Notes to the Consolidated Financial Statements

1.     General

Amendments to IFRS 16 COVID-19-Related Rent Concessions

The amendments to IFRS 16 in respect of COVID-19-related rent concessions enable lessees to make use of a practical recognition exemption. This means that PUMA, as a lessee, may waive the evaluation of whether COVID-19-related rent concessions – e.g. a deferral of or exemption from rent/lease payments for a specific period of time – constitute lease modifications as defined in IFRS 16. PUMA has decided to make use of this elective right for all rent concessions that fall within the scope of this measure and to apply the recognition exemption retroactively from January 1, 2020.

This practical recognition exemption applies only to rent concessions that are a direct consequence of the COVID-19 pandemic and that meet the following requirements cumulatively:

(a) The change to the lease payments may only result in a change to the consideration that is substantively equal to or less than the consideration before the rent concessions were granted. Accordingly, a (net) increase to the consideration would not fall within the scope of the practical recognition exemption.

(b) The provision may only be exercised for payments that would have been due on or before June 30, 2021 pursuant to the original contractual agreement.

(c) The changes must not be accompanied by any additional material changes to the terms and conditions of the contract. For example, a three-month suspension of lease payments before June 30, 2021, combined with a three-month lease extension at the end of the agreement term under practically the same conditions, does not constitute a material change to the contractual terms or conditions.

Where the above conditions are met, PUMA may represent the rent concessions on the balance sheet as if they were variable lease payments and recognize them in the income statement in the period in which the rent concessions were granted. In the case of final exempted lease payments, it must be checked whether the lease liability is to be written off in accordance with the provisions of IFRS 9 “Financial Instruments.” This simplifies the recognition of rent concessions on the balance sheet, as it is no longer necessary to check whether the conditions for a contractual modification apply and any changes must not be recognized as a contractual modification in the balance sheet.

As a result of this practical recognition exemption, in the financial year 2020 PUMA recognized €13.7 million in rent concessions as variable lease payments in the income statement. This also led to a reversal of lease liabilities in almost the same amount. Furthermore, lease payments were deferred and, for some contracts, the underlying lease term was extended by a period of up to three months. In these cases, no adjustment was made to the amount of lease liabilities.

The information regarding leases in financial year 2020 is presented in chapter 10.

Changes in Other Standards and Interpretations

The amendments to the other standards and interpretations described below, which were to be initially adopted as of January 1, 2020, did not affect the PUMA consolidated financial statements.

The amendments concern the revision of the IFRS Conceptual Framework, which includes revised definitions of assets and liabilities, along with new guidelines on measurement and write-off, reporting and disclosure. Alongside the revised Conceptual Framework, amendments to references to the conceptual framework in some standards were also issued.

Changes to IAS 1 and IAS 8 (Definition of Material) further clarify the definition of “material” and align the various definitions used in the Conceptual Framework and in the standards themselves.

The narrowly defined amendments to IFRS 3 (Definition of a Business) aim to clarify whether an entity has acquired a business or a group of assets. The amendments are applicable to all business combinations and asset acquisitions for which the acquisition date is on or after January 1, 2020.

The interest rate benchmark reform (amendments to IFRS 9, IAS 39 and IFRS 7) concerns specific requirements for the accounting of hedge relationships in interest rate hedge deals. As PUMA does not use interest rate hedging instruments, this amendment has no effect on the consolidated financial statements.

New, but not yet mandatory standards and interpretations

The following standards and interpretations have been released but will only become effective in later reporting periods and are not applied earlier by the Group.