4.8
Working capital

4.8.1 Inventories

In 2020, Accell Group wrote down inventories by € 10.1 million to lower net realisable value (2019: € 4.0 million) of which € 5.3 million is recognised as cost of materials and consumables (2019: € 1.7 million) and € 4.8 million as other operating expenses (2019: € 2.3 million). In 2020 Accell Group reversed write-downs of € 1.0 million (2019: € 1.4 million) recognised as a reduction of cost of materials and consumables of € 0.1 million (2019: € 0.1 million) and € 0.9 million as a reduction of other operating expenses (2019: € 1.3 million). At the reporting date, inventories with a carrying amount of approximately € 7.9 million (2019: € 9.3 million) were valued at lower net realisable value. Furthermore, inventories include goods in transit of € 63.8 million (2019: € 70.3 million) related to shipped goods for which Accell Group had acquired the economic ownership, but which have not yet been received.

Accounting policy

Inventories are measured at the lower of cost, using the first-in first-out (fifo) principle, and net realisable value. In the case of manufactured inventories and work in progress, cost includes an appropriate share of production overheads based on normal operating capacity. Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and selling expenses.

4.8.2 Trade and other receivables

Trade receivables

The nominal value of trade receivables is considered close to the fair value. Trade receivables are non-interest-bearing and, depending on the season, are governed by a 30 to 150-day payment term.

The group applies the IFRS 9 simplified approach to measure expected credit losses. This uses a lifetime expected loss allowance for all trade receivables. On that basis, the loss allowance was determined as follows:

The loss allowances for trade receivables reconciles to the opening loss allowances as follows:

Other receivables

Accounting estimates trade receivables

For trade receivables, Accell Group applies a simplified approach to the calculation of expected credit losses by recognising a loss allowance based on lifetime expected credit losses at each reporting date. Individually significant trade receivables are tested for impairment on an individual basis. The remaining trade receivables are assessed collectively in groups that share similar credit risk characteristics and the days past due. Accell Group has established a provision matrix that is based on its historical credit loss experience, adjusted for forward-looking factors specific to the debtors and the economic environment.

Accell Group makes estimates in the measurement of discount accruals, included in trade receivables. When customers are given discounts, these reduce the transaction price and consequently the revenue. The conditional discounts in revenue are estimated based on accumulated experience supported by historical and current sales information. Expected sales volumes are determined taking into account (historical) sales patterns and other relevant information. A discount accrual is recognised for expected volume and year-end discounts payable to customers in relation to sales made until the end of the reporting period.

Accounting estimates other receivables

For other receivables, Accell Group establishes an impairment loss allowance on a collective and individual assessment basis, by considering past events, current conditions and forecasts of future economic conditions using the general approach under IFRS 9.

Bonus receivables are the best estimate of the expected amount to be received from suppliers and are based on (annual) agreements. The bonus is usually a fixed or graduated percentage of the purchase value and advance payments received. When receipt of a bonus can be expected with a reasonable level of certainty, it is reflected in the carrying value of inventory or cost of goods sold. 

Accounting policies

Trade and other receivables are held in order to collect the related cash flows. These receivables are measured at fair value and subsequently at amortised cost less any impairment losses. Trade and other receivables are derecognised when substantially all risks and rewards are transferred or if Accell Group does not retain control over the receivables.

Impairment losses related to financial assets are presented separately in the consolidated income statement. When Accell Group considers that there are no realistic expectations of recovering a trade receivable, the relevant amount is written off. Indicators that there is no reasonable expectation of recovery include, amongst others, the failure of a debtor to engage in a repayment plan with Accell Group, and a failure to make contractual payments for a period longer than 360 days past due. If the amount of impairment loss subsequently decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, then the previously recognised impairment loss is reversed through profit or loss.

4.8.3 Trade payables and other current liabilities

Accell Group operates one (2019: two) supply chain finance programme that enables participating suppliers to discount their invoices for earlier payment with a participating bank based on individual contractual agreements between the supplier and the participating bank. Trade payables at 31 December 2020 include an amount of € 21.4 million (2019: € 22.4 million) related to the participating suppliers.

Accounting judgement

Accell Group has analysed its supply chain finance programmes to determine whether it should derecognise its original liability, the trade payable to the supplier, and recognise a new interest-bearing liability to the bank. Based on the analysis of (a) the extinguishment criteria of the trade payable and/or (b) if the term of the trade payable had been substantially modified, Accell Group concluded that payment obligations to participating suppliers should remain in trade payables.

Accounting policy

Trade payables and other current liabilities are initially recognised at fair value (less any directly attributable transaction costs) and subsequently measured at amortised cost. A liability is recognised for the amount expected to be paid if Accell Group has a present legal or constructive obligation to pay this amount as a result of past service provided and the obligation can be reliably estimated. Trade payables and other liabilities are derecognised when the contractual obligation is either discharged or cancelled or has expired.