Reebok 2012 Annual Report Download - page 245

adidas Group
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2012 Annual Report
Consolidated Financial Statements
223
2012
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04.8
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Notes
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Notes to the Consolidated Statement of Financial Position
Capital management
The Group’s policy is to maintain a strong capital base so as to
uphold investor, creditor and market confidence and to sustain future
development of the business.
The Group seeks to maintain a balance between a higher return on
equity that might be possible with higher levels of borrowings and the
advantages and security afforded by a sound capital position. The Group
further aims to maintain net debt below two times EBITDA over the long
term.
Financial leverage is defined as the ratio between net borrowings
(short- and long-term borrowings less cash and cash equivalents as well
as short-term financial assets) in an amount of negative € 448 million
(2011: negative € 90 million) and shareholders’ equity in an amount
of € 5.304 billion (2011 restated: € 5.137 billion). EBITDA amounted to
€ 1.445 billion for the financial year ending December 31, 2012 (2011
restated: € 1.199 billion). The ratio between net borrowings and EBITDA
amounted to negative 0.3 for the financial year ending December 31,
2012 (2011 restated: negative 0.1).
Reserves
Reserves within shareholders’ equity are as follows:
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Capital reserve: primarily comprises the paid premium for the
issuance of share capital as well as the equity component of issued
convertible bonds.
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Cumulative translation adjustments: comprises all foreign currency
differences arising from the translation of the financial statements of
foreign operations.
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Hedging reserve: comprises the effective portion of the cumulative
net change in the fair value of cash flow hedges related to hedged
transactions that have not yet occurred as well as of hedges of net
investments in foreign subsidiaries.
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Other reserves: comprise the cumulative net change of actuarial
gains or losses, the asset ceiling effect regarding defined benefit plans
as well as expenses recognised for share option plans and effects from
the acquisition of non-controlling interests.
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Retained earnings: comprise the accumulated profits less dividends
paid.
Distributable profits and dividends
Distributable profits to shareholders are determined by reference
to the retained earnings of adidas AG and calculated under German
Commercial Law.
Based on the resolution of the 2012 Annual General Meeting, the
dividend for 2011 was € 1.00 per share (total amount: € 209 million). The
Executive Board of adidas AG will propose to shareholders a dividend
payment of € 1.35 per dividend-entitled share for the year 2012 to be
made from retained earnings of € 606 million reported in the financial
statements of adidas AG according to the German Commercial Code as
at December 31, 2012. The subsequent remaining amount will be carried
forward.
As at December 31, 2012, 209,216,186 dividend-entitled shares exist,
resulting in a dividend payment of € 282 million.
27 Non-controlling interests
This line item within equity comprises the non-controlling interests in
several subsidiaries, which are not directly or indirectly attributable to
adidas AG.
Non-controlling interests are assigned to six subsidiaries as at
December 31, 2012 and to seven subsidiaries as at December 31,
2011 (see Attachment II to the consolidated financial statements
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SEE
SHAREHOLDINGS OF ADIDAS AG, HERZOGENAURACH, P. 240). These subsidiaries
were partly acquired in connection with the acquisition of Reebok and
partly through purchases or foundations in the last years.
As at December 31, 2011, this line item comprised a 15%
non-controlling interest in the subsidiary in Hungary, adidas Budapest
Kft., Budapest, which adidas AG acquired effective August 31, 2012
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SEE
NOTE 04.
In 2011, in compliance with IAS 32 “Financial Instruments: Presen-
tation”, the non-controlling interests of GEV Grundstücksgesellschaft
Herzogenaurach mbH & Co. KG (Germany) were not reported within
the line item non-controlling interests as the company is a limited
partnership. The fair value of these non-controlling interests was
shown within other liabilities and the result for these non-controlling
interests was reported within financial expenses
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SEE NOTE 33. Effective
March 30, 2012, adidas AG acquired the remaining share in the
company
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SEE NOTE 04.
28 Leasing and service arrangements
Operating leases
The Group leases primarily retail stores as well as offices, warehouses
and equipment. The contracts regarding these leases with expiration
dates of between 1 and 13 years partly include renewal options and
escalation clauses. Rent expenses, which partly depend on net sales,
amounted to € 637 million and € 548 million for the years ending
December 31, 2012 and 2011, respectively.
Future minimum lease payments for minimum lease durations on a
nominal basis are as follows:
Minimum lease payments for operating leases (€ in millions)
Dec. 31, 2012 Dec. 31, 2011
Within 1 year 456 449
Between 1 and 5 years 996 778
After 5 years 346 331
Total 1,798 1,558