Liquidity and capital resources

Liquidity

The Group applies a prudent policy to cover its liquidity risks, ensuring the fulfilment of the payment commitments acquired, both commercial and financial, for a minimum period of 12 months, covering its financial needs by recurring cash flow generation from its business, as well as the engagement of long-term loans and credit facilities.

As of 31 December 2016, available liquidity amounted to EUR1,102.6m, including cash, cash equivalents, and available credit facilities. 

Capital resources

In recent years, the DIA Group has invested close to EUR350m, excluding the acquisitions of shares and a number of stores from competitors. The Group’s strategy is focused on mainly investing in markets with higher returns and in store openings and store remodelling. Accordingly, between 40% and 50% of the investments are allocated to opening stores and warehouses. In 2016, the Group invested EUR345m.

Each business unit prepares an annual investment plan that is submitted to the Group Management through an Investment Committee. At the same time, senior management submits it for approval to the Board of Directors.

In financial terms, return on investment targets are set.

Analysis of contractual obligations and off-balance sheet transactions 

In the current development of the activity, the DIA Group has carried out certain operations that are not included in the balance sheet and that can imply a cash inflow or outflow in the case of having to deal with the commitments arising from these operations. These are mainly operating leases for stores and warehouses.

The total commitments acquired by the Group as of 31 December 2016, and that can affect its liquidity, amount to EUR424.13m (31 December 2015: EUR403.9m). The most significant item corresponds to lease contract commitments signed for the premises where the DIA Group carries out its activity.

Lease contract commitments of premises amounted to EUR237.5m as of 31 December 2016 (31 December 2015: EUR212.9m).

The DIA Group has obligations linked to furniture and equipment rental (vehicles, equipment, cleaning contracts, etc.) amounting to EUR10.4m as of 31 December 2016 (EUR9.5m as of 31 December 2015).

The rest of the obligations are classified between Treasury and Expansion transactions, totalling EUR176.23m as of 31 December 2016 (EUR181.5m as of 31 December 2015).

Treasury operations include open credit facilities for customers in stores, which amounted to EUR79.13m as of 31 December 2016 (EUR77.7m as of 31 December 2015). These credit facilities are related to limits granted originally to customers on payment cards.

Commitments related to expansion operations amounted to EUR97.1m as of 31 December 2016, and EUR103.8m in the same period in the previous year. These operations include primarily call and put options for properties, mainly warehouses, and obligations related to commercial operations and contracts, mainly with franchisees.

The DIA Group also received commitments that can involve a future cash inflow amounting to EUR1,082.8m (EUR954.1m as of 31 December 2015). These received commitments are related to Treasury and include the amounts of the credit facilities, revolving credit, commercial paper and confirming credit, granted and unused. The increase in these commitments between 2016 and 2015 is mainly due to lower utilisation levels in 2016 of revolving credit in the Parent company.

With these credit facilities, the Group covers its financial needs for daily operations and does not foresee any circumstances that could affect the granting of these credit facilities by financial institutions.