01 » General
The consolidated financial statements of adidas AG as at December 31, 2021, comprise adidas AG and its subsidiaries and are prepared in compliance with International Financial Reporting Standards (IFRS), as to be applied in the European Union (EU) as at December 31, 2021, and the additional requirements pursuant to § 315e section 1 German Commercial Code (Handelsgesetzbuch – HGB).
The following amendments to existing standards and interpretations are effective for financial years beginning on January 1, 2021, and have been applied for the first time to these consolidated financial statements:
- Amendment to IFRS 4: Extension of the temporary exemption from application of IFRS 9 (IASB effective date: January 1, 2021): In order to reduce the impact of the differing effective dates of IFRS 9 and IFRS 17, by amending IFRS 4 the expiration of the temporary exemption from the application of IFRS 9 is postponed to financial years beginning on or after January 1, 2023. IFRS 4 Insurance Contracts is currently not applied by the Group, which is why the amendments did not have any impact on the consolidated financial statements as at December 31, 2021.
- Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4, and IFRS 16: Interest Rate Benchmark Reform – Phase 2 (IASB effective date: January 1, 2021): The amendments provide temporary reliefs that address the financial reporting effects when an interbank offered rate (IBOR) is replaced with an alternative nearly risk-free interest rate. The amendments include the following: a practical expedient that contractual changes or changes to cash flows that are directly required by the reform can be treated as changes to a floating interest rate; the permission that changes required to hedge designations and hedge documentation can be made without the hedging relationship being discontinued; and a temporary relief from having to meet the separately identifiable requirement when a respective instrument is designated as a hedge of a risk component. These amendments had no material impact on the consolidated financial statements as at December 31, 2021.
- Amendments to IFRS 16: covid-19-Related Rent Concessions beyond 30 June 2021 (IASB effective date: April 1, 2021): On May 28, 2020, the IASB issued covid-19-Related Rent Concessions – amendments to IFRS 16. The amendments were initially intended to apply until June 30, 2021. As the impact of the covid-19 pandemic is, however, continuing, on March 31, 2021, the IASB extended the period of application to June 30, 2022. The amendments provide relief to lessees from applying IFRS 16 guidance on lease modification accounting for rent concessions arising as a direct consequence of the covid-19 pandemic, but to account for any change the same way it would account for the change under IFRS 16, if the change were not a lease modification. The amendments did not have any impact on the consolidated financial statements as at December 31, 2021, as adidas does not apply that accounting option for covid-19-Related Rent Concessions, but accounts for such concessions as lease modification in accordance with IFRS 16.
New standards and interpretations as well as amendments to existing standards and interpretations are usually not applied by adidas before the EU effective date.
The following new standards and interpretations and amendments to existing standards and interpretations issued by the International Accounting Standards Board (IASB), endorsed by the EU, and which are effective for financial years beginning after January 1, 2021, have not been applied in preparing these consolidated financial statements:
- IFRS 17 Insurance Contracts and Amendments to IFRS 17 (IASB effective date: January 1, 2023): The new standard covers the recognition and measurement, presentation and disclosure related to all types of insurance contracts. IFRS 17 is effective for reporting periods beginning on or after January 1, 2023, and once effective, will replace IFRS 4 Insurance Contracts. Neither IFRS 4 nor IFRS 17 are applicable to the Group, which is why no material impact is expected on the consolidated financial statements.
- Amendments to IFRS 3: Reference to the Conceptual Framework (IASB effective date: January 1, 2022): The amendments to IFRS 3 replace a reference to the Framework for the Preparation and Presentation of Financial Statements (1989) with a reference to the Conceptual Framework for Financial Reporting issued in March 2018. At the same time, the amendments clarify that by replacing the reference to the Framework for the Preparation and Presentation of Financial Statements, the existing guidance in IFRS 3 for contingent assets would not be affected. The amendments are effective for annual reporting periods beginning on or after January 1, 2022, and apply prospectively. The amendments are not expected to have a material impact on the consolidated financial statements.
- Amendments to IAS 16: Property, Plant, and Equipment: Proceeds before Intended Use (IASB effective date: January 1, 2022): Due to the amendments to IAS 16, it will no longer be possible to deduct from the cost of an item of property, plant, and equipment any proceeds from selling items produced while bringing that asset to the location and condition necessary for it to be capable of operating. Instead, an entity recognizes the proceeds from selling such items in profit or loss. The amendments are effective for annual reporting periods beginning on or after January 1, 2022, and are not expected to have a material impact on the consolidated financial statements.
- Amendments to IAS 37: Onerous Contracts – Costs of Fulfilling a Contract (IASB effective date: January 1, 2022): The amendments to IAS 37 specify that costs that relate directly to a contract are considered the costs of fulfilling a contract (‘directly related cost approach’) and hence include both incremental costs and an allocation of costs directly related to contract activities. The amendments are effective for annual reporting periods beginning on or after January 1, 2022. The Group will apply these amendments to contracts for which it has not yet fulfilled all its obligations at the beginning of the financial year in which it first applies the amendments. The amendments are not expected to have a material impact on the consolidated financial statements.
- Annual improvements to IFRS Standards (2018-2020): (IASB effective date: January 1, 2022): The annual improvements to IFRS standards process particularly includes amendments to IFRS 1. Subsidiary as a first-time adopter, Amendments to IFRS 9 Fees in the ’10 per cent’ test for derecognition of financial liabilities and amendments to IAS 41 Taxation in fair value measurements. The amendments are applicable for annual periods beginning on or after January 1, 2022. The amendments are not expected to have a material impact on the consolidated financial statements.
The following new standards and interpretations as well as amendments to existing standards and interpretations were issued by the IASB. These are not yet endorsed by the EU and hence have not been applied in preparing these consolidated financial statements:
- Amendment to IAS 1: Classification of Liabilities as Current or Non-current (IASB effective date: January 1, 2023): The amendments to IAS 1 specify the requirements for classifying liabilities as current or non-current. The amendments are effective for annual reporting periods beginning on or after January 1, 2023, and must then generally be applied retrospectively. Currently being assessed, it is not expected that the amendments will have a material impact on the Group’s consolidated financial statements.
- Amendments to IAS 1 and IFRS Practice Statement 2: Disclosure of Accounting Policies (IASB effective date: January 1, 2023): The amendments provide guidance and examples to help entities apply materiality judgments to accounting policy disclosures. By replacing the requirement for entities to disclose their ‘significant’ accounting policies with a requirement to disclose their ‘material’ accounting policies, the amendments aim to help entities provide accounting policy disclosures that are more relevant and useful for the users of the financial statements. The amendments to IAS 1 are applicable for annual periods beginning on or after January 1, 2023. Since the amendments to the Practice Statement 2 provide non-mandatory guidance, an effective date for these amendments has not been determined. Subject to the ongoing assessment it is currently not expected that the amendments will have a material impact on the Group’s accounting policy disclosures.
- Amendments to IAS 8: Definition of Accounting Estimates (IASB effective date: January 1, 2023): The amendments to IAS 8 introduce a new definition of ‘accounting estimates’ which clarifies the distinction between changes in accounting estimates and changes in accounting policies and the correction of errors. The amendments further provide guidance how entities can develop accounting estimates. The amendments to IAS 8 are effective for annual reporting periods beginning on or after January 1, 2023, and apply to changes in accounting policies and changes in accounting estimates that occur on or after the start of that period. Depending on the changes in accounting policies and changes in accounting estimates after that date, the amendments are currently not expected to have a material impact on the consolidated financial statements.
- Amendments to IAS 12: Deferred Tax related to Assets and Liabilities arising from a Single Transaction (IASB effective date: January 1, 2023): The amendments to IAS 12 clarify that the initial recognition exemption provided in IAS 12 does not apply to transactions in relation to leases and decommissioning obligations, and that entities hence have to recognize deferred taxes for transactions when an asset and a liability are recognized at the inception of the lease, or when an entity recognizes a liability and includes the decommissioning costs in the cost of the asset. The amendments are effective for annual reporting periods beginning on or after January 1, 2023. The amendments are not expected to have a material impact on the Group, in particular since adidas did not apply the initial recognition exemption in the context of leases under IFRS 16.
The consolidated financial statements have in principle been prepared on the historical cost basis with the exception of certain items in the statement of financial position, such as certain originated financial instruments, derivative financial instruments, and plan assets, which are measured at fair value.
Business development in 2021 continued to be impacted by the effects of the coronavirus pandemic, albeit less than in the financial year 2020. Estimates and assumptions relevant to the financial statements were made to the best of our knowledge, based on current events and actions. Due to the ongoing pandemic, it is still difficult to predict the impact on assets and liabilities as well as income and expenses. The impact of the coronavirus pandemic is described in the individual Notes to the consolidated financial statements, if relevant.
On February 11, 2021, adidas decided to begin a formal process aimed at divesting Reebok. Due to the initiation of that selling process, which led to a binding agreement with Authentic Brands Group LLC, on August 12, 2021, the Reebok operating business is reported as discontinued operations and classified as a disposal group held for sale since the resolution has been passed. The prior-year figures of the consolidated income statement and the consolidated statement of cash flows have been restated to report the discontinued operations separately from continuing operations. Note 03
The consolidated financial statements are presented in euros (€) and, unless otherwise stated, all values are presented in millions of euros (€ in millions). Due to rounding principles, numbers presented may not exactly sum up to totals provided. This can also lead to individual amounts rounded to zero.