03 » Discontinued Operations
Description
On February 11, 2021, the company decided to initiate a formal process aimed at divesting Reebok, which was completed with signing of a sales agreement with Authentic Brands Group LLC on August 12, 2021. Due to the concrete plans to divest Reebok and the approval by the relevant committees, the Reebok operating business has been reported as discontinued operations and classified as a disposal group held for sale since the resolution.
The Reebok business was sold on 28 February 2022 with effect from 1 March 2022. The majority of the purchase price was paid at closing, with the remainder comprising deferred and contingent consideration. The fair value of earn-out components was determined using the discounted cash flow method and the Monte Carlo method, respectively.
Information on the financial performance
€ in millions |
|
Full year 2022 |
|
Full year 2021 |
|---|---|---|---|---|
Net sales |
|
353 |
|
1,767 |
Expenses |
|
(366) |
|
(918) |
(Loss)/gain from operating activities before taxes |
|
(14) |
|
849 |
Income taxes |
|
248 |
|
(171) |
Gain from operating activities, net of tax |
|
235 |
|
678 |
Gain from the sale of discontinued operations |
|
522 |
|
– |
Other loss from revaluation of contingent consideration receivable |
|
(20) |
|
– |
Transaction costs |
|
(51) |
|
(30) |
Income taxes |
|
(308) |
|
6 |
Gain/(loss) from the sale of discontinued operations, net of tax |
|
143 |
|
(24) |
Gain from discontinued operations, net of tax |
|
378 |
|
654 |
The profit from discontinued operations for 2022 in the amount of € 384 million (2021: profit of € 666 million) is fully attributable to the shareholders of adidas AG. In addition to Reebok, the 2022 result from discontinued operations also includes a gain of € 6 million (2021: € 12 million) related to divestments from prior years.
The total tax benefit related to discontinued operations is € 248 million (2021: tax expense of € 168 million). The amount of € 248 million breaks down as follows: a gain from the release of a deferred tax liability of € 308 million is included in the gain from the sale of discontinued operations of € 522 million. The taxable profit from the sale of discontinued operations leads to a tax expense of € 308 million. The tax benefit of € 248 million includes a tax benefit resulting from restructuring measures related to discontinued operations.
As part of the divestiture of the Reebok brand, agreements were concluded for a limited period of time for the purchase and distribution of Reebok products in certain markets. In this context, adidas is acting as an agent in accordance with IFRS 15.
Assets and liabilities held for sale
The following assets and liabilities have been classified as a disposal group held for sale as at December 31, 2021:
Assets classified as held for sale € in millions |
|
Dec. 31, 2021 |
|---|---|---|
Accounts receivable |
|
82 |
Inventories |
|
300 |
Other current financial assets |
|
14 |
Other current assets |
|
15 |
Total current assets |
|
411 |
Long-term financial assets |
|
11 |
Property, plant, and equipment |
|
84 |
Right-of-use assets |
|
102 |
Goodwill |
|
28 |
Trademark Reebok |
|
1,368 |
Deferred tax assets |
|
26 |
Other non-current financial assets |
|
3 |
Total non-current assets |
|
1,622 |
Total assets |
|
2,033 |
|
|
|
Liabilities classified as held for sale € in millions |
|
Dec. 31, 2021 |
Accounts payable |
|
35 |
Current lease liabilities |
|
33 |
Other current provisions |
|
33 |
Current accrued liabilities |
|
55 |
Other current financial liabilities |
|
7 |
Other current liabilities |
|
6 |
Total current liabilities |
|
169 |
Non-current lease liabilities |
|
114 |
Pensions and similar obligations |
|
2 |
Deferred tax liabilities |
|
304 |
Other non-current provisions |
|
4 |
Non-current accrued liabilities |
|
0 |
Other non-current financial liabilities |
|
0 |
Other non-current liabilities |
|
1 |
Total non-current liabilities |
|
425 |
Total liabilities |
|
594 |
