Financial Statements and Management Report of adidas AG Information

adidas AG is the parent company of the adidas Group. It includes operating business functions, primarily for the German market, as well as corporate headquarter functions such as Marketing, IT, Treasury, Taxes, Legal, and Finance. adidas AG also administers the company’s shareholdings.

Operating activities and capital structure of adidas AG

The majority of the operating business of adidas AG consists of the sale of merchandise to wholesale partners and own retail activities.

In addition to its own trading activities, the results of adidas AG are significantly influenced by its holding function for the adidas Group. This is reflected primarily in currency effects, transfer of costs for services provided, interest result, and income from investments in related companies.

The opportunities and risks as well as the future development of adidas AG largely reflect those of the adidas Group. SEE OUTLOOK SEE RISK AND OPPORTUNITY REPORT

The asset and capital structure of adidas AG is significantly impacted by its holding and financing function for the adidas Group. For example, 48% of total assets as of December 31, 2023, related to financial assets (2022: 42%), which primarily consist of shares in affiliated companies. Intercompany accounts, through which transactions between affiliated companies are settled, represent another 28% of total assets (2022: 42%) and 28% of total equity and liabilities as of December 31, 2023 (2022: 28%).

Preparation of accounts

Unlike the consolidated financial statements, which are in conformity with the International Financial Reporting Standards (IFRS), as adopted by the European Union as of December 31, 2023, the following financial statements of adidas AG have been prepared in accordance with the rules set out in the German Commercial Code (Handelsgesetzbuch – HGB).

Income statement

Net sales down 6%

Sales of adidas AG comprise external revenues generated by adidas Germany with products of the adidas brand as well as revenues from foreign subsidiaries. Revenues of adidas AG also include royalty and commission income, mainly from affiliated companies, revenues from central distribution, and other revenues. From March 2022 until May 2023, the commission income for the Reebok sales is shown in other revenues. In 2023, adidas AG net sales decreased 6% to € 4,510 million compared to € 4,814 million in the prior year.

Other operating income down 41%

In 2023, other operating income of adidas AG decreased 41% to € 721 million (2022: € 1,226 million). This development was primarily due to lower positive currency effects.

Other operating expenses down 18%

In 2023, other operating expenses for adidas AG decreased 18% to € 2,801 million (2022: € 3,415 million). This was largely attributable to lower currency losses.

Depreciation and amortization slightly down

Depreciation and amortization for adidas AG relating to intangible and tangible fixed assets decreased slightly to € 139 million in 2023 (2022: € 140 million).

Operating result below prior year level

In 2023, adidas AG generated an operating loss of € 243 million (2022: € 117 million). The decrease is mainly due to lower sales.

Significant decrease of the financial result

The financial result of adidas AG decreased 95% to € 103 million in 2023 (2022: € 2,237 million). The decrease was attributable to lower income from dividends.

Net loss in 2023

Net loss, after taxes of € 49 million (2022: € 63 million), amounted to € 189 million in 2023 and was thus 109% below the prior year net income of € 2,057 million.

Balance sheet

Total assets below prior year

At the end of December 2023, total assets decreased 12% to € 9,265 million compared to € 10,475 million in the prior year. This development was mainly a result of the decrease in receivables and other assets.

Shareholders’ equity down 11%

Shareholders’ equity decreased 11% to € 2,455 million at the end of 2023 (2022: € 2,767 million). The equity ratio increased to 26.5% (2022: 26.4%).

Provisions decrease 2%

Provisions were down 2% to € 813 million at the end of 2023 (2022: € 833 million).

Liabilities and other items down 13%

At the end of December 2023, liabilities and other items decreased 13% to € 5,997 million (2022: € 6,875 million). This is mainly due to the repayment of a bond in 2023.

No major change in cash and cash equivalents

adidas AG has a syndicated credit facility of € 1,864 million and additional bilateral credit lines of € 889 million. In addition, the company has a multi-currency commercial paper program in an amount of € 2,000 million. SEE TREASURY

In 2023, operating activities of adidas AG resulted in a cash inflow of € 212 million (2022: cash outflow of € 1,699 million). The change versus the prior year was mainly a result of lower receivables. Net cash inflow from investment activities was € 104 million (2022: € 2,518 million). This was primarily attributable to lower dividend income. Financing activities resulted in a net cash outflow of € 323 million (2022: € 2,223 million). The net cash outflow from financing activities mainly relates to the dividend payment and interest payments. As a result of these developments, cash and cash equivalents of adidas AG decreased to € 189 million at the end of December 2023 compared to € 195 million at the end of the prior year.

adidas AG is able to meet its financial commitments at all times.