4.8
8. Working capital

  2021 2020
  € x 1,000 € x 1,000
Inventory 556,761 285,314
Trade receivables 120,241 104,006
Trade payables -221,624 -137,829
Trade working capital (TWC) 455,379 251,491
Other receivables 40,503 24,499
Other current liabilities -54,931 -49,080
Working capital 440,950 226,910

 

8.1 Inventories

  2021 2020
  € x 1,000 € x 1,000
Components for the purpose of production 353,654 168,222
Semi-finished goods 4,902 2,494
Trading and finished products 198,205 114,599
Balance at 31 December 556,761 285,314

 

In 2021, Accell Group wrote down inventories by € 7.1 million to lower net realizable value (2020: € 10.1 million) of which € 4.0 million is recognized as cost of materials and consumables (2020: € 5.3 million) and € 3.1 million as other operating expenses (2020: € 4.8 million). In 2021, Accell Group reversed write-downs of € 1.8 million (2020: € 1.0 million) recognized as a reduction of cost of materials and consumables of € 0.3 million (2020: € 0.1 million) and € 1.5 million as a reduction of other operating expenses (2020: € 0.9 million). At the reporting date, inventories with a carrying amount of approximately € 6.6 million (2020: € 7.9 million) were valued at lower net realizable value. Furthermore, inventories include goods in transit of € 120.9 million (2020: € 63.8 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 realizable 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 realizable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and selling expenses.

8.2 Trade and other receivables

 

  2021 2020
  € x 1,000 € x 1,000
Trade receivables 120,241 104,006
Other receivables 40,503 24,499
Total 160,744 128,505

 

Trade receivables

  2021 2020
  € x 1,000 € x 1,000
Trade receivables 124,341 109,932
Allowance for credit losses -4,099 -5,927
Balance at 31 December 120,241 104,006

 

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-day 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:

 

2021 Weighted average loss rate Trade receivables - gross Credit loss allowance Trade receivables - net
    € x 1,000 € x 1,000 € x 1,000
Current (not past due) 0.1% 101,866 -94 101,772
Past due 0-90 days 3.3% 16,170 -527 15,643
Past due 91-360 days 26.1% 3,226 -843 2,383
Past due over 360 days 85.6% 3,079 -2,635 443
Total at 31 December   124,341 -4,099 120,241

 

2020 Weighted average loss rate Trade receivables - gross Credit loss allowance Trade receivables - net
    € x 1,000 € x 1,000 € x 1,000
Current (not past due) 0.3% 92,775 -310 92,465
Past due 0-90 days 4.5% 10,118 -456 9,661
Past due 91-360 days 25.8% 1,928 -497 1,431
Past due over 360 days 91.2% 5,112 -4,664 448
Total at 31 December   109,932 -5,927 104,006

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

  2021 2020
  € x 1,000 € x 1,000
Balance at 1 January 5,927 9,401
Amounts written off -2,005 -1,978
Credit losses recognized 224 -1,251
Effect of movement in exchange rates -47 -245
Balance at 31 December 4,099 5,927

Other receivables

  2021 2020
  € x 1,000 € x 1,000
VAT receivable 12,057 2,225
Import duties receivable 122 2,890
Other taxes and social charges 1,265 482
Receivables from non-consolidated companies 701 727
Prepayments suppliers 8,184 3,940
Prepayments other 3,236 854
Bonus receivable 9,408 5,398
Other current assets 5,530 7,984
Balance at 31 December 40,503 24,499

Other receivables were assessed for impairment and impairment was deemed immaterial.

Accounting estimates trade receivables

For trade receivables, Accell Group applies a simplified approach to the calculation of expected credit losses by recognizing 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 recognized 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 amortized cost less any impairment losses. Trade and other receivables are derecognized 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 recognized, then the previously recognized impairment loss is reversed through profit or loss.

8.3 Trade payables and other current liabilities

  2021 2020
  € x 1,000 € x 1,000
Trade payables 221,624 137,829
VAT payable 13,870 13,975
Import duties payable 542 473
Taxes on wages and social charges 3,550 4,067
Payables to non-consolidated companies 2,815 1,391
Personnel-related liabilities 16,660 13,249
Other invoices receivable 11,256 8,535
Interest and bank cost payable 1,263 639
Other current liabilities 4,976 6,752
Balance at 31 December 276,555 186,909

 

Accell Group operates one 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 2021 include an amount of € 25.7 million (2020: € 21.4 million) related to the participating suppliers.

Accounting judgement

Accell Group has analyzed its supply chain finance programmes to determine whether it should derecognize its original liability, the trade payable to the supplier, and recognize 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 recognized at fair value (less any directly attributable transaction costs) and subsequently measured at amortized cost. A liability is recognized 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 derecognized when the contractual obligation is either discharged or cancelled or has expired.