DHL 2008 Annual Report Download - page 48

Deutsche Post World Net Annual Report 2008
Our principal goal is to minimise  nancial risks and the cost of capital, whilst
safeguarding the Group’s lasting  nancial stability and  exibility. In order to main-
tain its unrestricted access to the capital markets, the Group continues to seek a credit
rating appropriate to the sector. We therefore monitor the development of our oper-
ating cash  ows against adjusted debt particularly closely. Adjusted debt refers to the
Group’s net debt, allowing for pension obligations that are not directly capital-backed
and liabilities under operating leases.
Central cash and liquidity management
Cash and liquidity management is a central activity overseen by the Corporate
Treasury on behalf of our subsidiaries, whose operations span the globe. More than
  of the Group’s external revenue is consolidated in cash pools and used to balance
internal liquidity needs. In countries where this practice is ruled out for legal reasons,
internal and external borrowing and investment are arranged centrally by Corporate
Treasury. In this context, we observe a balanced banking policy in order to avoid
depending excessively on individual banks. Our subsidiaries’ intragroup revenue is also
pooled and managed by the in-house bank with a view to avoiding external bank charges
and margins (inter-company clearing). Payment transactions are made in accord ance
with uniform guidelines as well as by way of standardised processes and  systems.
 e Group’s unsecured committed credit lines total around  . billion, of which
  million had been used as at  December . Our banking policy seeks to spread
the volume of transactions widely and to foster long-term business relationships with
 nancial institutions. Alongside the customary equal treatment clauses and termin-
ation rights, the relevant loan agreements do not contain any further undertakings
concerning the Group’s  nancial indicators. Average drawings on credit lines came to
only around   in  (previous year: . ).
Managing market price risks
 e Group manages  nancial market risk by making use of both primary and
derivative  nancial instruments. Interest rate risks are managed exclusively via interest
rate swaps. Currency risks are hedged using forward transactions, cross-currency swaps
and options. However, we pass on most of the risk arising from commodity  uctuations
to our customers through operating measures.  e parameters, responsibilities and
controls governing the use of derivatives are established in internal guidelines.
Flexible and stable Group fi nancing
 e Group covers its  nancing requirements by maintaining a balanced ratio
of equity to liabilities.  is ensures our  nancial stability whilst providing adequate
 exibility. Our most important source of funds is net cash from operating activities.
We cover our borrowing requirements via a number of independent  nancing sources,
including con rmed bilateral credit lines, bonds and structured  nancing trans actions,
and operating leases. Most of the borrowings are taken out centrally in order to leverage
economies of scale and specialisation bene ts and to minimise the cost of capital.
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