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ris

Fri, 03 Jul 2009 10:19:59 GMT

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Clip Source: adidas-group.corporate-publications.com

Risk and opportunity management principles

The adidas Group is regularly confronted with risks and opportunities which have the potential to negatively or positively impact the Group’s asset value, earnings, cash flow strength, or intangible values such as brand image. We have summarised the most important of these risks and opportunities in this report in three main categories: External and Industry, Strategic and Operational, and Financial.

We define risk as the potential occurrence of external or internal events that may negatively impact our ability to achieve short-term goals or long-term strategies. Risks also include lost or poorly utilised opportunities.

Opportunities are broadly defined as internal and external strategic and operational developments that have the potential to positively impact the Group if properly exploited.

risk 2

Fri, 03 Jul 2009 10:18:52 GMT

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Of significant importance is our Group’s Risk Management Manual, which is available to all Group employees online. The manual outlines the principles, processes, tools, risk areas and key responsibilities within our Group. It also defines reporting requirements and communication timelines. Our Group supplements this top-down, bottom-up approach to risk and opportunity management by employing our Global Internal Audit department to independently assess and appraise operational and internal controls throughout the Group.

adidas Group risk and opportunity management system

risk 1

Fri, 03 Jul 2009 10:18:04 GMT

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We believe that risk and opportunity management is optimised when risks, risk-compensating measures and opportunities are identified and assessed where they arise, in conjunction with a concerted approach to controlling, aggregating and reporting. Therefore, risk and opportunity management is a Group-wide activity, which utilises critical day-to-day management insight from local and regional business units. Support and strategic direction is provided by brand and global functions. Centralised risk management is responsible for the alignment of various corporate functions in the risk and opportunity management process and coordinates the involvement of the Executive and Supervisory Boards as necessary. Centralised risk management is also responsible for providing line management with relevant tools and know-how to aggregate and control risks and opportunities utilising a consistent methodology.

risk

Fri, 03 Jul 2009 10:17:15 GMT

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Risk and opportunity management system

To facilitate effective management, we have implemented an integrated management system which focuses on the identification, assessment, treatment, controlling and reporting of risks and opportunities. The key objective of this system is to protect and further grow shareholder value through an opportunity-focused, but risk-aware decision-making framework.

annual profit

Fri, 03 Jul 2009 10:14:30 GMT

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The Group’s gross profit increased 8% to reach € 5.256 billion in 2008 versus € 4.882 billion in 2007. The Group’s operating margin grew 0.7 percentage points to 9.9% from 9.2% in 2007, due to the higher gross margin which more than offset higher net other operating expenses and income as a percentage of sales. The Group’s operating profit increased 13% to € 1.070 billion in 2008 versus € 949 million in 2007. The Group’s net income attributable to shareholders grew 16% to € 642 million from € 551 million in 2007. Diluted earnings per share increased 20% to € 3.07 in 2008 versus € 2.57 in 2007.

intro

Fri, 03 Jul 2009 10:13:04 GMT

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n 2008, the adidas Group again delivered strong financial performance. Group sales and profitability developed in line with Management’s initial expectations. Currency-neutral sales increased 9%. Double-digit sales growth in the adidas segment had the biggest impact on this development. In euro terms, adidas Group revenues grew 5% to € 10.799 billion in 2008 from € 10.299 billion in 2007. The Group’s gross margin increased 1.3 percentage points to 48.7% in 2008 (2007: 47.4%) mainly driven by an improving regional mix, further own-retail expansion and a more favourable product mix