26. Management of the Currency Risk  The company is exposed to currency risks which result from an imbalance in the worldwide cashflow. This imbalance is largely due to the high level of sourcing in US Dollar in the Far East. Sales are to a great extent invoiced in other currencies; in addition, the Company earns royalty income mainly in Japanese YEN (JPY)  and USD. The resulting assets and liabilities are subject to exchange-rate fluctuations from the date of their origin up to realization.  The PUMA Group uses derivative and primary hedging  instruments to minimize the currency risk arising from currency fluctuations in compliance with an intra-group Group guideline. Derivative transactions are concluded if a hedging requirement arises concerning future transactions after netting existing  foreign currency receivables and liabilities. In accordance with the Group’s treasury principles, no derivative financial instruments are held for trading purposes. As a general rule, derivatives are combined with the associated underlying transactions to  valuation units (hedge accounting) and, to this extent do not impact the net income for the year. The Company usually secures its net demand or net surplus of the respective currencies on a rolling basis twelve months in advance. Due to a further weakening of the US Dollar in  comparison with the Euro and other currencies in the past  financial year, the company extended the hedging period for this currency to up to twenty-four months of the net demand. In so doing, the planning period for 2005 and 2006 is hedged against adverse currency effects.  The net demand or net surplus results from the demand for a  certain currency net of expected income in the same currency. As a general rule, forward exchange deals are used to hedge exchange rate risks.  For accounting purposes, hedging transactions are clearly linked to certain parts of the overall risk position. As of the balance sheet date, forward exchange deals related almost exclusively to the purchase of USD and EUR and the sale of JPY and USD  concluded with renowned international financial institutions only. The credit risk is therefore assessed as being very low or unlike- ly. At present, the terms of the derivatives are up to twenty-four months. The contracts are exclusively used to hedge contracts already concluded, or where conclusion is expected. The nominal amounts and market values of open currency  hedging transactions, largely related to cashflow hedging, are structured as follows: Total forward exchange transactions 724.6 514.8 -59.6 -22.8 Nominal amount Nominal amount Market vlaue Market value Dec. 31, 2004 Dec. 31, 2003 Dec. 31, 2004 Dec. 31, 2003 € million € million € million € million The nominal amount corresponds to the amounts of the  respective hedging transactions as agreed upon between the  parties involved. The market value is the amount to which the financial instrument would be traded between interested parties on the balance sheet date. As a general rule, the market values are determined on the basis of market values communicated by the banks involved. The market value is reported under Other Financial Assets or Other Liabilities in accordance with IAS 39, and offset against equity with neutral effects on profits in as much as the hedging transaction relates to future transactions. Management does not expect any adverse influences on the Group’s financial position from the use of derivative financial instruments. 86 Foreword | Mission | Management Report | Share | Marketing |  Consolidated Financial Statements - IFRS - | Report of Supervisory Board | Board of Management