The activities of Deutsche Postbank group differ substantially fromm the ordinary activities of the other companies in the Deutsche Post World Net Group. To enable a clearer presentation of the net assets, financial position and results of operations of the Group, the Deutsche Postbank group was excluded from full consolidation in the accompanying consolidated financial statements as of December 31, 2001. The Deutsche Postbank group is accounted for in these financial statements only as a financial investment carried at equity.

The preparation of the consolidated financial statements of Deutsche Post World Net including the Deutsche Postbank group at equity is in agreement with the International Accounting Standards (IASs) adopted and published by the International Accounting Standards Committee (IASC) to be applied at the balance sheet date, and their interpretation by the Standing Interpretations Committee (SIC).

First-time application of IAS 39 resulted in recognition and measurement changes which are explained in note 6.

The accounting treatment differs from the standards required by the IASs to the extent that the Deutsche Postbank group was not fully consolidated, as required by IAS 27, but was accounted for at equity.

Compared with the full consolidation of the Deutsche Postbank group as applied to the consolidated financial statements, accounting for the Deutsche Postbank group using the equity method has the following consequences:

• The assets and liabilities of the Deutsche Postbank group are not recognized in the consolidated balance sheet, and its expenses and income are not recognized in the consolidated income statement.
  
• The consolidation adjustments for the full consolidation of Deutsche Postbank group have not been recognized. Transactions between the Deutsche Postbank group and the other Group companies are included in the financial statements. However, intercompany profits and losses between the Deutsche Postbank group and the fully consolidated Group companies have been eliminated as required for the inclusion of associates (SIC-3).
  
• The investments in the Deutsche Postbank group carried at equity are reported under long-term investments.

The investment income resulting from accounting for the investment in Deutsche Postbank group using the equity method is disclosed as a separate item in net financial income. Accordingly, net financial income includes the proportionate net profit for the period, income from the reversal of the negative goodwill of the Deutsche Postbank group and the effect on income of the continuation of hidden reserves released as part of first-time consolidation.