1,208,832,541 | 1,208,849,207 |
|---|---|
| 988 | 1,116 |
| 9M 2011 | 9M 2012 |
Diluted earnings per share in the reporting period were €0.92. Executives were entitled to 6,256,885 rights to shares as at the reporting date.
| 9M 2011 | 9M 2012 | ||
|---|---|---|---|
| Consolidated net profit for the period attributable |
|||
| to Deutsche Post AG shareholders | €m | 988 | 1,116 |
| Weighted average number of shares | |||
| outstanding | shares | 1,208,832,541 | 1,208,849,207 |
| Potentially dilutive shares | shares | 1,253,264 | 2,925,331 |
| Weighted average number of shares | |||
| for diluted earnings | shares | 1,210,085,805 | 1,211,774,538 |
| Diluted earnings per share | € | 0.82 | 0.92 |
Investments in intangible assets and property, plant and equipment amounted to €1,135 million in the period up to 30 September 2012 (previous year: €1,041 million). Of this figure, €219 million (previous year: €151 million) was attributable to intangible assets (not including goodwill). Investments in property, plant and equipment are shown in the following table:
| €m | ||
|---|---|---|
| 30 Sept. 2011 | 30 Sept. 2012 | |
| Property, plant and equipment | ||
| Land and buildings (incl. leasehold improvements) | 30 | 50 |
| Technical equipment and machinery | 136 | 72 |
| Transport equipment | 189 | 173 |
| Aircraft | 33 | 52 |
| IT equipment | 49 | 57 |
| Other operating and office equipment | 42 | 39 |
| Advance payments and assets under development | 411 | 473 |
| Total | 890 | 916 |
Advance payments and assets under development relate mainly to advance payments for aircraft deliveries.
Goodwill changed as follows in the reporting period:
| €m | ||
|---|---|---|
| 2011 | 2012 | |
| Cost | ||
| Balance at 1 January | 11,759 | 12,074 |
| Additions to consolidated group | 136 | 22 |
| Additions | 4 | 0 |
| Disposals | –34 | –29 |
| Currency translation differences | 209 | 99 |
| Balance at 31 December/30 September | 12,074 | 12,166 |
| Impairment losses | ||
| Balance at 1 January | 1,093 | 1,101 |
| Disposals | –7 | –3 |
| Currency translation differences | 15 | 21 |
| Balance at 31 December/30 September | 1,101 | 1,119 |
| Carrying amount at 31 December/30 September | 10,973 | 11,047 |
The reclassification in the previous year of the carrying amount of the equity interest in Deutsche Postbank AG (€1,801 million) to assets held for sale led to a decline in investments in associates; Note 13.
| €m | ||
|---|---|---|
| 2011 | 2012 | |
| Balance at 1 January | 1,847 | 44 |
| Additions | 0 | 2 |
| Changes in Group's share of equity | ||
| Changes recognised in profit or loss | 60 | 0 |
| Profit distributions | 0 | 0 |
| Changes recognised in other comprehensive income |
10 | 0 |
| Impairment losses | –72 | 0 |
| Elimination of intercompany profits and losses | 0 | 0 |
| Reclassified to current assets | –1,801 | 0 |
| Carrying amount at 31 December/30 September | 44 | 46 |
The additions relate mainly to the companies All you need GmbH, Berlin, and DHL Oman; Note 2.
| €m | Assets | Liabilities | ||
|---|---|---|---|---|
| 31 Dec. 2011 | 30 Sept. 2012 | 31 Dec. 2011 | 30 Sept. 2012 | |
| Deutsche Post AG – real estate (Corporate Center/Other) | 21 | 16 | 0 | 0 |
| US Express Aviation, USA – aircraft (EXPRESS segment) | 4 | 2 | 0 | 0 |
| Investment in Deutsche Postbank AG (Corporate Center/Other) | 1,916 | 0 | 0 | 0 |
| Deutsche Post Immobilienentwicklung Grundstücksgesellschaft mbH & Co. Logistikzentren KG, Germany – real estate (Corporate Center/Other) |
15 | 0 | 0 | 0 |
| Other | 5 | 3 | 0 | 0 |
| Assets held for sale and liabilities associated with assets held for sale | 1,961 | 21 | 0 | 0 |
The sale of the shares in Deutsche Postbank AG held by Deutsche Post AG was completed at the end of February 2012; Note 3.
The properties held for sale by Deutsche Post Immobilienentwicklung Grundstücksgesellschaft, Germany, were reclassified back to non-current assets due to lack of demand.
Since the middle of October 2012, Deutsche Post DHL has intended to sell the domestic express business in Romania. The transaction is expected to be completed in the first quarter of 2013.
| € | ||
|---|---|---|
| 2011 | 2012 | |
| Balance at 1 January | 1,209,015,874 | 1,209,015,874 |
| Treasury shares acquired | –1,676,178 | –1,770,503 |
| Treasury shares issued | 1,676,178 | 1,770,503 |
| Balance at 31 December/30 September | 1,209,015,874 | 1,209,015,874 |
Deutsche Post DHL acquired 1.8 million shares at a total price of €26 million, including transaction costs, to settle entitlements due under the 2011 tranche of the bonus programme for executives (Share Matching Scheme). In addition, 2,082 shares were acquired and issued to people who have since left the company. Consequently, issued capital was reduced by the notional value of the shares purchased. The average purchase price per share was €14.42.
The notional value of the treasury shares is deducted from issued capital and the difference between the notional value and the reported value of the treasury shares is deducted from retained earnings.
The issued capital increased again when the shares were issued to the executives. Changes in treasury shares are presented in the statement of changes in equity.
Changes in retained earnings are presented in the statement of changes in equity.
| €m | ||
|---|---|---|
| 2011 | 2012 | |
| Balance at 1 January | 7,767 | 8,086 |
| Dividend payment | –786 | – 846 |
| Consolidated net profit for the period attributable to Deutsche Post AG shareholders |
1,163 | 1,116 |
| Transactions with non-controlling interests | – 59 | 26 |
| Miscellaneous other changes | 1 | –1 |
| Balance at 31 December/30 September | 8,086 | 8,381 |
The dividend payment to Deutsche Post AG shareholders of €846 million was made in May 2012. This corresponds to a dividend of €0.70 per share.
As in the previous year, the amounts reported under transactions with non-controlling interests largely related to the option to acquire the remaining interest (24%) in DHL Logistics Private Limited (formerly DHL Lemuir Logistics Private Limited), India. The shares were transferred and the purchase price paid at the beginning of April 2012.
| €m | GLOBAL FORWARDING, | Corporate Center/ | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| EXPRESS | FREIGHT | SUPPLY CHAIN | Other | Consolidation | Group | |||||||||
| 1 January to 30 September | 20111 | 2012 | 20111 | 2012 | 20111 | 2012 | 2011 | 2012 | 2011 | 2012 | 2011 | 2012 | 20111 | 2012 |
| External revenue | 10,050 | 10,051 | 8,312 | 9,139 | 10,689 | 11,180 | 9,600 | 10,527 | 52 | 38 | 0 | 0 | 38,703 | 40,935 |
| Internal revenue | 70 | 70 | 279 | 297 | 472 | 497 | 75 | 80 | 874 | 849 | –1,770 | –1,793 | 0 | 0 |
| Total revenue | 10,120 | 10,121 | 8,591 | 9,436 | 11,161 | 11,677 | 9,675 | 10,607 | 926 | 887 | –1,770 | –1,793 | 38,703 | 40,935 |
| Profit/loss from operating activities (EBIT) |
861 | 678 | 672 | 829 | 310 | 346 | 289 | 301 | –295 | –315 | 0 | –1 | 1,837 | 1,838 |
| Net income from associates |
0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 58 | 0 | 0 | 0 | 58 | 0 |
| Segment assets2 | 4,325 | 4,549 | 8,587 | 8,641 | 8,007 | 8,240 | 6,314 | 6,498 | 3,167 | 1,291 | –254 | –222 | 30,146 | 28,997 |
| Investments in associates2 | 0 | 2 | 28 | 28 | 16 | 16 | 0 | 0 | 0 | 0 | 0 | 0 | 44 | 46 |
| Segment liabilities 2, 3 | 2,919 | 2,493 | 2,684 | 2,432 | 2,959 | 3,109 | 2,924 | 2,835 | 820 | 762 | –186 | –121 | 12,120 | 11,510 |
| Capex | 233 | 191 | 357 | 424 | 74 | 96 | 179 | 215 | 198 | 209 | 0 | 0 | 1,041 | 1,135 |
| Depreciation and amortisation |
235 | 247 | 243 | 283 | 77 | 83 | 201 | 213 | 146 | 147 | 0 | 0 | 902 | 973 |
| Impairment losses | 0 | 0 | 4 | 17 | 0 | 0 | 8 | 0 | 0 | 0 | 0 | 0 | 12 | 17 |
| Total depreciation, amortisation and impairment losses |
235 | 247 | 247 | 300 | 77 | 83 | 209 | 213 | 146 | 147 | 0 | 0 | 914 | 990 |
| Other non-cash expenses | 152 | 235 | 139 | 146 | 55 | 65 | 62 | 79 | 35 | 36 | 0 | 0 | 443 | 561 |
| Employees4 | 147,434 | 145,772 | 85,496 | 84,301 | 43,451 | 43,553 | 133,615 | 139,540 | 13,352 | 12,938 | 0 | 0 | 423,348 | 426,104 |
| Q3 External revenue |
3,317 | 3,252 | 2,816 | 3,074 | 3,641 | 3,860 | 3,295 | 3,641 | 24 | 12 | 0 | 0 | 13,093 | 13,839 |
| Internal revenue | 24 | 24 | 94 | 98 | 163 | 158 | 28 | 29 | 267 | 287 | – 576 | – 596 | 0 | 0 |
| Total revenue | 3,341 | 3,276 | 2,910 | 3,172 | 3,804 | 4,018 | 3,323 | 3,670 | 291 | 299 | – 576 | – 596 | 13,093 | 13,839 |
| Profit/loss from operating activities (EBIT) |
302 | 247 | 216 | 231 | 124 | 122 | 100 | 109 | – 96 | –104 | 0 | –1 | 646 | 604 |
| Net income from associates |
0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Capex | 90 | 98 | 135 | 141 | 38 | 31 | 58 | 70 | 97 | 116 | 0 | 0 | 418 | 456 |
| Depreciation and amortisation |
77 | 84 | 80 | 98 | 27 | 28 | 68 | 73 | 49 | 49 | 0 | 0 | 301 | 332 |
| Impairment losses | 0 | 0 | –1 | 11 | 0 | 0 | 3 | 0 | 0 | 0 | 0 | 0 | 2 | 11 |
| Total depreciation, amortisation and impairment losses |
77 | 84 | 79 | 109 | 27 | 28 | 71 | 73 | 49 | 49 | 0 | 0 | 303 | 343 |
| Other non-cash expenses | 44 | 112 | 42 | 61 | 17 | 27 | 18 | 31 | 8 | 11 | 0 | 0 | 129 | 242 |
1 Prior-year amounts adjusted.
2 As at 31 December 2011 and 30 September 2012.
3 Including non-interest-bearing provisions.
4 Average FTEs.
| €m | Europe | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Germany | (excluding Germany) | Americas | Asia Pacific | Other regions | Group | |||||||
| 1 January to 30 September | 20111 | 2012 | 2011 | 2012 | 2011 | 2012 | 2011 | 2012 | 2011 | 2012 | 20111 | 2012 |
| External revenue | 12,197 | 12,296 | 12,897 | 13,186 | 6,466 | 7,278 | 5,544 | 6,384 | 1,599 | 1,791 | 38,703 | 40,935 |
| Non-current assets2 | 4,465 | 4,621 | 7,313 | 7,314 | 3,376 | 3,420 | 3,361 | 3,333 | 329 | 321 | 18,844 | 19,009 |
| Capex | 638 | 627 | 172 | 188 | 117 | 181 | 77 | 110 | 37 | 29 | 1,041 | 1,135 |
| Q3 | ||||||||||||
| External revenue | 4,034 | 4,034 | 4,363 | 4,437 | 2,188 | 2,538 | 1,961 | 2,242 | 547 | 588 | 13,093 | 13,839 |
| Capex | 262 | 292 | 66 | 58 | 41 | 64 | 37 | 33 | 12 | 9 | 418 | 456 |
1 Prior-year amounts adjusted.
2 As at 31 December 2011 and 30 September 2012.
Deutsche Post DHL 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's top management.
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 main geographical areas in which the Group is active are Germany, Europe, the Americas, Asia Pacific and Other regions. External revenue, non-current assets and capex are disclosed for these regions.
Revenue, assets and capex are allocated to the 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.
The following adjustment was made to the segment reporting as at 30 September 2012:
At the beginning of January 2012, the Czech less-than-truckload and part-truckload business of PPL CZ s.r.o. was transferred from the EXPRESS segment to the GLOBAL FORWARDING, FREIGHT segment. The transfer was made to enable the two divisions to concentrate on their respective core competencies. The prior-year amounts were adjusted accordingly.
| €m | ||
|---|---|---|
| 9M 2011 | 9M 2012 | |
| Total income of reportable segments | 2,132 | 2,154 |
| Corporate Center/Other | –295 | –315 |
| Reconciliation to Group/consolidation | 0 | –1 |
| Profit from operating activities (EBIT) | 1,837 | 1,838 |
| Net finance costs | – 411 | –264 |
| Profit before income taxes | 1,426 | 1,574 |
| Income taxes | –356 | –378 |
| Consolidated net profit for the period | 1,070 | 1,196 |
A new system to grant variable remuneration components to certain Group executives was implemented in financial year 2009.
| 2009 | 2010 | 2011 | 2012 | ||
|---|---|---|---|---|---|
| tranche | tranche | tranche | tranche | ||
| Grant date | 1 Nov. 2009 | 1 Jan. 2010 | 1 Jan. 2011 | 1 Jan. 2012 | |
| Term | months | 53 | 63 | 63 | 63 |
| End of term | March 2014 | March 2015 | March 2016 | March 2017 | |
| Share price | |||||
| at grant date | € | 11.48 | 13.98 | 12.90 | 12.13 |
The sum of €30 million (31 December 2011: €33 million) was transferred to the capital reserves in the period up to 30 September 2012 for the Share Matching Scheme.
| €m | ||
|---|---|---|
| 2011 | 2012 | |
| Balance at 1 January | 2,158 | 2,170 |
| Addition/issue of rights under Share Matching Scheme |
||
| 2009 tranche | 3 | 1 |
| 2010 tranche | 17 | 3 |
| 2011 tranche | 13 | 18 |
| 2012 tranche | 0 | 8 |
| Exercise of rights under Share Matching Scheme | ||
| 2010 tranche | –21 | 0 |
| 2011 tranche | 0 | –24 |
| Balance at 31 December/30 September | 2,170 | 2,176 |
The SAR provisions for the other share-based payment systems for executives amounted to €158 million as at 30 September 2012 (31 December 2011: €61 million).
There have been no material changes in related party disclosures as against 31 December 2011; 2011 Annual Report, Note 53.
Contingent liabilities declined by €645 million in comparison with 31 December 2011, to €2,122 million. The decline relates largely to the additional VAT payment; Note 3. As a result, this tax matter is no longer included under contingent liabilities. The Group's other obligations have not changed significantly compared with 31 December 2011; 2011 Annual Report, Notes 49 and 50.
In the middle of July, the mail-order company Neckermann.de GmbH, Frankfurt am Main, filed an application to open insolvency proceedings. Neckermann.de is a customer of Deutsche Post DHL. The administrator announced in September that the company would be wound up. No significant effects arose for Deutsche Post DHL in the period up to 30 September 2012.
KfW Bankengruppe (KfW) placed a 5% stake in Deutsche Post AG on the market at the beginning of September, generating proceeds of approximately €924 million. This placement reduced the interest in Deutsche Post AG's share capital held by KfW to 25.5%; the remaining 74.5% of the shares are in free float. KfW holds the shares in trust for the federal government.
On 5 November 2012 the German cartel office (Bundeskartellamt) announced that it had launched an antitrust investigation into the large customer contracts in Deutsche Post's mail business. There were no other significant events after the reporting date.
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, 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, 7 November 2012
Deutsche Post AG The Board of Management
Dr Frank Appel
Ken Allen Roger Crook
Bruce Edwards Jürgen Gerdes
Lawrence Rosen Angela Titzrath
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 September 2012 which are part of the quarterly financial report pursuant to section 37x (3) 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, 7 November 2012
PricewaterhouseCoopers Aktiengesellschaft Wirtschaftsprüfungsgesellschaft
Gerd Eggemann Dietmar Prümm Wirtschaftsprüfer Wirtschaftsprüfer (German Public Auditor) (German Public Auditor)
| 01 Selected key figures 34 Events Interim Report by the Board of Management |
I II |
10 FFO to debt 11 Capex and depreciation, amortisation and impairment losses, 9 m 12 Capex and depreciation, amortisation and impairment losses, Q3 |
|---|---|---|
| Deutsche Post Shares 02 Share price performance 03 Deutsche Post shares 04 Peer group comparison: closing prices 1 Prior-year amounts adjusted Note 4. |
4 4 4 |
13 Capex by region 14 Operating cash flow by division, 9M 2012 15 Calculation of free cash flow 16 Selected indicators for net assets 17 Net liquidity (–)/net debt (+) |
| Economic Position 2 EBIT / revenue. |
Divisions | |
| 3 After deduction of non-controlling interests. 05 Selected indicators for results of operations 4 Prior-year amount as at 31 December, for the calculation |
6 | 18 Key figures by operating division page 12 of the Interim Report by the Board of Management. |
| 06 Consolidated revenue 5 Average FTE s, prior-year amount corresponds to that of fi nancial year 2011. |
6 | 19 Mail Communication: volumes |
| 07 Revenue by region |
6 | 20 Dialogue Marketing: volumes |
08 Consolidated EBIT 7
| Revenue 1 Cover |
09 Selected cash flow indicators € m 38,703 |
40,935 7 |
22 Mail International: volumes 5.8 13,093 13,839 5.7 |
15 | |
|---|---|---|---|---|---|
| Profi t from operating activities (EBIT) | 10 FFO to debt € m 1,837 |
8 1,838 |
23 EXPRESS: revenue by product 0.1 646 604 –6.5 |
16 | |
| 01 Selected key figures |
I | 11 Capex and depreciation, amortisation |
24 EXPRESS: volumes by product |
16 | |
| Return on sales 2 34 Events |
II | % 4.7 and impairment losses, 9 m |
4.5 9 |
– 4.9 4.4 25 Global Forwarding: revenue |
– 19 |
| Consolidated net profi t for the period 3 | € m 988 12 Capex and depreciation, amortisation |
1,116 | 13.0 385 382 –0.8 26 Global Forwarding: volumes |
19 | |
| Interim Report by the Board of Management Operating cash fl ow |
and impairment losses, Q3 € m 1,109 |
9 426 |
–61.6 826 568 –31.2 27 SUPPLY CHAIN: revenue by sector, 9M 2012 20 |
||
| Net liquidity (–)/net debt (+) 4 Deutsche Post Shares |
13 Capex by region € m –938 |
9 977 |
28 SUPPLY CHAIN: revenue by region, 9M 2012 20 – – – |
– | |
| 14 Operating cash flow by division, 9M 2012 |
10 | ||||
| 02 Share price performance Earnings per share |
4 | € 0.82 15 Calculation of free cash flow |
0.92 10 |
12.2 0.32 0.31 –3.1 |
|
| 03 Deutsche Post shares Number of employees 5 |
4 | 16 Selected indicators for net assets 423,348 |
11 426,104 |
Condensed Consolidated Interim Financial Statements 0.7 – – |
– |
| 04 Peer group comparison: closing prices 1 Prior-year amounts adjusted Note 4. |
4 | 17 Net liquidity (–)/net debt (+) |
12 | 29 Income Statement 27 |
|
| Economic Position 2 EBIT / revenue. |
Divisions | 30 Statement of Comprehensive Income 28 |
|||
| 3 After deduction of non-controlling interests. 05 Selected indicators for results of operations |
6 | ||||
| 4 Prior-year amount as at 31 December, for the calculation | 18 Key figures by operating division page 12 of the Interim Report by the Board of Management. |
13 | 31 Balance Sheet 29 |
||
| 06 Consolidated revenue 5 Average FTE s, prior-year amount corresponds to that of fi nancial year 2011. |
6 | 19 Mail Communication: volumes |
14 | 32 Cash Flow Statement 30 |
33 Statement of Changes in Equity 31
Tel.: +49 (0) 228 182-6 36 36 Fax: +49 (0) 228 182-6 31 99 E-mail: [email protected]
Tel.: +49 (0) 228 182-99 44 Fax: +49 (0) 228 182-98 80 E-mail: [email protected] We are confi rming our forecast for fi nancial year 2012. We plan to attain consolidated EBIT of between €2.6 billion and €2.7 billion. The MAIL division is likely to contribute between €1.0 billion and €1.1 billion
Published on 8 November 2012.
E-mail: [email protected] dp-dhl.com/en/investors.html
GeT and DHL Webshop Mat. no. 675-602-337
Deutsche Post Corporate Language Services et al.
The English version of the Interim Report January to September 2012 of Deutsche Post DHL 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.
| Financial calendar 1 | ||
|---|---|---|
| 5 MARCH 2013 | 12 MARCH 2013 | 14 MAY 2013 |
| PRESENTATION OF THE FINANCIAL FIGURES FOR 2012 |
ANNUAL REPORT 2012 | INTERIM REPORT JANUARY TO MARCH 2013 |
| 29 MAY 2013 | 30 MAY 2013 | 6 AUGUST 2013 |
| 2013 ANNUAL GENERAL MEETING (FRANKFURT AM MAIN) |
DIVIDEND PAYMENT | INTERIM REPORT JANUARY TO JUNE 2013 |
| 12 NOVEMBER 2013 INTERIM REPORT JANUARY TO SEPTEMBER 2013 |
||
| Investor events 1 14 November 2012 |
UBS European Conference (London) |
| 14 November 2012 | UBS European Conference (London) | ||
|---|---|---|---|
| 21 November 2012 | Mainfi rst German Growth Conference (Paris) | ||
| 22 November 2012 | HSBC Conference (Vienna) | ||
| 27 November 2012 | Capital Markets Tutorial Workshop DHL SUPPLY CHAIN (London) | ||
| 29 November 2012 | Capital Markets Tutorial Workshop DHL SUPPLY CHAIN (Frankfurt am Main) | ||
| 14 – 16 January 2013 | Commerzbank German Investment Seminar (New York) |
1Further dates, updates as well as information on live webcasts dp-dhl.com/en/investors.html.
Deutsche Post AG Headquarters Investor Relations 53250 Bonn Germany
dp-dhl.com
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