Deutsche Post Finance B.V.

Financial Statements

30 June, 2015

Deutsche Post Finance B.V., Maastricht

Management Report 3
1.1 Introduction 3
1.2 Business activities 3
1.3 Legal relationships 3
1.4 Main business developments 3
1.5 Future business developments 4
Financial Statements 5
2.1 Balance sheet 5
2.2 Statement of comprehensive income 6
2.3 Statement of changes in shareholders' equity 7
2.4 Cash flow statement 8
2.5 Notes to the Financial Statements 9
(1) General overview 9
(2) Basis of accounting 9
(3) Financial risk management 10
(4) Derivative financial instruments and hedging 11
(5) Shareholders' equity 12
(6) Bonds long-term and short-term 12
(7) Interest income 14
(8) Interest expenses 15
(9) Disclosure on financial instruments 15
(10) Income tax expense 17
(11) Cash flows 17
(12) Related party transactions 17
(13) Employees 17
(14) Director's remuneration 17
(15) Commitments and rights not included in the balance sheet 17
Post balance sheet events 18
Responsibility Statement 18

Deutsche Post Finance B.V., Maastricht

1. Management Report

1.1 Introduction

This report includes the Financial Statements of Deutsche Post Finance B.V. (“The Company”) as at 30 June, 2015. The Company is part of Deutsche Post DHL Group (“The Group”).

1.2 Business activities

The principal activity of the Company consists of raising capital in order to lend funds to Deutsche Post DHL group companies.

1.3 Legal relationships

General information

The Company was incorporated in the Netherlands, Rotterdam on 13 April, 1999 and is now listed in the Commercial Register of the Chamber of Commerce for Limburg under number 24.29.26.43. The Company is owned 100% by Deutsche Post International B.V. in Maastricht, the Netherlands. Ultimate shareholder is Deutsche Post AG in Bonn, Germany.

Management Board

The Management Board currently consists of two members:

Mr. Roland Buss
Mr. Timo van Druten.

Business address

Pierre de Coubertinweg 7N, 6225 XT Maastricht

1.4 Main business developments

In the first half year of 2015 there were no events that materially affected the Company’s net assets, financial position and results from operations.

In particular the Company did not perform any activities on the capital markets.

The Company’s result after taxation per 30 June 2015 amounts to a gain of EUR 644.650. Excluding the income from hedge ineffectiveness, totaling EUR 175.106, the 2015 minimum margin result amounts to a profit of EUR 469.544.

This profit meets the management’s expectations and is in line with the Company’s calculated minimum profit margin.

The ineffectiveness recognized in the statement of comprehensive income results from strict hedge accounting requirements.

The main risks affecting the Company are interest and currency risks. Interest risks as well as currency risks are hedged according to guidelines of the Group by the Group’s Central Treasury. The variety of instruments used for hedging purposes and the policies are described in the notes to the Financial Statements.

Deutsche Post Finance B.V., Maastricht

1.5 Future business developments

The liquidity situation of the Group remains solid. The management of the Company is not aware of any plans to raise funds from the capital markets in 2015.

The Company will persist as a Group finance company and any possible future proceeds of debt issues will be lent within the Group.

Maastricht, 26 August, 2015

The Management Board:

2. Financial Statements

2.1 Balance sheet

Amounts in EUR	Note	30 June, 2015	31 December, 2014
Non-current assets
Long-term loans receivable		1.342.299.976	1.276.505.610
Non-current derivatives positive FV	(4)	30.615.118	48.898.354
		1.372.915.094	1.325.403.964
Current assets
Short-term receivables from affiliated companies		194.000	9.935.049
Cash pool receivables	(4)	11.509.164	9.463.916
Other receivables		10.974	24.931
		11.714.138	19.423.896
		1.384.629.232	1.344.827.860
Shareholders’ equity	(5)
Share capital		18.500	18.500
Capital reserve		2.000.000	2.000.000
Hedge reserve		8.500.674	13.054.812
Retained earnings		14.880.604	14.235.954
		25.399.778	29.309.266
Long-term liabilities
Bonds long-term	(6)	1.275.293.468	1.285.479.782
Non-current derivatives negative FV	(4)	83.680.468	15.265.482
		1.358.973.936	1.300.745.264
Short-term liabilities
Accrued interest		236.168	14.761.473
Other current liabilities and accruals		19.350	11.857
		255.518	14.773.330
		1.384.629.232	1.344.827.860

The notes are an integral part of the Company’s Financial Statements.

Deutsche Post Finance B.V., Maastricht

2.2 Statement of comprehensive income

Amounts in EUR	Note	1 January - 30 June, 2015	1 January - 30 June, 2014
Interest income	(7)	12.482.247	13.732.882
Interest expenses	(8)	(11.952.782)	(13.190.035)
Other gains and losses		175.106	1.198
Other operating expenses		(59.921)	(82.989)
		644.650	461.056
Profit before Taxes		644.650	461.056
Income tax expense		0	0
		0	0
Profit for the Year		644.650	461.056
Changes in hedge reserve		(4.554.138)	7.913.944
Comprehensive Income		(3.909.488)	8.375.000

The profit for the year is attributable to the parent.

The notes are an integral part of the Company's Financial Statements.

Deutsche Post Finance B.V., Maastricht

2.3 Statement of changes in shareholders' equity

Movements in shareholders' equity during the financial year were as follows:

Amounts in EUR	Total	Share capital	Capital reserve	Cash flow hedge reserve	Retained earnings
At 1 January 2014	19.595.601	18.500	2.000.000	3.452.183	14.124.918
Movements 2014
Valuation Financial Instruments	7.913.944	0	0	7.913.944	0
Net result 2014	461.056	0	0	0	461.056
Balance at 30 June, 2014	27.970.601	18.500	2.000.000	11.366.127	14.585.974
At 1 January, 2015	29.309.266	18.500	2.000.000	13.054.812	14.235.954
Movements 2015
Valuation Financial Instruments	(4.554.138)	0	0	(4.554.138)	0
Net result 2015	644.650	0	0	0	644.650
Balance at 30 June, 2015	25.399.778	18.500	2.000.000	8.500.674	14.880.604

The notes are an integral part of the Company's Financial Statements.

Deutsche Post Finance B.V., Maastricht

2.4 Cash flow statement

Amounts in EUR	30 June, 2015	30 June, 2014
Cash inflow
Repayment of loans	0	964.434.381
Interest inflow	58.434.287	108.374.496
Cash pooling / IHB decrease	0	1.221.597
Net inflow from maturing FX derivatives	0	17.376.909
Total Cash inflow	58.434.287	1.091.407.383
Cash outflow
Redemption of maturing bonds	0	(925.800.000)
New allocation of loans	0	(59.324.290)
Interest outflow	(56.350.567)	(106.204.326)
Other outflows (SLA etc.)	(38.472)	(78.767)
Cash pooling / IHB increase	(2.045.248)	0
Total Cash outflow	(58.434.287)	(1.091.407.383)
Net cash flow	0	0

Gross cash flows include cash movements from and towards the cash pool balance. The cash pool balance is related to the cash pool agreement between Deutsche Post Finance B.V. and Deutsche Post AG.

Cash pool balance	2015	2014
Opening balance at 1 January	9.463.916	9.338.240
Net cash flow	2.045.248	(1.221.597)
Closing balance at 30 June	11.509.164	8.116.643

All cash flows are considered to be operating cash flows.

The notes are an integral part of the Company's Financial Statements.

Deutsche Post Finance B.V., Maastricht

2.5 Notes to the Financial Statements

(1) General overview

Deutsche Post Finance B.V. (hereafter “The Company”), having its statutory seat in Maastricht, was incorporated in the Netherlands, Rotterdam on 13 April, 1999 and is now listed in the Commercial Register of the Chamber of Commerce for Limburg under the number 24.29.26.43. The Company is owned 100% by Deutsche Post International B.V. in Maastricht, the Netherlands. The ultimate shareholder is Deutsche Post AG in Bonn, Germany.

The principal activity of the Company consists of raising capital in order to lend funds to Deutsche Post DHL group companies.

Items included in the Financial Statements are measured using the currency of the primary environment in which Deutsche Post Finance B.V. operates (“the functional currency”). The Financial Statements are presented in Euro, which is the Company’s presentation currency and functional currency.

The Company has no subsidiaries, joint ventures or associates. The Company itself is a part of the Group and the financial results of the Company are incorporated into the IFRS Consolidated Financial Statements of the Group.

The date of approval of these Financial Statements by the Management Board is 26 August, 2015.

(2) Basis of accounting

The interim Financial Statements as of 30 June, 2015, have been prepared in accordance with the International Financial Reporting Standards (IFRS) 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 IFRS to be presented in condensed interim Financial Statements. The accounting policies applied to the condensed interim financial statements are generally based on the same accounting policies used in the financial statements for the financial year 2014. For further information on the accounting policies applied, please refer to the financial statements for the year ended 31 December 2014, on which these interim financial statements are based.

Departures from the accounting policies applied in the financial year 2014 consist of the new or amended international accounting pronouncements under IFRS required to be applied since financial year 2015.

IFRIC 21 (Levies)

This interpretation provides guidance on when to recognize a liability for a levy imposed by a government. It covers the recognition of levies imposed in accordance with laws or regulations. It does not include taxes, fines and other outflows that fall within the scope of other standards. The interpretation does not affect the Deutsche Post Finance B.V. Financial Statements.

Annual Improvements 2011-2013

The improvements clarifies the first time of adoption of IFRS (IFRS 1 – changes in basis of conclusion only), clarifies that IFRS 3 excludes from its scope the accounting for the formation of a joint arrangement of the financial statements of the joint arrangement itself, clarifies that the scope of the portfolio exception defined in paragraph 52 of IFRS 13 includes all contracts accounted for within the scope of IAS 39 or IFRS 9 regardless of whether they meet the definition of financial assets or financial liabilities as defined in IAS 32 and that determining whether a specific transaction meets the definition of both as business combination as defined in IFRS 3 and investment property as defined in IAS 40 requires the separate application of both standards independently of each other.

Detailed explanations on the newly applicable accounting standards can be found in the Deutsche Post Finance B.V. Financial Statements per 31 December 2014.

(3) Financial risk management

The principal activity of Deutsche Post Finance B.V. consists of raising capital in order to lend funds to Deutsche Post DHL group companies. These activities result in financial risks that may arise from changes in exchange rates and interest rates. Both risks are hedged according to the Group’s guidelines by the Group’s Central Treasury.

Internal guidelines govern the universe of actions, responsibilities and controls necessary for using derivatives. Suitable risk management software is used to record, assess and process hedging transactions. It is also used to regularly assess the effectiveness of the hedging relationships. The Group only enters into hedging transactions with prime-rated banks. Each bank is assigned a counterparty limit, the use of which is regularly monitored.

The Group’s Board of Management receives regular internal information on the existing financial risk and the hedging instruments deployed to limit them.

The fair values of the derivatives used may be subject to substantial fluctuations depending on changes in exchange rates and interest rates. These fluctuations in fair value are not to be viewed in isolation from the underlying transactions that are hedged. Derivatives and hedged transactions form a unity with regard to their offsetting value development.

Interest rate risk and interest rate management

Interest rate risk arises from changes in market interest rates for financial assets and financial liabilities. To quantify the risk profile, according to the Group’s guidelines, all interest-bearing receivables and liabilities are recorded, interest rate analyses are regularly prepared, and the potential effects on the net interest income are examined. The Group uses interest rate derivatives, such as interest rate swaps and options, to reduce financing costs and optimally manage and limit interest rate risks by adjusting the ratio of fixed to variable interest agreements.

As at 30 June 2015 fixed rate bonds with a total notional volume of EUR 1.250 million were outstanding, maturing in 2017 and 2022. The bonds are used to finance a fixed rate USD 943 million loan to a Deutsche Post DHL group company in the US and to grant floating interest rate EUR loans to other Deutsche Post DHL group companies. The related interest rate and or foreign currency risks have been fully hedged using cross currency and interest rate swaps.

The proceeds of the EUR 750 million bonds maturing in 2017 have been used to grant a fixed rate USD 943 million loan to a Deutsche Post DHL group company in the US. The respective foreign currency and interest rate risk was hedged using a fixed to fixed cross currency interest rate swap. Cash flow hedge accounting is applied for this instrument.

The EUR 500 million bonds maturing in 2022 have been transformed into a floating rate liability with a fixed to float receiver interest rate swap. For this interest rate swap fair value hedge accounting is applied. The EUR 500 million have been used to finance floating rate EUR loans to Deutsche Post DHL group companies maturing in 2022.

Deutsche Post Finance B.V., Maastricht

Foreign exchange risk

Currency risks for the Company arise almost exclusively from its USD lending activities to the Deutsche Post DHL group companies. According to the Group's risk management guidelines the recorded currency risks arising from financial transactions are usually hedged in full.

These risks are hedged using financial derivatives, such as currency forwards, swaps and cross currency interest rate swaps.

The Company does not use derivative instruments for speculative purposes.

Liquidity risk

The Group ensures a sufficient supply of cash for Group companies at all times via a largely centralized liquidity management system. Deutsche Post Finance B.V. is one of the most important financing entities within the Group. Therefore the Company issued bonds which are fully guaranteed by Deutsche Post AG.

(4) Derivative financial instruments and hedging

Derivative financial instruments

The following table provides an overview of the derivatives applied by the Company:

Fair values:

	30-06-2015	31-12-2014
	EUR	EUR
Interest rate swaps (negative value)	0	0
Interest rate swaps (positive value)	30.615.118	48.898.354
Cross-currency interest rate swaps (negative value)	(83.680.468)	(15.265.482)
Cross-currency interest rate swaps (positive value)	0	0
Total FV of all derivative financial instruments	(53.065.350)	33.632.872

The positive market values of the interest rate swaps and the cross-currency interest rate swaps are included in the non-current assets.

The fair value of the interest rate and foreign currency hedging instruments was calculated on the basis of discounted expected future cash flows, using a discounted cash flow model using observable market input.

Nominal amounts:

	30-06-2015	31-12-2014
	EUR	EUR
Interest rate swaps	500.000.000	500.000.000
Cross-currency interest rate swaps	750.000.000	750.000.000

Fair value hedges

An Interest rate swap with a volume of EUR 500.000.000 was concluded in 2012 to hedge the fair value risk of the nominal amount of the fixed interest Euro-denominated bond maturing in 2022. The positive fair value of this fixed to floating interest rate swap amounts to EUR 30.615.118 [31 December 2014: EUR 48.898.354].

Cash flow hedges

Cash flow hedges were entered into to hedge the interest and currency cash flow risk on bonds/loans resulting from foreign currency and interest changes.

In 2012 the Company granted a long term USD denominated fixed interest loan (maturity 2017). In order to hedge the associated risks the Company entered into a fixed to fixed cross-currency interest rate swap changing the fixed USD 943.125.000 receivables of the loan into a fixed EUR 750.000.000 receivable and related interest receivable. The negative fair value of this cross-currency interest rate swap amounts to EUR 83.680.468 at balance sheet date [31 December 2014: EUR 15.265.482].

(5) Shareholders’ equity

Share capital

The authorized share capital of the Company as at 30 June, 2015 amounts to EUR 90.000 and consists of 180 ordinary shares each of EUR 500. The issued share capital amounts to EUR 18.500 and consists of 37 ordinary shares with a nominal value of EUR 500 each, which are fully paid.

Capital reserve

On 23 May, 2002 the shareholder paid a capital contribution amounting to EUR 2.925.697. On the same date the shareholder approved offsetting the negative retained earnings as at 31 December, 2001, amounting to EUR 925.697, against the capital reserve.

Hedge reserve

Net gains or losses from changes in the fair value of the effective portion of a cash flow hedge are taken directly to the hedge reserve. The hedge reserve is released to income when the hedged item is settled. The ineffective portion of the cash flow hedges is excluded from the hedge reserve and recognized in profit and loss for the year.

(6) Bonds long-term and short-term

On 25 June, 2012 the Company issued EUR 750.000.000, 1,875% bonds of 2012/2017 with an issue price of 99,467% and EUR 500.000.000, 2,950% bonds of 2012/2022 with an issue price of 99,471%.

Deutsche Post Finance B.V., Maastricht

The bonds issued by the Company are fully guaranteed by Deutsche Post AG.

Nominal amounts:

Bonds	30-06-2015	31-12-2014
	EUR	EUR
Bond 2017	750.000.000	750.000.000
Bond 2022	500.000.000	500.000.000
	1.250.000.000	1.250.000.000
	30-06-2015	31-12-2014
	EUR	EUR
1 – 5 years, nominal value	750.000.000	750.000.000
> 5 years, nominal value	500.000.000	500.000.000
	1.250.000.000	1.250.000.000

The Fair Values of the bonds are as follows:

Bonds	30-06-2015	31-12-2014
	EUR	EUR
Bond 2017	773.752.500	780.352.500
Bond 2022	560.605.000	574.665.000
	1.334.357.500	1.355.017.500

Deutsche Post Finance B.V., Maastricht

The carrying amounts of the amortized costs of the bonds (before the fair value adjustments relating to hedging) are as follows:

Bonds	30-06-2015	31-12-2014
	EUR	EUR
Bond 2017	747.392.313	746.752.184
Bond 2022	496.618.317	496.401.267
	1.244.010.630	1.243.153.451

The carrying amounts of the bonds (after fair value adjustment relating to hedging) are as follows:

Bonds	30-06-2015	31-12-2014
	EUR	EUR
Bond 2017	747.392.313	746.752.184
Bond 2022	527.901.155	538.727.598
	1.275.293.468	1.285.479.782

The effective interest rates were as follows:

Bonds	30-06-2015	31-12-2014
Bond 2017	2,0613%	2,0613%
Bond 2022	1.3849%	1,5107%

(7) Interest income

The interest income arises from settled and unsettled balances with related parties, which the Company shows as receivables. The interest income from affiliated companies can be specified as follows:

	1 January – 30 June, 2015	1 January – 30 June, 2014
	EUR	EUR
Deutsche Post DHL group companies	16.625.573	15.188.911
Interest expenses from cross-currency swaps	(4.143.326)	(1.456.029)
	12.482.247	13.732.882

Deutsche Post Finance B.V., Maastricht

(8) Interest expenses

Interest expenses due on bonds can be specified as follows:

	1 January – 30 June, 2015	1 January – 30 June, 2014
	EUR	EUR
Interest expenses (fixed) Bond 2014	0	(3.709.541)
Interest expenses (fixed) Bond 2017	(6.973.143)	(6.971.615)
Interest expenses (fixed) Bond 2022	(7.314.052)	(7.313.782)
Interest income from interest rate swaps related to Bond 2014	0	3.064.953
Interest income from interest rate swaps related to Bond 2022	3.811.427	3.265.578
Amortization of the bond discount and issue costs	(857.179)	(854.103)
Guarantee provision	(619.835)	(657.910)
Interest expense from affiliated companies (Deutsche Post AG loans)	0	(13.615)
	(11.952.782)	(13.190.035)

(9) Disclosure on financial instruments

The following table presents the financial instruments recognized at fair value and those financial instruments whose fair value is required to be disclosed; the financial instruments are presented by the level in the fair value hierarchy to which they are assigned. The simplification option under IFRS 7.29a was exercised for current assets and short-term liabilities with predominantly short maturities. Their carrying amounts as at the reporting date are approximately equivalent to their fair values.

Level 1 mainly comprises debt instruments measured at amortized cost.

In addition to these instruments, interest rate and currency derivatives are reported under Level 2. The fair values of the derivatives are measured on the basis of discounted expected future cash flows, taking into account forward rates for currencies and interest rates (market approach). For this purpose, price quotations observable on the market (exchange rates and interest rates) are imported from information platforms customary in the market into the treasury management system. The price quotations reflect actual transactions involving similar instruments on an active market. Any currency options used are measured using the Black-Scholes option pricing model. All significant inputs used to measure derivatives are observable on the market.

No instruments have been disclosed under Level 3.

No financial instruments have been transferred between levels in the current financial year.

Recurring fair value measurement

Financial assets and liabilities per 30 June 2015

EUR	Level 1	Level 2	Level 3	Total
Assets

Non-current assets	0	1.441.184.727	0	1.441.184.727
Current assets	0	0	0	0
Total assets	0	1.441.184.727	0	1.441.184.727
Liabilities

Long-term liabilities	(1.334.357.500)	(83.680.468)	0	(1.418.037.968)
Short-term liabilities	0	0	0	0
Total liabilities	(1.334.357.500)	(83.680.468)	0	(1.418.037.968)

Financial assets and liabilities per 31 December 2014

EUR	Level 1	Level 2	Level 3	Total
Assets

Non-current assets	0	1.405.015.755	0	1.405.015.755
Current assets	0	19.423.896	0	19.423.896
Total assets	0	1.424.439.651	0	1.424.439.651
Liabilities

Long-term liabilities	(1.355.017.500)	(15.265.482)	0	(1.370.282.982)
Short-term liabilities	0	(14.773.330)	0	(14.773.330)
Total liabilities	(1.355.017.500)	(30.038.812)	0	(1.385.056.312)

Level 1: Quoted prices for identical instruments in active market
Level 2: Inputs other than quoted prices that are directly or indirectly observable for instruments
Level 3: Inputs not based on observable market data

Financial assets and liabilities are set off on the basis of netting agreements (master netting agreements) only if an enforceable right of set-off exits and settlement on a net basis is intended as at the reporting date. If the right of set-off is not enforceable in a normal course of business and the master netting arrangements creates a conditional right of set-off that can only be enforced by taking legal action, the financial assets and liabilities must be recognized in the balance sheet at their gross amounts as at the reporting date.

To hedge cash flow and fair value risks, Deutsche Post Finance B.V. enters into financial derivative transactions with Deutsche Post AG. There are no netting agreements for these contracts. Therefore all derivatives are recognized at their gross amount in the financial statements.

Deutsche Post Finance B.V., Maastricht

(10) Income tax expense

The Company is part of the fiscal unity formed with Deutsche Post International B.V. and its affiliated companies in the Netherlands. Current and deferred income tax assets and liabilities of the Company have been included and recognized in the accounts of Deutsche Post International B.V. as head of the fiscal unity.

(11) Cash flows

The principal activity of the Company consists of raising capital in order to lend funds to Deutsche Post DHL group companies. Therefore all activities, relating to interest received and paid are classified as operating activities. All transactions and balances of the Company within the in-house bank of the Deutsche Post DHL Group are classified as changes in working capital (changes in receivables and payables).

The Company has not received or paid any dividends during 2015.

(12) Related party transactions

Deutsche Post Finance B.V. is involved in various related party transactions. For more details, we refer to these Financial Statements.

(13) Employees

The Company has no employees. Employees of the Deutsche Post European Financial Shared Services in Maastricht and the Treasury Center in Bonn perform the administrative activities.

(14) Director's remuneration

The Management Board of the Company currently consists of two members:

Mr. Roland Buss
Mr. Timo van Druten.

The members of the Management Board do not receive any remuneration from the Company.

(15) Commitments and rights not included in the balance sheet

The Company is part of the fiscal unity headed by Deutsche Post International B.V. as a consequence the Company is liable for all corporate income tax liabilities of the fiscal unity.

The tax position of the Company is accounted for and included in the consolidated tax position of the head of the fiscal unity, Deutsche Post International B.V. In line with Group policy the income tax expenses are not being charged to the Company, but remain with the head of the fiscal unity.

Deutsche Post Finance B.V., Maastricht

Post balance sheet events

No post balance sheet events have occurred.

Responsibility Statement

To the best of our knowledge, and in accordance with the applicable reporting principles, the Financial Statements give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company, and the management report of the Company includes a fair review of the development and performance of the business and the position of the Company, together with a description of the principal opportunities and risks associated with the expected development of the Company.

Signatures:

Maastricht, 26 August, 2015

The Management Board:

Roland Buss

Timo van Druten

Deutsche Post Finance B.V., Maastricht

AI assistant

Deutsche Post AG Interim / Quarterly Report 2015

111_ir_2015-08-27_89f2180c-5908-477d-add3-c9175be0ef9c.pdf

Deutsche Post Finance B.V.

Financial Statements

Table of contents

1. Management Report

1.1 Introduction

1.2 Business activities