DHL 2012 Annual Report Download - page 43

Financial position
Financial management is a centralised function in the Group
e Group’s nancial management activities include managing cash and liquidity;
hedging interest rate, currency and commodity price risk; ensuring Group nancing;
issuing guarantees and letters of comfort and liaising with rating agencies. We steer
processes centrally, allowing us to work eciently and successfully manage risk.
Responsibility for these activities rests with Corporate Finance at Group headquar-
ters in Bonn, which is supported by three Regional Treasury Centres in Bonn (Germany),
Weston  and Singapore. ese act as interfaces between headquarters and the
operating companies, advise the companies on all nancial management issues and
ensure compliance with Group-wide requirements.
Corporate Finance’s main task is to minimise nancial risk and the cost of capital,
whilst preserving the Group’s lasting nancial stability and exibility. In order to main-
tain its unrestricted access to the capital markets, the Group continues to aim for a credit
rating appropriate to the sector. We therefore monitor particularly closely the ratio of
our operating cash ow to our adjusted debt. Adjusted debt refers to the Group’s net
debt, allowing for unfunded pension obligations and liabilities under operating leases.
Maintaining financial flexibility and low cost of capital
e Group’s nance strategy builds on the principles and aims of nancial manage-
ment. In addition to the interests of shareholders, the strategy also takes lender require-
ments into account. e goal is for the Group to maintain its nancial exibility and low
cost of capital by ensuring a high degree of continuity and predictability for investors.
A key component of this strategy is a target rating of “+”, which is managed
via a dynamic performance metric known as funds from operations to debt ( to
debt). Our strategy additionally includes a sustained dividend policy and clear priorities
regarding the use of excess liquidity, part of which was to be used to gradually increase
plan assets of our German pension plans. However, due to the favourable capital mar-
ket conditions for companies with a high credit quality, at the end of  the Group
decided to increase plan assets via debt nancing. In the future, excess liquidity will
therefore be used for the continued gradual funding of pension liabilities, special divi-
dends and share buy-backs.
To increase plan assets, the Group placed a convertible bond with a volume of
 billion and two conventional bonds with a total volume of likewise  billion on the
market. Further information on the bonds issued is contained in the Notes. e funds
obtained were transferred directly to an external pension vehicle managed by the Group.
e plan assets covering pension obligations to German employees nearly doubled due
to the transfer. e Group expects this move to improve its operating cash ow in future
years and to also have a small positive impact on its nancial result and net income. e
transaction has no impact on our creditworthiness since the rating agencies already take
unfunded pension liabilities into account in their analyses.
Note .
Deutsche Post DHL Annual Report 
Group Management Report
Economic Position
Financial position
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