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33 Financial instruments and fair value information

This note provides an overview of the Group’s financial instruments, including derivative financial instruments, and their categorisation under IFRS. Further details about the different types of financial assets and financial liabilities are provided throughout these consolidated financial statements. This note also contains information about the fair value of the Group’s financial instruments and some general accounting policies covering more than one type of financial assets and liabilities.

Categories of financial instruments and fair value information

The Group’s financial assets and liabilities are classified into the following categories: financial assets at amortised cost, financial assets at fair value through profit or loss, financial liabilities at amortised cost and financial assets and liabilities at fair value through profit or loss.

The following tables present the carrying amounts of financial assets and liabilities as of 31 December 2020 and 31 December 2019. They also present the respective levels in the fair value hierarchy for financial assets and liabilities measured at fair value. Items that do not meet the definition of financial assets or liabilities are not included in the tables.

 

 

Carrying amount as of 31 December 2020

 

 

 

 

 

 

 

 

At amortised cost

 

At fair value through profit or loss (mandatorily)

 

Total

 

Fair value hierarchy
Level

(In € million)

 

 

 

 

1

 

2

 

3

Cash and cash equivalents

 

355.1

 

 

 

355.1

 

 

 

 

 

 

Trade and other receivables

 

194.0

 

16.2

 

210.2

 

 

 

x

 

 

Other financial assets

 

3.9

 

 

 

3.9

 

 

 

 

 

 

Derivatives

 

 

 

17.6

 

17.6

 

 

 

x

 

 

Total financial assets

 

553.0

 

33.8

 

586.8

 

 

 

 

 

 

Trade and other payables

 

(505.4)

 

 

 

(505.4)

 

 

 

 

 

 

Loans and borrowings:

 

 

 

 

 

 

 

 

 

 

 

 

– Senior unsecured notes

 

(992.2)

 

 

 

(992.2)

 

 

 

 

 

 

– Senior unsecured credit facilities

 

(544.5)

 

 

 

(544.5)

 

 

 

 

 

 

– Lease liabilities

 

(147.0)

 

 

 

(147.0)

 

 

 

 

 

 

Derivatives

 

 

 

(5.1)

 

(5.1)

 

 

 

x

 

 

Total financial liabilities

 

(2,189.1)

 

(5.1)

 

(2,194.2)

 

 

 

 

 

 

 

 

Carrying amount as of 31 December 2019

 

 

 

 

 

 

 

 

At amortised cost

 

At fair value through profit or loss (mandatorily)

 

Total

 

Fair value hierarchy
Level

(In € million)

 

 

 

 

1

 

2

 

3

Cash and cash equivalents

 

261.0

 

 

 

261.0

 

 

 

 

 

 

Trade and other receivables

 

205.9

 

52.9

 

258.8

 

 

 

x

 

 

Other financial assets

 

5.1

 

 

 

5.1

 

 

 

 

 

 

Derivatives

 

 

 

2.1

 

2.1

 

 

 

x

 

 

Total financial assets

 

472.0

 

55.0

 

527.0

 

 

 

 

 

 

Trade, other payables and other liabilities

 

(493.2)

 

 

 

(493.2)

 

 

 

 

 

 

Loans and borrowings:

 

 

 

 

 

 

 

 

 

 

 

 

– Senior secured credit facilities

 

(1,539.2)

 

 

 

(1,539.2)

 

 

 

 

 

 

– Lease liabilities

 

(53.5)

 

 

 

(53.5)

 

 

 

 

 

 

Derivatives

 

 

 

(13.7)

 

(13.7)

 

 

 

x

 

 

Total financial liabilities

 

(2,085.9)

 

(13.7)

 

(2,099.6)

 

 

 

 

 

 

Fair value of financial assets and liabilities at amortised cost

The carrying amount of the financial assets and liabilities that are not measured at fair value is a reasonable approximation of fair value. Excluding transaction costs and an original issue discount, this is also the case for the Group’s term loan that was entered into in June 2020. The fair value of the notes was €1,042 million as of 31 December 2020.

Fair value of trade receivables to be sold under securitisation and factoring programmes

Trade receivables that will be sold under the Group’s securitisation and factoring programmes are categorised as measured at fair value through profit or loss. They are sold shortly after being recognised by the Group and the amount initially recognised for these trade receivables is representative of their fair value.

Fair value of derivatives

The derivatives are entered into as part of the Group’s strategy to mitigate operational risks (commodity and foreign currency exchange derivatives) and to mitigate financing risks (interest rate swaps, for the secured term loans repaid in June 2020).

The following tables show the types of derivatives the Group had as of 31 December 2020 and 31 December 2019, and their presentation in the statement of financial position.

(In € million)

 

Current assets

 

Non-current assets

 

Total derivative assets

 

Current liabilities

 

Non-current liabilities

 

Total derivative liabilities

Commodity derivatives

 

11.4

 

 

11.4

 

(0.8)

 

 

(0.8)

Foreign currency exchange derivatives

 

6.2

 

 

6.2

 

(4.3)

 

 

(4.3)

Total operating derivatives

 

17.6

 

 

17.6

 

(5.1)

 

 

(5.1)

Total derivatives as of 31 December 2020

 

17.6

 

 

17.6

 

(5.1)

 

 

(5.1)

(In € million)

 

Current assets

 

Non-current assets

 

Total derivative
assets

 

Current liabilities

 

Non-current liabilities

 

Total derivative liabilities

Commodity derivatives

 

0.8

 

 

0.8

 

(8.7)

 

 

(8.7)

Foreign currency exchange derivatives

 

1.3

 

 

1.3

 

(2.4)

 

 

(2.4)

Total operating derivatives

 

2.1

 

 

2.1

 

(11.1)

 

 

(11.1)

Interest rate swaps

 

 

 

 

 

(2.6)

 

(2.6)

Total financing derivatives

 

 

 

 

 

(2.6)

 

(2.6)

Total derivatives as of 31 December 2019

 

2.1

 

 

2.1

 

(11.1)

 

(2.6)

 

(13.7)

The Group measures derivative assets and liabilities at fair value. The fair value is calculated based on valuation models commonly used in the market. These include consideration of credit risk, where applicable, and discounts the estimated future cash flows based on the terms and maturity of each contract, using forward interest rates extracted from observable yield curves and market forward exchange rates at the reporting date. The derivatives are categorised as level 2 fair value measurements in the fair value hierarchy as the measurements of fair value are based on observable market data, either directly (i.e. as prices) or indirectly (i.e. derived from prices). All changes in fair value are recognised in profit or loss as the Group does not apply hedge accounting under IFRS 9.

Accounting policy

The specific accounting policies for the Group’s different types of financial assets and liabilities are included in other sections of these consolidated financial statements. This section includes the accounting policy for topics covering more than one note.

Initial recognition of financial assets and liabilities

The Group initially recognises loans and receivables and any debt issued on the date when they are originated. All other financial assets and liabilities are initially recognised on the trade date when the entity becomes party to the contractual provisions of the financial instrument.

Offsetting

Financial assets and financial liabilities are only offset and the net amount presented in the statement of financial position when the Group currently has a legally enforceable right to offset the amounts and intends to either settle them on a net basis or realise the asset and settle the liability simultaneously.

Derivatives

Derivatives are measured at fair value with any related transaction costs expensed as incurred. All derivatives with a positive fair value are presented as other current or non-current assets in the statement of financial position, while all derivatives with a negative fair value are presented as other current or non-current liabilities.

The gain or loss on remeasurement to fair value is recognised in profit or loss. Net changes in the fair value of derivatives entered into as part of the operating business are presented as part of profit from operating activities, while net changes in the fair value of derivatives entered into in relation to the financing of the Group are presented in other finance income or expenses. The Group does not apply hedge accounting under IFRS.

A derivative embedded in another contract is separated and accounted for separately when its economic characteristics and risks are not closely related to those of its host contract, a separate instrument with the same terms as the embedded derivative would meet the definition of a derivative, and the host contract is not measured at fair value with the fair value changes recognised in profit or loss. Changes in the fair value of a separated embedded derivative are recognised immediately in profit or loss.