Deutsche Post AG

A warm welcome to everyone out there. Welcome to our Q4 Full-year 2017 Call.

As invited I have got here with me Frank Appel our CEO, and Melanie Kreis, our CFO. Both are going to take you through the presentation, which I think you have in front of you.

After that, as always there should as always be sufficient time for Q&A, and still leave some time for you to prepare for the next call this afternoon. So, we are aware of that and without any further adieu over to you Frank.

Yes, good afternoon, good morning from my side as well. So, I’m happy to go straight away to Page 3 of the presentation where we summarized 2017 has been for us, so we are well on our track to deliver our targets for 2020.

We will come to that later on again, because we have made them concrete than before. It is driven by strong top-line growth, very good development of the EBIT, strong cash flow generation and therefore we are very pleased with the progress we have made.

If we look forward, we are well positioned in all divisions to capture the potential of eCommerce, we still can improve our margins particularly in DGFF as we believe and of course to support that we will continue to invest. We also proposed today increase by €0.10 in our dividend to 1.15 and Melanie will later on talk about the IFRS 16 effect and as I said, we are now committed to deliver more than 5 billion EBIT by 2020.

On the next page you can see as well, and not only the top-line grow nicely and the EBIT, but also OCF and the free cash flow have developed in the right direction, the other from UK Mail acquisition and the disposal of Williams Lea Tag, but overall I think we see a healthy development of our cash flow lines as well. And that leads to the dividend on Page 5, in continuation of our policy, where we always set 40% to 60% of our net profits should be, in the distributed to shareholders we increased our dividend as said to 1.15, that’s equalized I guess 52 percentage points.

So, overall I think that's a strong signal that we are very confident on midterm development. Let’s now look into the divisional reviews on Page 7, I think there are several good things to be mentioned, I will start with top right, we are well on our journey to convert that business from the mail operation to a parcel and mail operation.

And I think in the future we will also will see that parcel become even a larger part of our operations, than the mail part. And that is in line what we said since 2008, after we lost the monopoly, we have to convert that and have to find new growth areas and I think we have done pretty well.

In addition, what you can see on the top left. We had a pretty strong quarter with revenue development in mail and even stronger in dialogue marketing, 7.9% up, and that's in a quarter where the election was already over.

So, that's really a strong growth. You see that also on the bottom right, the numbers of letters per working day, that's continued to decline in mail communication, but dialogue marketing is up quite nicely and volume, overall if you take the working day level we are slightly up even if the absolute amount is slightly down in 2017.

Finally parcel revenue and volume very well development as well, top-line growth and volume growth and if you can go to the next page, you see as well that’s again a year above our expectations of the market growth and our experience of the market growth and that has led based on our great service quality that we gained market share in the last year. In 2017 - if you look into our preliminary assessment of the market has not been different and we believe we gained another time market share in Germany.

So the reason is because we have a broadest portfolio of services, we have the best product overall, we have invested into our sorting capacity and the result is that we are continuing to grow our above market. If you then go to Page 9.

This is just to demonstrate that our investment in Parcel Europe and eCommerce are getting traction and that there is a flow that operations are going first into the negatives of course, we can’t walk on water either. But after a certain time period the countries are turning into the black numbers and we see already the first countries which are in a range between 5% and 8% return on sales with a pretty healthy margins and we believe other countries will follow.

So overall, our footprint has enlarged in Europe now to 26 countries, we also continue to invest into the eCommerce, outside Europe activities, not only in delivery, but also in fulfillment and we have no doubt that we will see more successes in these parts of the world as well. Next page shows a continuation of our great success in Express, very nice continuation of revenue growth and also volume growth and it’s all over the place, we see very nice growth rates and so therefore, we are very happy, the recipe of investing into employees to generate service, quality drives financial results.

I think in our Company Express is definitely a role model and shows the power of free bottom line approach and the opportunity we still have in the other divisions. Next page is a highlight of Express, how much progress we have made since the base year of our 2020 strategy, significant growth in TDI shipments, significant growth in EBIT, the margins is nicely up and the return on capital employed is even more up than the margins.

So all this is I think demonstrating how successful we have been here. Next page is on global forwarding, still a mixed picture, although we got traction in the second half, in the fourth quarter in particular, you see in airfreight, we really back on a good growth rate gross profit improvement.

In Ocean freight, yes, we grow, but we have not turned the corner with regard to the gross profit per TEU yet, that is still work in progress, but we see the first signs of the impact Tim Scharwath had on our operations and that's the reason why the improvement you have seen in the fourth quarter has materialized and that makes me very confident for 2018. On Page 13 you see as well.

We can't be satisfied with the gross profit conversion, but if you see on the bottom, the development in DGF over the quarters, I think we gained momentum and as I said we are confident that we can make even bigger steps in 2018 based on a good volume development, margin improvement of our IT systems, we are getting more and more traction and rolling the core system out for Ocean, but also our systems, we are making good progress and as I already said, I’m confident that we hired a great person to lead that division. Finally, supply chain.

We had another year of good signings. Here it looks like it was flattish, but we had included last year the Williams Lea, which are already excluded in 2017 numbers.

So if you take that out, we have had an increase year-over-year and we will see impact from deconsolidation of Williams Lea Tag by about a billion revenue this year and also low mid to double-digit EBIT impact which I think is important, if you asses that. The other nice dimension is that supply chain gets more and more attracted on introducing new technologies which definitely will help us improve productivity and consequential and the profitability.

So to summarize from our prospective, I will handover to Melanie. I think it was a very successful year 2017, we are on a growth path, strong cash generation and we are in a good position to strengthen our foot print even further and our market share particularly in eCommerce.

The long-term synergy goals are intact, we have no doubt that we can make the numbers that can grow eCommerce in the emerging market. There is still margin improvement and potential in the division particularly DGFF and I think we have a very solid balance sheet and have increased cash flow already and we will continue to do so.

So now I hand over to Melanie. So thank you very much for listening and Melanie will now give you more insights in the detail numbers.

Thank you.

Thank you very much Frank, and also from my side good morning, good afternoon and thank you very much for joining us on this call. I think frank has already talked about the relevant business strength and I’m going to compliment this picture in this somewhat number.

Starting on Page 17 with our overview of our group and full-year 2017. So as Frank already mentioned, I mean our group revenue increased by 5.4% to more than 60 billion in 2017.

If you take out the adverse currency effects which we saw again in the year our organic growth was actually 6.8%. We were able to convert this revenue growth into a 7.2% EBIT which was in line with our full-year guidance.

Looking at tax and I will come to that in a bit more details and we talk about the fourth quarter. We see over all that the structure trends are confirmed, good positive growth continues to more than offset line although.

We have to say that 2017 was actually also pretty good for yea for postal volume supported by the multiple connections we had in Germany in the course of 2017. When you look at the DHL divisions, clearly the strongest contribution in 2017 came again from Express with a 12% EBITDA increase.

Global Forwarding Freights continued to progress particularly in the second half of the year, with EBIT overall up 3% for the year and on the supply chain side, the profit improvement was held back by a non-cash one-off in the fourth quarter, which I will talk about in more detail in a couple of minutes. The financial results was affected by the write downs in the second half of the year, this quarter we had a write downs on financial holding in an emerging market.

Now we come to a very interesting lines of the tax development, so you will recall that when we talked about our nine months figures, in the beginning of the November, we actually guided for tax rate of around 13% because at that point in time the overall assumption was that U.S. Tax Reform would no longer come in the course of 2017.

As you all know, it actually happened thus at the end of 2017 and unfiltered that would have had, adverse effect of round about 150 million on taxes line in the P&L. However, at the same time our trading improved in the couple of countries and we were able to active a couple of further tax assets, so that the overall impact of what happened in the fourth quarter amounted to a full-year tax rate of 14.3%, slightly higher than the 13%, but clearly the 1.3% increase is not just the U.S.

Tax effect. I think going forward, you will see our guidance for the tax rate for 2018 in the second with regard to the U.S.

Tax Reform, this one-time at the end of 2017 was really the most relevant impact from the U.S. Tax Reform.

When you look at the consolidated net profit, due to the higher financial costs and increase in taxes our EBIT growth did not fully translate to the net income development, consolidated net profit is up 3%. I think the important point here for our shareholders is as Frank already said in our finance policy, we have sufficiently large headroom in our payout ratio and on that basis, we have proposed an increase in our dividend of 9.5% up to €1.15, so more in line with our operational progress in the course of 2017.

That takes me to the slide on Page 18 which we have already seen a couple of time, I think the important thing here as you see the continued development in the right direction. When you look at our two more asset incentive businesses on the Express side we saw a continued improvement in operating margin to 11.5% for the full-year, actually in the fourth quarter as well as up to 12.3%.

And PeP despite the growth on the international side which gives us at this point in time more additional revenue than EBIT, we have had EBIT margin solidly stable, and when you look at the right side of the page, I mean supply chain was impacted by the one-time effect in the fourth quarter which I will talk about in a second but directionally moving in the upward territory. And on Global Forwarding Freight, obviously we are not where we want to be and that is why overall for Global Forwarding Freight, but also for the other divisions, continuous margin improvement remain top priority on the divisional agenda quadrupling into 2018.

That takes me on Page 19 to the fourth quarter results. The first number I want to find out is on the revenue side, you can see that the reported revenue growth was 4.5%, so a bit less than what we had seen for the full-year, but the organic revenue increase was actually 8.4%.

there are two important messages here, the underlying growth remains very, very solid and strong, and the currency headwind which we had seen throughout the year was actually a bit stronger in the fourth quarter. The EBIT growth was healthy despite the currency headwinds and although it was held back by the one-off and supply chain that I will get to in a minute.

The financial results in the fourth quarter looks pretty flat, but that is because we had the effect of the write down from an emerging market financial effort and that offset higher effect from currency translations which we had in 2016. And finally when you look at the tax line, obviously we had to adjust with the fourth quarter tax rate for the full-year which is why in the fourth quarter itself the tax rate was at 17.2%.

On Page 20, we have put together the free cash flow numbers for the fourth quarter. The first thing I have to point out is the pension funding in Great Britain which we did in the fourth quarter that was close to €05.495 billion and that is of course included in our first nine years OTF for changes in working capital.

When you adjust for this UK pension funding you see that we actually had an increase of 22% versus previous year, so we saw our usual strong fourth quarter cash flow. Change in working capital was a bit lower than in 2016 as we had more balanced steering of our year-end cash management.

Now turning to the group CapEx. For the full-year, we have guided from the start of the year for gross CapEx of 2.3 billion and all that after nine months it’s didn’t look likely that we would actually go to that number which is why we had always talk about timing effect and we had and I think I mentioned that also in November already planned a couple of sizable acquisitions of aircraft and Express and those took place in the fourth quarter as planned and on this base we had the gross CapEx of 2.3 billion for the full-year and you can of course also see this effect here on the net CapEx in the fourth quarter.

You see a big swing in the M&A line, so last in 2106 we actually purchased U.K. Mail in December whilst in December of 2017, we had the closure of our Williams Lea Tag sale, so from cash outflow in the fourth quarter of 2016 we went to a cash inflow in the fourth quarter of 2017.

When you put all these four effect together, you get to the free cash flow line where you can see that the higher operating cash generation underlying up plus 22% and the positive swing in M&A spending were in the fourth quarter offset by higher CapEx as well as the form of €95 million pending funding. We have also put together EBIT to free cash flow bleach for the full-year and you can see that on page 21 and that’s the page you could talk about for a long time, I will just try to kind of like explain the main movement here starting with our EBIT entries.

So from 2016 to 2017 in the top-line you can see that we actually had a increase of €250 million then depreciation pretty unspectacular. Now changes in provisions.

So first of all, the changes in provisions line last year was heavily impacted by the pension funding of €1 billion, but also because some of the restructuring elements we did in our German pension plan, which also impacted the other line. In 2017, the big special number in the changes in provisions line is the UK pension funding, so when you take all this UK pension funding, you are actually for the change in provisions line in the 400 to 500 range what we had guided for, so I think we are more in normal territory here.

On the other line as I already mentioned 2017 is more normal, the 2016 number is unusually low and because that was very offsetting effect from the German structure change in 2016. Changes in working capital number is a bit up in 2017 due to the business.

So if you take all that together and you look at our OCF opportunities in working capital, you take all the pension funding in 2016, the 1, 495 billion in 2017, it is actually up by roughly 350 million. So we were able to translate the good EBITDA growth into an even better OCF growth.

Net CapEx we already talked about, so I think the biggest element here I the year-end were the aforementioned fleet investments at extract of acquisition from aircraft which have been planned for time just in terms of phasing and that more towards the end of the year that we had originally assumed. Net M&A, we talked about, so when we look at bottom line our free cash flow of 1.432 is slightly higher than our official reported guidance of minimum of 1.4, but when you correct for the pension funding it actually significantly exceeds the expectations.

And that takes me to another cash flow page on Page 22, what we have tried to compare here is the free cash flow in the different years, what was paid as a dividend in each of the year, I think the simple important message here is the yellow bars are higher than the grey bars, so actually we generated more cash flow than we pay out in dividend and of course in the free cash flow our CapEx is already included, so we were able to do that by significantly investing into our future growth. Obviously free cash flow is very important element and the basis for shareholders return and that key chart shows that we were able to generate excess liquidity on top of our yearly ordinary dividend payments and we have actually done this since 2013.

So as already mentioned, the proposal to AGM is to now increase the regular dividend by 9.5% up to €1.15 Then we turn to Page 23, you can see the CapEx development in the different divisions, where we have now added the full-year 2017 figure. And with a arrow we are giving you an indication of what the expectation is for the full-year 2018.

That our overall gross CapEx is around €2.5 billion and that is in the old definition i.e. excluding leasing to keep things comparable.

Final slide, think two more slides on the group overview before we come to what is happening in the revision on Page 24, let’s take a look as a pension funding situation and as we were in a solid position already before doing the UK investment of €495 million, I think when you look at the numbers now we are in a very comfortable position. For Germany where we have no regulatory funding requirements, the funding ratio is up to 60%.

For the UK after the injection in the fourth quarter, the funding ratio is actually up to 98% and you can see that in the increase of our plan assets which has gone up. Interest rates haven’t changed the materially.

So the overall defined benefit obligation has been comparatively stable compared to where we were at the end of the third quarter, but due to the funding in the UK, the net pension provision has decreased. So I would say that we are successfully utilized the low interest environment in 2017 to further increase our pension asset base and with that we feel very comfortable with the pension funding situation as it stands.

Final page on the Group overview, the net debt development. For me the key take away from this page is that in 2017 our cash flow was strong enough to drive net debt further down, despite as I just mentioned debt finance pension funding as well as our increased dividend, I think that's a very positive development.

And that takes me from the Group to the divisional fourth quarter results, starting with PeP on Page 26. So the revenue growth reported for PeP was 7.3 %.

Throughout the year 2017 we saw the effect of the UK Mail revenue coming in, which is now going to be on a like-for-like basis in the first quarter of 2018 onwards. So without this acquisition effect and corrected for currency, organic growth was 4.9% and that growth translated into a similar EBIT increase.

German EBIT only progressed slightly in the fourth quarter as in every year, peak season requires extra effort and extra costs. When you look at the international EBIT, we did see improvement in the international results, but I would also note over interpret these numbers.

Our international activities continue to progress as planned and as I mentioned several times before, they remain in start-up phase and we do not expect them to start contributing in a meaningful way to our EBIT growth in PeP for the time being. So in the first quarter, it was positive, in the second and third quarter it was a bit negative, now it’s positive.

I think so we are living up to what we had said before, it's hovering around the zero line. We don't expect it contribute materially yet, but we also don't expect it to be a drain and I think that has worked very well in the quarter of 2017.

OCF in PeP was supported by positive working capital management and timing effect and the CapEx for PeP increased in line with plan, with our German Parcel infrastructure still absorbing the bulk of the CapEx spend. With that, I come to Express where, I can only say that the fourth quarter was an excellent at the end of an excellent year.

Here as well, we see the negative currency effect on the top-line, reported top-line growth is 8%; organic top-line growth is 15.2%. And this top-line growth actually translated into a parallel EBIT growth of 15% where we saw again that our focus on yield as well as on efficiencies and our network operations continue to drive gradual margin improvement.

The fourth quarter margin was up to 12.3% and the full-year EBIT margin rose by 30 basis points to 11.5%. Operating cash flow in the fourth quarter for Express doesn't look that spectacular, essentially flat year-over-year but that was due to timing effect and when you look at the divisional cash flow for the full-year it was up actually almost 15% for the full-year.

So I think really overall great top-line growth driven by TDI volume growth translated into the EBIT development and into a roughly 15% OCF increase for Express throughout the year. And CapEx we already talked about, I mean obviously in the fourth quarter CapEx you see the effects particularly of the planned aircraft purchases.

That brings me to Global Forwarding Freight. In the fourth quarter we showed some improvement after a difficult first nine months.

As we have all seen trade volumes are picking up and were reflected in our good revenue growth which was 9.1% on an organic basis. You saw that in the numbers Frank presented earlier, Airfreight did particularly well, and we were able to post some increase in absolute GP as well as in GP per ton.

On the Ocean freight side, we are still facing GP pressure, also in part because the year-over-year Ocean freight comparison base was tougher than for Airfreight. Nevertheless, I would say also when we look at compared to first half of the year and the second half of the year I would say that we managed the peak season well and that is reflected in the EBIT increase and improvement in EBIT margin which we saw in the fourth quarter.

With regard to operating cash flow we experienced an increase in working capital in DGFF and that's held back the OCF development. And finally CapEx, I think you see again on that DGFF is clearly our least CapEx in terms of division.

This finally takes me last but not least to supply chain and obviously the reported numbers here do need some explaining. And let's start already on the top-line, so the reported revenue increase was a meager 0.3%.

Yes as you probably know, a lot of business in supply chain in Great Britain in the United States, countries where obviously the appreciation of the euro led to headwind on the currency side. So, when you look at the organic increase in supply chain it was actually up 7.8% in the fourth quarter so really good growth development.

In this organic increase the main driver is FX, but we also have the first time effect from the Williams Lea Tag sale in here which is going to be a big factor also in the revenue development of supply chain throughout 2018. Frank already have mentioned the number, we are talking about €1.1 billion in revenue, which are going to be reported figures also in 2018.

EBIT in the fourth quarter when you look at the reported numbers was nearly 11% below the previous year, but this EBIT number includes a negative one-time effect of 32 million and that's is a non-cash effect which came from one-time write down of customer relationships efforts which actually date back to Exel acquisition in 2005. So for me, the way to look at the supply chain numbers for the full-year is we had this one-time noncash effect in the fourth quarter, the €32 million and that is order of magnitude also what we had in EBIT contribution from William Lea Tag in the year 2017.

So on a full-year basis, those effects cancel each other out so when you kind of like think about going forward what is clean a starting point for supply chain for 2017 going into 2018 it is actually the reported number. On the OTF line, we have the next big distortion in the supply chain numbers because the majority of the already mentioned UK pension funding was for the benefit of UK employees in our supply chain division.

So effect pretty much exclusively happened in our supply chain division. And finally, CapEx for supply chain is low overall and in line with new customer setup as it is typical for this division.

And that takes me to the technical slides IFRS 2016. We already touched upon it in November and we recovered throughout the year.

Obviously May will be interesting when we present our first quarter numbers and for the first time kind of like the real final figures. At this point in time, we are also talking about estimate numbers and there maybe changes, but I think they are precise enough to help you gain on the spending of what to expect in 2018.

So when you look at our annual report, you can see that for operating leases in 2017 we had a material expense number of about €2.7 billion. This number is going to change completely, because the only thing which will stay in material expense will be low value and short-term leases.

The majority of the leases will go on the balance sheet that will add roughly €9 billion to our balance sheet and then those asset will be written down as depreciation and we expect that we will clearly see that effect in an increase in the depreciation line. But due to the fact that actually the biggest chunk goes from material expense to depreciation, our EBITDA will go up by round about €2 billion and the OCF reduce as well then we have the increase in depreciation and on the EBIT line, we expect to see a benefit of round about €150 million because there is a portion of the old material expense which grows as interest cost into the financial results.

And here, we have a timing effect, because we assume that all this will start on the 1st of January 2018. The interest cost in the beginning is going to be higher than over the duration of the contract and that leads to a higher increase in the interest cost than the benefit we see on the EBIT side.

The increase in the interest cost is going to give us some benefit due to the reduced profit on the tax side. So the current assumption is that EBIT will be positively impacted by round about €150 million while net profit will be negatively impacted in the first year by round about €150 million.

What does that all mean? I think the first important message is, it’s accounting and that means that we will not make €1 more or €1 less, because of an accounting change.

So our free cash definition is also adjusted in a way that the free cash flow is really the same like-for-like. The second important thing is, especially when you look at the technical reduction in our net profit number, obviously we will take that into consideration in all future dividends discussion and that is why we have this flexibilities of range that the 40% to 60% payout ratio.

So you shouldn’t be concerned about accounting changes having an impact on the dividend policy going forward. That already takes me to the guidance on what to expect for 2018 and also our medium-term outlook for 2020.

You can see that on Page 32. So for 2018, we have naturally included the 150 million for the IFRS 16 effect in our guidance number, which is 4.15 for the group.

And the breakdown of this is that for PeP we expect EBIT contribution of round about 1.5 billion, for the DHL division around 3 billion and essentially flat corporate center costs leading to this group EBIT number of around 4.15 billion. So when you look at the PeP guidance, particularly that is obviously saying that we assume that the PeP EBIT will be flat year-over-year, because we already had 1.5 in 2017.

When you take in the PeP share of IFRS 16 effect which is round about one third of the 150, it could mean that there maybe a little bit offer set back. So the reason why we are relatively cautious on the PeP number is not because of one negative effect, I think it’s just taking into account that 2018 is going to be demanding year for our PeP college, we don’t have opportunity to do a - price increase in 2018 i.e., we have limited pricing flexibility on top of our product portfolio, we have across increases, we are working on the expansion.

So putting all this together, let’s do this slightly cautious guidance on the PeP side. Right on the DHL side, we clearly expect significant progress year-over-year as implied by the 3 billion, obviously we expect in some division goods continuation of what we have already seen in 2017 and in others a significant step out compared to the year-over-year progress they showed in 2017.

Now looking at the 2020 guidance, we have essentially done three things. As you know, we have also written it on the column on the right, our original 2020 guidance was based on relative growth numbers, so I know you have all taken your pocket calculators and translated it 8% CAGR on the group numbers to €4.9 billion number, so we have now also changed to absolute number for 2020.

The second thing is, yes of course we have also affected in the IFRS 16 effect, which is why the Group number is now more than 5 billion and we have made some small adjustments in the relative contribution between PeP and DHL where we have taken into account also what has been achieved so far where PeP has over-delivered on the 3% annual growth whilst the DHL divisions most notably held back by the forwarding development have not quite met the 10% and that was relative adjustment between PeP and DHL. With regard to the other guidance elements for 2018 you can see them on the bottom of the page we expect to generate free cash flow of minimum €1.5 billion.

Tax rate at this point in time stands at 18% and with regard to gross CapEx as I already mentioned the expectation is around €2.5 billion. And that takes me to my summary slide on page 33.

I think overall, 2017 was another successful year for the group where we experienced strong financial progress in all divisions and where we were particularly glad to see DGF beginning to recover with the head of our new divisional CEO in the second half of the year. Going forward, we continue to be well positioned for further sustainable profitable growth and all the divisions know what they have to do, we continue to innovate and invest to support future growth.

One very important element for us this year was to translate the good top-line development into good EBIT development and into good cash flow generation. I think we have succeeded in doing this and on this basis it was a natural step for us to also increase our regular dividend correspondingly.

So finally on Page 34, we have updated our short-term summary investment profile for the new 2020 guidance and factoring in the increased dividend. Many thanks for listening and I will now turn back over to Martin to start the Q&A.

Thank you Melanie, thank you, Frank. And operator I think we still have sufficient time for Q&A, you could initiate that please.

Good afternoon. Three questions if I could please.

In terms of the sort of guidance say if you look at the EBIT growth from 2018 to 2020, that's basically 10% CAGR 2018 to 2020. Is there any reason why we can’t think of that sort of growth rate in the sort of medium to longer term post 2020?

And secondly could you just talk a little bit about the wage agreement that you put have in front of the unions and when you might expect to have that signed, sealed and delivered? And then maybe the third question just on the balance sheet.

In the presentation you mentioned solid balance sheet, further excess liquidity, you have obviously had close to €300 million from the sale of Williams Lea Tag, how should investors please think about surplus liquidity, doesn't feel like you have got a lot of M&A today? Thank you very much.

Thank you Andy. May I take the first and the second and Melanie answer the third question.

So it's definitely too early to commit really numbers beyond 2020, but what I can say is the eCommerce transformation of most industry is still at the beginning, and we will see benefits beyond 2020, that's the reason why we are investing into new activities, invested even if they contribute very little at the current stage. Secondly, I highlighted only the power of digitalization for our supply chain, we believe really that can help a lot, I have just looked the other day the GBS team into how you really easily can program, but in the meantime, I’m very confident that we will see tremendous productivity gains from these kind of activities, because technology becomes so straightforward and user friendly that I believe we can do significantly more as an operation on a global scale.

So, it's too early to commit, but of course the eCommerce and the digitalization definitely will drive our performance long-term. On the tariff agreement, first of all we felt that we offered a deal which is attractive to our employees without being over the point which we can't accept, so went up to the level to balance both the interest of the Company and the shareholders on one end and the interests of all the employees.

The time is not 100% fixed, but we assume just really have to go four weeks around from now, maybe slightly more, but that's not in our hands, that's in the hands of the union. I’m optimistic that our employees will see the strength of the offer we have made for them because is not only the salary increase, but also other elements like that they can exchange the salary increase in exchange for three days, which definitely helps our elder people, so I’m confident that we will get that through, but we know that only about four weeks somehow.

Maybe that one element which maybe I should mention is that the people have - the employees have to refuse it by more than 75% to get not signed and we think that's pretty unlikely that this will happen, but you never know. I expect acceptance, because the offer is attractive and it's good for the Company as well because we didn't go too far with the offer, but we believe still that this is an attractive offer for our people.

Yes then with regard to the balance sheet that question doesn't come completely unexpectedly, I mean obviously we are showing the numbers ourselves and we recognize that we have accumulated excess liquidity and also over the last one and a half years since the large share buyback we have now focused on doing a solid increase in our regular dividend, but of course we feel further bound to our finance policy and will act upon it when we think the right time have come.

Great. Thank you very much.

Thank you. Next caller please.

Hi good afternoon three for me if my way. First on the EBIT and PeP and Melanie already commented on the flat development it into 2017 but may be looking out and also with the chart Frank shared earlier.

What is the turning point here for the European ventures to in total really become profitable and take off and would you in the medium-term expect them to reach German levels as you have that curve kind of pointing upwards. Secondly on DGF and the progress there, I mean we talked a lot about the IT in the past, could you share some thoughts on how you are thinking about processes and staff capabilities into the future and how that may also impact the freight mix you have within DGF.

And then lastly just some comments on the TDI TDD shift within Express where you are seeing of course TDI growing the strong, is there any message embedded into TED and how is that performing in Europe possibly also against the stronger parcel networks and the entry of UPS and FedEx? Thanks.

So I will start with the PeP question. So that’s a tricky question following the sense the more successful we are to improve the performance of the existing countries, our appetite goes up to do more, because that’s proof of evidence that a path going forward.

I would not suggest that we should slowdown the growth to just deliver significant contributions for our 2020 targets. We always said the contribution to the bottom line will be relatively small and whatever we gain there and see that is working, I think we should accelerate the growth path going forward.

So that’s a recipe and therefore I would not comment on that. Can we get to level we see in certain markets likely Germany that’s also tricky, we will see a pattern of margins in the countries, because the competitive landscape is quite different from the customer side and also from the competitive side and that’s very tricky.

We have that in all our businesses, we have pretty high margins in some countries and only decent margins in others and that has some degree of competitive landscape the inbound and outbound of that place of part here as well in Europe. And we have significant inbound and outbound that has impact and therefore I think it’s better to look into that game on a retail base and a country base, because it will leach this perception, either because the margin is too little or the margin is too high and then you say “oh” therefore we will probably continue to say we can talk about what we do on a regional basis like the moment we are doing that on a global base, because the contribution is still so little.

On DGF, yes I think we are making good progress and of course the skills the people need to perfect - the system is perfect to the skills our people have already that the strength of the software so they don’t have to change that much and they didn’t understand fully if that was a crush. So, I think we have the great product; we have surrounding systems which we used already in some markets and scale them out globally that will work very well too and therefore we are very confident that we have the suite of IT systems with our fit purpose and our employees telling us as well that this is really what they needed for and it’s a significant step-up against the legacy system.

I’m not sure that was really the question but otherwise please ask again and I hand over for the last question to Melanie.

Yes so on the TDI TDD question and our TDD volume is coming from a handful of countries. It includes some European countries like Germany, the UK and the Switzerland, Italy and then outside Europe very important country is Mexico.

And from my prospective, the growth we have seen is 6.2% for the full-year has been healthy growth and you can also see that we had a bit of yield management in this revenue being up slightly more of a 7.5%. So I wouldn’t over interrupt with that as kind of like the European countries being under pressure from competition.

So I think in those six countries in Europe, German, UK, Switzerland, Italy where we had sizable TDD businesses. we are actually very pleased with the performance.

Let me also follow briefly on the on the DGF question. I think the thought is around Frank if you are after 2.1% for DGF currently and we discussed several times how that will kind of improve overtime and IT is one driver, remember driver has to be kind of change the mix of phrase to getting to more value added services, because otherwise you won’t be able to list the GP probably.

And here the question is, is the IT really all that you need or are there other element to that transition that you still need to put in place.

I think what is important and you see that already in the fourth quarter to a certain extent, what helps tremendously is I think Tim’s approach that we have to focus on GP conversion. He said that we need a data mix on the GP, because that will drive the GP conversation and we also at the same need a better management of our processes and structural change he intends to do, that includes IT.

So I think he is very clear, but we have to both to get to higher absolute profitability and he is very much committed to do so. And he understands that kind of business very well, we all believe it, where you they have to be firm with price increases and where you have to compromise.

His 25 year experience is tremendous help and he is very clear to his organization and that will help us to improve the GP and at the same time the GP conversion. And this is what he tells me all the time, we have to do both and he is very much committed and I think he has already identify to lead us on both what we should do differently to improve the performance overall.

Great, okay. Fair enough, thanks very much.

Thanks Daniel and next caller please.

Good afternoon everybody, three questions from me, if I may. So first of all on the pension where you paid a lot chuck at the UK deficit last year.

Could you talk about how you think about future law of payments in the pension as oppose for example returning cash to shareholders. And then second question on the free cash flow guidance.

When you guided for 1.4 billion free cash flow at the end of last year, which of course was achieved in the end. Did you anticipate that would include that the UK pension funding of almost 0.5 billion or was that only decided on most at the end of last year.

And then the final question on the Express, Melanie you mentioned the Express revenue would have been up 15% in Q4, without adverse FX effects rather than reported 8%. Could you just may be just comment on what the EBIT growth in Q4 would have looked like adverse FX effects?

Thank you.

Okay. So starting with the UK pension, first of all the way I think about this pension funding is not that we took excess liquidity away from what we can potentially distribute to shareholders which is why in this one graph we also adjusted for it.

For me, it’s more of a liability swap on the balance sheet where we took advantage of the very positive refinancing conditions we saw again in 2017. We had mentioned repeatedly in the course of the year that I mean in Germany, there is no regulatory pressure to come to a certain funding ratio and also from the social partner, there is no pressure.

The one plan there as you all know due to legal requirements. We had under funding situation was the UK.

There the regular negotiation with the trustees is actually only in 2018. But we saw the opportunity in the course of the 2017 that through a pre-funding, which is a lump sum amount cheaply refinanced we could actually and get that into a stable territory for some time now.

So I feel very comfortable with account funding situation and at the moment we don't have any further plans, because the UK and Germany are our 2 big plans. With regard to free cash flow guidance, did we kind of like already planned for it concretely in March 2017 and then we came out with a guidance.

I think it was one of the taxes we had on the moving parts list, because we knew in 2018, there would be those discussion with the U.K. trustee on the pension funding, but in March 2017that wasn’t spilled out in any detail with regard to amount and how to and timing of the whole thing.

Then finally with regard to currency effects, what did we see in the fourth quarter and what do we expect going forward. We don't disclose the details of the currency impact on the EBIT because there are really quite a number of factors flowing in.

I think the general message I would give you is, I mean, first of all being active in 220 countries and territories and having been active there for quite some time now, currency movements are a part of our business, which is why we have it at every quarter. The only time to talk about it when it’s really kind of like profound like what we have now seen in the course of 2017.

I think the important element also going forward is our ability to deal with that particularly on the EBIT side and here the different businesses have different headroom to adjust for currency development. On the Express side, everybody including the customers understand that our Express network is an extensive network and a big chunk of that is the denominated in hard currency, because everybody understands that the currency used on the aviation side is U.S.

dollar. So a customer in a small country where the currency has devaluated will understand that this will eventually leads to price increase and we have consistent taken currency development into our annual GPI numbers for Express and we have even in extreme cases done intra-year adjustments to recovery from currency.

At the other end of the spectrum is supply chain, we are as a positive as such revenue and costs are actually much more in sync because they are in the same currency, so when you have supply chain contract in the United States the revenue is in dollar, the cost base is in dollar, the result is in dollar and the only thing we have is the translational of results. Of course the downside of that is it's much more challenging to explain a customer in the U.S., let, hey just because U.S.

dollar result is now less than our group books, in euro we have similar price increase that's more challenging, tried increased discussion which takes longer. So putting it all together, on Express, I think we have ample of experience to adjust to a currency effect over time, and on a much more rapid basis then we can for example do it on supply chain side, whether is a more direct translation from the top-line to what you see on the bottom line.

That’s very helpful. Thanks very much.

Okay, thanks Rob and we continue with the next caller please.

Good afternoon. I guess three questions again.

Can I come back to the balance sheet issue and just sort of talk about the excess capital a little different way? Historically, there have been hints at times you would have explored things like interim extraordinary dividends, could you talk a little bit more about if those will be back on the agenda?

So, it's just more sort of smoothing position of the balance sheet or indeed we think sort of activity within the sector, both M&A and what looked like might be failed attempts at IPOs. Given that and the eCommerce background, when you think about your sort of potential returns on capital as you go down that priority list, would you still plan to think about the same time scale or if there are significant strategic moves you can make, would you think of loosening some the criteria if the risk reward is better?

Second question, just on the IFRS 16 change. Could you just talk a little bit more about how that would impact the way the metrics are set for the long-term management compensation?

Will those be re-based and if so, will they be re-based given the fact you get the depression of the short-term earnings with if you like an elevation long-term? And then very finally, just one of 220 countries you operate in, but size one at the moment, what sort of contingency planning are you making around the U.K.

exit from the EU at the moment? There seems to be at least one of your competitors taking cost and time to look at whether they need to go for more paper-based customs clearance, are you having to take the same cost?

And if so, were any in 2017?

So, Damien may I start with the second and first questions, so on IFRS 16, of course we are not changing our incentive scheme, for the management board, our incentive scheme is very much long-term oriented based on the share price development, in anyway, as you might remember and of course we don't see any reason why we should change that because at the first moment, the company should have the same strength as before and we think the right incentive is that our incentive scheme is very much tweaked into the direction of long-term and shareholder oriented as we have it and that is our intention to keep it. Second UK exit, of course we are looking to that very intensively as well and we are preparing that.

We are not probably talking about too much of the detail because I think the situation is too fragile already any way and it’s not good if we are now making more noise as business and I can reassure you that we are of course preparing for that. The cynical thing if that gets all, it is an upside for the short-term for companies like us because customers will look to us to get their complexity managed, but it’s not good all the long run for Europe and nor the UK nor Europe because it will impact the economic growth.

So, we are preparing for that still with the hope that they get to a conclusion which doesn’t need any drastic action. The costs are related to that and not - I think it’s more the preparation of systems and processes.

But of course now we are looking and that on management board level as well because we think that might have an important impact on certain elements. But again I repeat in the short-term, it might lead to support our business more than it is negative for us.

But that’s a little bit cynical, because we have to do everything we can and I say that publicly that we should get to amicable divorce if that’s possible or not I don’t know, but that is what I say publicly to journalists and politicians if I see them. But you know there is a risk, because there is actually not good traction at the moment and the negotiations as we all know.

So that maybe then Melanie you can talk about this subject.

Yes, and I will try to interpret your question little bit. I think I sense a little concern there that we may start doing big M&A or spending of excess on maybe not so return yielding investments that is very clearly not the intention I mean with regard to M&A what we said over the last quarter still holds true.

We will consider strategically sensible bolt-on acquisitions like what we have done this U.K. Mail and our supply chain expedition in the healthcare sector in Italy and Latin America.

But that’s it so M&A is still the bolt-on category. I think with regard to our more normal investments, I think we try to give you comfort that on the gross CapEx we are talking about €2.5 billion and what we kind of like do with the rest I hope that is our free cash balance sheet this year.

It shows that also we want to continue generating a reasonable free cash flow instead of spending of money in an unwise way. So as we said before, we are committed to our finance policy and on the other elements nothing has changed.

Okay, thank you and just to be clear, no chance of a [pseudo] change in dividend approach to some form of move or multi-year dividend?

Yes, so I think what we are now focused on is the increase in the regular dividend which is six weeks time that we decided by the AGM and then we will kind of like take the next decision at the right point of time.

Okay. It’s clear.

Thank you.

Yes, good afternoon. I have got three as well actually.

So if I could just start off, just sort of question of Express, how you see the market developing there, I mean obviously we have seen UPS announced an enormous CapEx program for the next few years, substantial investment in new aircraft and new capacity, a large amount of which they plan to deploy on international routes. I guess my question is do you think there is a risk of over capacity developing in the Express industry and what steps do you take to mitigate that is my first question.

My second is, on the issue the bridge to the 2020 guidance and just to understand specifically your thinking about mail, I mean obviously understands this year is going to be flattish year. But as we look into 2018 can you sort of help us, on some why you think this is going to be a pick up again specially in the light of further increases probably in labor cost and then my third quarter just because - asked it but this KFC chicken think, it is a significant risk, is it something that’s likely to weigh on the first quarter numbers.

Okay so I will answer the two first questions and alike, and then talk of the financial impact on KFC. So of course we see that as well that UPS is doing, but we have to be realistic, the industry is now much larger than it was a couple of years ago, incremental capacity, we will not be creating over capacity, we have seen that the last quarter as well, a significant increase in freight cost in both in Express and in Airfreight, due to the shortage of a market.

So there is a very remote risk and I think in UPS, FedEx and us have demonstrated in the past, we are not gambling on buying market share, we want to provide the best service and make a good margin and I trust that this has not changed, there is no need to change that. So I’m not concerned that that this will create over capacity.

Beyond 2018, therefore the country is also attractive for us as the tariff negotiations that last until if it signed until mid of 2020 that gives us good planning certainty and it gives us also good planning certainty while the discussions we will have later this year will be regulator, because we have had a deal for three years and it’s now up again for 2019 and 2020 and we are looking into the numbers there will be another negotiations how much, but there will be another discussion of our post this increase and that’s the reason why we think this will be more flattish. We have planning certainty if a deal is signed by the units until 2020 and we will get then planning certainty as well, how much lift we will get for the postage.

I don’t know yet what it will be but this is somehow embedded into that we want to grow then again in a growth momentum and want to deliver our 2020 number for PeP. So that’s will lot behind that and we don’t have that in 2018 and that’s a reason why we say okay that we will not have held from price increases and that’s the reason why we probably see a flattish year this year.

Okay than finally on KFC topic, of course we have been first and foremost focused on making sure that operations improved and stabilize, maybe we have seen significant progress and where we continue to work hand-in-hand with KFC and QSL, so really the energy has gone into making sure that all stores reopen and that’s the breadth of the search menu increases and the whole thing started on the 14th of February, by today we are really in a significantly more favorable situation again. With regard to financial impact, it's too early to talk about that, but I mean we have just today given our guidance for the year, yes of course we factor-in our best knowledge on all developments at the current point in time.

Okay. Thank you very much.

Thanks, Joel, and we have got more callers.

Yes, good afternoon. Just two quick questions on the forwarding division.

First, how much of the $700 million 2018 to 2020 DHL EBIT improvement is expected to come from forwarding? And then second Air is certainly doing better than Ocean at the moment, why do you think it is that Ocean take longer to turn or seems harder to turn?

So on the first one let me say that we have done that for the last years, we gave all these guidance for PeP and the DHL divisions combined and therefore we will not now give sub guidance on the subdivision, some of DHL, but of course we see a significant opportunity to improve the performance of DGFF. This is a good question, I think the time frame for certain contracts last longer in Ocean freight and that's the major driver.

So we will get out of that as well, I'm pretty sure it takes a little bit more time, but we still see growth and we are confident that we see progress in 2018 and in the Airfreight, we have achieved that earlier, but nothing there is no doubt that this is also achievable in the Ocean Freight area. David, question answered?

Yes. Thanks.

Yes hi everybody, good afternoon. Actually, two, three questions on post actually.

First of all, if you look at the fourth quarter and you could see quite a positive momentum on the unit prices both in mail and dialogue. Maybe you could add some flavor here why dialogue in particular was also strong on the volume side while mail looked a bit weaker or let's say to get to the downside of the trajectory.

And could you confirm the overall trajectory that you see for the mail decline or should we take something into account, why this should accelerate? I'm trying to figure out a little bit, are there any effects because you said pricing flexibility is not very strong obviously in 2018.

We should nevertheless think of being sustainable going forward from the good development in Q4? And then I might have a follow-up.

Yes. So, if I reflect on those, yes, there is a certain trend happening that more and more customers realizing that advertising through dialogue marketing is more attractive than some of them thought.

We have new products which you can combine with the online advertising and that helps and we have very cheap products sent by mail as well and then that might help as well, so, is that a trend, I think that's too early to say, but we are confident that the underlying trend of minus two to three is not accelerating we have no indication why it should happen. We might as we have just said as well, we have seen in the fourth quarter even in dialogue marketing had an opposite trend that I would say that's too early to say that this is an overall trend, therefore I would prefer to reconfirm, we assume in our guidance for 2018 and 2020 that we have a decline of 2% to 3% of our combined communication and dialogue mails.

And then on the other post revenues which I perceive is mostly the branches and shops obviously, but nevertheless pretty strong development in the fourth quarter, also here the question, were there any other effects we should take into account or is something of the let's say turnaround Q3, Q4 momentum at least giving some hopes for the development in 2018 and…

So, I’m not aware. Melanie, are you aware of anything special with regard to our revenue?

No, definitely nothing which I would consider trend changing going forward.

We looked at it in preparation and couldn't find anything that’s worth hinting to a better read. The good news is that we see elements which we didn’t expect to say explained when I presented that page as well.

That news is we don’t think that's the moment where we say okay now we have turned the corner, I think it's prudent to say you should assume and our guidance sustains on an assumption that we will see a continuation of the key strategic design without having the postage change in 2018, that's one of the element which leads to a flattish number in that division.

Alright. Thank you.

Thanks Adrian and we still have time for few more callers.

Hi there, thanks so much. Just two questions for myself.

Firstly just on the PeP business again, first is looking at the non-mail businesses particularly, the Streetscooter of the E-Postbrief in the past, can you just maybe discuss some of the investments you are putting in there and whether there is sort of anything else that might maybe going over the next couple of years. And I suppose, I know you won't give the absolute numbers, but can you give us an idea the investments you are putting into the sort of these new projects are they likely to go up in the short run over the next couple of years or do you see them coming down over the next year particularly going into 2020 and that target?

And then second question maybe for Melanie is, just on the cash flow, obviously the provisions look as though they are coming down again this year looking at the balance sheet, think about couple of 100 million looking at it, given the use of regarding that 400 million to 500 million normalized last year would you be suggesting that we will see a further improvement this year of maybe the 200 million which we are seeing in the balance sheet? Thanks very much.

May I comment on Streetscooter. So this is a good question, we see pretty strong external demand now, now there is always a lead time because this is B2B, people are taking some Streetscooters, testing them, assessing pilot then do another pilot and therefore there is a delay.

But at the moment we have encouraging signs, so therefore it might leads to proven investment to that area, but that’s backed then by sales, external sales are not only internal usage, which I believe or we believe would drive value creation in the Streetscooter arena. The investments for production are not very high.

We are talking more about changes in working capital, because if you produce for external, we buy products assembled across and sell it and there is if you made between [indiscernible] the different pieces and the sales of the car. If that gets bigger of course we have that belied and more transparency for you, because it’s a slightly different type of business model than we usually operated.

But at the moment, we have very strong external interest into that and it will lead external sales this year without a doubt, and if that happens I think we really have something which has value creation potential and this is what we try to do with that after we started originally to be prepared for [indiscernible] in the cities and as you can easily see we are getting closer to that in Germany and some of our countries. And we are the only one that will have some preparation, we are not 100%, but we are significantly better prepared, that was the original idea.

Now others are facing the same challenge and that probably will even accelerate to the external - which is for us an opportunity. But of course, if that gets larger you need more transparency of what we are doing there as well.

At the moment, we are very happy with the performance of our Streetscooters and the first customers are very happy too, so that’s the opportunity. The investments and manufacturing are not huge.

It’s mainly working capital, because we have to buy the products into assembly so that’s more what is changing and the capital investment into the plant is not huge. And Melanie, do we expect any major swings in the change in provision line?

Yes so mainly just to add to kind of like other stuff. I mean I think like the E-Postbrief that is now more of a hybrid offering in the regular postal revenue and with regard to the international expansion project that is what you mainly see in EBIT in the national line.

So, I don’t think there will be significant distortions here and I don’t think we have given few indications what we can expect in that area. With regard to the change in provisions line I mean what we said I think last year is May then we talked about it as a Capital Markets Day.

We had that range of 400 to 500 I mean we have stuff which is always circulating through these lines. For example, on the employee side, there are things which as a part of normal accounting process will always flow through these lines.

So, I would assume for now that it is going to be in 2018 also in that order of magnitude.

Thank you very much.

Okay. Thanks Dominic and one more caller please.

Good afternoon. In fact, a follow-up question on the Streetscooter, could you please give some indication of what you think the output of the business will be and number of vehicles this year and is it too early to start discussing where you think the output could get to in let's say five years' time, something like that?

So, this is of course the ultimate question that what we are doing is that we are preparing ourselves to be able to produce 15,000 vehicles of different types. We definitely have an internal demand 5000 ourselves and the rest will be driven by how much demand we will generate going forward.

So I think it’s too early to say how many we really will produce this year. But there are some opportunity, we get interest not only from Germany, we get interest from Europe and we get interest from overseas.

Because the vehicle is well designed and pretty attractive from the economic terms and that is an opportunity for us. When it will really go forward we will see, as I said we are in the B2B world and the B2B world is moving much slower than consumers.

Consumers are changing their mind rapidly and going away from Nokia as smart phones as you might remember being the backbone of big corporate is still Microsoft and the reason is because it is an embedded platform. so therefore the change from commercial vehicles from the current to the new ones takes more time and therefore it’s a little bit trial and error and we will see in due course but as we said we have tremendous impact and we have prepared for 15,000 production, because it’s not completely impossible to happen that, how likely that is we will see in due course.

So I can’t - we are doing prudent steps I think to leverage what we have today that without overstretching our capabilities.

Thank you.

Thank you Ed. And time is progressing, but I think we have got time for caller or two.

Yes good afternoon, thanks for taking my questions. Firstly, on forwarding Q4 and the details you provide there for net other operating positive for 8 million, usually that’s a negative.

Is there anything we should be aware of, last year you had some real estate sale gains in there. So anything we should be aware of in that.

And then I understand that the average 16 impacted in forwarding and supply chain will be similar on the EBIT and I’m starting to understand that given that the asset intensity of forwarding is so low, while our belief in impact be so substantial and forward. And then on your free cash flow guidance, we appreciate that you do give a guidance, but you have [indiscernible] but basically your EBIT is very precise, your CapEx is very preside, so the moving part is just working capital and disposals and I’m wondering why it can’t be more concise and commit to a higher free cash guidance, because it doesn’t really pick up with a profit progress you are making, the 1.5 billion looks very low to us.

Okay, so starting with the first question on the net other operating. So when you compare the fourth of 2017 with the fourth quarter of 2016.

In both quarters we actually had a positive contribution from the net other operating 15 million in 2016 and 8 million in 2017. In both cases that was driven by real estate disposals.

I think the important element when you want to understand the underline proof that is that the overall contribution in the fourth quarter of 2017 and fourth quarter of 2016 was comparable. So the like-for-like progress underlying is for real.

And in the fourth quarter it is...

Could you quantify these real estate gains?

I think we haven’t quantify them in the past, because in terms of order of magnitude that is not high enough for external disclosure, but as I said like-for-like the two fourth quarters are actually quite comparable and I think the important - I think here is in the fourth quarter and that wasn't obviously the case in the first three quarters of 2017. We are also seeing progress on the DGF side and we discuss that also in the previous quarters what we saw in the first half particularly the progress came from freight in the fourth quarter now we also saw it from DGF and there it was clearly driven by Airfreight on Ocean Freight are lagging a little bit behind.

That was on the first question. On the second question IFRS 16, yes, I see your point and I have to say we have given you a very rough indication, because we didn't want to go into too much details, we understand that you need a bit of a guidance for what to put into the model for the different divisions, we will give you the more precise numbers in May when we really have the half final numbers and there will be a shift between supply chain and DGF and will be more on the supply chain side than on the...

But there is also another element I think which we can say too early today. So as we have said real estate venture and it’s a significant part of the supply chain business, because we are leveraging our core competencies knowing where you have to build warehouses and having bringing the tenants for that part having our customers.

And of course that will be from an accounting perspective also different. So in the past we had one-time gains and that is offsetting, than the gains, we have now from IFRS 16.

We don't have any [indiscernible] So therefore you have a positive from IFRS 16, but you have a negative because the gains from our real estate venturing are not materialized in one year, where they are materializing now for many years and that leads to a comparable number maybe slightly higher in supply chain and that's an important part of that aspect and that's the reason why we said for the time being so early in the year it’s probably on similarly levels somehow.

And just another one of those detailed complexities behind the whole IFRS 16, they are reset, okay, we are going to really explain that in full details when we have the real numbers in May based on the first quarter. That take me to your last question, where I can only say, yes, I hear you and I understand what you are saying, I think we have made significant progress over the last year and getting more reliable also in our free cash flow forecasting and delivering consistently and over delivering consistently on our free cash flow guidance and I will hope that going forward we can get even more precise also on that KPI.

Thank you. It would be much appreciated.

Yes. That’s understood.

Well Tobias, thanks for that. And do we have more callers out there?

Yes, hello, good afternoon to all. Three questions from my side.

The first one is on more on the numbers about the tax rate and the tax rate guidance for the year. In the past you have provided the guidance at beginning of the year but then you did have some lowering of that tax guidance during the year.

How firm is this tax guidance for this year? Could there be some reduction during the year, assuming some conditions happen or not?

This is the first question. Secondly on the Express, on volume.

So, volumes appear very strong. Now, do you see yourselves gaining a lot of market share or do you see that the volume growth in Express is effectively say higher than what they used to be in the past, perhaps because of say B2C which I think you hinted in the past is going up 20% or so and that's become a materially positive I believe the business.

And then lastly there were really some comments about regulation, but if you just talk about regulation for next year for price increase, do you think it will be fair assume price increase broadly similar to what you achieved I think back in 2016, if I remember correctly, is that how we should understand this approach say the regulator review into next year? Thank you.

Matija I will do answers to the second and third for myself and then Melanie on the tax rates. So Express volume we believe that we gain market share in B2B and in B2C, the focus on the global network I think has helped tremendously and I think you know our recipe is the free bottom line simply engagement drives service qualities that drives top-line growth and without a doubt Express is our role model in doing that and therefore we believe that we gain market share in both elements.

So the nice thing is that the eCommerce will help us going forward, because we found also a way to make it margin accretive or at least margin neutral as you have seen in the last numbers. And I have seen many startup companies myself last year and they say all this is same without DHL Express you would not be in business, because our home market is not large enough and we have to ship to a 140 countries and you do that for us and customers are willing to pay the price for shipping because that's the only way how they can get these products.

So that what will continue, I'm very sure, so the pricing as much I appreciate your interest as much you probably appreciate that I say no comment. My experience now for the last 10 years is don’t push external pressure on politicians or regulators that is counterproductive and that's the reason why I have to tell you I don’t see anything about that, because we delivered nice increases and I don’t want to be danger as we can do something which is good for the Company by commenting already what is doable.

So please accept, that proof of evidences that’s keeping our lips closed has been pretty good and we will continue to do so.

Okay then finally on the tax rate, I mean the 18% guidance reflect our current understanding and yes you are right in the past years we have been able to reduce our tax rate in the course of the year. One important element there has been that due to our improving business performance, we were able to increase also the outlook going forward for tax planning purposes which then has us to utilize currently unutilized tax losses, and activate them on the balance sheet.

Depending on how the business develops that maybe an opportunity as well going forward, because we still have unutilized tax losses carry forward, but at this point in time the 18% really reflect our best understanding of what to expect for the tax rate in 2018.

Thank you very much. So just a quick follow-up on Express, B2C volumes, do you track, say the amount of B2C within Express and you track, say the growth rates approximately of the B2C component within the Global Express business?

Yes, we do I mean, we see B2C as a kind of vertical within express and we also kind of like shared some of that information with you that we talked about the increase of B2C in our network where we saw that from 2013 10% to 20% in 2016. I think that gives an indication for the growth rates.

And so obviously the growth rate trend on the B2C side continues with the same dynamic. What we also showed you when we first presented that 1.5 years ago was that like B2C is growing more strongly on the solid double-digit than we also had B2B growth in the mid single-digit range and that also continues.

Very good. Thank you very much.

Thanks Matija and operator.

Okay. So thank you for your questions so far and before I hand over to Frank for his closing remarks on this call, let me point you to two things to look forward to.

A, our next reporting is going to be on Q1 2018 that’s our first reporting then under IFRS 16. So as I heard also now this round eagerly anticipated and we will do our best to provide the necessary transparency to that.

The other thing to look forward to is our upcoming Capital Markets Day where the plan obviously is to address all the relevant and good questions that you have out there. And the interesting thing is both things are going to come on the same day May, 8th you seen this, save the date.

So after this we are going to be on Road Show seeing not all but some of you definitely and we are looking forward to seeing you then on May 8th in London now then on the Capital Markets Day. So with that advertising, over to you Frank.

Yes. Let me conclude following I think we had a very good 2017.

We are very confident that we have a clear plan to deliver our 2018 and 2020 goals. If you look backwards, we have the guts to tell you what we want to achieve until 2020 or in 2014.

I think we are on a very good journey to deliver that and we are happy about and a little bit proud as well that we so have far delivered promised and that is a long timeframe as you know. What makes me confident as well is we have a very strong senior team, two additions and both of them are getting traction as you can see; one in the negotiations with the union and the other one with improving the underlying performance and at the end of the day it’s important that we have a strong team at the top, and I think that’s the case and therefore I’m very happy with the progress.

I’m confident that we will deliver as in the last years what we had promised for this year. So therefore, thank you very much for showing your interest and your trust and talk to you soon in person or on phone calls again.

Thank you very much and good-bye for today. Bye-bye.

Thank you. Bye-bye.