Reebok 2011 Annual Report Download - page 133

adidas Group
2011 Annual Report
GROUP MANAGEMENT REPORT – FINANCIAL REVIEW
129
2011
Net cash position of € 90 million
Net cash at December 31, 2011 amounted to € 90 million, compared
to net borrowings of € 221 million at the end of December 2010,
reflecting an improvement of € 311 million. This development was
mainly driven by the cash flow generated from operating activities
over the past twelve months. Currency translation had a positive effect
in an amount of € 59 million. The Group’s ratio of net borrowings over
EBITDA amounted to –0.1 at the end of December 2011 (2010: 0.2).
Capital expenditure grows 39%
Capital expenditure is the total cash expenditure for the purchase
of tangible and intangible assets (excluding acquisitions). Group
capital expenditure increased 39% to € 376 million in 2011 (2010:
€ 269 million). The Retail segment accounted for 26% of Group
capital expenditure (2010: 23%). Investments primarily related to the
expansion of our store base for the adidas and Reebok brands. Expend-
iture in the Wholesale segment accounted for 17% of total capital
expenditure (2010: 12%). Capital expenditure in Other Businesses
accounted for 7% of total expenditure (2010: 10%). The remaining 50%
of Group capital expenditure was recorded in HQ/Consolidation (2010:
55%) and was mainly related to investments into new office buildings
and IT infrastructure DIAGRAM 41 .
03.2 Group Business Performance Statement of Financial Position and Statement of Cash Flows Treasur y
41 Capital expenditure by segment
42 Capital expenditure by type
2011
2011
1 50% HQ/Consolidation
2 26% Retail
3 17% Wholesale
4 7% Other Businesses
1 43% Other
2 26% Own retail
3 17% IT
4 14% Retailer support
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Treasury
Group financing policy
In order to be able to meet the Group’s payment commitments at all
times, the major goal of our financing policy is to ensure sufficient
liquidity reserves, while minimising the Group’s financial expenses.
The operating activities of our Group segments and markets and the
resulting cash inflows represent the Group’s main source of liquidity.
Liquidity is planned on a rolling monthly basis under a multi-year
financial and liquidity plan. This comprises all consolidated Group
companies. Our in-house bank concept takes advantage of any
surplus funds of individual Group companies to cover the financial
requirements of others, thus reducing external financing needs
and optimising our net interest expenses. By settling intercompany
transactions via intercompany financial accounts, we are able to
reduce external bank account transactions and thus bank charges.
Effective management of our currency exposure and interest rate
risks are additional goals and responsibilities of our Group Treasury
department.
Treasury system and responsibilities
Our Group’s Treasury Policy governs all treasury-related issues,
including banking policy and approval of bank relationships, global
financing arrangements and liquidity/asset management, currency
and interest risk management as well as the management of inter-
company cash flows. Responsibilities are arranged in a three-tiered
approach:
– The Treasury Committee consists of members of the Executive Board
and other senior executives who decide on the Group’s Treasury
Policy and provide strategic guidance for managing treasury-related
topics. Major changes to our Treasury Policy are subject to the prior
approval of the Treasury Committee.
– The Group Treasury department is responsible for specific
centralised treasury transactions and for the global implementation
of our Group’s Treasury Policy.
– On a subsidiary level, where applicable and economically reasonable,
local managing directors and financial controllers are responsible
for managing treasury matters in their respective subsidiaries.
Controlling functions on a Group level ensure that the transactions
of the individual business units are in compliance with the Group’s
Treasury Policy.