DHL 2012 Annual Report Download - page 45

e “ to debt” dynamic performance metric declined versus the prior year, since
even the improvement in funds from operations was not sucient to oset the increase
in debt.
Funds from operations increased by a total of  million to , million in
the year under review. Even though operating cash ow before changes in working
capital decreased signicantly, the decline was attributable to the one-time increase in
the plan assets of German pension plans (, million) and portions of the additional
 payment ( million). Since the related eects are non-recurring, they were
recorded under non-recurring income / expenses, which also includes operating restruc-
turing payments ( million) and the interest eects of the additional  payment
( million).
Although business performance was positive in the reporting year, debt rose by
, million to , million year-on-year. e primary reasons for the increase were
the lower discount rates and the related increase in the present value of pension obliga-
tions, the additional  payment ( million) and the payment made in connection
with the state aid proceedings ( million). Whereas the last two items reduced sur-
plus cash and near-cash investments, the lower discount rates for pension obligations
increased the “adjustment for pensions” considerably. However, due to the one-time,
debt-nanced increase in plan assets in the amount of , million, this item declined
by a total of , million to , million. More information on the financial liabilities
reported is contained in the Notes.
Cash and liquidity managed centrally
e cash and liquidity of our globally active subsidiaries is managed centrally by
Corporate Treasury. Approximately   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 remain independent of individual banks. Our sub sidiaries’
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
trans actions 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, to some extent,
use commodity swaps to manage the remaining risk. e parameters, responsibilities
and controls governing the use of derivatives are laid down in internal guidelines.
Flexible and stable financing
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.
Note 
Deutsche Post DHL Annual Report 
Group Management Report
Economic Position
Financial position
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