Reebok 2015 Annual Report Download - page 197

CONSOLIDATED FINANCIAL STATEMENTS
Notes
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A summary of exchange rates to the euro for major currencies in which the Group operates is as follows:
EXCHANGE RATES
€ 1 equals Average rates for the year ending Dec. 31, Spot rates at Dec. 31,
2015 2014 2015 2014
USD 1.1101 1.3296 1.0887 1.2141
GBP 0.7259 0.8066 0.7340 0.7789
JPY 134.4180 140.4395 131.0700 145.2300
CNY 6.9721 8.1919 7.0696 7.4291
RUB 67.6825 50.7372 79.3474 68.3033
Discontinued operations
A component of the Group’s business is classified as a discontinued operation if the operations and cash
flows of the component can be clearly distinguished, operationally and for financial reporting purposes, from
the rest of the Group and if the component either has been disposed of or is classified as held for sale, and:
•represents a separate major line of business or geographic area of operations,
•is part of a single coordinated plan to dispose of a separate major line of business or geographic area
of operations or
•is a subsidiary acquired exclusively with a view to resale.
When an operation is classified as a discontinued operation, the comparative consolidated income
statement and consolidated statement of cash flows are restated and presented as if the operation had
been discontinued from the start of the comparative year.
Derivative financial instruments
The Group uses derivative financial instruments, such as currency options, forward exchange contracts,
commodity futures as well as interest rate swaps and cross-currency interest rate swaps, to hedge its
exposure to foreign exchange, commodity price and interest rate risks. In accordance with its Treasury
Policy, the Group does not enter into transactions with derivative financial instruments for trading purposes.
Derivative financial instruments are initially recognised in the statement of financial position at fair
value, and subsequently also measured at their fair value. The method of recognising the resulting gains or
losses is dependent on the nature of the hedge. On the date a derivative contract is entered into, the Group
designates derivatives as either a hedge of a forecasted transaction (cash flow hedge), a hedge of the fair
value of a recognised asset or liability (fair value hedge) or a hedge of a net investment in a foreign operation.
Changes in the fair value of derivatives that are designated and qualify as cash flow hedges, and that
are effective, as defined in IAS 39 ‘Financial instruments: recognition and measurement’, are recognised in
equity. When the effectiveness is not 100%, the ineffective portion of the change in the fair value is recognised
in the income statement. Accumulated gains and losses in equity are transferred to the income statement
in the same periods during which the hedged forecasted transaction affects the income statement.
For derivative financial instruments designated as fair value hedges, the gains or losses on the derivatives
and the offsetting gains or losses on the hedged items are recognised immediately in the income statement.
Certain derivative transactions, while providing effective economic hedges under the Group’s risk
management policies, may not qualify for hedge accounting under the specific rules of IAS 39. Changes
in the fair value of any derivative instruments that do not meet these rules are recognised immediately in
the income statement.