The global expansion of our Group has placed increasing demands on our mission-critical infrastructure. We aim to avoid business interruptions at key operational facilities by continually monitoring our complex sorting and conveyor systems. The precautions we take and our emergency and contingency plans are effective tools for preventing business interruptions or minimizing their effects.

Our MAIL Division is well prepared for the deregulation of the postal markets and the resulting increase in competition. With our high quality standards and an efficient network of state-of-the-art mail centers, we will reinforce our position as a provider of solutions and value-added services to our customers and continue to internationalize our business. We intend to strengthen our presence further, above all in Europe and North America – depending in each case on the regulatory environment in the national postal market.

The EXPRESS Division faces a more hostile competitive environment both nationally and internationally as other providers aggressively contend for shares of the market. We plan to not only maintain our market position, but to expand it. To achieve this, we need high-performance transportation networks that have the capacity to meet our customers’ high expectations. Our network architecture generates its greatest share of added value in the use of combined air and ground transport. At the heart of this network architecture lie our central air hubs. In addition to hubs in Hong Kong and Wilmington, Ohio, we are currently building a new European air hub in Leipzig. The new hub is scheduled to be fully operational in 2008.

The logistics business is tied to the performance of the world economy. Healthy world economic growth is therefore a precondition for positive growth rates in our business. Our particular focus in this regard is on economic performance in the USA and in Asia. If slowdowns occurred here, we would face a reduction in logistics business. The loss of major customers due to aggressive competition or, for instance, due to bankruptcy is a constant risk facing logistics service providers. While this risk can be limited by far-sighted management, it cannot be entirely neutralized.

Postbank’s extensive experience in monitoring and managing its risks limits the danger of sudden fluctuations in earnings. The banking business is exposed to risks including those arising from changes in market prices, possible loan defaults and operational risks. Postbank’s risk management system monitors these risks on a regular basis. The Basel II capital adequacy requirements that apply as of January 1, 2007 and the Minimum Requirements for Risk Management (MaRisk) were integrated into Postbank’s risk management system early on.

Postbank was one of the first banks in Germany to receive approval from the Bundesanstalt für Finanzdienstleistungsaufsicht (German Financial Supervisory Authority) for its approach to implementing the requirements of Basel II. As a result, Postbank is permitted to use its own rating and scoring models to assess risk and ensure capital adequacy for the majority of its transactions starting on January 1, 2007.