Reebok 2015 Annual Report Download - page 207

203
4
CONSOLIDATED FINANCIAL STATEMENTS
Notes – Notes to the Consolidated Statement of Financial Position
Effective November 24, 2014, Reebok International Limited completed the acquisition of Luta Ltd. (‘Luta’).
Based in London (UK), Luta designs and sells boxing and workout clothing. With this acquisition, the adidas
Group has entered into a long-term partnership with ‘Fight for Peace’, a non-profit organisation which
combines boxing and martial arts with education and personal development. In addition, this partnership
facilitated the completion of a licence agreement with the mixed martial arts organisation ‘Ultimate Fighting
Championship’ (UFC). The entire business of Luta was acquired for a purchase price of GBP 5 million in cash.
At the acquisition date, the acquisition had the following effect on the Group’s assets and liabilities,
based on a purchase price allocation:
NETASSETS OF LUTA LTD. AT THE ACQUISITION DATE
€ in millions Pre-acquisition
carrying amounts
Fair value
adjustments
Recognised values
on acquisition
Cash and cash equivalents 0 – 0
Accounts receivable 0 – 0
Inventories 0 – 0
Other current assets 0 – 0
Property, plant and equipment 0 – 0
Trademarks and similar rights – 7 7
Accounts payable (0) – (0)
Deferred tax liabilities – (1) (1)
Net assets 166
Goodwill arising on acquisition –
Purchase price settled in cash 6
Less: cash and cash equivalents acquired (0)
Net cash outflow on acquisition 6
The following valuation method for the acquired assets was applied:
•
Trademarks and similar rights: The ‘relief-from-royalty method’ was applied. The fair value was
determined by discounting notional royalty savings after tax and adding a tax amortisation benefit,
resulting from the amortisation of the acquired asset.
The acquired subsidiary generated net sales of € 0 million as well as net losses of € 0.2 million in
December 2014. If this acquisition had occurred on January 1, 2014, total Group net sales would have
been € 14.5 billion and net income attributable to shareholders would have been € 489 million for the
year ending December 31, 2014.
NOTESTOTHE CONSOLIDATED STATEMENTOF FINANCIAL POSITION
Cash and cash equivalents consist of cash at banks, cash on hand, short-term deposits and investments in
money market funds. Short-term financial assets are only shown as cash and cash equivalents if they are
readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value.
Short-term financial assets are classified ‘at fair value through profit or loss’. Changes in the fair value
are recognised in the income statement as they occur.
The majority of short-term financial assets are time deposits.
05
CASH AND CASH
EQUIVALENTS
06
SHORT-TERM
FINANCIAL ASSETS