NOTES TO THE CONSOLIDATED STATEMENT OF FINANCIAL POSITION
26 — SHAREHOLDERS’ EQUITY
The nominal capital of adidas AG has remained unchanged since December 31, 2015. As at the balance sheet date, and in the period beyond, up to and including February 17, 2017, it amounted to € 209,216,186 divided into 209,216,186 registered no-par-value shares and is fully paid in.
Each share grants one vote and is entitled to dividends starting from the beginning of the year it was issued. Treasury shares held directly or indirectly are not entitled to dividend payment in accordance with § 71b German Stock Corporation Act (Aktiengesetz – AktG). As at the balance sheet date, adidas AG held 7,726,876 treasury shares, corresponding to a notional amount of € 7,726,876 in the nominal capital and consequently 3.69% of the nominal capital. As at February 17, 2017, adidas AG holds 8,072,349 treasury shares, corresponding to a notional amount of € 8,072,349 in the nominal capital and consequently 3.86% of the nominal capital.
CONSOLIDATED FINANCIAL STATEMENTS
Notes – Notes to the Consolidated Statement of Financial Position
174 175
4 4
Authorised Capital
The Executive Board of adidas AG did not utilise the existing amount of authorised capital of up to € 99 million in the 2016 financial year or in the period beyond the balance sheet date up to and including February 17, 2017.
The authorised capital of adidas AG, which is set out in § 4 sections 2, 3, 4 and 5 of the Articles of Association as at the balance sheet date, entitles the Executive Board, subject to Supervisory Board approval, to increase the nominal capital
until June 30, 2018
—
by issuing new shares against contributions in cash once or several times by no more than € 50 million and, subject to Supervisory Board approval, to exclude residual amounts from shareholders’ subscription rights (Authorised Capital 2013/I);until June 2, 2018
—
by issuing new shares against contributions in kind once or several times by no more than € 25 million and, subject to Supervisory Board approval, to exclude shareholders’ subscription rights (Authorised Capital 2015);until June 30, 2018
—
by issuing new shares against contributions in cash once or several times by no more than € 20 million and, subject to Supervisory Board approval, to exclude residual amounts from shareholders’ subscription rights and to exclude shareholders’ subscription rights when issuing the new shares at a value not essentially below the stock market price of shares with the same features; this exclusion of subscription rights can also be associated with the listing of the entity’s shares on a foreign stock exchange (Authorised Capital 2013/III). The authorisation to exclude subscription rights pursuant to the previous sentence may, however, only be used to the extent that the pro rata amount of the new shares in the nominal capital together with the pro rata amount in the nominal capital of other shares which have been issued by the entity since May 8, 2013, subject to the exclusion of subscription rights pursuant to or in accordance with § 186 section 3 sentence 4 AktG on the basis of an authorised capital or following a repurchase, or for which conversion or subscription rights or conversion or subscription obligations were granted after May 8, 2013, through the issuance of convertible bonds and/or bonds with warrants, with subscription rights excluded in accordance with § 186 section 3 sentence 4 AktG, does not exceed 10% of the nominal capital existing on the date of the entry of this authorisation into the commercial register or – if this amount is lower – as of the respective date on which the authorisation is used;until June 14, 2021
—
by issuing up to 4,000,000 new shares against contributions in cash once or several times by no more than € 4 million and, subject to Super-visory Board approval, to determine the further content of the rights embodied in the shares and the terms and conditions of the share issuance. Shareholders’ subscription rights shall be excluded (Authorised Capital 2016). Any repurchased treasury shares of the entity which are used by the entity for employee stock purchase plans during the term of this authorisation shall be attributed to the maximum number of 4,000,000 shares. The new shares may only be issued to (current or former) employees of the entity and its affiliated companies as well as to (current and former) members of management bodies of the entity’s affiliated companies.Contingent Capital
The following description of the Contingent Capital is based on § 4 sections 6 and 7 of the Articles of Association of adidas AG as well as on the underlying resolutions of the Annual General Meeting held on May 6, 2010 and May 8, 2014. Additional contingent capital does not exist.
Contingent Capital 2010 and Convertible Bond
The nominal capital of adidas AG is conditionally increased by up to € 36 million (Contingent Capital 2010). The Contingent Capital serves the purpose of granting holders or creditors of bonds that were issued up to May 5, 2015 based on the resolution of the Annual General Meeting on May 6, 2010 subscription or conversion rights relating to no more than a total of 36,000,000 shares in compliance with the corresponding conditions of the bonds. The new shares shall be issued at the respective option or conversion price to be established in accordance with the aforementioned authorisation resolution. The new shares shall carry dividend rights from the commencement of the financial year in which the shares are issued.
On March 14, 2012, the Executive Board, with the approval of the Supervisory Board, made partial use of the authorisation of the Annual General Meeting from May 6, 2010, and on March 21, 2012 issued a convertible bond due on June 14, 2019 (including a prolongation option) in a nominal value of € 500 million via an offer to institutional investors outside the USA excluding shareholders’ subscription rights. In principle, the conversion rights are exercisable at any time between May 21, 2012 and June 5, 2019, subject to lapsed conversion rights as set out under § 6 section 3 or to the excluded periods as defined by § 6 section 4 of the bond terms and conditions, and (subject to an adjustment to the conversion rights resulting from the dilution adjustment regulations set out under § 10 or a change of control in accordance with § 13 of the bond terms and conditions) based on a conversion price of € 81.57 per share are convertible into 6,129,671 shares of adidas AG. The conversion price currently amounts to € 81.57 per share. The convertible bond bears an interest rate of 0.25% per annum. Bondholders are entitled to demand early redemption of the bonds as of June 14, 2017. As of July 14, 2017, adidas AG may conduct an early redemption of the
CONSOLIDATED FINANCIAL STATEMENTS
Notes – Notes to the Consolidated Statement of Financial Position
175
4
bond, if, on 20 of 30 consecutive trading days, the share price of adidas AG exceeds the current conversion price of € 81.57 by at least 30%.
The bonds are listed on the Open Market segment of the Frankfurt Stock Exchange. For details regarding the servicing of the convertible bond with treasury shares see Repurchase and use of treasury shares, p. 175
Moreover, the authorisation to issue bonds with warrants and/or convertible bonds granted on May 6, 2010 was cancelled by resolution of the Annual General Meeting on May 8, 2014.
The Executive Board of adidas AG did not issue shares from the Contingent Capital 2010 in the period up to the balance sheet date and in the period beyond the balance sheet date up to and including February 17, 2017.
Contingent Capital 2014
At the balance sheet date, the nominal capital is conditionally increased by up to € 12.5 million divided into not more than 12,500,000 shares (Contingent Capital 2014). The contingent capital increase will be implemented only to the extent that holders or creditors of option or conversion rights or the persons obligated to exercise option or conversion duties based on bonds issued by the entity or a subordinated Group company, pursuant to the authorisation of the Executive Board granted by the resolution adopted by the Annual General Meeting on May 8, 2014 (Agenda Item 7), up to May 7, 2019 and guaranteed by the entity, exercise their option or conversion rights or, if they are obliged to exercise the option or conversion duties, meet their obligations to exercise the warrant or convert the bond, or to the extent that the entity exercises its rights to choose to deliver shares in the entity for the total amount or a part amount instead of payment of the amount due and insofar as no cash settlement, treasury shares or shares of another publicly listed company are used to serve these rights. The new shares will be issued at the respective option or conversion price to be established in accordance with the aforementioned authorisation resolution.
The new shares will carry dividend rights from the commencement of the financial year in which the shares are issued. The Executive Board is authorised, subject to Supervisory Board approval, to stipulate any additional details concerning the implementation of the contingent capital increase.
The Executive Board of adidas AG did not issue shares from the Contingent Capital 2014 in the 2016 financial year or in the period beyond the balance sheet date up to and including February 17, 2017.
Repurchase and use of treasury shares
Against the background of the introduction of an employee stock purchase plan, the Annual General Meeting of May 12, 2016 cancelled the authorisation of the Executive Board to repurchase treasury shares granted on May 8, 2014, which was used in 2014 and 2015. At the same time, the Annual General Meeting granted the Executive Board a new authorisation to repurchase treasury shares up to an amount totalling 10% of the nominal capital until May 11, 2021. The authorisation may be used by adidas AG but also by its subordinated Group companies or by third parties on account of adidas AG or its subordinated Group companies or third parties assigned by adidas AG or one of its subordinated Group companies.
Based on the authorisation to repurchase treasury shares granted by the Annual General Meeting on May 8, 2014, the adidas AG Executive Board commenced a share buyback programme on November 7, 2014.
Under the granted authorisation, adidas AG repurchased a total of 4,889,142 shares for a total price of € 299,999,987 (excluding incidental purchasing costs), i.e. for an average price of € 61.36 per share, in a first tranche between November 7, 2014 and December 12, 2014 inclusive. This corresponded to a notional amount of € 4,889,142 in the nominal capital and consequently to 2.34% of the nominal capital.
The shares were repurchased for cancellation (capital reduction) or otherwise used to meet obligations arising from the potential conversion of adidas AG’s € 500 million convertible bond.
Under the granted authorisation, adidas AG repurchased a total of 4,129,627 shares for a total price of € 299,999,992 (excluding incidental purchasing costs), i.e. for an average price of € 72.65 per share, in a second tranche between March 6, 2015 and June 15, 2015 inclusive. This corresponded to a notional amount of € 4,129,627 in the nominal capital and consequently to 1.97% of the nominal capital. The shares were repurchased for cancellation (capital reduction) or otherwise used to meet obligations arising from the potential conversion of adidas AG’s
€ 500 million convertible bond.
Based on the authorisation granted by the Annual General Meeting on May 12, 2016, the share buyback programme was continued in a third tranche between November 8, 2016 and January 31, 2017 inclusive. The repurchased shares may either be cancelled, thus reducing the nominal capital, or may be used to meet obligations arising from the potential conversion of adidas AG’s € 500 million convertible bond and other admissible purposes under the authorisation granted by the Annual General Meeting on May 12, 2016.
In November 2016, 1,143,103 shares were repurchased for an average price of € 136.47, corresponding to a notional amount of € 1,143,103 in the nominal capital and consequently to 0.55% of the nominal capital. In December 2016, 512,131 shares were repurchased for an average price of € 143.31, corresponding to a notional amount of € 512,131 in the nominal capital and consequently to 0.24% of the nominal capital.
In January 2017, 472,966 shares were repurchased for an average price of € 149.29, corresponding to a notional amount of € 472,966 in the nominal capital and consequently to 0.23% of the nominal capital. On January 31, 2017, the third tranche of the share buyback programme was concluded. Under the granted authorisation, adidas AG repurchased a total of 2,128,200 shares for a total price of € 299,999,851 (excluding incidental purchasing costs), i.e. for an average price of € 140.96 per share, in a third tranche between November 8, 2016 and January 31, 2017 inclusive. This corresponded to a notional amount of € 2,128,200 in the nominal capital and consequently to 1.02% of the
CONSOLIDATED FINANCIAL STATEMENTS
Notes – Notes to the Consolidated Statement of Financial Position
176 177
4 4
nominal capital. adidas AG reserves the right to continue with or to resume the share buyback programme in the future in alignment with the published parameters. For details see Disclosures Pursuant to § 315 Section 4 and § 289 Section 4 HGB, p. 107
In the 2016 financial year, a total of 2,947,127 treasury shares were used to meet obligations arising from the conversion of adidas AG’s convertible bond. In the 2017 financial year up to and including February 17, 2017, a total of 127,493 treasury shares were used to meet obliga-tions arising from the conversion of adidas AG’s convertible bond. Up to the balance sheet date and in the period beyond the balance sheet date up to and including February 17, 2017, adidas AG used a total of 3,074,620 treasury shares.
Employee stock purchase plan
In the 2016 financial year, adidas introduced an employee stock purchase plan in favour of employees. For details on the employee stock purchase plan see Disclosures Pursuant to § 315 Section 4 and § 289 Section 4 HGB, p. 107and see Notes 02 and 27
Changes in the percentage of voting rights
Pursuant to § 160 section 1 no. 8 AktG, existing shareholdings which have been notified to adidas AG in accordance with § 21 section 1 or section 1a German Securities Trading Act (Wertpapierhandelsgesetz – WpHG) need to be disclosed.
The following table reflects reportable shareholdings in adidas AG, Herzogenaurach, as at the balance sheet date and up to and including February 17, 2017 which have each been notified to adidas AG in written form. The respective details are taken from the most recent voting rights notification received by adidas AG. All voting rights notifications disclosed by adidas AG in the year under review and up to and including February 17, 2017 are available on the adidas website. www.adidas-group.com/s/voting-rights-notifications The details on the percentage of shareholdings and voting rights may no longer be up to date.