As in previous years, we are again reporting economic profit in addition to the EBIT performance indicator as part of our value-based Group management. With economic profit, we measure the value we create for our shareholders from operations, taking into account the total cost of capital used to generate revenue and profits.

We define the cost of capital as the Group’s weighted average net cost of interest-bearing debt and equity expressed as a percentage, taking into account division-specific risk factors. We then multiply this rate by the average net assets employed to obtain the total cost of capital.

We calculate economic profit by subtracting the total cost of capital from the net operating profit after taxes. The calculation is based on the consolidated financial statements for the “Postbank at equity” scenario and includes the net financial obligations from non-cancelable operating leases.

With an economic profit of €1,419 million, Deutsche Post World Net again generated considerable value through its operations in the year under review. As a result of non-recurring items reported in the previous year, net operating profit after taxes was virtually unchanged year on year despite operational improvements. By contrast, there was a sharp rise in average net assets employed, primarily due to the inclusion of Exel. Consequently, the economic profit was down 26.9% compared with the previous year. The cost of capital was set at an unchanged rate of 5.9% at the start of the year.

For fiscal 2007, the weighted average cost of capital after taxes at the Group level was increased to 6.7% due to the generally higher yield expectations for debt and equity.