32. Financial instruments and fair value information
This note provides an overview of the Group’s financial instruments, including derivative financial instruments, and their categorization 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 following tables present the carrying amounts of the Group’s different categories of financial assets and liabilities as of December 31, 2024 and December 31, 2023. They also present the respective levels in the fair value hierarchy for financial assets and liabilities measured at fair value.
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Carrying amount as of December 31, 2024 |
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|---|---|---|---|---|---|---|---|---|---|---|---|---|
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At amortized cost |
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At fair value through |
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Total |
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Fair value hierarchy Level |
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(In € million) |
|
|
|
|
1 |
|
2 |
|
3 |
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Cash and cash equivalents |
|
303.4 |
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|
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303.4 |
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|
|
|
|
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Trade and other receivables |
|
400.8 |
|
49.7 |
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450.5 |
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|
|
x |
|
|
Derivatives |
|
|
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11.3 |
|
11.3 |
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|
|
x |
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Other financial assets |
|
|
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8.1 |
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8.1 |
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|
|
|
|
x |
Total financial assets |
|
704.2 |
|
69.1 |
|
773.3 |
|
|
|
|
|
|
Trade and other payables |
|
(1,088.9) |
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|
|
(1,088.9) |
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|
|
|
|
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Loans and borrowings: |
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|
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|
|
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– Senior unsecured notes |
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(549.5) |
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(549.5) |
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|
|
|
|
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– Senior unsecured Euro term loan |
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(49.7) |
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|
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(49.7) |
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|
|
|
|
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– Unsecured US Dollar term loan |
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(259.5) |
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|
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(259.5) |
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|
|
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– Unsecured SSDs |
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(1,097.4) |
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(1,097.4) |
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|
|
|
|
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– Unsecured committed revolving credit facilities |
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(100.0) |
|
|
|
(100.0) |
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|
|
|
|
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– Local credit lines |
|
(93.2) |
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|
|
(93.2) |
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|
|
|
|
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– Lease liabilities |
|
(321.8) |
|
|
|
(321.8) |
|
|
|
|
|
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Derivatives |
|
|
|
(9.0) |
|
(9.0) |
|
|
|
x |
|
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Contingent consideration |
|
|
|
(3.7) |
|
(3.7) |
|
|
|
|
|
x |
Total financial liabilities |
|
(3,560.0) |
|
(12.7) |
|
(3,572.7) |
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|
|
|
|
|
|
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Carrying amount as of December 31, 2023 |
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|---|---|---|---|---|---|---|---|---|---|---|---|---|
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At amortized cost |
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At fair value through |
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Total |
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Fair value hierarchy Level |
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(In € million) |
|
|
|
|
1 |
|
2 |
|
3 |
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Cash and cash equivalents |
|
280.9 |
|
|
|
280.9 |
|
|
|
|
|
|
Trade and other receivables |
|
378.1 |
|
17.8 |
|
395.9 |
|
|
|
x |
|
|
Derivatives |
|
|
|
10.2 |
|
10.2 |
|
|
|
x |
|
|
Other financial assets |
|
|
|
2.6 |
|
2.6 |
|
|
|
|
|
x |
Total financial assets |
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659.0 |
|
30.6 |
|
689.6 |
|
|
|
|
|
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Trade and other payables |
|
(1,003.2) |
|
|
|
(1,003.2) |
|
|
|
|
|
|
Loans and borrowings: |
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|
|
|
|
|
|
|
|
|
|
|
– Senior unsecured notes |
|
(548.5) |
|
|
|
(548.5) |
|
|
|
|
|
|
– Senior unsecured Euro term loan |
|
(548.1) |
|
|
|
(548.1) |
|
|
|
|
|
|
– Unsecured US Dollar term loan |
|
(243.8) |
|
|
|
(243.8) |
|
|
|
|
|
|
– Unsecured SSD |
|
(648.2) |
|
|
|
(648.2) |
|
|
|
|
|
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– Unsecured credit facility |
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(100.0) |
|
|
|
(100.0) |
|
|
|
|
|
|
– Local credit lines |
|
(112.1) |
|
|
|
(112.1) |
|
|
|
|
|
|
– Lease liabilities |
|
(251.1) |
|
|
|
(251.1) |
|
|
|
|
|
|
Derivatives |
|
|
|
(14.3) |
|
(14.3) |
|
|
|
x |
|
|
Contingent consideration |
|
|
|
(55.0) |
|
(55.0) |
|
|
|
|
|
x |
Total financial liabilities |
|
(3,455.0) |
|
(69.3) |
|
(3,524.3) |
|
|
|
|
|
|
Fair value of financial assets and liabilities at amortized 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, this is also the case for the Euro and US Dollar term loans, the two SSDs and draw-downs of the Group’s revolving credit facilities and local credit lines. The fair value of the Group’s notes due in 2025 was €545 million as of December 31, 2024 (€538 million as of December 31, 2023).
Fair value of trade receivables to be sold under securitization and factoring programs
Trade receivables that will be sold under the Group’s securitization and factoring programs are categorized as measured at fair value through profit or loss. They are sold shortly after being recognized by the Group and the amount initially recognized for these trade receivables is representative of their fair value. These trade receivables are categorized as Level 2 fair value measurements in the fair value hierarchy.
Fair value of derivatives
The following tables show the types of derivatives the Group had as of December 31, 2024 and December 31, 2023, and their presentation in the statement of financial position. The derivatives have been entered into as part of the Group’s strategy to mitigate operational risks (commodity and foreign currency derivatives) and to mitigate financing risks (interest rate swap and forward interest rate agreements).
(In € million) |
|
Current |
|
Non-current assets |
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Total |
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Current liabilities |
|
Non-current liabilities |
|
Total derivative liabilities |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
Commodity derivatives |
|
3.1 |
|
0.2 |
|
3.3 |
|
(3.5) |
|
– |
|
(3.5) |
Foreign currency derivatives |
|
4.7 |
|
– |
|
4.7 |
|
(5.5) |
|
– |
|
(5.5) |
Total operating derivatives |
|
7.8 |
|
0.2 |
|
8.0 |
|
(9.0) |
|
– |
|
(9.0) |
Interest rate derivatives |
|
3.3 |
|
– |
|
3.3 |
|
– |
|
– |
|
– |
Total financing-related derivatives |
|
3.3 |
|
– |
|
3.3 |
|
– |
|
– |
|
– |
Total derivatives as of December 31, 2024 |
|
11.1 |
|
0.2 |
|
11.3 |
|
(9.0) |
|
– |
|
(9.0) |
(In € million) |
|
Current |
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Non-current |
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Total |
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Current |
|
Non-current liabilities |
|
Total derivative liabilities |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
Commodity derivatives |
|
2.1 |
|
– |
|
2.1 |
|
(11.3) |
|
(0.1) |
|
(11.4) |
Foreign currency derivatives |
|
1.5 |
|
– |
|
1.5 |
|
(2.9) |
|
– |
|
(2.9) |
Total operating derivatives |
|
3.6 |
|
– |
|
3.6 |
|
(14.2) |
|
(0.1) |
|
(14.3) |
Interest rate derivatives |
|
– |
|
6.6 |
|
6.6 |
|
– |
|
– |
|
– |
Total financing-related derivatives |
|
– |
|
6.6 |
|
6.6 |
|
– |
|
– |
|
– |
Total derivatives as of December 31, 2023 |
|
3.6 |
|
6.6 |
|
10.2 |
|
(14.2) |
|
(0.1) |
|
(14.3) |
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 discount 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 categorized as Level 2 fair value measurements in the fair value hierarchy because the measurements of fair value are based on significant observable market data, either directly (i.e. as prices) or indirectly (i.e. derived from prices). Changes in fair value are recognized in profit or loss as the Group generally does not apply hedge accounting under IFRS 9.
Fair value of contingent consideration
The Group’s liability for contingent consideration relates to the acquisition of Scholle IPN in 2022 and depends on the acquired bag-in-box and spouted pouch businesses outperforming the top end of the Group’s mid-term revenue growth guidance of 4–6% per year for the years ended December 31, 2023 and 2024 and the year ending December 31, 2025. Payments for growth rates ranging from 6 to 11.5% per the respective year will be made based on a pre-agreed ratchet structure. The liability will be settled in cash. The maximum amount payable is $300 million ($100 million per year).
The fair value of the contingent consideration was €3.7 million as of December 31, 2024 (€55.0 million as of December 31, 2023). The unrealized gain of €51.3 million for the year ended December 31, 2024 (an unrealized gain of €58.2 million for the year ended December 31, 2023) is presented as part of other income and expenses (see notes 8 and 9). The contingent consideration is presented as part of other non-current liabilities.
No payment is expected by the Group for the 2024 and 2025 contingent consideration periods based on the actual result and the growth rate used when assessing the contingent consideration as of December 31, 2024 (a payment of €39.2 million was expected as of December 31, 2023, see note 26).
Significant judgments and estimates are made by management relating to the assessments of the fair value of the contingent consideration. As significant unobservable inputs are used in the assessment of the fair value, the contingent consideration is categorized as a Level 3 fair value measurement in the fair value hierarchy. The fair value has been assessed using a Monte Carlo simulation, under which the simulated contingent consideration payments (for each of the three payment streams) have been discounted to present value at a corresponding risk-free rate.
The fair value of the contingent consideration of €3.7 million as of December 31, 2024 would increase by approximately €2.9 million if the revenue growth rates increased by 1.0 percentage point (decrease by approximately €1.9 million if the revenue growth rates decreased by 1.0 percentage point), and would increase by approximately €0.2 million if the discount rates decreased by 1.0 percentage point (decrease by approximately €0.3 million if the discount rates increased by 1.0 percentage point).
The fair value of the contingent consideration of €55.0 million as of December 31, 2023 would have increased by approximately €9.3 million if the revenue growth rates had increased by 1.0 percentage point (decreased by approximately €8.6 million if the revenue growth rates had decreased by 1.0 percentage point), and would have increased by approximately €2.7 million if the discount rates had decreased by 1.0 percentage point (decreased by approximately €2.4 million if the discount rates had increased by 1.0 percentage point).
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 that are covered in more than one note.
Initial recognition of financial assets and liabilities
The Group initially recognizes loans and receivables and any debt issued on the date when they are originated. All other financial assets and liabilities are initially recognized 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 if the Group currently has a legally enforceable right to offset the amounts and intends to either settle them on a net basis or realize the asset and settle the liability simultaneously.
Derivatives
Derivatives are measured at fair value with any related transaction costs expensed as incurred. Derivatives with a positive fair value are presented as other current or non-current assets in the statement of financial position, while 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 recognized 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 (if any) are presented in other finance income or expenses. The Group does not generally apply hedge accounting under IFRS 9.
A derivative embedded in another contract is separated and accounted for separately if 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 recognized in profit or loss. Changes in the fair value of a separated embedded derivative are recognized immediately in profit or loss.
Contingent consideration
Contingent consideration for acquired subsidiaries is measured at fair value at the acquisition date. When contingent consideration is payable in cash, and therefore recognized as a financial liability, it is remeasured to fair value at each reporting date until it is settled. Any changes in the fair value are recognized as part of other income and expenses.