Annual Report 2012 pdf (5 MB) - Deutsche Post DHL

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Exercise of judgement in applying the accounting policies
The preparation of IFRS-compliant consolidated financial
statements requires the exercise of judgement by management.
All estimates are reassessed on an ongoing basis and are based
on historical experience and expectations with regard to future
events that appear reasonable under the given circumstances. For
example, this applies to assets held for sale. In this case, it must be
determined whether the assets are available for sale in their present
condition and whether their sale is highly probable. If this is the
case, the assets and the associated liabilities are reported and measured
as assets held for sale and liabilities associated with assets held
for sale.
Estimates and assessments made by management
The preparation of the consolidated financial statements
in accordance with IFRS s requires management to make certain
assumptions and estimates that may affect the amounts of the assets
and liabilities included in the balance sheet, the amounts of income
and expenses, and the disclosures relating to contingent liabilities.
Examples of the main areas where assumptions, estimates and the
exercise of management judgement occur are the recognition of
provisions for pensions and similar obligations, the calculation of
discounted cash flows for impairment testing and purchase price
allocations, taxes and legal proceedings.
When determining the provisions for pensions and similar
obligations, the discount rate used is an important factor that has
to be estimated. The database used previously to calculate the
discount rate is no longer considered to represent an adequate
basis because significantly fewer high-quality corporate bonds with
matching maturities were included due to rating downgrades.
To calculate the discount rate for the euro zone, both the
selection criteria applicable to the database and the extrapolation
procedure have therefore been adjusted. In the future, the database
will include high-quality corporate bonds with an AA – rating
from at least one of the three major rating agencies. Overall, as
at 31 December 2012, the change led to a 0.45 percentage point
increase in the discount rate applied for the measurement of pension
obligations in the euro zone. A decrease of 0.45 percentage
points in the discount rate would result in an increase of around
€600 million in pension obligations in the euro zone and of around
€14 million in the following year’s expense (excluding remeasurements).
An increase or a reduction of 1 percentage point in the
discount rate used would generally result in a reduction or increase
of around €1,050 million in the present value of the total obligations
of pension plans in Germany at the end of the year and in a
reduction or increase of around €31 million in the following year’s
expense (excluding remeasurements). For Group companies in the
UK, such a change in the discount rate would result in a decrease or
increase of around €630 million in the pres ent value of the total
obligation at the end of the year and in a decrease or increase of
around €41 million in the following year’s expense (excluding
remeasurements).
Deutsche Post DHL Annual Report 2012
Consolidated Financial Statements
Notes
Basis of preparation
The Group has operating activities around the globe and
is subject to local tax laws. Management can exercise judgement
when calculating the amounts of current and deferred taxes in the
relevant countries. Although management believes that it has made
a reasonable estimate relating to tax matters that are inherently
uncertain, there can be no guarantee that the actual outcome of
these uncertain tax matters will correspond exactly to the original
estimate made. Any difference between actual events and the estimate
made could have an effect on tax liabilities and deferred taxes
in the period in which the matter is finally decided. The amount
recognised for deferred tax assets could be reduced if the estimates
of planned taxable income or the tax benefits achievable as a result
of tax planning strategies are revised downwards, or in the event
that changes to current tax laws restrict the extent to which future
tax benefits can be realised.
Goodwill is regularly reported in the Group’s balance sheet
as a consequence of business combinations. When an acquisition
is initially recognised in the consolidated financial statements, all
identifiable assets, liabilities and contingent liabilities are measured
at their fair values at the date of acquisition. One of the most
important estimates this requires is the determination of the fair
values of these assets and liabilities at the date of acquisition. Land,
buildings and office equipment are generally valued by independent
experts, whilst securities for which there is an active market
are recognised at the quoted exchange price. If intangible assets
are identified in the course of an acquisition, their measurement
can be based on the opinion of an independent external expert
valuer, depending on the type of intangible asset and the complexity
involved in determining its fair value. The independent expert
determines the fair value using appropriate valuation techniques,
normally based on expected future cash flows. In addition to the
assumptions about the development of future cash flows, these
valuations are also significantly affected by the discount rates used.
Impairment testing for goodwill is based on assumptions
with respect to the future. The Group carries out these tests
annually and also whenever there are indications that goodwill
has become impaired. The recoverable amount of the CGU must
then be calculated. This amount is the higher of fair value less costs
to sell and value in use. Determining value in use requires adjustments
and estimates to be made with respect to forecasted future
cash flows and the discount rate applied. Although management
believes that the assumptions made for the purpose of calculating
the recoverable amount are appropriate, possible unforeseeable
changes in these assumptions – e. g., a reduction in the EBIT margin,
an increase in the cost of capital or a decline in the long-term
growth rate – could result in an impairment loss that could negatively
affect the Group’s net assets, financial position and results of
operations.
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