Reebok 2012 Annual Report Download - page 166

adidas Group
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2012 Annual Report
Group Management Report – Financial Review
144
2012
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03.2
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Group Business Performance
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Treasur y
52
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Financial leverage (in %)
2012 (8.5)
2011 (1.7)
2010 4.8
2009 24.3
2008 64.6
53
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Issued bonds at a glance (in millions)
Issued bonds Volume Coupon Maturity
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
Convertible bond EUR 500 fixed 2019
51
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Financing structure 1) (€ in millions)
2012 2011
Cash and short-term financial assets 1,935 1,370
Bank borrowings 59 126
Commercial paper 0 0
Private placements 480 655
Eurobond 499 499
Convertible bond 449 0
Gross total borrowings 1,487 1,280
Net cash 448 90
1) Rounding differences may arise in totals.
Interest rate improves
The weighted average interest rate on the Group’s gross borrowings
decreased to 4.4% in 2012 (2011: 4.9%)
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DIAGRAM 50. The positive effect
from lower interest rates on short-term borrowings was partly offset
by the negative effect from local borrowings in currencies which carry
a higher average interest rate. Fixed-rate financing amounted to 96%
of the Group’s total gross borrowings at the end of 2012 (2011: 77%).
Variable-rate financing amounted to 4% of total gross borrowings at the
end of the year (2011: 23%).
Net cash position increases by € 358 million
The Group ended the year with a net cash position of € 448 million,
compared to a net cash position of € 90 million at the end of the
prior year, reflecting an improvement of € 358 million
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DIAGRAM 48.
Strong cash flow from operating activities significantly influenced this
development. Currency effects had a positive impact of € 3 million on net
cash development. The Group’s financial leverage declined to –8.5% at
the end of 2012 versus –1.7% in the prior year
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DIAGRAM 52. At the end of
2012, the ratio of net borrowings over EBITDA was –0.3 (2011: –0.1) 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 priority for the Group
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SEE SUBSEQUENT EVENTS AND OUTLOOK, P. 157.
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 the
Group’s Asian-dominated sourcing, which is largely denominated in US
dollars
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SEE GLOBAL OPERATIONS, P. 100 In 2012, Group Treasury managed
a net deficit of around US $ 2.7 billion against the euro, related to
operational activities (2011: US $ 3.0 billion). As governed by the 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 2013 as of year-end 2012 and have already started hedging our
exposure for 2014. The rates for 2013 are less favourable compared to
those of 2012. 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 the Group to benefit from future favourable exchange rate
developments
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SEE RISK AND OPPORTUNITY REPORT, P. 164.