IFRS 16 implementation at Deutsche Post DHL Group

Deutsche Post DHL Group: Leading the Way in IFRS 16 Implementation

How to plan for complexity, overcome unique hurdles and the key lessons we learned

Strategy Consulting

By Olaf Hermanni, Managing Director DHL Consulting

January 25, 2018

With more operating lease obligations than many other organizations, Deutsche Post DHL Group knew it had to make an early start with IFRS 16.


IFRS 16 redefines commonly used financial metrics


The new International Financial Reporting Standard on Leases, which comes into effect on January 1, 2019 (early adoption allowed), requires balance sheet accounting for almost all leases, creating much-appreciated asset and liability transparency and enabling valid comparisons between organizations that lease or buy.

Therefore, IFRS 16 leads to a redefinition of commonly used financial metrics – goodbye to almost all off-balance-sheet accounting for lessees and hello to new right-of-use assets, increased gearing, higher EBITDA and more. While increasing comparability between companies, this also affects stakeholder perceptions. With more focus on services than bricks, leasing markets are likely to develop, and companies that lease property will need more information around leases than previously.

Managing scale and complexity through cross-divisional and cross-functional collaboration


To undertake the mammoth task of IFRS 16 implementation, DPDHL Group worked with its subsidiary DHL Consulting. Over a period of 18 months, a core team of both corporate accountants and management consultants researched, recommended, and spearheaded a global implementation project, resulting in IFRS 16 compliance a full year ahead of the regulatory deadline – an extraordinary accomplishment. A projected positive EBIT impact in the low three-digit million euro range and a EUR +9 bn impact on the DPDHL Group 2018 balance sheet of additional assets and liabilities clearly illustrate the magnitude of this project.


The scale and complexity of this group-wide implementation cannot be overstated. Around 400 reporting units were involved on all continents with considerable effort to align all four of the DPDHL Group divisions and corporate center. DHL Consulting ensured excellence in cross-divisional and cross-functional cooperation with multiple stakeholders; for example, there were dozens of workstream meetings with all divisions and corporate representatives. Furthermore, many workshops were conducted with real estate, procurement and other experts to discuss upcoming changes and to collaboratively develop the best approaches. Overarching aims were to ensure compliance with the new accounting standards while limiting the additional workload for the finance and accounting teams. This was achieved by automating as much as possible through the creation of interfaces and standardized processes.


The project team organized a vast number of online and in-person training sessions around the globe, and supported the reporting units to enter more than 27,000 contracts for more than 37,000 assets into a new self-developed lease database. DPDHL Group Corporate Accounting and DHL Consulting were also responsible for developing guidelines, standard processes, workflows, and many more materials including a comprehensive transactional accounting manual. They also introduced the new role of a Lease Coordinator across DPDHL Group – an indispensable function in each reporting unit tasked with responding to all lease-related questions and issues and ensuring data quality.

OVercoming unique challenges

As a frontrunner among DAX 30 companies, DPDHL Group had limited opportunities for exchange with peers about this highly complex standard and its many implementation issues. In addition, a number of topics had yet to be aligned with the auditors – there were many open questions such as when a contract is enforceable or not and how to define a penalty. As an early adopter, DPDHL Group had to make key decisions while generally accepted accounting principles were still evolving.

The project team faced another key challenge at the beginning of the implementation – they were unable to find a suitable lease application on the market. To achieve a comprehensive and consistent lease contract management process across the entire organization, DPDHL Group had to develop its own lease application. With sale and lease-back transaction capabilities and an error correction functionality superior to many other available applications, this standalone Leasing Application (LEAP) solution provides a global overview of all third-party leases that need to be accounted for on the balance sheet, while significantly increasing transparency and accountability. The LEAP database stores all lease information centrally and the LEAP engine generates IFRS 16-compliant bookings. Users may customize and export booking data for local ERP systems via the LEAP outbound interface. In addition, the team ensured full integration of LEAP into the DPDHL Group’s SAP reporting landscape.



From this trailblazing IFRS 16 implementation experience, DPDHL Group has learned many important lessons. Here are our top recommendations that might be valid for future new financial reporting standards implementation initiatives:

  • Align early with auditors on your chosen approach, exceptions, the capabilities of your application, and your processes
  • Set up a PMO with sufficient resources to manage the high complexity of this type of implementation project
  • Provide a lot of training sessions and communicate regularly about how global standards may impact finance functions and reporting units (global and divisional)
  • Plan sufficient time for contract entry and particularly for quality assurance
  • Do not underestimate the time required to change your transactional accounting processes
  • Develop flexible tools and processes to cope with your heterogeneous ERP system landscape
  • Ensure early stakeholder alignment not once but often; regularly check and adjust your alignment with all parties including corporate divisions, accounting and controlling functions, investor relations, procurement and more
  • Be ready to estimate early the significant effect on both your P&L and balance sheet; do this while customizing your tools, entering contracts, and defining processes – it is the best way to plan and budget for the years ahead

Compliance on such a scale a year ahead of the regulatory deadline could only be achieved with the commitment of many individuals and high-level support across DPDHL Group. For any company seeking to implement IFRS 16, the overarching lesson is undoubtedly to commit and prepare as soon as possible in order to understand potential impacts, anticipate and resolve issues, reduce implementation costs, and minimize compliance risk.

If you would like to discuss how your company can learn from our experience, please get in touch.


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