DHL 2011 Annual Report Download - page 57

 to debt declined versus the prior year, primarily due to the decrease in our
liquidity as a result of higher capital expenditure. Funds from operations also decreased
slightly in the reporting year.
Cash and liquidity managed centrally
 e cash and liquidity of our globally active subsidiaries is managed centrally by
Corporate Treasury. More than   of the Group’s external revenue is consolidated in
cash pools and used to balance internal liquidity needs. In countries where this prac-
tice 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 bank-
ing policy in order to remain independent of individual banks. Our subsidiaries’ intra-
group revenue is also pooled and managed by our in-house bank in order to avoid
external bank charges and margins through intercompany clearing. Payment transac-
tions are executed in accordance with uniform guidelines using standardised processes
and  systems.
Limiting market risk
 e Group uses both primary and derivative  nancial instruments to limit market
risk. Interest rate risk is managed exclusively via swaps. Currency risk is additionally
hedged using forward transactions, cross-currency swaps and options. We pass on
most of the risk arising from commodity  uctuations to our customers and manage
the remaining risk by means of commodity swaps.  e parameters, responsibilities and
controls governing the use of derivatives are laid down in internal guidelines.
Flexible and stable fi nancing
 e Group covers its long-term  nancing requirements by maintaining a balanced
ratio of equity to liabilities.  is ensures our  nancial stability as well as providing
adequate  exibility. Our most important source of funds is net cash from operating
activities.
Since our liquidity remains good, the  ve-year syndicated credit facility issued in
December  at a total volume of   billion was not drawn down during the year
under review.  is syndicated credit facility guarantees us favourable market condi-
tions and acts as a secure, long-term liquidity reserve. It does not contain any covenants
concerning the Group’s  nancial indicators.
As part of our banking policy, we spread our business volume widely and maintain
long-term relationships with the  nancial institutions we entrust with our business. In
addition to credit lines, we meet our borrowing requirements through other independ-
ent sources of  nancing, including bonds, structured  nance products and operating
leases. Most debt is taken out centrally in order to leverage economies of scale and
specialisation bene ts and hence to minimise the cost of capital.
In view of the fact that the bond issued by Deutsche Post Finance .. in the amount
of  . billion will fall due in October , as well as of the European Commission’s
state aid ruling, the Board of Management has decided to establish a Debt Issuance
Programme in the amount of   billion.  is o ers us the possibility of issuing bonds
in customised tranches up to a stipulated total amount and enables us to react  exibly
to changing market conditions.
Note 
Note 
Deutsche Post DHL Annual Report 
Group Management Report
Economic Position
Financial position
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