Segment reporting was prepared in accordance with IAS 14 (Segment Reporting). The presentation of specific data from the consolidated financial statements is classified by divisions and regions, based on the Group’s internal reporting and organisational structure. Segment reporting is designed to enable a transparent view of the earnings power, net assets and financial position of the individual components of the Group’s activities and regions. For the segment reporting which forms part of the Notes, see segment reporting.
Prior-period amounts were restated due to the transfer of the German parcel business from the EXPRESS Division to the MAIL Division as at 1 January 2007 and the transfer of DHL Freight from the EXPRESS Division to the LOGISTICS Division and of the 
hubs and aviation services from the SERVICES segment to the EXPRESS Division as at 1 July 2006. In addition, some companies were transferred in the course of portfolio optimisation measures.
Reflecting the Group’s predominant organisational structure, the primary reporting format is based on the divisions. Deutsche Post World Net distinguishes between the following divisions:
8.1 Segments by division
In addition to the transport and delivery of written communications, the MAIL Division is positioning itself as an end-to-end service provider for the management of written communications. The division comprises the following business units: Mail Communication, Dialogue Marketing, Press Services, Parcel Germany, Global Mail and Corporate Information Solutions.
EXPRESS
The EXPRESS Division offers national and international courier, express and parcel services (DHL EXPRESS) under the DHL brand. Effective 1 July 2006, the European overland transport business – now the DHL Freight Business Unit – was transferred from the EXPRESS Division to the LOGISTICS Division. As part of the reorganisation of the global express network, hubs and global network aviation were removed from the SERVICES segment and transferred to the EXPRESS Division.
LOGISTICS
The LOGISTICS Division comprises the national and international logistics services of the DHL Global Forwarding and DHL Exel Supply Chain business units and, since 1 July 2006, the European overland transport business DHL Freight under the DHL brand.
FINANCIAL SERVICES
The FINANCIAL SERVICES Division consists of the Deutsche Postbank Group’s activities. Deutsche Postbank Group offers a wide range of standardised banking services, including payments, deposits, retail and corporate banking, fund products and investment securities services. Effective 1 January 2006, Deutsche Postbank AG took over DP Retail GmbH, thus acquiring 850 retail outlets of Deutsche Post AG. The transfer of ownership led to a change of employer for around 9,600 employees. The retail outlets still owned by Deutsche Post AG are reported in the SERVICES segment. In addition, the FINANCIAL SERVICES segment includes the Pension Service.
The following table shows a breakdown of the FINANCIAL SERVICES Division’s profit from operating activities (EBIT) by segment component:
|
FINANCIAL SERVICES EBIT |
| |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
€m |
2006 |
2007 | ||||||||||||||
|
|
Deutsche |
Pension Service |
Other |
Total |
Deutsche |
Pension Service |
Other |
Total | ||||||||
|
EBIT |
1,000 |
7 |
–3 |
1,004 |
1,069 |
7 |
0 |
1,076 | ||||||||
SERVICES
The SERVICES segment contains the company’s Global Business Services with the following areas: Legal, Insurance, Procurement, Finance Operations, IT Services, Real Estate, Fleet Management and Business Consulting. It also includes the Corporate Centre and those retail outlets still belonging to Deutsche Post AG. This segment also reports Deutsche Post AG income and expenses which cannot be allocated to an individual division. As part of the reorganisation of the global express network, hubs and global network aviation were removed from the SERVICES segment with effect from 1 July 2006 and transferred to the EXPRESS segment.
Consolidation
The amounts for the divisions are presented after consolidating intersegment transactions, which are eliminated in the consolidation column.
Reconciliation of segment amounts to consolidated amounts
The reconciliation column contains the effects of consolidation adjustments and the amounts from the differing definitions of segment items compared with the corresponding item for the Group.
|
Reconciliation |
| |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
€m |
Segments total |
Reconciliation |
Consolidated amount | |||||||||
|
|
2006 |
2007 |
2006 |
2007 |
2006 |
2007 | ||||||
|
External revenue |
60,545 |
63,512 |
0 |
0 |
60,545 |
63,512 | ||||||
|
Internal revenue |
4,407 |
4,368 |
–4,407 |
–4,368 |
0 |
0 | ||||||
|
Total revenue |
64,952 |
67,880 |
–4,407 |
–4,368 |
60,545 |
63,512 | ||||||
|
Other operating income |
4,766 |
4,219 |
–1,945 |
–1,633 |
2,821 |
2,586 | ||||||
|
Materials expense |
–39,216 |
–41,265 |
4,867 |
4,390 |
–34,349 |
–36,875 | ||||||
|
Staff costs |
–18,631 |
–18,491 |
15 |
20 |
–18,616 |
–18,471 | ||||||
|
Other operating expenses |
–6,192 |
–6,784 |
1,434 |
1,591 |
–4,758 |
–5,193 | ||||||
|
Depreciation, amortisation and impairment losses |
–1,771 |
–2,357 |
0 |
0 |
–1,771 |
–2,357 | ||||||
|
Profit from operating activities (EBIT) |
3,908 |
3,202 |
–36 |
0 |
3,872 |
3,202 | ||||||
|
Net income from associates |
4 |
3 |
0 |
0 |
4 |
3 | ||||||
|
Net other finance costs |
|
|
|
|
–1,034 |
–1,013 | ||||||
|
Income taxes |
|
|
|
|
–560 |
–307 | ||||||
|
Consolidated net profit |
|
|
|
|
2,282 |
1,885 | ||||||
|
of which attributable to Deutsche Post AG shareholders |
|
|
|
|
1,916 |
1,389 | ||||||
|
of which attributable to minorities |
|
|
|
|
366 |
496 | ||||||
|
Assets |
214,440 |
229,385 |
3,258 |
6,081 |
217,698 |
235,466 | ||||||
|
of which investments in associates |
63 |
203 |
0 |
0 |
63 |
203 | ||||||
|
Liabilities |
181,374 |
200,973 |
22,372 |
20,634 |
203,746 |
221,607 | ||||||
|
of which investments in associates |
0 |
0 |
0 |
0 |
0 |
0 | ||||||
External revenue is the revenue generated by the divisions from non-Group third parties. Internal revenue is revenue generated with other divisions. If comparable external market prices exist for services or products offered internally within the Group, these market prices or market-oriented prices are used as transfer prices (arm’s length principle). The transfer prices for services for which no external market exists are generally based on incremental costs.
The expenses for IT services provided in the IT service centres are allocated to the divisions by cause. That portion of the expenses which cannot be passed on to the divisions according to the arm’s length principle continues to be included in the SERVICES segment. The additional costs resulting from Deutsche Post AG’s postal universal service obligation (nationwide retail outlet network, delivery every working day), and from its obligation to assume the compensation structure as the legal successor to Deutsche Bundespost, are allocated to the MAIL Division. The segment income and expense of the FINANCIAL SERVICES Division also include the Deutsche Postbank Group’s interest, fee and commission income and expense because these are allocated to the business operations of this division. Segment assets are composed of non-current assets (excluding non-current financial assets) and current assets (excluding income tax receivables, cash and cash equivalents and current financial instruments). The receivables and other securities from financial services are reported under the FINANCIAL SERVICES segment. Purchased goodwill is allocated to the divisions.
|
|
| |||
|---|---|---|---|---|
|
€m |
2006 |
2007 | ||
|
Total assets |
217,698 |
235,466 | ||
|
Investment property |
–122 |
–187 | ||
|
Non-current financial assets |
–994 |
–1,060 | ||
|
Other non-current assets |
–303 |
–413 | ||
|
Deferred tax assets |
–542 |
–1,020 | ||
|
Income tax assets |
–281 |
–312 | ||
|
Receivables and other assets |
–200 |
–141 | ||
|
Financial instruments |
–42 |
–72 | ||
|
Cash and cash equivalents |
–2,391 |
–4,683 | ||
|
Reconciliation to segment assets |
212,823 |
227,578 | ||
Segment liabilities relate to non-interest-bearing provisions and liabilities (excluding income tax liabilities) and to liabilities from financial services.
|
|
| |||
|---|---|---|---|---|
|
€m |
2006 |
2007 | ||
|
Total assets |
217,698 |
235,466 | ||
|
Equity |
–13,952 |
–13,859 | ||
|
Non-current provisions |
–12,340 |
–10,573 | ||
|
Non-current liabilities |
–8,780 |
–8,986 | ||
|
Current provisions |
–616 |
–693 | ||
|
Current liabilities |
–2,048 |
–1,905 | ||
|
Reconciliation to segment liabilities |
179,962 |
199,450 | ||
The segment investments relate to intangible assets (including purchased goodwill) and property, plant and equipment. Depreciation, amortisation and write-downs relate to the segment assets allocated to the individual divisions. Other non-cash expenses relate primarily to expenses from the recognition of provisions.
8.2 Segments by region
The allocation of external revenue is based on the location of the customers. Only revenue generated from non-Group third parties is disclosed. Segment assets are allocated according to the location of the assets. They are composed of the non-current assets (excluding non-current financial assets) and current assets (excluding income tax assets, cash and cash equivalents, and current financial instruments) of the individual regions. Segment assets also include receivables and other securities from financial services, as well as purchased goodwill, which are generally allocated on the basis of the domicile of the Group companies. Segment investments are also allocated on the basis of the location of the assets. They include investments in intangible assets (including purchased goodwill) and property, plant and equipment.
