Reebok 2011 Annual Report Download - page 136

adidas Group
2011 Annual Report
GROUP MANAGEMENT REPORT – FINANCIAL REVIEW
132
2011
03.2 Group Business Performance Treasury
03.2
52 Financial leverage (in %)
2011 (1.7)
2010 4.8
2009 24.3
2008 64.6
2007 58.4
53 Issued bonds at a glance (in millions)
Issued bonds Volume Coupon Maturity
French private placement EUR 105 variable 2012
German private placement EUR 41 fixed 2012
US private placement USD 292 fixed 2013
Eurobond EUR 500 fixed 2014
German private placement EUR 56 fixed 2014
US private placement USD 115 fixed 2015
US private placement USD 150 fixed 2016
Other private placements EUR 18 variable 2012
51 Financing structure 1) (€ in millions)
2011 2010
Cash and short-term financial assets 1,370 1,389
Bank borrowings 126 95
Commercial paper 0 0
Private placements 655 1,017
Eurobond 499 498
Gross total borrowings 1,280 1,610
Net cash/(net borrowings) 90 (221)
1) Rounding differences may arise in totals.
Net cash position achieved at year-end
The Group ended the year with a net cash position of € 90 million,
compared to net borrowings of € 221 million at the end of the prior
year, reflecting an improvement of € 311 million DIAGRAM 48 . This
development exceeded our original target of further reducing net
borrowings, as communicated at the beginning of 2011. Strong cash
flow from operating activities positively influenced this development.
Currency effects had a positive impact of € 59 million on net cash
develop ment. The Group’s financial leverage declined to –1.7% at the
end of 2011 versus 4.8% in the prior year DIAGRAM 52 . At the end of
2011, the ratio of net borrowings over EBITDA was –0.1 (2010: 0.2) and
was thus well within the Group’s medium-term guideline of less than
two times. Efficient management of our capital structure continues
to be a top management priority SEE SUBSEQUENT EVENTS AND OUTLOOK, P. 163 .
Effective currency management a key priority
As a globally operating company, the Group is exposed to currency
risks. Therefore, effective currency management is a key focus of
Group Treasury, with the aim of reducing the impact of currency
fluctuations on non-euro-denominated net future cashflows. In this
regard, hedging US dollars is a central part of our programme. This
is a direct result of our Asian-dominated sourcing, which is largely
denominated in US dollars SEE GLOBAL OPERATIONS, P. 90 . In 2011, Group
Treasury managed a net deficit of around US $ 3.0 billion against
the euro, related to operational activities (2010: US $ 2.1 billion). As
governed by our Group’s Treasury Policy, we have established a rolling
12- to 24-month hedging system, under which the vast majority of the
anticipated seasonal hedging volume is secured approximately six
months prior to the start of a season. As a result, we have almost
completed our anticipated hedging needs for 2012 as of year-end
2011, and we have already started hedging our exposure for 2013.
The rates for 2012 are slightly less favourable compared to those of
2011. The use or combination of different hedging instruments, such
as forward contracts, currency options and swaps, protects us against
unfavourable currency movements. The use of currency options allows
us to benefit from future favourable exchange rate developments SEE
RISK AND OPPORTUNITY REPORT, P. 145
.