Financial Report 2015 Management report, corporate governance and annual fi nancial statements About this Financial Report Structure of reporting documents The Swiss Post annual reporting documents for 2015 consist of: – Swiss Post Annual Report – Swiss Post Financial Report (management report, corporate governance, Group, Swiss Post Ltd and PostFinance Ltd annual financial statements) – GRI report (in accordance with the Global Reporting Initiative guidelines) – Annual Report key figures True-to-scale representation of figures in charts All charts are shown to scale to present a true and fair view. 20 mm is equivalent to one billion francs. Percentages in charts are standardized as follows: Horizontal: 75 mm is equivalent to 100 percent. Vertical: 40 mm is equivalent to 100 percent. Key for charts and tables Current year Previous year Positive effect on result Negative effect on result Languages The Financial Report is available in English, German, French and Italian. The German version is authoritative. Ordering Electronic versions of these documents are available at www.swisspost.ch/annualreport. The Annual Report and Financial Report are also available in printed form. Forward-looking statements This report contains forward-looking statements. They are based on current management estimates and projections, and on the information currently available to management. Forward-looking statements are not intended as guarantees of future performance and results, which remain dependent on many different factors; they are subject to a variety of risks and uncertainties, and are based on assumptions that may not prove accurate. 1 Simple yet systematic – Swiss Post. Reliable, value-enhancing and sustainable. 8,224 million 645 million francs in operating income, down francs in normalized Group profit, slightly year-on-year. up slightly year-on-year. 2,171.6 million 115.2 million addressed letters were posted in parcels were delivered in Switzerland Switzerland in 2015. by PostLogistics in 2015. 114.9 billion 145.0 million francs represents the level of average passengers were transported by customer assets held by PostFinance. PostBus in 2015. 80 points 13% Customer satisfaction remains high. is the CO2 efficiency improvement over 2010 achieved by Swiss Post by the end of 2015. 44,131 82 points employees, slightly below the The index figure for employee headcount for the prior year. commitment is a testament to motivated and committed employees. Financial Report 2015 Management report 5 Business activities 6 Markets, solutions and services 6 Geographical segmentation 7 Customer access points in Switzerland 8 Customers 9 Brands 10 Development & Innovation 11 Sustainability 11 Organization 12 Developments 13 Trends in the environment 13 Market trends 14 Group strategy 16 Guidelines 16 Strategic framework 18 Strategic goals 18 Strategic thrusts 19 Development areas 19 Market strategies 20 Financial controlling 22 Business performance 24 Key figures 24 Drivers 25 Profit situation 29 Assets and financial situation 43 Appropriation of profit 44 Non-financial results of a material nature 45 Risk report 52 Outlook 57 Corporate governance 59 Group structure and shareholders 60 Legal form and ownership 60 Control by the Confederation 60 Regulatory accounting 60 Net costs arising from universal service obligation 60 Reduction in the delivery prices of newspapers and magazines eligible for subsidies 61 Capital structure 61 Board of Directors 61 Composition 61 Uniform management 64 Role and functioning of the Board of Directors 64 Information and control instruments 65 Executive Management 65 Composition 65 Remuneration 68 Policy 68 Determination 68 Level of remuneration 69 Auditor 71 Information policy 71 Group annual financial statements 73 Consolidated income statement 74 Consolidated statement of comprehensive income 75 Consolidated balance sheet 76 Consolidated statement of changes in equity 77 Consolidated cash flow statement 78 Notes 79 Auditor’s report 151 Swiss Post Ltd annual financial statements 153 Income statement 154 Balance sheet 155 Notes 156 Proposed appropriation of distributable profit 160 Auditor’s report 161 PostFinance annual financial statements 163 Reconciliation 164 PostFinance Ltd statutory annual financial statements 165 Balance sheet 166 Reconciliation of BAG with ARB 167 Income statement 168 Appropriation of profit 169 Cash flow statement 170 Statement of changes in equity 171 Notes 172 Information regarding the balance sheet 182 Information regarding off-balance sheet transactions 193 Information regarding the income statement 193 Auditor’s report 195 Five-year overview of key figures 197 4 5 Management report Swiss Post operates in the communication, logistics, financial services and passenger transport markets. It generates around 85 percent of its sales in competition. The remaining 15 percent is generated by the monopoly on letters weighing less than 50 grams. Here, Swiss Post faces direct competition from electronic services. 86 percent of sales are generated in Switzerland. Swiss Post 6 FINANCIAL REPORT 2015 Business activities Markets, solutions and services Swiss Post operates in the communication, logistics, financial services and passenger transport mar- Comprehensive kets. In each market, it offers solutions, products and services that meet the fundamental needs of coverage of business and private customers. customer Swiss Post generates around 85 percent of its sales in competition. The remaining 15 percent is ac- requirements. counted for by the monopoly on letters weighing less than 50 grams, where Swiss Post is in compe- tition with electronic services. Services provided for private customers include letters, parcels, courier and express shipments, finan- cial services (payments, savings, investments, retirement planning and financing) and passenger transport services. Swiss Post also offers a customer-oriented range of third-party products across 1,464 post offices. The services offered to business customers are structured partly as solutions along the e-commerce value chain and partly as specific products and services in the four markets. Communication market Letters Various shipping options for individual letters and bulk mailings in Switzerland and abroad (urgent items, priority items, non time-critical items, and letters with Track & Trace), collections and deliveries, automated franking solutions, address management and online tools, as well as hybrid services com- bining physical and digital options for receipt and delivery. Direct marketing Addressed and unaddressed promotional mailings in Switzerland and abroad, individual direct mar- keting solutions, address management and response management. Print media National and international distribution of subscription newspapers and magazines, daily newspapers, monthly magazines and periodicals, and local and regional newspapers. Early-morning and special deliveries, publishing logistics, subscription management, lettershop tasks and newsstand distribution. Document solutions Local integration of physical and digital processing of internal post at the customer’s premises. Digiti- zation of paper-based data and its introduction into electronic business and administrative processes to ensure the efficient processing, management and archiving of documents such as invoices, forms, orders or customer correspondence. Preparation of digital content for printing and mail processing. Logistics market Parcels (national/international) Customized logistics solutions for sending parcels within Switzerland and abroad. Combination of physical logistics with integrated IT solutions and services to make it easy to send and receive parcels. International document and goods shipments in almost all countries with value-added services such as customs clearance and Track & Trace for consignment tracking. Swiss Post FINANCIAL REPORT 2015 7 MANAGEMENT REPORT CORPORATE GOVERNANCE ANNUAL FINANCIAL STATEMENTS 6 Business activities 60 Group structure and shareholders 73 Group 12 Organization 60 Regulatory accounting 153 Swiss Post Ltd 13 Developments 61 Capital structure 163 PostFinance Ltd 16 Group strategy 61 Board of Directors 22 Financial controlling 65 Executive Management 24 Business performance 68 Remuneration 52 Risk report 71 Auditor 57 Outlook 71 Information policy Freight and warehousing National and international freight and contract logistics from a single source with value-added ser- vices such as cross-docking and combined road and rail transport. Central warehousing locations and storage systems for all kinds of goods. E-commerce Swiss Post is the only provider in Switzerland to offer a complete portfolio of services covering the entire e-commerce value chain: from the design of online shops to order processing and logistics. The YellowCube logistics solution covers all the logistics processes, from storage, assembly and pack- ing parcels, through to shipping and returns management. Innight / Express / Courier As a leading supplier of overnight logistics, Swiss Post transports tens of thousands of consignments, night after night and delivers them before the working day begins directly to where they are needed, for example a technician’s vehicle, mechanic’s workshop, shop or operating theatre. The service is also offered for consignments from abroad. With Courier and Express, urgent consignments reach their recipients in the shortest possible time by the most direct route. Financial services market PostFinance is one of Switzerland’s leading financial institutions