Reebok 2014 Annual Report Download - page 179

Group Management Report – Financial Review
175
2014
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03.5
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adidas Group
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2014 Annual Report
Risk and Opportunity Report
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Financial Risks
The Group Treasury department arranges currency, commodity and interest rate hedges, and invests
cash, with major banks of a high credit standing throughout the world. adidas Group companies are
authorised to work with banks rated BBB+ or higher. Only in exceptional cases are subsidiaries
authorised to work with banks rated lower than BBB+. To limit risk in these cases, restrictions
are clearly stipulated, such as maximum cash deposit levels. In addition, the credit default swap
premiums of our partner banks are monitored on a monthly basis. In the event that the defined
threshold is exceeded, credit balances are shifted to banks compliant with the limit.
We believe our risk concentration is limited due to the broad distribution of our investment business
with more than 20 globally operating banks. At December 31, 2014, no bank accounted for more
than 5% of our investments. Including subsidiaries’ short-term deposits in local banks, the average
concentration was 1%. This leads to a maximum exposure of € 82 million in the event of default of
any single bank. We have further diversified our investment exposure by investing into AAA-rated
money market funds.
In addition, we held derivatives with a positive fair market value in the amount of € 285 million. The
maximum exposure to any single bank resulting from these assets amounted to € 67 million and
the average concentration was 6%.
According to IFRS 7, the table below includes further information about set-off possibilities of
derivative financial assets and liabilities. The majority of agreements between financial institutions
and the adidas Group include a mutual right to set-off. However, these agreements do not meet the
criteria for offsetting in the statement of financial position, because the right to set-off is enforceable
only in the event of counterparty defaults.
The carrying amounts of recognised derivative financial instruments, which are subject to the
mentioned agreements, are presented in the table below.
see Table 06
see Table 06
06
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Set-off possibilities of derivative financial assets and liabilities (€ in millions)
2014 2013
Assets
Gross amounts of recognised financial assets 285 59
Financial instruments which qualify for
set-off in the statement of financial position 0 0
Net amounts of financial assets presented in the statement of financial position 285 59
Set-off possible due to master agreements (53) (53)
Total net amount of financial assets 232 6
Liabilities
Gross amounts of recognised financial liabilities (55) (93)
Financial instruments which qualify for
set-off in the statement of financial position 0 0
Net amounts of financial liabilities presented in the statement of financial position (55) (93)
Set-off possible due to master agreements 53 53
Total net amount of financial liabilities (2) (40)