16. Trade and other receivables
Trade and other receivables mainly comprise trade receivables. The Group has a securitisation programme under which it sells a portion of its aseptic carton sleeves-related trade receivables without recourse. It also maintains a small number of minor factoring programmes.
Composition of trade and other receivables
The table below provides an overview of the Group’s current and non-current trade and other receivables. Trade receivables that will be sold under the securitisation and factoring programmes are presented as trade receivables at fair value. Trade receivables that will not be sold are presented as trade receivables at amortised cost.
(In € million) |
|
As of |
|
As of |
|---|---|---|---|---|
Trade receivables at amortised cost |
|
294.1 |
|
171.3 |
Trade receivables at fair value |
|
33.7 |
|
25.7 |
Related party trade receivables |
|
3.8 |
|
0.4 |
VAT receivables |
|
56.3 |
|
35.4 |
Other receivables |
|
72.4 |
|
47.1 |
Total current trade and other receivables |
|
460.3 |
|
279.9 |
Non-current receivables |
|
18.8 |
|
4.2 |
Total current and non-current receivables |
|
479.1 |
|
284.1 |
The increase in trade receivables at amortised cost since 31 December 2021 is impacted by the acquisitions of Scholle IPN and Evergreen Asia in 2022 (see note 27).
The payment terms for the Group’s trade receivables for packaging material is an average of 30 to 45 days (an average of 40 days in the comparative period).
Trade receivables at amortised cost – loss allowance and ageing
(In € million) |
|
As of |
|
As of |
|---|---|---|---|---|
Current |
|
226.5 |
|
122.8 |
Past due up to 29 days |
|
31.4 |
|
21.4 |
Past due 30 days to 89 days |
|
17.2 |
|
7.0 |
Past due 90 days or more |
|
19.0 |
|
20.1 |
Trade receivables at amortised cost, net of loss allowance |
|
294.1 |
|
171.3 |
Loss allowance |
|
(9.7) |
|
(6.6) |
Trade receivables at amortised cost, gross |
|
303.8 |
|
177.9 |
The loss allowance represents the Group’s estimate of individually impaired trade receivables as well as expected credit losses on trade receivables that are not individually impaired. It primarily relates to trade receivables past due up to 29 days and past due more than 90 days. The expected credit losses are calculated using a provision matrix based on historical credit loss experience and assessments of current and future conditions. The expected loss rate for trade receivables past due more than 90 days that are not individually impaired is between 25% and 100% (with an expected loss rate of 100% when past due more than 270 days). For trade receivables past due 30 to 89 days that are not individually impaired, the expected loss rate is around 5%.
Management believes that the recognised loss allowance sufficiently covers the risk of default based on historical payment behaviour and assessments of future expectations of credit losses, including regular analysis of customer credit risk. The acquired trade receivables of Scholle IPN, Evergreen Asia and the former joint ventures in the Middle East were recognised at fair value at their respective acquisition dates in 2022 and 2021 (see note 27). See also the section “Credit risk” in note 25.
The table below shows the movements in the loss allowance for trade receivables at amortised cost.
(In € million) |
|
As of |
|
As of |
|---|---|---|---|---|
Loss allowance as of 1 January |
|
6.6 |
|
5.0 |
Change in loss allowance recognised in profit or loss during the year |
|
2.9 |
|
1.6 |
Foreign currency exchange differences |
|
0.2 |
|
– |
Loss allowance as of 31 December |
|
9.7 |
|
6.6 |
Securitisation programme
The Group has an asset-backed securitisation programme under which it sells without recourse a portion of its aseptic carton sleeves-related trade receivables to a special purpose entity. This entity is not controlled by the Group and therefore not consolidated. The trade receivables sold qualify for derecognition by the Group. The Group transfers the contractual rights to the cash flows of the trade receivables at their nominal value less a retained reserve in exchange for cash. The net amount is presented as part of other current receivables and represents the Group’s right to receive this amount once the trade receivables sold have been settled by the customers.
Trade receivables sold under the securitisation programme amounted to €165.2 million as of 31 December 2022 (€119.5 million as of 31 December 2021), of which €140.8 million (€106.1 million as of 31 December 2021) has been derecognised and €24.4 million (€13.4 million as of 31 December 2021), representing the retained reserve, is presented as part of other current receivables. The retained reserve represents the Group’s maximum exposure to any losses in respect of trade receivables previously sold under the programme. The interest expense paid under the asset-backed securitisation programme amounted to €2.2 million in the year ended 31 December 2022 (€1.4 million as of 31 December 2021) and is presented as part of other finance expenses.
Factoring programmes
The Group has a small number of minor factoring programmes under which trade receivables sold by the Group qualify for derecognition.
Accounting policy
Trade and other receivables at amortised cost
Trade and other receivables that will not be sold under the Group’s securitisation and factoring programmes are initially recognised at fair value plus any directly attributable transaction costs. Subsequent to initial recognition, these receivables are measured at amortised cost using the effective interest method less a loss allowance. The loss allowance represents the Group’s estimate of individually impaired trade receivables as well as expected credit losses on trade receivables that are not individually impaired. The expected credit losses are calculated using a provision matrix based on historical credit loss experience and assessments of current and future conditions. Any subsequent recoveries of amounts previously written off relating to individually impaired trade receivables are credited to the same line item in profit or loss where the original write-off was recognised. The Group holds these trade receivables to collect the contractual cash flows, and these cash flows are solely payments of principal and interest on the principal outstanding.
Trade receivables at fair value through profit or loss
Trade receivables that will be sold under the Group’s securitisation and factoring programmes are initially recognised at fair value plus any directly attributable transaction costs. Subsequent to initial recognition, they are recognised at fair value. These trade receivables are sold and derecognised shortly after their initial recognition in the statement of financial position. Any change in fair value is recognised through profit or loss. The objective of these trade receivables is to realise the cash flows primarily through selling them.
Derecognition of trade receivables
A financial asset is derecognised when the contractual rights to the cash flows from the asset have expired, when the contractual rights to receive the cash flows have been transferred and the Group has transferred substantially all of the risks and rewards of ownership, or when the Group transfers a financial asset but retains the contractual rights to receive the cash flows but at the same time assumes a contractual obligation to pay the cash flows to another recipient (and remits the cash flows to the other recipient without material delay once it has collected an amount from the original asset, and is also prohibited to sell or pledge the original asset). Any interest in such a derecognised financial asset that is retained by the Group is recognised as a separate asset or liability.