The principles and aims of financial management presented in the 2009 Annual Report are still valid and are being pursued unchanged. We are also continuing to implement unchanged the Group’s new finance strategy, whose main features are described in the Interim Report for the period January to March 2010. It builds on the principles and aims of financial management and was adopted by the Supervisory Board in March.
As part of our finance strategy, we have introduced the dynamic performance metric of “FFO to debt”, which is calculated on a rolling 12-month basis. The definition of this metric and the methodology used to calculate its individual components correspond to those used by the rating agency Standard & Poor’s.
|Ratio of funds from operations (FFO) to debt|
|1 Jan. to
31 Dec. 2009
|1 July 2009 to
30 June 2010
|Operating cash flow before changes in working capital||763||1,648|
|Interest and dividends received||103||66|
|Adjustment for operating leases||1,082||1,082|
|Adjustment for pensions||153||153|
|Funds from operations (FFO)||3,225||3,706|
Reported financial liabilities1)
|Financial liabilities related to the sale of Deutsche Postbank AG1)||3,990||4,075|
|Financial liabilities recognised at fair value through profit or loss1)||141||137|
|Adjustment for operating leases2)||4,933||4,933|
|Adjustment for pensions2)||5,221||5,221|
|Surplus cash and near-cash investments1), 3)||3,864||2,583|
FFO to Debt (%)
|1)||As at 31 December 2009 and 30 June 2010 respectively.|
|2)||As at 31 December 2009.|
|3)||Surplus cash and near-cash investments are defined as cash and cash equivalents and no-notice investment funds, less cash needed for operations.|
Although funds from operations increased substantially, the performance metric only improved slightly due to the prepayment made to Bundes-Pensions-Service für Post und Telekommunikation and the dividend payment.
Our credit rating was reviewed in the second quarter of 2010 by international rating agencies Standard & Poor’s and Moody’s Investors Service. Both agencies confirmed their ratings of BBB+ and Baa1, and Standard & Poor’s also upgraded its outlook from “negative” to “stable”. The Group’s credit quality therefore continues to be rated as adequate by both agencies.
Our liquidity is sufficient, due in part to the sale of Postbank. As a result, only an average of around 7.3% (previous year: 7.4%) of our unsecured committed credit lines were used in the reporting period. The total volume of these credit lines is currently €2.8 billion, €200 million of which had been used as at 30 June 2010. As at 30 June 2010, the Group had cash and cash equivalents of €2.1 billion. There are also no-notice investment funds of €1.3 billion that are reported as current financial assets in the balance sheet.