Reebok 2015 Annual Report Download - page 158

GROUP MANAGEMENT REPORT – FINANCIAL REVIEW
Subsequent Events and Outlook
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AVERAGE OPERATINGWORKING CAPITAL ASA PERCENTAGE OF SALES
TO REMAIN STABLE
In 2016, average operating working capital as a percentage of sales is projected to remain around the prior
year level (2015: 20.5%).
CAPITAL EXPENDITURE OF AROUND € 750 MILLION
In 2016, capital expenditure is expected to increase to a level of around € 750 million (2015: € 513 million).
Investments will mainly focus on adidas and Reebok controlled space initiatives. These investments will
account for the vast majority of total capital expenditure in 2016. Other areas of investment include the
Group’s logistics infrastructure as well as the further development of the adidas Group headquarters in
Herzogenaurach. All investments within the adidas Group in 2016 are expected to be fully financed through
cash generated from operating activities.
EXCESS CASH TO BE USEDTO SUPPORTGROWTH INITIATIVES
In 2016, we expect continued positive cash flow from operating activities. Cash will be used to finance
working capital needs, investment activities, dividend payments as well as the Group’s shareholder return
programme. We intend to largely use excess cash to invest in our growth activities, in particular the
continued expansion and improvement of our controlled space initiatives as well as the further development
of the Group’s headquarters. In 2016, gross borrowings of € 366 million mature. In order to ensure long-term
flexibility, we aim to maintain a ratio of net borrowings over EBITDA of less than two times as measured
at year-end (2015: 0.3).
EFFICIENT LIQUIDITY MANAGEMENT IN PLACE FOR 2016 AND BEYOND
Efficient liquidity management remains a priority for the adidas Group in 2016. We focus on continuously
anticipating the operating cash flows of our operating segments, as this represents the main source of
liquidity within the Group. Liquidity is planned on a rolling monthly basis under a multi-year financial and
liquidity plan. Long-term liquidity is ensured by continued positive operating cash flows and sufficient
financial flexibility through unused credit facilities.
MANAGEMENT TO PROPOSE DIVIDEND OF € 1.60
As a result of the stellar operational performance in 2015, the Group’s strong financial position as well as
Management’s confidence in our long-term growth aspirations, the adidas AG Executive and Supervisory
Boards will recommend paying an increased dividend of € 1.60 to shareholders at the Annual General
Meeting (AGM) on May 12, 2016 (2014: € 1.50). Subject to shareholder approval, the dividend will be paid on
May 13, 2016. Based on the number of shares outstanding at the end of 2015, the total payout of € 320 million
(2014: € 306 million) reflects a payout ratio of 47.9% of net income attributable to shareholders, excluding
goodwill impairment losses. The payout ratio for 2015 is at the upper end of the increased target range
of between 30% and 50% of net income attributable to shareholders as defined in our dividend policy. In
the prior year, Management had decided to keep the dividend stable despite a significant decline in net
income, resulting in a payout ratio of 53.9%.
see Treasury, p. 124