01 » General

The consolidated financial statements of adidas AG as at December 31, 2023, comprise adidas AG and its subsidiaries and are prepared in compliance with International Financial Reporting Standards (IFRS), as endorsed by the European Union (EU) as at December 31, 2023, 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, 2023, and have been applied for the first time to these consolidated financial statements:

• IFRS 17 ‘Insurance Contracts’ and Amendments to IFRS 17 (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 replaces IFRS 4 ‘Insurance Contracts’. IFRS 17 had no material impact on the consolidated financial statements.
• Amendments to IAS 8 ‘Definition of Accounting Estimates’ (effective date: January 1, 2023): In February 2021, the IASB issued amendments to IAS 8, in which it introduces a definition of ‘accounting estimates’. The amendments clarify the distinction between changes in accounting estimates and changes in accounting policies and the correction of errors. Also, they clarify how entities use measurement techniques and inputs to develop accounting estimates. The amendments apply to changes in accounting policies and changes in accounting estimates that occur on or after the start of the effective date. The amendments had no material impact on adidas’ consolidated financial statements.
• Amendments to IAS 1 and IFRS Practice Statement 2 ‘Disclosure of Accounting Policies’ (effective date: January 1, 2023) In February 2021, the IASB issued amendments to IAS 1 and IFRS Practice Statement 2 ‘Making Materiality Judgements’, in which it provides guidance and examples to help entities apply materiality judgments to accounting policy disclosures. The amendments aim to help entities provide accounting policy disclosures that are more useful by replacing the requirement for entities to disclose their ‘significant’ accounting policies with a requirement to disclose their ‘material’ accounting policies and adding guidance on how entities apply the concept of materiality in making decisions about accounting policy disclosures. 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 on the application of the definition of ‘material’ to accounting policy information, an effective date for these amendments is not necessary. The amendments have led to a selective reduction in the disclosures on accounting policies.
• Amendments to IAS 12 ‘Deferred Tax related to Assets and Liabilities arising from a Single Transaction’ (effective date: January 1, 2023) In May 2021, the Board issued amendments to IAS 12, which narrow the scope of the initial recognition exemption under IAS 12, so that it no longer applies to transactions that give rise to equal taxable and deductible temporary differences. The amendments should be applied to transactions that occur on or after the beginning of the earliest comparative period presented. In addition, at the beginning of the earliest comparative period presented, a deferred tax asset (provided that sufficient taxable profit is available) and a deferred tax liability should also be recognized for all deductible and taxable temporary differences associated with leases and decommissioning obligations. The amendments had no material impact on adidas, in particular since adidas did not apply the initial recognition exemption in the context of leases under IFRS 16.
• Amendments to IAS 12 ‘International Tax Reform — Pillar Two Model Rules’ (effective date: January 1, 2023): In May 2023, the IASB issued ‘International Tax Reform—Pillar Two Model Rules’ – amendments to IAS 12 to clarify the application of IAS 12 ‘Income Taxes’ to income taxes arising from tax law enacted or substantively enacted to implement the OECD Pillar Two Model Rules. The amendments include a temporary exception to the accounting for deferred taxes arising from the implementation of the Pillar Two model rules and additional disclosure requirements for affected entities, with the aim to help users of the financial statements better understand an entity’s exposure to the Pillar Two Model Rules. The required disclosures are provided in the Note of Income Taxes. SEE NOTE 34

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 IASB, endorsed by the EU, and which are effective for financial years beginning after January 1, 2023, have not been applied in preparing these consolidated financial statements:

• Amendments to IFRS 16 ‘Lease Liability in a Sale and Leaseback’ (effective date: January 1, 2024): In September 2022, the IASB has issued amendments to IFRS 16 to clarify how a seller-lessee subsequently measures sale and leaseback transactions that satisfy the requirements in IFRS 15 to be accounted for as a sale, to ensure the seller-lessee does not recognize any amount of the gain or loss that relates to the right of use it retains. The amendments to IFRS 16 are applicable for annual periods beginning on or after January 1, 2024, and must be applied retrospectively to sale and leaseback transactions entered into after the date of initial application of IFRS 16. Earlier application is permitted when the fact is disclosed. The amendments are not expected to have a material impact on the consolidated financial statements of adidas.
• Amendments to IAS 1 ‘Classification of Liabilities as Current or Non-current’ (effective date: January 1, 2024): In January 2020, the IASB issued amendments to paragraphs 69 to 76 of IAS 1 to specify the requirements for classifying liabilities as current or non-current. The amendments clarify what is meant by a right to defer settlement, that such a right to defer must exist at the end of the reporting period, and that the classification is unaffected by the likelihood that an entity will exercise its deferral right. In October 2022, the IASB issued further amendments to IAS 1, in which it clarifies that only covenants with which an entity must comply on or before the reporting date will affect a liability’s classification as current or non-current. The amendments are effective for annual reporting periods beginning on or after January 1, 2024, and must be applied retrospectively. The amendments are not expected to have a material impact on the consolidated financial statements of adidas.

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:

• Amendments to IAS 7 ‘Statement of Cash Flows’ and IFRS 7 ‘Financial Instruments: Disclosures’ – ‘Supplier Finance Arrangements’ (effective date: January 1, 2024): In May 2023, the IASB issued the clarification ‘Supplier Finance Arrangements’, which amended IAS 7 ‘Statement of Cash Flows’ and IFRS 7 ‘Financial Instruments: Disclosures’. The amendments clarify the characteristics of supplier finance arrangements and introduce additional disclosure requirements for such arrangements. The objective of the amendments is to assist users of financial statements in understanding the effects of supplier finance arrangements on an entity’s liabilities, cash flows and exposure to liquidity risk. The amendments are effective for annual reporting periods beginning on or after January 1, 2024. Early adoption is permitted but will need to be disclosed. The amendments are not expected to have a material impact on the consolidated financial statements of adidas.
• Amendments to IAS 21 ‘The Effects of Changes in Foreign Exchange Rates’ – ‘Lack of Exchangeability’ (effective date: January 1, 2025): In August 2023, the IASB issued ‘Lack of Exchangeability’ that amends IAS 21. IAS 21 sets out the requirements for determining the exchange rate to be used for recording a foreign currency transaction into the functional currency and translating a foreign operation into a different currency. The amendments to IAS 21 clarify how an entity should assess whether a currency is exchangeable and how to determine the exchange rate when it is not. The amendments are effective for annual reporting periods beginning on or after January 1, 2025. The effects of the amendments need to be further analyzed and evaluated but are currently not expected to have a material impact on the consolidated financial statements of adidas.

The consolidated financial statements have in principle been prepared on the historical cost basis except for 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.

In October 2022, adidas terminated the Yeezy partnership with immediate effect, discontinued the distribution of adidas Yeezy products, and stopped all payments to Kanye West and his companies. Being the sole owner of all design rights to existing products as well as previous and new colorways under the partnership, adidas announced in May 2023 that it would begin to sell the remaining inventory of adidas Yeezy products, with an initial release in May 2023. A second product drop took place in the third quarter. In total, these two drops generated revenues of around € 750 million in 2023. As of December 31, 2023, adidas still holds inventories with a total value of around € 250 million.

In connection with the sale of these remaining inventories, adidas has committed to donating a significant amount to selected organizations working to combat discrimination and hate, including racism and antisemitism. SEE NOTE 39

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.