ALD (\u201cthe Company\u201d) and its subsidiaries (together \u201cthe Group\u201d)is a service leasing and vehicle Fleet Management group with a fleet of around 1,806,500\u00a0vehicles (1,749,000\u00a0excluding disposal groups held for sale, see note\u00a08). The Group provides financing and management services in 43\u00a0countries in the world including the following businesses:
The Company is a French\u00a0Soci\u00e9t\u00e9 Anonyme\u00a0incorporated in\u00a0Societe Generale.\u00a0Its registered office is located at\u00a01-3\u00a0rue Eug\u00e8ne et Armand Peugeot, Le Corosa, 92500\u00a0Rueil-Malmaison,\u00a0France.
The Company is a subsidiary of the Societe Generale (75.9% ownership).
The consolidated financial statements are presented in millions of euros, which is the Group\u2019s presentation currency and values are rounded to the nearest million, unless otherwise indicated. In certain cases, rounding may cause non-material discrepancies in the lines and columns showing totals.
The Group\u2019s audited consolidated financial statements as at December 31, 2022 were examined by the Board of Directors on March 23, 2023.\u00a0
With the impact of COVID-19 and Russian Federation\u2019s invasion of Ukraine in February\u00a02022, the world economy faces a series of significant challenges such as global effects on commodity markets, supply chains, inflation and slowing down of global growth.
Global inflation has risen sharply over the last year with high global demand, supply shortages and soaring food and energy prices, especially since Russia\u2019s invasion of Ukraine, and remains elevated whilst monetary policies have been tightened further. Taking account high levels of inflation in its main markets, ALD continues to develop strategies which protect its margins by revising its pricing parameters more frequently, reinforcing customer advisory on more sustainable and innovative products and by maintaining its strict funding policy by hedging its liquidity, interest rates and foreign exchange risks at contract origination.
Despite the war, ALD continues its business operations and servicing its clients in Ukraine where the Group currently has circa 4,500\u00a0funded vehicles under leasing contracts. As to date, circa 150\u00a0vehicles are either have been or are at risk of being damaged, or located in the occupied territories. The rest of the fleet remains operational.
Although the situation in Ukraine remains critical, current business operations of the subsidiary have resumed and have been assessed as stable. Local management have provided a detailed analysis of the business activities which has resulted in a revised level of the provision. The provision as at 31\u00a0December 2022 is EUR\u00a04.9\u00a0million. It is aimed to cover expected losses for vehicles damaged or at risk and for potential customer payment defaults. As a reminder, at the end of 30\u00a0June 2022 ALD booked a provision charge of EUR\u00a029.2\u00a0million in the income statement,of which EUR 24.3 million was reversed at the year end. This provision represented a conservative position and reflected a high level of uncertainty in the initial stages of the war. ALD continues to review and monitor the situation with the local management.
After booking the provision, total assets of ALD Ukraine as at 31\u00a0December amount to EUR\u00a067.6\u00a0million (31\u00a0December 2021: EUR\u00a070.6\u00a0million).
The used car sector has been positively impacted by the limited production capacity of new cars due to ongoing shortage in the supply of semiconductors as well as shortages of other materials used in car manufacturing as a result of the war in Ukraine. As global demand has increased, these supply-chain issues caused delays in the delivery of new cars, including deliveries\u00a0 by ALD to its customers.
Used car sales continue to remain exceptionally strong in 2022, with a record result of EUR\u00a0747.6\u00a0million (31\u00a0December 2021: EUR\u00a0437.7\u00a0million).
On 16\u00a0March 2022, the International Practices Task Force of the Centre for Audit Quality, a standard reference for identifying countries with hyperinflation, published a working paper including Turkey in the list of hyperinflationary economies. Consequently, from 1\u00a0January 2022 onwards, the Group has been applying the provisions of the IAS\u00a029\u00a0standard (\u201cFinancial Reporting in Hyperinflationary Economies\u201d) to prepare the separate financial statements in Turkish Lira of the ALD entity located in Turkey (before their conversion into Euros as part of the consolidation process).
Adjustments are made to the non-monetary assets and liabilities (with biggest impacts in Rental Fleet, and the Group Consolidated Reserves pertaining to the subsidiary in Turkey). The carrying amounts of Rental fleet are adjusted to reflect the change in the consumer price index from the date of acquisition to the end of the reporting period. The Turkish consumer price index has been used to calculate the adjustments relating to the inflation.
The development of the CPI index in the current and previous reporting periods is as follows:
December 2019 | December 2020 | December 2021 | December 2022 | |
|---|---|---|---|---|
Conversion coefficient | 386.95 | 443.34 | 603.28 | 990.91 |
CPI Index (12 months) | 11.84 | 14.60 | 36.08 | 64.27 |
The financial statements of the Turkish subsidiary are based on a historic cost. Non-monetary items in the financial statements are restated for the change in CPI from the date of their acquisition or initial recognition to the end of the reporting period.
On initial application of hyperinflation at 1\u00a0January 2022 the total consolidated equity was increased by EUR\u00a041.3\u00a0million, including a reduction in consolidated reserves of EUR\u00a0-4.9\u00a0million after tax for the various adjustments and the reclassification of translation differences recorded on that date.
Gains or losses on all subsequent hyperinflation adjustments, such as restatement of non-monetary assets and liabilities, restatement of incomes and expenses at transaction date and the counterpart of restatement all components of equity from the beginning of the period, are recognised in the income statement in \u201cUnrealised gains and losses on financial instruments and other\u201d. An impairment loss will be recognised in the income statement if the restated amount of the book value of vehicles exceeds their estimated recoverable amount, although no such loss was identified in the second semester of 2022.
All items in the statement of cash flows which relate to the Turkish subsidiary of ALD are expressed in terms of the consumer price index at the end of the reporting period.
As at December, 31, 2022 gains from all hyperinflation adjustments in the Leasing Contract Margin amount to EUR 59.9 million, including a reclassification of EUR 14.5 million to the Used Car Sales to measure the impact of restatement for the change in CPI of the vehicles sold during the period. The total net gain recorded in the \u201cNet Income\u201d (including impact of deferred taxation) is EUR\u00a037.6\u00a0million.
On 6 January 2022, the Group announced the signing of a Memorandum of Understanding to acquire 100% of LeasePlan from a consortium of shareholders led by TDR Capital. Total consideration is estimated at EUR 4.7 billion as at the date of this Universal Registration Document, based on the Framework Agreement of 22 April 2022, amended on 28 March 2023. The acquisition would be made through a combination of cash and shares. After closing, Soci\u00e9t\u00e9 G\u00e9n\u00e9rale would own around 53% of the Group and LeasePlan shareholders would hold 30.75%, excluding warrant exercise (see Section 2.1.2.2 \u201cKey strategic initiatives and operational developments\u201d of this Universal Registration Document for more details). This strategic operation would generate significant value for shareholders through scale effects and synergies.
On 20\u00a0December 2022 ALD successfully completed its capital increase in order to finance cash component of the acquisition. For further information, see note\u00a02.6 \u201cRights Issue\u201d.
The acquisition of LeasePlan is expected to close on 28 April 2023, subject notably to remaining regulatory approvals and the completion of standard closing conditions (for further information, refer to Section 2.1.2.2 \u201cKey strategic initiatives and operational developments\u201d of this Universal Registration Document).
As at 31\u00a0December 2022 the Group has incurred EUR\u00a0128\u00a0million of preparation costs associated with this transaction recorded in \u201cTotal Operating Expenses\u201d.
On 20\u00a0December 2022, ALD successfully completed its capital increase with preferential subscription rights for an amount (including issue premium) of approximately EUR\u00a01.2\u00a0billion, achieving an important milestone in the proposed strategic acquisition of LeasePlan.
The final gross proceeds of the rights issue, including the issue premium, amount to approximately EUR\u00a01.2\u00a0billion, corresponding to the issuance of 161,641,456\u00a0new shares with a par value of EUR\u00a01.50 at a subscription price of EUR\u00a07.50 per share.
Following the settlement and delivery of the rights issue, the share capital of ALD will amount to EUR\u00a0848,617,644, comprised of 565,745,096\u00a0shares with a nominal value of EUR\u00a01.50 each. The share capital is allocated as per the table below:
Shareholders | As at 31 December 2022 | ||
|---|---|---|---|
Number of shares | % of capital | % of voting rights\u00a0(1) | |
Societe Generale | 429,649,292 | 75.9% | 76.1% |
Treasury Shares | 1,173,902 | 0.2% | 0.0% |
Free Float | 134,921,902 | 23.8% | 23.9% |
Total | 565,745,096 | 100.0% | 100.0% |
(1) % of the voting rights = net voting rights, excluding those related to treasury shares. |
As a result of Societe Generale\u2019s subscription to the transaction being below its pro rata share in ALD and due to the fact that its underwriting was not exercised, ALD free float has increased from 19.9% to 23.8% of its share capital.
The principal accounting policies applied in the preparation of these consolidated financial statements are set out below. All valuation methods are defined in the notes describing the relevant categories. These policies have been consistently applied to all the years presented, unless otherwise stated.
The consolidated financial statements of the Group have been prepared in accordance with International Financial Reporting Standards (IFRS) and interpretations issued by the IFRS\u00a0Interpretations Committee (IFRS\u00a0IC) applicable to companies reporting under IFRS. The financial statements comply with IFRS as issued by the International Accounting Standards Board (IASB).
The standards comprise IFRS\u00a01 to\u00a016 and International Accounting Standards (IAS)\u00a01 to\u00a041, as well as the interpretations of these standards adopted by the European Union as at 31\u00a0December 2022.
Presentation of consolidated income statement and statement of cash flows have been changed in 2022 due to application of hyperinflation accounting (IAS\u00a029) by the Group.
In the income statement, caption \u201cUnrealised gains and losses on financial instruments\u201d has been renamed to \u201cUnrealised gains and losses on financial instruments and other\u201d due to inclusion of hyperinflation adjustments in it.
Statement of cash flows contains a new caption \u201cEffects of hyperinflation adjustments\u201d.
For further information see note\u00a02.4 \u201cHyperinflation in Turkey\u201d.
The Group has adopted the following new standards, amendments and interpretations to published standards for the first time for the financial year \u00a0starting on\u00a0 1\u00a0January 2022:
Accounting standards, amendments or Interpretations | Note | Adoption dates by the European Union |
|---|---|---|
Onerous Contracts \u2013 Costs of Fulfilling a Contract \u2013 Amendments to IAS\u00a037 | 3.2.1 | 1\u00a0January 2022 |
Reference to the Conceptual Framework \u2013 Amendments to IFRS\u00a03 | 3.2.2 | 1\u00a0January 2022 |
Property, Plant and Equipment: Proceeds before Intended Use \u2013 Amendments to IAS\u00a016 | 3.2.3 | 1\u00a0January 2022 |
IFRS\u00a09 Financial Instruments \u2013 Fees in the \u201810 per cent\u2019 test for derecognition of financial liabilities | 3.2.4 | 1\u00a0January 2022 |
An onerous contract is a contract under which the unavoidable costs (i.e., the costs that the Group cannot avoid because it has the contract) of meeting the obligations under the contract exceed the economic benefits expected to be received under it.
The amendments specify that when assessing whether a contract is onerous or loss-making, an entity needs to include costs that relate directly to a contract to provide goods or services include both incremental costs (e.g., the costs of direct labour and materials) and an allocation of costs directly related to contract activities (e.g., depreciation of equipment used to fulfil the contract as well as costs of contract management and supervision). General and administrative costs do not relate directly to a contract and are excluded unless they are explicitly chargeable to the counterparty under the contract. This amendment had no impact on the consolidated financial statements of the Group.
The amendments replace a reference to a previous version of the IASB\u2019s Conceptual Framework with a reference to the current version issued in March\u00a02018 without significantly changing its requirements. The amendments add an exception to the recognition principle of IFRS\u00a03 Business Combinations to avoid the issue of potential \u2018day\u00a02\u2019 gains or losses arising for liabilities and contingent liabilities that would be within the scope of IAS\u00a037 Provisions, Contingent Liabilities and Contingent Assets or IFRIC\u00a021 Levies, if incurred separately. The exception requires entities to apply the criteria in IAS\u00a037 or IFRIC\u00a021, respectively, instead of the Conceptual Framework, to determine whether a present obligation exists at the acquisition date.
The amendments also add a new paragraph to IFRS\u00a03 to clarify that contingent assets do not qualify for recognition at the acquisition date.
These amendments had no impact on the consolidated financial statements of the Group as there were no contingent assets, liabilities and contingent liabilities within the scope of these amendments arisen during the period.
The amendment prohibits entities from deducting from the cost of an item of property, plant and equipment, any proceeds of the sale of items produced while bringing that asset to the location and condition necessary for it to be capable of operating in the manner intended by management. Instead, an entity recognises the proceeds from selling such items, and the costs of producing those items, in profit or loss.
These amendments had no impact on the consolidated financial statements of the Group as there were no sales of such items produced by property, plant and equipment made available for use on or after the beginning of the earliest period presented.
The amendment clarifies the fees that an entity includes when assessing whether the terms of a new or modified financial liability are substantially different from the terms of the original financial liability. These fees include only those paid or received between the borrower and the lender, including fees paid or received by either the borrower or lender on the other\u2019s behalf. There is no similar amendment proposed for IAS\u00a039 Financial Instruments: Recognition and Measurement.
These amendments had no impact on the condensed consolidated financial statements of the Group as there were no modifications of the Group\u2019s financial instruments during the period.
IASB publishes accounting standards, amendments and interpretations, some of which have not been adopted by the European Union as at 31\u00a0December 2022. They are required to be applied from annual periods beginning on 1\u00a0January 2023 at the earliest or on the date of their adoption by the European Union. They were therefore not applied by the Group as at 31\u00a0December 2022.
The Group will implement IFRS\u00a017 \u2018Insurance Contracts\u2019 including Amendments to IFRS\u00a017 once it becomes effective after 1\u00a0January 2023. This new standard will replace IFRS\u00a04 \u201cInsurance Contracts\u201d that was issued in 2004 and which currently allows entities to use national requirements for the accounting of insurance contracts.
IFRS\u00a017 provides new rules for the recognition, measurement, presentation and disclosure of insurance contracts that belong to its application scope (insurance contracts issued, reinsurance contracts held and investment contracts issued with discretionary participation features). The underwriting reserves currently recognised among liabilities in the balance sheet will be replaced by a current value measurement of insurance contracts.
Grouping of Contracts
Under IFRS\u00a017, the measurement of Insurance Contracts issued are required to be aggregated into homogeneous portfolios, where the contracts are subject to similar risks and managed together. Each portfolio is then required to be disaggregated into groups where the groups are segregated according to three levels of profitability:
The groups are determined upon initial recognition of the insurance contracts issued and each group must only contain contracts that are issued within the same 12\u00a0month period.
Similar requirements apply for Reinsurance Contracts held in terms of establishing portfolios and groups. However, the key difference is the groups are segregated according to two levels of profitability:
Measurement Model
The General Model provided for the measurement of insurance contracts on the balance sheet will be based on a building-block approach: a discounted best estimate of future cash flows, a risk adjustment and a contractual service margin.
The risk adjustment represents a margin for uncertainties in the estimated future cash flows with respect to non-financial risks. The contractual service margin represents the unearned profit in the insurance contract.
A positive contractual service margin will result in the profit being recognised over the duration of the contract as the insurance service is provided. However, in the case of expected loss-making contracts (Onerous Contracts), the loss will be immediately recognised in the income statement as soon as the insurance contract has been identified as being onerous.
At each valuation date, the liability for insurance contracts on the balance sheet is measured using current assumptions as the sum of two components:
Premium Allocation Approach
A simplified measurement approach called the Premium Allocation Approach (PAA) is permitted under the IFRS\u00a017 standard where certain eligibility criteria are met:
All contracts with 12\u00a0months coverage or less are automatically eligible whereas eligibility testing is required for contracts with coverage or greater than 12\u00a0months to support the justification outlined in (b)\u00a0above.
ALD Re DAC, a reinsurance subsidiary of the ALD Group, intends to apply the PAA at the first adoption of IFRS\u00a017 in 2023 and in subsequent reporting periods. The majority of ALD Re DAC\u2019s insurance contracts are for 12\u00a0months of coverage.
The PAA provides a simplified approach for measuring the liability for remaining coverage only. The liability for incurred claims will still be measured using the General Model (however, only using the discounted best estimate of future cash flows and the risk adjustment building blocks).
Accounting treatment under the PAA
The following accounting treatments apply under the PAA approach:
Risk adjustment
Under IFRS\u00a017, the risk adjustment is the compensation that the entity requires for bearing uncertainty about the amount and timing of cash flows that arise from non-financial risk. The risk adjustment is an entity specific measurement. The calculation must be explicit (separate from best estimate cash flows and discounting) and disclosure of the confidence level in the financial statements is required. The release of the risk adjustment over time (over the settlement period of claims) results in a recognition of profit.
Presentation of the financial performance
On the consolidated income statement, the profits and losses related to the insurance contracts issued and the reinsurance contracts held are presented under Services margin. The IFRS\u00a017 income statement distinguishes between:
The expenses for the services relating to the insurance and reinsurance contracts issued will then include a share of Operating Expenses that are considered directly attributable to the execution of the contracts which will thus be deducted from the Services margin.
Application of the IFRS\u00a017\u00a0standard
The initial application of IFRS\u00a017 as at 1\u00a0January 2023 will be retrospective and the comparative figures on the 2022 financial year will be restated.
The differences in measurement of the insurance assets and liabilities resulting from the retrospective application of IFRS\u00a017 as at 1\u00a0January 2022 will be presented directly under \u201cEquity\u201d. The retrospective measurement of these assets and liabilities may be subject to a simplified approach where historical data necessary is not available.
Transition
At this stage of the project aiming at implementing the IFRS\u00a017\u00a0standard by the Group\u2019s insurance entity, the consequences of its application in terms of amounts in the consolidated financial statements have been reasonably estimated and they do not present material amounts for the Group.
On 1\u00a0January 2023, the Group subsidiary ALD Ireland Re DAC operating in the insurance sector will, for the first time, apply the IFRS\u00a09 \u201cFinancial instruments\u201d standard the application of which was deferred for this entity according to the possibilities offered by the amendments to the IFRS\u00a017 and IFRS\u00a04 standards published by the IASB on 25\u00a0June 2020 and extended by regulations (EU)\u00a02017/1988 and (EU)\u00a02020/2097 of the European Commission.
The initial application of IFRS\u00a09 by the insurance entities of the Group as at 1\u00a0January 2023 will be retrospective.
For consistency purpose with the IFRS\u00a017 transition arrangements, and in order to provide more relevant information, the Group intends to restate the comparative figures for the 2022 financial year relating to the financial instruments concerned of its insurance entities.
The application of IFRS\u00a09 in the insurance entity is not expected to have a material impact on the Group financial statements at the time of the first adoption.
Group entities described in note\u00a038 \u201cScope of consolidation\u201d are included within the scope. Changes to the scope are presented in note\u00a07 \u201cChanges in the scope of consolidation\u201d in the year ended 31\u00a0December 2022.
Subsidiaries are all entities over which the Group has a controlling interest. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date that control ceases.
The Group applies the acquisition method to account for business combinations.
The consideration transferred for the acquisition of a subsidiary is the fair values of the assets transferred, the liabilities incurred to the former owners of the company acquired and the equity interests issued by the Group. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date in accordance with IFRS\u00a03. The Group recognises any non-controlling interest in the company acquired on an acquisition-by-acquisition basis, either at fair value or at the non-controlling interest\u2019s proportionate share of the recognised amounts of acquiree\u2019s identifiable net assets.
Acquisition-related costs are expensed as incurred.
Inter-company transactions, balances and unrealised gains on transactions between Group companies are eliminated. Unrealised losses are also eliminated. When necessary, amounts reported by subsidiaries have been adjusted to conform to the Group\u2019s accounting policies.
Non-controlling interests represent equity interests in subsidiaries owned by outside parties. The share of net assets of subsidiaries attributable to non-controlling interests is presented as a component of equity. Their share of Net income and comprehensive income is recognised directly in equity. Changes in the parent company\u2019s ownership interest in subsidiaries that do not result in a loss of control are accounted for as equity transactions.
Associates are all entities over which the Company has significant influence, but not control. The Company accounts for its investment in associates using the equity method. The Company\u2019s share of profits or losses of associates is recognised in the consolidated statement of income and its share of other comprehensive income (loss) of associates is included in other comprehensive income.
Unrealised gains on transactions between the Company and an associate are eliminated to the extent of the Company\u2019s interest in the associate. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Dilution gains and losses arising from changes in interests in investments in associates are recognised in the consolidated statement of income.
Further details are provided in note\u00a019 \u201cInvestments in associates\u201d.
The Group applies IFRS\u00a011 to all joint arrangements. Under IFRS\u00a011, investments in joint arrangements are classified as either joint operations or joint ventures depending on the contractual rights and obligations of each investor. The Group has assessed the nature of its joint arrangements and determined them to be joint ventures. Joint ventures are accounted for using the equity method.
Under the equity method of accounting, interests in joint ventures are initially recognised at cost and adjusted thereafter to recognise the Group\u2019s share of the post-acquisition profits or losses and movements in other comprehensive income.
When the Group\u2019s share of losses in a joint venture equals or exceeds its interests in the joint ventures (which includes any long-term interests that, in substance, form part of the Group\u2019s net investment in the joint ventures), the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the joint ventures.
Unrealised gains on transactions between the Group and its joint ventures are eliminated to the extent of the Group\u2019s interest in the joint ventures. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of the joint ventures are modified where necessary to ensure consistency with the policies adopted by the Group.
The asset-backed securitisation programme (described in note\u00a04 \u201cFinancial Risk Management\u201d) involved the sale of future lease receivables and related residual value receivables to special purpose companies. Special purpose companies are companies created to accomplish a narrow and well-defined objective, such as the securitisation of leased assets.
The financial statements of special purpose companies are included in the Group\u2019s consolidated financial statements where the substance of the relationship is that the Group continues to be exposed to risks and rewards from the securitised leased assets. The Group uses various legal entities, which have been incorporated specifically for the Group\u2019s securitisation transactions, and these companies are therefore regarded as subsidiaries and included in the consolidated financial statements of the Group.
Items included in the financial statements of each of the Group\u2019s entities are measured using the currency of the primary economic environment in which the entity operates (\u201cthe functional currency\u201d). The consolidated financial statements are presented in millions of Euros, which is the Group\u2019s presentation currency and it has been rounded to the nearest million, unless otherwise indicated. In certain cases, rounding may cause non-material discrepancies in the lines and columns showing totals.
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the income statement, except when deferred in other comprehensive income as qualifying cash flow hedges and qualifying net investment hedges. Foreign exchange gains and losses that relate to borrowings and cash and cash equivalents are presented in the income statement within \u201cInterest income or charges\u201d. All other foreign exchange gains and losses are presented in the income statement within \u201cLeasing contract margin\u201d.
The results and financial position of all the Group entities (none of which has the currency of a hyper-inflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows:
Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing rate. Exchange differences arising are recognised in comprehensive income.
The subsidiary in Turkey which operates in a hyperinflationary economy has been translated wholly at the closing rate.
The main exchange rates used in the consolidated financial statements for the years ended 31\u00a0December 2022 and 31\u00a0December 2021 are based on Paris stock exchange rates and are as follows:
31\u00a0December 2022 | 31\u00a0December 2021 | |||
|---|---|---|---|---|
Period-end Rate | Average Rate | Period-end Rate | Average Rate | |
EUR/Russian Ruble | 76.8600 | 73.9748 | 85.3004 | 87.2321 |
EUR/Ukrainian Hryvnia | 36.9170 | 34.4424 | 30.8765 | 32.2531 |
EUR/Brazilian Real | 5.6386 | 5.4432 | 6.3101 | 6.3814 |
EUR/UK Pound | 0.8869 | 0.8526 | 0.8403 | 0.8600 |
EUR/Swedish Krona | 11.1218 | 10.6274 | 10.2503 | 10.1449 |
EUR/Norwegian Krone | 10.5138 | 10.1015 | 9.9888 | 10.1634 |
The Group classifies its leases as operating leases or finance leases under IFRS\u00a016. The classification is based on the extent to which the lease transfers the risks and rewards resulting from ownership of an underlying asset. A lease is classified as a finance lease if it transfers substantially all the risks and rewards from ownership of an asset. Conversely, an operating lease is a lease that does not transfer substantially all the risks and rewards from ownership of an asset.
Various criteria are used to determine the lease classification of which the two most important are:
The Group\u2019s operating lease portfolio comprises cars leased under operating lease contracts.
The operating lease instalments are fully recognised on a straight-line basis over the lease term, normally 3\u00a0to 4\u00a0years duration, with the exception of that portion of the instalment that is considered to be services income. Services income is identified as a non-lease component and the Group applies IFRS\u00a015 to allocate the consideration in the contract. The instalments are classified and presented in the following categories in the income statement: (i)\u00a0Leasing contract revenues; and (ii)\u00a0Services revenues.
Measurement
Assets under operating lease are measured at cost less accumulated depreciation and impairment losses. The cost of the operating lease cars comprises of their purchase price and any incremental and directly attributable costs of bringing the assets held for use in operating leases to working condition for its intended use. Import duties and non-refundable purchase taxes are included in the purchase price and any trade discounts are deducted when calculating the purchase price. Furthermore, lease incentives and volume bonuses are also taken into account and depreciated over the expected lease term. The carrying amount of the Operating lease portfolio is presented in the category \u2018Rental Fleet\u2019 on the balance sheet. The depreciation policy relating to these assets is detailed in section\u00a03.7.1 \u2013 Property and equipment under operating lease and rental fleet.
For the fleet revaluation process, refer to note\u00a05.1 \u201cFleet revaluation\u201d.
For the impairment accounting policy refer to note\u00a05.3 \u201cImpairment of rental fleet\u201d. Upon termination of the lease or rental contract the relevant assets are reclassified to the caption \u2018Inventories\u2019 at their carrying amount.
Finance leases are recognised as financial assets at an amount equal to the present value of the minimum lease payments (including guaranteed residual value) and the unguaranteed residual value accruing to the Group, after deduction of provisions deemed necessary in respect of bad and doubtful debts and any accumulated impairment losses. Initial direct costs are included in the initial measurement of the finance lease receivables. The assets are presented within the category \u2018Receivables from clients and financial institutions\u2019 on the balance sheet (See note\u00a023 for further details).
The finance lease instalments can comprise various components each having its own revenue recognition. The instalments are classified and presented in the following categories in the income statement: (i)\u00a0interest income from finance lease (the difference between the gross receivable and the present value of the receivable is unearned finance income and is recognised over the term of the lease using the effective interest method); and (ii)\u00a0revenues (to the extent that services are included in the lease).
Revenue recognition for operating and finance leases is disclosed in more detail in note\u00a03.23.
These services include arranging for vehicle delivery and administration of the title and registration process, as well as tax and insurance requirements, ensuring maintenance of the vehicle, pursuing warranty claims, providing fleet policy analysis and recommendations, benchmarking, and providing vehicle recommendations. Vehicles classified under this category are featured within the Off-Balance Sheet fleet and their related revenue is recognised within the Services revenue line.
Other property and equipment are stated at cost less accumulated depreciation and accumulated impairment losses. Cost includes expenditures that are directly attributable to the acquisition of the asset. Subsequent costs are included in the asset\u2019s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost can be measured reliably. Repairs and maintenance costs are charged to the statement of income during the period in which they are incurred.
Land is not depreciated. Depreciation on other assets is calculated using the straight-line method to allocate their cost to their residual values over their estimated useful lives, as follows:
The Company allocates the amount initially recognised in respect of an item of property, plant and equipment to its significant parts and depreciates separately each such part. The carrying amount of a replaced part is derecognised when replaced. Residual values, method of amortisation and useful lives of the assets are reviewed annually and adjusted if appropriate. An asset\u2019s carrying amount is written down immediately to its recoverable amount if the asset\u2019s carrying amount is greater than its estimated recoverable amount.
This asset category includes mainly vehicles leased to third parties, but also include other properties owned by the Group (although not significant).
Property and equipment under operating lease and rental fleet are measured at cost less accumulated depreciation and impairment losses. Vehicles are capitalised based on (i)\u00a0the acquisition price, (ii)\u00a0all expenditures for items owned by the Company and considered a permanent addition to the vehicle (e.g. radios, anti-theft devices,\u00a0etc.) at the time of contract commencement, (iii)\u00a0initial external direct costs including commissions and legal fees and (iv)\u00a0delivery cost where material.
The assets subject to operating leases are presented in the balance sheet according to the nature of the asset. The leased assets are depreciated on a straight-line basis over its contract period to its residual value. The contract period ranges on average between 3\u00a0to 5\u00a0years.
The assets\u2019 residual values are reviewed and adjusted, if appropriate, at each balance sheet date.
Upon termination of the lease or rental contract the relevant assets are reclassified to the caption \u201cInventories\u201d at their carrying amount, as per IAS\u00a016 paragraph\u00a068A recommendations. The assets\u2019 residual values and useful lives are reviewed and adjusted, if appropriate, at each balance sheet date.
IFRS\u00a016 concerns any contract meeting the definition of a lease. There are exceptions in the standard which are not applicable to the Group. Lessees are not required to apply this standard to intangible assets leases (software for example). In preparing the application of the standard, the Group uses this option. All of the Group\u2019s right-of-use assets relate to building leases contracted for the lease of commercial and office space and vehicles.
The lease period to be applied in determining the rental payments to be discounted will match the non- cancellable period of the lease adjusted for:
The measurement of the reasonable certainty of exercising or not exercising the extension or early termination options shall take into account all the facts and circumstances that may create an economic incentive to exercise or not to exercise these options.
In the event of a change of circumstances of the lessee which has an impact on the certainty of exercise of an option that the lessee has or has not included in its calculation of the lease term, the term must be re-estimated.
Following a change in the lease term (re-estimate or revision), the lease obligation must be reassessed to reflect those changes. The revised rate is the interest rate implicit in the lease for the remaining term of the contract if it is possible to calculate this rate, otherwise the lessee must use its incremental borrowing rate on the date of modification of the lease term.
The Group recognises right-of-use assets at the commencement date of the lease (i.e. the date the underlying asset is available for use). Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any remeasurement of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities recognised, initial direct costs incurred, and lease payments made at or before the commencement date less any lease incentives received. Unless the Group is reasonably certain to obtain ownership of the leased asset at the end of the lease term, the recognised right-of-use assets are depreciated on a straight-line basis over the shorter of its estimated useful life and the lease term, defined as the non-cancellable period for which the lessee has the right to use an underlying asset including optional periods when an entity is reasonably certain to exercise an option to extend (or not to terminate) a lease. Depreciation expense is recorded in Depreciation and amortisation in the income statement. The asset value may be adjusted later if the lease is amended, the lease period is re-estimated or to account for contractual changes in the rental payments related to application of indices or rates. The cost of a right-of-use asset also includes an estimate of costs to be incurred by the lessee in dismantling and removing the underlying asset, restoring the site on which it is located or restoring the underlying asset to the condition required by the terms and conditions of the lease.
At the commencement date of the lease, the Group recognises lease liabilities measured at the present value of lease payments to be made over the lease term discounted using an incremental borrowing rate which varies per country within the Group. The lease payments include fixed payments (including in-substance fixed payments) less any lease incentives receivable and variable lease payments that depend on an index or a rate. The lease payments also include payments of penalties for terminating a lease, if the lease term reflects the Group exercising the option to terminate. Variable lease payments that are indexed based on the use of the leased asset (indexed to revenue or mileage, for example) are excluded from the measurement of lease liability. This variable portion of the rental payments is recorded in the income statement over time according to fluctuations in contractual indexing. Each lease payment is allocated between the liability and finance cost. The finance cost is charged to Leasing contract costs \u2013 financing in the income statement over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. After the commencement date, the amount of lease liabilities is increased to reflect the recognition of interest and reduced for the lease payments made. In addition, the carrying amount of lease liabilities is remeasured if there is a modification, a change in the lease term, a change in the in-substance fixed lease payments or a change in the assessment to purchase the underlying asset.
The implicit contract rates are not generally known, nor can be easily determined. Therefore, the Group has decided to use the lessees\u2019 incremental borrowing rate to discount rental payments as well as amount of lease liabilities.
The incremental borrowing rate is set by the lessee entity, not by the Group, in consideration of the borrowing terms and that entity\u2019s credit risk and the economic environment.
The discount rates used by the Group are then adjusted according to the currency and country of the location of the lessee entities.
The discount rate represents a risk free borrowing rate and liquidity spread by currency. The discount rate is also based on the duration of the lease term, where the duration of the lease is divided by two. Duration of the lease is the total lease term as described in section \u201cLease term\u201d.
Lessees may choose not to recognise a right-of-use asset and lease liability to contracts with a term of less than one year (including renewal options), nor to contracts on low-value items. This last simplification applies specifically to small equipment such as personal computers, tablets, telephones, and small items of office furniture.
Lease payments on short-term leases (less than one year) and leases of low-value assets are recognised as expense on a straight-line basis over the lease term and are disclosed in General and administrative expenses.
Deferred tax will be recorded on the basis of the net amount of taxable and deductible temporary differences. Generally, on the date of the initial recording of the right-of-use and the lease liability, no deferred tax is recorded as the asset value is equal to the liability value. The net temporary differences that may result from subsequent changes in the right-to-use and lease liability will result in the recognition of deferred tax.
Further details are provided in note\u00a017 \u201cRight-of-use Assets and Lease Liabilities\u201d.
Goodwill arises on the acquisition of subsidiaries, associates and joint ventures and represents the excess of the consideration transferred over the Group\u2019s interest in net fair value of the net identifiable assets, liabilities and contingent liabilities of the acquirer. Goodwill is measured at cost less any accumulated impairment losses. When the excess is negative (negative goodwill), it is recognised immediately in the statement of income.
For the purpose of impairment testing, goodwill acquired in a business combination is allocated to each of the cash generating units (\u201cCGUs\u201d), or groups of CGUs, which is expected to benefit from the synergies of the combination. Each unit or group of units to which the goodwill is allocated represents the lowest level within the entity at which the goodwill is monitored for internal management purposes. Goodwill is monitored as follows:
Goodwill impairment reviews are undertaken annually or more frequently if events or changes in circumstances indicate a potential impairment. The carrying value of goodwill is compared to the recoverable amount, which is the higher of value in use and the fair value less costs to sell. Any impairment is recognised immediately as an expense and is not subsequently reversed.
Further details are provided in note\u00a05.2 \u201cEstimated impairment of goodwill\u201d.
Internal software development costs are capitalised during the application development stage. The costs capitalised relate to external direct costs of materials and services and employee costs related to the time spent on the project during the capitalisation period. Capitalised software is evaluated for impairment annually or when changing circumstances indicate that amounts capitalised may be impaired. Impaired items are written down to their estimated fair values at the date of evaluation. Internally developed software is normally depreciated over its useful life, generally 3\u00a0to 5\u00a0years; however in some instances this can be longer.
Assets that have an indefinite useful life \u2013 for example, goodwill or intangible assets \u2013 are not subject to amortisation and are tested annually for impairment. Assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset\u2019s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset\u2019s fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). Non-financial assets other than goodwill, that suffered impairment, are reviewed for possible reversal of the impairment at each reporting date.
Further details are presented in note\u00a015 \u201cRental fleet\u201d.
The Group classifies non-current assets and disposal groups as held for sale if their carrying amounts will be recovered principally through a sale transaction rather than through continuing use. Non-current assets and disposal groups classified as held for sale are measured at the lower of their carrying amount and fair value less costs to sell. Costs to sell are the incremental costs directly attributable to the disposal of an asset (disposal group), excluding finance costs and income tax expense.
The criteria for held for sale classification is regarded as met only when the sale is highly probable and the asset or disposal groups is available for immediate sale in its present condition. Actions required to complete the sale should indicate that it is unlikely that significant changes to the sale will be made or that the decision to sell will be withdrawn. Management must be committed to the plan to sell the asset and the sale expected to be completed within one year from the date of the classification.
Property, plant and equipment and intangible assets are not depreciated or amortised once classified as held for sale.
Assets and liabilities classified as held for sale are presented separately as current items in the consolidated balance sheet.
A disposal group qualifies as discontinued operation if it is a component of an entity that either has been disposed of, or is classified as held for sale, and:
The results of discontinued operations are presented separately in the statement of profit or loss.
Additional disclosures relating to the Group\u2019s Discontinued Operations are provided in note\u00a07 \u201cChanges in the Scope of Consolidation\u201d.
Following the adoption of IFRS\u00a09, the Group classifies its financial assets in the following measuring categories:
By default, derivative financial instruments will be classified as subsequently measured at fair value through profit or loss.
Regular way purchases and sales of financial assets are recognised on a trade-date, the date on which the Group commits to purchase or sell the asset. Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired or have been transferred and the Group has transferred substantially all the risks and rewards of ownership.
Debt instruments (loans, receivables and bonds) will be measured at amortised cost only if the objective of the entity (business model) is to collect the contractual cash-flows and if these cash flows consist solely of payments of principal and interest. Debt instruments will be measured at fair value through other comprehensive income (with cumulative gain or loss reclassified in profit or loss when the instruments are derecognised) if the objective of the entity (business model) is to collect the contractual cash-flows or to sell the instruments and if these contractual cash-flows consist solely of payments of principal and interest (SPPI).
Financial assets are initially measured at fair value and subsequent measured at amortised cost using the effective interest method less any impairment losses. Transaction costs (including qualifying fees and commissions) are part of the amortised cost.
Amortised cost is the amount at which the financial asset or financial liability is measured at initial recognition minus the principal repayments, plus or minus the cumulative amortisation using the effective interest method of any difference between that initial amount and the maturity amount and, for financial assets, adjusted for any loss allowance.
The effective interest rate is the rate that exactly discounts estimated future cash payments or receipts through the expected life of the financial asset or financial liability to the gross carrying amount of a financial asset or to the amortised cost of a financial liability.
The following financial assets are classified at amortised cost: cash and cash equivalents, receivables from financial institutions, investments in debt securities and other receivables.
Equity instruments will be measured at fair value through profit or loss except in case of irrevocable election made at initial recognition for measurement at fair value through other comprehensive income (provided these financial assets are not held for trading purposes and not classified as such in financial assets measured at fair value through profit or loss) without subsequent reclassification in income.
Embedded derivatives will no longer be recognised separately when their host contracts are financial assets and the hybrid instrument in its entirety in most cases will then be measured at fair value through profit or loss.
A financial asset is derecognised when and only when the contractual rights to receive cash flows expire or when the financial asset, together with all the risks and rewards of ownership, has been transferred.
The Group assesses expected credit losses (ECL) associated with its assets carried at amortised cost. For trade receivables and contract assets, the Group applies a simplified approach in calculating ECLs. Therefore, the Group does not track changes in credit risk, but instead recognises a loss allowance based on lifetime ECLs at each reporting date. The 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 when the impact of those factors is material to the financial statements.
Further disclosure relating to impairment of financial assets is also provided in note\u00a023 \u201cReceivables from Clients and Financial Institutions\u201d.
Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, loans and borrowings, payables, or as derivatives designated as hedging instruments in an effective hedge, as appropriate.
All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs.
The Group\u2019s financial liabilities include trade and other payables, loans and borrowings including bank overdrafts, and derivative financial instruments.
For purposes of subsequent measurement, financial liabilities are classified in two categories:
Financial liabilities at fair value through profit or loss only include derivative financial instruments in the Group\u2019s financial statements. For further disclosures see note\u00a03.14 \u201cDerivative financial instruments and hedging activities\u201d and note\u00a020 \u201cDerivative financial instruments\u201d.
Financial liabilities are initially recognised at fair value incurred and are subsequently measured at amortised cost. Any difference between the proceeds (transaction costs) and the redemption value is recognised in the statement of profit or loss over the period of the financial liability using the effective interest method. Transaction costs are included in amortised cost using the effective interest method.
Financial liabilities at amortised cost (loans, borrowings and debt securities issued) is the category most relevant to the Group. After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the effective interest rate (EIR) method. Any difference between cost and redemption value is recognised in the income statement over the term of the loans and borrowings.
Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included as finance costs in the statement of profit or loss.
For more information, refer to note\u00a030 \u201cBorrowings from financial institutions, bonds and notes issued\u201d.
Financial liabilities are derecognised if the Group\u2019s obligations specified in the contract expire or are discharged or cancelled.
Financial assets and liabilities are offset and the net amount is presented in the balance sheet when the Group has a legal right to offset the amounts and intends either to settle on a net basis or to realise the asset and liability simultaneously.
Income and expenses are presented on a net basis only when permitted by IFRS.
Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. The method of recognising the resulting gain or loss depends on whether the derivative is designated as a hedging instrument, and if so, the nature of the item being hedged.
The Group documents at the inception of the transaction the relationship between hedging instruments and hedged items, as well as its risk management objectives and strategy for undertaking various hedging transactions. The Group also documents its assessment, both at hedge inception and on an ongoing basis, of whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in fair values or cash flows of hedged items.
The fair values of various derivative instruments used for hedging purposes are disclosed in note\u00a026. Movements on the hedging reserve in other comprehensive income are shown in consolidated statement of changes in equity. The full fair value of a hedging derivative is classified as a non-current asset or liability when the remaining hedged item is more than 12\u00a0months and as a current asset or liability when the remaining maturity of the hedged item is less than 12\u00a0months.
The Group designates certain derivatives as either:
Inventories are stated at the lower of cost and net realisable value. Upon termination of the lease or rental contract the relevant assets are reclassified from the caption \u201cRental fleet\u201d to the caption \u201cInventories\u201d at their carrying amount. At this point no further depreciation is charged. Net realisable value is the estimated selling price in the ordinary course of business, less applicable variable selling expenses. Valuation allowances on inventories are included in \u201cCost of cars sold\u201d.
This caption includes:
These receivable balances are shown after any accumulated impairment losses and are initially measured at fair value and subsequently at amortised cost using the effective interest method.
Other receivables and prepayments include prepayments in respect of expenses attributable to a subsequent period plus amounts still to be received.
In the consolidated statement of cash flows, cash and cash equivalents include cash in hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of three months or less and bank overdrafts. In the consolidated balance sheet, bank overdrafts are shown within borrowings in current liabilities. Cash equivalents are defined as short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. The short-term characteristic of a cash equivalent is generally taken as a term of three months or less from the date of acquisition.
The Group operates various post-employment schemes, including both defined benefit and defined contribution pension plans.
Group companies operate various pension\u2019 schemes. The Group has both defined benefit plans and defined contribution plans. A defined contribution plan is a pension plan under which the Group pays fixed contributions into a separate entity. The Group has no legal or constructive obligations to pay further contributions if the fund does not hold sufficient assets to pay all employees the benefits relating to employee service in the current and prior periods. A defined benefit plan is a pension plan that is not a defined contribution plan.
Typically defined benefit plans define an amount of pension benefit that an employee will receive on retirement, usually dependent on one or more factors such as age, years of service and compensation.
The liability recognised in the balance sheet in respect of defined benefit pension plans is the present value of the defined benefit obligation at the end of the reporting period together with adjustments for unrecognised past-service costs. The defined benefit obligation is calculated annually by independent actuaries using the projected unit credit method. The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows using interest rates of high-quality corporate bonds that are denominated in the currency in which the benefits will be paid, and that have terms to maturity approximating to the terms of the related pension obligation.
Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are charged or credited to equity in other comprehensive income in the period in which they arise without recycling to the statement of profit or loss. Past-service costs are recognised immediately in income statement.
Settlements and curtailments invoke immediate recognition in the income statement of the relevant change in the present value of the defined benefit obligations and in the market value of the plan assets. A settlement is an early termination of all or part of the defined benefit obligation. A curtailment occurs when the Company is demonstrably committed to materially reducing the number of employees in the defined benefit plan or the pension benefits for future services.
For defined contribution plans, the Group pays contributions to publicly or privately administered pension insurance plans on a mandatory, contractual or voluntary basis. The Group has no further payment obligations once the contributions have been paid. The contributions are recognised as employee benefit expense when they are due.
Further details are provided in note\u00a031 \u201cRetirement benefit obligations and long term benefits\u201d.
Termination benefits are payable when employment is terminated by the Group before the normal retirement date, or whenever an employee accepts voluntary redundancy in exchange for these benefits. The Group recognises termination benefits when it is demonstrably committed to a termination when the entity has a detailed formal plan to terminate the employment of current employees without possibility of withdrawal. In the case of an offer made to encourage voluntary redundancy, the termination benefits are measured based on the number of employees expected to accept the offer. Benefits falling due more than 12\u00a0months after the end of the reporting period are discounted to their present value.
The Group recognises a liability and an expense for bonuses and profit-sharing, based on a formula that takes into consideration the profit attributable to the Company\u2019s shareholders after certain adjustments. The Group recognises a provision where contractually obliged or where there is a past practice that has created a constructive obligation.
Provisions for restructuring costs and legal claims are recognised when: the Group has a present legal or constructive obligation as a result of past events; it is probable that an outflow of resources will be required to settle the obligation; and the amount has been reliably estimated. Restructuring provisions comprise lease termination penalties and employee termination payments. Provisions are not recognised for future operating losses.
Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. A provision is recognised even if the likelihood of an outflow with respect to any one item included in the same class of obligations may be small.
Provisions are measured at the present value of the expenditures expected to be required to settle the obligation using a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the obligation. The increase in the provision due to passage of time is recognised as interest expense.
The Group provides customers with an own damage and repair cover in exchange of the payment of a monthly premium. Own damage revenues are recorded in the caption \u201cServices Revenues\u201d. Further details are provided in note\u00a09 \u201cRevenues and cost of revenues\u201d.
In parallel, the Group calculates the own damage reserve based on two elements:
At the end of each month, the Group performs an adequacy test in respect of the level of the own damage reserve. In the event that the level of the reserve falls below the amount of open claims reserve plus IBNR, as determined above, then an immediate adjustment is made to adjust the reserve at this level. Open claims remain open so long as it is reasonably considered that the claim will be payable.
Where there is a stop-loss policy in place, limiting the risk of losses above a set level, open claims plus IBNR are booked only up to the level of the stop-loss. Beyond that level, all claims are debited to the reinsurance provider of the stop-loss cover. Any stop-loss cover on individual incidents is also taken into account in evaluation of claims plus IBNR. Gross claim costs are reduced to the level of cap per incident. Even where stop-loss cover is in place, if total claims are anticipated to be below the level of premium and stop-loss cover, then profit is booked in the normal way.
Trade and other payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Accounts payable are classified as current liabilities if payment is due within one year or less (or in the normal operating cycle of the business if longer). If not, they are presented as non-current liabilities.
Trade payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method.
The tax expense for the period comprises current and deferred tax. Tax is recognised in the income statement, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in equity, respectively.
The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the balance sheet date in the countries where the Company and its subsidiaries operate and generate taxable income.
Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.
Deferred income tax is recognised, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. However, deferred tax liabilities are not recognised if they arise from the initial recognition of goodwill; deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the balance sheet date and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.
Deferred income tax assets are recognised only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised.
Deferred income tax is provided on temporary differences arising on investments in subsidiaries and associates, except for deferred income tax liability where the timing of the reversal of the temporary difference is controlled by the Group and it is probable that the temporary difference will not reverse in the foreseeable future.
Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred income taxes assets and liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities where there is an intention to settle the balances on a net basis.
Revenue is recognised in accordance with the following standards:
The combined effect of the leases (IFRS\u00a016) and revenues (IFRS\u00a015) standards focus on the identification of lease and non-lease components in order to assess separate performance obligations. Both lessees and lessors consider the right to use an asset as a separate lease component if it meets the following criteria:
Activities or costs that transfer a good or service to the lessee are identified as non-lease components.
Amounts payable for activities and costs that do not transfer a good or service are part of the total consideration and are allocated to the lease and non-lease components identified in the contract.
If a contract contains a lease component and one or additional lease or non-lease components, then IFRS\u00a016 requires a lessor always to allocate the consideration in a contract following the approach in IFRS\u00a015 Revenue recognition.
The 5\u00a0steps process required by IFRS\u00a015 is summarised as follows:
a)\u00a0Operating leases
On operating leases, lease rental revenue (depreciation and interest) is recognised in accordance with IFRS\u00a016 on a straight-line basis over the lease term based on the total of the contractual payments divided by the number of months of the lease term.
b)\u00a0Finance leases
Regarding finance leases, IFRS\u00a016 standard is applied and the earnings are allocated between the capital amount and finance income. The capital amount is used to reduce the receivable balance and the income is recognised in the profit and loss in each period so as to give a constant periodic rate of return on the net investment in the lease. The Group uses the net investment method to allocate gross earnings, which excludes the effect of cash flows arising from taxes and financing relating to a lease transaction. In addition:
Amounts receivable from finance lease contracts are disclosed in note\u00a023.
c)\u00a0Other operating revenue for services
Cost of revenues comprises the cost associated with providing the above-mentioned service components of the lease instalment (including: vehicle maintenance, replacement and winter tyres, insurance premiums, accident repair and the provision of short term replacement vehicles).
Interest income, interest charges and similar charges for all interest-bearing assets and liabilities are recognised in the income statement on an accrual basis using the effective interest method. The effective interest rate is the rate that exactly discounts the estimated future cash payments and receipts through the expected life of the financial asset or liability to the carrying amount of the financial asset or liability.
The interest income component in operating lease instalments, which is charged on a straight-line basis to the client, is recognised in the \u201cLeasing contract revenue \u2013 operating lease\u201d based on the effective interest method in interest income using the interest rate included in the lease contract and based on the net investment value of the leased asset.
Interest income on finance lease contracts is recognised in the income statement on the basis of accruing interest income on the net investment (using the effective interest method). The receipts under the lease are allocated by the lessor between reducing the net investment and recognising interest income, so as to produce a constant rate of return on the net investment.
This item includes office overheads, automation costs, advertising costs, professional fees and other general expenses.
Share-based compensation benefits are provided to employees via the ALD long-term incentive plans, employee share schemes. Information relating to these schemes is set out in note\u00a029.
The fair value of shares granted under the ALD long-term incentive plan is recognised as an employee benefits expense with a corresponding increase in equity. The total amount to be expensed is determined by reference to the fair value of the shares granted. The total expense is recognised over the vesting period, which is the period when all of the specified vesting conditions are to be satisfied. At the end of each period, the entity revises its estimates of the number of shares that are expected to vest based on the non-market vesting and service conditions. It recognises the impact of the revision to original estimates, if any, in profit or loss, with a corresponding adjustment to equity.
The credit risk is the risk of losses arising from the inability of the Group\u2019s customers to meet their financial commitments. Credit risk includes the counterparty risk. In addition, credit risk may be further amplified by concentration risk, which arises from a large exposure to a given risk, to one or a few counterparties.
Credit risk management policy
Credit risk is the risk that a customer is not able to fulfil its financial obligations towards ALD. All ALD entities have to comply with risk procedures issued centrally which define the way credit requests have to be studied and validated, as well as the roles and responsibilities of all staff involved in the credit vetting process. Each subsidiary has a specific credit authority approved by ALD General Management and the Risk Department of Societe Generale, and determined according to the size of the fleet, the maturity of the subsidiary and the type of customer concerned (corporate, retail, financial institution,\u00a0etc.). Within its credit limit, each subsidiary can decide directly on its counterparty risk. Above this threshold, credit acceptance is made at central level jointly with the Risk Department of Societe Generale.
Regular risk committees are held by ALD in order to review all potential risk issues and to ensure the credit risk procedures are properly applied. All standard risk indicators (arrears/default/Cost of risk) are also monitored centrally. All ALD entities are applying the same process locally.
The primary responsibility for debt collection remains under the direct responsibility of ALD\u2019s subsidiaries with dedicated teams in charge of recovering unpaid invoices in compliance with local regulations and market practices. Local processes need, however, to be compliant with the corporate instructions and guidelines distributed to the whole network. Central monitoring of all ageing balances is performed on a monthly basis as part of the regular risk reviews, and actions plans are set up whenever necessary under the supervision of the Country Manager.
Impairment charges on receivables (Cost of risk) has historically remained very low due to the nature of the products proposed by ALD, a strict control of the risk assessment process and a very diversified customer portfolio.
Credit risk measurement
The Group applies the IFRS\u00a09 simplified approach to measuring expected credit losses which uses a lifetime expected loss allowance for all sound trade and lease receivables.
For not in default trade receivables and finance lease receivables, the Group does not track changes in credit risk, but instead recognises a loss allowance based on expected lifetime losses from initial recognition of the receivables. These losses are measured based on a provision matrix for receivables associated with sound customers, as described below. Probability of Default (PD) rates are based on observed default rates over the life of the receivables (the average contract length in each entity). Specific PD rates are calculated for each entity and each customer type. This process results in Probability of Default (PD) rates for each age of past-due receivables. The PD rates are applied to the aged receivables of the reporting period to arrive at a total provision. The final impairment allowance is also adjusted to consider Loss Given Default (LGD) specific to the entity.
The historical loss rates are adjusted to reflect current and forward looking information on specific local economies affecting the ability of the customers to settle the receivables.
Expected credit losses are reassessed at each reporting date and reflect all reasonable information that is available at the reporting date.
Management has reviewed the Group\u2019s provision matrix used in determining the expected credit losses, including the revision of the expected loss rates and assessed the potential impairment or write-off of receivables. The Group continues monitoring economic conditions and other various factors in determining loss rates.
In 2022 the main considerations in the forward looking provision calculation, which were used in 2020 and 2021, have been reviewed in the context of the latest economic environment.
The main considerations in the forward looking provision calculation are:
The forward looking provision has increased to EUR\u00a010.8\u00a0million (31\u00a0December 2021: EUR\u00a09.2\u00a0million).
As in the previous financial year, the Group has not yet seen significant deterioration in the recoverability of customer receivables in 2022. The provision on sound receivables has increased to EUR\u00a028.5\u00a0million (31\u00a0December 2021: EUR\u00a024.8\u00a0million).
The evolution of the Cost of risk (including forward looking element) and the Cost of risk as a percentage of the average net earning assets (NEA) over the last two years is shown in the table below.
(in EUR million) | 2022 | 2021 | ||
|---|---|---|---|---|
December YTD | June YTD | December YTD | June YTD | |
Cost of risk | 46.1 | 18.9 | 24.8 | 16.6 |
| 1.7 | 0.8 | (6.5) | (3.5) |
Average NEA\u00a0(1) | 23,643 | 23,070 | 21,657 | 21,205 |
Cost of risk as % of Average NEA (bps) | 20 | 16 | 11 | 16 |
(1) The arithmetic average of Earning Assets at the beginning and end of the period including disposal groups held for sale (Note 8)\u00a0 |
Management considers the current level of provisions to be adequate. The Group will continue to monitor the provision parameters, including the relevance of the local uplift factors, according to the macroeconomic situation.
Expected credit losses and provision matrix are disclosed in note\u00a023 \u201cReceivables from clients and financial institutions\u201d.
There is no change in the definition or policy for provisions on doubtful exposure under IFRS\u00a09. The definition of default exposure remains unchanged.
The Group considers that a customer is in default as soon as one of the three following conditions applies:
When a credit risk emerges, the following processes take place:
Where the customer is in default, the whole of the customer balance is classified as doubtful as a result of the \u201ccontagion principle\u201d. The application of this principle leads to the classification as doubtful of all outstanding amounts relating to a customer that is deemed to be in default regardless of the age of the invoice (i.e. a customer is either solvent or not).
If the customer belongs to a group of companies, or in cases where the parent company has been classified as being in default, a case-by-case study is undertaken to establish whether it is necessary to apply the same treatment to all the legal entities included in that group. This \u201ccontagion principle\u201d does not apply, however, in the following cases:
Impairment is only made in respect of customer receivables where the customer is considered to be in default (receivable is impaired). The impairment made for risk of default is consistent with the credit rating of each customer. The impairment must be sufficient to cover the entire probable loss in total or partial non-recovery of the loan.
The impairment is based upon the full amount outstanding for the customer in default.
Generally, ALD remains the owner of the vehicle and impairment is made against the recorded receivables relating to issued invoices. In addition, where it is considered likely that the vehicles will be returned, a further provision is required for the amount of the likely shortfall from the sale of the asset.
Where there are guarantees from the customer providing the right of offset in the event of a default, these amounts are taken into account in assessing the impairment on a customer by customer basis.
Derivative financial instruments
In addition to its natural exposure to credit risk in the leasing of vehicles, the Group is also exposed to credit risk because of its use of derivative financial instruments and because of excess cash being deposited with banks. The Group controls this risk by requiring minimum external rating grades that such external counterparties are assigned.
Treasury risk entails 3\u00a0types of risk: liquidity risk, interest rate risk and foreign exchange risk.
Group Treasury risk management policy consists in matching assets and liabilities in terms of maturities, currencies, and interest rate exposure. Group procedures defining the sensitivity measurement of such risks and tolerance levels are applied across the Group to allow a close monitoring of the treasury risk. These risks are monitored on a Group level by the Group\u2019s central Treasury, which reports on a quarterly basis to the management team of ALD during a dedicated committee. This committee is informed about all relevant developments with regards to the Group\u2019s treasury risk profile and decides any action to mitigate the risks when necessary.
Interest rate risk
ALD policy consists of financing the underlying assets with fixed rate loans as lease contracts are mostly priced at fixed rates, in order to avoid any interest rate mismatch between assets and liabilities. Structural interest rate risk arises from the residual gap (surplus or deficit) in each entity\u2019s fixed-rate forecast position. To this end, any residual interest rate risk exposure must comply with the sensitivity limits set for each entity. The sensitivity is defined as the variation in the net present value of the future residual fixed-rate positions (surplus or deficit) for non-stressed shocks of +100\u00a0bps and -100\u00a0bps in the yield curve.
The ALD Group Central Treasury monitors the Group\u2019s interest rate risk exposure and advises subsidiaries to implement adequate hedging operations. A monthly report measuring interest risk exposure is produced by each entity to be reviewed and consolidated by the ALD Group Central Treasury Department.
Each entity and the Group as a whole are subject to sensitivity thresholds and limits validated by the ALM Committee (ALCO). The Group structural risks are discussed on a quarterly basis during ALCO meetings.
Thanks to this close follow up of the interest rate risk exposure by subsidiaries and the supervision of asset and liability monitoring performed at central level, ALD Group interest rate sensitivity has always remained limited.
Range Movement | NPV sensitivity impact (in EUR million)(1)\u00a0(2) |
|---|---|
+100\u00a0bps | +38.4 |
-100\u00a0bps | (38.7) |
(1)\u00a0\u00a0\u00a0The NPV (Net Present Value) sensitivity aims at measuring the potential deterioration/enhancement of value of the balance sheet in static view (no new production) by considering all discounted cash inflows (e.g. mainly remaining cash flows from rental contracts) and cash outflows over the time (e.g. mainly remaining cash flows from financial debts). (2)\u00a0\u00a0\u00a0Includes the impact of the capital increase. |
Foreign exchange risk
ALD Group is present in 26\u00a0countries outside the Euro zone and is therefore exposed to foreign exchange risks related to cash inflows and outflows from daily business activities as well as participations in subsidiaries outside the Euro zone.
Currency risks related to the current business activities are very limited as there are no cross-border leasing activities. ALD Group policy consists of financing the underlying asset in the same currency as the corresponding lease contract.
The residual foreign exchange risk is managed in order to minimise the impact to the Group due to fluctuations in the currencies it operates.
To achieve this goal, ALD quantifies its exposure to structural exchange rate risks for each subsidiary by analysing all assets and liabilities arising from commercial operations and proprietary transactions. The risk sensitivity is measured by quantifying the impact of a variation of 10% of the exchange rate (hard currencies against local currency) and a threshold is defined for each subsidiary. ALD Group Treasury Department is responsible for monitoring structural foreign exchange risk positions and manages the impact on profitability due to foreign exchange rate fluctuations.
Currency risks related to equity invested in foreign currencies are not hedged at a Group level, as the risk exposure has been considered insignificant.
Liquidity risk
ALD Group is exposed to liquidity risk which is the risk of not being able to meet cash flow requirements when they fall due. A structural liquidity position is defined as resulting from the maturities of all balance sheet or off-balance sheet outstanding positions according to their liquidity profile.
ALD Group\u2019s exposure to liquidity risk is limited as the Group policy consists of financing the underlying asset over the same duration as the corresponding lease contract. A residual liquidity gap is measured on a monthly basis, under the supervision of ALD Group Treasury Department, by assessing the matching of the run-off of the existing leased assets with the remaining liabilities.
The liquidity position measured is then reviewed and consolidated at a Group level. Any deviation from the sensitivity threshold is corrected under the supervision of the Group central Treasury.
As part of the funding plan the ALD Group raises external funds through both asset-backed securitisation programmes and the EMTN bonds programme described below.
Most of the funding provided by Societe Generale is granted through Societe Generale Luxembourg and Societe Generale Paris. SG Luxembourg and SG Paris funds ALD Group Central Treasury which then grants loans in different currencies to 27\u00a0ALD subsidiaries (including funding provided for disposal groups held for sale) as well as to the holding companies. The total amount of loans granted by SG Luxembourg and SG Paris amounted to EUR\u00a012,158\u00a0million (EUR\u00a012,165\u00a0million including funding provided for disposal groups held for sale) at 31\u00a0December 2022 for an average maturity of 2\u00a0years.
The remaining SG funding is provided either by local SG branches or subsidiaries. As at 31\u00a0December 2022 the total amount of loans granted to the Group by Societe Generale, including local branches and subsidiaries was EUR\u00a013,711\u00a0million (EUR\u00a013,718\u00a0million including loans granted to disposal groups held for sale).
31% of fiscal year 2022 funding is provided from local external banks or third parties, representing EUR\u00a06,164\u00a0million (EUR\u00a06,220\u00a0million including loans granted to disposal groups held for sale) at 31\u00a0December 2022.
The following funding arrangements concluded by the Group impacted the assessment of liquidity risk:
Securitisation
As at 31\u00a0December 2022, the Group has asset-backed securitisation programmes in five European countries.
These transactions involve the sale of future lease receivables and (for only three of them) related residual value receivables to securitisation special purpose companies. Debt securities were issued by those special purpose companies and sold to external investors. The special purpose companies are responsible for making interest and principal payments to the note-holders. The note-holders do not have any recourse on the Group in case of default of the originating ALD entity or default of the Group.
These funds were all raised with a floating-to-fixed rate hedge (UK, Belgium, Netherlands, France and Germany).
For further details on the transactions reference is made to note\u00a030.
Corporate bond
The Group is also engaged in a Euro Medium Term Notes (EMTN) programme. The EMTN programme limit is set at EUR\u00a015\u00a0billion for the aggregate nominal amount of notes outstanding at any one time. An application has been filed with the Luxembourg Stock Exchange in order for the notes issued under the programme to be listed on the official list and admitted to trading on the Regulated Market of the Luxembourg Stock Exchange. The programme is rated BBB by Standard & Poor\u2019s and BBB+ by Fitch Ratings.
Positive Impact Bond (Green Bond) was issued in July\u00a02022 for an amount of EUR\u00a0500\u00a0million maturing in July\u00a02027.
The presentation of financial borrowings by maturity and further information on bonds issued by the Group is provided in note\u00a030.
Capital Management
ALD is a commercial company and as such does not have any regulatory capital requirement.
The Group\u2019s objectives when managing capital are to:
To achieve these objectives the Group carefully monitors its leverage ratio, defined as the ratio of Total Equity to Total Assets, for which it has set a target range in its public communications to investors and rating agencies.
The ratio as at 31\u00a0December 2022 and 31\u00a0December 2021 is as follows:
(in EUR million) | As at 31\u00a0December | |
|---|---|---|
2022 | 2021 | |
Total Equity | 6,893.4 | 4,845.6 |
Total Assets | 31,351.0 | 26,991.4 |
Leverage ratio | 22.0% | 18.0% |
In the management of capital and in its definition the instruments at the Group\u2019s disposal are:
In addition, the Group can effect changes to its asset growth rate in order modify the denominator of this ratio.
The Group is exposed to asset risk, which can be split into two main underlying risk components: the residual value risk and the risk related to service maintenance.
Residual value risk
The residual value, defined as the value of the vehicle at the end of the lease as estimated by ALD at inception of the lease, may differ from the future market value of the car at the end of the contract. This difference is a part of the global risk on used car sales and is managed in ALD Group through robust internal procedures applied to all ALD subsidiaries in order to set, control and revaluate the residual values on the running fleet. The residual value setting procedure defines the processes, roles and responsibilities involved in the definition of residual values that will be used for the quotation of future contracts. Residual value setting is performed locally as the expertise in used car market is local and controlled and approved centrally. Calculation is based on refined market segmentation and on a statistical model using internal used car sales data for each market segment as well as Trade Guides references and country specific factors (inflation, market sector adjustments, life cycle,\u00a0etc.). As part of this process, current external issues are analysed in order to apply a stress factor to the valuation of the current fleet. Residual value setting is reviewed by local general management during a local Pricing Committee held at least twice a year (quarterly for larger subsidiaries), and then controlled and validated at an ALD Group level.
Residual values of the current running fleet are reviewed at least yearly (twice a year for the entities with more than 5,000\u00a0vehicles, one in each semester). It is performed at a local level through a revaluation process which is reviewed and approved at ALD level. The current residual value embedded in the contract is compared with the expected market value on a car by car basis.
Revaluation adjustments are accounted for on a portfolio basis whenever necessary, in order to match the expected market value at contract ending and mitigate any market risk.
In accordance with IAS\u00a08, a residual value is treated as an accounting estimate; as such, all potential car sales losses are recognised on a straight line basis between the date of the revaluation and the end of the contract; where the revaluation in a country produces an overall profit, no adjustment is made. The residual value of the total lease portfolio at 31\u00a0December 2022 amounts to EUR\u00a015,869\u00a0million.
Further details on the residual value risk management and fleet revaluation are disclosed in note\u00a05.1.
Risk related to services maintenance and tyres
The maintenance risk is the risk that the actual costs of maintenance incurred during the contract life are greater than the costs forecasted and included in the quotation at the beginning of the contract. Maintenance pricing setting is done locally using local historical statistics, under the supervision of ALD Group. A global review of the maintenance margins is done for each country on a regular basis in order to back test the pricing assumptions in terms of costs and frequencies.
The Group is exposed to the risk of damage to vehicles within its fleet and also to liability to third parties arising from accidents involving vehicles in its fleet. This risk can take the form of third party liability (TPL), legal defence, material damage or passenger indemnity. Where the Group decides not to retain this risk or is legally obliged to buy insurance, this risk is placed through local insurance companies. However, for some local ALD entities, the Group has selectively decided that the entity should retain the material damage risk to its own vehicles, where it is justified by the fleet size, the fleet risk profile and local market conditions. The entity managing this material damage risk must comply with strict internal procedures in terms of pricing setting, risk selection, and reserve setting. Material own damages reserves are a combination of the estimated amount required to meet the costs of future claims plus an estimation of future claims costs which have been incurred but not reported (IBNR). This IBNR is based on statistical analysis of damage frequency and amounts.
The Group also selectively retains some motor risks (material damages, passenger insurance and TPL risks) within its own reinsurance company, ALD Re DAC (ALD Re). ALD Re is based in Ireland and is regulated by the Central Bank of Ireland. The Company reinsures TPL, material damages and related ancillary covers for approximately 500,000\u00a0vehicles and has reinsurance liabilities covering 27\u00a0entities within the Group. ALD Re strictly monitors its risk universe, including underwriting, market, credit and operational risk, via a strong corporate governance structure, a clearly defined risk appetite and a developed risk monitoring process. In addition, in order to minimize the financial impact of a single event, ALD Re purchases reinsurance protection for claims above a specified amount. This reinsurance strategy is reviewed at least annually.
An independent review of the level of technical reserves held by ALD Re is conducted as an exercise to validate that reserves held are adequate to meet future obligations.
The Group analyses financial assets and liabilities by various valuation methods. The different levels have been defined as follows:
The fair value of financial assets and liabilities is measured at amortised cost, except for receivables for which fair value is deemed to be the nominal amount.
The fair value of financial instruments traded in active markets is based on quoted market prices at the balance sheet date. A market is regarded as active if quoted prices are readily and regularly available from an exchange, dealer, broker, industry group, pricing service, or regulatory agency, and those prices represent actual and regularly occurring market transactions on an arm\u2019s length basis. The quoted market price used for financial assets held by the Group is the current bid price. These instruments are included in Level\u00a01. Instruments included in Level\u00a01 comprise primarily cash and cash equivalents and long-term investments (please refer to note\u00a021 \u201cOther non-current and current financial assets\u201d).
The fair value of financial instruments that are not traded in an active market (for example, over-the-counter derivatives) is determined by using valuation techniques. These valuation techniques maximise the use of observable market data where it is available and rely as little as possible on entity specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in Level\u00a02.
If one or more of the significant inputs is not based on observable market data, the instrument is included in Level\u00a03.
Specific valuation techniques used to value financial instruments include:
Refer to note\u00a026 \u201cFinancial assets and liabilities by category\u201d.
The preparation of the Group\u2019s consolidated financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods.
In preparing the Group\u2019s consolidated financial statements, the significant judgements made by management in applying the Group\u2019s accounting policies and the key sources of estimation of uncertainty were largely the same as those that were applied to the consolidated financial statements for the year ended 31\u00a0December 2021. However, the main assumptions concerning expected credit losses applied during the COVID-19 pandemic have been reviewed to reflect the current economic environment. Further details can be found in note\u00a04 \u201cFinancial risk management\u201d.
Estimates relating to residual value risk management have also undergone significant revision due to buoyant used car market conditions. Further details can be found in note\u00a05.1 below.
Residual values of the current running fleet are reviewed at least yearly (twice a year for the entities with more than 5,000\u00a0vehicles, one in each semester). It is performed at a local level through a revaluation process which is reviewed and approved at ALD Group level. The process is based on a statistical analysis of the car sales results covering a reference period of 24\u00a0months. The local sales force/market analysts also include additional scenarios in the calculation to take into account elements that are not captured by the statistics. These scenarios include assumptions such as possible decreases of diesel vehicles prices, concentration mix of vehicles and local factors.
In 2021 and 2022 the Group also considered two further assumptions which could affect future sales proceeds such as:
Current residual value embedded in the contract is compared with the expected market value on a car-by-car basis taking into account concentration mix of vehicle makes and models, fuel type and other local market specificities.
In accordance with IAS\u00a08, a residual value is treated as an accounting estimate. Revision of the expected residual values can result in one of three outcomes for the prospective depreciation over the remaining life of the contract:
\u201cLeasing contract costs \u2013 depreciation\u201d is comprised of both regular depreciation costs and movement in the calculation for fleet depreciation which is analysed in each entity during the fleet revaluation process.
Used vehicles prices have continued to drive exceptionally high profit from the used car sales activity throughout 2022. In the first semester fleet revaluation, used car market was anticipated to normalise in 2023. However, in the second semester\u2019s fleet revaluation, this normalisation is now expected to take place from 2024 onwards for most countries.
This assessment has now resulted in a reduction in depreciation costs of EUR\u00a0422.4\u00a0million and represents partial recognition of estimated future used car profits.
Due to decrease in depreciation mentioned above, the used car sales margin has been impacted by the increase in net book value of the vehicles. The impact for the vehicles sold in 2022 was EUR\u00a0110.9\u00a0million.
+Increase/-Decrease in expected sales proceeds per vehicle | Income Statement Net Impact |
|---|---|
- EUR 1,000 | -110.2 |
+EUR 1,000\u00a0 | 90.9 |
The impact of the sensitivity analysis is not linear.
The Group tests annually whether goodwill has suffered any impairment, in accordance with the accounting policy stated presented in note\u00a03.9.1 of these consolidated financial statements. The recoverable amounts of cash-generating units have been determined based on value-in-use calculations. These calculations require the use of estimates. The key assumptions calculating the value in use are those regarding discount rates, growth rates and other expected changes in cash flows. The Group uses a five-year business plan for each of the CGUs or group of CGUs identified. The business plans used incorporated assumptions relevant to the current economic climate such as fleet growth, used car market and credit risk.
Based on all the assumptions made by the Group, no need for impairment on goodwill has been identified.
Sensitivity tests are carried out to measure the impact on each CGU\u2019s recoverable value based on certain assumptions. At 31\u00a0December 2021, sensitivities to variations in the cash flows and discount rates were measured.
According to the results in these tests:
Further details are provided in note\u00a018 \u201cGoodwill\u201d.
In the annual assessment of whether there is any indication that an asset may be impaired, the Group considers both external as well as internal sources of information. If such indication for impairment exists, an analysis is performed to assess whether the carrying value of the asset or cash generating unit under an operating lease exceeds the recoverable amount, being the higher of the fair value less costs to sell and the value in use. The value in use is determined at the present value of the future cash flows expected to be derived from the object or cash generating unit. The management closely monitors residual values, which are reviewed internally at least each financial year, in accordance with internal procedures. The original residual values within internal systems will be compared to the revised residual values expected at contract termination, following a review. The results of this exercise will be used to assess the level of exposure, reserves held and potential impairment required. To prevent impairment on residual values, each country completes a minimum of one annual review of pricing under the supervision of the Group to ensure that assumptions used in pricing reflect expected future market conditions, thus ensuring residual values are predicted with a reasonable degree of accuracy and on a consistent basis going forward.
At the end of 2022, no provision for impairment on rental fleet was required.
The fair value of certain financial instruments is determined by using valuation techniques. The Group uses its judgment to select a variety of methods and make assumptions that are mainly based on market conditions existing at the end of each reporting period. The Group has used discounted cash flow analysis for various available-for-sale financial assets that are not traded in active markets. Such assets do not present material amounts in the financial statements.
The present value of the pension obligations depends on a number of factors that are determined on an actuarial basis using a number of assumptions. The assumptions used in determining the net cost/(income) for pensions include the discount rate. Any changes in these assumptions will impact the carrying amount of pension obligations.
The Group determines the appropriate discount rate at the end of each year. This is the interest rate that is used to determine the present value of estimated future cash outflows expected to be required to settle the pension obligations. In determining the appropriate discount rate, the Group considers the interest rates of high-quality corporate bonds that are denominated in the currency in which the benefits will be paid and that have terms to maturity approximating the terms of the related pension obligation.
If the discount rate used were to differ by +0.5% from management\u2019s estimates, the carrying amount of pension obligations would be an estimated EUR\u00a01.0\u00a0million lower.
Further details are provided in note\u00a031 \u201cRetirement benefit obligations and long term benefits\u201d.
The Group is subject to income taxes in numerous jurisdictions. Significant judgment is required in determining the worldwide provision for income taxes. There are many transactions and calculations for which the ultimate tax determination is uncertain. The Group recognises liabilities for anticipated tax audit issues based on estimates of whether additional taxes will be due. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the current and deferred income tax assets and liabilities in the period in which such determination is made.
The own damage reserve is based on assumptions such as technical damage risk principles, policyholder behaviour, inflation and court decisions. The assumptions may differ from the actual data as a result of changes in economic and market conditions.
Geographically, management considers the performance in Western Europe, Continental and Eastern Europe, Nordic and South America, Africa, Asia and rest of the world.
The central treasury function based in Luxembourg provides funding to 26\u00a0ALD entities located in 20\u00a0countries. The total loans in place to these entities amounts to EUR\u00a016.1\u00a0billion (EUR\u00a015.6\u00a0billion excluding balances of disposal groups classified as held for sale).
Loans by the central treasury to ALD entities are at arm\u2019s length according to OECD guidelines and supported by relevant transfer pricing documentation.
This department is responsible for monitoring the funding requirements and structural risks of the Group. Furthermore, it provides technical advice on financial instruments, including derivatives and on the various securitisations and bond issue program of the Group.
The Group\u2019s Management assesses the performance of the operating segments based on a measure of revenue and profit before tax as presented in consolidated financial statements. They also check to ensure that no customer represents more than 10% of the total revenue.
Sales between segments are carried out at arm\u2019s length. The revenue from external parties reported to the Board of Directors is measured in a manner consistent with that in the income statement.
(in EUR million) | Year ended 31\u00a0December 2022 | Year ended 31\u00a0December 2021 | ||
|---|---|---|---|---|
Profit before tax | Revenue from external customers | Profit before tax | Revenue from external customers | |
Western Europe | 1,249.2 | 8,588.2 | 797.0 | 8,033.7 |
Nordic | 108.4 | 1,015.4 | 104.0 | 1,050.6 |
Continental & Eastern Europe | 229.6 | 1,148.4 | 168.8 | 1,032.5 |
LatAm, Africa, Asia & Rest of world | 65.3 | 466.8 | 49.0 | 362.7 |
Total | 1,652.5 | 11,218.8 | 1,118.7 | 10,479.6 |
(in EUR million) | Year ended 31\u00a0December 2022 | Year ended 31\u00a0December 2021 |
|---|---|---|
Revenue from external customers | Revenue from external customers | |
Leasing contract revenues | 4,803.9 | 4,477.6 |
Service revenues | 2,461.3 | 2,138.3 |
Proceeds of cars sold | 3,953.6 | 3,863.7 |
Total | 11,218.8 | 10,479.6 |
(in EUR million) | Year ended 31\u00a0December 2022 | ||
|---|---|---|---|
Rental fleet\u00a0(1) | Total assets | Net financial debt\u00a0(1)\u00a0(2) | |
Western Europe\u00a0(1) | 19,040.2 | 25,637.4 | 17,278.7 |
Nordic\u00a0(1) | 1,863.1 | 2,080.6 | 101.6 |
Continental & Eastern Europe\u00a0(1) | 2,235.8 | 2,472.7 | 1,379.7 |
LatAm, Africa, Asia & Rest of world | 940.5 | 1,160.4 | 831.8 |
Total | 24,079.6 | 31,351.0 | 19,591.8 |
(in EUR million) | Year ended 31\u00a0December 2021 | ||
|---|---|---|---|
Rental fleet | Total assets | Net financial debt\u00a0(2) | |
Western Europe | 17,226.5 | 22,047.3 | 16,340.7 |
Nordic | 1,885.7 | 2,061.5 | 78.3 |
Continental & Eastern Europe | 1,917.0 | 2,025.9 | 1,289.1 |
LatAm, Africa, Asia & Rest of world | 682.1 | 856.8 | 656.4 |
Total | 21,711.3 | 26,991.4 | 18,364.6 |
Revenue from external customers and Rental Fleet by countries with Revenues in excess of EUR\u00a0500\u00a0million are detailed below:
Year ended 31\u00a0December 2022 | Year ended 31\u00a0December 2021 | Year ended 31\u00a0December 2022 | Year ended 31\u00a0December 2021 | |
|---|---|---|---|---|
Revenue from external customers\u00a0 | Revenue from external customers\u00a0 | Rental Fleet | Rental Fleet | |
France | 2,260.4 | 2,241.7 | 5,495.9 | 4,977.0 |
Italy | 1,257.6 | 1,374.8 | 2,532.1 | 2,224.9 |
UK | 1,116.4 | 1,074.7 | 2,326.7 | 2,238.8 |
Germany | 1,092.4 | 921.8 | 2,282.1 | 2,292.1 |
Spain | 820.1 | 724.1 | 1,959.8 | 1,764.2 |
Netherlands | 686.0 | 679.4 | 1,528.4 | 1,466.8 |
Belgium | 680.6 | 622.9 | 1,604.6 | 1,455.3 |
Other Countries\u00a0(1) | 3,305.2 | 2,840.2 | 6,350.1 | 5,292.2 |
11,218.8 | 10,479.6 | 24,079.6 | 21,711.3 | |
(1)\u00a0\u00a0\u00a0Including balances of disposal groups classified as held for sale (See note\u00a08 for further details). (2)\u00a0\u00a0\u00a0Net financial debt is defined as the sum of Borrowings from financial institutions (non-current and current), together with any related derivatives and obligations under finance leases, minus cash and cash equivalents, as presented in the Group\u2019s consolidated balance sheet. |
At 31\u00a0December 2022, all companies are fully consolidated. Changes in the scope of consolidation compared to December\u00a02021 are as follows:
The above mentioned changes in the consolidation scope impact mainly Rental Fleet and trade receivables for the amount of EUR 742 million and\u00a0 goodwill for the amount of EUR 71.9 million.
ALD has obtained all merger control clearances conditioning the completion of the acquisition of LeasePlan. The last clearance was obtained from the European Commission on 25 November 2022, it being specified that\u00a0(i) this clearance is conditional upon the divestiture of the subsidiaries carrying on the full-service leasing and fleet management business of ALD in Portugal, in Ireland and in Norway (with the exception, in the latter country, of NF Fleet Norway, a company jointly owned by ALD and Nordea)\u00a0and of LeasePlan in the Czech Republic, in Finland and in Luxembourg and (ii) closing of the acquisition is contingent upon receiving from the European Commission a decision agreeing the proposed acquiror and the terms agreed with the latter for the divestiture of these entities. An agreement with Cr\u00e9dit Agricole Consumer Finance has been reached on 22 March 2023 for the sale of these six entities, whose combined fleet represented approximately 100,000 vehicles or 3% of the total combined fleet of ALD and LeasePlan as at 31 December 2022. \u00a0
The Group considered the three subsidiaries of ALD to meet the criteria to be classified as held for sale for the following reasons:
The major classes of assets and liabilities of ALD Automotive\u00a0AS \u2013 Norway, SG ALD Automotive Sociedade Geral de Comercio e Aluguer de Benz\u00a0SA \u2013 Portugal and Merrion Fleet Management Limited are measured at their carrying amount and are as follows:
(in EUR million) | 2022 |
|---|---|
Assets | |
Rental fleet | 688.3 |
Receivables from clients | 31.6 |
Cash and cash equivalents | 2.6 |
Other | 130.0 |
Assets of disposal group classified as held for sale | 852.5 |
Liabilities | |
Borrowings from financial institutions and intragroup debt\u00a0(1) | 542.7 |
Other | 123.7 |
Liabilities of disposal group classified as held for sale | 666.4 |
Net assets directly associated with disposal group | 186.1 |
(1) Including EUR\u00a0536\u00a0million of intragroup debt with ALD Luxembourg. |
The subsidiaries are not classified as a discontinued operation as at 31\u00a0December 2022 as they do not meet the criteria of being a major line of business or geographical area of operations.
All disclosures relating to the Group\u2019s assets and liabilities exclude assets and liabilities of the disposal Group unless stated otherwise.
ALD is engaged in a process to sell its entire stake in ALD Automotive OOO, which operates in Russia and through its branch in Kazakhstan, and ALD Belarus LLC. \u00a0
These operations together represented a funded fleet of 14,600\u00a0vehicles as at 31\u00a0December 2022 (1% of ALD Group\u2019s total funded fleet).\u00a0
The disposal, which is subject to the approval of the relevant regulatory authorities, will be conducted in full compliance with applicable legal and regulatory requirements.
These events had the following impacts on the Group financial statements:
(in EUR million) | 2022 |
|---|---|
Assets | |
Rental fleet | 164.0 |
Receivables from clients | 10.1 |
Cash and cash equivalents | 90.2 |
Other\u00a0(1) | (31.8) |
Assets of disposal group classified as held for sale | 232.5 |
Liabilities | |
Borrowings from financial institutions | 57.0 |
Other | 39.4 |
Liabilities of disposal group classified as held for sale | 96.5 |
Net assets directly associated with disposal group | 136.0 |
(1) Including EUR\u00a050.6\u00a0million of impairment of disposal group in Russia. |
(in EUR million) | Year ended 31\u00a0December | |
|---|---|---|
2022 | 2021 | |
Leasing contract revenue \u2013 operating leases | 4,757.2 | 4,439.2 |
Interest income from finance lease | 36.1 | 35.7 |
Other interest income | 10.6 | 2.7 |
Leasing contract revenues | 4,803.9 | 4,477.6 |
Leasing contract costs \u2013 depreciation | (3,433.1) | (3,592.3) |
Leasing contract costs - financing: | ||
Interest charges on loans from financial institutions | (177.6) | (119.5) |
Interest charges on issued bonds | (38.2) | (16.0) |
Other interest charges | (28.3) | 2.9 |
Total interest charges | (244.1) | (132.7) |
Leasing contract costs \u2013 depreciation and financing | (3,677.2) | (3,725.0) |
Trading derivatives | (1.6) | (7.4) |
Imperfectness of derivatives at fair value hedges | \u2212 | 0.3 |
Imperfectness of derivatives at cash flow hedges | (0.2) | (1.3) |
Unrealised gains/losses on derivative financial instruments | (1.8) | (8.4) |
Unrealised Foreign Exchange Gains or Losses | (3.7) | (11.3) |
Hyperinflation - net monetary gain | 59.9 | \u2212 |
Total unrealised gains/losses on financial instruments and other | 54.4 | (19.8) |
Leasing contract margin | 1,181.1 | 732.8 |
\u201cOther interest income\u201d mainly comprises of income received for cash deposits with third party counterparts.
\u201cOther interest charges\u201d mainly comprise of interest charges incurred from asset-backed borrowings, net interest costs on financial instruments, where these instruments are embedded in the same structured funding transaction designed to remove market risk from this transaction, realised gains or losses on translation of financial liabilities and interest expense on lease liabilities.
Leasing contract costs \u2013 depreciation is comprised of both regular depreciation costs and it also includes movement in the provision for excess depreciation which is booked in each entity following the fleet revaluation process which detailed in note\u00a05.1 \u201cFleet Revaluation\u201d
Used vehicles prices have continued to drive exceptionally high profit from the used car sales activity throughout 2022. In the first semester fleet revaluation, used car market was anticipated to normalise in 2023. However, in the second semester\u2019s fleet revaluation this normalisation is now expected to take place from 2024 onwards.
This assessment has now resulted in a reduction in depreciation costs of EUR\u00a0422.4\u00a0million and represents partial recognition of estimated future used car profits.
Revenues and costs are derived from the various service components included within the contractual lease instalments, such as maintenance and tyres, damage risk retention and replacement vehicles.
(in EUR million) | Year ended 31\u00a0December | |
|---|---|---|
2022 | 2021 | |
Services revenue | 2,461.3 | 2,138.3 |
Cost of services revenues | (1,758.1) | (1,488.3) |
Services margin | 703.2 | 650.0 |
(in EUR million) | Year ended 31\u00a0December | |
|---|---|---|
2022 | 2021 | |
Proceeds of cars sold | 3,953.6 | 3,863.7 |
Cost of cars sold\u00a0(1) | (3,205.9) | (3,426.0) |
Used Car Sales result | 747.6 | 437.7 |
(1) Cost of cars sold represents the written down value of the vehicle and any additional disposal costs. |
The used car sector has been positively impacted by the limited production capacity of new cars due to ongoing shortage in the supply of semiconductors as well as shortages of other materials used in car manufacturing as a result of the war in Ukraine. As global demand has increased, these supply-chain issues caused delays in the delivery of new cars, including by ALD.
Revenues that are included within the margins analysed in 9a, 9b and 9c are shown in the following table. They are analysed into Revenues derived from the Rental activity and Proceeds of Cars sold at the end of the leasing period.
(in EUR million) | Year ended 31\u00a0December | |
|---|---|---|
2022 | 2021 | |
Services Revenues | 2,461.3 | 2,138.3 |
Leasing contract revenue - operating leases | 4,757.2 | 4,439.2 |
Interest revenue | 46.7 | 38.4 |
Leasing contract revenues | 4,803.9 | 4,477.6 |
Sub-Total - Revenues from Rental Activity | 7,265.2 | 6,615.9 |
Proceeds of Cars Sold | 3,953.6 | 3,863.7 |
Total Revenues | 11,218.8 | 10,479.6 |
Total Revenues excluding Interest Income | 10,299.2 | 9,629.1 |
(in EUR million) | Note | Year ended 31\u00a0December | |
|---|---|---|---|
2022 | 2021 | ||
Impairment | (125.2) | (104.2) | |
Reversal of impairment\u00a0(1) | 79.1 | 79.4 | |
Impairment charges on receivables | 4.1.1, 23 | (46.1) | (24.8) |
(1) Reversal of impairment represents doubtful receivables recovered in the year and the movement in IFRS\u00a09 provision. |
(in EUR million) | Year ended 31\u00a0December | |
|---|---|---|
2022 | 2021 | |
Wages and salaries | (419.6) | (333.6) |
Social security charges | (76.0) | (69.7) |
Defined benefit post-employment costs | (0.8) | (2.5) |
Other staff costs | (22.5) | (27.9) |
Total | (518.9) | (433.7) |
The average number of staff employed (including temporary staff) by the Group during the year was 7,154 (2021: 6,748). At year-end, the full time equivalent number of staff employed by the Group was 7,529 (2021: 6,893).
The breakdown of the components of the defined benefit pension cost is identified in note\u00a031.
General and administrative expenses mainly include IT costs, professional fees and marketing. ALD continues to accelerate the IT investment programme as part of the Group\u2019s commitment to be the preferred choice for mobility solutions within the market. There has been a specific focus on digital solutions in order to further enhance customer experience, including fleet manager and driver web portals as well as investment in the development of new flexible products for our customers.
As at 31\u00a0December 2022 the Group has incurred EUR 128 million of costs related to the preparation of the LeasePlan acquisition, \u201cTotal Operating Expenses\u201d.
(in EUR million) | Notes | Year ended 31\u00a0December | |
|---|---|---|---|
2022 | 2021 | ||
Depreciation of other property and equipment | 16 | (20.2) | (18.2) |
Depreciation of intangible assets | 16 | (25.5) | (27.3) |
Depreciation of right of use asset | 17 | (21.0) | (19.7) |
Total | (66.7) | (65.1) |
(in EUR million) | Year ended 31\u00a0December | |
|---|---|---|
2022 | 2021 | |
Current tax | (223.9) | (167.6) |
Deferred tax | (220.7) | (71.1) |
Income tax expense | (444.6) | (238.6) |
(in EUR million) | Year ended 31\u00a0December | |
|---|---|---|
2022 | 2021 | |
Profit before tax | 1,652.5 | 1,118.7 |
Standard tax rate in France | 25.83% | 28.41% |
Tax expense at standard rate | (426.8) | (317.8) |
Tax calculated at domestic tax rates applicable to profits in the respective countries | 46.4 | 65.5 |
Tax effects of: | ||
| 0.5 | (0.6) |
| (11.8) | (7.3) |
| (30.2) | 5.0 |
| \u2212 | \u2212 |
| (1.4) | \u2212 |
| 0.7 | 19.3 |
| (6.9) | 7.7 |
| (15.1) | (10.5) |
Total | (444.6) | (238.6) |
Effective rate of income tax | 26.91% | 21.33% |
(1) Mainly regional taxes based on the productive activities. |
Effective tax rate has been negatively impacted by increase in Expenses not deductible for tax purposes due to:
Year on year change in the re-measurement of deferred tax is mainly attributable to a decrease in future tax rate in France in 2021.
Adjustment in respect of prior years in 2021 is related mostly to Luxembourg where additional EUR 8.3\u00a0million corresponds to tax benefit that can be deducted from corporate income tax due in an amount of 13% of the additional investment carried out during the tax year in qualifying assets as per article\u00a0152\u00a0bis of Luxembourg Income Tax law.
Of the tax calculated at domestic rates applicable to profits in the respective countries in 2022, the major contributors are UK, Ireland, Luxembourg, Italy, Turkey, Hungary, Czech Republic and Finland where effective tax rates are lower than in France (with applicable tax rates of 19%, 12.5%, 18.9%, 24%, 23%, 9%, 19% and 20% respectively).
The tax charge/credit relating to components of other comprehensive income is as follows:
(in EUR million) | Year ended 31\u00a0December | |
|---|---|---|
2022 | 2021 | |
Deferred tax on cash flow hedges | (14.1) | (6.3) |
Deferred tax on debt instruments at fair value through OCI | 2.2 | \u2212 |
Deferred tax on actuarial gain/(loss) on retirement benefit | (0.4) | (1.3) |
Deferred tax charged to OCI | (12.4) | (7.6) |
(in EUR million) | As at 31\u00a0December | |
|---|---|---|
2022 | 2021 | |
Net deferred tax liabilities at 1\u00a0January | (322.9) | (257.6) |
Income statement charge | (220.7) | (71.1) |
Tax charged/(credited) directly to equity | (12.4) | (7.5) |
Hyperinflation adjustment (FTA) charged directly to equity\u00a0(1) | (9.4) | \u2212 |
Exchange differences | 2.5 | 13.3 |
Scope changes | (8.0) | \u2212 |
Transfer to assets held for sale | 24.6 | \u2212 |
Other | 0.0 | |
Net deferred tax liabilities at 31\u00a0December | (546.3) | (322.9) |
(1) First time application of IAS\u00a029. |
The gross movement on the net deferred tax account is as follows:
(in EUR million) | As at 31\u00a0December | |
|---|---|---|
2022 | 2021 | |
Accelerated tax depreciation | (777.5) | (604.1) |
Provisions | 130.9 | 156.9 |
Tax losses | 55.7 | 67.3 |
Fair value gains | (8.8) | 3.6 |
Retirement benefit obligation | 2.2 | 3.2 |
Other timing differences | 51.2 | 50.1 |
Other | (0.0) | 0.1 |
Net deferred tax asset/(liability) | (546.3) | (322.9) |
Tax losses
The majority of the 2022 tax losses EUR\u00a055.7\u00a0million (2021: EUR\u00a067.3\u00a0million) are attributable to France EUR\u00a024.6\u00a0million (2021: EUR\u00a028.5\u00a0million), Chile EUR\u00a010\u00a0million (2021 EUR\u00a04.2\u00a0million) Belgium EUR\u00a08.7\u00a0million (2021: EUR\u00a013.9\u00a0million) and Norway EUR\u00a05.7\u00a0million (2021: EUR\u00a016.9\u00a0million). These entities utilised the strategy of accelerated depreciation which lead to the recognition of fiscal losses and deferment of tax liabilities. No significant unrecognised accumulated tax losses have been incurred over the last two financial years.
The expiration profile of the losses carried forward can be illustrated as follows:
(in EUR million) | Year ended 31\u00a0December | |
|---|---|---|
2022 | 2021 | |
Expiry within 1\u00a0year | 10.0 | \u2212 |
Expiry within 1-5\u00a0years | 1.2 | 2.1 |
Expiry <\u00a05\u00a0years | \u2212 | |
Without expiry | 44.4 | 65.2 |
Total | 55.7 | 67.3 |
The total tax value of losses carried forward is presented before offsetting the corresponding deferred tax liabilities (which are reflected in the offset of deferred tax assets and liabilities in the Group balance sheet).
The deferred tax liability relating to operating leases reverses over the remaining term of the operating lease contracts, which ranges from three to five years.
(in EUR million) | Rental fleet |
|---|---|
At 1\u00a0January 2021 | |
Cost | 27,749.3 |
Accumulated depreciation & impairment | (7,672.3) |
Carrying amount as at 1\u00a0January 2021 | 20,077.0 |
Year ended 31\u00a0December 2021 | |
Opening net book amount | 20,077.0 |
Additions | 8,767.8 |
Disposals | (3,530.5) |
Depreciation charge | (3,708.5) |
Transfer to assets qualified as held-for-sale | \u2212 |
Currency translation differences | 105.5 |
Closing net book amount as at 31\u00a0December 2021 | 21,711.3 |
At 31\u00a0December 2021 | |
Cost | 29,917.0 |
Accumulated depreciation & impairment | (8,205.7) |
Carrying amount as at 31\u00a0December 2021 | 21,711.3 |
Year ended 31\u00a0December 2022 | |
Opening net book amount | 21,711.3 |
Additions | 9,554.0 |
Disposals | (3,916.6) |
Acquisition of a subsidiary | 340.8 |
Depreciation charge | (3,573.6) |
Transfer to assets qualified as held-for-sale | (852.3) |
Hyperinflation adjustment | 121.1 |
Currency translation differences | (157.4) |
Closing net book amount as at 31\u00a0December 2022 | 23,227.4 |
At 31\u00a0December 2022 | |
Cost | 31,771.7 |
Accumulated depreciation & impairment | (8,544.4) |
Carrying amount as at 31\u00a0December 2022 | 23,227.4 |
Minimum undiscounted lease payments receivable on operating leases are as follows:
(in EUR million) | Year ended 31\u00a0December | |
|---|---|---|
2022 | 2021 | |
Within 1\u00a0year | 766.1\u00a0 | 998.9 |
Between 1\u00a0and 2\u00a0years | 1,768.3\u00a0 | 1,673.1 |
Between 2\u00a0and 3\u00a0years | 2,557.0\u00a0 | 2,599.0 |
Between 3\u00a0and 4\u00a0years | 2,003.8\u00a0 | 1,875.9 |
Between 4\u00a0and 5\u00a0years | 531.1\u00a0 | 496.1 |
Later than 5\u00a0years | 27.2\u00a0 | 37.5 |
Total | 7,653.5 | 7,680.3 |
The Group concluded a number of asset-backed securitisation programmes which involve the sale of future lease instalment receivables and, in some cases, related residual value receivables originated by various ALD subsidiaries to special purpose companies which are included in the consolidated financial statements of the Group.
As a result of this sale, net book value of securitised operating lease assets amount to EUR\u00a02,173\u00a0million at 31\u00a0December 2022 (EUR\u00a02,466\u00a0million at 31\u00a0December 2021) and present value of transferred lease receivables derived from these assets is EUR\u00a02,313\u00a0million (EUR\u00a02,517\u00a0million at 31\u00a0December 2021). The transferred lease receivables cannot be sold.
For further details on the securitisation transactions and transferred assets reference is made to the note\u00a030.
(in EUR million) | Note | Land | Property | Equipment | Total |
|---|---|---|---|---|---|
At 1\u00a0January 2021 | |||||
Cost | 4.5 | 64.2 | 90.5 | 159.2 | |
Accumulated depreciation & impairment | (30.8) | (48.0) | (78.8) | ||
Carrying amount As at 1\u00a0January 2021 | 4.5 | 33.5 | 42.5 | 80.5 | |
Year ended 31\u00a0December 2021 | |||||
Opening net book amount | 4.5 | 33.5 | 42.5 | 80.5 | |
Additions | \u2212 | 3.2 | 31.4 | 34.6 | |
Disposals | \u2212 | (0.7) | (11.7) | (12.5) | |
Depreciation charge | 13 | \u2212 | (5.9) | (12.2) | (18.2) |
Currency translation differences | \u2212 | 0.2 | 0.3 | 0.5 | |
Closing Net book amount As at 31\u00a0December 2021 | 4.5 | 30.2 | 50.3 | 85.0 | |
At 31\u00a0December 2021 | |||||
Cost | 4.5 | 66.0 | 103.3 | 173.8 | |
Accumulated depreciation & impairment | (35.8) | (53.0) | (88.8) | ||
Carrying amount As at 31\u00a0December 2021 | 4.5 | 30.2 | 50.3 | 85.0 | |
Opening net book amount | 4.5 | 30.2 | 50.3 | 85.0 | |
Additions | \u2212 | 5.9 | 34.9 | 40.9 | |
Disposals | (0.0) | (0.9) | (12.4) | (13.3) | |
Depreciation charge | 13 | \u2212 | (5.8) | (14.4) | (20.2) |
Transfer to assets qualified as held-for-sale | (0.0) | (2.6) | (1.5) | (4.1) | |
Scope changes | 7.0 | 1.5 | 0.9 | 9.4 | |
Currency translation differences | \u2212 | (0.0) | (0.6) | (0.7) | |
Closing Net book amount As at 31\u00a0December 2022 | 11.4 | 28.3 | 57.2 | 96.9 | |
At 31\u00a0December 2022 | |||||
Cost | 11.4 | 67.9 | 114.4 | 193.7 | |
Accumulated depreciation & impairment | (39.5) | (57.3) | (96.8) | ||
Carrying amount As at 31\u00a0December 2022 | 11.4 | 28.3 | 57.2 | 96.9 |
(in EUR million) | Note | Software | Other | Total |
|---|---|---|---|---|
At 1\u00a0January 2021 | ||||
Cost | 85.3 | 93.4 | 178.8 | |
Accumulated amortisation and impairment | (61.2) | (38.8) | (100.0) | |
Carrying amount As at 31\u00a0December 2021 | 24.1 | 54.7 | 78.8 | |
Year ended 31\u00a0December 2021 | ||||
Opening net book amount | 24.1 | 54.7 | 78.8 | |
Additions | 9.6 | 45.4 | 55.0 | |
Divestments | (0.0) | (18.1) | (18.1) | |
Amortization | 13 | (14.7) | (12.6) | (27.3) |
Currency translation differences | 0.1 | 0.3 | 0.4 | |
Closing net book amount As at 31\u00a0December 2021 | 19.1 | 69.6 | 88.7 | |
At 31\u00a0December 2021 | ||||
Cost | 90.3 | 113.3 | 203.6 | |
Accumulated amortisation and impairment | (71.2) | (43.6) | (114.8) | |
Carrying amount As at 31\u00a0December 2021 | 19.1 | 69.6 | 88.7 | |
Year ended 31\u00a0December 2021 | ||||
Opening net book amount | 19.1 | 69.6 | 88.7 | |
Additions | 12.9 | 55.4 | 68.3 | |
Divestments | (4.2) | (11.8) | (16.0) | |
Amortization | 13 | (10.2) | (15.3) | (25.5) |
Transfer to assets qualified as held-for-sale | (0.2) | (0.4) | (0.6) | |
Scope changes | 0.4 | 12.0 | 12.4 | |
Currency translation differences | 0.0 | (0.8) | (0.8) | |
Closing net book amount As at 31\u00a0December 2022 | 17.9 | 108.8 | 126.6 | |
At 31\u00a0December 2022 | ||||
Cost | 84.6 | 160.4 | 245.0 | |
Accumulated amortisation and impairment | (66.7) | (51.7) | (118.4) | |
Carrying amount As at 31\u00a0December 2022 | 17.9 | 108.8 | 126.6 |
(in EUR million) | Right-of-use assets (vehicles) | Right-of-use assets (property leases) | Lease liabilities |
|---|---|---|---|
As at 1\u00a0January 2021 | 128.0 | 132.7 | |
Additions | 20.8 | 20.8 | |
Disposals | (7.6) | (7.6) | |
Accumulated depreciation | (24.6) | \u2212 | |
Transfer to assets held for sale | \u2212 | \u2212 | |
Transfer from trade and other payables | \u2212 | \u2212 | |
Interest | - | 1.6 | |
Payments | - | (26.9) | |
Currency translation differences | 0.7 | 0.8 | |
As at 31\u00a0December 2021 | - | 117.3 | 121.4 |
As at 1\u00a0January 2022 | 117.3 | 121.4 | |
Additions | 40.9 | 21.3 | 63.5 |
Disposals | (1.0) | (11.6) | (12.6) |
Accumulated depreciation | (27.6) | (25.7) | |
Transfer to assets held for sale | - | (2.8) | (2.8) |
Scope changes | 17.1 | 5.2 | 18.4 |
Interest | - | \u2212 | 1.3 |
Payments | - | \u2212 | (71.1) |
Currency translation differences | (0.9) | (0.9) | |
As at 31\u00a0December 2022 | 29.4 | 102.8 | 117.2 |
The maturity analysis of the discounted lease liabilities is shown below:
(in EUR million) | Year ended 31\u00a0December | |
|---|---|---|
2022 | 2021 | |
Not later than one year | 42.3 | 23.9 |
Later than one year | 74.9 | 97.4 |
Total | 117.2 | 121.4 |
(in EUR million) | Goodwill |
|---|---|
At 1\u00a0January 2021 | |
Cost | 576.0 |
Accumulated impairment | \u2212 |
Carrying amount As at 1\u00a0January 2021 | 576.0 |
Year ended 31\u00a0December 2021 | |
Closing net book amount As at 31\u00a0December 2021 | 576.0 |
At 31\u00a0December 2021 | |
Cost | 576.0 |
Accumulated impairment | \u2212 |
Carrying amount As at 31\u00a0December 2021 | 576.0 |
Year ended 31\u00a0December 2022 | |
Opening net book amount | 576.0 |
Impairment | (2.7) |
Transfer to assets qualified as held-for-sale | (26.6) |
Scope changes | 71.9 |
Closing net book amount As at 31\u00a0December 2022 | 618.6 |
At 31\u00a0December 2022 | |
Cost | 621.3 |
Accumulated impairment | (2.7) |
Carrying amount As at 31\u00a0December 2022 | 618.6 |
(in EUR million) | As at | Addition | Impairment | Transfer to assets-held-for-sale | As at |
|---|---|---|---|---|---|
France | 212.0 | \u2212 | \u2212 | \u2212 | 212.0 |
Germany | 35.2 | \u2212 | \u2212 | \u2212 | 35.2 |
Germany (Fleetpool) | \u2212 | 53.0 | \u2212 | \u2212 | 53.0 |
Italy | 50.2 | \u2212 | \u2212 | \u2212 | 50.2 |
Spain | 109.1 | 18.9 | \u2212 | \u2212 | 128.0 |
UK | 22.6 | \u2212 | \u2212 | \u2212 | 22.6 |
Benelux | 56.9 | \u2212 | \u2212 | \u2212 | 56.9 |
Ireland | 24.1 | \u2212 | \u2212 | (24.1) | \u2212 |
Mediterranean Hub | 2.5 | \u2212 | \u2212 | (2.5) | \u2212 |
Nordics Hub | 18.3 | \u2212 | \u2212 | \u2212 | 18.3 |
South Eastern Europe Hub | 9.5 | \u2212 | \u2212 | \u2212 | 9.5 |
North Eastern Europe Hub | 4.1 | \u2212 | (2.7) | \u2212 | 1.4 |
Central Europe Hub | 31.5 | \u2212 | \u2212 | \u2212 | 31.5 |
Total | 576.0 | 71.9 | (2.7) | (26.6) | 618.6 |
On an annual basis, ALD performs an impairment test for each cash-generating unit (CGU) to which goodwill has been allocated.
An impairment loss is recognised in the income statement if the carrying amount of CGU, including its allocated goodwill, is higher than its recoverable amount. This impairment loss is then allocated first to reduce the carrying amount of goodwill.
The recoverable amount of cash-generating unit is calculated using the most appropriate method, generally the discounted cash flow (DCF). Cash flows were projected on actual financial results and the 5-year business plans, for which Management has assessed and approved the reasonableness of its assumptions by examining the causes of differences between past cash flow projections and actual cash flows.
A discount rate was applied which is built up of a risk-free interest, a market premium multiplied by a market specific beta.
In 2022 the Group booked an impairment of goodwill in North Eastern Europe Hub which relates to the Russian subsidiary that was classified as a disposal group held for sale. Impairment was identified due to the net book value of the disposal group being higher than its fair value less costs to sell. For further details see note\u00a08 \u201cAssets held for sale\u201d. No other impairment of goodwill was identified during the reporting period.
The Group has performed additional \u201cstressed\u201d scenario for the future cashflow projections. The scenario had the following stresses:
Historically, the greatest reduction in the Group\u2019s sales proceeds on a per vehicle basis was just over 7% in the 2009 financial crisis compared to the pre-crisis levels.
Based on the assumptions made by the Group, even with these severe stresses, no need for impairment of goodwill has been identified in 2022. There was no impairment recognised in 2021.
The key assumptions used for value-in-use calculations in 2022 and 2021 are as follows:
Discount Factor 2022 | Discount Factor 2021 | Perpetuity rate (2022 and 2021) | |
|---|---|---|---|
France | 10.0% | 9.4% | 2.0% |
Germany | 10.0% | 9.4% | 2.0% |
Italy | 12.1% | 9.4% | 2.0% |
Spain | 10.6% | 9.4% | 2.0% |
UK | 10.0% | 9.4% | 2.0% |
Fleetpool\u00a0(1) | 10.0% | 2.0% | |
Benelux | 10.0% | 9.4% | 2.0% |
Nordics Hub | 13.6% | 9.4% | 2.0% |
South Eastern Europe Hub | 21.8% | 17.3% | 2.0% |
North Eastern Europe Hub | 10.0% | 9.4% | 2.0% |
Central Europe Hub | 19.2% | 9.6% | 2.0% |
(1) Newly\u00a0consolidated in 2022 |
Climate-related matters \u2013 The Group constantly monitors the latest government legislation in relation to climate related matters. At the current time, no legislation has been passed that will impact the Group. The Group will adjust the key assumptions used in value-in-use calculations and sensitivity to changes in assumptions should a change be required.
(in EUR million) | Year ended 31\u00a0December | |
|---|---|---|
2022 | 2021 | |
Balance as at 1\u00a0January | 7.9 | 10.2 |
Share of results | 1.7 | (2.6) |
Currency translation differences | (0.4) | 0.3 |
Scope changes | (1.2) | \u2212 |
Balance as at 31\u00a0December | 7.9 | 7.9 |
On 1\u00a0October 2022, ALD signed an agreement to acquire the remaining shares in Nedderfeld\u00a095 Immobilien Gmbh & Co.KG, such that it became a 100% subsidiary and has been subconsolidated within the Group\u2019s German subsidiary\u2019s financial statements as at 31\u00a0December 2022. Nedderfeld\u00a095 Immobilien Gmbh & Co. had previously been a 35% associate of ALD accounted for using equity method.
Name | Country of incorporation | Assets | Liabilities\u00a0(1) | Revenues | Profit/(Loss) | % interest held |
|---|---|---|---|---|---|---|
As at 1\u00a0January 2021 | ||||||
ALD Automotive\u00a0SA Morocco | MOROCCO | 53.2 | 44.3 | 22.3 | 1.9 | 35% |
Nedderfeld 95 Immobilien Gmbh & Co. KG | GERMANY | 1.2 | 0.0 | \u2212 | \u2212 | 35% |
Total | 54.4 | 44.3 | 22.3 | 1.9 | ||
As at 31\u00a0December 2021 | ||||||
ALD Automotive\u00a0SA Morocco | MOROCCO | 52.2 | 45.5 | 19.1 | (1.9) | 35% |
Nedderfeld 95 Immobilien Gmbh & Co. KG | GERMANY | 1.2 | 0.0 | \u2212 | \u2212 | 35% |
Total | 53.4 | 45.5 | 19.1 | (1.9) | ||
As at 31\u00a0December 2022 | ||||||
ALD Automotive\u00a0SA Morocco | MOROCCO | 49.3 | \u00a0 41.4 | 18.2 | 1.7 | 35% |
Total | 49.3 | 41.4 | 18.2 | 1.7 | ||
(1) Excluding net equity. |
Derivative instruments are used as part of the overall strategy to manage exposure to market risks primarily associated with fluctuations in interest rates and foreign exchange rates through interest rate and currency swaps respectively. As a matter of policy, derivatives are not used for speculative purposes. Derivative instruments that are measured at fair value on a recurring basis are included in the caption \u201cDerivative financial instruments\u201d in the consolidated balance sheet.
(in EUR million) | Year ended 31\u00a0December 2022 | Year ended 31\u00a0December 2021 | ||
|---|---|---|---|---|
Assets | Liabilities | Assets | Liabilities | |
Interest rate swaps \u2013 cash flow hedge | 61.6 | 0.0 | 3.9 | 0.1 |
Foreign Exchange swaps | 20.8 | 44.5 | 23.5 | 4.9 |
Interest rate swaps (not in hedge) | 46.6 | 44.5 | 11.2 | 6.1 |
Total | 128.9 | 89.0 | 38.6 | 11.2 |
Less non-current portion: | ||||
Interest rate swaps \u2013 cash flow hedge | 61.6 | 0.0 | 3.9 | 0.1 |
Foreign Exchange swaps | 13.1 | 34.3 | 12.4 | 4.7 |
Interest rate swaps (not in hedge) | 44.3 | 43.8 | 4.8 | 5.5 |
Total non-current portion | 118.9 | 78.1 | 21.1 | 10.3 |
Current portion | 10.0 | 10.9 | 17.5 | 0.8 |
The full fair value of a hedging derivative is classified as a non-current asset or liability if the remaining maturity of the hedged item is more than 12\u00a0months and, as a current asset or liability, if the maturity of the hedged item is less than 12\u00a0months.
Foreign exchange swaps are used as hedging instruments for financial debt.
The notional principal amounts of the foreign exchange swaps contracts at 31\u00a0December 2022 were EUR\u00a0491.0\u00a0million (2021: EUR\u00a0361.7\u00a0million).
The hedged, highly probable forecast transactions denominated in foreign currency are expected to occur at various dates during the next 12\u00a0months. Gains and losses recognised in the hedging reserve in equity on forward foreign exchange contracts as of 31\u00a0December 2022 are recognised in the income statement in the period or periods during which the hedged forecast transaction affects the income statement. This is generally within 12\u00a0months of the end of the reporting period.
Interest rate swaps are concluded to cover cash-flows or fair value of its main borrowings.
The notional principal amounts of the outstanding interest rate swap contracts designated as cash flow hedges at 31\u00a0December 2022 were EUR\u00a01,634\u00a0million (2021: EUR\u00a01,962\u00a0million).
At 31\u00a0December 2022, the main floating rates used are EURIBOR and SONIA (UK). Gains and losses recognised in the hedging reserve in equity on interest rate swap contracts as of 31\u00a0December 2022 will be continuously released to the income statement within finance charges until the repayment of the financial debt.
(in EUR million) | Year ended 31\u00a0December | |
|---|---|---|
2022 | 2021 | |
Long-term investments (10\u00a0years) | 200.5 | 279.9 |
Other current financial assets | 331.6 | 380.7 |
Other | 5.6 | 122.6 |
Total | 537.7 | 783.2 |
Long-term investments are a resource resulting from the policy of the Group and of its main shareholder, Societe Generale, to monitor the Group\u2019s interest rate risk through the matching of assets and liabilities by maturity. Available equity is considered as a long term resource which needs to be matched with long-term assets (refer to Interest rate risks management in financial risk management section above). Equity reinvestments are made in long term amortising deposits within Societe Generale in order to remain within the interest rate sensitivity limit set for each entity (variation in the net present value of the future residual fixed rate positions, surplus or deficit, for a 1% parallel increase in the yield curve). These deposits will roll-out in approximately 4\u00a0years\u2019 time and will not be renewed.
In 2021 Bansabadell Renting and Fleetpool subsidiaries were reported as investments under caption \u201cOther\u201d due to the timing of the acquisitions. These subsidiaries are included in the scope of consolidation as at 31\u00a0December 2022. See note\u00a07 for further detail.
(in EUR million) | As at 31\u00a0December | |
|---|---|---|
2022 | 2021 | |
Inventories - gross value | 407.3 | 304.9 |
Valuation allowance | (11.9) | (8.5) |
Inventories net | 395.3 | 296.4 |
Inventories are stated at the lower of cost or net realisable value.
This item includes amounts receivable under lease contracts and trade receivables, after deduction of allowances for debtor risks, where necessary.
(in EUR million) | As at 31\u00a0December | |
|---|---|---|
2022 | 2021 | |
Amounts receivable under finance lease contracts | 727.2 | 790.3 |
Provision for impairment of Finance lease receivables | (11.6) | (13.0) |
Of which | ||
| (6.0) | (8.0) |
| (4.3) | (4.0) |
| (1.3) | (1.0) |
Amounts receivable from credit institutions and related parties\u00a0(1) | 1,256.8 | 240.7 |
Trade receivables | 1,379.8 | 1,012.0 |
Provision for impairment of trade receivables | (174.6) | (171.8) |
Of which | ||
| (151.7) | (152.0) |
| (13.4) | (11.6) |
| (9.5) | (8.2) |
Provision for customer disputes | (19.6) | (30.6) |
Total receivables | 3,157.9 | 1,827.6 |
(1) \u00a0\u00a0Mainly towards Societe Generale \u2013 no impairment provision has been calculated on these receivables due to their inter-group nature. Increase in these receivables represents cash generated from the share rights issue which has been placed on a short-term deposit with Societe Generale. |
The fair value of receivables is equivalent to the carrying value.
The below table presents analysis of receivables which are in and out of scope of the simplified approach of IFRS\u00a09 for sound customers.
ALD considers some specific receivable types as out of scope. These receivables have zero or almost no history of credit risk and include receivables on used car sales and insurance, which have been reviewed for credit losses and found to be of a different risk nature to the Group\u2019s main lease receivables.
(in EUR million) | 31\u00a0December 2022 | 31\u00a0December 2021 | ||||
|---|---|---|---|---|---|---|
In scope | Out of scope | Total | In scope | Out of scope | Total | |
Amounts receivable under finance lease contracts | 714.3\u00a0(1) | 12.8\u00a0(2) | 727.2 | 771.9\u00a0(1) | 18.5\u00a0(2) | 790.3 |
Provision for impairment of receivables under finance lease contracts | (4.3) | (6.0) | (10.3) | (4.0) | (8.0) | (12.0) |
Provision for impairment of receivables under finance lease contracts \u2013 forward looking | (1.3) | (1.3) | (1.0) | (1.0) | ||
Amounts receivable from credit institutions | 1,256.8 | 1,256.8 | 240.7 | 240.7 | ||
Trade receivables | 651.5 | 728.3\u00a0(2) | 1,379.8 | 598.9 | 413.2\u00a0(2) | 1,012.0 |
Provision for impairment of trade receivables | (13.4) | (151.7) | (165.2) | (11.6) | (152.1) | (163.6) |
Provision for impairment of trade receivables \u2013 forward looking | (9.5) | \u2212 | (9.5) | (8.2) | \u2212 | (8.2) |
Provision for customer disputes | (19.6) | (19.6) | (30.6) | (30.6) | ||
Total receivables | 1,337.4 | 1,820.5 | 3,157.9 | 1,346.0 | 481.6 | 1,827.6 |
(1) Including remaining capital. (2) These amounts represent doubtful and non-lease receivables. |
Based on the receivables which are in the scope, the loss allowance as at 31\u00a0December 2022 and 31\u00a0December 2021 was determined as follows for both trade and finance lease receivables:
(in EUR million) | Not past due | 0 -30\u00a0days past due | 31-60\u00a0days past due | 61-90\u00a0days past due | >\u00a090\u00a0days past due | Total |
|---|---|---|---|---|---|---|
Loss rate | 1% | 4% | 8% | 16% | 22% | |
Gross carrying amount of receivables in IFRS\u00a09 scope | 1,187.7 | 120.3 | 30.6 | 5.6 | 21.6 | 1,365.8 |
Loss Allowance | (16.2) | (4.4) | (2.3) | (0.9) | (4.7) | (28.5) |
Net carrying amount of receivables in IFRS\u00a09 scope | 1,171.6 | 115.9 | 28.3 | 4.7 | 16.9 | 1,337.4 |
(in EUR million) | Not past due | 0 -30\u00a0days past due | 31-60\u00a0days past due | 61-90\u00a0days past due | >\u00a090\u00a0days past due | Total |
|---|---|---|---|---|---|---|
Loss rate | 1% | 3% | 8% | 12% | 14% | |
Gross carrying amount of receivables in IFRS\u00a09 scope | 1,194.0 | 106.1 | 29.5 | 8.1 | 33.0 | 1,370.7 |
Loss Allowance | (13.3) | (3.5) | (2.3) | (1.0) | (4.6) | (24.7) |
Net carrying amount of receivables in IFRS\u00a09 scope | 1,180.7 | 102.7 | 27.2 | 7.1 | 28.4 | 1,346.0 |
The amounts presented in the tables below include loans and finance receivables by Basel\u00a0II portfolio that are not past due and that are past due but not individually impaired.
(in EUR million) | Year ended 31\u00a0December 2022 | |||||
|---|---|---|---|---|---|---|
Loans and receivables to customers | ||||||
Banks | Corporates | Small and medium enterprises | Credit to individuals | Very small companies | Total | |
Amounts not past due | 7.1 | 385.0 | 30.9 | 55.4 | 170.8 | 649.2 |
Amounts including past due between 1\u00a0to 30\u00a0days | 0.3 | 16.2 | 13.0 | 0.1 | 5.0 | 34.7 |
Amounts including past due between 31\u00a0to 60\u00a0days | 0.0 | 1.3 | 1.8 | 0.0 | 1.5 | 4.6 |
Amounts including past due between 61\u00a0to 90\u00a0days | 0.1 | 0.8 | 2.1 | 0.0 | 0.5 | 3.5 |
Amounts including past due between 91\u00a0to 180\u00a0days | 0.3 | 6.6 | 1.1 | 0.1 | 3.4 | 11.4 |
Amounts including past due between 181\u00a0days to 1\u00a0year | 0.1 | 0.3 | 0.5 | 0.0 | 2.1 | 3.0 |
Amounts including past due over 1\u00a0year | 0.2 | 5.0 | 0.7 | 0.0 | 2.0 | 7.9 |
Total | 8.1 | 415.1 | 50.1 | 55.8 | 185.3 | 714.3 |
(in EUR million) | Year ended 31\u00a0December 2021 | |||||
|---|---|---|---|---|---|---|
Loans and receivables to customers | ||||||
Banks | Corporates | Small and medium enterprises | Credit to individuals | Very small companies | Total | |
Amounts not past due | 9.0 | 371.1 | 65.4 | 82.2 | 192.4 | 720.1 |
Amounts including past due between 1\u00a0to 30\u00a0days | 0.3 | 5.1 | 10.8 | 0.2 | 5.1 | 21.5 |
Amounts including past due between 31\u00a0to 60\u00a0days | 0.0 | 5.3 | 2.4 | 0.0 | 1.6 | 9.3 |
Amounts including past due between 61\u00a0to 90\u00a0days | \u2212 | 0.1 | 0.5 | 0.0 | 0.8 | 1.5 |
Amounts including past due between 91\u00a0to 180\u00a0days | 0.5 | 7.3 | 0.1 | 0.2 | 2.8 | 10.9 |
Amounts including past due between 181\u00a0days to 1\u00a0year | 0.0 | 4.5 | 0.5 | 0.0 | 2.3 | 7.3 |
Amounts including past due over 1\u00a0year | 0.3 | 0.2 | 0.0 | 0.7 | 1.2 | |
Total | 9.7 | 393.8 | 79.9 | 82.8 | 205.7 | 771.9 |
The decrease in amounts not past due is related to fleet decrease.
A full description of the impairment policy is contained in the Credit Risk Measurement section of the Note 4.1 Financial risk factors.
The movement in impairment of trade lease receivables is as follows:
(in EUR million) | Note | As at 31\u00a0December | |
|---|---|---|---|
2022 | 2021 | ||
Balance at 1\u00a0January | (171.8) | (178.1) | |
Net Impairment charges | 10 | (46.1) | (24.8) |
Receivables written off | 49.3 | 33.1 | |
Movement in Finance Lease Provision | (1.4) | (1.2) | |
Transfer of disposal groups to assets held for sale | 5.6 | \u2212 | |
Scope changes | (10.6) | \u2212 | |
Other and currency translation differences | 0.3 | (0.7) | |
Balance at 31\u00a0December | (174.6) | (171.8) |
The maturity analysis is as follows:
(in EUR million) | As at 31\u00a0December | |
|---|---|---|
2022 | 2021 | |
Trade receivables not overdue | 968.0 | 670.2 |
Past due up to 90\u00a0days | 226.4 | 144.1 |
Past due between 90-180\u00a0days | 27.6 | 23.9 |
Past due over 180\u00a0days | 157.8 | 173.8 |
Total | 1,379.8 | 1,012.0 |
The improvement in the past due over 180\u00a0days maturity profile in 2022 is due to higher focus on collection procedures, outsourcing of payment collections and direct debit payments implemented by Group entities.
(in EUR million) | As at 31\u00a0December | |
|---|---|---|
2022 | 2021 | |
VAT and other taxes | 388.1 | 276.8 |
Prepaid motor vehicle tax and insurance premiums | 117.4 | 95.4 |
Reclaimable damages | 10.1 | 8.2 |
Prepaid expenses | 424.4 | 346.6 |
Other | 414.8 | 307.6 |
Other receivables and prepayments | 1,354.7 | 1,034.6 |
The majority of the other receivables and prepayments have a maturity of less than one year.
The other receivables balance includes EUR\u00a0249.8\u00a0million (2021: EUR\u00a0193.3\u00a0million) relating to rebates receivable from dealers and manufacturers.
(in EUR million) | As at 31\u00a0December | |
|---|---|---|
2022 | 2021 | |
Cash at bank and on hand | 195.9 | 112.2 |
Short-term bank deposits | 57.3 | 40.5 |
Cash at bank and short-term bank deposits attributable to disposal groups held for sale | 92.8 | \u2212 |
Cash and cash equivalents excl. bank overdrafts | 346.0 | 152.7 |
Bank overdrafts | (129.5) | (228.4) |
Cash and cash equivalents, net of bank overdrafts | 216.4 | (75.7) |
As ALD operates its own re-insurance program the cash balance includes funds required for this business.
The Company\u2019s financial assets and liabilities are categorised as follows:
The table below summarises the Group\u2019s financial assets and financial liabilities, of which the derivatives and corporate bonds are measured at fair value and the other financial assets and other financial liabilities are measured at amortised cost on the balance sheet as at 31\u00a0December 2022. For all other financial assets and liabilities, the carrying amount is a reasonable approximation of fair value.
As at 31\u00a0December 2022 (in EUR million) | Fair Value | |||
|---|---|---|---|---|
Carrying Value | Level\u00a01 | Level\u00a02 | Total | |
Financial assets measured at fair value | ||||
Derivative financial instruments in hedge | 82.3 | 82.3 | 82.3 | |
Derivative financial instruments not in hedge | 46.6 | 46.6 | 46.6 | |
Other current financial assets | 237.8 | 237.8 | 237.8 | |
Financial assets not measured at fair value | ||||
Receivables from clients and from financial institutions | 3,157.9 | 3,157.9 | 3,157.9 | |
Investment in associates | 7.9 | |||
Other non current and current financial assets | 299.9 | |||
Cash and cash equivalents | 253.1 | |||
Total | 4,085.5 | 237.8 | 3,286.8 | 3,524.6 |
As at 31\u00a0December 2021 (in EUR million) | Fair Value | |||
|---|---|---|---|---|
Carrying Value | Level\u00a01 | Level\u00a02 | Total | |
Financial assets measured at fair value | ||||
Derivative financial instruments in hedge | 27.4 | 27.4 | 27.4 | |
Derivative financial instruments not in hedge | 11.2 | 11.2 | 11.2 | |
Other current financial assets | 260.3 | 260.3 | 260.3 | |
Financial assets not measured at fair value | ||||
Receivables from clients and from financial institutions | 1,827.6 | 1,827.6 | 1,827.6 | |
Investment in associates | 7.9 | |||
Other non current and current financial assets | 522.9 | |||
Cash and cash equivalents | 152.7 | |||
Total | 2,810.0 | 260.3 | 1,866.2 | 2,126.6 |
As at 31\u00a0December 2022 (in EUR million) | Fair Value | |||
|---|---|---|---|---|
Carrying Value | Level\u00a01 | Level\u00a02 | Total | |
Financial liabilities measured at fair value | ||||
Derivative financial instruments in hedge | 44.5 | 44.5 | 44.5 | |
Derivative financial instruments not in hedge | 44.5 | 44.5 | 44.5 | |
Financial liabilities not measured at fair value | ||||
Bank borrowings | 14,571.1 | 14,571.1 | 14,571.1 | |
Bonds issued | 5,303.4 | 3,460.9 | 1,727.1 | 5,188.0 |
Trade payables | 1,105.9 | 1,105.9 | 1,105.9 | |
Total | 21,069.5 | 3,460.9 | 17,493.2 | 20,954.1 |
As at 31\u00a0December 2021 (in EUR million) | Fair Value | |||
|---|---|---|---|---|
Carrying Value | Level\u00a01 | Level\u00a02 | Total | |
Financial liabilities measured at fair value | ||||
Derivative financial instruments in hedge | 5.0 | 5.0 | 5.0 | |
Derivative financial instruments not in hedge | 6.1 | 6.1 | 6.1 | |
Financial liabilities not measured at fair value | ||||
Bank borrowings | 13,848.6 | 13,848.6 | 13,848.6 | |
Bonds issued | 4,668.7 | 2,720.0 | 1,963.6 | 4,683.6 |
Trade payables | 828.7 | 828.7 | 828.7 | |
Total | 19,357.2 | 2,720.0 | 16,652.1 | 19,372.1 |
There were no transfers between levels\u00a01 and\u00a02 for recurring fair value measurements during the year.
Changes in liabilities arising from financing activities are shown in the table below.
(in EUR million) | Balance as at 1\u00a0January 2022 | Financing cash flows | Foreign exchange adjustment | Scope changes | Other non-cash movements | Balance as at 31\u00a0December 2022 |
|---|---|---|---|---|---|---|
Overdraft | 228.4 | (97.3) | (1.6) | \u2212 | \u2212 | 129.5 |
Borrowings from financial institutions excl. overdraft | 13,620.2 | 652.6 | (65.1) | 291.9 | (58.0) | 14,441.6 |
Bonds and notes issued | 4,668.7 | 639.4 | (25.9) | \u2212 | 21.2 | 5,303.4 |
Lease liabilities | 121.4 | (71.1) | (0.9) | 19.7 | 48.1 | 117.2 |
(in EUR million) | Balance as at 1\u00a0January 2021 | Financing cash flows | Foreign exchange adjustment | Scope changes | Other non-cash movements | Balance as at 31\u00a0December 2021 |
|---|---|---|---|---|---|---|
Overdraft | 315.7 | (90.8) | 3.5 | \u2212 | \u2212 | 228.4 |
Borrowings from financial institutions excl. overdraft | 12,418.4 | 1,102.1 | 101.8 | \u2212 | (2.1) | 13,620.2 |
Bonds and notes issued | 4,911.6 | (275.0) | 32.2 | \u2212 | (0.1) | 4,668.7 |
Lease liabilities | 132.7 | (26.9) | 0.8 | \u2212 | 14.8 | 121.4 |
On 16\u00a0December 2022 ALD successfully completed its capital increase in order to finance cash component of the LeasePlan acquisition . For further information, see note\u00a02.6 \u201cRights Issue\u201d.
At 31\u00a0December 2022, the authorised capital amounted to EUR\u00a0848.6\u00a0million (2021: EUR\u00a0606.2\u00a0million), divided into 565,745,096\u00a0ordinary shares with a nominal value of EUR\u00a01.5 each.
At 31\u00a0December 2022, share premium amounted to EUR\u00a01,328\u00a0million (2021: EUR\u00a0367\u00a0million).
All shares issued by ALD\u00a0SA were fully paid. See note\u00a035 for further information.
The holders of the shares are entitled to receive dividend as declared at Annual General Meetings and are entitled to vote per share at meetings of the Company.
Following the Combined General Meeting held in 2021, 2020, 2019 and 2018, ALD\u00a0SA was authorised to purchase its own shares for the purposes of attributing, covering and paying off any scheme for the allocation of free shares, employee savings scheme and any other form of allocation to employees and executive directors of the Company or of companies related to it under the conditions set out in applicable legislative and regulatory provisions, in particular in terms of sharing in the benefits of the Company\u2019s expansion, the allocation of free shares, all schemes for employee shareholding and to carry out all hedging operations relating to the said employee shareholding schemes.
Number of shares | EUR million | |
|---|---|---|
Opening balance 1\u00a0January 2021 | 1,062,905 | (12.9) |
Acquisition of treasury shares employee share schemes | 214,044 | (2.9) |
Employee share scheme issue | (261,610) | 2.9 |
Liquidity contracts | (14,310) | (0.3) |
Balance at 31\u00a0December 2021 | 1,001,029 | (13.2) |
Opening balance 1\u00a0January 2022 | 1,001,029 | (13.2) |
Acquisition of treasury shares employee share schemes | 400,705 | (5.4) |
Employee share scheme issue | (240,996) | 2.4 |
Liquidity contracts | 13,164 | (0.0) |
Balance at 31\u00a0December 2022 | 1,173,902 | (16.1) |
Movements in retained earnings and other reserves are presented in the Statement of changes in equity.
In 2022 three new equity-settled share-based payment plans were approved by the ALD Board of Directors. The plans are designed to provide long-term incentives for selected employees across the Group to deliver long-term shareholder returns. Under the plans, participants are granted free shares in the parent company ALD\u00a0SA which will only vest if certain performance and service conditions are met. Participation in the plan is at the Board\u2019s discretion and no individual has a contractual right to participate in the plan or to receive any guaranteed benefits. Shares are granted under the plans for no consideration and carry no dividend or voting rights. Prior to approval of the plans ALD\u00a0SA did not hold any shares bound to be distributed to own employees, therefore ALD\u00a0SA can either issue new shares or acquire its own shares on the market between the grant date and vesting date in order to settle the obligation to its employees.
Plan\u00a09 | Plan\u00a010.A | Plan\u00a010.B | |
|---|---|---|---|
Date of Board Meeting | 29\u00a0March 2022 | 29\u00a0March 2022 | 29\u00a0March 2022 |
Total number of shares granted | 409,602 | 12,720 | 12,723 |
Vesting date | 31\u00a0March 2025 | 31\u00a0March 2025 | 31\u00a0March 2026 |
Holding period end date | no holding period | 30\u00a0September 2025 | 30\u00a0September 2026 |
Fair value (in EUR) | 9.5 | 9.5 | 9.5 |
Number of employees in the plan | 374 | 6 | 6 |
Plan\u00a07 | Plan\u00a08.A | Plan\u00a08.B | |
|---|---|---|---|
Date of Board Meeting | 26\u00a0March 2021 | 26\u00a0March 2021 | 26\u00a0March 2021 |
Total number of shares granted | 264,223 | 9,913 | 9,914 |
Vesting date | 31\u00a0March 2024 | 31\u00a0March 2023 | 31\u00a0March 2024 |
Holding period end date | no holding period | 30\u00a0September 2023 | 30\u00a0September 2024 |
Fair value (in EUR) | 10.72 | 11.44 | 10.72 |
Number of employees in the plan | 280 | 5 | 5 |
Plan\u00a05 | Plan\u00a06.A | Plan\u00a06.B | |
|---|---|---|---|
Date of Board Meeting | 27\u00a0March 2020 | 27\u00a0March 2020 | 27\u00a0March 2020 |
Total number of shares granted | 353,281 | 17,316 | 17,319 |
Vesting date | 31\u00a0March 2023 | 31\u00a0March 2022 | 31\u00a0March 2023 |
Holding period end date | no holding period | 30\u00a0September 2022 | 30\u00a0September 2023 |
Fair value (in EUR) | 7.25 | 7.75 | 7.25 |
Number of employees in the plan | 264 | 5 | 5 |
Plan\u00a03 | Plan\u00a04.A | Plan\u00a04.B | |
|---|---|---|---|
Date of Board Meeting | 28\u00a0March 2019 | 28\u00a0March 2019 | 28\u00a0March 2019 |
Total number of shares granted | 235,475 | 16,614 | 16,617 |
Vesting date | 31\u00a0March 2022 | 31\u00a0March 2021 | 31\u00a0March 2022 |
Holding period end date | no holding period | 30\u00a0September 2021 | 30\u00a0September 2022 |
Fair value (in EUR) | 10.16 | 10.16 | 10.16 |
Number of employees in the plan | 229 | 6 | 6 |
Vesting conditions are based on ALD\u2019s profitability, as measured by the average Group Net income over the 4, 3\u00a0or 2\u00a0years of the vesting period. The ALD Group Net income corresponds to the published ALD Group Net income.
At 31\u00a0December 2022, 600\u00a0employees (524\u00a0employees as at 31\u00a0December 2021) benefit from the long-term incentives plans.
The following table shows the shares granted and outstanding at the beginning and end of the reporting period.
Number of shares | |
|---|---|
As at 1\u00a0January 2021 | 871,563 |
Granted during the year | 284,050 |
Vested during the year | (261,610) |
Forfeited during the year | (27,030) |
As at 31\u00a0December 2021 | 866,973 |
As at 1\u00a0January 2022 | 866,973 |
Granted during the year | 435,045 |
Vested during the year | (240,996) |
Forfeited during the year | (32,255) |
As at 31\u00a0December 2022 | 1,028,767 |
For equity settled share-based payments, the fair value of these instruments, measured at the grant date, is spread over the vesting period and recorded in shareholders\u2019 equity under Retained earnings and other reserves. At each accounting date, the number of these instruments is revised in order to take into account vesting conditions and adjust the overall cost of the plan as originally determined. Expenses recognised under Staff expenses from the start of the plan are then adjusted accordingly.
(in EUR million) | 31\u00a0December 2022 | 31\u00a0December 2021 |
|---|---|---|
Net expenses from free share ALD plans | (2.9) | (2.6) |
(in EUR million) | As at 31\u00a0December | |
|---|---|---|
2022 | 2021 | |
Bank borrowings | 10,613.1 | 9,407.1 |
Non-current borrowings from financial institutions | 10,613.1 | 9,407.1 |
Bank overdrafts | 129.5 | 228.4 |
Bank borrowings | 3,828.5 | 4,213.1 |
Current borrowings from financial institutions | 3,958.0 | 4,441.5 |
Total borrowings from financial institutions | 14,571.1 | 13,848.6 |
Bonds and notes-originated from securitisation transactions | 1,123.4 | 1,628.8 |
Bonds and notes-originated from EMTN programme | 2,450.0 | 1,600.0 |
Other non-current bonds issued | \u2212 | \u2212 |
Non-current bonds and notes issued | 3,573.4 | 3,228.8 |
Bonds and notes-originated from securitisation transactions | 603.7 | 334.8 |
Bonds and notes-originated from EMTN programme | 1,126.3 | 1,105.1 |
Other current bonds issued | \u2212 | \u2212 |
Current bonds and notes issued | 1,729.9 | 1,439.9 |
Total bonds and notes issued | 5,303.4 | 4,668.7 |
Total borrowings from financial institutions and bonds | 19,874.5 | 18,517.3 |
There are no non-cash items from all outstanding sources of borrowings.
(in EUR million) | As at 31\u00a0December | |
|---|---|---|
2022 | 2021 | |
Less than 1\u00a0year | 5,688.0 | 5,881.4 |
1-5\u00a0years | 13,985.5 | 12,581.1 |
Over 5\u00a0years | 201.0 | 54.8 |
Total borrowings and bonds | 19,874.5 | 18,517.3 |
The carrying amounts of the Group\u2019s borrowings are denominated in the following currencies:
(in EUR million) | As at 31\u00a0December | |
|---|---|---|
2022 | 2021 | |
Euro | 14,689.2 | 13,684.7 |
UK Pound | 2,619.7 | 2,543.3 |
Danish Krone | 455.8 | 376.9 |
Swedish Kronor | 349.7 | 388.5 |
Other currencies | 1,760.0 | 1,523.9 |
Total borrowings and bonds | 19,874.5 | 18,517.3 |
Local external banks and third parties provide 31.0% of total funding, representing EUR\u00a06,164\u00a0million (EUR\u00a06,220\u00a0million including loans granted to disposal groups held for sale) at 31\u00a0December 2022 (29.1% and EUR\u00a05,392\u00a0million at 31\u00a0December 2021).
An amount of EUR\u00a0860\u00a0million or 4.3% of total funding (EUR\u00a0917\u00a0million including loans granted to disposal groups held for sale) is provided by external banks. The residual external funding (EUR\u00a05,303\u00a0million) has been raised through asset-backed securitisations and unsecured bonds.
Included within this amount is loan of EUR\u00a0250\u00a0million granted by the European Investment Bank in September\u00a02019. This will enable the Group to develop its range of hybrid and electric vehicles across the EU, particularly in France, Germany, Italy, Spain, Belgium and the Netherlands.
In June\u00a02015 a private securitisation deal was set up in Belgium for EUR\u00a0300\u00a0million. This deal was renewed and increased by EUR\u00a060\u00a0million in June\u00a02018. In June\u00a02020 this EUR\u00a0360\u00a0million deal was renewed for two additional years. In June\u00a02022, this deal was renewed for 3\u00a0additional years and increased by EUR\u00a040\u00a0million.
The private securitisation deal set up in December\u00a02013 in the Netherlands was renewed for EUR\u00a0236\u00a0million in December\u00a02020 for 6\u00a0additional months. In June\u00a02021 this deal was renewed and increased by EUR\u00a0164\u00a0million (reaching an outstanding amount EUR\u00a0400\u00a0million) for two additional years.
A private securitisation deal was set up in the UK in December\u00a02018 for GBP\u00a0414\u00a0million with a revolving period of 1\u00a0year. The deal has been renewed in December\u00a02019 for two additional years and again in December\u00a02021 for a 14\u00a0month period.
A public securitisation deal has been set up in Germany in October\u00a02020 for EUR\u00a0350\u00a0million with a revolving period of 1\u00a0year. The transaction entered the amortisation phase in November\u00a02021.
A public securitisation deal has been set up in France in October\u00a02021 for EUR\u00a0400\u00a0million with a revolving period of 1\u00a0year.
The following debt securities are currently issued:
Programme and special purpose company | Originator | Country | Currency | Amount\u00a0(1) |
|---|---|---|---|---|
ALD Funding Limited | ALD | UK | GBP | 414\u00a0million |
Axus Finance NL B | ALD | Netherlands | EUR | 400\u00a0million |
Axus Finance SPRL | ALD | Belgium | EUR | 400\u00a0million |
Red & Black Auto Lease Germany\u00a0SA, compartment\u00a03 | ALD | Germany | EUR | 108.3\u00a0million |
FCT Red & Black Auto Lease France\u00a01 | ALD | France | EUR | 351.3\u00a0million |
(1) Transaction outstanding amount at 31\u00a0December 2022. |
The maturity of the asset-backed securitisation programmes is as follows:
(in EUR million) | 31\u00a0December 2022 | 31\u00a0December 2021 |
|---|---|---|
Less than 1\u00a0year | 603.7 | 334.8 |
1-5\u00a0years | 1,079.2 | 1,628.8 |
Over 5\u00a0years | 44.2 | \u2212 |
Total securitisation programme | 1,727.1 | 1,963.6 |
Securitisation programmes involve the sale of future lease instalment receivables and, in some cases, related residual value receivables originated by various ALD subsidiaries to special purpose companies which are included in the consolidated financial statements of the Group. ALD continues to retain substantially all of the risks and rewards of the lease receivables as in all asset-backed securitisation programmes they subscribed to the first class of notes which will result in ALD bearing any realised losses. Therefore, ALD continues to recognise the transferred lease assets in their entirety.
(in EUR million) | Receivables from clients | Cash collateral deposited | Total |
|---|---|---|---|
At 31\u00a0December 2022 | |||
Carrying amount of transferred assets | 2,182.6 | 23.3 | 2,205.9 |
Carrying amount of associated liabilities\u00a0(1) | (1,727.1) | ||
Net carrying amount position | 478.8 | ||
Fair value of transferred assets | 2,334.3 | 23.3 | 2,357.6 |
Fair value of associated liabilities\u00a0(1) | (1,727.1) | ||
Net fair value position as at 31\u00a0December 2022 | 630.5 | ||
At 31\u00a0December 2021 | |||
Carrying amount of transferred assets | 2,489.6 | 36.0 | 2,525.6 |
Carrying amount of associated liabilities\u00a0(1) | (1,963.6) | ||
Net carrying amount position | 562.0 | ||
Fair value of transferred assets | 2,543.4 | 36.0 | 2,579.4 |
Fair value of associated liabilities\u00a0(1) | (1,963.6) | ||
Net fair value position as at 31\u00a0December 2021 | 615.8 | ||
(1) Bonds and notes originated from asset-backed securitisation transactions. |
Within this programme, the Group has the following outstanding bonds issued as at 31\u00a0December 2021:
Following the external funding raised in recent years, the funding raised through Societe Generale has remained stable at 69.0% as at 31\u00a0December 2022.
Most of the funding provided by Societe Generale is granted through Societe Generale Luxembourg and Societe Generale Paris. SG Luxembourg and SG Paris funds ALD Group Central Treasury which then grants loans in different currencies to 27\u00a0ALD subsidiaries as well as to the holding companies. The total amount of loans granted by SG Luxembourg and SG Paris amounted to EUR\u00a012,158\u00a0million at 31\u00a0December 2022 (EUR\u00a012,165\u00a0million including loans granted to disposal groups held for sale) for an average maturity of 2.01\u00a0years.
The remaining SG funding is provided either by local SG branches or subsidiaries. As at 31\u00a0December 2022 the total amount of loans granted to the Group by Societe Generale, including local branches and subsidiaries was EUR\u00a013,711\u00a0million (EUR\u00a013,718\u00a0million including loans granted to disposal groups held for sale).
At 31\u00a0December 2022 the Group has undrawn borrowing facilities of EUR\u00a02.6\u00a0billion (EUR\u00a02.4\u00a0billion at 31\u00a0December 2021) of which EUR\u00a0506\u00a0million are committed undrawn borrowing facilities. Providing there is a market liquidity, these facilities are readily available to ALD entities.
A first demand guarantee has been granted to an English Financial institution for an amount of GBP\u00a0108\u00a0million on behalf of ALD Automotive UK, under the conditions negotiated in the frame of the distribution agreement concluded with this financial institution.
A first demand guarantee has been granted to ING Luxembourg for an amount of EUR\u00a052\u00a0million on behalf of Axus Luxembourg\u00a0SA, under the condition negotiated in the frame of the distribution agreement concluded with this financial institution.
A first demand guarantee has been granted to a landlord for an amount of EUR\u00a06.5\u00a0million on behalf of ALD Re DAC Ireland, under the conditions negotiated in the frame of the premises rental agreement concluded with this landlord.
Defined contribution plans limit ALD\u2019s liability to contributions paid to the plan but do not commit ALD to a specific level of future benefits.
Main defined contribution plans provided to employees of the Group are located in France. They include state pension plans and other national pension plans such as ARRCO and AGIRC, as well as pension schemes put in place by some entities of the Group for which the only commitment is to pay annual contributions (PERCO).
Defined benefit plans define an amount of pension benefit that an employee will receive on retirement, usually dependent on one or more factors such as age, years of service and compensation.
Main defined benefit plans provided to employees of the Group are located in France, Belgium, Germany, Italy and Switzerland.
The amount recognised in the balance sheet is determined as follows:
(in EUR million) | 31\u00a0December 2022 | 31\u00a0December 2021 |
|---|---|---|
A \u2013 Present value of defined benefit obligations | 17.3 | 21.0 |
B \u2013 Fair Value of plan assets | (13.8) | (14.6) |
C \u2013 Fair value of separate assets | \u2212 | \u2212 |
D \u2013 Change in asset ceiling | \u2212 | \u2212 |
A +\u00a0B -\u00a0C +\u00a0D =\u00a0Net balance recorded in the balance sheet | 3.6 | 6.4 |
Post-employment benefit plans include annuity payments, end-of-career indemnities as well as mixed plans (cash balance). Annuity payments are added to pension plans paid by state and mandatory benefit plans.
The present values of defined benefit obligations have been valued by independent qualified actuaries.
(in EUR million) | 2022 | 2021 |
|---|---|---|
Current service cost including social security contributions | 0.6 | 1.0 |
Employee contributions | (0.2) | (0.1) |
Past service cost/curtailments | \u2212 | \u2212 |
Transfer via the expense | \u2212 | \u2212 |
Net interest | 0.0 | \u2212 |
Components recognised in income statement | 0.5 | 0.9 |
Actuarial gains and losses due to assets\u00a0(1) | 1.6 | (1.2) |
Actuarial gains and losses due to changes in demographic assumptions | \u2212 | (0.1) |
Actuarial gains and losses due to changes in economical and financial assumptions | (6.3) | (2.5) |
Actuarial gains and losses due to experience | 1.9 | (1.7) |
Change in asset ceiling | \u2212 | \u2212 |
Components recognised in unrealised or deferred gains and losses | (2.7) | (5.5) |
Total components of the cost of the defined benefits | (2.2) | (4.6) |
(1) Actuarial gains and losses due to assets from which the actuarial gains and losses due to assets included in the net interest cost is deducted. |
Changes in the present value of defined benefit obligations:
(in EUR million) | 2022 | 2021 |
|---|---|---|
Balance at 1\u00a0January | 21.0 | 24.7 |
Current service cost including social security contributions | 0.6 | 1.0 |
Employee contributions | \u2212 | \u2212 |
Past service cost/curtailments | \u2212 | \u2212 |
Settlement | \u2212 | \u2212 |
Net interest | 0.2 | 0.1 |
Actuarial gains and losses due to changes in demographic assumptions | \u2212 | (0.1) |
Actuarial gains and losses due to changes in economical and financial assumptions | (6.3) | (2.5) |
Actuarial gains and losses due to experience | 1.9 | (1.7) |
Foreign exchange adjustment | \u2212 | 0.1 |
Benefit payments | (0.2) | (1.0) |
Acquisition/(Sale) of subsidiaries | \u2212 | \u2212 |
Transfers and others | 0.1 | 0.5 |
Balance at 31\u00a0December | 17.3 | 21.0 |
Changes in fair value of plan assets and separate assets:
(in EUR million) | 2022 | 2021 |
|---|---|---|
Balance at 1\u00a0January | 14.6 | 13.5 |
Expected return on plan assets | 0.1 | 0.0 |
Expected return on separate assets | \u2212 | \u2212 |
Actuarial gains and losses due to assets | (1.6) | 1.2 |
Foreign exchange adjustment | \u2212 | 0.1 |
Employee contributions | 0.2 | 0.2 |
Employer contributions to plan assets | 0.6 | 0.5 |
Benefit payments | (0.1) | (0.8) |
Acquisition/(Sale) of subsidiaries | \u2212 | \u2212 |
Transfers and others | \u2212 | \u2212 |
Balance at 31\u00a0December | 13.8 | 14.6 |
The breakdown of the fair value of plan assets is as follows: 34% bonds, 41% equities, 4% money market instruments and 21% others.
Employer contributions to be paid to post-employment defined benefit plans for 2023 are estimated at EUR\u00a00.7\u00a0million.
The actual returns on plan and separate assets were:
(in EUR million) | 2022 | 2021 |
|---|---|---|
Plan assets | (1.5) | 1.2 |
Separate assets | \u2212 | \u2212 |
The assumptions on return on assets are presented in the following section.
The significant actuarial assumptions used to determine the pension benefit obligation amount are as follows:
2022 | 2021 | |
|---|---|---|
Discount rate | ||
Europe | 3.5% | 0.8% |
Long-term inflation | ||
Europe | 2.3% | 2.0% |
Future salary increase | ||
Europe | 1.5% | 1.4% |
Average remaining working lifetime of employees (in years) | ||
Europe | 12.3 | 14.1 |
Duration (in years) | ||
Europe | 9.5 | 11.7 |
The assumptions by geographical area are averages weighted by the present value of the liabilities (DBO).
The yield curves used to discount the liabilities are corporate AA yield curves (source: Merrill Lynch) observed in the end of October for GBP and EUR, and corrected at the end of December if the decrease in discount rates had a significant impact.
Inflation rates used are the long-term targets of the central banks of the monetary areas above.
The average remaining working lifetime of employees is calculated taking into account withdrawal assumptions.
The assumptions described above have been applied on post-employment benefit plans.
(Percentage of item measured) | 31\u00a0December 2022 | 31\u00a0December 2021 |
|---|---|---|
Variation of +0.5% in discount rate | ||
Impact on the present value of defined benefit obligations at 31\u00a0December N | -5.7% | -6.7% |
Variation of +0.5% in long term inflation | ||
Impact on the present value of defined benefit obligations at 31\u00a0December N | 2.3% | 3.1% |
Variation of +0.5% in future salary increases | ||
Impact on the present value of defined benefit obligations at 31\u00a0December N | 9.3% | 7.1% |
The disclosed sensitivities are averages of the variations weighted by the present value of defined benefit obligations.
(in EUR million) | 2022 | 2021 |
|---|---|---|
N+1 | 0.4 | 0.4 |
N+2 | 0.5 | 0.4 |
N+3 | 1.2 | 0.4 |
N+4 | 0.8 | 1.1 |
N+5 | 0.9 | 0.8 |
N+6 to N+10 | 8.3 | 5.8 |
Some entities of ALD may award their employees other long-term benefits, like long-term deferred variable remunerations, time saving accounts (French Term) Comptes Epargne Temps or long service awards. They are different from post-employment benefits and termination benefits, which are not fully due within twelve months following the financial year during which the services are rendered by the employees.
The net balance of other long-term benefits is EUR\u00a010.3\u00a0million. The total amount of charges for other long-term benefits is EUR\u00a01.1\u00a0million.
(in EUR million) | Damage risk retention | Other | Total |
|---|---|---|---|
At 1\u00a0January 2021 | 207.2 | 36.0 | 243.1 |
Additions | 38.8 | 27.2 | 66.0 |
Reversal (utilisation) | (25.5) | (3.4) | (29.0) |
Transfer to Receivables from Clients and Financial Institutions | \u2212 | (0.1) | (0.1) |
Currency translation differences | 0.1 | 1.6 | 1.7 |
At 31\u00a0December 2021 | 220.5 | 61.3 | 281.7 |
Of which current | 105.2 | 47.0 | 152.2 |
As at 1\u00a0January 2022 | 220.5 | 61.3 | 281.7 |
Additions | 44.7 | 4.1 | 48.8 |
Reversal (utilisation) | (16.3) | (7.4) | (23.7) |
Transfer to liabilities qualified as held-for-sale | (0.8) | (0.1) | (1.0) |
Currency translation differences | 0.2 | (1.4) | (1.2) |
Scope changes | 3.6 | \u2212 | 3.6 |
As at 31\u00a0December 2022 | 251.9 | 56.5 | 308.2 |
Of which current | 125.5 | 43.0 | 168.4 |
(in EUR million) | As at 31\u00a0December | |
|---|---|---|
2022 | 2021 | |
Trade payables\u00a0(1) | 1,105.9 | 828.7 |
Deferred leasing income\u00a0(2) | 363.7 | 389.9 |
Other accruals and other deferred income | 612.5 | 582.7 |
Advance lease instalments received | 448.3 | 325.5 |
Accruals for contract settlements | 214.9 | 191.2 |
VAT and other taxes | 243.6 | 254.6 |
Other | 0.1 | 0.5 |
Trade and other payables | 2,989.8 | 2,573.3 |
(1) \u00a0Increase in trade and other payables is due to a larger amount of vehicle orders as at 31\u00a0December 2022 as well as scope changes related to consolidation of new subsidiaries. (2) \u00a0Deferred leasing income relates to maintenance and tyre revenue which is profiled in line with historical maintenance expenditure in order to match revenue and costs. This policy is explained further in note\u00a04 \u201cFinancial Risk Management\u201d. |
A dividend related to the period ended 31\u00a0December 2021 for an amount of EUR\u00a0435.2\u00a0million (EUR\u00a01.08\u00a0per share) was paid to ALD shareholders on 2\u00a0June 2022 of which dividend paid to Societe Generale is EUR\u00a0348.3\u00a0million (a dividend related to the period ended 31\u00a0December 2020 for an amount of EUR\u00a0253.9\u00a0million (EUR\u00a00.63\u00a0per share) was paid to ALD shareholders on 1\u00a0June 2021 of which dividend paid to Societe Generale was EUR\u00a0203.2\u00a0million).
On 16\u00a0December 2022, ALD successfully completed its capital increase with preferential subscription rights for an amount (including issue premium) of approximately EUR\u00a01.2\u00a0billion.
The final gross proceeds of the rights issue, including the issue premium, amount to approximately EUR\u00a01.2\u00a0billion, corresponding to the issuance of 161,641,456\u00a0new shares with a par value of EUR\u00a01.50 at a subscription price of EUR\u00a07.50 per share.
Following the settlement and delivery of the rights issue, the share capital of ALD comprised of 565,745,096\u00a0shares with a nominal value of EUR\u00a01.50 each.
After the rights issue weighted average number of shares\u2019 calculation for the current year includes:
Weighted average number of shares for the year 2021 has been restated to include effect of the bonus element as though the bonus shares had been issued before the earliest period presented.\u00a0
As at 31\u00a0December | |||
|---|---|---|---|
2022 | 2021 restated | 2021 | |
Net income attributable to owners of the parent (in EUR million) | 1,203.2 | 873.0 | 873.0 |
Weighted average number of ordinary shares with voting rights (in thousands) | 452,168 | 441,872 | 403,072 |
Total basic earnings per share (in EUR) | 2.66 | 1.98 | 2.17 |
As at 31\u00a0December | |||
|---|---|---|---|
2022 | 2021 restated | 2021 | |
Net income attributable to owners of the parent (in EUR million) | 1,203.2 | 873.0 | 873.0 |
Weighted average number of ordinary shares (in thousands) | 453,169 | 442,935 | 404,104 |
Total diluted earnings per share (in EUR) | 2.66 | 1.97 | 2.16 |
Following the combined General Meetings held in 2021, 2020 and 2019 ALD\u00a0SA was authorised to purchase its own shares for the purposes of attributing, covering and paying off any scheme for the allocation of free shares, employee savings scheme and any other form of allocation to employees and executive directors of the Company or of companies related to it under the conditions set out in applicable legislative and regulatory provisions. Total number of shares making up current share capital is 565,745,096. As at 31\u00a0December 2022, total number of shares to which voting rights are attached, excluding shares without voting rights (treasury shares,\u00a0etc.) is 564,571,194.
Rights to free shares granted to employees will be settled with treasury shares under the long-term incentives employee plans. Treasury shares are included in the calculation of diluted earnings per share assuming all outstanding rights will vest.
The Group is controlled by Societe Generale. Transactions with Societe Generale and its subsidiaries have been identified as related party transactions. All business relations with Societe Generale are handled at normal market conditions.
In addition, one member of ALD Board of Directors was also a Non-Executive director at the Supervisory Board of a company based in the US, MT Americas (Virginia, US) until March\u00a02020. The Company operates within the recycling industry in the US and South America. There is no business relationship between MT Americas and ALD Group.
Key management includes the following members of the Executive Committee: Chief Executive Officer, two Deputy Chief Executive Officers, Chairman of the Board and the Board directors.
The compensation paid or payable to key management for employee services is shown below:
(in EUR million) | As at 31\u00a0December | |
|---|---|---|
2022 | 2021 | |
Salaries and other short-term employment benefits | 2.8 | 2.2 |
Post employment benefits | 0.4 | 0.6 |
Attendance fees for the Board members | 0.3 | 0.2 |
Other long-term benefits | 1.1 | 0.6 |
Total | 4.6 | 3.7 |
Since the listing of the Company in June\u00a02017, ALD\u00a0SA is supervised by a new Board Committee which has been implemented according to the AFEP-MEDEF rules. The Board is composed of employees and Executive directors of ALD\u00a0SA and Societe Generale as well as independent Board members who benefit from a compensation.
Societe Generale (\u201cSG\u201d) and its subsidiaries are customers of ALD Group. Total fleet leased to SG and its subsidiaries amounts to 7,240\u00a0cars in 21\u00a0countries. Rentals have been priced at normal market conditions. More than 50% of the total fleet leased to Societe Generale is leased by ALD France. Rental paid by Societe Generale to ALD France accounts for EUR\u00a019.8\u00a0million and EUR\u00a017.2\u00a0million in the years ended 31\u00a0December 2022 and 31\u00a0December 2021, respectively.
ALD Group has a contract with SG Global Services centre (India), with which ALD subcontracted IT services including development, maintenance and support of international applications. The main advantage is to facilitate the roll out of common tools to all subsidiaries while ALD IT teams at a Group level still keep the knowledge of each project, train users and follow up the set-up, usage and evolution locally. ALD has also subcontracted some technical infrastructure services to SG, mainly in France. Overall amount of IT services subcontracted to SG and its subsidiaries amounts to EUR\u00a023.01\u00a0million in fiscal year 2022 (2021: EUR\u00a021.56\u00a0million).
Some Group entities share premises with SG or with SG business divisions in some countries (mainly ALD France and ALD Denmark which represent around 90% of the total rentals paid to SG). Rentals have been priced at arm\u2019s length and amounted to EUR\u00a00.6\u00a0million in fiscal year 2022 (2021: EUR\u00a00.5\u00a0million) for ALD France and ALD Denmark.
Societe Generale retail and corporate banking network sells long term rental contracts to customers on behalf of ALD against a commission for each contract sourced. In year 2022, around 19,000\u00a0contracts have been signed through Societe Generale distribution network in 3\u00a0different countries. 85% of contracts originated through this channel come from the French banking networks of Societe Generale. The commission paid to SG by ALD France represented EUR\u00a03.3\u00a0million for the year ended 31\u00a0December 2022 (2021: EUR\u00a03\u00a0million).
ALD Italy has subscribed to a TPL insurance policy for part of their fleet through Sogessur, the Car insurance company of Societe Generale. Sogessur acts as a frontier and is reinsured through ALD Re, the reinsurance company of ALD Group. Insurance premiums have been fixed at arm\u2019s length. The overall amount of insurance premium paid by ALD Italy to Sogessur amount EUR\u00a055.4\u00a0million in fiscal year 2022 (2021: EUR\u00a059.2\u00a0million).
Societe Generale, as a shareholder, provides ALD Group with the following intercompany corporate services:
These Corporate services provided by Societe Generale have been subject to compensation of EUR\u00a09.5\u00a0million (estimated) in fiscal year 2022 (2021 Actual: EUR\u00a08.5\u00a0million (9.5\u00a0million disclosed in Financial Statements for the Year Ended 31\u00a0December 2021 was estimated)).
In addition, in fiscal year 2022, there were 57\u00a0employees coming from SG (51\u00a0in 2021) with a temporary detachment contract in ALD Group with duration of 3\u00a0to 5\u00a0years; they are part of the local management teams and most of them are included in ALD payroll during the detachment period and are therefore not re-billed to SG. Only the employees based in ALD France and ALD\u00a0SA are still paid by SG and re-billed to ALD; the amount re-billed by SG was EUR\u00a014.9\u00a0million in 2022 and 11.7\u00a0million in 2021.
Societe Generale and its affiliates provide ALD Group with funding either through ALD Treasury centre or directly to ALD subsidiaries at a market rate. 69% of the Group\u2019s funding was provided through SG in fiscal year 2021, i.e. EUR\u00a013,711\u00a0million.
Societe Generale provides also bank guarantees on behalf of ALD and its subsidiaries in case of external funding. Overall guarantees released by Societe Generale amounted up to EUR\u00a01,569.5\u00a0million as of 31\u00a0December 2022 (2021: EUR\u00a01,079.1\u00a0million).
Societe Generale also provides ALD Group with derivatives instruments which have a nominal amount of EUR\u00a01,336.3\u00a0million, and are represented on the balance sheet for a total amount of EUR\u00a045.0\u00a0million in assets and EUR\u00a01.5\u00a0million in liabilities.
In compliance with the Asset Liability Management policies of Societe Generale, ALD Group reinvested its equity in long term assets in the form of deposits with the central treasury of Societe Generale. These deposits will roll-out in approximately 4\u00a0years\u2019 time from now on and will not be renewed. At 31\u00a0December 2022 the total amount of these long term deposits was EUR\u00a0269.6\u00a0million (2021: EUR\u00a0387.4\u00a0million).
The proceeds of the rights issue, described in note\u00a02.6, for an amount of EUR\u00a01,205\u00a0million, recorded in the Receivables from clients and financial institutions, have been placed on a short-term deposit with SG Paris until the acquisition of LeasePlan which is expected to close on 28 April 2023, subject notably to remaining regulatory approvals and the completion of standard closing conditions.
Several ALD entities have entered into tax consolidation agreements or Group relief with Societe Generale entities:
The total fees of the Company\u2019s auditors, as charged to the consolidated income statement for the year ended 31\u00a0December 2022, amounted to:
Services other than the certification of the accounts mainly consisted of compliance assignments related to regulatory requirements as well as services specifically and exclusively assigned to statutory auditors. Fees for such services amounted to:
(in %) | As at 31\u00a0December | |
|---|---|---|
2022 | 2021 | |
ALD International\u00a0SA | Parent company | Parent company |
Consolidated companies under global integration | interest % | interest % |
ALD Autoleasing D\u00a0GmbH - GERMANY\u00a0* | 100.00 | 100.00 |
ALD Automotive OOO - RUSSIA | 100.00 | 100.00 |
ALD Automotive A/S - DENMARK | 100.00 | 100.00 |
ALD Automotive\u00a0AB - SWEDEN | 100.00 | 100.00 |
ALD Automotive\u00a0AG - SWITZERLAND | 100.00 | 100.00 |
ALD Automotive\u00a0AS - NORWAY | 100.00 | 100.00 |
ALD Automotive D.O.O. BEOGRAD - SERBIA | 100.00 | 100.00 |
ALD Automotive D.O.O. ZA. Operativni i Financijski Leasing - CROATIA\u00a0* | 100.00 | 100.00 |
ALD Automotive for Cars Rental and Fleet Management\u00a0S.A.E. - EGYPT | 100.00 | 100.00 |
ALD Automotive Fuhrparkmanagement und Leasing\u00a0GmbH - AUSTRIA | 100.00 | 100.00 |
ALD Automotive Group Limited - UK\u00a0* | 100.00 | 100.00 |
ALD Automotive\u00a0S.A. - BRAZIL | 100.00 | 100.00 |
ALD Automotive Magyarorszag Autopark - kezelo es Finanszirozo KFT - HUNGARY\u00a0* | 100.00 | 100.00 |
ALD Automotive Operational Leasing DOO - SLOVENIA | 100.00 | 100.00 |
ALD Automotive Polska Sp z o.o. - POLAND | 100.00 | 100.00 |
ALD Automotive Private Limited - INDIA | 100.00 | 100.00 |
ALD Automotive\u00a0S.A. de C.V. - MEXICO | 100.00 | 100.00 |
ALD Automotive\u00a0S.A. Lease of Cars - GREECE | 100.00 | 100.00 |
ALD Automotive\u00a0SAU - SPAIN\u00a0* | 100.00 | 100.00 |
ALD Automotive SRO - CZECH REPUBLIC | 100.00 | 100.00 |
ALD Automotive Turizm Ticaret Anonim Sirketi - TURKEY | 100.00 | 100.00 |
ALD Fleet\u00a0SA de CV SOFOM ENR | 100.00 | 100.00 |
ALD International\u00a0SAS & CO KG\u00a0* | 100.00 | 100.00 |
ALD Re Designated Activity Company - IRELAND | 100.00 | 100.00 |
Axus Finland\u00a0OY | 100.00 | 100.00 |
ALD Automotive Italia SRL | 100.00 | 100.00 |
Axus Luxembourg\u00a0SA | 100.00 | 100.00 |
Axus Nederland\u00a0BV\u00a0* | 100.00 | 100.00 |
Axus\u00a0SA\u00a0NV - BELGIUM\u00a0* | 100.00 | 100.00 |
ALD Automotive Ukraine Limited Liability Company | 100.00 | 100.00 |
SG ALD Automotive Sociedade Geral de Comercio e Aluguer de Benz sa - PORTUGAL | 100.00 | 100.00 |
TEMSYS - France\u00a0* | 100.00 | 100.00 |
ALD Automotive Algerie\u00a0SPA | 99.99 | 99.99 |
ALD Automotive SRL - ROMANIA | 80.00 | 80.00 |
NF Fleet A/S - DENMARK | 80.00 | 80.00 |
NF Fleet\u00a0OY - FINLAND | 80.00 | 80.00 |
NF fleet\u00a0AB - SWEDEN | 80.00 | 80.00 |
NF Fleet\u00a0AS - NORWAY | 80.00 | 80.00 |
ALD Automotive Eesti\u00a0AS - ESTONIA | 75.01 | 75.01 |
ALD Automotive SIA - LATVIA | 75.00 | 75.00 |
UAB ALD Automotive - LITHUANIA | 75.00 | 75.00 |
ALD Automotive EOOD - BULGARIA | 100.00 | 100.00 |
ALD Automotive Limitada - CHILE | 100.00 | 100.00 |
ALD Automotive Peru\u00a0S.A.C. | 100.00 | 100.00 |
ALD Mul Mobility Services Malaysia SND. BHD. - MALAYSIA | 60.00 | 60.00 |
UK FFM | 50.10 | \u2212 |
ALD Automotive\u00a0LLC (Belarus) | 100.00 | 100.00 |
ALD Automotive Euro Leasing B.V. | 50.10 | \u2212 |
Soluciones De Renting Movilidad S.L. | 100.00 | \u2212 |
Fleetpool Holding\u00a0GmbH | 100.00 | \u2212 |
ALD Automotive\u00a0S.A.S - COLOMBIA | 100.00 | 100.00 |
Merrion Fleet Management Limited | 100.00 | 100.00 |
ALD Automotive Slovakia S.R.O | 100.00 | 100.00 |
ALD International Participations\u00a0SAS | \u2212 | 100.00 |
Consolidated companies under equity method | ||
ALD Automotive\u00a0SA Maroc | 35.00 | 35.00 |
Nedderfeld 95 Immobilien Gmbh & Co. KG | \u2212 | 35.00 |
* Including subsidiaries. |
ALD (\u201cthe Company\u201d) and its subsidiaries (together \u201cthe Group\u201d)is a service leasing and vehicle Fleet Management group with a fleet of around 1,806,500\u00a0vehicles (1,749,000\u00a0excluding disposal groups held for sale, see note\u00a08). The Group provides financing and management services in 43\u00a0countries in the world including the following businesses:
The Company is a French\u00a0Soci\u00e9t\u00e9 Anonyme\u00a0incorporated in\u00a0Societe Generale.\u00a0Its registered office is located at\u00a01-3\u00a0rue Eug\u00e8ne et Armand Peugeot, Le Corosa, 92500\u00a0Rueil-Malmaison,\u00a0France.
The Company is a subsidiary of the Societe Generale (75.9% ownership).
The consolidated financial statements are presented in millions of euros, which is the Group\u2019s presentation currency and values are rounded to the nearest million, unless otherwise indicated. In certain cases, rounding may cause non-material discrepancies in the lines and columns showing totals.
The Group\u2019s audited consolidated financial statements as at December 31, 2022 were examined by the Board of Directors on March 23, 2023.\u00a0
With the impact of COVID-19 and Russian Federation\u2019s invasion of Ukraine in February\u00a02022, the world economy faces a series of significant challenges such as global effects on commodity markets, supply chains, inflation and slowing down of global growth.Global inflation has risen sharply over the last year with high global demand, supply shortages and soaring food and energy prices, especially since Russia\u2019s invasion of Ukraine, and remains elevated whilst monetary policies have been tightened further. Taking account high levels of inflation in its main markets, ALD continues to develop strategies which protect its margins by revising its pricing parameters more frequently, reinforcing customer advisory on more sustainable and innovative products and by maintaining its strict funding policy by hedging its liquidity, interest rates and foreign exchange risks at contract origination.Despite the war, ALD continues its business operations and servicing its clients in Ukraine where the Group currently has circa 4,500\u00a0funded vehicles under leasing contracts. As to date, circa 150\u00a0vehicles are either have been or are at risk of being damaged, or located in the occupied territories. The rest of the fleet remains operational.Although the situation in Ukraine remains critical, current business operations of the subsidiary have resumed and have been assessed as stable. Local management have provided a detailed analysis of the business activities which has resulted in a revised level of the provision. The provision as at 31\u00a0December 2022 is EUR\u00a04.9\u00a0million. It is aimed to cover expected losses for vehicles damaged or at risk and for potential customer payment defaults. As a reminder, at the end of 30\u00a0June 2022 ALD booked a provision charge of EUR\u00a029.2\u00a0million in the income statement,of which EUR 24.3 million was reversed at the year end. This provision represented a conservative position and reflected a high level of uncertainty in the initial stages of the war. ALD continues to review and monitor the situation with the local management.After booking the provision, total assets of ALD Ukraine as at 31\u00a0December amount to EUR\u00a067.6\u00a0million (31\u00a0December 2021: EUR\u00a070.6\u00a0million).The used car sector has been positively impacted by the limited production capacity of new cars due to ongoing shortage in the supply of semiconductors as well as shortages of other materials used in car manufacturing as a result of the war in Ukraine. As global demand has increased, these supply-chain issues caused delays in the delivery of new cars, including deliveries\u00a0 by ALD to its customers.Used car sales continue to remain exceptionally strong in 2022, with a record result of EUR\u00a0747.6\u00a0million (31\u00a0December 2021: EUR\u00a0437.7\u00a0million).The consolidated financial statements of the Group have been prepared in accordance with International Financial Reporting Standards (IFRS) and interpretations issued by the IFRS\u00a0Interpretations Committee (IFRS\u00a0IC) applicable to companies reporting under IFRS. The financial statements comply with IFRS as issued by the International Accounting Standards Board (IASB).
The standards comprise IFRS\u00a01 to\u00a016 and International Accounting Standards (IAS)\u00a01 to\u00a041, as well as the interpretations of these standards adopted by the European Union as at 31\u00a0December 2022.Subsidiaries are all entities over which the Group has a controlling interest. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date that control ceases.
The asset-backed securitisation programme (described in note\u00a04 \u201cFinancial Risk Management\u201d) involved the sale of future lease receivables and related residual value receivables to special purpose companies. Special purpose companies are companies created to accomplish a narrow and well-defined objective, such as the securitisation of leased assets.
The financial statements of special purpose companies are included in the Group\u2019s consolidated financial statements where the substance of the relationship is that the Group continues to be exposed to risks and rewards from the securitised leased assets. The Group uses various legal entities, which have been incorporated specifically for the Group\u2019s securitisation transactions, and these companies are therefore regarded as subsidiaries and included in the consolidated financial statements of the Group.The preparation of the Group\u2019s consolidated financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods.In preparing the Group\u2019s consolidated financial statements, the significant judgements made by management in applying the Group\u2019s accounting policies and the key sources of estimation of uncertainty were largely the same as those that were applied to the consolidated financial statements for the year ended 31\u00a0December 2021. However, the main assumptions concerning expected credit losses applied during the COVID-19 pandemic have been reviewed to reflect the current economic environment. Further details can be found in note\u00a04 \u201cFinancial risk management\u201d.Estimates relating to residual value risk management have also undergone significant revision due to buoyant used car market conditions. Further details can be found in note\u00a05.1 below.The Group tests annually whether goodwill has suffered any impairment, in accordance with the accounting policy stated presented in note\u00a03.9.1 of these consolidated financial statements. The recoverable amounts of cash-generating units have been determined based on value-in-use calculations. These calculations require the use of estimates. The key assumptions calculating the value in use are those regarding discount rates, growth rates and other expected changes in cash flows. The Group uses a five-year business plan for each of the CGUs or group of CGUs identified. The business plans used incorporated assumptions relevant to the current economic climate such as fleet growth, used car market and credit risk.
Based on all the assumptions made by the Group, no need for impairment on goodwill has been identified.
Sensitivity tests are carried out to measure the impact on each CGU\u2019s recoverable value based on certain assumptions. At 31\u00a0December 2021, sensitivities to variations in the cash flows and discount rates were measured.
According to the results in these tests:
In the annual assessment of whether there is any indication that an asset may be impaired, the Group considers both external as well as internal sources of information. If such indication for impairment exists, an analysis is performed to assess whether the carrying value of the asset or cash generating unit under an operating lease exceeds the recoverable amount, being the higher of the fair value less costs to sell and the value in use. The value in use is determined at the present value of the future cash flows expected to be derived from the object or cash generating unit. The management closely monitors residual values, which are reviewed internally at least each financial year, in accordance with internal procedures. The original residual values within internal systems will be compared to the revised residual values expected at contract termination, following a review. The results of this exercise will be used to assess the level of exposure, reserves held and potential impairment required. To prevent impairment on residual values, each country completes a minimum of one annual review of pricing under the supervision of the Group to ensure that assumptions used in pricing reflect expected future market conditions, thus ensuring residual values are predicted with a reasonable degree of accuracy and on a consistent basis going forward.
At the end of 2022, no provision for impairment on rental fleet was required.If the discount rate used were to differ by +0.5% from management\u2019s estimates, the carrying amount of pension obligations would be an estimated EUR\u00a01.0\u00a0million lower.
Further details are provided in note\u00a031 \u201cRetirement benefit obligations and long term benefits\u201d.(1)\u00a0\u00a0\u00a0Including balances of disposal groups classified as held for sale (See note\u00a08 for further details).(2)\u00a0\u00a0\u00a0Net financial debt is defined as the sum of Borrowings from financial institutions (non-current and current), together with any related derivatives and obligations under finance leases, minus cash and cash equivalents, as presented in the Group\u2019s consolidated balance sheet.At 31\u00a0December 2022, all companies are fully consolidated. Changes in the scope of consolidation compared to December\u00a02021 are as follows:
The above mentioned changes in the consolidation scope impact mainly Rental Fleet and trade receivables for the amount of EUR 742 million and\u00a0 goodwill for the amount of EUR 71.9 million.
Consolidated companies under equity methodALD Automotive\u00a0SA Maroc35.0035.00Nedderfeld 95 Immobilien Gmbh & Co. KG\u221235.00", "dimensions": { "concept": "ifrs-full:DisclosureOfGeneralInformationAboutFinancialStatementsExplanatory", "language": "en", "entity": "scheme:969500E7V019H9NP7427", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "corporatings-nesting-hOrtGw-2": { "value": "ALD (\u201cthe Company\u201d) and its subsidiaries (together \u201cthe Group\u201d)", "dimensions": { "concept": "ifrs-full:NameOfReportingEntityOrOtherMeansOfIdentification", "language": "en", "entity": "scheme:969500E7V019H9NP7427", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "corporatings-nesting-hOrtGw-3": { "value": "is a service leasing and vehicle Fleet Management group with a fleet of around 1,806,500\u00a0vehicles (1,749,000\u00a0excluding disposal groups held for sale, see note\u00a08). The Group provides financing and management services in 43\u00a0countries in the world including the following businesses:Full Service Leasing: Under a full service lease, the client pays the leasing company a regular monthly lease payment to cover financing, depreciation of the vehicle and the cost of various services provided in relation to the use of the vehicle (such as maintenance, replacement car, tyre management, fuel cards and insurance);Fleet Management: Fleet Management services include the provision of outsourcing contracts to clients under which the vehicle is not owned by the Group but is managed by the Group and for which the client pays fees for the various Fleet Management services provided. These services are generally identical to those listed under the full-service leasing above, with the exception of the financing service, as the vehicle is owned by the client.", "dimensions": { "concept": "ifrs-full:DescriptionOfNatureOfEntitysOperationsAndPrincipalActivities", "language": "en", "entity": "scheme:969500E7V019H9NP7427", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "corporatings-nesting-hOrtGw-4": { "value": "Soci\u00e9t\u00e9 Anonyme", "dimensions": { "concept": "ifrs-full:LegalFormOfEntity", "language": "en", "entity": "scheme:969500E7V019H9NP7427", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "corporatings-nesting-fix-yFwUWG-1": { "value": "Societe GeneraleThe Group is controlled by Societe Generale. Transactions with Societe Generale and its subsidiaries have been identified as related party transactions. All business relations with Societe Generale are handled at normal market conditions.
In addition, one member of ALD Board of Directors was also a Non-Executive director at the Supervisory Board of a company based in the US, MT Americas (Virginia, US) until March\u00a02020. The Company operates within the recycling industry in the US and South America. There is no business relationship between MT Americas and ALD Group.
Key management includes the following members of the Executive Committee: Chief Executive Officer, two Deputy Chief Executive Officers, Chairman of the Board and the Board directors.
The compensation paid or payable to key management for employee services is shown below:
(in EUR million) | As at 31\u00a0December | |
|---|---|---|
2022 | 2021 | |
Salaries and other short-term employment benefits | 2.8 | 2.2 |
Post employment benefits | 0.4 | 0.6 |
Attendance fees for the Board members | 0.3 | 0.2 |
Other long-term benefits | 1.1 | 0.6 |
Total | 4.6 | 3.7 |
Since the listing of the Company in June\u00a02017, ALD\u00a0SA is supervised by a new Board Committee which has been implemented according to the AFEP-MEDEF rules. The Board is composed of employees and Executive directors of ALD\u00a0SA and Societe Generale as well as independent Board members who benefit from a compensation.
Societe Generale (\u201cSG\u201d) and its subsidiaries are customers of ALD Group. Total fleet leased to SG and its subsidiaries amounts to 7,240\u00a0cars in 21\u00a0countries. Rentals have been priced at normal market conditions. More than 50% of the total fleet leased to Societe Generale is leased by ALD France. Rental paid by Societe Generale to ALD France accounts for EUR\u00a019.8\u00a0million and EUR\u00a017.2\u00a0million in the years ended 31\u00a0December 2022 and 31\u00a0December 2021, respectively.
ALD Group has a contract with SG Global Services centre (India), with which ALD subcontracted IT services including development, maintenance and support of international applications. The main advantage is to facilitate the roll out of common tools to all subsidiaries while ALD IT teams at a Group level still keep the knowledge of each project, train users and follow up the set-up, usage and evolution locally. ALD has also subcontracted some technical infrastructure services to SG, mainly in France. Overall amount of IT services subcontracted to SG and its subsidiaries amounts to EUR\u00a023.01\u00a0million in fiscal year 2022 (2021: EUR\u00a021.56\u00a0million).
Some Group entities share premises with SG or with SG business divisions in some countries (mainly ALD France and ALD Denmark which represent around 90% of the total rentals paid to SG). Rentals have been priced at arm\u2019s length and amounted to EUR\u00a00.6\u00a0million in fiscal year 2022 (2021: EUR\u00a00.5\u00a0million) for ALD France and ALD Denmark.
Societe Generale retail and corporate banking network sells long term rental contracts to customers on behalf of ALD against a commission for each contract sourced. In year 2022, around 19,000\u00a0contracts have been signed through Societe Generale distribution network in 3\u00a0different countries. 85% of contracts originated through this channel come from the French banking networks of Societe Generale. The commission paid to SG by ALD France represented EUR\u00a03.3\u00a0million for the year ended 31\u00a0December 2022 (2021: EUR\u00a03\u00a0million).
ALD Italy has subscribed to a TPL insurance policy for part of their fleet through Sogessur, the Car insurance company of Societe Generale. Sogessur acts as a frontier and is reinsured through ALD Re, the reinsurance company of ALD Group. Insurance premiums have been fixed at arm\u2019s length. The overall amount of insurance premium paid by ALD Italy to Sogessur amount EUR\u00a055.4\u00a0million in fiscal year 2022 (2021: EUR\u00a059.2\u00a0million).
Societe Generale, as a shareholder, provides ALD Group with the following intercompany corporate services:
These Corporate services provided by Societe Generale have been subject to compensation of EUR\u00a09.5\u00a0million (estimated) in fiscal year 2022 (2021 Actual: EUR\u00a08.5\u00a0million (9.5\u00a0million disclosed in Financial Statements for the Year Ended 31\u00a0December 2021 was estimated)).
In addition, in fiscal year 2022, there were 57\u00a0employees coming from SG (51\u00a0in 2021) with a temporary detachment contract in ALD Group with duration of 3\u00a0to 5\u00a0years; they are part of the local management teams and most of them are included in ALD payroll during the detachment period and are therefore not re-billed to SG. Only the employees based in ALD France and ALD\u00a0SA are still paid by SG and re-billed to ALD; the amount re-billed by SG was EUR\u00a014.9\u00a0million in 2022 and 11.7\u00a0million in 2021.
Societe Generale and its affiliates provide ALD Group with funding either through ALD Treasury centre or directly to ALD subsidiaries at a market rate. 69% of the Group\u2019s funding was provided through SG in fiscal year 2021, i.e. EUR\u00a013,711\u00a0million.
Societe Generale provides also bank guarantees on behalf of ALD and its subsidiaries in case of external funding. Overall guarantees released by Societe Generale amounted up to EUR\u00a01,569.5\u00a0million as of 31\u00a0December 2022 (2021: EUR\u00a01,079.1\u00a0million).
Societe Generale also provides ALD Group with derivatives instruments which have a nominal amount of EUR\u00a01,336.3\u00a0million, and are represented on the balance sheet for a total amount of EUR\u00a045.0\u00a0million in assets and EUR\u00a01.5\u00a0million in liabilities.
In compliance with the Asset Liability Management policies of Societe Generale, ALD Group reinvested its equity in long term assets in the form of deposits with the central treasury of Societe Generale. These deposits will roll-out in approximately 4\u00a0years\u2019 time from now on and will not be renewed. At 31\u00a0December 2022 the total amount of these long term deposits was EUR\u00a0269.6\u00a0million (2021: EUR\u00a0387.4\u00a0million).
The proceeds of the rights issue, described in note\u00a02.6, for an amount of EUR\u00a01,205\u00a0million, recorded in the Receivables from clients and financial institutions, have been placed on a short-term deposit with SG Paris until the acquisition of LeasePlan which is expected to close on 28 April 2023, subject notably to remaining regulatory approvals and the completion of standard closing conditions.
Several ALD entities have entered into tax consolidation agreements or Group relief with Societe Generale entities:
With the impact of COVID-19 and Russian Federation\u2019s invasion of Ukraine in February\u00a02022, the world economy faces a series of significant challenges such as global effects on commodity markets, supply chains, inflation and slowing down of global growth.
Global inflation has risen sharply over the last year with high global demand, supply shortages and soaring food and energy prices, especially since Russia\u2019s invasion of Ukraine, and remains elevated whilst monetary policies have been tightened further. Taking account high levels of inflation in its main markets, ALD continues to develop strategies which protect its margins by revising its pricing parameters more frequently, reinforcing customer advisory on more sustainable and innovative products and by maintaining its strict funding policy by hedging its liquidity, interest rates and foreign exchange risks at contract origination.
Despite the war, ALD continues its business operations and servicing its clients in Ukraine where the Group currently has circa 4,500\u00a0funded vehicles under leasing contracts. As to date, circa 150\u00a0vehicles are either have been or are at risk of being damaged, or located in the occupied territories. The rest of the fleet remains operational.
Although the situation in Ukraine remains critical, current business operations of the subsidiary have resumed and have been assessed as stable. Local management have provided a detailed analysis of the business activities which has resulted in a revised level of the provision. The provision as at 31\u00a0December 2022 is EUR\u00a04.9\u00a0million. It is aimed to cover expected losses for vehicles damaged or at risk and for potential customer payment defaults. As a reminder, at the end of 30\u00a0June 2022 ALD booked a provision charge of EUR\u00a029.2\u00a0million in the income statement,of which EUR 24.3 million was reversed at the year end. This provision represented a conservative position and reflected a high level of uncertainty in the initial stages of the war. ALD continues to review and monitor the situation with the local management.
After booking the provision, total assets of ALD Ukraine as at 31\u00a0December amount to EUR\u00a067.6\u00a0million (31\u00a0December 2021: EUR\u00a070.6\u00a0million).
The used car sector has been positively impacted by the limited production capacity of new cars due to ongoing shortage in the supply of semiconductors as well as shortages of other materials used in car manufacturing as a result of the war in Ukraine. As global demand has increased, these supply-chain issues caused delays in the delivery of new cars, including deliveries\u00a0 by ALD to its customers.
Used car sales continue to remain exceptionally strong in 2022, with a record result of EUR\u00a0747.6\u00a0million (31\u00a0December 2021: EUR\u00a0437.7\u00a0million).The preparation of the Group\u2019s consolidated financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods.
In preparing the Group\u2019s consolidated financial statements, the significant judgements made by management in applying the Group\u2019s accounting policies and the key sources of estimation of uncertainty were largely the same as those that were applied to the consolidated financial statements for the year ended 31\u00a0December 2021. However, the main assumptions concerning expected credit losses applied during the COVID-19 pandemic have been reviewed to reflect the current economic environment. Further details can be found in note\u00a04 \u201cFinancial risk management\u201d.
Estimates relating to residual value risk management have also undergone significant revision due to buoyant used car market conditions. Further details can be found in note\u00a05.1 below.
Residual values of the current running fleet are reviewed at least yearly (twice a year for the entities with more than 5,000\u00a0vehicles, one in each semester). It is performed at a local level through a revaluation process which is reviewed and approved at ALD Group level. The process is based on a statistical analysis of the car sales results covering a reference period of 24\u00a0months. The local sales force/market analysts also include additional scenarios in the calculation to take into account elements that are not captured by the statistics. These scenarios include assumptions such as possible decreases of diesel vehicles prices, concentration mix of vehicles and local factors.
In 2021 and 2022 the Group also considered two further assumptions which could affect future sales proceeds such as:
Current residual value embedded in the contract is compared with the expected market value on a car-by-car basis taking into account concentration mix of vehicle makes and models, fuel type and other local market specificities.
In accordance with IAS\u00a08, a residual value is treated as an accounting estimate. Revision of the expected residual values can result in one of three outcomes for the prospective depreciation over the remaining life of the contract:
\u201cLeasing contract costs \u2013 depreciation\u201d is comprised of both regular depreciation costs and movement in the calculation for fleet depreciation which is analysed in each entity during the fleet revaluation process.
Used vehicles prices have continued to drive exceptionally high profit from the used car sales activity throughout 2022. In the first semester fleet revaluation, used car market was anticipated to normalise in 2023. However, in the second semester\u2019s fleet revaluation, this normalisation is now expected to take place from 2024 onwards for most countries.
This assessment has now resulted in a reduction in depreciation costs of EUR\u00a0422.4\u00a0million and represents partial recognition of estimated future used car profits.
Due to decrease in depreciation mentioned above, the used car sales margin has been impacted by the increase in net book value of the vehicles. The impact for the vehicles sold in 2022 was EUR\u00a0110.9\u00a0million.
+Increase/-Decrease in expected sales proceeds per vehicle | Income Statement Net Impact |
|---|---|
- EUR 1,000 | -110.2 |
+EUR 1,000\u00a0 | 90.9 |
The impact of the sensitivity analysis is not linear.
The Group tests annually whether goodwill has suffered any impairment, in accordance with the accounting policy stated presented in note\u00a03.9.1 of these consolidated financial statements. The recoverable amounts of cash-generating units have been determined based on value-in-use calculations. These calculations require the use of estimates. The key assumptions calculating the value in use are those regarding discount rates, growth rates and other expected changes in cash flows. The Group uses a five-year business plan for each of the CGUs or group of CGUs identified. The business plans used incorporated assumptions relevant to the current economic climate such as fleet growth, used car market and credit risk.
Based on all the assumptions made by the Group, no need for impairment on goodwill has been identified.
Sensitivity tests are carried out to measure the impact on each CGU\u2019s recoverable value based on certain assumptions. At 31\u00a0December 2021, sensitivities to variations in the cash flows and discount rates were measured.
According to the results in these tests:
Further details are provided in note\u00a018 \u201cGoodwill\u201d.
In the annual assessment of whether there is any indication that an asset may be impaired, the Group considers both external as well as internal sources of information. If such indication for impairment exists, an analysis is performed to assess whether the carrying value of the asset or cash generating unit under an operating lease exceeds the recoverable amount, being the higher of the fair value less costs to sell and the value in use. The value in use is determined at the present value of the future cash flows expected to be derived from the object or cash generating unit. The management closely monitors residual values, which are reviewed internally at least each financial year, in accordance with internal procedures. The original residual values within internal systems will be compared to the revised residual values expected at contract termination, following a review. The results of this exercise will be used to assess the level of exposure, reserves held and potential impairment required. To prevent impairment on residual values, each country completes a minimum of one annual review of pricing under the supervision of the Group to ensure that assumptions used in pricing reflect expected future market conditions, thus ensuring residual values are predicted with a reasonable degree of accuracy and on a consistent basis going forward.
At the end of 2022, no provision for impairment on rental fleet was required.
The fair value of certain financial instruments is determined by using valuation techniques. The Group uses its judgment to select a variety of methods and make assumptions that are mainly based on market conditions existing at the end of each reporting period. The Group has used discounted cash flow analysis for various available-for-sale financial assets that are not traded in active markets. Such assets do not present material amounts in the financial statements.
The present value of the pension obligations depends on a number of factors that are determined on an actuarial basis using a number of assumptions. The assumptions used in determining the net cost/(income) for pensions include the discount rate. Any changes in these assumptions will impact the carrying amount of pension obligations.
The Group determines the appropriate discount rate at the end of each year. This is the interest rate that is used to determine the present value of estimated future cash outflows expected to be required to settle the pension obligations. In determining the appropriate discount rate, the Group considers the interest rates of high-quality corporate bonds that are denominated in the currency in which the benefits will be paid and that have terms to maturity approximating the terms of the related pension obligation.
If the discount rate used were to differ by +0.5% from management\u2019s estimates, the carrying amount of pension obligations would be an estimated EUR\u00a01.0\u00a0million lower.
Further details are provided in note\u00a031 \u201cRetirement benefit obligations and long term benefits\u201d.
The Group is subject to income taxes in numerous jurisdictions. Significant judgment is required in determining the worldwide provision for income taxes. There are many transactions and calculations for which the ultimate tax determination is uncertain. The Group recognises liabilities for anticipated tax audit issues based on estimates of whether additional taxes will be due. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the current and deferred income tax assets and liabilities in the period in which such determination is made.
The own damage reserve is based on assumptions such as technical damage risk principles, policyholder behaviour, inflation and court decisions. The assumptions may differ from the actual data as a result of changes in economic and market conditions.
", "dimensions": { "concept": "ifrs-full:DisclosureOfAccountingJudgementsAndEstimatesExplanatory", "language": "en", "entity": "scheme:969500E7V019H9NP7427", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "corporatings-nesting-hOrtGw-11": { "value": "With the impact of COVID-19 and Russian Federation\u2019s invasion of Ukraine in February\u00a02022, the world economy faces a series of significant challenges such as global effects on commodity markets, supply chains, inflation and slowing down of global growth.Global inflation has risen sharply over the last year with high global demand, supply shortages and soaring food and energy prices, especially since Russia\u2019s invasion of Ukraine, and remains elevated whilst monetary policies have been tightened further. Taking account high levels of inflation in its main markets, ALD continues to develop strategies which protect its margins by revising its pricing parameters more frequently, reinforcing customer advisory on more sustainable and innovative products and by maintaining its strict funding policy by hedging its liquidity, interest rates and foreign exchange risks at contract origination.Despite the war, ALD continues its business operations and servicing its clients in Ukraine where the Group currently has circa 4,500\u00a0funded vehicles under leasing contracts. As to date, circa 150\u00a0vehicles are either have been or are at risk of being damaged, or located in the occupied territories. The rest of the fleet remains operational.Although the situation in Ukraine remains critical, current business operations of the subsidiary have resumed and have been assessed as stable. Local management have provided a detailed analysis of the business activities which has resulted in a revised level of the provision. The provision as at 31\u00a0December 2022 is EUR\u00a04.9\u00a0million. It is aimed to cover expected losses for vehicles damaged or at risk and for potential customer payment defaults. As a reminder, at the end of 30\u00a0June 2022 ALD booked a provision charge of EUR\u00a029.2\u00a0million in the income statement,of which EUR 24.3 million was reversed at the year end. This provision represented a conservative position and reflected a high level of uncertainty in the initial stages of the war. ALD continues to review and monitor the situation with the local management.After booking the provision, total assets of ALD Ukraine as at 31\u00a0December amount to EUR\u00a067.6\u00a0million (31\u00a0December 2021: EUR\u00a070.6\u00a0million).The used car sector has been positively impacted by the limited production capacity of new cars due to ongoing shortage in the supply of semiconductors as well as shortages of other materials used in car manufacturing as a result of the war in Ukraine. As global demand has increased, these supply-chain issues caused delays in the delivery of new cars, including deliveries\u00a0 by ALD to its customers.Used car sales continue to remain exceptionally strong in 2022, with a record result of EUR\u00a0747.6\u00a0million (31\u00a0December 2021: EUR\u00a0437.7\u00a0million).On 16\u00a0March 2022, the International Practices Task Force of the Centre for Audit Quality, a standard reference for identifying countries with hyperinflation, published a working paper including Turkey in the list of hyperinflationary economies. Consequently, from 1\u00a0January 2022 onwards, the Group has been applying the provisions of the IAS\u00a029\u00a0standard (\u201cFinancial Reporting in Hyperinflationary Economies\u201d) to prepare the separate financial statements in Turkish Lira of the ALD entity located in Turkey (before their conversion into Euros as part of the consolidation process).Adjustments are made to the non-monetary assets and liabilities (with biggest impacts in Rental Fleet, and the Group Consolidated Reserves pertaining to the subsidiary in Turkey). The carrying amounts of Rental fleet are adjusted to reflect the change in the consumer price index from the date of acquisition to the end of the reporting period. The Turkish consumer price index has been used to calculate the adjustments relating to the inflation. The development of the CPI index in the current and previous reporting periods is as follows:December 2019December 2020December 2021December 2022Conversion coefficient386.95443.34603.28990.91CPI Index (12 months)11.8414.6036.0864.27The financial statements of the Turkish subsidiary are based on a historic cost. Non-monetary items in the financial statements are restated for the change in CPI from the date of their acquisition or initial recognition to the end of the reporting period. On initial application of hyperinflation at 1\u00a0January 2022 the total consolidated equity was increased by EUR\u00a041.3\u00a0million, including a reduction in consolidated reserves of EUR\u00a0-4.9\u00a0million after tax for the various adjustments and the reclassification of translation differences recorded on that date.Gains or losses on all subsequent hyperinflation adjustments, such as restatement of non-monetary assets and liabilities, restatement of incomes and expenses at transaction date and the counterpart of restatement all components of equity from the beginning of the period, are recognised in the income statement in \u201cUnrealised gains and losses on financial instruments and other\u201d. An impairment loss will be recognised in the income statement if the restated amount of the book value of vehicles exceeds their estimated recoverable amount, although no such loss was identified in the second semester of 2022.All items in the statement of cash flows which relate to the Turkish subsidiary of ALD are expressed in terms of the consumer price index at the end of the reporting period.As at December, 31, 2022 gains from all hyperinflation adjustments in the Leasing Contract Margin amount to EUR 59.9 million, including a reclassification of EUR 14.5 million to the Used Car Sales to measure the impact of restatement for the change in CPI of the vehicles sold during the period. The total net gain recorded in the \u201cNet Income\u201d (including impact of deferred taxation) is EUR\u00a037.6\u00a0million.On 6 January 2022, the Group announced the signing of a Memorandum of Understanding to acquire 100% of LeasePlan from a consortium of shareholders led by TDR Capital. Total consideration is estimated at EUR 4.7 billion as at the date of this Universal Registration Document, based on the Framework Agreement of 22 April 2022, amended on 28 March 2023. The acquisition would be made through a combination of cash and shares. After closing, Soci\u00e9t\u00e9 G\u00e9n\u00e9rale would own around 53% of the Group and LeasePlan shareholders would hold 30.75%, excluding warrant exercise (see Section 2.1.2.2 \u201cKey strategic initiatives and operational developments\u201d of this Universal Registration Document for more details). This strategic operation would generate significant value for shareholders through scale effects and synergies.On 20\u00a0December 2022 ALD successfully completed its capital increase in order to finance cash component of the acquisition. For further information, see note\u00a02.6 \u201cRights Issue\u201d.The acquisition of LeasePlan is expected to close on 28 April 2023, subject notably to remaining regulatory approvals and the completion of standard closing conditions (for further information, refer to Section 2.1.2.2 \u201cKey strategic initiatives and operational developments\u201d of this Universal Registration Document).As at 31\u00a0December 2022 the Group has incurred EUR\u00a0128\u00a0million of preparation costs associated with this transaction recorded in \u201cTotal Operating Expenses\u201d.On 20\u00a0December 2022, ALD successfully completed its capital increase with preferential subscription rights for an amount (including issue premium) of approximately EUR\u00a01.2\u00a0billion, achieving an important milestone in the proposed strategic acquisition of LeasePlan.The final gross proceeds of the rights issue, including the issue premium, amount to approximately EUR\u00a01.2\u00a0billion, corresponding to the issuance of 161,641,456\u00a0new shares with a par value of EUR\u00a01.50 at a subscription price of EUR\u00a07.50 per share.Following the settlement and delivery of the rights issue, the share capital of ALD will amount to EUR\u00a0848,617,644, comprised of 565,745,096\u00a0shares with a nominal value of EUR\u00a01.50 each. The share capital is allocated as per the table below:ShareholdersAs at 31 December 2022Number of shares% of capital% of voting rights\u00a0(1)Societe Generale429,649,29275.9%76.1%Treasury Shares1,173,9020.2%0.0%Free Float134,921,90223.8%23.9%Total565,745,096100.0%100.0%(1) % of the voting rights = net voting rights, excluding those related to treasury shares.As a result of Societe Generale\u2019s subscription to the transaction being below its pro rata share in ALD and due to the fact that its underwriting was not exercised, ALD free float has increased from 19.9% to 23.8% of its share capital.", "dimensions": { "concept": "ifrs-full:DescriptionOfSignificantEventsAndTransactions", "language": "en", "entity": "scheme:969500E7V019H9NP7427", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "corporatings-nesting-hOrtGw-12": { "value": "On 16\u00a0March 2022, the International Practices Task Force of the Centre for Audit Quality, a standard reference for identifying countries with hyperinflation, published a working paper including Turkey in the list of hyperinflationary economies. Consequently, from 1\u00a0January 2022 onwards, the Group has been applying the provisions of the IAS\u00a029\u00a0standard (\u201cFinancial Reporting in Hyperinflationary Economies\u201d) to prepare the separate financial statements in Turkish Lira of the ALD entity located in Turkey (before their conversion into Euros as part of the consolidation process).
Adjustments are made to the non-monetary assets and liabilities (with biggest impacts in Rental Fleet, and the Group Consolidated Reserves pertaining to the subsidiary in Turkey). The carrying amounts of Rental fleet are adjusted to reflect the change in the consumer price index from the date of acquisition to the end of the reporting period. The Turkish consumer price index has been used to calculate the adjustments relating to the inflation.
The development of the CPI index in the current and previous reporting periods is as follows:
December 2019 | December 2020 | December 2021 | December 2022 | |
|---|---|---|---|---|
Conversion coefficient | 386.95 | 443.34 | 603.28 | 990.91 |
CPI Index (12 months) | 11.84 | 14.60 | 36.08 | 64.27 |
The financial statements of the Turkish subsidiary are based on a historic cost. Non-monetary items in the financial statements are restated for the change in CPI from the date of their acquisition or initial recognition to the end of the reporting period.
On initial application of hyperinflation at 1\u00a0January 2022 the total consolidated equity was increased by EUR\u00a041.3\u00a0million, including a reduction in consolidated reserves of EUR\u00a0-4.9\u00a0million after tax for the various adjustments and the reclassification of translation differences recorded on that date.
Gains or losses on all subsequent hyperinflation adjustments, such as restatement of non-monetary assets and liabilities, restatement of incomes and expenses at transaction date and the counterpart of restatement all components of equity from the beginning of the period, are recognised in the income statement in \u201cUnrealised gains and losses on financial instruments and other\u201d. An impairment loss will be recognised in the income statement if the restated amount of the book value of vehicles exceeds their estimated recoverable amount, although no such loss was identified in the second semester of 2022.
All items in the statement of cash flows which relate to the Turkish subsidiary of ALD are expressed in terms of the consumer price index at the end of the reporting period.
As at December, 31, 2022 gains from all hyperinflation adjustments in the Leasing Contract Margin amount to EUR 59.9 million, including a reclassification of EUR 14.5 million to the Used Car Sales to measure the impact of restatement for the change in CPI of the vehicles sold during the period. The total net gain recorded in the \u201cNet Income\u201d (including impact of deferred taxation) is EUR\u00a037.6\u00a0million.", "dimensions": { "concept": "ifrs-full:DisclosureOfHyperinflationaryReportingExplanatory", "language": "en", "entity": "scheme:969500E7V019H9NP7427", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "corporatings-nesting-hOrtGw-13": { "value": "On 6 January 2022, the Group announced the signing of a Memorandum of Understanding to acquire 100% of LeasePlan from a consortium of shareholders led by TDR Capital. Total consideration is estimated at EUR 4.7 billion as at the date of this Universal Registration Document, based on the Framework Agreement of 22 April 2022, amended on 28 March 2023. The acquisition would be made through a combination of cash and shares. After closing, Soci\u00e9t\u00e9 G\u00e9n\u00e9rale would own around 53% of the Group and LeasePlan shareholders would hold 30.75%, excluding warrant exercise (see Section 2.1.2.2 \u201cKey strategic initiatives and operational developments\u201d of this Universal Registration Document for more details). This strategic operation would generate significant value for shareholders through scale effects and synergies.
On 20\u00a0December 2022 ALD successfully completed its capital increase in order to finance cash component of the acquisition. For further information, see note\u00a02.6 \u201cRights Issue\u201d.
The acquisition of LeasePlan is expected to close on 28 April 2023, subject notably to remaining regulatory approvals and the completion of standard closing conditions (for further information, refer to Section 2.1.2.2 \u201cKey strategic initiatives and operational developments\u201d of this Universal Registration Document).
As at 31\u00a0December 2022 the Group has incurred EUR\u00a0128\u00a0million of preparation costs associated with this transaction recorded in \u201cTotal Operating Expenses\u201d.
The Group applies the acquisition method to account for business combinations.
The consideration transferred for the acquisition of a subsidiary is the fair values of the assets transferred, the liabilities incurred to the former owners of the company acquired and the equity interests issued by the Group. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date in accordance with IFRS\u00a03. The Group recognises any non-controlling interest in the company acquired on an acquisition-by-acquisition basis, either at fair value or at the non-controlling interest\u2019s proportionate share of the recognised amounts of acquiree\u2019s identifiable net assets.
Acquisition-related costs are expensed as incurred.
Inter-company transactions, balances and unrealised gains on transactions between Group companies are eliminated. Unrealised losses are also eliminated. When necessary, amounts reported by subsidiaries have been adjusted to conform to the Group\u2019s accounting policies.
Non-controlling interests represent equity interests in subsidiaries owned by outside parties. The share of net assets of subsidiaries attributable to non-controlling interests is presented as a component of equity. Their share of Net income and comprehensive income is recognised directly in equity. Changes in the parent company\u2019s ownership interest in subsidiaries that do not result in a loss of control are accounted for as equity transactions.
Goodwill arises on the acquisition of subsidiaries, associates and joint ventures and represents the excess of the consideration transferred over the Group\u2019s interest in net fair value of the net identifiable assets, liabilities and contingent liabilities of the acquirer. Goodwill is measured at cost less any accumulated impairment losses. When the excess is negative (negative goodwill), it is recognised immediately in the statement of income.
For the purpose of impairment testing, goodwill acquired in a business combination is allocated to each of the cash generating units (\u201cCGUs\u201d), or groups of CGUs, which is expected to benefit from the synergies of the combination. Each unit or group of units to which the goodwill is allocated represents the lowest level within the entity at which the goodwill is monitored for internal management purposes. Goodwill is monitored as follows:
Goodwill impairment reviews are undertaken annually or more frequently if events or changes in circumstances indicate a potential impairment. The carrying value of goodwill is compared to the recoverable amount, which is the higher of value in use and the fair value less costs to sell. Any impairment is recognised immediately as an expense and is not subsequently reversed.
Further details are provided in note\u00a05.2 \u201cEstimated impairment of goodwill\u201d.The Group tests annually whether goodwill has suffered any impairment, in accordance with the accounting policy stated presented in note\u00a03.9.1 of these consolidated financial statements. The recoverable amounts of cash-generating units have been determined based on value-in-use calculations. These calculations require the use of estimates. The key assumptions calculating the value in use are those regarding discount rates, growth rates and other expected changes in cash flows. The Group uses a five-year business plan for each of the CGUs or group of CGUs identified. The business plans used incorporated assumptions relevant to the current economic climate such as fleet growth, used car market and credit risk.
Based on all the assumptions made by the Group, no need for impairment on goodwill has been identified.
Sensitivity tests are carried out to measure the impact on each CGU\u2019s recoverable value based on certain assumptions. At 31\u00a0December 2021, sensitivities to variations in the cash flows and discount rates were measured.
According to the results in these tests:
The principal accounting policies applied in the preparation of these consolidated financial statements are set out below. All valuation methods are defined in the notes describing the relevant categories. These policies have been consistently applied to all the years presented, unless otherwise stated.
The consolidated financial statements of the Group have been prepared in accordance with International Financial Reporting Standards (IFRS) and interpretations issued by the IFRS\u00a0Interpretations Committee (IFRS\u00a0IC) applicable to companies reporting under IFRS. The financial statements comply with IFRS as issued by the International Accounting Standards Board (IASB).
The standards comprise IFRS\u00a01 to\u00a016 and International Accounting Standards (IAS)\u00a01 to\u00a041, as well as the interpretations of these standards adopted by the European Union as at 31\u00a0December 2022.
Presentation of consolidated income statement and statement of cash flows have been changed in 2022 due to application of hyperinflation accounting (IAS\u00a029) by the Group.
In the income statement, caption \u201cUnrealised gains and losses on financial instruments\u201d has been renamed to \u201cUnrealised gains and losses on financial instruments and other\u201d due to inclusion of hyperinflation adjustments in it.
Statement of cash flows contains a new caption \u201cEffects of hyperinflation adjustments\u201d.
For further information see note\u00a02.4 \u201cHyperinflation in Turkey\u201d.
Subsidiaries are all entities over which the Group has a controlling interest. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date that control ceases.
The Group applies the acquisition method to account for business combinations.
The consideration transferred for the acquisition of a subsidiary is the fair values of the assets transferred, the liabilities incurred to the former owners of the company acquired and the equity interests issued by the Group. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date in accordance with IFRS\u00a03. The Group recognises any non-controlling interest in the company acquired on an acquisition-by-acquisition basis, either at fair value or at the non-controlling interest\u2019s proportionate share of the recognised amounts of acquiree\u2019s identifiable net assets.
Acquisition-related costs are expensed as incurred.
Inter-company transactions, balances and unrealised gains on transactions between Group companies are eliminated. Unrealised losses are also eliminated. When necessary, amounts reported by subsidiaries have been adjusted to conform to the Group\u2019s accounting policies.
Non-controlling interests represent equity interests in subsidiaries owned by outside parties. The share of net assets of subsidiaries attributable to non-controlling interests is presented as a component of equity. Their share of Net income and comprehensive income is recognised directly in equity. Changes in the parent company\u2019s ownership interest in subsidiaries that do not result in a loss of control are accounted for as equity transactions.
Associates are all entities over which the Company has significant influence, but not control. The Company accounts for its investment in associates using the equity method. The Company\u2019s share of profits or losses of associates is recognised in the consolidated statement of income and its share of other comprehensive income (loss) of associates is included in other comprehensive income.
Unrealised gains on transactions between the Company and an associate are eliminated to the extent of the Company\u2019s interest in the associate. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Dilution gains and losses arising from changes in interests in investments in associates are recognised in the consolidated statement of income.
Further details are provided in note\u00a019 \u201cInvestments in associates\u201d.The Group applies IFRS\u00a011 to all joint arrangements. Under IFRS\u00a011, investments in joint arrangements are classified as either joint operations or joint ventures depending on the contractual rights and obligations of each investor. The Group has assessed the nature of its joint arrangements and determined them to be joint ventures. Joint ventures are accounted for using the equity method.
Under the equity method of accounting, interests in joint ventures are initially recognised at cost and adjusted thereafter to recognise the Group\u2019s share of the post-acquisition profits or losses and movements in other comprehensive income.
When the Group\u2019s share of losses in a joint venture equals or exceeds its interests in the joint ventures (which includes any long-term interests that, in substance, form part of the Group\u2019s net investment in the joint ventures), the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the joint ventures.
Unrealised gains on transactions between the Group and its joint ventures are eliminated to the extent of the Group\u2019s interest in the joint ventures. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of the joint ventures are modified where necessary to ensure consistency with the policies adopted by the Group.Items included in the financial statements of each of the Group\u2019s entities are measured using the currency of the primary economic environment in which the entity operates (\u201cthe functional currency\u201d). The consolidated financial statements are presented in millions of Euros, which is the Group\u2019s presentation currency and it has been rounded to the nearest million, unless otherwise indicated. In certain cases, rounding may cause non-material discrepancies in the lines and columns showing totals.
31\u00a0December 2022 | 31\u00a0December 2021 | |||
|---|---|---|---|---|
Period-end Rate | Average Rate | Period-end Rate | Average Rate | |
EUR/Russian Ruble | 76.8600 | 73.9748 | 85.3004 | 87.2321 |
EUR/Ukrainian Hryvnia | 36.9170 | 34.4424 | 30.8765 | 32.2531 |
EUR/Brazilian Real | 5.6386 | 5.4432 | 6.3101 | 6.3814 |
EUR/UK Pound | 0.8869 | 0.8526 | 0.8403 | 0.8600 |
EUR/Swedish Krona | 11.1218 | 10.6274 | 10.2503 | 10.1449 |
EUR/Norwegian Krone | 10.5138 | 10.1015 | 9.9888 | 10.1634 |
Other property and equipment are stated at cost less accumulated depreciation and accumulated impairment losses. Cost includes expenditures that are directly attributable to the acquisition of the asset. Subsequent costs are included in the asset\u2019s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost can be measured reliably. Repairs and maintenance costs are charged to the statement of income during the period in which they are incurred.
Land is not depreciated. Depreciation on other assets is calculated using the straight-line method to allocate their cost to their residual values over their estimated useful lives, as follows:
The Company allocates the amount initially recognised in respect of an item of property, plant and equipment to its significant parts and depreciates separately each such part. The carrying amount of a replaced part is derecognised when replaced. Residual values, method of amortisation and useful lives of the assets are reviewed annually and adjusted if appropriate. An asset\u2019s carrying amount is written down immediately to its recoverable amount if the asset\u2019s carrying amount is greater than its estimated recoverable amount.
This asset category includes mainly vehicles leased to third parties, but also include other properties owned by the Group (although not significant).
Property and equipment under operating lease and rental fleet are measured at cost less accumulated depreciation and impairment losses. Vehicles are capitalised based on (i)\u00a0the acquisition price, (ii)\u00a0all expenditures for items owned by the Company and considered a permanent addition to the vehicle (e.g. radios, anti-theft devices,\u00a0etc.) at the time of contract commencement, (iii)\u00a0initial external direct costs including commissions and legal fees and (iv)\u00a0delivery cost where material.
The assets subject to operating leases are presented in the balance sheet according to the nature of the asset. The leased assets are depreciated on a straight-line basis over its contract period to its residual value. The contract period ranges on average between 3\u00a0to 5\u00a0years.
The assets\u2019 residual values are reviewed and adjusted, if appropriate, at each balance sheet date.
Upon termination of the lease or rental contract the relevant assets are reclassified to the caption \u201cInventories\u201d at their carrying amount, as per IAS\u00a016 paragraph\u00a068A recommendations. The assets\u2019 residual values and useful lives are reviewed and adjusted, if appropriate, at each balance sheet date.IFRS\u00a016 concerns any contract meeting the definition of a lease. There are exceptions in the standard which are not applicable to the Group. Lessees are not required to apply this standard to intangible assets leases (software for example). In preparing the application of the standard, the Group uses this option. All of the Group\u2019s right-of-use assets relate to building leases contracted for the lease of commercial and office space and vehicles.
The lease period to be applied in determining the rental payments to be discounted will match the non- cancellable period of the lease adjusted for:
The measurement of the reasonable certainty of exercising or not exercising the extension or early termination options shall take into account all the facts and circumstances that may create an economic incentive to exercise or not to exercise these options.
In the event of a change of circumstances of the lessee which has an impact on the certainty of exercise of an option that the lessee has or has not included in its calculation of the lease term, the term must be re-estimated.
Following a change in the lease term (re-estimate or revision), the lease obligation must be reassessed to reflect those changes. The revised rate is the interest rate implicit in the lease for the remaining term of the contract if it is possible to calculate this rate, otherwise the lessee must use its incremental borrowing rate on the date of modification of the lease term.
The Group recognises right-of-use assets at the commencement date of the lease (i.e. the date the underlying asset is available for use). Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any remeasurement of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities recognised, initial direct costs incurred, and lease payments made at or before the commencement date less any lease incentives received. Unless the Group is reasonably certain to obtain ownership of the leased asset at the end of the lease term, the recognised right-of-use assets are depreciated on a straight-line basis over the shorter of its estimated useful life and the lease term, defined as the non-cancellable period for which the lessee has the right to use an underlying asset including optional periods when an entity is reasonably certain to exercise an option to extend (or not to terminate) a lease. Depreciation expense is recorded in Depreciation and amortisation in the income statement. The asset value may be adjusted later if the lease is amended, the lease period is re-estimated or to account for contractual changes in the rental payments related to application of indices or rates. The cost of a right-of-use asset also includes an estimate of costs to be incurred by the lessee in dismantling and removing the underlying asset, restoring the site on which it is located or restoring the underlying asset to the condition required by the terms and conditions of the lease.
At the commencement date of the lease, the Group recognises lease liabilities measured at the present value of lease payments to be made over the lease term discounted using an incremental borrowing rate which varies per country within the Group. The lease payments include fixed payments (including in-substance fixed payments) less any lease incentives receivable and variable lease payments that depend on an index or a rate. The lease payments also include payments of penalties for terminating a lease, if the lease term reflects the Group exercising the option to terminate. Variable lease payments that are indexed based on the use of the leased asset (indexed to revenue or mileage, for example) are excluded from the measurement of lease liability. This variable portion of the rental payments is recorded in the income statement over time according to fluctuations in contractual indexing. Each lease payment is allocated between the liability and finance cost. The finance cost is charged to Leasing contract costs \u2013 financing in the income statement over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. After the commencement date, the amount of lease liabilities is increased to reflect the recognition of interest and reduced for the lease payments made. In addition, the carrying amount of lease liabilities is remeasured if there is a modification, a change in the lease term, a change in the in-substance fixed lease payments or a change in the assessment to purchase the underlying asset.
The implicit contract rates are not generally known, nor can be easily determined. Therefore, the Group has decided to use the lessees\u2019 incremental borrowing rate to discount rental payments as well as amount of lease liabilities.
The incremental borrowing rate is set by the lessee entity, not by the Group, in consideration of the borrowing terms and that entity\u2019s credit risk and the economic environment.
The discount rates used by the Group are then adjusted according to the currency and country of the location of the lessee entities.
The discount rate represents a risk free borrowing rate and liquidity spread by currency. The discount rate is also based on the duration of the lease term, where the duration of the lease is divided by two. Duration of the lease is the total lease term as described in section \u201cLease term\u201d.
Lessees may choose not to recognise a right-of-use asset and lease liability to contracts with a term of less than one year (including renewal options), nor to contracts on low-value items. This last simplification applies specifically to small equipment such as personal computers, tablets, telephones, and small items of office furniture.
Lease payments on short-term leases (less than one year) and leases of low-value assets are recognised as expense on a straight-line basis over the lease term and are disclosed in General and administrative expenses.
Deferred tax will be recorded on the basis of the net amount of taxable and deductible temporary differences. Generally, on the date of the initial recording of the right-of-use and the lease liability, no deferred tax is recorded as the asset value is equal to the liability value. The net temporary differences that may result from subsequent changes in the right-to-use and lease liability will result in the recognition of deferred tax.
Further details are provided in note\u00a017 \u201cRight-of-use Assets and Lease Liabilities\u201d.Goodwill arises on the acquisition of subsidiaries, associates and joint ventures and represents the excess of the consideration transferred over the Group\u2019s interest in net fair value of the net identifiable assets, liabilities and contingent liabilities of the acquirer. Goodwill is measured at cost less any accumulated impairment losses. When the excess is negative (negative goodwill), it is recognised immediately in the statement of income.
For the purpose of impairment testing, goodwill acquired in a business combination is allocated to each of the cash generating units (\u201cCGUs\u201d), or groups of CGUs, which is expected to benefit from the synergies of the combination. Each unit or group of units to which the goodwill is allocated represents the lowest level within the entity at which the goodwill is monitored for internal management purposes. Goodwill is monitored as follows:
Goodwill impairment reviews are undertaken annually or more frequently if events or changes in circumstances indicate a potential impairment. The carrying value of goodwill is compared to the recoverable amount, which is the higher of value in use and the fair value less costs to sell. Any impairment is recognised immediately as an expense and is not subsequently reversed.
Further details are provided in note\u00a05.2 \u201cEstimated impairment of goodwill\u201d.Assets that have an indefinite useful life \u2013 for example, goodwill or intangible assets \u2013 are not subject to amortisation and are tested annually for impairment. Assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset\u2019s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset\u2019s fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). Non-financial assets other than goodwill, that suffered impairment, are reviewed for possible reversal of the impairment at each reporting date.
Further details are presented in note\u00a015 \u201cRental fleet\u201d.The Group classifies non-current assets and disposal groups as held for sale if their carrying amounts will be recovered principally through a sale transaction rather than through continuing use. Non-current assets and disposal groups classified as held for sale are measured at the lower of their carrying amount and fair value less costs to sell. Costs to sell are the incremental costs directly attributable to the disposal of an asset (disposal group), excluding finance costs and income tax expense.
The criteria for held for sale classification is regarded as met only when the sale is highly probable and the asset or disposal groups is available for immediate sale in its present condition. Actions required to complete the sale should indicate that it is unlikely that significant changes to the sale will be made or that the decision to sell will be withdrawn. Management must be committed to the plan to sell the asset and the sale expected to be completed within one year from the date of the classification.
Property, plant and equipment and intangible assets are not depreciated or amortised once classified as held for sale.
Assets and liabilities classified as held for sale are presented separately as current items in the consolidated balance sheet.
A disposal group qualifies as discontinued operation if it is a component of an entity that either has been disposed of, or is classified as held for sale, and:
The results of discontinued operations are presented separately in the statement of profit or loss.
Additional disclosures relating to the Group\u2019s Discontinued Operations are provided in note\u00a07 \u201cChanges in the Scope of Consolidation\u201d.Following the adoption of IFRS\u00a09, the Group classifies its financial assets in the following measuring categories:
By default, derivative financial instruments will be classified as subsequently measured at fair value through profit or loss.
Regular way purchases and sales of financial assets are recognised on a trade-date, the date on which the Group commits to purchase or sell the asset. Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired or have been transferred and the Group has transferred substantially all the risks and rewards of ownership.
Debt instruments (loans, receivables and bonds) will be measured at amortised cost only if the objective of the entity (business model) is to collect the contractual cash-flows and if these cash flows consist solely of payments of principal and interest. Debt instruments will be measured at fair value through other comprehensive income (with cumulative gain or loss reclassified in profit or loss when the instruments are derecognised) if the objective of the entity (business model) is to collect the contractual cash-flows or to sell the instruments and if these contractual cash-flows consist solely of payments of principal and interest (SPPI).
Financial assets are initially measured at fair value and subsequent measured at amortised cost using the effective interest method less any impairment losses. Transaction costs (including qualifying fees and commissions) are part of the amortised cost.
Amortised cost is the amount at which the financial asset or financial liability is measured at initial recognition minus the principal repayments, plus or minus the cumulative amortisation using the effective interest method of any difference between that initial amount and the maturity amount and, for financial assets, adjusted for any loss allowance.
The effective interest rate is the rate that exactly discounts estimated future cash payments or receipts through the expected life of the financial asset or financial liability to the gross carrying amount of a financial asset or to the amortised cost of a financial liability.
The following financial assets are classified at amortised cost: cash and cash equivalents, receivables from financial institutions, investments in debt securities and other receivables.
Equity instruments will be measured at fair value through profit or loss except in case of irrevocable election made at initial recognition for measurement at fair value through other comprehensive income (provided these financial assets are not held for trading purposes and not classified as such in financial assets measured at fair value through profit or loss) without subsequent reclassification in income.
Embedded derivatives will no longer be recognised separately when their host contracts are financial assets and the hybrid instrument in its entirety in most cases will then be measured at fair value through profit or loss.
The Group assesses expected credit losses (ECL) associated with its assets carried at amortised cost. For trade receivables and contract assets, the Group applies a simplified approach in calculating ECLs. Therefore, the Group does not track changes in credit risk, but instead recognises a loss allowance based on lifetime ECLs at each reporting date. The 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 when the impact of those factors is material to the financial statements.
Further disclosure relating to impairment of financial assets is also provided in note\u00a023 \u201cReceivables from Clients and Financial Institutions\u201d.Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, loans and borrowings, payables, or as derivatives designated as hedging instruments in an effective hedge, as appropriate.
All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs.
The Group\u2019s financial liabilities include trade and other payables, loans and borrowings including bank overdrafts, and derivative financial instruments.
For purposes of subsequent measurement, financial liabilities are classified in two categories:
Financial liabilities at fair value through profit or loss only include derivative financial instruments in the Group\u2019s financial statements. For further disclosures see note\u00a03.14 \u201cDerivative financial instruments and hedging activities\u201d and note\u00a020 \u201cDerivative financial instruments\u201d.
Financial liabilities are initially recognised at fair value incurred and are subsequently measured at amortised cost. Any difference between the proceeds (transaction costs) and the redemption value is recognised in the statement of profit or loss over the period of the financial liability using the effective interest method. Transaction costs are included in amortised cost using the effective interest method.
Financial liabilities at amortised cost (loans, borrowings and debt securities issued) is the category most relevant to the Group. After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the effective interest rate (EIR) method. Any difference between cost and redemption value is recognised in the income statement over the term of the loans and borrowings.
Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included as finance costs in the statement of profit or loss.
For more information, refer to note\u00a030 \u201cBorrowings from financial institutions, bonds and notes issued\u201d.
Financial liabilities are derecognised if the Group\u2019s obligations specified in the contract expire or are discharged or cancelled.
Financial assets and liabilities are offset and the net amount is presented in the balance sheet when the Group has a legal right to offset the amounts and intends either to settle on a net basis or to realise the asset and liability simultaneously.
Income and expenses are presented on a net basis only when permitted by IFRS.Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. The method of recognising the resulting gain or loss depends on whether the derivative is designated as a hedging instrument, and if so, the nature of the item being hedged.
The Group documents at the inception of the transaction the relationship between hedging instruments and hedged items, as well as its risk management objectives and strategy for undertaking various hedging transactions. The Group also documents its assessment, both at hedge inception and on an ongoing basis, of whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in fair values or cash flows of hedged items.
The fair values of various derivative instruments used for hedging purposes are disclosed in note\u00a026. Movements on the hedging reserve in other comprehensive income are shown in consolidated statement of changes in equity. The full fair value of a hedging derivative is classified as a non-current asset or liability when the remaining hedged item is more than 12\u00a0months and as a current asset or liability when the remaining maturity of the hedged item is less than 12\u00a0months.
The Group designates certain derivatives as either:
fair value hedge: hedges of the fair value of recognised assets or liabilities or a firm commitment.Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recorded in the income statement, together with any changes in the fair value of the hedged asset or liability that are attributable to the hedged risk. The Group only applies fair value hedge accounting for hedging fixed interest risk on borrowings. The gain or loss relating to fair value hedges is recognised in the income statement within \u201cunrealised gains/losses on financial instruments\u201d.If the hedge no longer meets the criteria for hedge accounting, the adjustment to the carrying amount of a hedged item for which the effective interest method is used is amortised to profit or loss over the period to maturity.No fair value hedge instruments have been recorded by the Group for the year ended 31\u00a0December 2022;cash flow hedge: hedges of a particular risk associated with a recognised asset or liability or a highly probable forecasted transaction.The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is recognised in other comprehensive income. The gain or loss relating to the ineffective portion is recognised immediately in the income statement within \u201cunrealised gains/losses on financial instruments\u201d.Amounts accumulated in equity are reclassified to profit or loss in the periods when the hedged item affects profit or loss. The gain or loss relating to the effective portion of interest rate swaps hedging variable rate borrowings is recognised in the income statement.When a hedging instrument expires or is sold, or when a hedge no longer meets the criteria for hedge accounting, any cumulative gain or loss existing in equity at that time remains in equity and is recognised when the forecast transaction is ultimately recognised in the income statement. When a forecast transaction is no longer expected to occur, the cumulative gain or loss that was reported in equity is immediately transferred to the income statement;derivatives: changes in the fair value of derivatives that are not designated as a hedging instrument are recognised immediately in the income statement in the caption \u201cUnrealised gains/(losses) on financial instruments\u201d.The types of risks that the Group is exposed to and derivatives used to hedge these risks can be found in section\u00a04.1.2 Treasury Risk and note\u00a020 \u201cDerivative financial instruments\u201d.This caption includes:
These receivable balances are shown after any accumulated impairment losses and are initially measured at fair value and subsequently at amortised cost using the effective interest method.
Group companies operate various pension\u2019 schemes. The Group has both defined benefit plans and defined contribution plans. A defined contribution plan is a pension plan under which the Group pays fixed contributions into a separate entity. The Group has no legal or constructive obligations to pay further contributions if the fund does not hold sufficient assets to pay all employees the benefits relating to employee service in the current and prior periods. A defined benefit plan is a pension plan that is not a defined contribution plan.
Typically defined benefit plans define an amount of pension benefit that an employee will receive on retirement, usually dependent on one or more factors such as age, years of service and compensation.
The liability recognised in the balance sheet in respect of defined benefit pension plans is the present value of the defined benefit obligation at the end of the reporting period together with adjustments for unrecognised past-service costs. The defined benefit obligation is calculated annually by independent actuaries using the projected unit credit method. The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows using interest rates of high-quality corporate bonds that are denominated in the currency in which the benefits will be paid, and that have terms to maturity approximating to the terms of the related pension obligation.
Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are charged or credited to equity in other comprehensive income in the period in which they arise without recycling to the statement of profit or loss. Past-service costs are recognised immediately in income statement.
Settlements and curtailments invoke immediate recognition in the income statement of the relevant change in the present value of the defined benefit obligations and in the market value of the plan assets. A settlement is an early termination of all or part of the defined benefit obligation. A curtailment occurs when the Company is demonstrably committed to materially reducing the number of employees in the defined benefit plan or the pension benefits for future services.
For defined contribution plans, the Group pays contributions to publicly or privately administered pension insurance plans on a mandatory, contractual or voluntary basis. The Group has no further payment obligations once the contributions have been paid. The contributions are recognised as employee benefit expense when they are due.
Further details are provided in note\u00a031 \u201cRetirement benefit obligations and long term benefits\u201d.
Termination benefits are payable when employment is terminated by the Group before the normal retirement date, or whenever an employee accepts voluntary redundancy in exchange for these benefits. The Group recognises termination benefits when it is demonstrably committed to a termination when the entity has a detailed formal plan to terminate the employment of current employees without possibility of withdrawal. In the case of an offer made to encourage voluntary redundancy, the termination benefits are measured based on the number of employees expected to accept the offer. Benefits falling due more than 12\u00a0months after the end of the reporting period are discounted to their present value.
Provisions for restructuring costs and legal claims are recognised when: the Group has a present legal or constructive obligation as a result of past events; it is probable that an outflow of resources will be required to settle the obligation; and the amount has been reliably estimated. Restructuring provisions comprise lease termination penalties and employee termination payments. Provisions are not recognised for future operating losses.
Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. A provision is recognised even if the likelihood of an outflow with respect to any one item included in the same class of obligations may be small.
Provisions are measured at the present value of the expenditures expected to be required to settle the obligation using a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the obligation. The increase in the provision due to passage of time is recognised as interest expense.
The Group provides customers with an own damage and repair cover in exchange of the payment of a monthly premium. Own damage revenues are recorded in the caption \u201cServices Revenues\u201d. Further details are provided in note\u00a09 \u201cRevenues and cost of revenues\u201d.
In parallel, the Group calculates the own damage reserve based on two elements:
At the end of each month, the Group performs an adequacy test in respect of the level of the own damage reserve. In the event that the level of the reserve falls below the amount of open claims reserve plus IBNR, as determined above, then an immediate adjustment is made to adjust the reserve at this level. Open claims remain open so long as it is reasonably considered that the claim will be payable.
Where there is a stop-loss policy in place, limiting the risk of losses above a set level, open claims plus IBNR are booked only up to the level of the stop-loss. Beyond that level, all claims are debited to the reinsurance provider of the stop-loss cover. Any stop-loss cover on individual incidents is also taken into account in evaluation of claims plus IBNR. Gross claim costs are reduced to the level of cap per incident. Even where stop-loss cover is in place, if total claims are anticipated to be below the level of premium and stop-loss cover, then profit is booked in the normal way.Trade and other payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Accounts payable are classified as current liabilities if payment is due within one year or less (or in the normal operating cycle of the business if longer). If not, they are presented as non-current liabilities.
Trade payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method.The tax expense for the period comprises current and deferred tax. Tax is recognised in the income statement, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in equity, respectively.
The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the balance sheet date in the countries where the Company and its subsidiaries operate and generate taxable income.
Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.Deferred income tax is recognised, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. However, deferred tax liabilities are not recognised if they arise from the initial recognition of goodwill; deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the balance sheet date and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.
Deferred income tax assets are recognised only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised.
Deferred income tax is provided on temporary differences arising on investments in subsidiaries and associates, except for deferred income tax liability where the timing of the reversal of the temporary difference is controlled by the Group and it is probable that the temporary difference will not reverse in the foreseeable future.
Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred income taxes assets and liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities where there is an intention to settle the balances on a net basis.Revenue is recognised in accordance with the following standards:
The combined effect of the leases (IFRS\u00a016) and revenues (IFRS\u00a015) standards focus on the identification of lease and non-lease components in order to assess separate performance obligations. Both lessees and lessors consider the right to use an asset as a separate lease component if it meets the following criteria:
Activities or costs that transfer a good or service to the lessee are identified as non-lease components.
Amounts payable for activities and costs that do not transfer a good or service are part of the total consideration and are allocated to the lease and non-lease components identified in the contract.
If a contract contains a lease component and one or additional lease or non-lease components, then IFRS\u00a016 requires a lessor always to allocate the consideration in a contract following the approach in IFRS\u00a015 Revenue recognition.
The 5\u00a0steps process required by IFRS\u00a015 is summarised as follows:
a)\u00a0Operating leases
On operating leases, lease rental revenue (depreciation and interest) is recognised in accordance with IFRS\u00a016 on a straight-line basis over the lease term based on the total of the contractual payments divided by the number of months of the lease term.
b)\u00a0Finance leases
Regarding finance leases, IFRS\u00a016 standard is applied and the earnings are allocated between the capital amount and finance income. The capital amount is used to reduce the receivable balance and the income is recognised in the profit and loss in each period so as to give a constant periodic rate of return on the net investment in the lease. The Group uses the net investment method to allocate gross earnings, which excludes the effect of cash flows arising from taxes and financing relating to a lease transaction. In addition:
Amounts receivable from finance lease contracts are disclosed in note\u00a023.
c)\u00a0Other operating revenue for services
Interest income, interest charges and similar charges for all interest-bearing assets and liabilities are recognised in the income statement on an accrual basis using the effective interest method. The effective interest rate is the rate that exactly discounts the estimated future cash payments and receipts through the expected life of the financial asset or liability to the carrying amount of the financial asset or liability.
The interest income component in operating lease instalments, which is charged on a straight-line basis to the client, is recognised in the \u201cLeasing contract revenue \u2013 operating lease\u201d based on the effective interest method in interest income using the interest rate included in the lease contract and based on the net investment value of the leased asset.
Interest income on finance lease contracts is recognised in the income statement on the basis of accruing interest income on the net investment (using the effective interest method). The receipts under the lease are allocated by the lessor between reducing the net investment and recognising interest income, so as to produce a constant rate of return on the net investment.Share-based compensation benefits are provided to employees via the ALD long-term incentive plans, employee share schemes. Information relating to these schemes is set out in note\u00a029.
The fair value of shares granted under the ALD long-term incentive plan is recognised as an employee benefits expense with a corresponding increase in equity. The total amount to be expensed is determined by reference to the fair value of the shares granted. The total expense is recognised over the vesting period, which is the period when all of the specified vesting conditions are to be satisfied. At the end of each period, the entity revises its estimates of the number of shares that are expected to vest based on the non-market vesting and service conditions. It recognises the impact of the revision to original estimates, if any, in profit or loss, with a corresponding adjustment to equity.The Group analyses financial assets and liabilities by various valuation methods. The different levels have been defined as follows:
The fair value of financial assets and liabilities is measured at amortised cost, except for receivables for which fair value is deemed to be the nominal amount.
The fair value of financial instruments traded in active markets is based on quoted market prices at the balance sheet date. A market is regarded as active if quoted prices are readily and regularly available from an exchange, dealer, broker, industry group, pricing service, or regulatory agency, and those prices represent actual and regularly occurring market transactions on an arm\u2019s length basis. The quoted market price used for financial assets held by the Group is the current bid price. These instruments are included in Level\u00a01. Instruments included in Level\u00a01 comprise primarily cash and cash equivalents and long-term investments (please refer to note\u00a021 \u201cOther non-current and current financial assets\u201d).
The fair value of financial instruments that are not traded in an active market (for example, over-the-counter derivatives) is determined by using valuation techniques. These valuation techniques maximise the use of observable market data where it is available and rely as little as possible on entity specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in Level\u00a02.
If one or more of the significant inputs is not based on observable market data, the instrument is included in Level\u00a03.
Specific valuation techniques used to value financial instruments include:
Refer to note\u00a026 \u201cFinancial assets and liabilities by category\u201d.
In the annual assessment of whether there is any indication that an asset may be impaired, the Group considers both external as well as internal sources of information. If such indication for impairment exists, an analysis is performed to assess whether the carrying value of the asset or cash generating unit under an operating lease exceeds the recoverable amount, being the higher of the fair value less costs to sell and the value in use. The value in use is determined at the present value of the future cash flows expected to be derived from the object or cash generating unit. The management closely monitors residual values, which are reviewed internally at least each financial year, in accordance with internal procedures. The original residual values within internal systems will be compared to the revised residual values expected at contract termination, following a review. The results of this exercise will be used to assess the level of exposure, reserves held and potential impairment required. To prevent impairment on residual values, each country completes a minimum of one annual review of pricing under the supervision of the Group to ensure that assumptions used in pricing reflect expected future market conditions, thus ensuring residual values are predicted with a reasonable degree of accuracy and on a consistent basis going forward.
At the end of 2022, no provision for impairment on rental fleet was required.", "dimensions": { "concept": "ifrs-full:DisclosureOfSummaryOfSignificantAccountingPoliciesExplanatory", "language": "en", "entity": "scheme:969500E7V019H9NP7427", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "corporatings-nesting-hOrtGw-15": { "value": "The consolidated financial statements of the Group have been prepared in accordance with International Financial Reporting Standards (IFRS) and interpretations issued by the IFRS\u00a0Interpretations Committee (IFRS\u00a0IC) applicable to companies reporting under IFRS. The financial statements comply with IFRS as issued by the International Accounting Standards Board (IASB).
The standards comprise IFRS\u00a01 to\u00a016 and International Accounting Standards (IAS)\u00a01 to\u00a041, as well as the interpretations of these standards adopted by the European Union as at 31\u00a0December 2022.", "dimensions": { "concept": "ifrs-full:StatementOfIFRSCompliance", "language": "en", "entity": "scheme:969500E7V019H9NP7427", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "corporatings-nesting-hOrtGw-16": { "value": "The Group has adopted the following new standards, amendments and interpretations to published standards for the first time for the financial year \u00a0starting on\u00a0 1\u00a0January 2022:
Accounting standards, amendments or Interpretations | Note | Adoption dates by the European Union |
|---|---|---|
Onerous Contracts \u2013 Costs of Fulfilling a Contract \u2013 Amendments to IAS\u00a037 | 3.2.1 | 1\u00a0January 2022 |
Reference to the Conceptual Framework \u2013 Amendments to IFRS\u00a03 | 3.2.2 | 1\u00a0January 2022 |
Property, Plant and Equipment: Proceeds before Intended Use \u2013 Amendments to IAS\u00a016 | 3.2.3 | 1\u00a0January 2022 |
IFRS\u00a09 Financial Instruments \u2013 Fees in the \u201810 per cent\u2019 test for derecognition of financial liabilities | 3.2.4 | 1\u00a0January 2022 |
An onerous contract is a contract under which the unavoidable costs (i.e., the costs that the Group cannot avoid because it has the contract) of meeting the obligations under the contract exceed the economic benefits expected to be received under it.
The amendments specify that when assessing whether a contract is onerous or loss-making, an entity needs to include costs that relate directly to a contract to provide goods or services include both incremental costs (e.g., the costs of direct labour and materials) and an allocation of costs directly related to contract activities (e.g., depreciation of equipment used to fulfil the contract as well as costs of contract management and supervision). General and administrative costs do not relate directly to a contract and are excluded unless they are explicitly chargeable to the counterparty under the contract. This amendment had no impact on the consolidated financial statements of the Group.
The amendments replace a reference to a previous version of the IASB\u2019s Conceptual Framework with a reference to the current version issued in March\u00a02018 without significantly changing its requirements. The amendments add an exception to the recognition principle of IFRS\u00a03 Business Combinations to avoid the issue of potential \u2018day\u00a02\u2019 gains or losses arising for liabilities and contingent liabilities that would be within the scope of IAS\u00a037 Provisions, Contingent Liabilities and Contingent Assets or IFRIC\u00a021 Levies, if incurred separately. The exception requires entities to apply the criteria in IAS\u00a037 or IFRIC\u00a021, respectively, instead of the Conceptual Framework, to determine whether a present obligation exists at the acquisition date.
The amendments also add a new paragraph to IFRS\u00a03 to clarify that contingent assets do not qualify for recognition at the acquisition date.
These amendments had no impact on the consolidated financial statements of the Group as there were no contingent assets, liabilities and contingent liabilities within the scope of these amendments arisen during the period.
The amendment prohibits entities from deducting from the cost of an item of property, plant and equipment, any proceeds of the sale of items produced while bringing that asset to the location and condition necessary for it to be capable of operating in the manner intended by management. Instead, an entity recognises the proceeds from selling such items, and the costs of producing those items, in profit or loss.
These amendments had no impact on the consolidated financial statements of the Group as there were no sales of such items produced by property, plant and equipment made available for use on or after the beginning of the earliest period presented.
The amendment clarifies the fees that an entity includes when assessing whether the terms of a new or modified financial liability are substantially different from the terms of the original financial liability. These fees include only those paid or received between the borrower and the lender, including fees paid or received by either the borrower or lender on the other\u2019s behalf. There is no similar amendment proposed for IAS\u00a039 Financial Instruments: Recognition and Measurement.
These amendments had no impact on the condensed consolidated financial statements of the Group as there were no modifications of the Group\u2019s financial instruments during the period.", "dimensions": { "concept": "ifrs-full:DisclosureOfChangesInAccountingPoliciesAccountingEstimatesAndErrorsExplanatory", "language": "en", "entity": "scheme:969500E7V019H9NP7427", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "corporatings-nesting-hOrtGw-17": { "value": "IASB publishes accounting standards, amendments and interpretations, some of which have not been adopted by the European Union as at 31\u00a0December 2022. They are required to be applied from annual periods beginning on 1\u00a0January 2023 at the earliest or on the date of their adoption by the European Union. They were therefore not applied by the Group as at 31\u00a0December 2022.
The Group will implement IFRS\u00a017 \u2018Insurance Contracts\u2019 including Amendments to IFRS\u00a017 once it becomes effective after 1\u00a0January 2023. This new standard will replace IFRS\u00a04 \u201cInsurance Contracts\u201d that was issued in 2004 and which currently allows entities to use national requirements for the accounting of insurance contracts.
IFRS\u00a017 provides new rules for the recognition, measurement, presentation and disclosure of insurance contracts that belong to its application scope (insurance contracts issued, reinsurance contracts held and investment contracts issued with discretionary participation features). The underwriting reserves currently recognised among liabilities in the balance sheet will be replaced by a current value measurement of insurance contracts.
Grouping of Contracts
Under IFRS\u00a017, the measurement of Insurance Contracts issued are required to be aggregated into homogeneous portfolios, where the contracts are subject to similar risks and managed together. Each portfolio is then required to be disaggregated into groups where the groups are segregated according to three levels of profitability:
The groups are determined upon initial recognition of the insurance contracts issued and each group must only contain contracts that are issued within the same 12\u00a0month period.
Similar requirements apply for Reinsurance Contracts held in terms of establishing portfolios and groups. However, the key difference is the groups are segregated according to two levels of profitability:
Measurement Model
The General Model provided for the measurement of insurance contracts on the balance sheet will be based on a building-block approach: a discounted best estimate of future cash flows, a risk adjustment and a contractual service margin.
The risk adjustment represents a margin for uncertainties in the estimated future cash flows with respect to non-financial risks. The contractual service margin represents the unearned profit in the insurance contract.
A positive contractual service margin will result in the profit being recognised over the duration of the contract as the insurance service is provided. However, in the case of expected loss-making contracts (Onerous Contracts), the loss will be immediately recognised in the income statement as soon as the insurance contract has been identified as being onerous.
At each valuation date, the liability for insurance contracts on the balance sheet is measured using current assumptions as the sum of two components:
Premium Allocation Approach
A simplified measurement approach called the Premium Allocation Approach (PAA) is permitted under the IFRS\u00a017 standard where certain eligibility criteria are met:
All contracts with 12\u00a0months coverage or less are automatically eligible whereas eligibility testing is required for contracts with coverage or greater than 12\u00a0months to support the justification outlined in (b)\u00a0above.
ALD Re DAC, a reinsurance subsidiary of the ALD Group, intends to apply the PAA at the first adoption of IFRS\u00a017 in 2023 and in subsequent reporting periods. The majority of ALD Re DAC\u2019s insurance contracts are for 12\u00a0months of coverage.
The PAA provides a simplified approach for measuring the liability for remaining coverage only. The liability for incurred claims will still be measured using the General Model (however, only using the discounted best estimate of future cash flows and the risk adjustment building blocks).
Accounting treatment under the PAA
The following accounting treatments apply under the PAA approach:
Risk adjustment
Under IFRS\u00a017, the risk adjustment is the compensation that the entity requires for bearing uncertainty about the amount and timing of cash flows that arise from non-financial risk. The risk adjustment is an entity specific measurement. The calculation must be explicit (separate from best estimate cash flows and discounting) and disclosure of the confidence level in the financial statements is required. The release of the risk adjustment over time (over the settlement period of claims) results in a recognition of profit.
Presentation of the financial performance
On the consolidated income statement, the profits and losses related to the insurance contracts issued and the reinsurance contracts held are presented under Services margin. The IFRS\u00a017 income statement distinguishes between:
The expenses for the services relating to the insurance and reinsurance contracts issued will then include a share of Operating Expenses that are considered directly attributable to the execution of the contracts which will thus be deducted from the Services margin.
Application of the IFRS\u00a017\u00a0standard
The initial application of IFRS\u00a017 as at 1\u00a0January 2023 will be retrospective and the comparative figures on the 2022 financial year will be restated.
The differences in measurement of the insurance assets and liabilities resulting from the retrospective application of IFRS\u00a017 as at 1\u00a0January 2022 will be presented directly under \u201cEquity\u201d. The retrospective measurement of these assets and liabilities may be subject to a simplified approach where historical data necessary is not available.
Transition
At this stage of the project aiming at implementing the IFRS\u00a017\u00a0standard by the Group\u2019s insurance entity, the consequences of its application in terms of amounts in the consolidated financial statements have been reasonably estimated and they do not present material amounts for the Group.
On 1\u00a0January 2023, the Group subsidiary ALD Ireland Re DAC operating in the insurance sector will, for the first time, apply the IFRS\u00a09 \u201cFinancial instruments\u201d standard the application of which was deferred for this entity according to the possibilities offered by the amendments to the IFRS\u00a017 and IFRS\u00a04 standards published by the IASB on 25\u00a0June 2020 and extended by regulations (EU)\u00a02017/1988 and (EU)\u00a02020/2097 of the European Commission.
The initial application of IFRS\u00a09 by the insurance entities of the Group as at 1\u00a0January 2023 will be retrospective.
For consistency purpose with the IFRS\u00a017 transition arrangements, and in order to provide more relevant information, the Group intends to restate the comparative figures for the 2022 financial year relating to the financial instruments concerned of its insurance entities.
The application of IFRS\u00a09 in the insurance entity is not expected to have a material impact on the Group financial statements at the time of the first adoption.
", "dimensions": { "concept": "ifrs-full:ExplanationOfNotAppliedNewStandardsOrInterpretations", "language": "en", "entity": "scheme:969500E7V019H9NP7427", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "corporatings-nesting-hOrtGw-19": { "value": "Group entities described in note\u00a038 \u201cScope of consolidation\u201d are included within the scope. Changes to the scope are presented in note\u00a07 \u201cChanges in the scope of consolidation\u201d in the year ended 31\u00a0December 2022.
Subsidiaries are all entities over which the Group has a controlling interest. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date that control ceases.
The asset-backed securitisation programme (described in note\u00a04 \u201cFinancial Risk Management\u201d) involved the sale of future lease receivables and related residual value receivables to special purpose companies. Special purpose companies are companies created to accomplish a narrow and well-defined objective, such as the securitisation of leased assets.
The financial statements of special purpose companies are included in the Group\u2019s consolidated financial statements where the substance of the relationship is that the Group continues to be exposed to risks and rewards from the securitised leased assets. The Group uses various legal entities, which have been incorporated specifically for the Group\u2019s securitisation transactions, and these companies are therefore regarded as subsidiaries and included in the consolidated financial statements of the Group.At 31\u00a0December 2022, all companies are fully consolidated. Changes in the scope of consolidation compared to December\u00a02021 are as follows:
The above mentioned changes in the consolidation scope impact mainly Rental Fleet and trade receivables for the amount of EUR 742 million and\u00a0 goodwill for the amount of EUR 71.9 million.
(in %) | As at 31\u00a0December | |
|---|---|---|
2022 | 2021 | |
ALD International\u00a0SA | Parent company | Parent company |
Consolidated companies under global integration | interest % | interest % |
ALD Autoleasing D\u00a0GmbH - GERMANY\u00a0* | 100.00 | 100.00 |
ALD Automotive OOO - RUSSIA | 100.00 | 100.00 |
ALD Automotive A/S - DENMARK | 100.00 | 100.00 |
ALD Automotive\u00a0AB - SWEDEN | 100.00 | 100.00 |
ALD Automotive\u00a0AG - SWITZERLAND | 100.00 | 100.00 |
ALD Automotive\u00a0AS - NORWAY | 100.00 | 100.00 |
ALD Automotive D.O.O. BEOGRAD - SERBIA | 100.00 | 100.00 |
ALD Automotive D.O.O. ZA. Operativni i Financijski Leasing - CROATIA\u00a0* | 100.00 | 100.00 |
ALD Automotive for Cars Rental and Fleet Management\u00a0S.A.E. - EGYPT | 100.00 | 100.00 |
ALD Automotive Fuhrparkmanagement und Leasing\u00a0GmbH - AUSTRIA | 100.00 | 100.00 |
ALD Automotive Group Limited - UK\u00a0* | 100.00 | 100.00 |
ALD Automotive\u00a0S.A. - BRAZIL | 100.00 | 100.00 |
ALD Automotive Magyarorszag Autopark - kezelo es Finanszirozo KFT - HUNGARY\u00a0* | 100.00 | 100.00 |
ALD Automotive Operational Leasing DOO - SLOVENIA | 100.00 | 100.00 |
ALD Automotive Polska Sp z o.o. - POLAND | 100.00 | 100.00 |
ALD Automotive Private Limited - INDIA | 100.00 | 100.00 |
ALD Automotive\u00a0S.A. de C.V. - MEXICO | 100.00 | 100.00 |
ALD Automotive\u00a0S.A. Lease of Cars - GREECE | 100.00 | 100.00 |
ALD Automotive\u00a0SAU - SPAIN\u00a0* | 100.00 | 100.00 |
ALD Automotive SRO - CZECH REPUBLIC | 100.00 | 100.00 |
ALD Automotive Turizm Ticaret Anonim Sirketi - TURKEY | 100.00 | 100.00 |
ALD Fleet\u00a0SA de CV SOFOM ENR | 100.00 | 100.00 |
ALD International\u00a0SAS & CO KG\u00a0* | 100.00 | 100.00 |
ALD Re Designated Activity Company - IRELAND | 100.00 | 100.00 |
Axus Finland\u00a0OY | 100.00 | 100.00 |
ALD Automotive Italia SRL | 100.00 | 100.00 |
Axus Luxembourg\u00a0SA | 100.00 | 100.00 |
Axus Nederland\u00a0BV\u00a0* | 100.00 | 100.00 |
Axus\u00a0SA\u00a0NV - BELGIUM\u00a0* | 100.00 | 100.00 |
ALD Automotive Ukraine Limited Liability Company | 100.00 | 100.00 |
SG ALD Automotive Sociedade Geral de Comercio e Aluguer de Benz sa - PORTUGAL | 100.00 | 100.00 |
TEMSYS - France\u00a0* | 100.00 | 100.00 |
ALD Automotive Algerie\u00a0SPA | 99.99 | 99.99 |
ALD Automotive SRL - ROMANIA | 80.00 | 80.00 |
NF Fleet A/S - DENMARK | 80.00 | 80.00 |
NF Fleet\u00a0OY - FINLAND | 80.00 | 80.00 |
NF fleet\u00a0AB - SWEDEN | 80.00 | 80.00 |
NF Fleet\u00a0AS - NORWAY | 80.00 | 80.00 |
ALD Automotive Eesti\u00a0AS - ESTONIA | 75.01 | 75.01 |
ALD Automotive SIA - LATVIA | 75.00 | 75.00 |
UAB ALD Automotive - LITHUANIA | 75.00 | 75.00 |
ALD Automotive EOOD - BULGARIA | 100.00 | 100.00 |
ALD Automotive Limitada - CHILE | 100.00 | 100.00 |
ALD Automotive Peru\u00a0S.A.C. | 100.00 | 100.00 |
ALD Mul Mobility Services Malaysia SND. BHD. - MALAYSIA | 60.00 | 60.00 |
UK FFM | 50.10 | \u2212 |
ALD Automotive\u00a0LLC (Belarus) | 100.00 | 100.00 |
ALD Automotive Euro Leasing B.V. | 50.10 | \u2212 |
Soluciones De Renting Movilidad S.L. | 100.00 | \u2212 |
Fleetpool Holding\u00a0GmbH | 100.00 | \u2212 |
ALD Automotive\u00a0S.A.S - COLOMBIA | 100.00 | 100.00 |
Merrion Fleet Management Limited | 100.00 | 100.00 |
ALD Automotive Slovakia S.R.O | 100.00 | 100.00 |
ALD International Participations\u00a0SAS | \u2212 | 100.00 |
Consolidated companies under equity method | ||
ALD Automotive\u00a0SA Maroc | 35.00 | 35.00 |
Nedderfeld 95 Immobilien Gmbh & Co. KG | \u2212 | 35.00 |
* Including subsidiaries. |
Subsidiaries are all entities over which the Group has a controlling interest. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date that control ceases.
The Group applies the acquisition method to account for business combinations.
The consideration transferred for the acquisition of a subsidiary is the fair values of the assets transferred, the liabilities incurred to the former owners of the company acquired and the equity interests issued by the Group. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date in accordance with IFRS\u00a03. The Group recognises any non-controlling interest in the company acquired on an acquisition-by-acquisition basis, either at fair value or at the non-controlling interest\u2019s proportionate share of the recognised amounts of acquiree\u2019s identifiable net assets.
Acquisition-related costs are expensed as incurred.
Inter-company transactions, balances and unrealised gains on transactions between Group companies are eliminated. Unrealised losses are also eliminated. When necessary, amounts reported by subsidiaries have been adjusted to conform to the Group\u2019s accounting policies.
Non-controlling interests represent equity interests in subsidiaries owned by outside parties. The share of net assets of subsidiaries attributable to non-controlling interests is presented as a component of equity. Their share of Net income and comprehensive income is recognised directly in equity. Changes in the parent company\u2019s ownership interest in subsidiaries that do not result in a loss of control are accounted for as equity transactions.
(in %) | As at 31\u00a0December | |
|---|---|---|
2022 | 2021 | |
ALD International\u00a0SA | Parent company | Parent company |
Consolidated companies under global integration | interest % | interest % |
ALD Autoleasing D\u00a0GmbH - GERMANY\u00a0* | 100.00 | 100.00 |
ALD Automotive OOO - RUSSIA | 100.00 | 100.00 |
ALD Automotive A/S - DENMARK | 100.00 | 100.00 |
ALD Automotive\u00a0AB - SWEDEN | 100.00 | 100.00 |
ALD Automotive\u00a0AG - SWITZERLAND | 100.00 | 100.00 |
ALD Automotive\u00a0AS - NORWAY | 100.00 | 100.00 |
ALD Automotive D.O.O. BEOGRAD - SERBIA | 100.00 | 100.00 |
ALD Automotive D.O.O. ZA. Operativni i Financijski Leasing - CROATIA\u00a0* | 100.00 | 100.00 |
ALD Automotive for Cars Rental and Fleet Management\u00a0S.A.E. - EGYPT | 100.00 | 100.00 |
ALD Automotive Fuhrparkmanagement und Leasing\u00a0GmbH - AUSTRIA | 100.00 | 100.00 |
ALD Automotive Group Limited - UK\u00a0* | 100.00 | 100.00 |
ALD Automotive\u00a0S.A. - BRAZIL | 100.00 | 100.00 |
ALD Automotive Magyarorszag Autopark - kezelo es Finanszirozo KFT - HUNGARY\u00a0* | 100.00 | 100.00 |
ALD Automotive Operational Leasing DOO - SLOVENIA | 100.00 | 100.00 |
ALD Automotive Polska Sp z o.o. - POLAND | 100.00 | 100.00 |
ALD Automotive Private Limited - INDIA | 100.00 | 100.00 |
ALD Automotive\u00a0S.A. de C.V. - MEXICO | 100.00 | 100.00 |
ALD Automotive\u00a0S.A. Lease of Cars - GREECE | 100.00 | 100.00 |
ALD Automotive\u00a0SAU - SPAIN\u00a0* | 100.00 | 100.00 |
ALD Automotive SRO - CZECH REPUBLIC | 100.00 | 100.00 |
ALD Automotive Turizm Ticaret Anonim Sirketi - TURKEY | 100.00 | 100.00 |
ALD Fleet\u00a0SA de CV SOFOM ENR | 100.00 | 100.00 |
ALD International\u00a0SAS & CO KG\u00a0* | 100.00 | 100.00 |
ALD Re Designated Activity Company - IRELAND | 100.00 | 100.00 |
Axus Finland\u00a0OY | 100.00 | 100.00 |
ALD Automotive Italia SRL | 100.00 | 100.00 |
Axus Luxembourg\u00a0SA | 100.00 | 100.00 |
Axus Nederland\u00a0BV\u00a0* | 100.00 | 100.00 |
Axus\u00a0SA\u00a0NV - BELGIUM\u00a0* | 100.00 | 100.00 |
ALD Automotive Ukraine Limited Liability Company | 100.00 | 100.00 |
SG ALD Automotive Sociedade Geral de Comercio e Aluguer de Benz sa - PORTUGAL | 100.00 | 100.00 |
TEMSYS - France\u00a0* | 100.00 | 100.00 |
ALD Automotive Algerie\u00a0SPA | 99.99 | 99.99 |
ALD Automotive SRL - ROMANIA | 80.00 | 80.00 |
NF Fleet A/S - DENMARK | 80.00 | 80.00 |
NF Fleet\u00a0OY - FINLAND | 80.00 | 80.00 |
NF fleet\u00a0AB - SWEDEN | 80.00 | 80.00 |
NF Fleet\u00a0AS - NORWAY | 80.00 | 80.00 |
ALD Automotive Eesti\u00a0AS - ESTONIA | 75.01 | 75.01 |
ALD Automotive SIA - LATVIA | 75.00 | 75.00 |
UAB ALD Automotive - LITHUANIA | 75.00 | 75.00 |
ALD Automotive EOOD - BULGARIA | 100.00 | 100.00 |
ALD Automotive Limitada - CHILE | 100.00 | 100.00 |
ALD Automotive Peru\u00a0S.A.C. | 100.00 | 100.00 |
ALD Mul Mobility Services Malaysia SND. BHD. - MALAYSIA | 60.00 | 60.00 |
UK FFM | 50.10 | \u2212 |
ALD Automotive\u00a0LLC (Belarus) | 100.00 | 100.00 |
ALD Automotive Euro Leasing B.V. | 50.10 | \u2212 |
Soluciones De Renting Movilidad S.L. | 100.00 | \u2212 |
Fleetpool Holding\u00a0GmbH | 100.00 | \u2212 |
ALD Automotive\u00a0S.A.S - COLOMBIA | 100.00 | 100.00 |
Merrion Fleet Management Limited | 100.00 | 100.00 |
ALD Automotive Slovakia S.R.O | 100.00 | 100.00 |
ALD International Participations\u00a0SAS | \u2212 | 100.00 |
Consolidated companies under equity method | ||
ALD Automotive\u00a0SA Maroc | 35.00 | 35.00 |
Nedderfeld 95 Immobilien Gmbh & Co. KG | \u2212 | 35.00 |
* Including subsidiaries. |
Subsidiaries are all entities over which the Group has a controlling interest. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date that control ceases.
The Group applies the acquisition method to account for business combinations.
The consideration transferred for the acquisition of a subsidiary is the fair values of the assets transferred, the liabilities incurred to the former owners of the company acquired and the equity interests issued by the Group. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date in accordance with IFRS\u00a03. The Group recognises any non-controlling interest in the company acquired on an acquisition-by-acquisition basis, either at fair value or at the non-controlling interest\u2019s proportionate share of the recognised amounts of acquiree\u2019s identifiable net assets.
Acquisition-related costs are expensed as incurred.
Inter-company transactions, balances and unrealised gains on transactions between Group companies are eliminated. Unrealised losses are also eliminated. When necessary, amounts reported by subsidiaries have been adjusted to conform to the Group\u2019s accounting policies.
Non-controlling interests represent equity interests in subsidiaries owned by outside parties. The share of net assets of subsidiaries attributable to non-controlling interests is presented as a component of equity. Their share of Net income and comprehensive income is recognised directly in equity. Changes in the parent company\u2019s ownership interest in subsidiaries that do not result in a loss of control are accounted for as equity transactions.
Associates are all entities over which the Company has significant influence, but not control. The Company accounts for its investment in associates using the equity method. The Company\u2019s share of profits or losses of associates is recognised in the consolidated statement of income and its share of other comprehensive income (loss) of associates is included in other comprehensive income.
Unrealised gains on transactions between the Company and an associate are eliminated to the extent of the Company\u2019s interest in the associate. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Dilution gains and losses arising from changes in interests in investments in associates are recognised in the consolidated statement of income.
Further details are provided in note\u00a019 \u201cInvestments in associates\u201d.The Group applies IFRS\u00a011 to all joint arrangements. Under IFRS\u00a011, investments in joint arrangements are classified as either joint operations or joint ventures depending on the contractual rights and obligations of each investor. The Group has assessed the nature of its joint arrangements and determined them to be joint ventures. Joint ventures are accounted for using the equity method.
Under the equity method of accounting, interests in joint ventures are initially recognised at cost and adjusted thereafter to recognise the Group\u2019s share of the post-acquisition profits or losses and movements in other comprehensive income.
When the Group\u2019s share of losses in a joint venture equals or exceeds its interests in the joint ventures (which includes any long-term interests that, in substance, form part of the Group\u2019s net investment in the joint ventures), the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the joint ventures.
Unrealised gains on transactions between the Group and its joint ventures are eliminated to the extent of the Group\u2019s interest in the joint ventures. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of the joint ventures are modified where necessary to ensure consistency with the policies adopted by the Group.The asset-backed securitisation programme (described in note\u00a04 \u201cFinancial Risk Management\u201d) involved the sale of future lease receivables and related residual value receivables to special purpose companies. Special purpose companies are companies created to accomplish a narrow and well-defined objective, such as the securitisation of leased assets.
The financial statements of special purpose companies are included in the Group\u2019s consolidated financial statements where the substance of the relationship is that the Group continues to be exposed to risks and rewards from the securitised leased assets. The Group uses various legal entities, which have been incorporated specifically for the Group\u2019s securitisation transactions, and these companies are therefore regarded as subsidiaries and included in the consolidated financial statements of the Group.(in EUR million) | Year ended 31\u00a0December | |
|---|---|---|
2022 | 2021 | |
Balance as at 1\u00a0January | 7.9 | 10.2 |
Share of results | 1.7 | (2.6) |
Currency translation differences | (0.4) | 0.3 |
Scope changes | (1.2) | \u2212 |
Balance as at 31\u00a0December | 7.9 | 7.9 |
On 1\u00a0October 2022, ALD signed an agreement to acquire the remaining shares in Nedderfeld\u00a095 Immobilien Gmbh & Co.KG, such that it became a 100% subsidiary and has been subconsolidated within the Group\u2019s German subsidiary\u2019s financial statements as at 31\u00a0December 2022. Nedderfeld\u00a095 Immobilien Gmbh & Co. had previously been a 35% associate of ALD accounted for using equity method.
Name | Country of incorporation | Assets | Liabilities\u00a0(1) | Revenues | Profit/(Loss) | % interest held |
|---|---|---|---|---|---|---|
As at 1\u00a0January 2021 | ||||||
ALD Automotive\u00a0SA Morocco | MOROCCO | 53.2 | 44.3 | 22.3 | 1.9 | 35% |
Nedderfeld 95 Immobilien Gmbh & Co. KG | GERMANY | 1.2 | 0.0 | \u2212 | \u2212 | 35% |
Total | 54.4 | 44.3 | 22.3 | 1.9 | ||
As at 31\u00a0December 2021 | ||||||
ALD Automotive\u00a0SA Morocco | MOROCCO | 52.2 | 45.5 | 19.1 | (1.9) | 35% |
Nedderfeld 95 Immobilien Gmbh & Co. KG | GERMANY | 1.2 | 0.0 | \u2212 | \u2212 | 35% |
Total | 53.4 | 45.5 | 19.1 | (1.9) | ||
As at 31\u00a0December 2022 | ||||||
ALD Automotive\u00a0SA Morocco | MOROCCO | 49.3 | \u00a0 41.4 | 18.2 | 1.7 | 35% |
Total | 49.3 | 41.4 | 18.2 | 1.7 | ||
(1) Excluding net equity. |
(in %) | As at 31\u00a0December | |
|---|---|---|
2022 | 2021 | |
ALD International\u00a0SA | Parent company | Parent company |
Consolidated companies under global integration | interest % | interest % |
ALD Autoleasing D\u00a0GmbH - GERMANY\u00a0* | 100.00 | 100.00 |
ALD Automotive OOO - RUSSIA | 100.00 | 100.00 |
ALD Automotive A/S - DENMARK | 100.00 | 100.00 |
ALD Automotive\u00a0AB - SWEDEN | 100.00 | 100.00 |
ALD Automotive\u00a0AG - SWITZERLAND | 100.00 | 100.00 |
ALD Automotive\u00a0AS - NORWAY | 100.00 | 100.00 |
ALD Automotive D.O.O. BEOGRAD - SERBIA | 100.00 | 100.00 |
ALD Automotive D.O.O. ZA. Operativni i Financijski Leasing - CROATIA\u00a0* | 100.00 | 100.00 |
ALD Automotive for Cars Rental and Fleet Management\u00a0S.A.E. - EGYPT | 100.00 | 100.00 |
ALD Automotive Fuhrparkmanagement und Leasing\u00a0GmbH - AUSTRIA | 100.00 | 100.00 |
ALD Automotive Group Limited - UK\u00a0* | 100.00 | 100.00 |
ALD Automotive\u00a0S.A. - BRAZIL | 100.00 | 100.00 |
ALD Automotive Magyarorszag Autopark - kezelo es Finanszirozo KFT - HUNGARY\u00a0* | 100.00 | 100.00 |
ALD Automotive Operational Leasing DOO - SLOVENIA | 100.00 | 100.00 |
ALD Automotive Polska Sp z o.o. - POLAND | 100.00 | 100.00 |
ALD Automotive Private Limited - INDIA | 100.00 | 100.00 |
ALD Automotive\u00a0S.A. de C.V. - MEXICO | 100.00 | 100.00 |
ALD Automotive\u00a0S.A. Lease of Cars - GREECE | 100.00 | 100.00 |
ALD Automotive\u00a0SAU - SPAIN\u00a0* | 100.00 | 100.00 |
ALD Automotive SRO - CZECH REPUBLIC | 100.00 | 100.00 |
ALD Automotive Turizm Ticaret Anonim Sirketi - TURKEY | 100.00 | 100.00 |
ALD Fleet\u00a0SA de CV SOFOM ENR | 100.00 | 100.00 |
ALD International\u00a0SAS & CO KG\u00a0* | 100.00 | 100.00 |
ALD Re Designated Activity Company - IRELAND | 100.00 | 100.00 |
Axus Finland\u00a0OY | 100.00 | 100.00 |
ALD Automotive Italia SRL | 100.00 | 100.00 |
Axus Luxembourg\u00a0SA | 100.00 | 100.00 |
Axus Nederland\u00a0BV\u00a0* | 100.00 | 100.00 |
Axus\u00a0SA\u00a0NV - BELGIUM\u00a0* | 100.00 | 100.00 |
ALD Automotive Ukraine Limited Liability Company | 100.00 | 100.00 |
SG ALD Automotive Sociedade Geral de Comercio e Aluguer de Benz sa - PORTUGAL | 100.00 | 100.00 |
TEMSYS - France\u00a0* | 100.00 | 100.00 |
ALD Automotive Algerie\u00a0SPA | 99.99 | 99.99 |
ALD Automotive SRL - ROMANIA | 80.00 | 80.00 |
NF Fleet A/S - DENMARK | 80.00 | 80.00 |
NF Fleet\u00a0OY - FINLAND | 80.00 | 80.00 |
NF fleet\u00a0AB - SWEDEN | 80.00 | 80.00 |
NF Fleet\u00a0AS - NORWAY | 80.00 | 80.00 |
ALD Automotive Eesti\u00a0AS - ESTONIA | 75.01 | 75.01 |
ALD Automotive SIA - LATVIA | 75.00 | 75.00 |
UAB ALD Automotive - LITHUANIA | 75.00 | 75.00 |
ALD Automotive EOOD - BULGARIA | 100.00 | 100.00 |
ALD Automotive Limitada - CHILE | 100.00 | 100.00 |
ALD Automotive Peru\u00a0S.A.C. | 100.00 | 100.00 |
ALD Mul Mobility Services Malaysia SND. BHD. - MALAYSIA | 60.00 | 60.00 |
UK FFM | 50.10 | \u2212 |
ALD Automotive\u00a0LLC (Belarus) | 100.00 | 100.00 |
ALD Automotive Euro Leasing B.V. | 50.10 | \u2212 |
Soluciones De Renting Movilidad S.L. | 100.00 | \u2212 |
Fleetpool Holding\u00a0GmbH | 100.00 | \u2212 |
ALD Automotive\u00a0S.A.S - COLOMBIA | 100.00 | 100.00 |
Merrion Fleet Management Limited | 100.00 | 100.00 |
ALD Automotive Slovakia S.R.O | 100.00 | 100.00 |
ALD International Participations\u00a0SAS | \u2212 | 100.00 |
Consolidated companies under equity method | ||
ALD Automotive\u00a0SA Maroc | 35.00 | 35.00 |
Nedderfeld 95 Immobilien Gmbh & Co. KG | \u2212 | 35.00 |
* Including subsidiaries. |
Subsidiaries are all entities over which the Group has a controlling interest. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date that control ceases.
The Group applies the acquisition method to account for business combinations.
The consideration transferred for the acquisition of a subsidiary is the fair values of the assets transferred, the liabilities incurred to the former owners of the company acquired and the equity interests issued by the Group. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date in accordance with IFRS\u00a03. The Group recognises any non-controlling interest in the company acquired on an acquisition-by-acquisition basis, either at fair value or at the non-controlling interest\u2019s proportionate share of the recognised amounts of acquiree\u2019s identifiable net assets.
Acquisition-related costs are expensed as incurred.
Inter-company transactions, balances and unrealised gains on transactions between Group companies are eliminated. Unrealised losses are also eliminated. When necessary, amounts reported by subsidiaries have been adjusted to conform to the Group\u2019s accounting policies.
Non-controlling interests represent equity interests in subsidiaries owned by outside parties. The share of net assets of subsidiaries attributable to non-controlling interests is presented as a component of equity. Their share of Net income and comprehensive income is recognised directly in equity. Changes in the parent company\u2019s ownership interest in subsidiaries that do not result in a loss of control are accounted for as equity transactions.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForSubsidiariesExplanatory", "language": "en", "entity": "scheme:969500E7V019H9NP7427", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "f22061": { "value": "The Group applies the acquisition method to account for business combinations.
The consideration transferred for the acquisition of a subsidiary is the fair values of the assets transferred, the liabilities incurred to the former owners of the company acquired and the equity interests issued by the Group. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date in accordance with IFRS\u00a03. The Group recognises any non-controlling interest in the company acquired on an acquisition-by-acquisition basis, either at fair value or at the non-controlling interest\u2019s proportionate share of the recognised amounts of acquiree\u2019s identifiable net assets.
Acquisition-related costs are expensed as incurred.
Inter-company transactions, balances and unrealised gains on transactions between Group companies are eliminated. Unrealised losses are also eliminated. When necessary, amounts reported by subsidiaries have been adjusted to conform to the Group\u2019s accounting policies.
Non-controlling interests represent equity interests in subsidiaries owned by outside parties. The share of net assets of subsidiaries attributable to non-controlling interests is presented as a component of equity. Their share of Net income and comprehensive income is recognised directly in equity. Changes in the parent company\u2019s ownership interest in subsidiaries that do not result in a loss of control are accounted for as equity transactions.
Goodwill arises on the acquisition of subsidiaries, associates and joint ventures and represents the excess of the consideration transferred over the Group\u2019s interest in net fair value of the net identifiable assets, liabilities and contingent liabilities of the acquirer. Goodwill is measured at cost less any accumulated impairment losses. When the excess is negative (negative goodwill), it is recognised immediately in the statement of income.
For the purpose of impairment testing, goodwill acquired in a business combination is allocated to each of the cash generating units (\u201cCGUs\u201d), or groups of CGUs, which is expected to benefit from the synergies of the combination. Each unit or group of units to which the goodwill is allocated represents the lowest level within the entity at which the goodwill is monitored for internal management purposes. Goodwill is monitored as follows:
Goodwill impairment reviews are undertaken annually or more frequently if events or changes in circumstances indicate a potential impairment. The carrying value of goodwill is compared to the recoverable amount, which is the higher of value in use and the fair value less costs to sell. Any impairment is recognised immediately as an expense and is not subsequently reversed.
Further details are provided in note\u00a05.2 \u201cEstimated impairment of goodwill\u201d.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForBusinessCombinationsExplanatory", "language": "en", "entity": "scheme:969500E7V019H9NP7427", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "corporatings-nesting-fix-yFwUWG-40": { "value": "The Group applies the acquisition method to account for business combinations.
The consideration transferred for the acquisition of a subsidiary is the fair values of the assets transferred, the liabilities incurred to the former owners of the company acquired and the equity interests issued by the Group. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date in accordance with IFRS\u00a03. The Group recognises any non-controlling interest in the company acquired on an acquisition-by-acquisition basis, either at fair value or at the non-controlling interest\u2019s proportionate share of the recognised amounts of acquiree\u2019s identifiable net assets.
Acquisition-related costs are expensed as incurred.
Inter-company transactions, balances and unrealised gains on transactions between Group companies are eliminated. Unrealised losses are also eliminated. When necessary, amounts reported by subsidiaries have been adjusted to conform to the Group\u2019s accounting policies.
Non-controlling interests represent equity interests in subsidiaries owned by outside parties. The share of net assets of subsidiaries attributable to non-controlling interests is presented as a component of equity. Their share of Net income and comprehensive income is recognised directly in equity. Changes in the parent company\u2019s ownership interest in subsidiaries that do not result in a loss of control are accounted for as equity transactions.
Goodwill arises on the acquisition of subsidiaries, associates and joint ventures and represents the excess of the consideration transferred over the Group\u2019s interest in net fair value of the net identifiable assets, liabilities and contingent liabilities of the acquirer. Goodwill is measured at cost less any accumulated impairment losses. When the excess is negative (negative goodwill), it is recognised immediately in the statement of income.
For the purpose of impairment testing, goodwill acquired in a business combination is allocated to each of the cash generating units (\u201cCGUs\u201d), or groups of CGUs, which is expected to benefit from the synergies of the combination. Each unit or group of units to which the goodwill is allocated represents the lowest level within the entity at which the goodwill is monitored for internal management purposes. Goodwill is monitored as follows:
Goodwill impairment reviews are undertaken annually or more frequently if events or changes in circumstances indicate a potential impairment. The carrying value of goodwill is compared to the recoverable amount, which is the higher of value in use and the fair value less costs to sell. Any impairment is recognised immediately as an expense and is not subsequently reversed.
Further details are provided in note\u00a05.2 \u201cEstimated impairment of goodwill\u201d.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForBusinessCombinationsAndGoodwillExplanatory", "language": "en", "entity": "scheme:969500E7V019H9NP7427", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "corporatings-nesting-fix-yFwUWG-49": { "value": "Associates are all entities over which the Company has significant influence, but not control. The Company accounts for its investment in associates using the equity method. The Company\u2019s share of profits or losses of associates is recognised in the consolidated statement of income and its share of other comprehensive income (loss) of associates is included in other comprehensive income.
Unrealised gains on transactions between the Company and an associate are eliminated to the extent of the Company\u2019s interest in the associate. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Dilution gains and losses arising from changes in interests in investments in associates are recognised in the consolidated statement of income.
Further details are provided in note\u00a019 \u201cInvestments in associates\u201d.The Group applies IFRS\u00a011 to all joint arrangements. Under IFRS\u00a011, investments in joint arrangements are classified as either joint operations or joint ventures depending on the contractual rights and obligations of each investor. The Group has assessed the nature of its joint arrangements and determined them to be joint ventures. Joint ventures are accounted for using the equity method.
Under the equity method of accounting, interests in joint ventures are initially recognised at cost and adjusted thereafter to recognise the Group\u2019s share of the post-acquisition profits or losses and movements in other comprehensive income.
When the Group\u2019s share of losses in a joint venture equals or exceeds its interests in the joint ventures (which includes any long-term interests that, in substance, form part of the Group\u2019s net investment in the joint ventures), the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the joint ventures.
Unrealised gains on transactions between the Group and its joint ventures are eliminated to the extent of the Group\u2019s interest in the joint ventures. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of the joint ventures are modified where necessary to ensure consistency with the policies adopted by the Group.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForInvestmentInAssociatesAndJointVenturesExplanatory", "language": "en", "entity": "scheme:969500E7V019H9NP7427", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "corporatings-nesting-fix-yFwUWG-48": { "value": "Associates are all entities over which the Company has significant influence, but not control. The Company accounts for its investment in associates using the equity method. The Company\u2019s share of profits or losses of associates is recognised in the consolidated statement of income and its share of other comprehensive income (loss) of associates is included in other comprehensive income.
Unrealised gains on transactions between the Company and an associate are eliminated to the extent of the Company\u2019s interest in the associate. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Dilution gains and losses arising from changes in interests in investments in associates are recognised in the consolidated statement of income.
Further details are provided in note\u00a019 \u201cInvestments in associates\u201d.(in EUR million) | Year ended 31\u00a0December | |
|---|---|---|
2022 | 2021 | |
Balance as at 1\u00a0January | 7.9 | 10.2 |
Share of results | 1.7 | (2.6) |
Currency translation differences | (0.4) | 0.3 |
Scope changes | (1.2) | \u2212 |
Balance as at 31\u00a0December | 7.9 | 7.9 |
On 1\u00a0October 2022, ALD signed an agreement to acquire the remaining shares in Nedderfeld\u00a095 Immobilien Gmbh & Co.KG, such that it became a 100% subsidiary and has been subconsolidated within the Group\u2019s German subsidiary\u2019s financial statements as at 31\u00a0December 2022. Nedderfeld\u00a095 Immobilien Gmbh & Co. had previously been a 35% associate of ALD accounted for using equity method.
Name | Country of incorporation | Assets | Liabilities\u00a0(1) | Revenues | Profit/(Loss) | % interest held |
|---|---|---|---|---|---|---|
As at 1\u00a0January 2021 | ||||||
ALD Automotive\u00a0SA Morocco | MOROCCO | 53.2 | 44.3 | 22.3 | 1.9 | 35% |
Nedderfeld 95 Immobilien Gmbh & Co. KG | GERMANY | 1.2 | 0.0 | \u2212 | \u2212 | 35% |
Total | 54.4 | 44.3 | 22.3 | 1.9 | ||
As at 31\u00a0December 2021 | ||||||
ALD Automotive\u00a0SA Morocco | MOROCCO | 52.2 | 45.5 | 19.1 | (1.9) | 35% |
Nedderfeld 95 Immobilien Gmbh & Co. KG | GERMANY | 1.2 | 0.0 | \u2212 | \u2212 | 35% |
Total | 53.4 | 45.5 | 19.1 | (1.9) | ||
As at 31\u00a0December 2022 | ||||||
ALD Automotive\u00a0SA Morocco | MOROCCO | 49.3 | \u00a0 41.4 | 18.2 | 1.7 | 35% |
Total | 49.3 | 41.4 | 18.2 | 1.7 | ||
(1) Excluding net equity. |
Associates are all entities over which the Company has significant influence, but not control. The Company accounts for its investment in associates using the equity method. The Company\u2019s share of profits or losses of associates is recognised in the consolidated statement of income and its share of other comprehensive income (loss) of associates is included in other comprehensive income.
Unrealised gains on transactions between the Company and an associate are eliminated to the extent of the Company\u2019s interest in the associate. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Dilution gains and losses arising from changes in interests in investments in associates are recognised in the consolidated statement of income.
Further details are provided in note\u00a019 \u201cInvestments in associates\u201d.The Group applies IFRS\u00a011 to all joint arrangements. Under IFRS\u00a011, investments in joint arrangements are classified as either joint operations or joint ventures depending on the contractual rights and obligations of each investor. The Group has assessed the nature of its joint arrangements and determined them to be joint ventures. Joint ventures are accounted for using the equity method.
Under the equity method of accounting, interests in joint ventures are initially recognised at cost and adjusted thereafter to recognise the Group\u2019s share of the post-acquisition profits or losses and movements in other comprehensive income.
When the Group\u2019s share of losses in a joint venture equals or exceeds its interests in the joint ventures (which includes any long-term interests that, in substance, form part of the Group\u2019s net investment in the joint ventures), the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the joint ventures.
Unrealised gains on transactions between the Group and its joint ventures are eliminated to the extent of the Group\u2019s interest in the joint ventures. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of the joint ventures are modified where necessary to ensure consistency with the policies adopted by the Group.(in EUR million) | Year ended 31\u00a0December | |
|---|---|---|
2022 | 2021 | |
Balance as at 1\u00a0January | 7.9 | 10.2 |
Share of results | 1.7 | (2.6) |
Currency translation differences | (0.4) | 0.3 |
Scope changes | (1.2) | \u2212 |
Balance as at 31\u00a0December | 7.9 | 7.9 |
On 1\u00a0October 2022, ALD signed an agreement to acquire the remaining shares in Nedderfeld\u00a095 Immobilien Gmbh & Co.KG, such that it became a 100% subsidiary and has been subconsolidated within the Group\u2019s German subsidiary\u2019s financial statements as at 31\u00a0December 2022. Nedderfeld\u00a095 Immobilien Gmbh & Co. had previously been a 35% associate of ALD accounted for using equity method.
Name | Country of incorporation | Assets | Liabilities\u00a0(1) | Revenues | Profit/(Loss) | % interest held |
|---|---|---|---|---|---|---|
As at 1\u00a0January 2021 | ||||||
ALD Automotive\u00a0SA Morocco | MOROCCO | 53.2 | 44.3 | 22.3 | 1.9 | 35% |
Nedderfeld 95 Immobilien Gmbh & Co. KG | GERMANY | 1.2 | 0.0 | \u2212 | \u2212 | 35% |
Total | 54.4 | 44.3 | 22.3 | 1.9 | ||
As at 31\u00a0December 2021 | ||||||
ALD Automotive\u00a0SA Morocco | MOROCCO | 52.2 | 45.5 | 19.1 | (1.9) | 35% |
Nedderfeld 95 Immobilien Gmbh & Co. KG | GERMANY | 1.2 | 0.0 | \u2212 | \u2212 | 35% |
Total | 53.4 | 45.5 | 19.1 | (1.9) | ||
As at 31\u00a0December 2022 | ||||||
ALD Automotive\u00a0SA Morocco | MOROCCO | 49.3 | \u00a0 41.4 | 18.2 | 1.7 | 35% |
Total | 49.3 | 41.4 | 18.2 | 1.7 | ||
(1) Excluding net equity. |
Associates are all entities over which the Company has significant influence, but not control. The Company accounts for its investment in associates using the equity method. The Company\u2019s share of profits or losses of associates is recognised in the consolidated statement of income and its share of other comprehensive income (loss) of associates is included in other comprehensive income.
Unrealised gains on transactions between the Company and an associate are eliminated to the extent of the Company\u2019s interest in the associate. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Dilution gains and losses arising from changes in interests in investments in associates are recognised in the consolidated statement of income.
Further details are provided in note\u00a019 \u201cInvestments in associates\u201d.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForInvestmentInAssociates", "language": "en", "entity": "scheme:969500E7V019H9NP7427", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "corporatings-nesting-fix-yFwUWG-63": { "value": "The Group applies IFRS\u00a011 to all joint arrangements. Under IFRS\u00a011, investments in joint arrangements are classified as either joint operations or joint ventures depending on the contractual rights and obligations of each investor. The Group has assessed the nature of its joint arrangements and determined them to be joint ventures. Joint ventures are accounted for using the equity method.
Under the equity method of accounting, interests in joint ventures are initially recognised at cost and adjusted thereafter to recognise the Group\u2019s share of the post-acquisition profits or losses and movements in other comprehensive income.
When the Group\u2019s share of losses in a joint venture equals or exceeds its interests in the joint ventures (which includes any long-term interests that, in substance, form part of the Group\u2019s net investment in the joint ventures), the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the joint ventures.
Unrealised gains on transactions between the Group and its joint ventures are eliminated to the extent of the Group\u2019s interest in the joint ventures. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of the joint ventures are modified where necessary to ensure consistency with the policies adopted by the Group.", "dimensions": { "concept": "ifrs-full:DisclosureOfJointVenturesExplanatory", "language": "en", "entity": "scheme:969500E7V019H9NP7427", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "corporatings-nesting-hOrtGw-22": { "value": "The Group applies IFRS\u00a011 to all joint arrangements. Under IFRS\u00a011, investments in joint arrangements are classified as either joint operations or joint ventures depending on the contractual rights and obligations of each investor. The Group has assessed the nature of its joint arrangements and determined them to be joint ventures. Joint ventures are accounted for using the equity method.
Under the equity method of accounting, interests in joint ventures are initially recognised at cost and adjusted thereafter to recognise the Group\u2019s share of the post-acquisition profits or losses and movements in other comprehensive income.
When the Group\u2019s share of losses in a joint venture equals or exceeds its interests in the joint ventures (which includes any long-term interests that, in substance, form part of the Group\u2019s net investment in the joint ventures), the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the joint ventures.
Unrealised gains on transactions between the Group and its joint ventures are eliminated to the extent of the Group\u2019s interest in the joint ventures. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of the joint ventures are modified where necessary to ensure consistency with the policies adopted by the Group.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForInvestmentsInJointVentures", "language": "en", "entity": "scheme:969500E7V019H9NP7427", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "corporatings-nesting-hOrtGw-24": { "value": "Items included in the financial statements of each of the Group\u2019s entities are measured using the currency of the primary economic environment in which the entity operates (\u201cthe functional currency\u201d). The consolidated financial statements are presented in millions of Euros, which is the Group\u2019s presentation currency and it has been rounded to the nearest million, unless otherwise indicated. In certain cases, rounding may cause non-material discrepancies in the lines and columns showing totals.
31\u00a0December 2022 | 31\u00a0December 2021 | |||
|---|---|---|---|---|
Period-end Rate | Average Rate | Period-end Rate | Average Rate | |
EUR/Russian Ruble | 76.8600 | 73.9748 | 85.3004 | 87.2321 |
EUR/Ukrainian Hryvnia | 36.9170 | 34.4424 | 30.8765 | 32.2531 |
EUR/Brazilian Real | 5.6386 | 5.4432 | 6.3101 | 6.3814 |
EUR/UK Pound | 0.8869 | 0.8526 | 0.8403 | 0.8600 |
EUR/Swedish Krona | 11.1218 | 10.6274 | 10.2503 | 10.1449 |
EUR/Norwegian Krone | 10.5138 | 10.1015 | 9.9888 | 10.1634 |
The results and financial position of all the Group entities (none of which has the currency of a hyper-inflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows:
Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing rate. Exchange differences arising are recognised in comprehensive income.
The subsidiary in Turkey which operates in a hyperinflationary economy has been translated wholly at the closing rate.
The main exchange rates used in the consolidated financial statements for the years ended 31\u00a0December 2022 and 31\u00a0December 2021 are based on Paris stock exchange rates and are as follows:
31\u00a0December 2022 | 31\u00a0December 2021 | |||
|---|---|---|---|---|
Period-end Rate | Average Rate | Period-end Rate | Average Rate | |
EUR/Russian Ruble | 76.8600 | 73.9748 | 85.3004 | 87.2321 |
EUR/Ukrainian Hryvnia | 36.9170 | 34.4424 | 30.8765 | 32.2531 |
EUR/Brazilian Real | 5.6386 | 5.4432 | 6.3101 | 6.3814 |
EUR/UK Pound | 0.8869 | 0.8526 | 0.8403 | 0.8600 |
EUR/Swedish Krona | 11.1218 | 10.6274 | 10.2503 | 10.1449 |
EUR/Norwegian Krone | 10.5138 | 10.1015 | 9.9888 | 10.1634 |
IFRS\u00a016 concerns any contract meeting the definition of a lease. There are exceptions in the standard which are not applicable to the Group. Lessees are not required to apply this standard to intangible assets leases (software for example). In preparing the application of the standard, the Group uses this option. All of the Group\u2019s right-of-use assets relate to building leases contracted for the lease of commercial and office space and vehicles.
The lease period to be applied in determining the rental payments to be discounted will match the non- cancellable period of the lease adjusted for:
The measurement of the reasonable certainty of exercising or not exercising the extension or early termination options shall take into account all the facts and circumstances that may create an economic incentive to exercise or not to exercise these options.
In the event of a change of circumstances of the lessee which has an impact on the certainty of exercise of an option that the lessee has or has not included in its calculation of the lease term, the term must be re-estimated.
Following a change in the lease term (re-estimate or revision), the lease obligation must be reassessed to reflect those changes. The revised rate is the interest rate implicit in the lease for the remaining term of the contract if it is possible to calculate this rate, otherwise the lessee must use its incremental borrowing rate on the date of modification of the lease term.
The Group recognises right-of-use assets at the commencement date of the lease (i.e. the date the underlying asset is available for use). Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any remeasurement of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities recognised, initial direct costs incurred, and lease payments made at or before the commencement date less any lease incentives received. Unless the Group is reasonably certain to obtain ownership of the leased asset at the end of the lease term, the recognised right-of-use assets are depreciated on a straight-line basis over the shorter of its estimated useful life and the lease term, defined as the non-cancellable period for which the lessee has the right to use an underlying asset including optional periods when an entity is reasonably certain to exercise an option to extend (or not to terminate) a lease. Depreciation expense is recorded in Depreciation and amortisation in the income statement. The asset value may be adjusted later if the lease is amended, the lease period is re-estimated or to account for contractual changes in the rental payments related to application of indices or rates. The cost of a right-of-use asset also includes an estimate of costs to be incurred by the lessee in dismantling and removing the underlying asset, restoring the site on which it is located or restoring the underlying asset to the condition required by the terms and conditions of the lease.
At the commencement date of the lease, the Group recognises lease liabilities measured at the present value of lease payments to be made over the lease term discounted using an incremental borrowing rate which varies per country within the Group. The lease payments include fixed payments (including in-substance fixed payments) less any lease incentives receivable and variable lease payments that depend on an index or a rate. The lease payments also include payments of penalties for terminating a lease, if the lease term reflects the Group exercising the option to terminate. Variable lease payments that are indexed based on the use of the leased asset (indexed to revenue or mileage, for example) are excluded from the measurement of lease liability. This variable portion of the rental payments is recorded in the income statement over time according to fluctuations in contractual indexing. Each lease payment is allocated between the liability and finance cost. The finance cost is charged to Leasing contract costs \u2013 financing in the income statement over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. After the commencement date, the amount of lease liabilities is increased to reflect the recognition of interest and reduced for the lease payments made. In addition, the carrying amount of lease liabilities is remeasured if there is a modification, a change in the lease term, a change in the in-substance fixed lease payments or a change in the assessment to purchase the underlying asset.
The implicit contract rates are not generally known, nor can be easily determined. Therefore, the Group has decided to use the lessees\u2019 incremental borrowing rate to discount rental payments as well as amount of lease liabilities.
The incremental borrowing rate is set by the lessee entity, not by the Group, in consideration of the borrowing terms and that entity\u2019s credit risk and the economic environment.
The discount rates used by the Group are then adjusted according to the currency and country of the location of the lessee entities.
The discount rate represents a risk free borrowing rate and liquidity spread by currency. The discount rate is also based on the duration of the lease term, where the duration of the lease is divided by two. Duration of the lease is the total lease term as described in section \u201cLease term\u201d.
Lessees may choose not to recognise a right-of-use asset and lease liability to contracts with a term of less than one year (including renewal options), nor to contracts on low-value items. This last simplification applies specifically to small equipment such as personal computers, tablets, telephones, and small items of office furniture.
Lease payments on short-term leases (less than one year) and leases of low-value assets are recognised as expense on a straight-line basis over the lease term and are disclosed in General and administrative expenses.
Deferred tax will be recorded on the basis of the net amount of taxable and deductible temporary differences. Generally, on the date of the initial recording of the right-of-use and the lease liability, no deferred tax is recorded as the asset value is equal to the liability value. The net temporary differences that may result from subsequent changes in the right-to-use and lease liability will result in the recognition of deferred tax.
Further details are provided in note\u00a017 \u201cRight-of-use Assets and Lease Liabilities\u201d.(in EUR million) | Rental fleet |
|---|---|
At 1\u00a0January 2021 | |
Cost | 27,749.3 |
Accumulated depreciation & impairment | (7,672.3) |
Carrying amount as at 1\u00a0January 2021 | 20,077.0 |
Year ended 31\u00a0December 2021 | |
Opening net book amount | 20,077.0 |
Additions | 8,767.8 |
Disposals | (3,530.5) |
Depreciation charge | (3,708.5) |
Transfer to assets qualified as held-for-sale | \u2212 |
Currency translation differences | 105.5 |
Closing net book amount as at 31\u00a0December 2021 | 21,711.3 |
At 31\u00a0December 2021 | |
Cost | 29,917.0 |
Accumulated depreciation & impairment | (8,205.7) |
Carrying amount as at 31\u00a0December 2021 | 21,711.3 |
Year ended 31\u00a0December 2022 | |
Opening net book amount | 21,711.3 |
Additions | 9,554.0 |
Disposals | (3,916.6) |
Acquisition of a subsidiary | 340.8 |
Depreciation charge | (3,573.6) |
Transfer to assets qualified as held-for-sale | (852.3) |
Hyperinflation adjustment | 121.1 |
Currency translation differences | (157.4) |
Closing net book amount as at 31\u00a0December 2022 | 23,227.4 |
At 31\u00a0December 2022 | |
Cost | 31,771.7 |
Accumulated depreciation & impairment | (8,544.4) |
Carrying amount as at 31\u00a0December 2022 | 23,227.4 |
Minimum undiscounted lease payments receivable on operating leases are as follows:
(in EUR million) | Year ended 31\u00a0December | |
|---|---|---|
2022 | 2021 | |
Within 1\u00a0year | 766.1\u00a0 | 998.9 |
Between 1\u00a0and 2\u00a0years | 1,768.3\u00a0 | 1,673.1 |
Between 2\u00a0and 3\u00a0years | 2,557.0\u00a0 | 2,599.0 |
Between 3\u00a0and 4\u00a0years | 2,003.8\u00a0 | 1,875.9 |
Between 4\u00a0and 5\u00a0years | 531.1\u00a0 | 496.1 |
Later than 5\u00a0years | 27.2\u00a0 | 37.5 |
Total | 7,653.5 | 7,680.3 |
The Group concluded a number of asset-backed securitisation programmes which involve the sale of future lease instalment receivables and, in some cases, related residual value receivables originated by various ALD subsidiaries to special purpose companies which are included in the consolidated financial statements of the Group.
As a result of this sale, net book value of securitised operating lease assets amount to EUR\u00a02,173\u00a0million at 31\u00a0December 2022 (EUR\u00a02,466\u00a0million at 31\u00a0December 2021) and present value of transferred lease receivables derived from these assets is EUR\u00a02,313\u00a0million (EUR\u00a02,517\u00a0million at 31\u00a0December 2021). The transferred lease receivables cannot be sold.
For further details on the securitisation transactions and transferred assets reference is made to the note\u00a030.(in EUR million) | Right-of-use assets (vehicles) | Right-of-use assets (property leases) | Lease liabilities |
|---|---|---|---|
As at 1\u00a0January 2021 | 128.0 | 132.7 | |
Additions | 20.8 | 20.8 | |
Disposals | (7.6) | (7.6) | |
Accumulated depreciation | (24.6) | \u2212 | |
Transfer to assets held for sale | \u2212 | \u2212 | |
Transfer from trade and other payables | \u2212 | \u2212 | |
Interest | - | 1.6 | |
Payments | - | (26.9) | |
Currency translation differences | 0.7 | 0.8 | |
As at 31\u00a0December 2021 | - | 117.3 | 121.4 |
As at 1\u00a0January 2022 | 117.3 | 121.4 | |
Additions | 40.9 | 21.3 | 63.5 |
Disposals | (1.0) | (11.6) | (12.6) |
Accumulated depreciation | (27.6) | (25.7) | |
Transfer to assets held for sale | - | (2.8) | (2.8) |
Scope changes | 17.1 | 5.2 | 18.4 |
Interest | - | \u2212 | 1.3 |
Payments | - | \u2212 | (71.1) |
Currency translation differences | (0.9) | (0.9) | |
As at 31\u00a0December 2022 | 29.4 | 102.8 | 117.2 |
The maturity analysis of the discounted lease liabilities is shown below:
(in EUR million) | Year ended 31\u00a0December | |
|---|---|---|
2022 | 2021 | |
Not later than one year | 42.3 | 23.9 |
Later than one year | 74.9 | 97.4 |
Total | 117.2 | 121.4 |
The Group classifies its leases as operating leases or finance leases under IFRS\u00a016. The classification is based on the extent to which the lease transfers the risks and rewards resulting from ownership of an underlying asset. A lease is classified as a finance lease if it transfers substantially all the risks and rewards from ownership of an asset. Conversely, an operating lease is a lease that does not transfer substantially all the risks and rewards from ownership of an asset.
Various criteria are used to determine the lease classification of which the two most important are:
The Group\u2019s operating lease portfolio comprises cars leased under operating lease contracts.
The operating lease instalments are fully recognised on a straight-line basis over the lease term, normally 3\u00a0to 4\u00a0years duration, with the exception of that portion of the instalment that is considered to be services income. Services income is identified as a non-lease component and the Group applies IFRS\u00a015 to allocate the consideration in the contract. The instalments are classified and presented in the following categories in the income statement: (i)\u00a0Leasing contract revenues; and (ii)\u00a0Services revenues.
Measurement
Assets under operating lease are measured at cost less accumulated depreciation and impairment losses. The cost of the operating lease cars comprises of their purchase price and any incremental and directly attributable costs of bringing the assets held for use in operating leases to working condition for its intended use. Import duties and non-refundable purchase taxes are included in the purchase price and any trade discounts are deducted when calculating the purchase price. Furthermore, lease incentives and volume bonuses are also taken into account and depreciated over the expected lease term. The carrying amount of the Operating lease portfolio is presented in the category \u2018Rental Fleet\u2019 on the balance sheet. The depreciation policy relating to these assets is detailed in section\u00a03.7.1 \u2013 Property and equipment under operating lease and rental fleet.
For the fleet revaluation process, refer to note\u00a05.1 \u201cFleet revaluation\u201d.
For the impairment accounting policy refer to note\u00a05.3 \u201cImpairment of rental fleet\u201d. Upon termination of the lease or rental contract the relevant assets are reclassified to the caption \u2018Inventories\u2019 at their carrying amount.
Finance leases are recognised as financial assets at an amount equal to the present value of the minimum lease payments (including guaranteed residual value) and the unguaranteed residual value accruing to the Group, after deduction of provisions deemed necessary in respect of bad and doubtful debts and any accumulated impairment losses. Initial direct costs are included in the initial measurement of the finance lease receivables. The assets are presented within the category \u2018Receivables from clients and financial institutions\u2019 on the balance sheet (See note\u00a023 for further details).
The finance lease instalments can comprise various components each having its own revenue recognition. The instalments are classified and presented in the following categories in the income statement: (i)\u00a0interest income from finance lease (the difference between the gross receivable and the present value of the receivable is unearned finance income and is recognised over the term of the lease using the effective interest method); and (ii)\u00a0revenues (to the extent that services are included in the lease).
Revenue recognition for operating and finance leases is disclosed in more detail in note\u00a03.23.
IFRS\u00a016 concerns any contract meeting the definition of a lease. There are exceptions in the standard which are not applicable to the Group. Lessees are not required to apply this standard to intangible assets leases (software for example). In preparing the application of the standard, the Group uses this option. All of the Group\u2019s right-of-use assets relate to building leases contracted for the lease of commercial and office space and vehicles.
The lease period to be applied in determining the rental payments to be discounted will match the non- cancellable period of the lease adjusted for:
The measurement of the reasonable certainty of exercising or not exercising the extension or early termination options shall take into account all the facts and circumstances that may create an economic incentive to exercise or not to exercise these options.
In the event of a change of circumstances of the lessee which has an impact on the certainty of exercise of an option that the lessee has or has not included in its calculation of the lease term, the term must be re-estimated.
Following a change in the lease term (re-estimate or revision), the lease obligation must be reassessed to reflect those changes. The revised rate is the interest rate implicit in the lease for the remaining term of the contract if it is possible to calculate this rate, otherwise the lessee must use its incremental borrowing rate on the date of modification of the lease term.
The Group recognises right-of-use assets at the commencement date of the lease (i.e. the date the underlying asset is available for use). Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any remeasurement of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities recognised, initial direct costs incurred, and lease payments made at or before the commencement date less any lease incentives received. Unless the Group is reasonably certain to obtain ownership of the leased asset at the end of the lease term, the recognised right-of-use assets are depreciated on a straight-line basis over the shorter of its estimated useful life and the lease term, defined as the non-cancellable period for which the lessee has the right to use an underlying asset including optional periods when an entity is reasonably certain to exercise an option to extend (or not to terminate) a lease. Depreciation expense is recorded in Depreciation and amortisation in the income statement. The asset value may be adjusted later if the lease is amended, the lease period is re-estimated or to account for contractual changes in the rental payments related to application of indices or rates. The cost of a right-of-use asset also includes an estimate of costs to be incurred by the lessee in dismantling and removing the underlying asset, restoring the site on which it is located or restoring the underlying asset to the condition required by the terms and conditions of the lease.
At the commencement date of the lease, the Group recognises lease liabilities measured at the present value of lease payments to be made over the lease term discounted using an incremental borrowing rate which varies per country within the Group. The lease payments include fixed payments (including in-substance fixed payments) less any lease incentives receivable and variable lease payments that depend on an index or a rate. The lease payments also include payments of penalties for terminating a lease, if the lease term reflects the Group exercising the option to terminate. Variable lease payments that are indexed based on the use of the leased asset (indexed to revenue or mileage, for example) are excluded from the measurement of lease liability. This variable portion of the rental payments is recorded in the income statement over time according to fluctuations in contractual indexing. Each lease payment is allocated between the liability and finance cost. The finance cost is charged to Leasing contract costs \u2013 financing in the income statement over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. After the commencement date, the amount of lease liabilities is increased to reflect the recognition of interest and reduced for the lease payments made. In addition, the carrying amount of lease liabilities is remeasured if there is a modification, a change in the lease term, a change in the in-substance fixed lease payments or a change in the assessment to purchase the underlying asset.
The implicit contract rates are not generally known, nor can be easily determined. Therefore, the Group has decided to use the lessees\u2019 incremental borrowing rate to discount rental payments as well as amount of lease liabilities.
The incremental borrowing rate is set by the lessee entity, not by the Group, in consideration of the borrowing terms and that entity\u2019s credit risk and the economic environment.
The discount rates used by the Group are then adjusted according to the currency and country of the location of the lessee entities.
The discount rate represents a risk free borrowing rate and liquidity spread by currency. The discount rate is also based on the duration of the lease term, where the duration of the lease is divided by two. Duration of the lease is the total lease term as described in section \u201cLease term\u201d.
Lessees may choose not to recognise a right-of-use asset and lease liability to contracts with a term of less than one year (including renewal options), nor to contracts on low-value items. This last simplification applies specifically to small equipment such as personal computers, tablets, telephones, and small items of office furniture.
Lease payments on short-term leases (less than one year) and leases of low-value assets are recognised as expense on a straight-line basis over the lease term and are disclosed in General and administrative expenses.
Deferred tax will be recorded on the basis of the net amount of taxable and deductible temporary differences. Generally, on the date of the initial recording of the right-of-use and the lease liability, no deferred tax is recorded as the asset value is equal to the liability value. The net temporary differences that may result from subsequent changes in the right-to-use and lease liability will result in the recognition of deferred tax.
Further details are provided in note\u00a017 \u201cRight-of-use Assets and Lease Liabilities\u201d.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForLeasesExplanatory", "language": "en", "entity": "scheme:969500E7V019H9NP7427", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "corporatings-nesting-fix-yFwUWG-88": { "value": "Revenue is recognised in accordance with the following standards:
The combined effect of the leases (IFRS\u00a016) and revenues (IFRS\u00a015) standards focus on the identification of lease and non-lease components in order to assess separate performance obligations. Both lessees and lessors consider the right to use an asset as a separate lease component if it meets the following criteria:
Activities or costs that transfer a good or service to the lessee are identified as non-lease components.
Amounts payable for activities and costs that do not transfer a good or service are part of the total consideration and are allocated to the lease and non-lease components identified in the contract.
If a contract contains a lease component and one or additional lease or non-lease components, then IFRS\u00a016 requires a lessor always to allocate the consideration in a contract following the approach in IFRS\u00a015 Revenue recognition.
The 5\u00a0steps process required by IFRS\u00a015 is summarised as follows:
a)\u00a0Operating leases
On operating leases, lease rental revenue (depreciation and interest) is recognised in accordance with IFRS\u00a016 on a straight-line basis over the lease term based on the total of the contractual payments divided by the number of months of the lease term.
b)\u00a0Finance leases
Regarding finance leases, IFRS\u00a016 standard is applied and the earnings are allocated between the capital amount and finance income. The capital amount is used to reduce the receivable balance and the income is recognised in the profit and loss in each period so as to give a constant periodic rate of return on the net investment in the lease. The Group uses the net investment method to allocate gross earnings, which excludes the effect of cash flows arising from taxes and financing relating to a lease transaction. In addition:
Amounts receivable from finance lease contracts are disclosed in note\u00a023.
c)\u00a0Other operating revenue for services
(in EUR million) | Year ended 31\u00a0December | |
|---|---|---|
2022 | 2021 | |
Leasing contract revenue \u2013 operating leases | 4,757.2 | 4,439.2 |
Interest income from finance lease | 36.1 | 35.7 |
Other interest income | 10.6 | 2.7 |
Leasing contract revenues | 4,803.9 | 4,477.6 |
Leasing contract costs \u2013 depreciation | (3,433.1) | (3,592.3) |
Leasing contract costs - financing: | ||
Interest charges on loans from financial institutions | (177.6) | (119.5) |
Interest charges on issued bonds | (38.2) | (16.0) |
Other interest charges | (28.3) | 2.9 |
Total interest charges | (244.1) | (132.7) |
Leasing contract costs \u2013 depreciation and financing | (3,677.2) | (3,725.0) |
Trading derivatives | (1.6) | (7.4) |
Imperfectness of derivatives at fair value hedges | \u2212 | 0.3 |
Imperfectness of derivatives at cash flow hedges | (0.2) | (1.3) |
Unrealised gains/losses on derivative financial instruments | (1.8) | (8.4) |
Unrealised Foreign Exchange Gains or Losses | (3.7) | (11.3) |
Hyperinflation - net monetary gain | 59.9 | \u2212 |
Total unrealised gains/losses on financial instruments and other | 54.4 | (19.8) |
Leasing contract margin | 1,181.1 | 732.8 |
\u201cOther interest income\u201d mainly comprises of income received for cash deposits with third party counterparts.
\u201cOther interest charges\u201d mainly comprise of interest charges incurred from asset-backed borrowings, net interest costs on financial instruments, where these instruments are embedded in the same structured funding transaction designed to remove market risk from this transaction, realised gains or losses on translation of financial liabilities and interest expense on lease liabilities.
Leasing contract costs \u2013 depreciation is comprised of both regular depreciation costs and it also includes movement in the provision for excess depreciation which is booked in each entity following the fleet revaluation process which detailed in note\u00a05.1 \u201cFleet Revaluation\u201d
Used vehicles prices have continued to drive exceptionally high profit from the used car sales activity throughout 2022. In the first semester fleet revaluation, used car market was anticipated to normalise in 2023. However, in the second semester\u2019s fleet revaluation this normalisation is now expected to take place from 2024 onwards.
This assessment has now resulted in a reduction in depreciation costs of EUR\u00a0422.4\u00a0million and represents partial recognition of estimated future used car profits.
Revenues and costs are derived from the various service components included within the contractual lease instalments, such as maintenance and tyres, damage risk retention and replacement vehicles.
(in EUR million) | Year ended 31\u00a0December | |
|---|---|---|
2022 | 2021 | |
Services revenue | 2,461.3 | 2,138.3 |
Cost of services revenues | (1,758.1) | (1,488.3) |
Services margin | 703.2 | 650.0 |
(in EUR million) | Year ended 31\u00a0December | |
|---|---|---|
2022 | 2021 | |
Proceeds of cars sold | 3,953.6 | 3,863.7 |
Cost of cars sold\u00a0(1) | (3,205.9) | (3,426.0) |
Used Car Sales result | 747.6 | 437.7 |
(1) Cost of cars sold represents the written down value of the vehicle and any additional disposal costs. |
The used car sector has been positively impacted by the limited production capacity of new cars due to ongoing shortage in the supply of semiconductors as well as shortages of other materials used in car manufacturing as a result of the war in Ukraine. As global demand has increased, these supply-chain issues caused delays in the delivery of new cars, including by ALD.
Revenues that are included within the margins analysed in 9a, 9b and 9c are shown in the following table. They are analysed into Revenues derived from the Rental activity and Proceeds of Cars sold at the end of the leasing period.
(in EUR million) | Year ended 31\u00a0December | |
|---|---|---|
2022 | 2021 | |
Services Revenues | 2,461.3 | 2,138.3 |
Leasing contract revenue - operating leases | 4,757.2 | 4,439.2 |
Interest revenue | 46.7 | 38.4 |
Leasing contract revenues | 4,803.9 | 4,477.6 |
Sub-Total - Revenues from Rental Activity | 7,265.2 | 6,615.9 |
Proceeds of Cars Sold | 3,953.6 | 3,863.7 |
Total Revenues | 11,218.8 | 10,479.6 |
Total Revenues excluding Interest Income | 10,299.2 | 9,629.1 |
Revenue is recognised in accordance with the following standards:
The combined effect of the leases (IFRS\u00a016) and revenues (IFRS\u00a015) standards focus on the identification of lease and non-lease components in order to assess separate performance obligations. Both lessees and lessors consider the right to use an asset as a separate lease component if it meets the following criteria:
Activities or costs that transfer a good or service to the lessee are identified as non-lease components.
Amounts payable for activities and costs that do not transfer a good or service are part of the total consideration and are allocated to the lease and non-lease components identified in the contract.
If a contract contains a lease component and one or additional lease or non-lease components, then IFRS\u00a016 requires a lessor always to allocate the consideration in a contract following the approach in IFRS\u00a015 Revenue recognition.
The 5\u00a0steps process required by IFRS\u00a015 is summarised as follows:
a)\u00a0Operating leases
On operating leases, lease rental revenue (depreciation and interest) is recognised in accordance with IFRS\u00a016 on a straight-line basis over the lease term based on the total of the contractual payments divided by the number of months of the lease term.
b)\u00a0Finance leases
Regarding finance leases, IFRS\u00a016 standard is applied and the earnings are allocated between the capital amount and finance income. The capital amount is used to reduce the receivable balance and the income is recognised in the profit and loss in each period so as to give a constant periodic rate of return on the net investment in the lease. The Group uses the net investment method to allocate gross earnings, which excludes the effect of cash flows arising from taxes and financing relating to a lease transaction. In addition:
Amounts receivable from finance lease contracts are disclosed in note\u00a023.
c)\u00a0Other operating revenue for services
Other property and equipment are stated at cost less accumulated depreciation and accumulated impairment losses. Cost includes expenditures that are directly attributable to the acquisition of the asset. Subsequent costs are included in the asset\u2019s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost can be measured reliably. Repairs and maintenance costs are charged to the statement of income during the period in which they are incurred.
Land is not depreciated. Depreciation on other assets is calculated using the straight-line method to allocate their cost to their residual values over their estimated useful lives, as follows:
The Company allocates the amount initially recognised in respect of an item of property, plant and equipment to its significant parts and depreciates separately each such part. The carrying amount of a replaced part is derecognised when replaced. Residual values, method of amortisation and useful lives of the assets are reviewed annually and adjusted if appropriate. An asset\u2019s carrying amount is written down immediately to its recoverable amount if the asset\u2019s carrying amount is greater than its estimated recoverable amount.
This asset category includes mainly vehicles leased to third parties, but also include other properties owned by the Group (although not significant).
Property and equipment under operating lease and rental fleet are measured at cost less accumulated depreciation and impairment losses. Vehicles are capitalised based on (i)\u00a0the acquisition price, (ii)\u00a0all expenditures for items owned by the Company and considered a permanent addition to the vehicle (e.g. radios, anti-theft devices,\u00a0etc.) at the time of contract commencement, (iii)\u00a0initial external direct costs including commissions and legal fees and (iv)\u00a0delivery cost where material.
The assets subject to operating leases are presented in the balance sheet according to the nature of the asset. The leased assets are depreciated on a straight-line basis over its contract period to its residual value. The contract period ranges on average between 3\u00a0to 5\u00a0years.
The assets\u2019 residual values are reviewed and adjusted, if appropriate, at each balance sheet date.
Upon termination of the lease or rental contract the relevant assets are reclassified to the caption \u201cInventories\u201d at their carrying amount, as per IAS\u00a016 paragraph\u00a068A recommendations. The assets\u2019 residual values and useful lives are reviewed and adjusted, if appropriate, at each balance sheet date.(in EUR million) | Note | Land | Property | Equipment | Total |
|---|---|---|---|---|---|
At 1\u00a0January 2021 | |||||
Cost | 4.5 | 64.2 | 90.5 | 159.2 | |
Accumulated depreciation & impairment | (30.8) | (48.0) | (78.8) | ||
Carrying amount As at 1\u00a0January 2021 | 4.5 | 33.5 | 42.5 | 80.5 | |
Year ended 31\u00a0December 2021 | |||||
Opening net book amount | 4.5 | 33.5 | 42.5 | 80.5 | |
Additions | \u2212 | 3.2 | 31.4 | 34.6 | |
Disposals | \u2212 | (0.7) | (11.7) | (12.5) | |
Depreciation charge | 13 | \u2212 | (5.9) | (12.2) | (18.2) |
Currency translation differences | \u2212 | 0.2 | 0.3 | 0.5 | |
Closing Net book amount As at 31\u00a0December 2021 | 4.5 | 30.2 | 50.3 | 85.0 | |
At 31\u00a0December 2021 | |||||
Cost | 4.5 | 66.0 | 103.3 | 173.8 | |
Accumulated depreciation & impairment | (35.8) | (53.0) | (88.8) | ||
Carrying amount As at 31\u00a0December 2021 | 4.5 | 30.2 | 50.3 | 85.0 | |
Opening net book amount | 4.5 | 30.2 | 50.3 | 85.0 | |
Additions | \u2212 | 5.9 | 34.9 | 40.9 | |
Disposals | (0.0) | (0.9) | (12.4) | (13.3) | |
Depreciation charge | 13 | \u2212 | (5.8) | (14.4) | (20.2) |
Transfer to assets qualified as held-for-sale | (0.0) | (2.6) | (1.5) | (4.1) | |
Scope changes | 7.0 | 1.5 | 0.9 | 9.4 | |
Currency translation differences | \u2212 | (0.0) | (0.6) | (0.7) | |
Closing Net book amount As at 31\u00a0December 2022 | 11.4 | 28.3 | 57.2 | 96.9 | |
At 31\u00a0December 2022 | |||||
Cost | 11.4 | 67.9 | 114.4 | 193.7 | |
Accumulated depreciation & impairment | (39.5) | (57.3) | (96.8) | ||
Carrying amount As at 31\u00a0December 2022 | 11.4 | 28.3 | 57.2 | 96.9 |
Other property and equipment are stated at cost less accumulated depreciation and accumulated impairment losses. Cost includes expenditures that are directly attributable to the acquisition of the asset. Subsequent costs are included in the asset\u2019s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost can be measured reliably. Repairs and maintenance costs are charged to the statement of income during the period in which they are incurred.
Land is not depreciated. Depreciation on other assets is calculated using the straight-line method to allocate their cost to their residual values over their estimated useful lives, as follows:
The Company allocates the amount initially recognised in respect of an item of property, plant and equipment to its significant parts and depreciates separately each such part. The carrying amount of a replaced part is derecognised when replaced. Residual values, method of amortisation and useful lives of the assets are reviewed annually and adjusted if appropriate. An asset\u2019s carrying amount is written down immediately to its recoverable amount if the asset\u2019s carrying amount is greater than its estimated recoverable amount.
This asset category includes mainly vehicles leased to third parties, but also include other properties owned by the Group (although not significant).
Property and equipment under operating lease and rental fleet are measured at cost less accumulated depreciation and impairment losses. Vehicles are capitalised based on (i)\u00a0the acquisition price, (ii)\u00a0all expenditures for items owned by the Company and considered a permanent addition to the vehicle (e.g. radios, anti-theft devices,\u00a0etc.) at the time of contract commencement, (iii)\u00a0initial external direct costs including commissions and legal fees and (iv)\u00a0delivery cost where material.
The assets subject to operating leases are presented in the balance sheet according to the nature of the asset. The leased assets are depreciated on a straight-line basis over its contract period to its residual value. The contract period ranges on average between 3\u00a0to 5\u00a0years.
The assets\u2019 residual values are reviewed and adjusted, if appropriate, at each balance sheet date.
Upon termination of the lease or rental contract the relevant assets are reclassified to the caption \u201cInventories\u201d at their carrying amount, as per IAS\u00a016 paragraph\u00a068A recommendations. The assets\u2019 residual values and useful lives are reviewed and adjusted, if appropriate, at each balance sheet date.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForPropertyPlantAndEquipmentExplanatory", "language": "en", "entity": "scheme:969500E7V019H9NP7427", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "corporatings-nesting-fix-yFwUWG-114": { "value": "Goodwill arises on the acquisition of subsidiaries, associates and joint ventures and represents the excess of the consideration transferred over the Group\u2019s interest in net fair value of the net identifiable assets, liabilities and contingent liabilities of the acquirer. Goodwill is measured at cost less any accumulated impairment losses. When the excess is negative (negative goodwill), it is recognised immediately in the statement of income.
For the purpose of impairment testing, goodwill acquired in a business combination is allocated to each of the cash generating units (\u201cCGUs\u201d), or groups of CGUs, which is expected to benefit from the synergies of the combination. Each unit or group of units to which the goodwill is allocated represents the lowest level within the entity at which the goodwill is monitored for internal management purposes. Goodwill is monitored as follows:
Goodwill impairment reviews are undertaken annually or more frequently if events or changes in circumstances indicate a potential impairment. The carrying value of goodwill is compared to the recoverable amount, which is the higher of value in use and the fair value less costs to sell. Any impairment is recognised immediately as an expense and is not subsequently reversed.
Further details are provided in note\u00a05.2 \u201cEstimated impairment of goodwill\u201d.(in EUR million) | Goodwill |
|---|---|
At 1\u00a0January 2021 | |
Cost | 576.0 |
Accumulated impairment | \u2212 |
Carrying amount As at 1\u00a0January 2021 | 576.0 |
Year ended 31\u00a0December 2021 | |
Closing net book amount As at 31\u00a0December 2021 | 576.0 |
At 31\u00a0December 2021 | |
Cost | 576.0 |
Accumulated impairment | \u2212 |
Carrying amount As at 31\u00a0December 2021 | 576.0 |
Year ended 31\u00a0December 2022 | |
Opening net book amount | 576.0 |
Impairment | (2.7) |
Transfer to assets qualified as held-for-sale | (26.6) |
Scope changes | 71.9 |
Closing net book amount As at 31\u00a0December 2022 | 618.6 |
At 31\u00a0December 2022 | |
Cost | 621.3 |
Accumulated impairment | (2.7) |
Carrying amount As at 31\u00a0December 2022 | 618.6 |
(in EUR million) | As at | Addition | Impairment | Transfer to assets-held-for-sale | As at |
|---|---|---|---|---|---|
France | 212.0 | \u2212 | \u2212 | \u2212 | 212.0 |
Germany | 35.2 | \u2212 | \u2212 | \u2212 | 35.2 |
Germany (Fleetpool) | \u2212 | 53.0 | \u2212 | \u2212 | 53.0 |
Italy | 50.2 | \u2212 | \u2212 | \u2212 | 50.2 |
Spain | 109.1 | 18.9 | \u2212 | \u2212 | 128.0 |
UK | 22.6 | \u2212 | \u2212 | \u2212 | 22.6 |
Benelux | 56.9 | \u2212 | \u2212 | \u2212 | 56.9 |
Ireland | 24.1 | \u2212 | \u2212 | (24.1) | \u2212 |
Mediterranean Hub | 2.5 | \u2212 | \u2212 | (2.5) | \u2212 |
Nordics Hub | 18.3 | \u2212 | \u2212 | \u2212 | 18.3 |
South Eastern Europe Hub | 9.5 | \u2212 | \u2212 | \u2212 | 9.5 |
North Eastern Europe Hub | 4.1 | \u2212 | (2.7) | \u2212 | 1.4 |
Central Europe Hub | 31.5 | \u2212 | \u2212 | \u2212 | 31.5 |
Total | 576.0 | 71.9 | (2.7) | (26.6) | 618.6 |
On an annual basis, ALD performs an impairment test for each cash-generating unit (CGU) to which goodwill has been allocated.
An impairment loss is recognised in the income statement if the carrying amount of CGU, including its allocated goodwill, is higher than its recoverable amount. This impairment loss is then allocated first to reduce the carrying amount of goodwill.
The recoverable amount of cash-generating unit is calculated using the most appropriate method, generally the discounted cash flow (DCF). Cash flows were projected on actual financial results and the 5-year business plans, for which Management has assessed and approved the reasonableness of its assumptions by examining the causes of differences between past cash flow projections and actual cash flows.
A discount rate was applied which is built up of a risk-free interest, a market premium multiplied by a market specific beta.
In 2022 the Group booked an impairment of goodwill in North Eastern Europe Hub which relates to the Russian subsidiary that was classified as a disposal group held for sale. Impairment was identified due to the net book value of the disposal group being higher than its fair value less costs to sell. For further details see note\u00a08 \u201cAssets held for sale\u201d. No other impairment of goodwill was identified during the reporting period.
The Group has performed additional \u201cstressed\u201d scenario for the future cashflow projections. The scenario had the following stresses:
Historically, the greatest reduction in the Group\u2019s sales proceeds on a per vehicle basis was just over 7% in the 2009 financial crisis compared to the pre-crisis levels.
Based on the assumptions made by the Group, even with these severe stresses, no need for impairment of goodwill has been identified in 2022. There was no impairment recognised in 2021.
The key assumptions used for value-in-use calculations in 2022 and 2021 are as follows:
Discount Factor 2022 | Discount Factor 2021 | Perpetuity rate (2022 and 2021) | |
|---|---|---|---|
France | 10.0% | 9.4% | 2.0% |
Germany | 10.0% | 9.4% | 2.0% |
Italy | 12.1% | 9.4% | 2.0% |
Spain | 10.6% | 9.4% | 2.0% |
UK | 10.0% | 9.4% | 2.0% |
Fleetpool\u00a0(1) | 10.0% | 2.0% | |
Benelux | 10.0% | 9.4% | 2.0% |
Nordics Hub | 13.6% | 9.4% | 2.0% |
South Eastern Europe Hub | 21.8% | 17.3% | 2.0% |
North Eastern Europe Hub | 10.0% | 9.4% | 2.0% |
Central Europe Hub | 19.2% | 9.6% | 2.0% |
(1) Newly\u00a0consolidated in 2022 |
Goodwill arises on the acquisition of subsidiaries, associates and joint ventures and represents the excess of the consideration transferred over the Group\u2019s interest in net fair value of the net identifiable assets, liabilities and contingent liabilities of the acquirer. Goodwill is measured at cost less any accumulated impairment losses. When the excess is negative (negative goodwill), it is recognised immediately in the statement of income.
For the purpose of impairment testing, goodwill acquired in a business combination is allocated to each of the cash generating units (\u201cCGUs\u201d), or groups of CGUs, which is expected to benefit from the synergies of the combination. Each unit or group of units to which the goodwill is allocated represents the lowest level within the entity at which the goodwill is monitored for internal management purposes. Goodwill is monitored as follows:
Goodwill impairment reviews are undertaken annually or more frequently if events or changes in circumstances indicate a potential impairment. The carrying value of goodwill is compared to the recoverable amount, which is the higher of value in use and the fair value less costs to sell. Any impairment is recognised immediately as an expense and is not subsequently reversed.
Further details are provided in note\u00a05.2 \u201cEstimated impairment of goodwill\u201d.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForGoodwillExplanatory", "language": "en", "entity": "scheme:969500E7V019H9NP7427", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "corporatings-nesting-fix-yFwUWG-112": { "value": "Goodwill arises on the acquisition of subsidiaries, associates and joint ventures and represents the excess of the consideration transferred over the Group\u2019s interest in net fair value of the net identifiable assets, liabilities and contingent liabilities of the acquirer. Goodwill is measured at cost less any accumulated impairment losses. When the excess is negative (negative goodwill), it is recognised immediately in the statement of income.
For the purpose of impairment testing, goodwill acquired in a business combination is allocated to each of the cash generating units (\u201cCGUs\u201d), or groups of CGUs, which is expected to benefit from the synergies of the combination. Each unit or group of units to which the goodwill is allocated represents the lowest level within the entity at which the goodwill is monitored for internal management purposes. Goodwill is monitored as follows:
Goodwill impairment reviews are undertaken annually or more frequently if events or changes in circumstances indicate a potential impairment. The carrying value of goodwill is compared to the recoverable amount, which is the higher of value in use and the fair value less costs to sell. Any impairment is recognised immediately as an expense and is not subsequently reversed.
Further details are provided in note\u00a05.2 \u201cEstimated impairment of goodwill\u201d.(in EUR million) | Note | Software | Other | Total |
|---|---|---|---|---|
At 1\u00a0January 2021 | ||||
Cost | 85.3 | 93.4 | 178.8 | |
Accumulated amortisation and impairment | (61.2) | (38.8) | (100.0) | |
Carrying amount As at 31\u00a0December 2021 | 24.1 | 54.7 | 78.8 | |
Year ended 31\u00a0December 2021 | ||||
Opening net book amount | 24.1 | 54.7 | 78.8 | |
Additions | 9.6 | 45.4 | 55.0 | |
Divestments | (0.0) | (18.1) | (18.1) | |
Amortization | 13 | (14.7) | (12.6) | (27.3) |
Currency translation differences | 0.1 | 0.3 | 0.4 | |
Closing net book amount As at 31\u00a0December 2021 | 19.1 | 69.6 | 88.7 | |
At 31\u00a0December 2021 | ||||
Cost | 90.3 | 113.3 | 203.6 | |
Accumulated amortisation and impairment | (71.2) | (43.6) | (114.8) | |
Carrying amount As at 31\u00a0December 2021 | 19.1 | 69.6 | 88.7 | |
Year ended 31\u00a0December 2021 | ||||
Opening net book amount | 19.1 | 69.6 | 88.7 | |
Additions | 12.9 | 55.4 | 68.3 | |
Divestments | (4.2) | (11.8) | (16.0) | |
Amortization | 13 | (10.2) | (15.3) | (25.5) |
Transfer to assets qualified as held-for-sale | (0.2) | (0.4) | (0.6) | |
Scope changes | 0.4 | 12.0 | 12.4 | |
Currency translation differences | 0.0 | (0.8) | (0.8) | |
Closing net book amount As at 31\u00a0December 2022 | 17.9 | 108.8 | 126.6 | |
At 31\u00a0December 2022 | ||||
Cost | 84.6 | 160.4 | 245.0 | |
Accumulated amortisation and impairment | (66.7) | (51.7) | (118.4) | |
Carrying amount As at 31\u00a0December 2022 | 17.9 | 108.8 | 126.6 |
Goodwill arises on the acquisition of subsidiaries, associates and joint ventures and represents the excess of the consideration transferred over the Group\u2019s interest in net fair value of the net identifiable assets, liabilities and contingent liabilities of the acquirer. Goodwill is measured at cost less any accumulated impairment losses. When the excess is negative (negative goodwill), it is recognised immediately in the statement of income.
For the purpose of impairment testing, goodwill acquired in a business combination is allocated to each of the cash generating units (\u201cCGUs\u201d), or groups of CGUs, which is expected to benefit from the synergies of the combination. Each unit or group of units to which the goodwill is allocated represents the lowest level within the entity at which the goodwill is monitored for internal management purposes. Goodwill is monitored as follows:
Goodwill impairment reviews are undertaken annually or more frequently if events or changes in circumstances indicate a potential impairment. The carrying value of goodwill is compared to the recoverable amount, which is the higher of value in use and the fair value less costs to sell. Any impairment is recognised immediately as an expense and is not subsequently reversed.
Further details are provided in note\u00a05.2 \u201cEstimated impairment of goodwill\u201d.Goodwill arises on the acquisition of subsidiaries, associates and joint ventures and represents the excess of the consideration transferred over the Group\u2019s interest in net fair value of the net identifiable assets, liabilities and contingent liabilities of the acquirer. Goodwill is measured at cost less any accumulated impairment losses. When the excess is negative (negative goodwill), it is recognised immediately in the statement of income.
For the purpose of impairment testing, goodwill acquired in a business combination is allocated to each of the cash generating units (\u201cCGUs\u201d), or groups of CGUs, which is expected to benefit from the synergies of the combination. Each unit or group of units to which the goodwill is allocated represents the lowest level within the entity at which the goodwill is monitored for internal management purposes. Goodwill is monitored as follows:
Goodwill impairment reviews are undertaken annually or more frequently if events or changes in circumstances indicate a potential impairment. The carrying value of goodwill is compared to the recoverable amount, which is the higher of value in use and the fair value less costs to sell. Any impairment is recognised immediately as an expense and is not subsequently reversed.
Further details are provided in note\u00a05.2 \u201cEstimated impairment of goodwill\u201d.(in EUR million) | Note | Software | Other | Total |
|---|---|---|---|---|
At 1\u00a0January 2021 | ||||
Cost | 85.3 | 93.4 | 178.8 | |
Accumulated amortisation and impairment | (61.2) | (38.8) | (100.0) | |
Carrying amount As at 31\u00a0December 2021 | 24.1 | 54.7 | 78.8 | |
Year ended 31\u00a0December 2021 | ||||
Opening net book amount | 24.1 | 54.7 | 78.8 | |
Additions | 9.6 | 45.4 | 55.0 | |
Divestments | (0.0) | (18.1) | (18.1) | |
Amortization | 13 | (14.7) | (12.6) | (27.3) |
Currency translation differences | 0.1 | 0.3 | 0.4 | |
Closing net book amount As at 31\u00a0December 2021 | 19.1 | 69.6 | 88.7 | |
At 31\u00a0December 2021 | ||||
Cost | 90.3 | 113.3 | 203.6 | |
Accumulated amortisation and impairment | (71.2) | (43.6) | (114.8) | |
Carrying amount As at 31\u00a0December 2021 | 19.1 | 69.6 | 88.7 | |
Year ended 31\u00a0December 2021 | ||||
Opening net book amount | 19.1 | 69.6 | 88.7 | |
Additions | 12.9 | 55.4 | 68.3 | |
Divestments | (4.2) | (11.8) | (16.0) | |
Amortization | 13 | (10.2) | (15.3) | (25.5) |
Transfer to assets qualified as held-for-sale | (0.2) | (0.4) | (0.6) | |
Scope changes | 0.4 | 12.0 | 12.4 | |
Currency translation differences | 0.0 | (0.8) | (0.8) | |
Closing net book amount As at 31\u00a0December 2022 | 17.9 | 108.8 | 126.6 | |
At 31\u00a0December 2022 | ||||
Cost | 84.6 | 160.4 | 245.0 | |
Accumulated amortisation and impairment | (66.7) | (51.7) | (118.4) | |
Carrying amount As at 31\u00a0December 2022 | 17.9 | 108.8 | 126.6 |
(in EUR million) | Goodwill |
|---|---|
At 1\u00a0January 2021 | |
Cost | 576.0 |
Accumulated impairment | \u2212 |
Carrying amount As at 1\u00a0January 2021 | 576.0 |
Year ended 31\u00a0December 2021 | |
Closing net book amount As at 31\u00a0December 2021 | 576.0 |
At 31\u00a0December 2021 | |
Cost | 576.0 |
Accumulated impairment | \u2212 |
Carrying amount As at 31\u00a0December 2021 | 576.0 |
Year ended 31\u00a0December 2022 | |
Opening net book amount | 576.0 |
Impairment | (2.7) |
Transfer to assets qualified as held-for-sale | (26.6) |
Scope changes | 71.9 |
Closing net book amount As at 31\u00a0December 2022 | 618.6 |
At 31\u00a0December 2022 | |
Cost | 621.3 |
Accumulated impairment | (2.7) |
Carrying amount As at 31\u00a0December 2022 | 618.6 |
(in EUR million) | As at | Addition | Impairment | Transfer to assets-held-for-sale | As at |
|---|---|---|---|---|---|
France | 212.0 | \u2212 | \u2212 | \u2212 | 212.0 |
Germany | 35.2 | \u2212 | \u2212 | \u2212 | 35.2 |
Germany (Fleetpool) | \u2212 | 53.0 | \u2212 | \u2212 | 53.0 |
Italy | 50.2 | \u2212 | \u2212 | \u2212 | 50.2 |
Spain | 109.1 | 18.9 | \u2212 | \u2212 | 128.0 |
UK | 22.6 | \u2212 | \u2212 | \u2212 | 22.6 |
Benelux | 56.9 | \u2212 | \u2212 | \u2212 | 56.9 |
Ireland | 24.1 | \u2212 | \u2212 | (24.1) | \u2212 |
Mediterranean Hub | 2.5 | \u2212 | \u2212 | (2.5) | \u2212 |
Nordics Hub | 18.3 | \u2212 | \u2212 | \u2212 | 18.3 |
South Eastern Europe Hub | 9.5 | \u2212 | \u2212 | \u2212 | 9.5 |
North Eastern Europe Hub | 4.1 | \u2212 | (2.7) | \u2212 | 1.4 |
Central Europe Hub | 31.5 | \u2212 | \u2212 | \u2212 | 31.5 |
Total | 576.0 | 71.9 | (2.7) | (26.6) | 618.6 |
On an annual basis, ALD performs an impairment test for each cash-generating unit (CGU) to which goodwill has been allocated.
An impairment loss is recognised in the income statement if the carrying amount of CGU, including its allocated goodwill, is higher than its recoverable amount. This impairment loss is then allocated first to reduce the carrying amount of goodwill.
The recoverable amount of cash-generating unit is calculated using the most appropriate method, generally the discounted cash flow (DCF). Cash flows were projected on actual financial results and the 5-year business plans, for which Management has assessed and approved the reasonableness of its assumptions by examining the causes of differences between past cash flow projections and actual cash flows.
A discount rate was applied which is built up of a risk-free interest, a market premium multiplied by a market specific beta.
In 2022 the Group booked an impairment of goodwill in North Eastern Europe Hub which relates to the Russian subsidiary that was classified as a disposal group held for sale. Impairment was identified due to the net book value of the disposal group being higher than its fair value less costs to sell. For further details see note\u00a08 \u201cAssets held for sale\u201d. No other impairment of goodwill was identified during the reporting period.
The Group has performed additional \u201cstressed\u201d scenario for the future cashflow projections. The scenario had the following stresses:
Historically, the greatest reduction in the Group\u2019s sales proceeds on a per vehicle basis was just over 7% in the 2009 financial crisis compared to the pre-crisis levels.
Based on the assumptions made by the Group, even with these severe stresses, no need for impairment of goodwill has been identified in 2022. There was no impairment recognised in 2021.
The key assumptions used for value-in-use calculations in 2022 and 2021 are as follows:
Discount Factor 2022 | Discount Factor 2021 | Perpetuity rate (2022 and 2021) | |
|---|---|---|---|
France | 10.0% | 9.4% | 2.0% |
Germany | 10.0% | 9.4% | 2.0% |
Italy | 12.1% | 9.4% | 2.0% |
Spain | 10.6% | 9.4% | 2.0% |
UK | 10.0% | 9.4% | 2.0% |
Fleetpool\u00a0(1) | 10.0% | 2.0% | |
Benelux | 10.0% | 9.4% | 2.0% |
Nordics Hub | 13.6% | 9.4% | 2.0% |
South Eastern Europe Hub | 21.8% | 17.3% | 2.0% |
North Eastern Europe Hub | 10.0% | 9.4% | 2.0% |
Central Europe Hub | 19.2% | 9.6% | 2.0% |
(1) Newly\u00a0consolidated in 2022 |
Goodwill arises on the acquisition of subsidiaries, associates and joint ventures and represents the excess of the consideration transferred over the Group\u2019s interest in net fair value of the net identifiable assets, liabilities and contingent liabilities of the acquirer. Goodwill is measured at cost less any accumulated impairment losses. When the excess is negative (negative goodwill), it is recognised immediately in the statement of income.
For the purpose of impairment testing, goodwill acquired in a business combination is allocated to each of the cash generating units (\u201cCGUs\u201d), or groups of CGUs, which is expected to benefit from the synergies of the combination. Each unit or group of units to which the goodwill is allocated represents the lowest level within the entity at which the goodwill is monitored for internal management purposes. Goodwill is monitored as follows:
Goodwill impairment reviews are undertaken annually or more frequently if events or changes in circumstances indicate a potential impairment. The carrying value of goodwill is compared to the recoverable amount, which is the higher of value in use and the fair value less costs to sell. Any impairment is recognised immediately as an expense and is not subsequently reversed.
Further details are provided in note\u00a05.2 \u201cEstimated impairment of goodwill\u201d.Assets that have an indefinite useful life \u2013 for example, goodwill or intangible assets \u2013 are not subject to amortisation and are tested annually for impairment. Assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset\u2019s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset\u2019s fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). Non-financial assets other than goodwill, that suffered impairment, are reviewed for possible reversal of the impairment at each reporting date.
Further details are presented in note\u00a015 \u201cRental fleet\u201d.In the annual assessment of whether there is any indication that an asset may be impaired, the Group considers both external as well as internal sources of information. If such indication for impairment exists, an analysis is performed to assess whether the carrying value of the asset or cash generating unit under an operating lease exceeds the recoverable amount, being the higher of the fair value less costs to sell and the value in use. The value in use is determined at the present value of the future cash flows expected to be derived from the object or cash generating unit. The management closely monitors residual values, which are reviewed internally at least each financial year, in accordance with internal procedures. The original residual values within internal systems will be compared to the revised residual values expected at contract termination, following a review. The results of this exercise will be used to assess the level of exposure, reserves held and potential impairment required. To prevent impairment on residual values, each country completes a minimum of one annual review of pricing under the supervision of the Group to ensure that assumptions used in pricing reflect expected future market conditions, thus ensuring residual values are predicted with a reasonable degree of accuracy and on a consistent basis going forward.
At the end of 2022, no provision for impairment on rental fleet was required.(in EUR million) | Note | Year ended 31\u00a0December | |
|---|---|---|---|
2022 | 2021 | ||
Impairment | (125.2) | (104.2) | |
Reversal of impairment\u00a0(1) | 79.1 | 79.4 | |
Impairment charges on receivables | 4.1.1, 23 | (46.1) | (24.8) |
(1) Reversal of impairment represents doubtful receivables recovered in the year and the movement in IFRS\u00a09 provision. |
Assets that have an indefinite useful life \u2013 for example, goodwill or intangible assets \u2013 are not subject to amortisation and are tested annually for impairment. Assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset\u2019s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset\u2019s fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). Non-financial assets other than goodwill, that suffered impairment, are reviewed for possible reversal of the impairment at each reporting date.
Further details are presented in note\u00a015 \u201cRental fleet\u201d.In the annual assessment of whether there is any indication that an asset may be impaired, the Group considers both external as well as internal sources of information. If such indication for impairment exists, an analysis is performed to assess whether the carrying value of the asset or cash generating unit under an operating lease exceeds the recoverable amount, being the higher of the fair value less costs to sell and the value in use. The value in use is determined at the present value of the future cash flows expected to be derived from the object or cash generating unit. The management closely monitors residual values, which are reviewed internally at least each financial year, in accordance with internal procedures. The original residual values within internal systems will be compared to the revised residual values expected at contract termination, following a review. The results of this exercise will be used to assess the level of exposure, reserves held and potential impairment required. To prevent impairment on residual values, each country completes a minimum of one annual review of pricing under the supervision of the Group to ensure that assumptions used in pricing reflect expected future market conditions, thus ensuring residual values are predicted with a reasonable degree of accuracy and on a consistent basis going forward.
At the end of 2022, no provision for impairment on rental fleet was required.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForImpairmentOfNonfinancialAssetsExplanatory", "language": "en", "entity": "scheme:969500E7V019H9NP7427", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "corporatings-nesting-fix-yFwUWG-163": { "value": "The Group classifies non-current assets and disposal groups as held for sale if their carrying amounts will be recovered principally through a sale transaction rather than through continuing use. Non-current assets and disposal groups classified as held for sale are measured at the lower of their carrying amount and fair value less costs to sell. Costs to sell are the incremental costs directly attributable to the disposal of an asset (disposal group), excluding finance costs and income tax expense.
The criteria for held for sale classification is regarded as met only when the sale is highly probable and the asset or disposal groups is available for immediate sale in its present condition. Actions required to complete the sale should indicate that it is unlikely that significant changes to the sale will be made or that the decision to sell will be withdrawn. Management must be committed to the plan to sell the asset and the sale expected to be completed within one year from the date of the classification.
Property, plant and equipment and intangible assets are not depreciated or amortised once classified as held for sale.
Assets and liabilities classified as held for sale are presented separately as current items in the consolidated balance sheet.
A disposal group qualifies as discontinued operation if it is a component of an entity that either has been disposed of, or is classified as held for sale, and:
The results of discontinued operations are presented separately in the statement of profit or loss.
Additional disclosures relating to the Group\u2019s Discontinued Operations are provided in note\u00a07 \u201cChanges in the Scope of Consolidation\u201d.", "dimensions": { "concept": "ifrs-full:DisclosureOfDiscontinuedOperationsExplanatory", "language": "en", "entity": "scheme:969500E7V019H9NP7427", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "corporatings-nesting-fix-yFwUWG-162": { "value": "The Group classifies non-current assets and disposal groups as held for sale if their carrying amounts will be recovered principally through a sale transaction rather than through continuing use. Non-current assets and disposal groups classified as held for sale are measured at the lower of their carrying amount and fair value less costs to sell. Costs to sell are the incremental costs directly attributable to the disposal of an asset (disposal group), excluding finance costs and income tax expense.
The criteria for held for sale classification is regarded as met only when the sale is highly probable and the asset or disposal groups is available for immediate sale in its present condition. Actions required to complete the sale should indicate that it is unlikely that significant changes to the sale will be made or that the decision to sell will be withdrawn. Management must be committed to the plan to sell the asset and the sale expected to be completed within one year from the date of the classification.
Property, plant and equipment and intangible assets are not depreciated or amortised once classified as held for sale.
Assets and liabilities classified as held for sale are presented separately as current items in the consolidated balance sheet.
A disposal group qualifies as discontinued operation if it is a component of an entity that either has been disposed of, or is classified as held for sale, and:
The results of discontinued operations are presented separately in the statement of profit or loss.
Additional disclosures relating to the Group\u2019s Discontinued Operations are provided in note\u00a07 \u201cChanges in the Scope of Consolidation\u201d.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForDiscontinuedOperationsExplanatory", "language": "en", "entity": "scheme:969500E7V019H9NP7427", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "corporatings-nesting-fix-yFwUWG-161": { "value": "The Group classifies non-current assets and disposal groups as held for sale if their carrying amounts will be recovered principally through a sale transaction rather than through continuing use. Non-current assets and disposal groups classified as held for sale are measured at the lower of their carrying amount and fair value less costs to sell. Costs to sell are the incremental costs directly attributable to the disposal of an asset (disposal group), excluding finance costs and income tax expense.
The criteria for held for sale classification is regarded as met only when the sale is highly probable and the asset or disposal groups is available for immediate sale in its present condition. Actions required to complete the sale should indicate that it is unlikely that significant changes to the sale will be made or that the decision to sell will be withdrawn. Management must be committed to the plan to sell the asset and the sale expected to be completed within one year from the date of the classification.
Property, plant and equipment and intangible assets are not depreciated or amortised once classified as held for sale.
Assets and liabilities classified as held for sale are presented separately as current items in the consolidated balance sheet.
A disposal group qualifies as discontinued operation if it is a component of an entity that either has been disposed of, or is classified as held for sale, and:
The results of discontinued operations are presented separately in the statement of profit or loss.
Additional disclosures relating to the Group\u2019s Discontinued Operations are provided in note\u00a07 \u201cChanges in the Scope of Consolidation\u201d.ALD has obtained all merger control clearances conditioning the completion of the acquisition of LeasePlan. The last clearance was obtained from the European Commission on 25 November 2022, it being specified that\u00a0(i) this clearance is conditional upon the divestiture of the subsidiaries carrying on the full-service leasing and fleet management business of ALD in Portugal, in Ireland and in Norway (with the exception, in the latter country, of NF Fleet Norway, a company jointly owned by ALD and Nordea)\u00a0and of LeasePlan in the Czech Republic, in Finland and in Luxembourg and (ii) closing of the acquisition is contingent upon receiving from the European Commission a decision agreeing the proposed acquiror and the terms agreed with the latter for the divestiture of these entities. An agreement with Cr\u00e9dit Agricole Consumer Finance has been reached on 22 March 2023 for the sale of these six entities, whose combined fleet represented approximately 100,000 vehicles or 3% of the total combined fleet of ALD and LeasePlan as at 31 December 2022. \u00a0
The Group considered the three subsidiaries of ALD to meet the criteria to be classified as held for sale for the following reasons:
The major classes of assets and liabilities of ALD Automotive\u00a0AS \u2013 Norway, SG ALD Automotive Sociedade Geral de Comercio e Aluguer de Benz\u00a0SA \u2013 Portugal and Merrion Fleet Management Limited are measured at their carrying amount and are as follows:
(in EUR million) | 2022 |
|---|---|
Assets | |
Rental fleet | 688.3 |
Receivables from clients | 31.6 |
Cash and cash equivalents | 2.6 |
Other | 130.0 |
Assets of disposal group classified as held for sale | 852.5 |
Liabilities | |
Borrowings from financial institutions and intragroup debt\u00a0(1) | 542.7 |
Other | 123.7 |
Liabilities of disposal group classified as held for sale | 666.4 |
Net assets directly associated with disposal group | 186.1 |
(1) Including EUR\u00a0536\u00a0million of intragroup debt with ALD Luxembourg. |
The subsidiaries are not classified as a discontinued operation as at 31\u00a0December 2022 as they do not meet the criteria of being a major line of business or geographical area of operations.
All disclosures relating to the Group\u2019s assets and liabilities exclude assets and liabilities of the disposal Group unless stated otherwise.
ALD is engaged in a process to sell its entire stake in ALD Automotive OOO, which operates in Russia and through its branch in Kazakhstan, and ALD Belarus LLC. \u00a0
These operations together represented a funded fleet of 14,600\u00a0vehicles as at 31\u00a0December 2022 (1% of ALD Group\u2019s total funded fleet).\u00a0
The disposal, which is subject to the approval of the relevant regulatory authorities, will be conducted in full compliance with applicable legal and regulatory requirements.
These events had the following impacts on the Group financial statements:
(in EUR million) | 2022 |
|---|---|
Assets | |
Rental fleet | 164.0 |
Receivables from clients | 10.1 |
Cash and cash equivalents | 90.2 |
Other\u00a0(1) | (31.8) |
Assets of disposal group classified as held for sale | 232.5 |
Liabilities | |
Borrowings from financial institutions | 57.0 |
Other | 39.4 |
Liabilities of disposal group classified as held for sale | 96.5 |
Net assets directly associated with disposal group | 136.0 |
(1) Including EUR\u00a050.6\u00a0million of impairment of disposal group in Russia. |
The Group classifies non-current assets and disposal groups as held for sale if their carrying amounts will be recovered principally through a sale transaction rather than through continuing use. Non-current assets and disposal groups classified as held for sale are measured at the lower of their carrying amount and fair value less costs to sell. Costs to sell are the incremental costs directly attributable to the disposal of an asset (disposal group), excluding finance costs and income tax expense.
The criteria for held for sale classification is regarded as met only when the sale is highly probable and the asset or disposal groups is available for immediate sale in its present condition. Actions required to complete the sale should indicate that it is unlikely that significant changes to the sale will be made or that the decision to sell will be withdrawn. Management must be committed to the plan to sell the asset and the sale expected to be completed within one year from the date of the classification.
Property, plant and equipment and intangible assets are not depreciated or amortised once classified as held for sale.
Assets and liabilities classified as held for sale are presented separately as current items in the consolidated balance sheet.
A disposal group qualifies as discontinued operation if it is a component of an entity that either has been disposed of, or is classified as held for sale, and:
The results of discontinued operations are presented separately in the statement of profit or loss.
Additional disclosures relating to the Group\u2019s Discontinued Operations are provided in note\u00a07 \u201cChanges in the Scope of Consolidation\u201d.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForNoncurrentAssetsOrDisposalGroupsClassifiedAsHeldForSaleExplanatory", "language": "en", "entity": "scheme:969500E7V019H9NP7427", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "corporatings-nesting-fix-yFwUWG-158": { "value": "The Group classifies non-current assets and disposal groups as held for sale if their carrying amounts will be recovered principally through a sale transaction rather than through continuing use. Non-current assets and disposal groups classified as held for sale are measured at the lower of their carrying amount and fair value less costs to sell. Costs to sell are the incremental costs directly attributable to the disposal of an asset (disposal group), excluding finance costs and income tax expense.
The criteria for held for sale classification is regarded as met only when the sale is highly probable and the asset or disposal groups is available for immediate sale in its present condition. Actions required to complete the sale should indicate that it is unlikely that significant changes to the sale will be made or that the decision to sell will be withdrawn. Management must be committed to the plan to sell the asset and the sale expected to be completed within one year from the date of the classification.
Property, plant and equipment and intangible assets are not depreciated or amortised once classified as held for sale.
Assets and liabilities classified as held for sale are presented separately as current items in the consolidated balance sheet.
A disposal group qualifies as discontinued operation if it is a component of an entity that either has been disposed of, or is classified as held for sale, and:
The results of discontinued operations are presented separately in the statement of profit or loss.
Additional disclosures relating to the Group\u2019s Discontinued Operations are provided in note\u00a07 \u201cChanges in the Scope of Consolidation\u201d.ALD has obtained all merger control clearances conditioning the completion of the acquisition of LeasePlan. The last clearance was obtained from the European Commission on 25 November 2022, it being specified that\u00a0(i) this clearance is conditional upon the divestiture of the subsidiaries carrying on the full-service leasing and fleet management business of ALD in Portugal, in Ireland and in Norway (with the exception, in the latter country, of NF Fleet Norway, a company jointly owned by ALD and Nordea)\u00a0and of LeasePlan in the Czech Republic, in Finland and in Luxembourg and (ii) closing of the acquisition is contingent upon receiving from the European Commission a decision agreeing the proposed acquiror and the terms agreed with the latter for the divestiture of these entities. An agreement with Cr\u00e9dit Agricole Consumer Finance has been reached on 22 March 2023 for the sale of these six entities, whose combined fleet represented approximately 100,000 vehicles or 3% of the total combined fleet of ALD and LeasePlan as at 31 December 2022. \u00a0
The Group considered the three subsidiaries of ALD to meet the criteria to be classified as held for sale for the following reasons:
The major classes of assets and liabilities of ALD Automotive\u00a0AS \u2013 Norway, SG ALD Automotive Sociedade Geral de Comercio e Aluguer de Benz\u00a0SA \u2013 Portugal and Merrion Fleet Management Limited are measured at their carrying amount and are as follows:
(in EUR million) | 2022 |
|---|---|
Assets | |
Rental fleet | 688.3 |
Receivables from clients | 31.6 |
Cash and cash equivalents | 2.6 |
Other | 130.0 |
Assets of disposal group classified as held for sale | 852.5 |
Liabilities | |
Borrowings from financial institutions and intragroup debt\u00a0(1) | 542.7 |
Other | 123.7 |
Liabilities of disposal group classified as held for sale | 666.4 |
Net assets directly associated with disposal group | 186.1 |
(1) Including EUR\u00a0536\u00a0million of intragroup debt with ALD Luxembourg. |
The subsidiaries are not classified as a discontinued operation as at 31\u00a0December 2022 as they do not meet the criteria of being a major line of business or geographical area of operations.
All disclosures relating to the Group\u2019s assets and liabilities exclude assets and liabilities of the disposal Group unless stated otherwise.
ALD is engaged in a process to sell its entire stake in ALD Automotive OOO, which operates in Russia and through its branch in Kazakhstan, and ALD Belarus LLC. \u00a0
These operations together represented a funded fleet of 14,600\u00a0vehicles as at 31\u00a0December 2022 (1% of ALD Group\u2019s total funded fleet).\u00a0
The disposal, which is subject to the approval of the relevant regulatory authorities, will be conducted in full compliance with applicable legal and regulatory requirements.
These events had the following impacts on the Group financial statements:
(in EUR million) | 2022 |
|---|---|
Assets | |
Rental fleet | 164.0 |
Receivables from clients | 10.1 |
Cash and cash equivalents | 90.2 |
Other\u00a0(1) | (31.8) |
Assets of disposal group classified as held for sale | 232.5 |
Liabilities | |
Borrowings from financial institutions | 57.0 |
Other | 39.4 |
Liabilities of disposal group classified as held for sale | 96.5 |
Net assets directly associated with disposal group | 136.0 |
(1) Including EUR\u00a050.6\u00a0million of impairment of disposal group in Russia. |
The Group classifies non-current assets and disposal groups as held for sale if their carrying amounts will be recovered principally through a sale transaction rather than through continuing use. Non-current assets and disposal groups classified as held for sale are measured at the lower of their carrying amount and fair value less costs to sell. Costs to sell are the incremental costs directly attributable to the disposal of an asset (disposal group), excluding finance costs and income tax expense.
The criteria for held for sale classification is regarded as met only when the sale is highly probable and the asset or disposal groups is available for immediate sale in its present condition. Actions required to complete the sale should indicate that it is unlikely that significant changes to the sale will be made or that the decision to sell will be withdrawn. Management must be committed to the plan to sell the asset and the sale expected to be completed within one year from the date of the classification.
Property, plant and equipment and intangible assets are not depreciated or amortised once classified as held for sale.
Assets and liabilities classified as held for sale are presented separately as current items in the consolidated balance sheet.
A disposal group qualifies as discontinued operation if it is a component of an entity that either has been disposed of, or is classified as held for sale, and:
The results of discontinued operations are presented separately in the statement of profit or loss.
Additional disclosures relating to the Group\u2019s Discontinued Operations are provided in note\u00a07 \u201cChanges in the Scope of Consolidation\u201d.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForNoncurrentAssetsOrDisposalGroupsClassifiedAsHeldForSaleAndDiscontinuedOperationsExplanatory", "language": "en", "entity": "scheme:969500E7V019H9NP7427", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "corporatings-nesting-fix-yFwUWG-177": { "value": "Following the adoption of IFRS\u00a09, the Group classifies its financial assets in the following measuring categories:
By default, derivative financial instruments will be classified as subsequently measured at fair value through profit or loss.
Regular way purchases and sales of financial assets are recognised on a trade-date, the date on which the Group commits to purchase or sell the asset. Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired or have been transferred and the Group has transferred substantially all the risks and rewards of ownership.
Debt instruments (loans, receivables and bonds) will be measured at amortised cost only if the objective of the entity (business model) is to collect the contractual cash-flows and if these cash flows consist solely of payments of principal and interest. Debt instruments will be measured at fair value through other comprehensive income (with cumulative gain or loss reclassified in profit or loss when the instruments are derecognised) if the objective of the entity (business model) is to collect the contractual cash-flows or to sell the instruments and if these contractual cash-flows consist solely of payments of principal and interest (SPPI).
Financial assets are initially measured at fair value and subsequent measured at amortised cost using the effective interest method less any impairment losses. Transaction costs (including qualifying fees and commissions) are part of the amortised cost.
Amortised cost is the amount at which the financial asset or financial liability is measured at initial recognition minus the principal repayments, plus or minus the cumulative amortisation using the effective interest method of any difference between that initial amount and the maturity amount and, for financial assets, adjusted for any loss allowance.
The effective interest rate is the rate that exactly discounts estimated future cash payments or receipts through the expected life of the financial asset or financial liability to the gross carrying amount of a financial asset or to the amortised cost of a financial liability.
The following financial assets are classified at amortised cost: cash and cash equivalents, receivables from financial institutions, investments in debt securities and other receivables.
Equity instruments will be measured at fair value through profit or loss except in case of irrevocable election made at initial recognition for measurement at fair value through other comprehensive income (provided these financial assets are not held for trading purposes and not classified as such in financial assets measured at fair value through profit or loss) without subsequent reclassification in income.
Embedded derivatives will no longer be recognised separately when their host contracts are financial assets and the hybrid instrument in its entirety in most cases will then be measured at fair value through profit or loss.
The Group assesses expected credit losses (ECL) associated with its assets carried at amortised cost. For trade receivables and contract assets, the Group applies a simplified approach in calculating ECLs. Therefore, the Group does not track changes in credit risk, but instead recognises a loss allowance based on lifetime ECLs at each reporting date. The 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 when the impact of those factors is material to the financial statements.
Further disclosure relating to impairment of financial assets is also provided in note\u00a023 \u201cReceivables from Clients and Financial Institutions\u201d.Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, loans and borrowings, payables, or as derivatives designated as hedging instruments in an effective hedge, as appropriate.
All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs.
The Group\u2019s financial liabilities include trade and other payables, loans and borrowings including bank overdrafts, and derivative financial instruments.
For purposes of subsequent measurement, financial liabilities are classified in two categories:
Financial liabilities at fair value through profit or loss only include derivative financial instruments in the Group\u2019s financial statements. For further disclosures see note\u00a03.14 \u201cDerivative financial instruments and hedging activities\u201d and note\u00a020 \u201cDerivative financial instruments\u201d.
Financial liabilities are initially recognised at fair value incurred and are subsequently measured at amortised cost. Any difference between the proceeds (transaction costs) and the redemption value is recognised in the statement of profit or loss over the period of the financial liability using the effective interest method. Transaction costs are included in amortised cost using the effective interest method.
Financial liabilities at amortised cost (loans, borrowings and debt securities issued) is the category most relevant to the Group. After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the effective interest rate (EIR) method. Any difference between cost and redemption value is recognised in the income statement over the term of the loans and borrowings.
Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included as finance costs in the statement of profit or loss.
For more information, refer to note\u00a030 \u201cBorrowings from financial institutions, bonds and notes issued\u201d.
Financial liabilities are derecognised if the Group\u2019s obligations specified in the contract expire or are discharged or cancelled.
Financial assets and liabilities are offset and the net amount is presented in the balance sheet when the Group has a legal right to offset the amounts and intends either to settle on a net basis or to realise the asset and liability simultaneously.
Income and expenses are presented on a net basis only when permitted by IFRS.Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. The method of recognising the resulting gain or loss depends on whether the derivative is designated as a hedging instrument, and if so, the nature of the item being hedged.
The Group documents at the inception of the transaction the relationship between hedging instruments and hedged items, as well as its risk management objectives and strategy for undertaking various hedging transactions. The Group also documents its assessment, both at hedge inception and on an ongoing basis, of whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in fair values or cash flows of hedged items.
The fair values of various derivative instruments used for hedging purposes are disclosed in note\u00a026. Movements on the hedging reserve in other comprehensive income are shown in consolidated statement of changes in equity. The full fair value of a hedging derivative is classified as a non-current asset or liability when the remaining hedged item is more than 12\u00a0months and as a current asset or liability when the remaining maturity of the hedged item is less than 12\u00a0months.
The Group designates certain derivatives as either:
fair value hedge: hedges of the fair value of recognised assets or liabilities or a firm commitment.Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recorded in the income statement, together with any changes in the fair value of the hedged asset or liability that are attributable to the hedged risk. The Group only applies fair value hedge accounting for hedging fixed interest risk on borrowings. The gain or loss relating to fair value hedges is recognised in the income statement within \u201cunrealised gains/losses on financial instruments\u201d.If the hedge no longer meets the criteria for hedge accounting, the adjustment to the carrying amount of a hedged item for which the effective interest method is used is amortised to profit or loss over the period to maturity.No fair value hedge instruments have been recorded by the Group for the year ended 31\u00a0December 2022;cash flow hedge: hedges of a particular risk associated with a recognised asset or liability or a highly probable forecasted transaction.The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is recognised in other comprehensive income. The gain or loss relating to the ineffective portion is recognised immediately in the income statement within \u201cunrealised gains/losses on financial instruments\u201d.Amounts accumulated in equity are reclassified to profit or loss in the periods when the hedged item affects profit or loss. The gain or loss relating to the effective portion of interest rate swaps hedging variable rate borrowings is recognised in the income statement.When a hedging instrument expires or is sold, or when a hedge no longer meets the criteria for hedge accounting, any cumulative gain or loss existing in equity at that time remains in equity and is recognised when the forecast transaction is ultimately recognised in the income statement. When a forecast transaction is no longer expected to occur, the cumulative gain or loss that was reported in equity is immediately transferred to the income statement;derivatives: changes in the fair value of derivatives that are not designated as a hedging instrument are recognised immediately in the income statement in the caption \u201cUnrealised gains/(losses) on financial instruments\u201d.The types of risks that the Group is exposed to and derivatives used to hedge these risks can be found in section\u00a04.1.2 Treasury Risk and note\u00a020 \u201cDerivative financial instruments\u201d.In the annual assessment of whether there is any indication that an asset may be impaired, the Group considers both external as well as internal sources of information. If such indication for impairment exists, an analysis is performed to assess whether the carrying value of the asset or cash generating unit under an operating lease exceeds the recoverable amount, being the higher of the fair value less costs to sell and the value in use. The value in use is determined at the present value of the future cash flows expected to be derived from the object or cash generating unit. The management closely monitors residual values, which are reviewed internally at least each financial year, in accordance with internal procedures. The original residual values within internal systems will be compared to the revised residual values expected at contract termination, following a review. The results of this exercise will be used to assess the level of exposure, reserves held and potential impairment required. To prevent impairment on residual values, each country completes a minimum of one annual review of pricing under the supervision of the Group to ensure that assumptions used in pricing reflect expected future market conditions, thus ensuring residual values are predicted with a reasonable degree of accuracy and on a consistent basis going forward.
At the end of 2022, no provision for impairment on rental fleet was required.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFinancialInstrumentsExplanatory", "language": "en", "entity": "scheme:969500E7V019H9NP7427", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "corporatings-nesting-fix-yFwUWG-176": { "value": "Following the adoption of IFRS\u00a09, the Group classifies its financial assets in the following measuring categories:
By default, derivative financial instruments will be classified as subsequently measured at fair value through profit or loss.
Regular way purchases and sales of financial assets are recognised on a trade-date, the date on which the Group commits to purchase or sell the asset. Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired or have been transferred and the Group has transferred substantially all the risks and rewards of ownership.
Debt instruments (loans, receivables and bonds) will be measured at amortised cost only if the objective of the entity (business model) is to collect the contractual cash-flows and if these cash flows consist solely of payments of principal and interest. Debt instruments will be measured at fair value through other comprehensive income (with cumulative gain or loss reclassified in profit or loss when the instruments are derecognised) if the objective of the entity (business model) is to collect the contractual cash-flows or to sell the instruments and if these contractual cash-flows consist solely of payments of principal and interest (SPPI).
Financial assets are initially measured at fair value and subsequent measured at amortised cost using the effective interest method less any impairment losses. Transaction costs (including qualifying fees and commissions) are part of the amortised cost.
Amortised cost is the amount at which the financial asset or financial liability is measured at initial recognition minus the principal repayments, plus or minus the cumulative amortisation using the effective interest method of any difference between that initial amount and the maturity amount and, for financial assets, adjusted for any loss allowance.
The effective interest rate is the rate that exactly discounts estimated future cash payments or receipts through the expected life of the financial asset or financial liability to the gross carrying amount of a financial asset or to the amortised cost of a financial liability.
The following financial assets are classified at amortised cost: cash and cash equivalents, receivables from financial institutions, investments in debt securities and other receivables.
Equity instruments will be measured at fair value through profit or loss except in case of irrevocable election made at initial recognition for measurement at fair value through other comprehensive income (provided these financial assets are not held for trading purposes and not classified as such in financial assets measured at fair value through profit or loss) without subsequent reclassification in income.
Embedded derivatives will no longer be recognised separately when their host contracts are financial assets and the hybrid instrument in its entirety in most cases will then be measured at fair value through profit or loss.
The Group assesses expected credit losses (ECL) associated with its assets carried at amortised cost. For trade receivables and contract assets, the Group applies a simplified approach in calculating ECLs. Therefore, the Group does not track changes in credit risk, but instead recognises a loss allowance based on lifetime ECLs at each reporting date. The 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 when the impact of those factors is material to the financial statements.
Further disclosure relating to impairment of financial assets is also provided in note\u00a023 \u201cReceivables from Clients and Financial Institutions\u201d.Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, loans and borrowings, payables, or as derivatives designated as hedging instruments in an effective hedge, as appropriate.
All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs.
The Group\u2019s financial liabilities include trade and other payables, loans and borrowings including bank overdrafts, and derivative financial instruments.
For purposes of subsequent measurement, financial liabilities are classified in two categories:
Financial liabilities at fair value through profit or loss only include derivative financial instruments in the Group\u2019s financial statements. For further disclosures see note\u00a03.14 \u201cDerivative financial instruments and hedging activities\u201d and note\u00a020 \u201cDerivative financial instruments\u201d.
Financial liabilities are initially recognised at fair value incurred and are subsequently measured at amortised cost. Any difference between the proceeds (transaction costs) and the redemption value is recognised in the statement of profit or loss over the period of the financial liability using the effective interest method. Transaction costs are included in amortised cost using the effective interest method.
Financial liabilities at amortised cost (loans, borrowings and debt securities issued) is the category most relevant to the Group. After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the effective interest rate (EIR) method. Any difference between cost and redemption value is recognised in the income statement over the term of the loans and borrowings.
Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included as finance costs in the statement of profit or loss.
For more information, refer to note\u00a030 \u201cBorrowings from financial institutions, bonds and notes issued\u201d.
Financial liabilities are derecognised if the Group\u2019s obligations specified in the contract expire or are discharged or cancelled.
Financial assets and liabilities are offset and the net amount is presented in the balance sheet when the Group has a legal right to offset the amounts and intends either to settle on a net basis or to realise the asset and liability simultaneously.
Income and expenses are presented on a net basis only when permitted by IFRS.Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. The method of recognising the resulting gain or loss depends on whether the derivative is designated as a hedging instrument, and if so, the nature of the item being hedged.
The Group documents at the inception of the transaction the relationship between hedging instruments and hedged items, as well as its risk management objectives and strategy for undertaking various hedging transactions. The Group also documents its assessment, both at hedge inception and on an ongoing basis, of whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in fair values or cash flows of hedged items.
The fair values of various derivative instruments used for hedging purposes are disclosed in note\u00a026. Movements on the hedging reserve in other comprehensive income are shown in consolidated statement of changes in equity. The full fair value of a hedging derivative is classified as a non-current asset or liability when the remaining hedged item is more than 12\u00a0months and as a current asset or liability when the remaining maturity of the hedged item is less than 12\u00a0months.
The Group designates certain derivatives as either:
fair value hedge: hedges of the fair value of recognised assets or liabilities or a firm commitment.Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recorded in the income statement, together with any changes in the fair value of the hedged asset or liability that are attributable to the hedged risk. The Group only applies fair value hedge accounting for hedging fixed interest risk on borrowings. The gain or loss relating to fair value hedges is recognised in the income statement within \u201cunrealised gains/losses on financial instruments\u201d.If the hedge no longer meets the criteria for hedge accounting, the adjustment to the carrying amount of a hedged item for which the effective interest method is used is amortised to profit or loss over the period to maturity.No fair value hedge instruments have been recorded by the Group for the year ended 31\u00a0December 2022;cash flow hedge: hedges of a particular risk associated with a recognised asset or liability or a highly probable forecasted transaction.The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is recognised in other comprehensive income. The gain or loss relating to the ineffective portion is recognised immediately in the income statement within \u201cunrealised gains/losses on financial instruments\u201d.Amounts accumulated in equity are reclassified to profit or loss in the periods when the hedged item affects profit or loss. The gain or loss relating to the effective portion of interest rate swaps hedging variable rate borrowings is recognised in the income statement.When a hedging instrument expires or is sold, or when a hedge no longer meets the criteria for hedge accounting, any cumulative gain or loss existing in equity at that time remains in equity and is recognised when the forecast transaction is ultimately recognised in the income statement. When a forecast transaction is no longer expected to occur, the cumulative gain or loss that was reported in equity is immediately transferred to the income statement;derivatives: changes in the fair value of derivatives that are not designated as a hedging instrument are recognised immediately in the income statement in the caption \u201cUnrealised gains/(losses) on financial instruments\u201d.The types of risks that the Group is exposed to and derivatives used to hedge these risks can be found in section\u00a04.1.2 Treasury Risk and note\u00a020 \u201cDerivative financial instruments\u201d.Credit risk management policy
Credit risk is the risk that a customer is not able to fulfil its financial obligations towards ALD. All ALD entities have to comply with risk procedures issued centrally which define the way credit requests have to be studied and validated, as well as the roles and responsibilities of all staff involved in the credit vetting process. Each subsidiary has a specific credit authority approved by ALD General Management and the Risk Department of Societe Generale, and determined according to the size of the fleet, the maturity of the subsidiary and the type of customer concerned (corporate, retail, financial institution,\u00a0etc.). Within its credit limit, each subsidiary can decide directly on its counterparty risk. Above this threshold, credit acceptance is made at central level jointly with the Risk Department of Societe Generale.
Regular risk committees are held by ALD in order to review all potential risk issues and to ensure the credit risk procedures are properly applied. All standard risk indicators (arrears/default/Cost of risk) are also monitored centrally. All ALD entities are applying the same process locally.
The primary responsibility for debt collection remains under the direct responsibility of ALD\u2019s subsidiaries with dedicated teams in charge of recovering unpaid invoices in compliance with local regulations and market practices. Local processes need, however, to be compliant with the corporate instructions and guidelines distributed to the whole network. Central monitoring of all ageing balances is performed on a monthly basis as part of the regular risk reviews, and actions plans are set up whenever necessary under the supervision of the Country Manager.
Impairment charges on receivables (Cost of risk) has historically remained very low due to the nature of the products proposed by ALD, a strict control of the risk assessment process and a very diversified customer portfolio.
Credit risk measurement
The Group applies the IFRS\u00a09 simplified approach to measuring expected credit losses which uses a lifetime expected loss allowance for all sound trade and lease receivables.
For not in default trade receivables and finance lease receivables, the Group does not track changes in credit risk, but instead recognises a loss allowance based on expected lifetime losses from initial recognition of the receivables. These losses are measured based on a provision matrix for receivables associated with sound customers, as described below. Probability of Default (PD) rates are based on observed default rates over the life of the receivables (the average contract length in each entity). Specific PD rates are calculated for each entity and each customer type. This process results in Probability of Default (PD) rates for each age of past-due receivables. The PD rates are applied to the aged receivables of the reporting period to arrive at a total provision. The final impairment allowance is also adjusted to consider Loss Given Default (LGD) specific to the entity.
The historical loss rates are adjusted to reflect current and forward looking information on specific local economies affecting the ability of the customers to settle the receivables.
Expected credit losses are reassessed at each reporting date and reflect all reasonable information that is available at the reporting date.There is no change in the definition or policy for provisions on doubtful exposure under IFRS\u00a09. The definition of default exposure remains unchanged.The Group considers that a customer is in default as soon as one of the three following conditions applies:legal proceedings (or a similar event in accordance to local legislation) are in progress which has resulted in the customer being placed either in bankruptcy or legal liquidation or receivership;one or several overdue invoices for more than 90\u00a0days (270\u00a0days in the case of public or sovereign counterparties) have been recorded and a settlement procedure has been initiated;a significant degradation of the customer\u2019s financial situation has taken place, making it likely that the customer will be unable to fulfil its overall commitments and there is therefore a high probability of losses.In addition to its natural exposure to credit risk in the leasing of vehicles, the Group is also exposed to credit risk because of its use of derivative financial instruments and because of excess cash being deposited with banks. The Group controls this risk by requiring minimum external rating grades that such external counterparties are assigned.Interest rate risk
ALD policy consists of financing the underlying assets with fixed rate loans as lease contracts are mostly priced at fixed rates, in order to avoid any interest rate mismatch between assets and liabilities. Structural interest rate risk arises from the residual gap (surplus or deficit) in each entity\u2019s fixed-rate forecast position. To this end, any residual interest rate risk exposure must comply with the sensitivity limits set for each entity. The sensitivity is defined as the variation in the net present value of the future residual fixed-rate positions (surplus or deficit) for non-stressed shocks of +100\u00a0bps and -100\u00a0bps in the yield curve.
The ALD Group Central Treasury monitors the Group\u2019s interest rate risk exposure and advises subsidiaries to implement adequate hedging operations. A monthly report measuring interest risk exposure is produced by each entity to be reviewed and consolidated by the ALD Group Central Treasury Department.
Each entity and the Group as a whole are subject to sensitivity thresholds and limits validated by the ALM Committee (ALCO). The Group structural risks are discussed on a quarterly basis during ALCO meetings.
Thanks to this close follow up of the interest rate risk exposure by subsidiaries and the supervision of asset and liability monitoring performed at central level, ALD Group interest rate sensitivity has always remained limited.
Range Movement | NPV sensitivity impact (in EUR million)(1)\u00a0(2) |
|---|---|
+100\u00a0bps | +38.4 |
-100\u00a0bps | (38.7) |
(1)\u00a0\u00a0\u00a0The NPV (Net Present Value) sensitivity aims at measuring the potential deterioration/enhancement of value of the balance sheet in static view (no new production) by considering all discounted cash inflows (e.g. mainly remaining cash flows from rental contracts) and cash outflows over the time (e.g. mainly remaining cash flows from financial debts). (2)\u00a0\u00a0\u00a0Includes the impact of the capital increase. |
Foreign exchange risk
ALD Group is present in 26\u00a0countries outside the Euro zone and is therefore exposed to foreign exchange risks related to cash inflows and outflows from daily business activities as well as participations in subsidiaries outside the Euro zone.
Currency risks related to the current business activities are very limited as there are no cross-border leasing activities. ALD Group policy consists of financing the underlying asset in the same currency as the corresponding lease contract.
The residual foreign exchange risk is managed in order to minimise the impact to the Group due to fluctuations in the currencies it operates.
To achieve this goal, ALD quantifies its exposure to structural exchange rate risks for each subsidiary by analysing all assets and liabilities arising from commercial operations and proprietary transactions. The risk sensitivity is measured by quantifying the impact of a variation of 10% of the exchange rate (hard currencies against local currency) and a threshold is defined for each subsidiary. ALD Group Treasury Department is responsible for monitoring structural foreign exchange risk positions and manages the impact on profitability due to foreign exchange rate fluctuations.
Currency risks related to equity invested in foreign currencies are not hedged at a Group level, as the risk exposure has been considered insignificant.Liquidity risk
ALD Group is exposed to liquidity risk which is the risk of not being able to meet cash flow requirements when they fall due. A structural liquidity position is defined as resulting from the maturities of all balance sheet or off-balance sheet outstanding positions according to their liquidity profile.
ALD Group\u2019s exposure to liquidity risk is limited as the Group policy consists of financing the underlying asset over the same duration as the corresponding lease contract. A residual liquidity gap is measured on a monthly basis, under the supervision of ALD Group Treasury Department, by assessing the matching of the run-off of the existing leased assets with the remaining liabilities.
The liquidity position measured is then reviewed and consolidated at a Group level. Any deviation from the sensitivity threshold is corrected under the supervision of the Group central Treasury.
As part of the funding plan the ALD Group raises external funds through both asset-backed securitisation programmes and the EMTN bonds programme described below.
Most of the funding provided by Societe Generale is granted through Societe Generale Luxembourg and Societe Generale Paris. SG Luxembourg and SG Paris funds ALD Group Central Treasury which then grants loans in different currencies to 27\u00a0ALD subsidiaries (including funding provided for disposal groups held for sale) as well as to the holding companies. The total amount of loans granted by SG Luxembourg and SG Paris amounted to EUR\u00a012,158\u00a0million (EUR\u00a012,165\u00a0million including funding provided for disposal groups held for sale) at 31\u00a0December 2022 for an average maturity of 2\u00a0years.
The remaining SG funding is provided either by local SG branches or subsidiaries. As at 31\u00a0December 2022 the total amount of loans granted to the Group by Societe Generale, including local branches and subsidiaries was EUR\u00a013,711\u00a0million (EUR\u00a013,718\u00a0million including loans granted to disposal groups held for sale).
31% of fiscal year 2022 funding is provided from local external banks or third parties, representing EUR\u00a06,164\u00a0million (EUR\u00a06,220\u00a0million including loans granted to disposal groups held for sale) at 31\u00a0December 2022.
The following funding arrangements concluded by the Group impacted the assessment of liquidity risk:
Securitisation
As at 31\u00a0December 2022, the Group has asset-backed securitisation programmes in five European countries.
These transactions involve the sale of future lease receivables and (for only three of them) related residual value receivables to securitisation special purpose companies. Debt securities were issued by those special purpose companies and sold to external investors. The special purpose companies are responsible for making interest and principal payments to the note-holders. The note-holders do not have any recourse on the Group in case of default of the originating ALD entity or default of the Group.
These funds were all raised with a floating-to-fixed rate hedge (UK, Belgium, Netherlands, France and Germany).
For further details on the transactions reference is made to note\u00a030.
Corporate bond
The Group is also engaged in a Euro Medium Term Notes (EMTN) programme. The EMTN programme limit is set at EUR\u00a015\u00a0billion for the aggregate nominal amount of notes outstanding at any one time. An application has been filed with the Luxembourg Stock Exchange in order for the notes issued under the programme to be listed on the official list and admitted to trading on the Regulated Market of the Luxembourg Stock Exchange. The programme is rated BBB by Standard & Poor\u2019s and BBB+ by Fitch Ratings.
Positive Impact Bond (Green Bond) was issued in July\u00a02022 for an amount of EUR\u00a0500\u00a0million maturing in July\u00a02027.
The presentation of financial borrowings by maturity and further information on bonds issued by the Group is provided in note\u00a030.
Capital Management
ALD is a commercial company and as such does not have any regulatory capital requirement.
The Group\u2019s objectives when managing capital are to:
To achieve these objectives the Group carefully monitors its leverage ratio, defined as the ratio of Total Equity to Total Assets, for which it has set a target range in its public communications to investors and rating agencies.
The ratio as at 31\u00a0December 2022 and 31\u00a0December 2021 is as follows:
(in EUR million) | As at 31\u00a0December | |
|---|---|---|
2022 | 2021 | |
Total Equity | 6,893.4 | 4,845.6 |
Total Assets | 31,351.0 | 26,991.4 |
Leverage ratio | 22.0% | 18.0% |
In the management of capital and in its definition the instruments at the Group\u2019s disposal are:
In addition, the Group can effect changes to its asset growth rate in order modify the denominator of this ratio.
In the annual assessment of whether there is any indication that an asset may be impaired, the Group considers both external as well as internal sources of information. If such indication for impairment exists, an analysis is performed to assess whether the carrying value of the asset or cash generating unit under an operating lease exceeds the recoverable amount, being the higher of the fair value less costs to sell and the value in use. The value in use is determined at the present value of the future cash flows expected to be derived from the object or cash generating unit. The management closely monitors residual values, which are reviewed internally at least each financial year, in accordance with internal procedures. The original residual values within internal systems will be compared to the revised residual values expected at contract termination, following a review. The results of this exercise will be used to assess the level of exposure, reserves held and potential impairment required. To prevent impairment on residual values, each country completes a minimum of one annual review of pricing under the supervision of the Group to ensure that assumptions used in pricing reflect expected future market conditions, thus ensuring residual values are predicted with a reasonable degree of accuracy and on a consistent basis going forward.
At the end of 2022, no provision for impairment on rental fleet was required.Derivative instruments are used as part of the overall strategy to manage exposure to market risks primarily associated with fluctuations in interest rates and foreign exchange rates through interest rate and currency swaps respectively. As a matter of policy, derivatives are not used for speculative purposes. Derivative instruments that are measured at fair value on a recurring basis are included in the caption \u201cDerivative financial instruments\u201d in the consolidated balance sheet.
(in EUR million) | Year ended 31\u00a0December 2022 | Year ended 31\u00a0December 2021 | ||
|---|---|---|---|---|
Assets | Liabilities | Assets | Liabilities | |
Interest rate swaps \u2013 cash flow hedge | 61.6 | 0.0 | 3.9 | 0.1 |
Foreign Exchange swaps | 20.8 | 44.5 | 23.5 | 4.9 |
Interest rate swaps (not in hedge) | 46.6 | 44.5 | 11.2 | 6.1 |
Total | 128.9 | 89.0 | 38.6 | 11.2 |
Less non-current portion: | ||||
Interest rate swaps \u2013 cash flow hedge | 61.6 | 0.0 | 3.9 | 0.1 |
Foreign Exchange swaps | 13.1 | 34.3 | 12.4 | 4.7 |
Interest rate swaps (not in hedge) | 44.3 | 43.8 | 4.8 | 5.5 |
Total non-current portion | 118.9 | 78.1 | 21.1 | 10.3 |
Current portion | 10.0 | 10.9 | 17.5 | 0.8 |
The full fair value of a hedging derivative is classified as a non-current asset or liability if the remaining maturity of the hedged item is more than 12\u00a0months and, as a current asset or liability, if the maturity of the hedged item is less than 12\u00a0months.
Foreign exchange swaps are used as hedging instruments for financial debt.
The notional principal amounts of the foreign exchange swaps contracts at 31\u00a0December 2022 were EUR\u00a0491.0\u00a0million (2021: EUR\u00a0361.7\u00a0million).
The hedged, highly probable forecast transactions denominated in foreign currency are expected to occur at various dates during the next 12\u00a0months. Gains and losses recognised in the hedging reserve in equity on forward foreign exchange contracts as of 31\u00a0December 2022 are recognised in the income statement in the period or periods during which the hedged forecast transaction affects the income statement. This is generally within 12\u00a0months of the end of the reporting period.
Interest rate swaps are concluded to cover cash-flows or fair value of its main borrowings.
The notional principal amounts of the outstanding interest rate swap contracts designated as cash flow hedges at 31\u00a0December 2022 were EUR\u00a01,634\u00a0million (2021: EUR\u00a01,962\u00a0million).
At 31\u00a0December 2022, the main floating rates used are EURIBOR and SONIA (UK). Gains and losses recognised in the hedging reserve in equity on interest rate swap contracts as of 31\u00a0December 2022 will be continuously released to the income statement within finance charges until the repayment of the financial debt.(in EUR million) | Year ended 31\u00a0December | |
|---|---|---|
2022 | 2021 | |
Long-term investments (10\u00a0years) | 200.5 | 279.9 |
Other current financial assets | 331.6 | 380.7 |
Other | 5.6 | 122.6 |
Total | 537.7 | 783.2 |
Long-term investments are a resource resulting from the policy of the Group and of its main shareholder, Societe Generale, to monitor the Group\u2019s interest rate risk through the matching of assets and liabilities by maturity. Available equity is considered as a long term resource which needs to be matched with long-term assets (refer to Interest rate risks management in financial risk management section above). Equity reinvestments are made in long term amortising deposits within Societe Generale in order to remain within the interest rate sensitivity limit set for each entity (variation in the net present value of the future residual fixed rate positions, surplus or deficit, for a 1% parallel increase in the yield curve). These deposits will roll-out in approximately 4\u00a0years\u2019 time and will not be renewed.
In 2021 Bansabadell Renting and Fleetpool subsidiaries were reported as investments under caption \u201cOther\u201d due to the timing of the acquisitions. These subsidiaries are included in the scope of consolidation as at 31\u00a0December 2022. See note\u00a07 for further detail.The below table presents analysis of receivables which are in and out of scope of the simplified approach of IFRS\u00a09 for sound customers.
ALD considers some specific receivable types as out of scope. These receivables have zero or almost no history of credit risk and include receivables on used car sales and insurance, which have been reviewed for credit losses and found to be of a different risk nature to the Group\u2019s main lease receivables.
(in EUR million) | 31\u00a0December 2022 | 31\u00a0December 2021 | ||||
|---|---|---|---|---|---|---|
In scope | Out of scope | Total | In scope | Out of scope | Total | |
Amounts receivable under finance lease contracts | 714.3\u00a0(1) | 12.8\u00a0(2) | 727.2 | 771.9\u00a0(1) | 18.5\u00a0(2) | 790.3 |
Provision for impairment of receivables under finance lease contracts | (4.3) | (6.0) | (10.3) | (4.0) | (8.0) | (12.0) |
Provision for impairment of receivables under finance lease contracts \u2013 forward looking | (1.3) | (1.3) | (1.0) | (1.0) | ||
Amounts receivable from credit institutions | 1,256.8 | 1,256.8 | 240.7 | 240.7 | ||
Trade receivables | 651.5 | 728.3\u00a0(2) | 1,379.8 | 598.9 | 413.2\u00a0(2) | 1,012.0 |
Provision for impairment of trade receivables | (13.4) | (151.7) | (165.2) | (11.6) | (152.1) | (163.6) |
Provision for impairment of trade receivables \u2013 forward looking | (9.5) | \u2212 | (9.5) | (8.2) | \u2212 | (8.2) |
Provision for customer disputes | (19.6) | (19.6) | (30.6) | (30.6) | ||
Total receivables | 1,337.4 | 1,820.5 | 3,157.9 | 1,346.0 | 481.6 | 1,827.6 |
(1) Including remaining capital. (2) These amounts represent doubtful and non-lease receivables. |
Based on the receivables which are in the scope, the loss allowance as at 31\u00a0December 2022 and 31\u00a0December 2021 was determined as follows for both trade and finance lease receivables:
(in EUR million) | Not past due | 0 -30\u00a0days past due | 31-60\u00a0days past due | 61-90\u00a0days past due | >\u00a090\u00a0days past due | Total |
|---|---|---|---|---|---|---|
Loss rate | 1% | 4% | 8% | 16% | 22% | |
Gross carrying amount of receivables in IFRS\u00a09 scope | 1,187.7 | 120.3 | 30.6 | 5.6 | 21.6 | 1,365.8 |
Loss Allowance | (16.2) | (4.4) | (2.3) | (0.9) | (4.7) | (28.5) |
Net carrying amount of receivables in IFRS\u00a09 scope | 1,171.6 | 115.9 | 28.3 | 4.7 | 16.9 | 1,337.4 |
(in EUR million) | Not past due | 0 -30\u00a0days past due | 31-60\u00a0days past due | 61-90\u00a0days past due | >\u00a090\u00a0days past due | Total |
|---|---|---|---|---|---|---|
Loss rate | 1% | 3% | 8% | 12% | 14% | |
Gross carrying amount of receivables in IFRS\u00a09 scope | 1,194.0 | 106.1 | 29.5 | 8.1 | 33.0 | 1,370.7 |
Loss Allowance | (13.3) | (3.5) | (2.3) | (1.0) | (4.6) | (24.7) |
Net carrying amount of receivables in IFRS\u00a09 scope | 1,180.7 | 102.7 | 27.2 | 7.1 | 28.4 | 1,346.0 |
The Company\u2019s financial assets and liabilities are categorised as follows:
The table below summarises the Group\u2019s financial assets and financial liabilities, of which the derivatives and corporate bonds are measured at fair value and the other financial assets and other financial liabilities are measured at amortised cost on the balance sheet as at 31\u00a0December 2022. For all other financial assets and liabilities, the carrying amount is a reasonable approximation of fair value.
As at 31\u00a0December 2022 (in EUR million) | Fair Value | |||
|---|---|---|---|---|
Carrying Value | Level\u00a01 | Level\u00a02 | Total | |
Financial assets measured at fair value | ||||
Derivative financial instruments in hedge | 82.3 | 82.3 | 82.3 | |
Derivative financial instruments not in hedge | 46.6 | 46.6 | 46.6 | |
Other current financial assets | 237.8 | 237.8 | 237.8 | |
Financial assets not measured at fair value | ||||
Receivables from clients and from financial institutions | 3,157.9 | 3,157.9 | 3,157.9 | |
Investment in associates | 7.9 | |||
Other non current and current financial assets | 299.9 | |||
Cash and cash equivalents | 253.1 | |||
Total | 4,085.5 | 237.8 | 3,286.8 | 3,524.6 |
As at 31\u00a0December 2021 (in EUR million) | Fair Value | |||
|---|---|---|---|---|
Carrying Value | Level\u00a01 | Level\u00a02 | Total | |
Financial assets measured at fair value | ||||
Derivative financial instruments in hedge | 27.4 | 27.4 | 27.4 | |
Derivative financial instruments not in hedge | 11.2 | 11.2 | 11.2 | |
Other current financial assets | 260.3 | 260.3 | 260.3 | |
Financial assets not measured at fair value | ||||
Receivables from clients and from financial institutions | 1,827.6 | 1,827.6 | 1,827.6 | |
Investment in associates | 7.9 | |||
Other non current and current financial assets | 522.9 | |||
Cash and cash equivalents | 152.7 | |||
Total | 2,810.0 | 260.3 | 1,866.2 | 2,126.6 |
As at 31\u00a0December 2022 (in EUR million) | Fair Value | |||
|---|---|---|---|---|
Carrying Value | Level\u00a01 | Level\u00a02 | Total | |
Financial liabilities measured at fair value | ||||
Derivative financial instruments in hedge | 44.5 | 44.5 | 44.5 | |
Derivative financial instruments not in hedge | 44.5 | 44.5 | 44.5 | |
Financial liabilities not measured at fair value | ||||
Bank borrowings | 14,571.1 | 14,571.1 | 14,571.1 | |
Bonds issued | 5,303.4 | 3,460.9 | 1,727.1 | 5,188.0 |
Trade payables | 1,105.9 | 1,105.9 | 1,105.9 | |
Total | 21,069.5 | 3,460.9 | 17,493.2 | 20,954.1 |
As at 31\u00a0December 2021 (in EUR million) | Fair Value | |||
|---|---|---|---|---|
Carrying Value | Level\u00a01 | Level\u00a02 | Total | |
Financial liabilities measured at fair value | ||||
Derivative financial instruments in hedge | 5.0 | 5.0 | 5.0 | |
Derivative financial instruments not in hedge | 6.1 | 6.1 | 6.1 | |
Financial liabilities not measured at fair value | ||||
Bank borrowings | 13,848.6 | 13,848.6 | 13,848.6 | |
Bonds issued | 4,668.7 | 2,720.0 | 1,963.6 | 4,683.6 |
Trade payables | 828.7 | 828.7 | 828.7 | |
Total | 19,357.2 | 2,720.0 | 16,652.1 | 19,372.1 |
(in EUR million) | As at 31\u00a0December | |
|---|---|---|
2022 | 2021 | |
Less than 1\u00a0year | 5,688.0 | 5,881.4 |
1-5\u00a0years | 13,985.5 | 12,581.1 |
Over 5\u00a0years | 201.0 | 54.8 |
Total borrowings and bonds | 19,874.5 | 18,517.3 |
The carrying amounts of the Group\u2019s borrowings are denominated in the following currencies:
(in EUR million) | As at 31\u00a0December | |
|---|---|---|
2022 | 2021 | |
Euro | 14,689.2 | 13,684.7 |
UK Pound | 2,619.7 | 2,543.3 |
Danish Krone | 455.8 | 376.9 |
Swedish Kronor | 349.7 | 388.5 |
Other currencies | 1,760.0 | 1,523.9 |
Total borrowings and bonds | 19,874.5 | 18,517.3 |
In June\u00a02015 a private securitisation deal was set up in Belgium for EUR\u00a0300\u00a0million. This deal was renewed and increased by EUR\u00a060\u00a0million in June\u00a02018. In June\u00a02020 this EUR\u00a0360\u00a0million deal was renewed for two additional years. In June\u00a02022, this deal was renewed for 3\u00a0additional years and increased by EUR\u00a040\u00a0million.
The private securitisation deal set up in December\u00a02013 in the Netherlands was renewed for EUR\u00a0236\u00a0million in December\u00a02020 for 6\u00a0additional months. In June\u00a02021 this deal was renewed and increased by EUR\u00a0164\u00a0million (reaching an outstanding amount EUR\u00a0400\u00a0million) for two additional years.
A private securitisation deal was set up in the UK in December\u00a02018 for GBP\u00a0414\u00a0million with a revolving period of 1\u00a0year. The deal has been renewed in December\u00a02019 for two additional years and again in December\u00a02021 for a 14\u00a0month period.
A public securitisation deal has been set up in Germany in October\u00a02020 for EUR\u00a0350\u00a0million with a revolving period of 1\u00a0year. The transaction entered the amortisation phase in November\u00a02021.
A public securitisation deal has been set up in France in October\u00a02021 for EUR\u00a0400\u00a0million with a revolving period of 1\u00a0year.
The following debt securities are currently issued:
Programme and special purpose company | Originator | Country | Currency | Amount\u00a0(1) |
|---|---|---|---|---|
ALD Funding Limited | ALD | UK | GBP | 414\u00a0million |
Axus Finance NL B | ALD | Netherlands | EUR | 400\u00a0million |
Axus Finance SPRL | ALD | Belgium | EUR | 400\u00a0million |
Red & Black Auto Lease Germany\u00a0SA, compartment\u00a03 | ALD | Germany | EUR | 108.3\u00a0million |
FCT Red & Black Auto Lease France\u00a01 | ALD | France | EUR | 351.3\u00a0million |
(1) Transaction outstanding amount at 31\u00a0December 2022. |
The maturity of the asset-backed securitisation programmes is as follows:
(in EUR million) | 31\u00a0December 2022 | 31\u00a0December 2021 |
|---|---|---|
Less than 1\u00a0year | 603.7 | 334.8 |
1-5\u00a0years | 1,079.2 | 1,628.8 |
Over 5\u00a0years | 44.2 | \u2212 |
Total securitisation programme | 1,727.1 | 1,963.6 |
Securitisation programmes involve the sale of future lease instalment receivables and, in some cases, related residual value receivables originated by various ALD subsidiaries to special purpose companies which are included in the consolidated financial statements of the Group. ALD continues to retain substantially all of the risks and rewards of the lease receivables as in all asset-backed securitisation programmes they subscribed to the first class of notes which will result in ALD bearing any realised losses. Therefore, ALD continues to recognise the transferred lease assets in their entirety.
(in EUR million) | Receivables from clients | Cash collateral deposited | Total |
|---|---|---|---|
At 31\u00a0December 2022 | |||
Carrying amount of transferred assets | 2,182.6 | 23.3 | 2,205.9 |
Carrying amount of associated liabilities\u00a0(1) | (1,727.1) | ||
Net carrying amount position | 478.8 | ||
Fair value of transferred assets | 2,334.3 | 23.3 | 2,357.6 |
Fair value of associated liabilities\u00a0(1) | (1,727.1) | ||
Net fair value position as at 31\u00a0December 2022 | 630.5 | ||
At 31\u00a0December 2021 | |||
Carrying amount of transferred assets | 2,489.6 | 36.0 | 2,525.6 |
Carrying amount of associated liabilities\u00a0(1) | (1,963.6) | ||
Net carrying amount position | 562.0 | ||
Fair value of transferred assets | 2,543.4 | 36.0 | 2,579.4 |
Fair value of associated liabilities\u00a0(1) | (1,963.6) | ||
Net fair value position as at 31\u00a0December 2021 | 615.8 | ||
(1) Bonds and notes originated from asset-backed securitisation transactions. |
Within this programme, the Group has the following outstanding bonds issued as at 31\u00a0December 2021:
A first demand guarantee has been granted to an English Financial institution for an amount of GBP\u00a0108\u00a0million on behalf of ALD Automotive UK, under the conditions negotiated in the frame of the distribution agreement concluded with this financial institution.
A first demand guarantee has been granted to ING Luxembourg for an amount of EUR\u00a052\u00a0million on behalf of Axus Luxembourg\u00a0SA, under the condition negotiated in the frame of the distribution agreement concluded with this financial institution.
A first demand guarantee has been granted to a landlord for an amount of EUR\u00a06.5\u00a0million on behalf of ALD Re DAC Ireland, under the conditions negotiated in the frame of the premises rental agreement concluded with this landlord.", "dimensions": { "concept": "ifrs-full:DisclosureOfFinancialInstrumentsExplanatory", "language": "en", "entity": "scheme:969500E7V019H9NP7427", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "corporatings-nesting-hOrtGw-35": { "value": "Following the adoption of IFRS\u00a09, the Group classifies its financial assets in the following measuring categories:
By default, derivative financial instruments will be classified as subsequently measured at fair value through profit or loss.
Regular way purchases and sales of financial assets are recognised on a trade-date, the date on which the Group commits to purchase or sell the asset. Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired or have been transferred and the Group has transferred substantially all the risks and rewards of ownership.
Debt instruments (loans, receivables and bonds) will be measured at amortised cost only if the objective of the entity (business model) is to collect the contractual cash-flows and if these cash flows consist solely of payments of principal and interest. Debt instruments will be measured at fair value through other comprehensive income (with cumulative gain or loss reclassified in profit or loss when the instruments are derecognised) if the objective of the entity (business model) is to collect the contractual cash-flows or to sell the instruments and if these contractual cash-flows consist solely of payments of principal and interest (SPPI).
Financial assets are initially measured at fair value and subsequent measured at amortised cost using the effective interest method less any impairment losses. Transaction costs (including qualifying fees and commissions) are part of the amortised cost.
Amortised cost is the amount at which the financial asset or financial liability is measured at initial recognition minus the principal repayments, plus or minus the cumulative amortisation using the effective interest method of any difference between that initial amount and the maturity amount and, for financial assets, adjusted for any loss allowance.
The effective interest rate is the rate that exactly discounts estimated future cash payments or receipts through the expected life of the financial asset or financial liability to the gross carrying amount of a financial asset or to the amortised cost of a financial liability.
The following financial assets are classified at amortised cost: cash and cash equivalents, receivables from financial institutions, investments in debt securities and other receivables.
Equity instruments will be measured at fair value through profit or loss except in case of irrevocable election made at initial recognition for measurement at fair value through other comprehensive income (provided these financial assets are not held for trading purposes and not classified as such in financial assets measured at fair value through profit or loss) without subsequent reclassification in income.
Embedded derivatives will no longer be recognised separately when their host contracts are financial assets and the hybrid instrument in its entirety in most cases will then be measured at fair value through profit or loss.
The Group assesses expected credit losses (ECL) associated with its assets carried at amortised cost. For trade receivables and contract assets, the Group applies a simplified approach in calculating ECLs. Therefore, the Group does not track changes in credit risk, but instead recognises a loss allowance based on lifetime ECLs at each reporting date. The 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 when the impact of those factors is material to the financial statements.
Further disclosure relating to impairment of financial assets is also provided in note\u00a023 \u201cReceivables from Clients and Financial Institutions\u201d.In the annual assessment of whether there is any indication that an asset may be impaired, the Group considers both external as well as internal sources of information. If such indication for impairment exists, an analysis is performed to assess whether the carrying value of the asset or cash generating unit under an operating lease exceeds the recoverable amount, being the higher of the fair value less costs to sell and the value in use. The value in use is determined at the present value of the future cash flows expected to be derived from the object or cash generating unit. The management closely monitors residual values, which are reviewed internally at least each financial year, in accordance with internal procedures. The original residual values within internal systems will be compared to the revised residual values expected at contract termination, following a review. The results of this exercise will be used to assess the level of exposure, reserves held and potential impairment required. To prevent impairment on residual values, each country completes a minimum of one annual review of pricing under the supervision of the Group to ensure that assumptions used in pricing reflect expected future market conditions, thus ensuring residual values are predicted with a reasonable degree of accuracy and on a consistent basis going forward.
At the end of 2022, no provision for impairment on rental fleet was required.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFinancialAssetsExplanatory", "language": "en", "entity": "scheme:969500E7V019H9NP7427", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "corporatings-nesting-fix-yFwUWG-189": { "value": "The Group assesses expected credit losses (ECL) associated with its assets carried at amortised cost. For trade receivables and contract assets, the Group applies a simplified approach in calculating ECLs. Therefore, the Group does not track changes in credit risk, but instead recognises a loss allowance based on lifetime ECLs at each reporting date. The 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 when the impact of those factors is material to the financial statements.
Further disclosure relating to impairment of financial assets is also provided in note\u00a023 \u201cReceivables from Clients and Financial Institutions\u201d.In the annual assessment of whether there is any indication that an asset may be impaired, the Group considers both external as well as internal sources of information. If such indication for impairment exists, an analysis is performed to assess whether the carrying value of the asset or cash generating unit under an operating lease exceeds the recoverable amount, being the higher of the fair value less costs to sell and the value in use. The value in use is determined at the present value of the future cash flows expected to be derived from the object or cash generating unit. The management closely monitors residual values, which are reviewed internally at least each financial year, in accordance with internal procedures. The original residual values within internal systems will be compared to the revised residual values expected at contract termination, following a review. The results of this exercise will be used to assess the level of exposure, reserves held and potential impairment required. To prevent impairment on residual values, each country completes a minimum of one annual review of pricing under the supervision of the Group to ensure that assumptions used in pricing reflect expected future market conditions, thus ensuring residual values are predicted with a reasonable degree of accuracy and on a consistent basis going forward.
At the end of 2022, no provision for impairment on rental fleet was required.The below table presents analysis of receivables which are in and out of scope of the simplified approach of IFRS\u00a09 for sound customers.
ALD considers some specific receivable types as out of scope. These receivables have zero or almost no history of credit risk and include receivables on used car sales and insurance, which have been reviewed for credit losses and found to be of a different risk nature to the Group\u2019s main lease receivables.
(in EUR million) | 31\u00a0December 2022 | 31\u00a0December 2021 | ||||
|---|---|---|---|---|---|---|
In scope | Out of scope | Total | In scope | Out of scope | Total | |
Amounts receivable under finance lease contracts | 714.3\u00a0(1) | 12.8\u00a0(2) | 727.2 | 771.9\u00a0(1) | 18.5\u00a0(2) | 790.3 |
Provision for impairment of receivables under finance lease contracts | (4.3) | (6.0) | (10.3) | (4.0) | (8.0) | (12.0) |
Provision for impairment of receivables under finance lease contracts \u2013 forward looking | (1.3) | (1.3) | (1.0) | (1.0) | ||
Amounts receivable from credit institutions | 1,256.8 | 1,256.8 | 240.7 | 240.7 | ||
Trade receivables | 651.5 | 728.3\u00a0(2) | 1,379.8 | 598.9 | 413.2\u00a0(2) | 1,012.0 |
Provision for impairment of trade receivables | (13.4) | (151.7) | (165.2) | (11.6) | (152.1) | (163.6) |
Provision for impairment of trade receivables \u2013 forward looking | (9.5) | \u2212 | (9.5) | (8.2) | \u2212 | (8.2) |
Provision for customer disputes | (19.6) | (19.6) | (30.6) | (30.6) | ||
Total receivables | 1,337.4 | 1,820.5 | 3,157.9 | 1,346.0 | 481.6 | 1,827.6 |
(1) Including remaining capital. (2) These amounts represent doubtful and non-lease receivables. |
Based on the receivables which are in the scope, the loss allowance as at 31\u00a0December 2022 and 31\u00a0December 2021 was determined as follows for both trade and finance lease receivables:
(in EUR million) | Not past due | 0 -30\u00a0days past due | 31-60\u00a0days past due | 61-90\u00a0days past due | >\u00a090\u00a0days past due | Total |
|---|---|---|---|---|---|---|
Loss rate | 1% | 4% | 8% | 16% | 22% | |
Gross carrying amount of receivables in IFRS\u00a09 scope | 1,187.7 | 120.3 | 30.6 | 5.6 | 21.6 | 1,365.8 |
Loss Allowance | (16.2) | (4.4) | (2.3) | (0.9) | (4.7) | (28.5) |
Net carrying amount of receivables in IFRS\u00a09 scope | 1,171.6 | 115.9 | 28.3 | 4.7 | 16.9 | 1,337.4 |
(in EUR million) | Not past due | 0 -30\u00a0days past due | 31-60\u00a0days past due | 61-90\u00a0days past due | >\u00a090\u00a0days past due | Total |
|---|---|---|---|---|---|---|
Loss rate | 1% | 3% | 8% | 12% | 14% | |
Gross carrying amount of receivables in IFRS\u00a09 scope | 1,194.0 | 106.1 | 29.5 | 8.1 | 33.0 | 1,370.7 |
Loss Allowance | (13.3) | (3.5) | (2.3) | (1.0) | (4.6) | (24.7) |
Net carrying amount of receivables in IFRS\u00a09 scope | 1,180.7 | 102.7 | 27.2 | 7.1 | 28.4 | 1,346.0 |
The Group assesses expected credit losses (ECL) associated with its assets carried at amortised cost. For trade receivables and contract assets, the Group applies a simplified approach in calculating ECLs. Therefore, the Group does not track changes in credit risk, but instead recognises a loss allowance based on lifetime ECLs at each reporting date. The 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 when the impact of those factors is material to the financial statements.
Further disclosure relating to impairment of financial assets is also provided in note\u00a023 \u201cReceivables from Clients and Financial Institutions\u201d.The credit risk is the risk of losses arising from the inability of the Group\u2019s customers to meet their financial commitments. Credit risk includes the counterparty risk. In addition, credit risk may be further amplified by concentration risk, which arises from a large exposure to a given risk, to one or a few counterparties.
Credit risk management policy
Credit risk is the risk that a customer is not able to fulfil its financial obligations towards ALD. All ALD entities have to comply with risk procedures issued centrally which define the way credit requests have to be studied and validated, as well as the roles and responsibilities of all staff involved in the credit vetting process. Each subsidiary has a specific credit authority approved by ALD General Management and the Risk Department of Societe Generale, and determined according to the size of the fleet, the maturity of the subsidiary and the type of customer concerned (corporate, retail, financial institution,\u00a0etc.). Within its credit limit, each subsidiary can decide directly on its counterparty risk. Above this threshold, credit acceptance is made at central level jointly with the Risk Department of Societe Generale.
Regular risk committees are held by ALD in order to review all potential risk issues and to ensure the credit risk procedures are properly applied. All standard risk indicators (arrears/default/Cost of risk) are also monitored centrally. All ALD entities are applying the same process locally.
The primary responsibility for debt collection remains under the direct responsibility of ALD\u2019s subsidiaries with dedicated teams in charge of recovering unpaid invoices in compliance with local regulations and market practices. Local processes need, however, to be compliant with the corporate instructions and guidelines distributed to the whole network. Central monitoring of all ageing balances is performed on a monthly basis as part of the regular risk reviews, and actions plans are set up whenever necessary under the supervision of the Country Manager.
Impairment charges on receivables (Cost of risk) has historically remained very low due to the nature of the products proposed by ALD, a strict control of the risk assessment process and a very diversified customer portfolio.
Credit risk measurement
The Group applies the IFRS\u00a09 simplified approach to measuring expected credit losses which uses a lifetime expected loss allowance for all sound trade and lease receivables.
For not in default trade receivables and finance lease receivables, the Group does not track changes in credit risk, but instead recognises a loss allowance based on expected lifetime losses from initial recognition of the receivables. These losses are measured based on a provision matrix for receivables associated with sound customers, as described below. Probability of Default (PD) rates are based on observed default rates over the life of the receivables (the average contract length in each entity). Specific PD rates are calculated for each entity and each customer type. This process results in Probability of Default (PD) rates for each age of past-due receivables. The PD rates are applied to the aged receivables of the reporting period to arrive at a total provision. The final impairment allowance is also adjusted to consider Loss Given Default (LGD) specific to the entity.
The historical loss rates are adjusted to reflect current and forward looking information on specific local economies affecting the ability of the customers to settle the receivables.
Expected credit losses are reassessed at each reporting date and reflect all reasonable information that is available at the reporting date.
Management has reviewed the Group\u2019s provision matrix used in determining the expected credit losses, including the revision of the expected loss rates and assessed the potential impairment or write-off of receivables. The Group continues monitoring economic conditions and other various factors in determining loss rates.
In 2022 the main considerations in the forward looking provision calculation, which were used in 2020 and 2021, have been reviewed in the context of the latest economic environment.
The main considerations in the forward looking provision calculation are:
The forward looking provision has increased to EUR\u00a010.8\u00a0million (31\u00a0December 2021: EUR\u00a09.2\u00a0million).
As in the previous financial year, the Group has not yet seen significant deterioration in the recoverability of customer receivables in 2022. The provision on sound receivables has increased to EUR\u00a028.5\u00a0million (31\u00a0December 2021: EUR\u00a024.8\u00a0million).
The evolution of the Cost of risk (including forward looking element) and the Cost of risk as a percentage of the average net earning assets (NEA) over the last two years is shown in the table below.
(in EUR million) | 2022 | 2021 | ||
|---|---|---|---|---|
December YTD | June YTD | December YTD | June YTD | |
Cost of risk | 46.1 | 18.9 | 24.8 | 16.6 |
| 1.7 | 0.8 | (6.5) | (3.5) |
Average NEA\u00a0(1) | 23,643 | 23,070 | 21,657 | 21,205 |
Cost of risk as % of Average NEA (bps) | 20 | 16 | 11 | 16 |
(1) The arithmetic average of Earning Assets at the beginning and end of the period including disposal groups held for sale (Note 8)\u00a0 |
Management considers the current level of provisions to be adequate. The Group will continue to monitor the provision parameters, including the relevance of the local uplift factors, according to the macroeconomic situation.
Expected credit losses and provision matrix are disclosed in note\u00a023 \u201cReceivables from clients and financial institutions\u201d.
There is no change in the definition or policy for provisions on doubtful exposure under IFRS\u00a09. The definition of default exposure remains unchanged.
The Group considers that a customer is in default as soon as one of the three following conditions applies:
When a credit risk emerges, the following processes take place:
Where the customer is in default, the whole of the customer balance is classified as doubtful as a result of the \u201ccontagion principle\u201d. The application of this principle leads to the classification as doubtful of all outstanding amounts relating to a customer that is deemed to be in default regardless of the age of the invoice (i.e. a customer is either solvent or not).
If the customer belongs to a group of companies, or in cases where the parent company has been classified as being in default, a case-by-case study is undertaken to establish whether it is necessary to apply the same treatment to all the legal entities included in that group. This \u201ccontagion principle\u201d does not apply, however, in the following cases:
Impairment is only made in respect of customer receivables where the customer is considered to be in default (receivable is impaired). The impairment made for risk of default is consistent with the credit rating of each customer. The impairment must be sufficient to cover the entire probable loss in total or partial non-recovery of the loan.
The impairment is based upon the full amount outstanding for the customer in default.
Generally, ALD remains the owner of the vehicle and impairment is made against the recorded receivables relating to issued invoices. In addition, where it is considered likely that the vehicles will be returned, a further provision is required for the amount of the likely shortfall from the sale of the asset.
Where there are guarantees from the customer providing the right of offset in the event of a default, these amounts are taken into account in assessing the impairment on a customer by customer basis.
Derivative financial instruments
In addition to its natural exposure to credit risk in the leasing of vehicles, the Group is also exposed to credit risk because of its use of derivative financial instruments and because of excess cash being deposited with banks. The Group controls this risk by requiring minimum external rating grades that such external counterparties are assigned.In the annual assessment of whether there is any indication that an asset may be impaired, the Group considers both external as well as internal sources of information. If such indication for impairment exists, an analysis is performed to assess whether the carrying value of the asset or cash generating unit under an operating lease exceeds the recoverable amount, being the higher of the fair value less costs to sell and the value in use. The value in use is determined at the present value of the future cash flows expected to be derived from the object or cash generating unit. The management closely monitors residual values, which are reviewed internally at least each financial year, in accordance with internal procedures. The original residual values within internal systems will be compared to the revised residual values expected at contract termination, following a review. The results of this exercise will be used to assess the level of exposure, reserves held and potential impairment required. To prevent impairment on residual values, each country completes a minimum of one annual review of pricing under the supervision of the Group to ensure that assumptions used in pricing reflect expected future market conditions, thus ensuring residual values are predicted with a reasonable degree of accuracy and on a consistent basis going forward.
At the end of 2022, no provision for impairment on rental fleet was required.The below table presents analysis of receivables which are in and out of scope of the simplified approach of IFRS\u00a09 for sound customers.
ALD considers some specific receivable types as out of scope. These receivables have zero or almost no history of credit risk and include receivables on used car sales and insurance, which have been reviewed for credit losses and found to be of a different risk nature to the Group\u2019s main lease receivables.
(in EUR million) | 31\u00a0December 2022 | 31\u00a0December 2021 | ||||
|---|---|---|---|---|---|---|
In scope | Out of scope | Total | In scope | Out of scope | Total | |
Amounts receivable under finance lease contracts | 714.3\u00a0(1) | 12.8\u00a0(2) | 727.2 | 771.9\u00a0(1) | 18.5\u00a0(2) | 790.3 |
Provision for impairment of receivables under finance lease contracts | (4.3) | (6.0) | (10.3) | (4.0) | (8.0) | (12.0) |
Provision for impairment of receivables under finance lease contracts \u2013 forward looking | (1.3) | (1.3) | (1.0) | (1.0) | ||
Amounts receivable from credit institutions | 1,256.8 | 1,256.8 | 240.7 | 240.7 | ||
Trade receivables | 651.5 | 728.3\u00a0(2) | 1,379.8 | 598.9 | 413.2\u00a0(2) | 1,012.0 |
Provision for impairment of trade receivables | (13.4) | (151.7) | (165.2) | (11.6) | (152.1) | (163.6) |
Provision for impairment of trade receivables \u2013 forward looking | (9.5) | \u2212 | (9.5) | (8.2) | \u2212 | (8.2) |
Provision for customer disputes | (19.6) | (19.6) | (30.6) | (30.6) | ||
Total receivables | 1,337.4 | 1,820.5 | 3,157.9 | 1,346.0 | 481.6 | 1,827.6 |
(1) Including remaining capital. (2) These amounts represent doubtful and non-lease receivables. |
Based on the receivables which are in the scope, the loss allowance as at 31\u00a0December 2022 and 31\u00a0December 2021 was determined as follows for both trade and finance lease receivables:
(in EUR million) | Not past due | 0 -30\u00a0days past due | 31-60\u00a0days past due | 61-90\u00a0days past due | >\u00a090\u00a0days past due | Total |
|---|---|---|---|---|---|---|
Loss rate | 1% | 4% | 8% | 16% | 22% | |
Gross carrying amount of receivables in IFRS\u00a09 scope | 1,187.7 | 120.3 | 30.6 | 5.6 | 21.6 | 1,365.8 |
Loss Allowance | (16.2) | (4.4) | (2.3) | (0.9) | (4.7) | (28.5) |
Net carrying amount of receivables in IFRS\u00a09 scope | 1,171.6 | 115.9 | 28.3 | 4.7 | 16.9 | 1,337.4 |
(in EUR million) | Not past due | 0 -30\u00a0days past due | 31-60\u00a0days past due | 61-90\u00a0days past due | >\u00a090\u00a0days past due | Total |
|---|---|---|---|---|---|---|
Loss rate | 1% | 3% | 8% | 12% | 14% | |
Gross carrying amount of receivables in IFRS\u00a09 scope | 1,194.0 | 106.1 | 29.5 | 8.1 | 33.0 | 1,370.7 |
Loss Allowance | (13.3) | (3.5) | (2.3) | (1.0) | (4.6) | (24.7) |
Net carrying amount of receivables in IFRS\u00a09 scope | 1,180.7 | 102.7 | 27.2 | 7.1 | 28.4 | 1,346.0 |
The Group assesses expected credit losses (ECL) associated with its assets carried at amortised cost. For trade receivables and contract assets, the Group applies a simplified approach in calculating ECLs. Therefore, the Group does not track changes in credit risk, but instead recognises a loss allowance based on lifetime ECLs at each reporting date. The 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 when the impact of those factors is material to the financial statements.
Further disclosure relating to impairment of financial assets is also provided in note\u00a023 \u201cReceivables from Clients and Financial Institutions\u201d.In the annual assessment of whether there is any indication that an asset may be impaired, the Group considers both external as well as internal sources of information. If such indication for impairment exists, an analysis is performed to assess whether the carrying value of the asset or cash generating unit under an operating lease exceeds the recoverable amount, being the higher of the fair value less costs to sell and the value in use. The value in use is determined at the present value of the future cash flows expected to be derived from the object or cash generating unit. The management closely monitors residual values, which are reviewed internally at least each financial year, in accordance with internal procedures. The original residual values within internal systems will be compared to the revised residual values expected at contract termination, following a review. The results of this exercise will be used to assess the level of exposure, reserves held and potential impairment required. To prevent impairment on residual values, each country completes a minimum of one annual review of pricing under the supervision of the Group to ensure that assumptions used in pricing reflect expected future market conditions, thus ensuring residual values are predicted with a reasonable degree of accuracy and on a consistent basis going forward.
At the end of 2022, no provision for impairment on rental fleet was required.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForImpairmentOfFinancialAssetsExplanatory", "language": "en", "entity": "scheme:969500E7V019H9NP7427", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "corporatings-nesting-hOrtGw-37": { "value": "Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, loans and borrowings, payables, or as derivatives designated as hedging instruments in an effective hedge, as appropriate.
All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs.
The Group\u2019s financial liabilities include trade and other payables, loans and borrowings including bank overdrafts, and derivative financial instruments.
For purposes of subsequent measurement, financial liabilities are classified in two categories:
Financial liabilities at fair value through profit or loss only include derivative financial instruments in the Group\u2019s financial statements. For further disclosures see note\u00a03.14 \u201cDerivative financial instruments and hedging activities\u201d and note\u00a020 \u201cDerivative financial instruments\u201d.
Financial liabilities are initially recognised at fair value incurred and are subsequently measured at amortised cost. Any difference between the proceeds (transaction costs) and the redemption value is recognised in the statement of profit or loss over the period of the financial liability using the effective interest method. Transaction costs are included in amortised cost using the effective interest method.
Financial liabilities at amortised cost (loans, borrowings and debt securities issued) is the category most relevant to the Group. After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the effective interest rate (EIR) method. Any difference between cost and redemption value is recognised in the income statement over the term of the loans and borrowings.
Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included as finance costs in the statement of profit or loss.
For more information, refer to note\u00a030 \u201cBorrowings from financial institutions, bonds and notes issued\u201d.
Financial liabilities are derecognised if the Group\u2019s obligations specified in the contract expire or are discharged or cancelled.
Financial assets and liabilities are offset and the net amount is presented in the balance sheet when the Group has a legal right to offset the amounts and intends either to settle on a net basis or to realise the asset and liability simultaneously.
Income and expenses are presented on a net basis only when permitted by IFRS.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFinancialLiabilitiesExplanatory", "language": "en", "entity": "scheme:969500E7V019H9NP7427", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "corporatings-nesting-fix-yFwUWG-217": { "value": "Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. The method of recognising the resulting gain or loss depends on whether the derivative is designated as a hedging instrument, and if so, the nature of the item being hedged.
The Group documents at the inception of the transaction the relationship between hedging instruments and hedged items, as well as its risk management objectives and strategy for undertaking various hedging transactions. The Group also documents its assessment, both at hedge inception and on an ongoing basis, of whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in fair values or cash flows of hedged items.
The fair values of various derivative instruments used for hedging purposes are disclosed in note\u00a026. Movements on the hedging reserve in other comprehensive income are shown in consolidated statement of changes in equity. The full fair value of a hedging derivative is classified as a non-current asset or liability when the remaining hedged item is more than 12\u00a0months and as a current asset or liability when the remaining maturity of the hedged item is less than 12\u00a0months.
The Group designates certain derivatives as either:
fair value hedge: hedges of the fair value of recognised assets or liabilities or a firm commitment.Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recorded in the income statement, together with any changes in the fair value of the hedged asset or liability that are attributable to the hedged risk. The Group only applies fair value hedge accounting for hedging fixed interest risk on borrowings. The gain or loss relating to fair value hedges is recognised in the income statement within \u201cunrealised gains/losses on financial instruments\u201d.If the hedge no longer meets the criteria for hedge accounting, the adjustment to the carrying amount of a hedged item for which the effective interest method is used is amortised to profit or loss over the period to maturity.No fair value hedge instruments have been recorded by the Group for the year ended 31\u00a0December 2022;cash flow hedge: hedges of a particular risk associated with a recognised asset or liability or a highly probable forecasted transaction.The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is recognised in other comprehensive income. The gain or loss relating to the ineffective portion is recognised immediately in the income statement within \u201cunrealised gains/losses on financial instruments\u201d.Amounts accumulated in equity are reclassified to profit or loss in the periods when the hedged item affects profit or loss. The gain or loss relating to the effective portion of interest rate swaps hedging variable rate borrowings is recognised in the income statement.When a hedging instrument expires or is sold, or when a hedge no longer meets the criteria for hedge accounting, any cumulative gain or loss existing in equity at that time remains in equity and is recognised when the forecast transaction is ultimately recognised in the income statement. When a forecast transaction is no longer expected to occur, the cumulative gain or loss that was reported in equity is immediately transferred to the income statement;derivatives: changes in the fair value of derivatives that are not designated as a hedging instrument are recognised immediately in the income statement in the caption \u201cUnrealised gains/(losses) on financial instruments\u201d.The types of risks that the Group is exposed to and derivatives used to hedge these risks can be found in section\u00a04.1.2 Treasury Risk and note\u00a020 \u201cDerivative financial instruments\u201d.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForHedgingExplanatory", "language": "en", "entity": "scheme:969500E7V019H9NP7427", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "corporatings-nesting-fix-yFwUWG-216": { "value": "Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. The method of recognising the resulting gain or loss depends on whether the derivative is designated as a hedging instrument, and if so, the nature of the item being hedged.
The Group documents at the inception of the transaction the relationship between hedging instruments and hedged items, as well as its risk management objectives and strategy for undertaking various hedging transactions. The Group also documents its assessment, both at hedge inception and on an ongoing basis, of whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in fair values or cash flows of hedged items.
The fair values of various derivative instruments used for hedging purposes are disclosed in note\u00a026. Movements on the hedging reserve in other comprehensive income are shown in consolidated statement of changes in equity. The full fair value of a hedging derivative is classified as a non-current asset or liability when the remaining hedged item is more than 12\u00a0months and as a current asset or liability when the remaining maturity of the hedged item is less than 12\u00a0months.
The Group designates certain derivatives as either:
fair value hedge: hedges of the fair value of recognised assets or liabilities or a firm commitment.Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recorded in the income statement, together with any changes in the fair value of the hedged asset or liability that are attributable to the hedged risk. The Group only applies fair value hedge accounting for hedging fixed interest risk on borrowings. The gain or loss relating to fair value hedges is recognised in the income statement within \u201cunrealised gains/losses on financial instruments\u201d.If the hedge no longer meets the criteria for hedge accounting, the adjustment to the carrying amount of a hedged item for which the effective interest method is used is amortised to profit or loss over the period to maturity.No fair value hedge instruments have been recorded by the Group for the year ended 31\u00a0December 2022;cash flow hedge: hedges of a particular risk associated with a recognised asset or liability or a highly probable forecasted transaction.The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is recognised in other comprehensive income. The gain or loss relating to the ineffective portion is recognised immediately in the income statement within \u201cunrealised gains/losses on financial instruments\u201d.Amounts accumulated in equity are reclassified to profit or loss in the periods when the hedged item affects profit or loss. The gain or loss relating to the effective portion of interest rate swaps hedging variable rate borrowings is recognised in the income statement.When a hedging instrument expires or is sold, or when a hedge no longer meets the criteria for hedge accounting, any cumulative gain or loss existing in equity at that time remains in equity and is recognised when the forecast transaction is ultimately recognised in the income statement. When a forecast transaction is no longer expected to occur, the cumulative gain or loss that was reported in equity is immediately transferred to the income statement;derivatives: changes in the fair value of derivatives that are not designated as a hedging instrument are recognised immediately in the income statement in the caption \u201cUnrealised gains/(losses) on financial instruments\u201d.The types of risks that the Group is exposed to and derivatives used to hedge these risks can be found in section\u00a04.1.2 Treasury Risk and note\u00a020 \u201cDerivative financial instruments\u201d.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForDerivativeFinancialInstrumentsExplanatory", "language": "en", "entity": "scheme:969500E7V019H9NP7427", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "corporatings-nesting-fix-yFwUWG-214": { "value": "Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. The method of recognising the resulting gain or loss depends on whether the derivative is designated as a hedging instrument, and if so, the nature of the item being hedged.
The Group documents at the inception of the transaction the relationship between hedging instruments and hedged items, as well as its risk management objectives and strategy for undertaking various hedging transactions. The Group also documents its assessment, both at hedge inception and on an ongoing basis, of whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in fair values or cash flows of hedged items.
The fair values of various derivative instruments used for hedging purposes are disclosed in note\u00a026. Movements on the hedging reserve in other comprehensive income are shown in consolidated statement of changes in equity. The full fair value of a hedging derivative is classified as a non-current asset or liability when the remaining hedged item is more than 12\u00a0months and as a current asset or liability when the remaining maturity of the hedged item is less than 12\u00a0months.
The Group designates certain derivatives as either:
fair value hedge: hedges of the fair value of recognised assets or liabilities or a firm commitment.Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recorded in the income statement, together with any changes in the fair value of the hedged asset or liability that are attributable to the hedged risk. The Group only applies fair value hedge accounting for hedging fixed interest risk on borrowings. The gain or loss relating to fair value hedges is recognised in the income statement within \u201cunrealised gains/losses on financial instruments\u201d.If the hedge no longer meets the criteria for hedge accounting, the adjustment to the carrying amount of a hedged item for which the effective interest method is used is amortised to profit or loss over the period to maturity.No fair value hedge instruments have been recorded by the Group for the year ended 31\u00a0December 2022;cash flow hedge: hedges of a particular risk associated with a recognised asset or liability or a highly probable forecasted transaction.The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is recognised in other comprehensive income. The gain or loss relating to the ineffective portion is recognised immediately in the income statement within \u201cunrealised gains/losses on financial instruments\u201d.Amounts accumulated in equity are reclassified to profit or loss in the periods when the hedged item affects profit or loss. The gain or loss relating to the effective portion of interest rate swaps hedging variable rate borrowings is recognised in the income statement.When a hedging instrument expires or is sold, or when a hedge no longer meets the criteria for hedge accounting, any cumulative gain or loss existing in equity at that time remains in equity and is recognised when the forecast transaction is ultimately recognised in the income statement. When a forecast transaction is no longer expected to occur, the cumulative gain or loss that was reported in equity is immediately transferred to the income statement;derivatives: changes in the fair value of derivatives that are not designated as a hedging instrument are recognised immediately in the income statement in the caption \u201cUnrealised gains/(losses) on financial instruments\u201d.The types of risks that the Group is exposed to and derivatives used to hedge these risks can be found in section\u00a04.1.2 Treasury Risk and note\u00a020 \u201cDerivative financial instruments\u201d.Derivative instruments are used as part of the overall strategy to manage exposure to market risks primarily associated with fluctuations in interest rates and foreign exchange rates through interest rate and currency swaps respectively. As a matter of policy, derivatives are not used for speculative purposes. Derivative instruments that are measured at fair value on a recurring basis are included in the caption \u201cDerivative financial instruments\u201d in the consolidated balance sheet.
(in EUR million) | Year ended 31\u00a0December 2022 | Year ended 31\u00a0December 2021 | ||
|---|---|---|---|---|
Assets | Liabilities | Assets | Liabilities | |
Interest rate swaps \u2013 cash flow hedge | 61.6 | 0.0 | 3.9 | 0.1 |
Foreign Exchange swaps | 20.8 | 44.5 | 23.5 | 4.9 |
Interest rate swaps (not in hedge) | 46.6 | 44.5 | 11.2 | 6.1 |
Total | 128.9 | 89.0 | 38.6 | 11.2 |
Less non-current portion: | ||||
Interest rate swaps \u2013 cash flow hedge | 61.6 | 0.0 | 3.9 | 0.1 |
Foreign Exchange swaps | 13.1 | 34.3 | 12.4 | 4.7 |
Interest rate swaps (not in hedge) | 44.3 | 43.8 | 4.8 | 5.5 |
Total non-current portion | 118.9 | 78.1 | 21.1 | 10.3 |
Current portion | 10.0 | 10.9 | 17.5 | 0.8 |
The full fair value of a hedging derivative is classified as a non-current asset or liability if the remaining maturity of the hedged item is more than 12\u00a0months and, as a current asset or liability, if the maturity of the hedged item is less than 12\u00a0months.
Foreign exchange swaps are used as hedging instruments for financial debt.
The notional principal amounts of the foreign exchange swaps contracts at 31\u00a0December 2022 were EUR\u00a0491.0\u00a0million (2021: EUR\u00a0361.7\u00a0million).
The hedged, highly probable forecast transactions denominated in foreign currency are expected to occur at various dates during the next 12\u00a0months. Gains and losses recognised in the hedging reserve in equity on forward foreign exchange contracts as of 31\u00a0December 2022 are recognised in the income statement in the period or periods during which the hedged forecast transaction affects the income statement. This is generally within 12\u00a0months of the end of the reporting period.
Interest rate swaps are concluded to cover cash-flows or fair value of its main borrowings.
The notional principal amounts of the outstanding interest rate swap contracts designated as cash flow hedges at 31\u00a0December 2022 were EUR\u00a01,634\u00a0million (2021: EUR\u00a01,962\u00a0million).
At 31\u00a0December 2022, the main floating rates used are EURIBOR and SONIA (UK). Gains and losses recognised in the hedging reserve in equity on interest rate swap contracts as of 31\u00a0December 2022 will be continuously released to the income statement within finance charges until the repayment of the financial debt.", "dimensions": { "concept": "ifrs-full:DisclosureOfDerivativeFinancialInstrumentsExplanatory", "language": "en", "entity": "scheme:969500E7V019H9NP7427", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "corporatings-nesting-hOrtGw-38": { "value": "Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. The method of recognising the resulting gain or loss depends on whether the derivative is designated as a hedging instrument, and if so, the nature of the item being hedged.
The Group documents at the inception of the transaction the relationship between hedging instruments and hedged items, as well as its risk management objectives and strategy for undertaking various hedging transactions. The Group also documents its assessment, both at hedge inception and on an ongoing basis, of whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in fair values or cash flows of hedged items.
The fair values of various derivative instruments used for hedging purposes are disclosed in note\u00a026. Movements on the hedging reserve in other comprehensive income are shown in consolidated statement of changes in equity. The full fair value of a hedging derivative is classified as a non-current asset or liability when the remaining hedged item is more than 12\u00a0months and as a current asset or liability when the remaining maturity of the hedged item is less than 12\u00a0months.
The Group designates certain derivatives as either:
fair value hedge: hedges of the fair value of recognised assets or liabilities or a firm commitment.Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recorded in the income statement, together with any changes in the fair value of the hedged asset or liability that are attributable to the hedged risk. The Group only applies fair value hedge accounting for hedging fixed interest risk on borrowings. The gain or loss relating to fair value hedges is recognised in the income statement within \u201cunrealised gains/losses on financial instruments\u201d.If the hedge no longer meets the criteria for hedge accounting, the adjustment to the carrying amount of a hedged item for which the effective interest method is used is amortised to profit or loss over the period to maturity.No fair value hedge instruments have been recorded by the Group for the year ended 31\u00a0December 2022;cash flow hedge: hedges of a particular risk associated with a recognised asset or liability or a highly probable forecasted transaction.The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is recognised in other comprehensive income. The gain or loss relating to the ineffective portion is recognised immediately in the income statement within \u201cunrealised gains/losses on financial instruments\u201d.Amounts accumulated in equity are reclassified to profit or loss in the periods when the hedged item affects profit or loss. The gain or loss relating to the effective portion of interest rate swaps hedging variable rate borrowings is recognised in the income statement.When a hedging instrument expires or is sold, or when a hedge no longer meets the criteria for hedge accounting, any cumulative gain or loss existing in equity at that time remains in equity and is recognised when the forecast transaction is ultimately recognised in the income statement. When a forecast transaction is no longer expected to occur, the cumulative gain or loss that was reported in equity is immediately transferred to the income statement;derivatives: changes in the fair value of derivatives that are not designated as a hedging instrument are recognised immediately in the income statement in the caption \u201cUnrealised gains/(losses) on financial instruments\u201d.The types of risks that the Group is exposed to and derivatives used to hedge these risks can be found in section\u00a04.1.2 Treasury Risk and note\u00a020 \u201cDerivative financial instruments\u201d.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForDerivativeFinancialInstrumentsAndHedgingExplanatory", "language": "en", "entity": "scheme:969500E7V019H9NP7427", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "corporatings-nesting-fix-yFwUWG-278": { "value": "(in EUR million) | As at 31\u00a0December | |
|---|---|---|
2022 | 2021 | |
Inventories - gross value | 407.3 | 304.9 |
Valuation allowance | (11.9) | (8.5) |
Inventories net | 395.3 | 296.4 |
This caption includes:
These receivable balances are shown after any accumulated impairment losses and are initially measured at fair value and subsequently at amortised cost using the effective interest method.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForLoansAndReceivablesExplanatory", "language": "en", "entity": "scheme:969500E7V019H9NP7427", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "corporatings-nesting-fix-yFwUWG-292": { "value": "This item includes amounts receivable under lease contracts and trade receivables, after deduction of allowances for debtor risks, where necessary.
(in EUR million) | As at 31\u00a0December | |
|---|---|---|
2022 | 2021 | |
Amounts receivable under finance lease contracts | 727.2 | 790.3 |
Provision for impairment of Finance lease receivables | (11.6) | (13.0) |
Of which | ||
| (6.0) | (8.0) |
| (4.3) | (4.0) |
| (1.3) | (1.0) |
Amounts receivable from credit institutions and related parties\u00a0(1) | 1,256.8 | 240.7 |
Trade receivables | 1,379.8 | 1,012.0 |
Provision for impairment of trade receivables | (174.6) | (171.8) |
Of which | ||
| (151.7) | (152.0) |
| (13.4) | (11.6) |
| (9.5) | (8.2) |
Provision for customer disputes | (19.6) | (30.6) |
Total receivables | 3,157.9 | 1,827.6 |
(1) \u00a0\u00a0Mainly towards Societe Generale \u2013 no impairment provision has been calculated on these receivables due to their inter-group nature. Increase in these receivables represents cash generated from the share rights issue which has been placed on a short-term deposit with Societe Generale. |
The fair value of receivables is equivalent to the carrying value.
The below table presents analysis of receivables which are in and out of scope of the simplified approach of IFRS\u00a09 for sound customers.
ALD considers some specific receivable types as out of scope. These receivables have zero or almost no history of credit risk and include receivables on used car sales and insurance, which have been reviewed for credit losses and found to be of a different risk nature to the Group\u2019s main lease receivables.
(in EUR million) | 31\u00a0December 2022 | 31\u00a0December 2021 | ||||
|---|---|---|---|---|---|---|
In scope | Out of scope | Total | In scope | Out of scope | Total | |
Amounts receivable under finance lease contracts | 714.3\u00a0(1) | 12.8\u00a0(2) | 727.2 | 771.9\u00a0(1) | 18.5\u00a0(2) | 790.3 |
Provision for impairment of receivables under finance lease contracts | (4.3) | (6.0) | (10.3) | (4.0) | (8.0) | (12.0) |
Provision for impairment of receivables under finance lease contracts \u2013 forward looking | (1.3) | (1.3) | (1.0) | (1.0) | ||
Amounts receivable from credit institutions | 1,256.8 | 1,256.8 | 240.7 | 240.7 | ||
Trade receivables | 651.5 | 728.3\u00a0(2) | 1,379.8 | 598.9 | 413.2\u00a0(2) | 1,012.0 |
Provision for impairment of trade receivables | (13.4) | (151.7) | (165.2) | (11.6) | (152.1) | (163.6) |
Provision for impairment of trade receivables \u2013 forward looking | (9.5) | \u2212 | (9.5) | (8.2) | \u2212 | (8.2) |
Provision for customer disputes | (19.6) | (19.6) | (30.6) | (30.6) | ||
Total receivables | 1,337.4 | 1,820.5 | 3,157.9 | 1,346.0 | 481.6 | 1,827.6 |
(1) Including remaining capital. (2) These amounts represent doubtful and non-lease receivables. |
Based on the receivables which are in the scope, the loss allowance as at 31\u00a0December 2022 and 31\u00a0December 2021 was determined as follows for both trade and finance lease receivables:
(in EUR million) | Not past due | 0 -30\u00a0days past due | 31-60\u00a0days past due | 61-90\u00a0days past due | >\u00a090\u00a0days past due | Total |
|---|---|---|---|---|---|---|
Loss rate | 1% | 4% | 8% | 16% | 22% | |
Gross carrying amount of receivables in IFRS\u00a09 scope | 1,187.7 | 120.3 | 30.6 | 5.6 | 21.6 | 1,365.8 |
Loss Allowance | (16.2) | (4.4) | (2.3) | (0.9) | (4.7) | (28.5) |
Net carrying amount of receivables in IFRS\u00a09 scope | 1,171.6 | 115.9 | 28.3 | 4.7 | 16.9 | 1,337.4 |
(in EUR million) | Not past due | 0 -30\u00a0days past due | 31-60\u00a0days past due | 61-90\u00a0days past due | >\u00a090\u00a0days past due | Total |
|---|---|---|---|---|---|---|
Loss rate | 1% | 3% | 8% | 12% | 14% | |
Gross carrying amount of receivables in IFRS\u00a09 scope | 1,194.0 | 106.1 | 29.5 | 8.1 | 33.0 | 1,370.7 |
Loss Allowance | (13.3) | (3.5) | (2.3) | (1.0) | (4.6) | (24.7) |
Net carrying amount of receivables in IFRS\u00a09 scope | 1,180.7 | 102.7 | 27.2 | 7.1 | 28.4 | 1,346.0 |
The amounts presented in the tables below include loans and finance receivables by Basel\u00a0II portfolio that are not past due and that are past due but not individually impaired.
(in EUR million) | Year ended 31\u00a0December 2022 | |||||
|---|---|---|---|---|---|---|
Loans and receivables to customers | ||||||
Banks | Corporates | Small and medium enterprises | Credit to individuals | Very small companies | Total | |
Amounts not past due | 7.1 | 385.0 | 30.9 | 55.4 | 170.8 | 649.2 |
Amounts including past due between 1\u00a0to 30\u00a0days | 0.3 | 16.2 | 13.0 | 0.1 | 5.0 | 34.7 |
Amounts including past due between 31\u00a0to 60\u00a0days | 0.0 | 1.3 | 1.8 | 0.0 | 1.5 | 4.6 |
Amounts including past due between 61\u00a0to 90\u00a0days | 0.1 | 0.8 | 2.1 | 0.0 | 0.5 | 3.5 |
Amounts including past due between 91\u00a0to 180\u00a0days | 0.3 | 6.6 | 1.1 | 0.1 | 3.4 | 11.4 |
Amounts including past due between 181\u00a0days to 1\u00a0year | 0.1 | 0.3 | 0.5 | 0.0 | 2.1 | 3.0 |
Amounts including past due over 1\u00a0year | 0.2 | 5.0 | 0.7 | 0.0 | 2.0 | 7.9 |
Total | 8.1 | 415.1 | 50.1 | 55.8 | 185.3 | 714.3 |
(in EUR million) | Year ended 31\u00a0December 2021 | |||||
|---|---|---|---|---|---|---|
Loans and receivables to customers | ||||||
Banks | Corporates | Small and medium enterprises | Credit to individuals | Very small companies | Total | |
Amounts not past due | 9.0 | 371.1 | 65.4 | 82.2 | 192.4 | 720.1 |
Amounts including past due between 1\u00a0to 30\u00a0days | 0.3 | 5.1 | 10.8 | 0.2 | 5.1 | 21.5 |
Amounts including past due between 31\u00a0to 60\u00a0days | 0.0 | 5.3 | 2.4 | 0.0 | 1.6 | 9.3 |
Amounts including past due between 61\u00a0to 90\u00a0days | \u2212 | 0.1 | 0.5 | 0.0 | 0.8 | 1.5 |
Amounts including past due between 91\u00a0to 180\u00a0days | 0.5 | 7.3 | 0.1 | 0.2 | 2.8 | 10.9 |
Amounts including past due between 181\u00a0days to 1\u00a0year | 0.0 | 4.5 | 0.5 | 0.0 | 2.3 | 7.3 |
Amounts including past due over 1\u00a0year | 0.3 | 0.2 | 0.0 | 0.7 | 1.2 | |
Total | 9.7 | 393.8 | 79.9 | 82.8 | 205.7 | 771.9 |
The decrease in amounts not past due is related to fleet decrease.
A full description of the impairment policy is contained in the Credit Risk Measurement section of the Note 4.1 Financial risk factors.
The movement in impairment of trade lease receivables is as follows:
(in EUR million) | Note | As at 31\u00a0December | |
|---|---|---|---|
2022 | 2021 | ||
Balance at 1\u00a0January | (171.8) | (178.1) | |
Net Impairment charges | 10 | (46.1) | (24.8) |
Receivables written off | 49.3 | 33.1 | |
Movement in Finance Lease Provision | (1.4) | (1.2) | |
Transfer of disposal groups to assets held for sale | 5.6 | \u2212 | |
Scope changes | (10.6) | \u2212 | |
Other and currency translation differences | 0.3 | (0.7) | |
Balance at 31\u00a0December | (174.6) | (171.8) |
The maturity analysis is as follows:
(in EUR million) | As at 31\u00a0December | |
|---|---|---|
2022 | 2021 | |
Trade receivables not overdue | 968.0 | 670.2 |
Past due up to 90\u00a0days | 226.4 | 144.1 |
Past due between 90-180\u00a0days | 27.6 | 23.9 |
Past due over 180\u00a0days | 157.8 | 173.8 |
Total | 1,379.8 | 1,012.0 |
(in EUR million) | As at 31\u00a0December | |
|---|---|---|
2022 | 2021 | |
Cash at bank and on hand | 195.9 | 112.2 |
Short-term bank deposits | 57.3 | 40.5 |
Cash at bank and short-term bank deposits attributable to disposal groups held for sale | 92.8 | \u2212 |
Cash and cash equivalents excl. bank overdrafts | 346.0 | 152.7 |
Bank overdrafts | (129.5) | (228.4) |
Cash and cash equivalents, net of bank overdrafts | 216.4 | (75.7) |
Group companies operate various pension\u2019 schemes. The Group has both defined benefit plans and defined contribution plans. A defined contribution plan is a pension plan under which the Group pays fixed contributions into a separate entity. The Group has no legal or constructive obligations to pay further contributions if the fund does not hold sufficient assets to pay all employees the benefits relating to employee service in the current and prior periods. A defined benefit plan is a pension plan that is not a defined contribution plan.
Typically defined benefit plans define an amount of pension benefit that an employee will receive on retirement, usually dependent on one or more factors such as age, years of service and compensation.
The liability recognised in the balance sheet in respect of defined benefit pension plans is the present value of the defined benefit obligation at the end of the reporting period together with adjustments for unrecognised past-service costs. The defined benefit obligation is calculated annually by independent actuaries using the projected unit credit method. The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows using interest rates of high-quality corporate bonds that are denominated in the currency in which the benefits will be paid, and that have terms to maturity approximating to the terms of the related pension obligation.
Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are charged or credited to equity in other comprehensive income in the period in which they arise without recycling to the statement of profit or loss. Past-service costs are recognised immediately in income statement.
Settlements and curtailments invoke immediate recognition in the income statement of the relevant change in the present value of the defined benefit obligations and in the market value of the plan assets. A settlement is an early termination of all or part of the defined benefit obligation. A curtailment occurs when the Company is demonstrably committed to materially reducing the number of employees in the defined benefit plan or the pension benefits for future services.
For defined contribution plans, the Group pays contributions to publicly or privately administered pension insurance plans on a mandatory, contractual or voluntary basis. The Group has no further payment obligations once the contributions have been paid. The contributions are recognised as employee benefit expense when they are due.
Further details are provided in note\u00a031 \u201cRetirement benefit obligations and long term benefits\u201d.
Termination benefits are payable when employment is terminated by the Group before the normal retirement date, or whenever an employee accepts voluntary redundancy in exchange for these benefits. The Group recognises termination benefits when it is demonstrably committed to a termination when the entity has a detailed formal plan to terminate the employment of current employees without possibility of withdrawal. In the case of an offer made to encourage voluntary redundancy, the termination benefits are measured based on the number of employees expected to accept the offer. Benefits falling due more than 12\u00a0months after the end of the reporting period are discounted to their present value.
Share-based compensation benefits are provided to employees via the ALD long-term incentive plans, employee share schemes. Information relating to these schemes is set out in note\u00a029.
The fair value of shares granted under the ALD long-term incentive plan is recognised as an employee benefits expense with a corresponding increase in equity. The total amount to be expensed is determined by reference to the fair value of the shares granted. The total expense is recognised over the vesting period, which is the period when all of the specified vesting conditions are to be satisfied. At the end of each period, the entity revises its estimates of the number of shares that are expected to vest based on the non-market vesting and service conditions. It recognises the impact of the revision to original estimates, if any, in profit or loss, with a corresponding adjustment to equity.(in EUR million) | Year ended 31\u00a0December | |
|---|---|---|
2022 | 2021 | |
Wages and salaries | (419.6) | (333.6) |
Social security charges | (76.0) | (69.7) |
Defined benefit post-employment costs | (0.8) | (2.5) |
Other staff costs | (22.5) | (27.9) |
Total | (518.9) | (433.7) |
The average number of staff employed (including temporary staff) by the Group during the year was 7,154 (2021: 6,748). At year-end, the full time equivalent number of staff employed by the Group was 7,529 (2021: 6,893).
The breakdown of the components of the defined benefit pension cost is identified in note\u00a031.In 2022 three new equity-settled share-based payment plans were approved by the ALD Board of Directors. The plans are designed to provide long-term incentives for selected employees across the Group to deliver long-term shareholder returns. Under the plans, participants are granted free shares in the parent company ALD\u00a0SA which will only vest if certain performance and service conditions are met. Participation in the plan is at the Board\u2019s discretion and no individual has a contractual right to participate in the plan or to receive any guaranteed benefits. Shares are granted under the plans for no consideration and carry no dividend or voting rights. Prior to approval of the plans ALD\u00a0SA did not hold any shares bound to be distributed to own employees, therefore ALD\u00a0SA can either issue new shares or acquire its own shares on the market between the grant date and vesting date in order to settle the obligation to its employees.
Plan\u00a09 | Plan\u00a010.A | Plan\u00a010.B | |
|---|---|---|---|
Date of Board Meeting | 29\u00a0March 2022 | 29\u00a0March 2022 | 29\u00a0March 2022 |
Total number of shares granted | 409,602 | 12,720 | 12,723 |
Vesting date | 31\u00a0March 2025 | 31\u00a0March 2025 | 31\u00a0March 2026 |
Holding period end date | no holding period | 30\u00a0September 2025 | 30\u00a0September 2026 |
Fair value (in EUR) | 9.5 | 9.5 | 9.5 |
Number of employees in the plan | 374 | 6 | 6 |
Plan\u00a07 | Plan\u00a08.A | Plan\u00a08.B | |
|---|---|---|---|
Date of Board Meeting | 26\u00a0March 2021 | 26\u00a0March 2021 | 26\u00a0March 2021 |
Total number of shares granted | 264,223 | 9,913 | 9,914 |
Vesting date | 31\u00a0March 2024 | 31\u00a0March 2023 | 31\u00a0March 2024 |
Holding period end date | no holding period | 30\u00a0September 2023 | 30\u00a0September 2024 |
Fair value (in EUR) | 10.72 | 11.44 | 10.72 |
Number of employees in the plan | 280 | 5 | 5 |
Plan\u00a05 | Plan\u00a06.A | Plan\u00a06.B | |
|---|---|---|---|
Date of Board Meeting | 27\u00a0March 2020 | 27\u00a0March 2020 | 27\u00a0March 2020 |
Total number of shares granted | 353,281 | 17,316 | 17,319 |
Vesting date | 31\u00a0March 2023 | 31\u00a0March 2022 | 31\u00a0March 2023 |
Holding period end date | no holding period | 30\u00a0September 2022 | 30\u00a0September 2023 |
Fair value (in EUR) | 7.25 | 7.75 | 7.25 |
Number of employees in the plan | 264 | 5 | 5 |
Plan\u00a03 | Plan\u00a04.A | Plan\u00a04.B | |
|---|---|---|---|
Date of Board Meeting | 28\u00a0March 2019 | 28\u00a0March 2019 | 28\u00a0March 2019 |
Total number of shares granted | 235,475 | 16,614 | 16,617 |
Vesting date | 31\u00a0March 2022 | 31\u00a0March 2021 | 31\u00a0March 2022 |
Holding period end date | no holding period | 30\u00a0September 2021 | 30\u00a0September 2022 |
Fair value (in EUR) | 10.16 | 10.16 | 10.16 |
Number of employees in the plan | 229 | 6 | 6 |
Vesting conditions are based on ALD\u2019s profitability, as measured by the average Group Net income over the 4, 3\u00a0or 2\u00a0years of the vesting period. The ALD Group Net income corresponds to the published ALD Group Net income.
At 31\u00a0December 2022, 600\u00a0employees (524\u00a0employees as at 31\u00a0December 2021) benefit from the long-term incentives plans.
The following table shows the shares granted and outstanding at the beginning and end of the reporting period.
Number of shares | |
|---|---|
As at 1\u00a0January 2021 | 871,563 |
Granted during the year | 284,050 |
Vested during the year | (261,610) |
Forfeited during the year | (27,030) |
As at 31\u00a0December 2021 | 866,973 |
As at 1\u00a0January 2022 | 866,973 |
Granted during the year | 435,045 |
Vested during the year | (240,996) |
Forfeited during the year | (32,255) |
As at 31\u00a0December 2022 | 1,028,767 |
For equity settled share-based payments, the fair value of these instruments, measured at the grant date, is spread over the vesting period and recorded in shareholders\u2019 equity under Retained earnings and other reserves. At each accounting date, the number of these instruments is revised in order to take into account vesting conditions and adjust the overall cost of the plan as originally determined. Expenses recognised under Staff expenses from the start of the plan are then adjusted accordingly.
(in EUR million) | 31\u00a0December 2022 | 31\u00a0December 2021 |
|---|---|---|
Net expenses from free share ALD plans | (2.9) | (2.6) |
Defined contribution plans limit ALD\u2019s liability to contributions paid to the plan but do not commit ALD to a specific level of future benefits.
Main defined contribution plans provided to employees of the Group are located in France. They include state pension plans and other national pension plans such as ARRCO and AGIRC, as well as pension schemes put in place by some entities of the Group for which the only commitment is to pay annual contributions (PERCO).
Defined benefit plans define an amount of pension benefit that an employee will receive on retirement, usually dependent on one or more factors such as age, years of service and compensation.
Main defined benefit plans provided to employees of the Group are located in France, Belgium, Germany, Italy and Switzerland.
The amount recognised in the balance sheet is determined as follows:
(in EUR million) | 31\u00a0December 2022 | 31\u00a0December 2021 |
|---|---|---|
A \u2013 Present value of defined benefit obligations | 17.3 | 21.0 |
B \u2013 Fair Value of plan assets | (13.8) | (14.6) |
C \u2013 Fair value of separate assets | \u2212 | \u2212 |
D \u2013 Change in asset ceiling | \u2212 | \u2212 |
A +\u00a0B -\u00a0C +\u00a0D =\u00a0Net balance recorded in the balance sheet | 3.6 | 6.4 |
Post-employment benefit plans include annuity payments, end-of-career indemnities as well as mixed plans (cash balance). Annuity payments are added to pension plans paid by state and mandatory benefit plans.
The present values of defined benefit obligations have been valued by independent qualified actuaries.
(in EUR million) | 2022 | 2021 |
|---|---|---|
Current service cost including social security contributions | 0.6 | 1.0 |
Employee contributions | (0.2) | (0.1) |
Past service cost/curtailments | \u2212 | \u2212 |
Transfer via the expense | \u2212 | \u2212 |
Net interest | 0.0 | \u2212 |
Components recognised in income statement | 0.5 | 0.9 |
Actuarial gains and losses due to assets\u00a0(1) | 1.6 | (1.2) |
Actuarial gains and losses due to changes in demographic assumptions | \u2212 | (0.1) |
Actuarial gains and losses due to changes in economical and financial assumptions | (6.3) | (2.5) |
Actuarial gains and losses due to experience | 1.9 | (1.7) |
Change in asset ceiling | \u2212 | \u2212 |
Components recognised in unrealised or deferred gains and losses | (2.7) | (5.5) |
Total components of the cost of the defined benefits | (2.2) | (4.6) |
(1) Actuarial gains and losses due to assets from which the actuarial gains and losses due to assets included in the net interest cost is deducted. |
Changes in the present value of defined benefit obligations:
(in EUR million) | 2022 | 2021 |
|---|---|---|
Balance at 1\u00a0January | 21.0 | 24.7 |
Current service cost including social security contributions | 0.6 | 1.0 |
Employee contributions | \u2212 | \u2212 |
Past service cost/curtailments | \u2212 | \u2212 |
Settlement | \u2212 | \u2212 |
Net interest | 0.2 | 0.1 |
Actuarial gains and losses due to changes in demographic assumptions | \u2212 | (0.1) |
Actuarial gains and losses due to changes in economical and financial assumptions | (6.3) | (2.5) |
Actuarial gains and losses due to experience | 1.9 | (1.7) |
Foreign exchange adjustment | \u2212 | 0.1 |
Benefit payments | (0.2) | (1.0) |
Acquisition/(Sale) of subsidiaries | \u2212 | \u2212 |
Transfers and others | 0.1 | 0.5 |
Balance at 31\u00a0December | 17.3 | 21.0 |
Changes in fair value of plan assets and separate assets:
(in EUR million) | 2022 | 2021 |
|---|---|---|
Balance at 1\u00a0January | 14.6 | 13.5 |
Expected return on plan assets | 0.1 | 0.0 |
Expected return on separate assets | \u2212 | \u2212 |
Actuarial gains and losses due to assets | (1.6) | 1.2 |
Foreign exchange adjustment | \u2212 | 0.1 |
Employee contributions | 0.2 | 0.2 |
Employer contributions to plan assets | 0.6 | 0.5 |
Benefit payments | (0.1) | (0.8) |
Acquisition/(Sale) of subsidiaries | \u2212 | \u2212 |
Transfers and others | \u2212 | \u2212 |
Balance at 31\u00a0December | 13.8 | 14.6 |
The breakdown of the fair value of plan assets is as follows: 34% bonds, 41% equities, 4% money market instruments and 21% others.
Employer contributions to be paid to post-employment defined benefit plans for 2023 are estimated at EUR\u00a00.7\u00a0million.
The actual returns on plan and separate assets were:
(in EUR million) | 2022 | 2021 |
|---|---|---|
Plan assets | (1.5) | 1.2 |
Separate assets | \u2212 | \u2212 |
The assumptions on return on assets are presented in the following section.
The significant actuarial assumptions used to determine the pension benefit obligation amount are as follows:
2022 | 2021 | |
|---|---|---|
Discount rate | ||
Europe | 3.5% | 0.8% |
Long-term inflation | ||
Europe | 2.3% | 2.0% |
Future salary increase | ||
Europe | 1.5% | 1.4% |
Average remaining working lifetime of employees (in years) | ||
Europe | 12.3 | 14.1 |
Duration (in years) | ||
Europe | 9.5 | 11.7 |
The assumptions by geographical area are averages weighted by the present value of the liabilities (DBO).
The yield curves used to discount the liabilities are corporate AA yield curves (source: Merrill Lynch) observed in the end of October for GBP and EUR, and corrected at the end of December if the decrease in discount rates had a significant impact.
Inflation rates used are the long-term targets of the central banks of the monetary areas above.
The average remaining working lifetime of employees is calculated taking into account withdrawal assumptions.
The assumptions described above have been applied on post-employment benefit plans.
(Percentage of item measured) | 31\u00a0December 2022 | 31\u00a0December 2021 |
|---|---|---|
Variation of +0.5% in discount rate | ||
Impact on the present value of defined benefit obligations at 31\u00a0December N | -5.7% | -6.7% |
Variation of +0.5% in long term inflation | ||
Impact on the present value of defined benefit obligations at 31\u00a0December N | 2.3% | 3.1% |
Variation of +0.5% in future salary increases | ||
Impact on the present value of defined benefit obligations at 31\u00a0December N | 9.3% | 7.1% |
The disclosed sensitivities are averages of the variations weighted by the present value of defined benefit obligations.
(in EUR million) | 2022 | 2021 |
|---|---|---|
N+1 | 0.4 | 0.4 |
N+2 | 0.5 | 0.4 |
N+3 | 1.2 | 0.4 |
N+4 | 0.8 | 1.1 |
N+5 | 0.9 | 0.8 |
N+6 to N+10 | 8.3 | 5.8 |
Some entities of ALD may award their employees other long-term benefits, like long-term deferred variable remunerations, time saving accounts (French Term) Comptes Epargne Temps or long service awards. They are different from post-employment benefits and termination benefits, which are not fully due within twelve months following the financial year during which the services are rendered by the employees.
The net balance of other long-term benefits is EUR\u00a010.3\u00a0million. The total amount of charges for other long-term benefits is EUR\u00a01.1\u00a0million.
", "dimensions": { "concept": "ifrs-full:DisclosureOfEmployeeBenefitsExplanatory", "language": "en", "entity": "scheme:969500E7V019H9NP7427", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "corporatings-nesting-hOrtGw-43": { "value": "The Group operates various post-employment schemes, including both defined benefit and defined contribution pension plans.
Group companies operate various pension\u2019 schemes. The Group has both defined benefit plans and defined contribution plans. A defined contribution plan is a pension plan under which the Group pays fixed contributions into a separate entity. The Group has no legal or constructive obligations to pay further contributions if the fund does not hold sufficient assets to pay all employees the benefits relating to employee service in the current and prior periods. A defined benefit plan is a pension plan that is not a defined contribution plan.
Typically defined benefit plans define an amount of pension benefit that an employee will receive on retirement, usually dependent on one or more factors such as age, years of service and compensation.
The liability recognised in the balance sheet in respect of defined benefit pension plans is the present value of the defined benefit obligation at the end of the reporting period together with adjustments for unrecognised past-service costs. The defined benefit obligation is calculated annually by independent actuaries using the projected unit credit method. The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows using interest rates of high-quality corporate bonds that are denominated in the currency in which the benefits will be paid, and that have terms to maturity approximating to the terms of the related pension obligation.
Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are charged or credited to equity in other comprehensive income in the period in which they arise without recycling to the statement of profit or loss. Past-service costs are recognised immediately in income statement.
Settlements and curtailments invoke immediate recognition in the income statement of the relevant change in the present value of the defined benefit obligations and in the market value of the plan assets. A settlement is an early termination of all or part of the defined benefit obligation. A curtailment occurs when the Company is demonstrably committed to materially reducing the number of employees in the defined benefit plan or the pension benefits for future services.
For defined contribution plans, the Group pays contributions to publicly or privately administered pension insurance plans on a mandatory, contractual or voluntary basis. The Group has no further payment obligations once the contributions have been paid. The contributions are recognised as employee benefit expense when they are due.
Further details are provided in note\u00a031 \u201cRetirement benefit obligations and long term benefits\u201d.
Termination benefits are payable when employment is terminated by the Group before the normal retirement date, or whenever an employee accepts voluntary redundancy in exchange for these benefits. The Group recognises termination benefits when it is demonstrably committed to a termination when the entity has a detailed formal plan to terminate the employment of current employees without possibility of withdrawal. In the case of an offer made to encourage voluntary redundancy, the termination benefits are measured based on the number of employees expected to accept the offer. Benefits falling due more than 12\u00a0months after the end of the reporting period are discounted to their present value.
Share-based compensation benefits are provided to employees via the ALD long-term incentive plans, employee share schemes. Information relating to these schemes is set out in note\u00a029.
The fair value of shares granted under the ALD long-term incentive plan is recognised as an employee benefits expense with a corresponding increase in equity. The total amount to be expensed is determined by reference to the fair value of the shares granted. The total expense is recognised over the vesting period, which is the period when all of the specified vesting conditions are to be satisfied. At the end of each period, the entity revises its estimates of the number of shares that are expected to vest based on the non-market vesting and service conditions. It recognises the impact of the revision to original estimates, if any, in profit or loss, with a corresponding adjustment to equity.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForEmployeeBenefitsExplanatory", "language": "en", "entity": "scheme:969500E7V019H9NP7427", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "corporatings-nesting-fix-yFwUWG-306": { "value": "Group companies operate various pension\u2019 schemes. The Group has both defined benefit plans and defined contribution plans. A defined contribution plan is a pension plan under which the Group pays fixed contributions into a separate entity. The Group has no legal or constructive obligations to pay further contributions if the fund does not hold sufficient assets to pay all employees the benefits relating to employee service in the current and prior periods. A defined benefit plan is a pension plan that is not a defined contribution plan.
Typically defined benefit plans define an amount of pension benefit that an employee will receive on retirement, usually dependent on one or more factors such as age, years of service and compensation.
The liability recognised in the balance sheet in respect of defined benefit pension plans is the present value of the defined benefit obligation at the end of the reporting period together with adjustments for unrecognised past-service costs. The defined benefit obligation is calculated annually by independent actuaries using the projected unit credit method. The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows using interest rates of high-quality corporate bonds that are denominated in the currency in which the benefits will be paid, and that have terms to maturity approximating to the terms of the related pension obligation.
Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are charged or credited to equity in other comprehensive income in the period in which they arise without recycling to the statement of profit or loss. Past-service costs are recognised immediately in income statement.
Settlements and curtailments invoke immediate recognition in the income statement of the relevant change in the present value of the defined benefit obligations and in the market value of the plan assets. A settlement is an early termination of all or part of the defined benefit obligation. A curtailment occurs when the Company is demonstrably committed to materially reducing the number of employees in the defined benefit plan or the pension benefits for future services.
For defined contribution plans, the Group pays contributions to publicly or privately administered pension insurance plans on a mandatory, contractual or voluntary basis. The Group has no further payment obligations once the contributions have been paid. The contributions are recognised as employee benefit expense when they are due.
Further details are provided in note\u00a031 \u201cRetirement benefit obligations and long term benefits\u201d.
Provisions for restructuring costs and legal claims are recognised when: the Group has a present legal or constructive obligation as a result of past events; it is probable that an outflow of resources will be required to settle the obligation; and the amount has been reliably estimated. Restructuring provisions comprise lease termination penalties and employee termination payments. Provisions are not recognised for future operating losses.
Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. A provision is recognised even if the likelihood of an outflow with respect to any one item included in the same class of obligations may be small.
Provisions are measured at the present value of the expenditures expected to be required to settle the obligation using a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the obligation. The increase in the provision due to passage of time is recognised as interest expense.
The Group provides customers with an own damage and repair cover in exchange of the payment of a monthly premium. Own damage revenues are recorded in the caption \u201cServices Revenues\u201d. Further details are provided in note\u00a09 \u201cRevenues and cost of revenues\u201d.
In parallel, the Group calculates the own damage reserve based on two elements:
At the end of each month, the Group performs an adequacy test in respect of the level of the own damage reserve. In the event that the level of the reserve falls below the amount of open claims reserve plus IBNR, as determined above, then an immediate adjustment is made to adjust the reserve at this level. Open claims remain open so long as it is reasonably considered that the claim will be payable.
Where there is a stop-loss policy in place, limiting the risk of losses above a set level, open claims plus IBNR are booked only up to the level of the stop-loss. Beyond that level, all claims are debited to the reinsurance provider of the stop-loss cover. Any stop-loss cover on individual incidents is also taken into account in evaluation of claims plus IBNR. Gross claim costs are reduced to the level of cap per incident. Even where stop-loss cover is in place, if total claims are anticipated to be below the level of premium and stop-loss cover, then profit is booked in the normal way.Defined contribution plans limit ALD\u2019s liability to contributions paid to the plan but do not commit ALD to a specific level of future benefits.
Main defined contribution plans provided to employees of the Group are located in France. They include state pension plans and other national pension plans such as ARRCO and AGIRC, as well as pension schemes put in place by some entities of the Group for which the only commitment is to pay annual contributions (PERCO).
Defined benefit plans define an amount of pension benefit that an employee will receive on retirement, usually dependent on one or more factors such as age, years of service and compensation.
Main defined benefit plans provided to employees of the Group are located in France, Belgium, Germany, Italy and Switzerland.
The amount recognised in the balance sheet is determined as follows:
(in EUR million) | 31\u00a0December 2022 | 31\u00a0December 2021 |
|---|---|---|
A \u2013 Present value of defined benefit obligations | 17.3 | 21.0 |
B \u2013 Fair Value of plan assets | (13.8) | (14.6) |
C \u2013 Fair value of separate assets | \u2212 | \u2212 |
D \u2013 Change in asset ceiling | \u2212 | \u2212 |
A +\u00a0B -\u00a0C +\u00a0D =\u00a0Net balance recorded in the balance sheet | 3.6 | 6.4 |
Post-employment benefit plans include annuity payments, end-of-career indemnities as well as mixed plans (cash balance). Annuity payments are added to pension plans paid by state and mandatory benefit plans.
The present values of defined benefit obligations have been valued by independent qualified actuaries.
(in EUR million) | 2022 | 2021 |
|---|---|---|
Current service cost including social security contributions | 0.6 | 1.0 |
Employee contributions | (0.2) | (0.1) |
Past service cost/curtailments | \u2212 | \u2212 |
Transfer via the expense | \u2212 | \u2212 |
Net interest | 0.0 | \u2212 |
Components recognised in income statement | 0.5 | 0.9 |
Actuarial gains and losses due to assets\u00a0(1) | 1.6 | (1.2) |
Actuarial gains and losses due to changes in demographic assumptions | \u2212 | (0.1) |
Actuarial gains and losses due to changes in economical and financial assumptions | (6.3) | (2.5) |
Actuarial gains and losses due to experience | 1.9 | (1.7) |
Change in asset ceiling | \u2212 | \u2212 |
Components recognised in unrealised or deferred gains and losses | (2.7) | (5.5) |
Total components of the cost of the defined benefits | (2.2) | (4.6) |
(1) Actuarial gains and losses due to assets from which the actuarial gains and losses due to assets included in the net interest cost is deducted. |
Changes in the present value of defined benefit obligations:
(in EUR million) | 2022 | 2021 |
|---|---|---|
Balance at 1\u00a0January | 21.0 | 24.7 |
Current service cost including social security contributions | 0.6 | 1.0 |
Employee contributions | \u2212 | \u2212 |
Past service cost/curtailments | \u2212 | \u2212 |
Settlement | \u2212 | \u2212 |
Net interest | 0.2 | 0.1 |
Actuarial gains and losses due to changes in demographic assumptions | \u2212 | (0.1) |
Actuarial gains and losses due to changes in economical and financial assumptions | (6.3) | (2.5) |
Actuarial gains and losses due to experience | 1.9 | (1.7) |
Foreign exchange adjustment | \u2212 | 0.1 |
Benefit payments | (0.2) | (1.0) |
Acquisition/(Sale) of subsidiaries | \u2212 | \u2212 |
Transfers and others | 0.1 | 0.5 |
Balance at 31\u00a0December | 17.3 | 21.0 |
Changes in fair value of plan assets and separate assets:
(in EUR million) | 2022 | 2021 |
|---|---|---|
Balance at 1\u00a0January | 14.6 | 13.5 |
Expected return on plan assets | 0.1 | 0.0 |
Expected return on separate assets | \u2212 | \u2212 |
Actuarial gains and losses due to assets | (1.6) | 1.2 |
Foreign exchange adjustment | \u2212 | 0.1 |
Employee contributions | 0.2 | 0.2 |
Employer contributions to plan assets | 0.6 | 0.5 |
Benefit payments | (0.1) | (0.8) |
Acquisition/(Sale) of subsidiaries | \u2212 | \u2212 |
Transfers and others | \u2212 | \u2212 |
Balance at 31\u00a0December | 13.8 | 14.6 |
The breakdown of the fair value of plan assets is as follows: 34% bonds, 41% equities, 4% money market instruments and 21% others.
Employer contributions to be paid to post-employment defined benefit plans for 2023 are estimated at EUR\u00a00.7\u00a0million.
The actual returns on plan and separate assets were:
(in EUR million) | 2022 | 2021 |
|---|---|---|
Plan assets | (1.5) | 1.2 |
Separate assets | \u2212 | \u2212 |
The assumptions on return on assets are presented in the following section.
The significant actuarial assumptions used to determine the pension benefit obligation amount are as follows:
2022 | 2021 | |
|---|---|---|
Discount rate | ||
Europe | 3.5% | 0.8% |
Long-term inflation | ||
Europe | 2.3% | 2.0% |
Future salary increase | ||
Europe | 1.5% | 1.4% |
Average remaining working lifetime of employees (in years) | ||
Europe | 12.3 | 14.1 |
Duration (in years) | ||
Europe | 9.5 | 11.7 |
The assumptions by geographical area are averages weighted by the present value of the liabilities (DBO).
The yield curves used to discount the liabilities are corporate AA yield curves (source: Merrill Lynch) observed in the end of October for GBP and EUR, and corrected at the end of December if the decrease in discount rates had a significant impact.
Inflation rates used are the long-term targets of the central banks of the monetary areas above.
The average remaining working lifetime of employees is calculated taking into account withdrawal assumptions.
The assumptions described above have been applied on post-employment benefit plans.
(Percentage of item measured) | 31\u00a0December 2022 | 31\u00a0December 2021 |
|---|---|---|
Variation of +0.5% in discount rate | ||
Impact on the present value of defined benefit obligations at 31\u00a0December N | -5.7% | -6.7% |
Variation of +0.5% in long term inflation | ||
Impact on the present value of defined benefit obligations at 31\u00a0December N | 2.3% | 3.1% |
Variation of +0.5% in future salary increases | ||
Impact on the present value of defined benefit obligations at 31\u00a0December N | 9.3% | 7.1% |
The disclosed sensitivities are averages of the variations weighted by the present value of defined benefit obligations.
(in EUR million) | 2022 | 2021 |
|---|---|---|
N+1 | 0.4 | 0.4 |
N+2 | 0.5 | 0.4 |
N+3 | 1.2 | 0.4 |
N+4 | 0.8 | 1.1 |
N+5 | 0.9 | 0.8 |
N+6 to N+10 | 8.3 | 5.8 |
Some entities of ALD may award their employees other long-term benefits, like long-term deferred variable remunerations, time saving accounts (French Term) Comptes Epargne Temps or long service awards. They are different from post-employment benefits and termination benefits, which are not fully due within twelve months following the financial year during which the services are rendered by the employees.
The net balance of other long-term benefits is EUR\u00a010.3\u00a0million. The total amount of charges for other long-term benefits is EUR\u00a01.1\u00a0million.
(in EUR million) | Damage risk retention | Other | Total |
|---|---|---|---|
At 1\u00a0January 2021 | 207.2 | 36.0 | 243.1 |
Additions | 38.8 | 27.2 | 66.0 |
Reversal (utilisation) | (25.5) | (3.4) | (29.0) |
Transfer to Receivables from Clients and Financial Institutions | \u2212 | (0.1) | (0.1) |
Currency translation differences | 0.1 | 1.6 | 1.7 |
At 31\u00a0December 2021 | 220.5 | 61.3 | 281.7 |
Of which current | 105.2 | 47.0 | 152.2 |
As at 1\u00a0January 2022 | 220.5 | 61.3 | 281.7 |
Additions | 44.7 | 4.1 | 48.8 |
Reversal (utilisation) | (16.3) | (7.4) | (23.7) |
Transfer to liabilities qualified as held-for-sale | (0.8) | (0.1) | (1.0) |
Currency translation differences | 0.2 | (1.4) | (1.2) |
Scope changes | 3.6 | \u2212 | 3.6 |
As at 31\u00a0December 2022 | 251.9 | 56.5 | 308.2 |
Of which current | 125.5 | 43.0 | 168.4 |
Group companies operate various pension\u2019 schemes. The Group has both defined benefit plans and defined contribution plans. A defined contribution plan is a pension plan under which the Group pays fixed contributions into a separate entity. The Group has no legal or constructive obligations to pay further contributions if the fund does not hold sufficient assets to pay all employees the benefits relating to employee service in the current and prior periods. A defined benefit plan is a pension plan that is not a defined contribution plan.
Typically defined benefit plans define an amount of pension benefit that an employee will receive on retirement, usually dependent on one or more factors such as age, years of service and compensation.
The liability recognised in the balance sheet in respect of defined benefit pension plans is the present value of the defined benefit obligation at the end of the reporting period together with adjustments for unrecognised past-service costs. The defined benefit obligation is calculated annually by independent actuaries using the projected unit credit method. The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows using interest rates of high-quality corporate bonds that are denominated in the currency in which the benefits will be paid, and that have terms to maturity approximating to the terms of the related pension obligation.
Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are charged or credited to equity in other comprehensive income in the period in which they arise without recycling to the statement of profit or loss. Past-service costs are recognised immediately in income statement.
Settlements and curtailments invoke immediate recognition in the income statement of the relevant change in the present value of the defined benefit obligations and in the market value of the plan assets. A settlement is an early termination of all or part of the defined benefit obligation. A curtailment occurs when the Company is demonstrably committed to materially reducing the number of employees in the defined benefit plan or the pension benefits for future services.
For defined contribution plans, the Group pays contributions to publicly or privately administered pension insurance plans on a mandatory, contractual or voluntary basis. The Group has no further payment obligations once the contributions have been paid. The contributions are recognised as employee benefit expense when they are due.
Further details are provided in note\u00a031 \u201cRetirement benefit obligations and long term benefits\u201d.
Provisions for restructuring costs and legal claims are recognised when: the Group has a present legal or constructive obligation as a result of past events; it is probable that an outflow of resources will be required to settle the obligation; and the amount has been reliably estimated. Restructuring provisions comprise lease termination penalties and employee termination payments. Provisions are not recognised for future operating losses.
Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. A provision is recognised even if the likelihood of an outflow with respect to any one item included in the same class of obligations may be small.
Provisions are measured at the present value of the expenditures expected to be required to settle the obligation using a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the obligation. The increase in the provision due to passage of time is recognised as interest expense.
The Group provides customers with an own damage and repair cover in exchange of the payment of a monthly premium. Own damage revenues are recorded in the caption \u201cServices Revenues\u201d. Further details are provided in note\u00a09 \u201cRevenues and cost of revenues\u201d.
In parallel, the Group calculates the own damage reserve based on two elements:
At the end of each month, the Group performs an adequacy test in respect of the level of the own damage reserve. In the event that the level of the reserve falls below the amount of open claims reserve plus IBNR, as determined above, then an immediate adjustment is made to adjust the reserve at this level. Open claims remain open so long as it is reasonably considered that the claim will be payable.
Where there is a stop-loss policy in place, limiting the risk of losses above a set level, open claims plus IBNR are booked only up to the level of the stop-loss. Beyond that level, all claims are debited to the reinsurance provider of the stop-loss cover. Any stop-loss cover on individual incidents is also taken into account in evaluation of claims plus IBNR. Gross claim costs are reduced to the level of cap per incident. Even where stop-loss cover is in place, if total claims are anticipated to be below the level of premium and stop-loss cover, then profit is booked in the normal way.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForProvisionsExplanatory", "language": "en", "entity": "scheme:969500E7V019H9NP7427", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "corporatings-nesting-hOrtGw-45": { "value": "Termination benefits are payable when employment is terminated by the Group before the normal retirement date, or whenever an employee accepts voluntary redundancy in exchange for these benefits. The Group recognises termination benefits when it is demonstrably committed to a termination when the entity has a detailed formal plan to terminate the employment of current employees without possibility of withdrawal. In the case of an offer made to encourage voluntary redundancy, the termination benefits are measured based on the number of employees expected to accept the offer. Benefits falling due more than 12\u00a0months after the end of the reporting period are discounted to their present value.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForTerminationBenefits", "language": "en", "entity": "scheme:969500E7V019H9NP7427", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "corporatings-nesting-fix-yFwUWG-317": { "value": "Share-based compensation benefits are provided to employees via the ALD long-term incentive plans, employee share schemes. Information relating to these schemes is set out in note\u00a029.
The fair value of shares granted under the ALD long-term incentive plan is recognised as an employee benefits expense with a corresponding increase in equity. The total amount to be expensed is determined by reference to the fair value of the shares granted. The total expense is recognised over the vesting period, which is the period when all of the specified vesting conditions are to be satisfied. At the end of each period, the entity revises its estimates of the number of shares that are expected to vest based on the non-market vesting and service conditions. It recognises the impact of the revision to original estimates, if any, in profit or loss, with a corresponding adjustment to equity.In 2022 three new equity-settled share-based payment plans were approved by the ALD Board of Directors. The plans are designed to provide long-term incentives for selected employees across the Group to deliver long-term shareholder returns. Under the plans, participants are granted free shares in the parent company ALD\u00a0SA which will only vest if certain performance and service conditions are met. Participation in the plan is at the Board\u2019s discretion and no individual has a contractual right to participate in the plan or to receive any guaranteed benefits. Shares are granted under the plans for no consideration and carry no dividend or voting rights. Prior to approval of the plans ALD\u00a0SA did not hold any shares bound to be distributed to own employees, therefore ALD\u00a0SA can either issue new shares or acquire its own shares on the market between the grant date and vesting date in order to settle the obligation to its employees.
Plan\u00a09 | Plan\u00a010.A | Plan\u00a010.B | |
|---|---|---|---|
Date of Board Meeting | 29\u00a0March 2022 | 29\u00a0March 2022 | 29\u00a0March 2022 |
Total number of shares granted | 409,602 | 12,720 | 12,723 |
Vesting date | 31\u00a0March 2025 | 31\u00a0March 2025 | 31\u00a0March 2026 |
Holding period end date | no holding period | 30\u00a0September 2025 | 30\u00a0September 2026 |
Fair value (in EUR) | 9.5 | 9.5 | 9.5 |
Number of employees in the plan | 374 | 6 | 6 |
Plan\u00a07 | Plan\u00a08.A | Plan\u00a08.B | |
|---|---|---|---|
Date of Board Meeting | 26\u00a0March 2021 | 26\u00a0March 2021 | 26\u00a0March 2021 |
Total number of shares granted | 264,223 | 9,913 | 9,914 |
Vesting date | 31\u00a0March 2024 | 31\u00a0March 2023 | 31\u00a0March 2024 |
Holding period end date | no holding period | 30\u00a0September 2023 | 30\u00a0September 2024 |
Fair value (in EUR) | 10.72 | 11.44 | 10.72 |
Number of employees in the plan | 280 | 5 | 5 |
Plan\u00a05 | Plan\u00a06.A | Plan\u00a06.B | |
|---|---|---|---|
Date of Board Meeting | 27\u00a0March 2020 | 27\u00a0March 2020 | 27\u00a0March 2020 |
Total number of shares granted | 353,281 | 17,316 | 17,319 |
Vesting date | 31\u00a0March 2023 | 31\u00a0March 2022 | 31\u00a0March 2023 |
Holding period end date | no holding period | 30\u00a0September 2022 | 30\u00a0September 2023 |
Fair value (in EUR) | 7.25 | 7.75 | 7.25 |
Number of employees in the plan | 264 | 5 | 5 |
Plan\u00a03 | Plan\u00a04.A | Plan\u00a04.B | |
|---|---|---|---|
Date of Board Meeting | 28\u00a0March 2019 | 28\u00a0March 2019 | 28\u00a0March 2019 |
Total number of shares granted | 235,475 | 16,614 | 16,617 |
Vesting date | 31\u00a0March 2022 | 31\u00a0March 2021 | 31\u00a0March 2022 |
Holding period end date | no holding period | 30\u00a0September 2021 | 30\u00a0September 2022 |
Fair value (in EUR) | 10.16 | 10.16 | 10.16 |
Number of employees in the plan | 229 | 6 | 6 |
Vesting conditions are based on ALD\u2019s profitability, as measured by the average Group Net income over the 4, 3\u00a0or 2\u00a0years of the vesting period. The ALD Group Net income corresponds to the published ALD Group Net income.
At 31\u00a0December 2022, 600\u00a0employees (524\u00a0employees as at 31\u00a0December 2021) benefit from the long-term incentives plans.
The following table shows the shares granted and outstanding at the beginning and end of the reporting period.
Number of shares | |
|---|---|
As at 1\u00a0January 2021 | 871,563 |
Granted during the year | 284,050 |
Vested during the year | (261,610) |
Forfeited during the year | (27,030) |
As at 31\u00a0December 2021 | 866,973 |
As at 1\u00a0January 2022 | 866,973 |
Granted during the year | 435,045 |
Vested during the year | (240,996) |
Forfeited during the year | (32,255) |
As at 31\u00a0December 2022 | 1,028,767 |
For equity settled share-based payments, the fair value of these instruments, measured at the grant date, is spread over the vesting period and recorded in shareholders\u2019 equity under Retained earnings and other reserves. At each accounting date, the number of these instruments is revised in order to take into account vesting conditions and adjust the overall cost of the plan as originally determined. Expenses recognised under Staff expenses from the start of the plan are then adjusted accordingly.
(in EUR million) | 31\u00a0December 2022 | 31\u00a0December 2021 |
|---|---|---|
Net expenses from free share ALD plans | (2.9) | (2.6) |
Share-based compensation benefits are provided to employees via the ALD long-term incentive plans, employee share schemes. Information relating to these schemes is set out in note\u00a029.
The fair value of shares granted under the ALD long-term incentive plan is recognised as an employee benefits expense with a corresponding increase in equity. The total amount to be expensed is determined by reference to the fair value of the shares granted. The total expense is recognised over the vesting period, which is the period when all of the specified vesting conditions are to be satisfied. At the end of each period, the entity revises its estimates of the number of shares that are expected to vest based on the non-market vesting and service conditions. It recognises the impact of the revision to original estimates, if any, in profit or loss, with a corresponding adjustment to equity.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForSharebasedPaymentTransactionsExplanatory", "language": "en", "entity": "scheme:969500E7V019H9NP7427", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "corporatings-nesting-fix-yFwUWG-331": { "value": "Trade and other payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Accounts payable are classified as current liabilities if payment is due within one year or less (or in the normal operating cycle of the business if longer). If not, they are presented as non-current liabilities.
Trade payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method.(in EUR million) | As at 31\u00a0December | |
|---|---|---|
2022 | 2021 | |
Trade payables\u00a0(1) | 1,105.9 | 828.7 |
Deferred leasing income\u00a0(2) | 363.7 | 389.9 |
Other accruals and other deferred income | 612.5 | 582.7 |
Advance lease instalments received | 448.3 | 325.5 |
Accruals for contract settlements | 214.9 | 191.2 |
VAT and other taxes | 243.6 | 254.6 |
Other | 0.1 | 0.5 |
Trade and other payables | 2,989.8 | 2,573.3 |
(1) \u00a0Increase in trade and other payables is due to a larger amount of vehicle orders as at 31\u00a0December 2022 as well as scope changes related to consolidation of new subsidiaries. (2) \u00a0Deferred leasing income relates to maintenance and tyre revenue which is profiled in line with historical maintenance expenditure in order to match revenue and costs. This policy is explained further in note\u00a04 \u201cFinancial Risk Management\u201d. |
Trade and other payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Accounts payable are classified as current liabilities if payment is due within one year or less (or in the normal operating cycle of the business if longer). If not, they are presented as non-current liabilities.
Trade payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForTradeAndOtherPayablesExplanatory", "language": "en", "entity": "scheme:969500E7V019H9NP7427", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "corporatings-nesting-fix-yFwUWG-337": { "value": "The tax expense for the period comprises current and deferred tax. Tax is recognised in the income statement, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in equity, respectively.
The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the balance sheet date in the countries where the Company and its subsidiaries operate and generate taxable income.
Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.Deferred income tax is recognised, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. However, deferred tax liabilities are not recognised if they arise from the initial recognition of goodwill; deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the balance sheet date and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.
Deferred income tax assets are recognised only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised.
Deferred income tax is provided on temporary differences arising on investments in subsidiaries and associates, except for deferred income tax liability where the timing of the reversal of the temporary difference is controlled by the Group and it is probable that the temporary difference will not reverse in the foreseeable future.
Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred income taxes assets and liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities where there is an intention to settle the balances on a net basis.(in EUR million) | Year ended 31\u00a0December | |
|---|---|---|
2022 | 2021 | |
Current tax | (223.9) | (167.6) |
Deferred tax | (220.7) | (71.1) |
Income tax expense | (444.6) | (238.6) |
(in EUR million) | Year ended 31\u00a0December | |
|---|---|---|
2022 | 2021 | |
Profit before tax | 1,652.5 | 1,118.7 |
Standard tax rate in France | 25.83% | 28.41% |
Tax expense at standard rate | (426.8) | (317.8) |
Tax calculated at domestic tax rates applicable to profits in the respective countries | 46.4 | 65.5 |
Tax effects of: | ||
| 0.5 | (0.6) |
| (11.8) | (7.3) |
| (30.2) | 5.0 |
| \u2212 | \u2212 |
| (1.4) | \u2212 |
| 0.7 | 19.3 |
| (6.9) | 7.7 |
| (15.1) | (10.5) |
Total | (444.6) | (238.6) |
Effective rate of income tax | 26.91% | 21.33% |
(1) Mainly regional taxes based on the productive activities. |
Effective tax rate has been negatively impacted by increase in Expenses not deductible for tax purposes due to:
Year on year change in the re-measurement of deferred tax is mainly attributable to a decrease in future tax rate in France in 2021.
Adjustment in respect of prior years in 2021 is related mostly to Luxembourg where additional EUR 8.3\u00a0million corresponds to tax benefit that can be deducted from corporate income tax due in an amount of 13% of the additional investment carried out during the tax year in qualifying assets as per article\u00a0152\u00a0bis of Luxembourg Income Tax law.
Of the tax calculated at domestic rates applicable to profits in the respective countries in 2022, the major contributors are UK, Ireland, Luxembourg, Italy, Turkey, Hungary, Czech Republic and Finland where effective tax rates are lower than in France (with applicable tax rates of 19%, 12.5%, 18.9%, 24%, 23%, 9%, 19% and 20% respectively).The tax charge/credit relating to components of other comprehensive income is as follows:
(in EUR million) | Year ended 31\u00a0December | |
|---|---|---|
2022 | 2021 | |
Deferred tax on cash flow hedges | (14.1) | (6.3) |
Deferred tax on debt instruments at fair value through OCI | 2.2 | \u2212 |
Deferred tax on actuarial gain/(loss) on retirement benefit | (0.4) | (1.3) |
Deferred tax charged to OCI | (12.4) | (7.6) |
(in EUR million) | As at 31\u00a0December | |
|---|---|---|
2022 | 2021 | |
Net deferred tax liabilities at 1\u00a0January | (322.9) | (257.6) |
Income statement charge | (220.7) | (71.1) |
Tax charged/(credited) directly to equity | (12.4) | (7.5) |
Hyperinflation adjustment (FTA) charged directly to equity\u00a0(1) | (9.4) | \u2212 |
Exchange differences | 2.5 | 13.3 |
Scope changes | (8.0) | \u2212 |
Transfer to assets held for sale | 24.6 | \u2212 |
Other | 0.0 | |
Net deferred tax liabilities at 31\u00a0December | (546.3) | (322.9) |
(1) First time application of IAS\u00a029. |
The gross movement on the net deferred tax account is as follows:
(in EUR million) | As at 31\u00a0December | |
|---|---|---|
2022 | 2021 | |
Accelerated tax depreciation | (777.5) | (604.1) |
Provisions | 130.9 | 156.9 |
Tax losses | 55.7 | 67.3 |
Fair value gains | (8.8) | 3.6 |
Retirement benefit obligation | 2.2 | 3.2 |
Other timing differences | 51.2 | 50.1 |
Other | (0.0) | 0.1 |
Net deferred tax asset/(liability) | (546.3) | (322.9) |
Tax losses
The majority of the 2022 tax losses EUR\u00a055.7\u00a0million (2021: EUR\u00a067.3\u00a0million) are attributable to France EUR\u00a024.6\u00a0million (2021: EUR\u00a028.5\u00a0million), Chile EUR\u00a010\u00a0million (2021 EUR\u00a04.2\u00a0million) Belgium EUR\u00a08.7\u00a0million (2021: EUR\u00a013.9\u00a0million) and Norway EUR\u00a05.7\u00a0million (2021: EUR\u00a016.9\u00a0million). These entities utilised the strategy of accelerated depreciation which lead to the recognition of fiscal losses and deferment of tax liabilities. No significant unrecognised accumulated tax losses have been incurred over the last two financial years.
The expiration profile of the losses carried forward can be illustrated as follows:
(in EUR million) | Year ended 31\u00a0December | |
|---|---|---|
2022 | 2021 | |
Expiry within 1\u00a0year | 10.0 | \u2212 |
Expiry within 1-5\u00a0years | 1.2 | 2.1 |
Expiry <\u00a05\u00a0years | \u2212 | |
Without expiry | 44.4 | 65.2 |
Total | 55.7 | 67.3 |
The total tax value of losses carried forward is presented before offsetting the corresponding deferred tax liabilities (which are reflected in the offset of deferred tax assets and liabilities in the Group balance sheet).
The deferred tax liability relating to operating leases reverses over the remaining term of the operating lease contracts, which ranges from three to five years.", "dimensions": { "concept": "ifrs-full:DisclosureOfIncomeTaxExplanatory", "language": "en", "entity": "scheme:969500E7V019H9NP7427", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "corporatings-nesting-hOrtGw-48": { "value": "The tax expense for the period comprises current and deferred tax. Tax is recognised in the income statement, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in equity, respectively.
The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the balance sheet date in the countries where the Company and its subsidiaries operate and generate taxable income.
Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.Deferred income tax is recognised, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. However, deferred tax liabilities are not recognised if they arise from the initial recognition of goodwill; deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the balance sheet date and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.
Deferred income tax assets are recognised only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised.
Deferred income tax is provided on temporary differences arising on investments in subsidiaries and associates, except for deferred income tax liability where the timing of the reversal of the temporary difference is controlled by the Group and it is probable that the temporary difference will not reverse in the foreseeable future.
Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred income taxes assets and liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities where there is an intention to settle the balances on a net basis.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForIncomeTaxExplanatory", "language": "en", "entity": "scheme:969500E7V019H9NP7427", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "corporatings-nesting-fix-yFwUWG-344": { "value": "Deferred income tax is recognised, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. However, deferred tax liabilities are not recognised if they arise from the initial recognition of goodwill; deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the balance sheet date and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.
Deferred income tax assets are recognised only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised.
Deferred income tax is provided on temporary differences arising on investments in subsidiaries and associates, except for deferred income tax liability where the timing of the reversal of the temporary difference is controlled by the Group and it is probable that the temporary difference will not reverse in the foreseeable future.
Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred income taxes assets and liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities where there is an intention to settle the balances on a net basis.The tax charge/credit relating to components of other comprehensive income is as follows:
(in EUR million) | Year ended 31\u00a0December | |
|---|---|---|
2022 | 2021 | |
Deferred tax on cash flow hedges | (14.1) | (6.3) |
Deferred tax on debt instruments at fair value through OCI | 2.2 | \u2212 |
Deferred tax on actuarial gain/(loss) on retirement benefit | (0.4) | (1.3) |
Deferred tax charged to OCI | (12.4) | (7.6) |
(in EUR million) | As at 31\u00a0December | |
|---|---|---|
2022 | 2021 | |
Net deferred tax liabilities at 1\u00a0January | (322.9) | (257.6) |
Income statement charge | (220.7) | (71.1) |
Tax charged/(credited) directly to equity | (12.4) | (7.5) |
Hyperinflation adjustment (FTA) charged directly to equity\u00a0(1) | (9.4) | \u2212 |
Exchange differences | 2.5 | 13.3 |
Scope changes | (8.0) | \u2212 |
Transfer to assets held for sale | 24.6 | \u2212 |
Other | 0.0 | |
Net deferred tax liabilities at 31\u00a0December | (546.3) | (322.9) |
(1) First time application of IAS\u00a029. |
The gross movement on the net deferred tax account is as follows:
(in EUR million) | As at 31\u00a0December | |
|---|---|---|
2022 | 2021 | |
Accelerated tax depreciation | (777.5) | (604.1) |
Provisions | 130.9 | 156.9 |
Tax losses | 55.7 | 67.3 |
Fair value gains | (8.8) | 3.6 |
Retirement benefit obligation | 2.2 | 3.2 |
Other timing differences | 51.2 | 50.1 |
Other | (0.0) | 0.1 |
Net deferred tax asset/(liability) | (546.3) | (322.9) |
Deferred income tax is recognised, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. However, deferred tax liabilities are not recognised if they arise from the initial recognition of goodwill; deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the balance sheet date and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.
Deferred income tax assets are recognised only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised.
Deferred income tax is provided on temporary differences arising on investments in subsidiaries and associates, except for deferred income tax liability where the timing of the reversal of the temporary difference is controlled by the Group and it is probable that the temporary difference will not reverse in the foreseeable future.
Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred income taxes assets and liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities where there is an intention to settle the balances on a net basis.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForDeferredIncomeTaxExplanatory", "language": "en", "entity": "scheme:969500E7V019H9NP7427", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "corporatings-nesting-hOrtGw-50": { "value": "Interest income, interest charges and similar charges for all interest-bearing assets and liabilities are recognised in the income statement on an accrual basis using the effective interest method. The effective interest rate is the rate that exactly discounts the estimated future cash payments and receipts through the expected life of the financial asset or liability to the carrying amount of the financial asset or liability.
The interest income component in operating lease instalments, which is charged on a straight-line basis to the client, is recognised in the \u201cLeasing contract revenue \u2013 operating lease\u201d based on the effective interest method in interest income using the interest rate included in the lease contract and based on the net investment value of the leased asset.
Interest income on finance lease contracts is recognised in the income statement on the basis of accruing interest income on the net investment (using the effective interest method). The receipts under the lease are allocated by the lessor between reducing the net investment and recognising interest income, so as to produce a constant rate of return on the net investment.", "dimensions": { "concept": "ifrs-full:DisclosureOfInterestIncomeExpenseExplanatory", "language": "en", "entity": "scheme:969500E7V019H9NP7427", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "corporatings-nesting-fix-yFwUWG-359": { "value": "Interest income, interest charges and similar charges for all interest-bearing assets and liabilities are recognised in the income statement on an accrual basis using the effective interest method. The effective interest rate is the rate that exactly discounts the estimated future cash payments and receipts through the expected life of the financial asset or liability to the carrying amount of the financial asset or liability.
The interest income component in operating lease instalments, which is charged on a straight-line basis to the client, is recognised in the \u201cLeasing contract revenue \u2013 operating lease\u201d based on the effective interest method in interest income using the interest rate included in the lease contract and based on the net investment value of the leased asset.
Interest income on finance lease contracts is recognised in the income statement on the basis of accruing interest income on the net investment (using the effective interest method). The receipts under the lease are allocated by the lessor between reducing the net investment and recognising interest income, so as to produce a constant rate of return on the net investment.", "dimensions": { "concept": "ifrs-full:DisclosureOfFinanceIncomeExpenseExplanatory", "language": "en", "entity": "scheme:969500E7V019H9NP7427", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "corporatings-nesting-hOrtGw-51": { "value": "Interest income, interest charges and similar charges for all interest-bearing assets and liabilities are recognised in the income statement on an accrual basis using the effective interest method. The effective interest rate is the rate that exactly discounts the estimated future cash payments and receipts through the expected life of the financial asset or liability to the carrying amount of the financial asset or liability.
The interest income component in operating lease instalments, which is charged on a straight-line basis to the client, is recognised in the \u201cLeasing contract revenue \u2013 operating lease\u201d based on the effective interest method in interest income using the interest rate included in the lease contract and based on the net investment value of the leased asset.
Interest income on finance lease contracts is recognised in the income statement on the basis of accruing interest income on the net investment (using the effective interest method). The receipts under the lease are allocated by the lessor between reducing the net investment and recognising interest income, so as to produce a constant rate of return on the net investment.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForInterestIncomeAndExpenseExplanatory", "language": "en", "entity": "scheme:969500E7V019H9NP7427", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "corporatings-nesting-fix-yFwUWG-368": { "value": "The credit risk is the risk of losses arising from the inability of the Group\u2019s customers to meet their financial commitments. Credit risk includes the counterparty risk. In addition, credit risk may be further amplified by concentration risk, which arises from a large exposure to a given risk, to one or a few counterparties.
Credit risk management policy
Credit risk is the risk that a customer is not able to fulfil its financial obligations towards ALD. All ALD entities have to comply with risk procedures issued centrally which define the way credit requests have to be studied and validated, as well as the roles and responsibilities of all staff involved in the credit vetting process. Each subsidiary has a specific credit authority approved by ALD General Management and the Risk Department of Societe Generale, and determined according to the size of the fleet, the maturity of the subsidiary and the type of customer concerned (corporate, retail, financial institution,\u00a0etc.). Within its credit limit, each subsidiary can decide directly on its counterparty risk. Above this threshold, credit acceptance is made at central level jointly with the Risk Department of Societe Generale.
Regular risk committees are held by ALD in order to review all potential risk issues and to ensure the credit risk procedures are properly applied. All standard risk indicators (arrears/default/Cost of risk) are also monitored centrally. All ALD entities are applying the same process locally.
The primary responsibility for debt collection remains under the direct responsibility of ALD\u2019s subsidiaries with dedicated teams in charge of recovering unpaid invoices in compliance with local regulations and market practices. Local processes need, however, to be compliant with the corporate instructions and guidelines distributed to the whole network. Central monitoring of all ageing balances is performed on a monthly basis as part of the regular risk reviews, and actions plans are set up whenever necessary under the supervision of the Country Manager.
Impairment charges on receivables (Cost of risk) has historically remained very low due to the nature of the products proposed by ALD, a strict control of the risk assessment process and a very diversified customer portfolio.
Credit risk measurement
The Group applies the IFRS\u00a09 simplified approach to measuring expected credit losses which uses a lifetime expected loss allowance for all sound trade and lease receivables.
For not in default trade receivables and finance lease receivables, the Group does not track changes in credit risk, but instead recognises a loss allowance based on expected lifetime losses from initial recognition of the receivables. These losses are measured based on a provision matrix for receivables associated with sound customers, as described below. Probability of Default (PD) rates are based on observed default rates over the life of the receivables (the average contract length in each entity). Specific PD rates are calculated for each entity and each customer type. This process results in Probability of Default (PD) rates for each age of past-due receivables. The PD rates are applied to the aged receivables of the reporting period to arrive at a total provision. The final impairment allowance is also adjusted to consider Loss Given Default (LGD) specific to the entity.
The historical loss rates are adjusted to reflect current and forward looking information on specific local economies affecting the ability of the customers to settle the receivables.
Expected credit losses are reassessed at each reporting date and reflect all reasonable information that is available at the reporting date.
Management has reviewed the Group\u2019s provision matrix used in determining the expected credit losses, including the revision of the expected loss rates and assessed the potential impairment or write-off of receivables. The Group continues monitoring economic conditions and other various factors in determining loss rates.
In 2022 the main considerations in the forward looking provision calculation, which were used in 2020 and 2021, have been reviewed in the context of the latest economic environment.
The main considerations in the forward looking provision calculation are:
The forward looking provision has increased to EUR\u00a010.8\u00a0million (31\u00a0December 2021: EUR\u00a09.2\u00a0million).
As in the previous financial year, the Group has not yet seen significant deterioration in the recoverability of customer receivables in 2022. The provision on sound receivables has increased to EUR\u00a028.5\u00a0million (31\u00a0December 2021: EUR\u00a024.8\u00a0million).
The evolution of the Cost of risk (including forward looking element) and the Cost of risk as a percentage of the average net earning assets (NEA) over the last two years is shown in the table below.
(in EUR million) | 2022 | 2021 | ||
|---|---|---|---|---|
December YTD | June YTD | December YTD | June YTD | |
Cost of risk | 46.1 | 18.9 | 24.8 | 16.6 |
| 1.7 | 0.8 | (6.5) | (3.5) |
Average NEA\u00a0(1) | 23,643 | 23,070 | 21,657 | 21,205 |
Cost of risk as % of Average NEA (bps) | 20 | 16 | 11 | 16 |
(1) The arithmetic average of Earning Assets at the beginning and end of the period including disposal groups held for sale (Note 8)\u00a0 |
Management considers the current level of provisions to be adequate. The Group will continue to monitor the provision parameters, including the relevance of the local uplift factors, according to the macroeconomic situation.
Expected credit losses and provision matrix are disclosed in note\u00a023 \u201cReceivables from clients and financial institutions\u201d.
There is no change in the definition or policy for provisions on doubtful exposure under IFRS\u00a09. The definition of default exposure remains unchanged.
The Group considers that a customer is in default as soon as one of the three following conditions applies:
When a credit risk emerges, the following processes take place:
Where the customer is in default, the whole of the customer balance is classified as doubtful as a result of the \u201ccontagion principle\u201d. The application of this principle leads to the classification as doubtful of all outstanding amounts relating to a customer that is deemed to be in default regardless of the age of the invoice (i.e. a customer is either solvent or not).
If the customer belongs to a group of companies, or in cases where the parent company has been classified as being in default, a case-by-case study is undertaken to establish whether it is necessary to apply the same treatment to all the legal entities included in that group. This \u201ccontagion principle\u201d does not apply, however, in the following cases:
Impairment is only made in respect of customer receivables where the customer is considered to be in default (receivable is impaired). The impairment made for risk of default is consistent with the credit rating of each customer. The impairment must be sufficient to cover the entire probable loss in total or partial non-recovery of the loan.
The impairment is based upon the full amount outstanding for the customer in default.
Generally, ALD remains the owner of the vehicle and impairment is made against the recorded receivables relating to issued invoices. In addition, where it is considered likely that the vehicles will be returned, a further provision is required for the amount of the likely shortfall from the sale of the asset.
Where there are guarantees from the customer providing the right of offset in the event of a default, these amounts are taken into account in assessing the impairment on a customer by customer basis.
Derivative financial instruments
In addition to its natural exposure to credit risk in the leasing of vehicles, the Group is also exposed to credit risk because of its use of derivative financial instruments and because of excess cash being deposited with banks. The Group controls this risk by requiring minimum external rating grades that such external counterparties are assigned.
Treasury risk entails 3\u00a0types of risk: liquidity risk, interest rate risk and foreign exchange risk.
Group Treasury risk management policy consists in matching assets and liabilities in terms of maturities, currencies, and interest rate exposure. Group procedures defining the sensitivity measurement of such risks and tolerance levels are applied across the Group to allow a close monitoring of the treasury risk. These risks are monitored on a Group level by the Group\u2019s central Treasury, which reports on a quarterly basis to the management team of ALD during a dedicated committee. This committee is informed about all relevant developments with regards to the Group\u2019s treasury risk profile and decides any action to mitigate the risks when necessary.
Interest rate risk
ALD policy consists of financing the underlying assets with fixed rate loans as lease contracts are mostly priced at fixed rates, in order to avoid any interest rate mismatch between assets and liabilities. Structural interest rate risk arises from the residual gap (surplus or deficit) in each entity\u2019s fixed-rate forecast position. To this end, any residual interest rate risk exposure must comply with the sensitivity limits set for each entity. The sensitivity is defined as the variation in the net present value of the future residual fixed-rate positions (surplus or deficit) for non-stressed shocks of +100\u00a0bps and -100\u00a0bps in the yield curve.
The ALD Group Central Treasury monitors the Group\u2019s interest rate risk exposure and advises subsidiaries to implement adequate hedging operations. A monthly report measuring interest risk exposure is produced by each entity to be reviewed and consolidated by the ALD Group Central Treasury Department.
Each entity and the Group as a whole are subject to sensitivity thresholds and limits validated by the ALM Committee (ALCO). The Group structural risks are discussed on a quarterly basis during ALCO meetings.
Thanks to this close follow up of the interest rate risk exposure by subsidiaries and the supervision of asset and liability monitoring performed at central level, ALD Group interest rate sensitivity has always remained limited.
Range Movement | NPV sensitivity impact (in EUR million)(1)\u00a0(2) |
|---|---|
+100\u00a0bps | +38.4 |
-100\u00a0bps | (38.7) |
(1)\u00a0\u00a0\u00a0The NPV (Net Present Value) sensitivity aims at measuring the potential deterioration/enhancement of value of the balance sheet in static view (no new production) by considering all discounted cash inflows (e.g. mainly remaining cash flows from rental contracts) and cash outflows over the time (e.g. mainly remaining cash flows from financial debts). (2)\u00a0\u00a0\u00a0Includes the impact of the capital increase. |
Foreign exchange risk
ALD Group is present in 26\u00a0countries outside the Euro zone and is therefore exposed to foreign exchange risks related to cash inflows and outflows from daily business activities as well as participations in subsidiaries outside the Euro zone.
Currency risks related to the current business activities are very limited as there are no cross-border leasing activities. ALD Group policy consists of financing the underlying asset in the same currency as the corresponding lease contract.
The residual foreign exchange risk is managed in order to minimise the impact to the Group due to fluctuations in the currencies it operates.
To achieve this goal, ALD quantifies its exposure to structural exchange rate risks for each subsidiary by analysing all assets and liabilities arising from commercial operations and proprietary transactions. The risk sensitivity is measured by quantifying the impact of a variation of 10% of the exchange rate (hard currencies against local currency) and a threshold is defined for each subsidiary. ALD Group Treasury Department is responsible for monitoring structural foreign exchange risk positions and manages the impact on profitability due to foreign exchange rate fluctuations.
Currency risks related to equity invested in foreign currencies are not hedged at a Group level, as the risk exposure has been considered insignificant.
Liquidity risk
ALD Group is exposed to liquidity risk which is the risk of not being able to meet cash flow requirements when they fall due. A structural liquidity position is defined as resulting from the maturities of all balance sheet or off-balance sheet outstanding positions according to their liquidity profile.
ALD Group\u2019s exposure to liquidity risk is limited as the Group policy consists of financing the underlying asset over the same duration as the corresponding lease contract. A residual liquidity gap is measured on a monthly basis, under the supervision of ALD Group Treasury Department, by assessing the matching of the run-off of the existing leased assets with the remaining liabilities.
The liquidity position measured is then reviewed and consolidated at a Group level. Any deviation from the sensitivity threshold is corrected under the supervision of the Group central Treasury.
As part of the funding plan the ALD Group raises external funds through both asset-backed securitisation programmes and the EMTN bonds programme described below.
Most of the funding provided by Societe Generale is granted through Societe Generale Luxembourg and Societe Generale Paris. SG Luxembourg and SG Paris funds ALD Group Central Treasury which then grants loans in different currencies to 27\u00a0ALD subsidiaries (including funding provided for disposal groups held for sale) as well as to the holding companies. The total amount of loans granted by SG Luxembourg and SG Paris amounted to EUR\u00a012,158\u00a0million (EUR\u00a012,165\u00a0million including funding provided for disposal groups held for sale) at 31\u00a0December 2022 for an average maturity of 2\u00a0years.
The remaining SG funding is provided either by local SG branches or subsidiaries. As at 31\u00a0December 2022 the total amount of loans granted to the Group by Societe Generale, including local branches and subsidiaries was EUR\u00a013,711\u00a0million (EUR\u00a013,718\u00a0million including loans granted to disposal groups held for sale).
31% of fiscal year 2022 funding is provided from local external banks or third parties, representing EUR\u00a06,164\u00a0million (EUR\u00a06,220\u00a0million including loans granted to disposal groups held for sale) at 31\u00a0December 2022.
The following funding arrangements concluded by the Group impacted the assessment of liquidity risk:
Securitisation
As at 31\u00a0December 2022, the Group has asset-backed securitisation programmes in five European countries.
These transactions involve the sale of future lease receivables and (for only three of them) related residual value receivables to securitisation special purpose companies. Debt securities were issued by those special purpose companies and sold to external investors. The special purpose companies are responsible for making interest and principal payments to the note-holders. The note-holders do not have any recourse on the Group in case of default of the originating ALD entity or default of the Group.
These funds were all raised with a floating-to-fixed rate hedge (UK, Belgium, Netherlands, France and Germany).
For further details on the transactions reference is made to note\u00a030.
Corporate bond
The Group is also engaged in a Euro Medium Term Notes (EMTN) programme. The EMTN programme limit is set at EUR\u00a015\u00a0billion for the aggregate nominal amount of notes outstanding at any one time. An application has been filed with the Luxembourg Stock Exchange in order for the notes issued under the programme to be listed on the official list and admitted to trading on the Regulated Market of the Luxembourg Stock Exchange. The programme is rated BBB by Standard & Poor\u2019s and BBB+ by Fitch Ratings.
Positive Impact Bond (Green Bond) was issued in July\u00a02022 for an amount of EUR\u00a0500\u00a0million maturing in July\u00a02027.
The presentation of financial borrowings by maturity and further information on bonds issued by the Group is provided in note\u00a030.
Capital Management
ALD is a commercial company and as such does not have any regulatory capital requirement.
The Group\u2019s objectives when managing capital are to:
To achieve these objectives the Group carefully monitors its leverage ratio, defined as the ratio of Total Equity to Total Assets, for which it has set a target range in its public communications to investors and rating agencies.
The ratio as at 31\u00a0December 2022 and 31\u00a0December 2021 is as follows:
(in EUR million) | As at 31\u00a0December | |
|---|---|---|
2022 | 2021 | |
Total Equity | 6,893.4 | 4,845.6 |
Total Assets | 31,351.0 | 26,991.4 |
Leverage ratio | 22.0% | 18.0% |
In the management of capital and in its definition the instruments at the Group\u2019s disposal are:
In addition, the Group can effect changes to its asset growth rate in order modify the denominator of this ratio.
The Group is exposed to asset risk, which can be split into two main underlying risk components: the residual value risk and the risk related to service maintenance.
Residual value risk
The residual value, defined as the value of the vehicle at the end of the lease as estimated by ALD at inception of the lease, may differ from the future market value of the car at the end of the contract. This difference is a part of the global risk on used car sales and is managed in ALD Group through robust internal procedures applied to all ALD subsidiaries in order to set, control and revaluate the residual values on the running fleet. The residual value setting procedure defines the processes, roles and responsibilities involved in the definition of residual values that will be used for the quotation of future contracts. Residual value setting is performed locally as the expertise in used car market is local and controlled and approved centrally. Calculation is based on refined market segmentation and on a statistical model using internal used car sales data for each market segment as well as Trade Guides references and country specific factors (inflation, market sector adjustments, life cycle,\u00a0etc.). As part of this process, current external issues are analysed in order to apply a stress factor to the valuation of the current fleet. Residual value setting is reviewed by local general management during a local Pricing Committee held at least twice a year (quarterly for larger subsidiaries), and then controlled and validated at an ALD Group level.
Residual values of the current running fleet are reviewed at least yearly (twice a year for the entities with more than 5,000\u00a0vehicles, one in each semester). It is performed at a local level through a revaluation process which is reviewed and approved at ALD level. The current residual value embedded in the contract is compared with the expected market value on a car by car basis.
Revaluation adjustments are accounted for on a portfolio basis whenever necessary, in order to match the expected market value at contract ending and mitigate any market risk.
In accordance with IAS\u00a08, a residual value is treated as an accounting estimate; as such, all potential car sales losses are recognised on a straight line basis between the date of the revaluation and the end of the contract; where the revaluation in a country produces an overall profit, no adjustment is made. The residual value of the total lease portfolio at 31\u00a0December 2022 amounts to EUR\u00a015,869\u00a0million.
Further details on the residual value risk management and fleet revaluation are disclosed in note\u00a05.1.
Risk related to services maintenance and tyres
The maintenance risk is the risk that the actual costs of maintenance incurred during the contract life are greater than the costs forecasted and included in the quotation at the beginning of the contract. Maintenance pricing setting is done locally using local historical statistics, under the supervision of ALD Group. A global review of the maintenance margins is done for each country on a regular basis in order to back test the pricing assumptions in terms of costs and frequencies.
The Group is exposed to the risk of damage to vehicles within its fleet and also to liability to third parties arising from accidents involving vehicles in its fleet. This risk can take the form of third party liability (TPL), legal defence, material damage or passenger indemnity. Where the Group decides not to retain this risk or is legally obliged to buy insurance, this risk is placed through local insurance companies. However, for some local ALD entities, the Group has selectively decided that the entity should retain the material damage risk to its own vehicles, where it is justified by the fleet size, the fleet risk profile and local market conditions. The entity managing this material damage risk must comply with strict internal procedures in terms of pricing setting, risk selection, and reserve setting. Material own damages reserves are a combination of the estimated amount required to meet the costs of future claims plus an estimation of future claims costs which have been incurred but not reported (IBNR). This IBNR is based on statistical analysis of damage frequency and amounts.
The Group also selectively retains some motor risks (material damages, passenger insurance and TPL risks) within its own reinsurance company, ALD Re DAC (ALD Re). ALD Re is based in Ireland and is regulated by the Central Bank of Ireland. The Company reinsures TPL, material damages and related ancillary covers for approximately 500,000\u00a0vehicles and has reinsurance liabilities covering 27\u00a0entities within the Group. ALD Re strictly monitors its risk universe, including underwriting, market, credit and operational risk, via a strong corporate governance structure, a clearly defined risk appetite and a developed risk monitoring process. In addition, in order to minimize the financial impact of a single event, ALD Re purchases reinsurance protection for claims above a specified amount. This reinsurance strategy is reviewed at least annually.
An independent review of the level of technical reserves held by ALD Re is conducted as an exercise to validate that reserves held are adequate to meet future obligations.
The Group analyses financial assets and liabilities by various valuation methods. The different levels have been defined as follows:
The fair value of financial assets and liabilities is measured at amortised cost, except for receivables for which fair value is deemed to be the nominal amount.
The fair value of financial instruments traded in active markets is based on quoted market prices at the balance sheet date. A market is regarded as active if quoted prices are readily and regularly available from an exchange, dealer, broker, industry group, pricing service, or regulatory agency, and those prices represent actual and regularly occurring market transactions on an arm\u2019s length basis. The quoted market price used for financial assets held by the Group is the current bid price. These instruments are included in Level\u00a01. Instruments included in Level\u00a01 comprise primarily cash and cash equivalents and long-term investments (please refer to note\u00a021 \u201cOther non-current and current financial assets\u201d).
The fair value of financial instruments that are not traded in an active market (for example, over-the-counter derivatives) is determined by using valuation techniques. These valuation techniques maximise the use of observable market data where it is available and rely as little as possible on entity specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in Level\u00a02.
If one or more of the significant inputs is not based on observable market data, the instrument is included in Level\u00a03.
Specific valuation techniques used to value financial instruments include:
Refer to note\u00a026 \u201cFinancial assets and liabilities by category\u201d.
", "dimensions": { "concept": "ifrs-full:DisclosureOfFinancialRiskManagementExplanatory", "language": "en", "entity": "scheme:969500E7V019H9NP7427", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "corporatings-nesting-hOrtGw-55": { "value": "Credit risk management policy
Credit risk is the risk that a customer is not able to fulfil its financial obligations towards ALD. All ALD entities have to comply with risk procedures issued centrally which define the way credit requests have to be studied and validated, as well as the roles and responsibilities of all staff involved in the credit vetting process. Each subsidiary has a specific credit authority approved by ALD General Management and the Risk Department of Societe Generale, and determined according to the size of the fleet, the maturity of the subsidiary and the type of customer concerned (corporate, retail, financial institution,\u00a0etc.). Within its credit limit, each subsidiary can decide directly on its counterparty risk. Above this threshold, credit acceptance is made at central level jointly with the Risk Department of Societe Generale.
Regular risk committees are held by ALD in order to review all potential risk issues and to ensure the credit risk procedures are properly applied. All standard risk indicators (arrears/default/Cost of risk) are also monitored centrally. All ALD entities are applying the same process locally.
The primary responsibility for debt collection remains under the direct responsibility of ALD\u2019s subsidiaries with dedicated teams in charge of recovering unpaid invoices in compliance with local regulations and market practices. Local processes need, however, to be compliant with the corporate instructions and guidelines distributed to the whole network. Central monitoring of all ageing balances is performed on a monthly basis as part of the regular risk reviews, and actions plans are set up whenever necessary under the supervision of the Country Manager.
Impairment charges on receivables (Cost of risk) has historically remained very low due to the nature of the products proposed by ALD, a strict control of the risk assessment process and a very diversified customer portfolio.
Credit risk measurement
The Group applies the IFRS\u00a09 simplified approach to measuring expected credit losses which uses a lifetime expected loss allowance for all sound trade and lease receivables.
For not in default trade receivables and finance lease receivables, the Group does not track changes in credit risk, but instead recognises a loss allowance based on expected lifetime losses from initial recognition of the receivables. These losses are measured based on a provision matrix for receivables associated with sound customers, as described below. Probability of Default (PD) rates are based on observed default rates over the life of the receivables (the average contract length in each entity). Specific PD rates are calculated for each entity and each customer type. This process results in Probability of Default (PD) rates for each age of past-due receivables. The PD rates are applied to the aged receivables of the reporting period to arrive at a total provision. The final impairment allowance is also adjusted to consider Loss Given Default (LGD) specific to the entity.
The historical loss rates are adjusted to reflect current and forward looking information on specific local economies affecting the ability of the customers to settle the receivables.
Expected credit losses are reassessed at each reporting date and reflect all reasonable information that is available at the reporting date.", "dimensions": { "concept": "ifrs-full:ExplanationOfCreditRiskManagementPracticesAndHowTheyRelateToRecognitionAndMeasurementOfExpectedCreditLossesExplanatory", "language": "en", "entity": "scheme:969500E7V019H9NP7427", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "corporatings-nesting-hOrtGw-56": { "value": "There is no change in the definition or policy for provisions on doubtful exposure under IFRS\u00a09. The definition of default exposure remains unchanged.The Group considers that a customer is in default as soon as one of the three following conditions applies:legal proceedings (or a similar event in accordance to local legislation) are in progress which has resulted in the customer being placed either in bankruptcy or legal liquidation or receivership;one or several overdue invoices for more than 90\u00a0days (270\u00a0days in the case of public or sovereign counterparties) have been recorded and a settlement procedure has been initiated;a significant degradation of the customer\u2019s financial situation has taken place, making it likely that the customer will be unable to fulfil its overall commitments and there is therefore a high probability of losses.", "dimensions": { "concept": "ifrs-full:InformationAboutEntitysDefinitionsOfDefault", "language": "en", "entity": "scheme:969500E7V019H9NP7427", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "corporatings-nesting-hOrtGw-57": { "value": "Interest rate risk
ALD policy consists of financing the underlying assets with fixed rate loans as lease contracts are mostly priced at fixed rates, in order to avoid any interest rate mismatch between assets and liabilities. Structural interest rate risk arises from the residual gap (surplus or deficit) in each entity\u2019s fixed-rate forecast position. To this end, any residual interest rate risk exposure must comply with the sensitivity limits set for each entity. The sensitivity is defined as the variation in the net present value of the future residual fixed-rate positions (surplus or deficit) for non-stressed shocks of +100\u00a0bps and -100\u00a0bps in the yield curve.
The ALD Group Central Treasury monitors the Group\u2019s interest rate risk exposure and advises subsidiaries to implement adequate hedging operations. A monthly report measuring interest risk exposure is produced by each entity to be reviewed and consolidated by the ALD Group Central Treasury Department.
Each entity and the Group as a whole are subject to sensitivity thresholds and limits validated by the ALM Committee (ALCO). The Group structural risks are discussed on a quarterly basis during ALCO meetings.
Thanks to this close follow up of the interest rate risk exposure by subsidiaries and the supervision of asset and liability monitoring performed at central level, ALD Group interest rate sensitivity has always remained limited.
Range Movement | NPV sensitivity impact (in EUR million)(1)\u00a0(2) |
|---|---|
+100\u00a0bps | +38.4 |
-100\u00a0bps | (38.7) |
(1)\u00a0\u00a0\u00a0The NPV (Net Present Value) sensitivity aims at measuring the potential deterioration/enhancement of value of the balance sheet in static view (no new production) by considering all discounted cash inflows (e.g. mainly remaining cash flows from rental contracts) and cash outflows over the time (e.g. mainly remaining cash flows from financial debts). (2)\u00a0\u00a0\u00a0Includes the impact of the capital increase. |
Foreign exchange risk
ALD Group is present in 26\u00a0countries outside the Euro zone and is therefore exposed to foreign exchange risks related to cash inflows and outflows from daily business activities as well as participations in subsidiaries outside the Euro zone.
Currency risks related to the current business activities are very limited as there are no cross-border leasing activities. ALD Group policy consists of financing the underlying asset in the same currency as the corresponding lease contract.
The residual foreign exchange risk is managed in order to minimise the impact to the Group due to fluctuations in the currencies it operates.
To achieve this goal, ALD quantifies its exposure to structural exchange rate risks for each subsidiary by analysing all assets and liabilities arising from commercial operations and proprietary transactions. The risk sensitivity is measured by quantifying the impact of a variation of 10% of the exchange rate (hard currencies against local currency) and a threshold is defined for each subsidiary. ALD Group Treasury Department is responsible for monitoring structural foreign exchange risk positions and manages the impact on profitability due to foreign exchange rate fluctuations.
Currency risks related to equity invested in foreign currencies are not hedged at a Group level, as the risk exposure has been considered insignificant.", "dimensions": { "concept": "ifrs-full:DisclosureOfMarketRiskExplanatory", "language": "en", "entity": "scheme:969500E7V019H9NP7427", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "corporatings-nesting-hOrtGw-58": { "value": "Liquidity risk
ALD Group is exposed to liquidity risk which is the risk of not being able to meet cash flow requirements when they fall due. A structural liquidity position is defined as resulting from the maturities of all balance sheet or off-balance sheet outstanding positions according to their liquidity profile.
ALD Group\u2019s exposure to liquidity risk is limited as the Group policy consists of financing the underlying asset over the same duration as the corresponding lease contract. A residual liquidity gap is measured on a monthly basis, under the supervision of ALD Group Treasury Department, by assessing the matching of the run-off of the existing leased assets with the remaining liabilities.
The liquidity position measured is then reviewed and consolidated at a Group level. Any deviation from the sensitivity threshold is corrected under the supervision of the Group central Treasury.
As part of the funding plan the ALD Group raises external funds through both asset-backed securitisation programmes and the EMTN bonds programme described below.
Most of the funding provided by Societe Generale is granted through Societe Generale Luxembourg and Societe Generale Paris. SG Luxembourg and SG Paris funds ALD Group Central Treasury which then grants loans in different currencies to 27\u00a0ALD subsidiaries (including funding provided for disposal groups held for sale) as well as to the holding companies. The total amount of loans granted by SG Luxembourg and SG Paris amounted to EUR\u00a012,158\u00a0million (EUR\u00a012,165\u00a0million including funding provided for disposal groups held for sale) at 31\u00a0December 2022 for an average maturity of 2\u00a0years.
The remaining SG funding is provided either by local SG branches or subsidiaries. As at 31\u00a0December 2022 the total amount of loans granted to the Group by Societe Generale, including local branches and subsidiaries was EUR\u00a013,711\u00a0million (EUR\u00a013,718\u00a0million including loans granted to disposal groups held for sale).
31% of fiscal year 2022 funding is provided from local external banks or third parties, representing EUR\u00a06,164\u00a0million (EUR\u00a06,220\u00a0million including loans granted to disposal groups held for sale) at 31\u00a0December 2022.
The following funding arrangements concluded by the Group impacted the assessment of liquidity risk:
Securitisation
As at 31\u00a0December 2022, the Group has asset-backed securitisation programmes in five European countries.
These transactions involve the sale of future lease receivables and (for only three of them) related residual value receivables to securitisation special purpose companies. Debt securities were issued by those special purpose companies and sold to external investors. The special purpose companies are responsible for making interest and principal payments to the note-holders. The note-holders do not have any recourse on the Group in case of default of the originating ALD entity or default of the Group.
These funds were all raised with a floating-to-fixed rate hedge (UK, Belgium, Netherlands, France and Germany).
For further details on the transactions reference is made to note\u00a030.
Corporate bond
The Group is also engaged in a Euro Medium Term Notes (EMTN) programme. The EMTN programme limit is set at EUR\u00a015\u00a0billion for the aggregate nominal amount of notes outstanding at any one time. An application has been filed with the Luxembourg Stock Exchange in order for the notes issued under the programme to be listed on the official list and admitted to trading on the Regulated Market of the Luxembourg Stock Exchange. The programme is rated BBB by Standard & Poor\u2019s and BBB+ by Fitch Ratings.
Positive Impact Bond (Green Bond) was issued in July\u00a02022 for an amount of EUR\u00a0500\u00a0million maturing in July\u00a02027.
The presentation of financial borrowings by maturity and further information on bonds issued by the Group is provided in note\u00a030.
Capital Management
ALD is a commercial company and as such does not have any regulatory capital requirement.
The Group\u2019s objectives when managing capital are to:
To achieve these objectives the Group carefully monitors its leverage ratio, defined as the ratio of Total Equity to Total Assets, for which it has set a target range in its public communications to investors and rating agencies.
The ratio as at 31\u00a0December 2022 and 31\u00a0December 2021 is as follows:
(in EUR million) | As at 31\u00a0December | |
|---|---|---|
2022 | 2021 | |
Total Equity | 6,893.4 | 4,845.6 |
Total Assets | 31,351.0 | 26,991.4 |
Leverage ratio | 22.0% | 18.0% |
In the management of capital and in its definition the instruments at the Group\u2019s disposal are:
In addition, the Group can effect changes to its asset growth rate in order modify the denominator of this ratio.
", "dimensions": { "concept": "ifrs-full:DisclosureOfLiquidityRiskExplanatory", "language": "en", "entity": "scheme:969500E7V019H9NP7427", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "corporatings-nesting-hOrtGw-59": { "value": "The Group is exposed to the risk of damage to vehicles within its fleet and also to liability to third parties arising from accidents involving vehicles in its fleet. This risk can take the form of third party liability (TPL), legal defence, material damage or passenger indemnity. Where the Group decides not to retain this risk or is legally obliged to buy insurance, this risk is placed through local insurance companies. However, for some local ALD entities, the Group has selectively decided that the entity should retain the material damage risk to its own vehicles, where it is justified by the fleet size, the fleet risk profile and local market conditions. The entity managing this material damage risk must comply with strict internal procedures in terms of pricing setting, risk selection, and reserve setting. Material own damages reserves are a combination of the estimated amount required to meet the costs of future claims plus an estimation of future claims costs which have been incurred but not reported (IBNR). This IBNR is based on statistical analysis of damage frequency and amounts.
The Group also selectively retains some motor risks (material damages, passenger insurance and TPL risks) within its own reinsurance company, ALD Re DAC (ALD Re). ALD Re is based in Ireland and is regulated by the Central Bank of Ireland. The Company reinsures TPL, material damages and related ancillary covers for approximately 500,000\u00a0vehicles and has reinsurance liabilities covering 27\u00a0entities within the Group. ALD Re strictly monitors its risk universe, including underwriting, market, credit and operational risk, via a strong corporate governance structure, a clearly defined risk appetite and a developed risk monitoring process. In addition, in order to minimize the financial impact of a single event, ALD Re purchases reinsurance protection for claims above a specified amount. This reinsurance strategy is reviewed at least annually.
An independent review of the level of technical reserves held by ALD Re is conducted as an exercise to validate that reserves held are adequate to meet future obligations.", "dimensions": { "concept": "ifrs-full:DisclosureOfInsuranceRiskExplanatory", "language": "en", "entity": "scheme:969500E7V019H9NP7427", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "corporatings-nesting-fix-yFwUWG-401": { "value": "The Group analyses financial assets and liabilities by various valuation methods. The different levels have been defined as follows:
The fair value of financial assets and liabilities is measured at amortised cost, except for receivables for which fair value is deemed to be the nominal amount.
The fair value of financial instruments traded in active markets is based on quoted market prices at the balance sheet date. A market is regarded as active if quoted prices are readily and regularly available from an exchange, dealer, broker, industry group, pricing service, or regulatory agency, and those prices represent actual and regularly occurring market transactions on an arm\u2019s length basis. The quoted market price used for financial assets held by the Group is the current bid price. These instruments are included in Level\u00a01. Instruments included in Level\u00a01 comprise primarily cash and cash equivalents and long-term investments (please refer to note\u00a021 \u201cOther non-current and current financial assets\u201d).
The fair value of financial instruments that are not traded in an active market (for example, over-the-counter derivatives) is determined by using valuation techniques. These valuation techniques maximise the use of observable market data where it is available and rely as little as possible on entity specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in Level\u00a02.
If one or more of the significant inputs is not based on observable market data, the instrument is included in Level\u00a03.
Specific valuation techniques used to value financial instruments include:
Refer to note\u00a026 \u201cFinancial assets and liabilities by category\u201d.
If the discount rate used were to differ by +0.5% from management\u2019s estimates, the carrying amount of pension obligations would be an estimated EUR\u00a01.0\u00a0million lower.
Further details are provided in note\u00a031 \u201cRetirement benefit obligations and long term benefits\u201d.The Company\u2019s financial assets and liabilities are categorised as follows:
The table below summarises the Group\u2019s financial assets and financial liabilities, of which the derivatives and corporate bonds are measured at fair value and the other financial assets and other financial liabilities are measured at amortised cost on the balance sheet as at 31\u00a0December 2022. For all other financial assets and liabilities, the carrying amount is a reasonable approximation of fair value.
As at 31\u00a0December 2022 (in EUR million) | Fair Value | |||
|---|---|---|---|---|
Carrying Value | Level\u00a01 | Level\u00a02 | Total | |
Financial assets measured at fair value | ||||
Derivative financial instruments in hedge | 82.3 | 82.3 | 82.3 | |
Derivative financial instruments not in hedge | 46.6 | 46.6 | 46.6 | |
Other current financial assets | 237.8 | 237.8 | 237.8 | |
Financial assets not measured at fair value | ||||
Receivables from clients and from financial institutions | 3,157.9 | 3,157.9 | 3,157.9 | |
Investment in associates | 7.9 | |||
Other non current and current financial assets | 299.9 | |||
Cash and cash equivalents | 253.1 | |||
Total | 4,085.5 | 237.8 | 3,286.8 | 3,524.6 |
As at 31\u00a0December 2021 (in EUR million) | Fair Value | |||
|---|---|---|---|---|
Carrying Value | Level\u00a01 | Level\u00a02 | Total | |
Financial assets measured at fair value | ||||
Derivative financial instruments in hedge | 27.4 | 27.4 | 27.4 | |
Derivative financial instruments not in hedge | 11.2 | 11.2 | 11.2 | |
Other current financial assets | 260.3 | 260.3 | 260.3 | |
Financial assets not measured at fair value | ||||
Receivables from clients and from financial institutions | 1,827.6 | 1,827.6 | 1,827.6 | |
Investment in associates | 7.9 | |||
Other non current and current financial assets | 522.9 | |||
Cash and cash equivalents | 152.7 | |||
Total | 2,810.0 | 260.3 | 1,866.2 | 2,126.6 |
As at 31\u00a0December 2022 (in EUR million) | Fair Value | |||
|---|---|---|---|---|
Carrying Value | Level\u00a01 | Level\u00a02 | Total | |
Financial liabilities measured at fair value | ||||
Derivative financial instruments in hedge | 44.5 | 44.5 | 44.5 | |
Derivative financial instruments not in hedge | 44.5 | 44.5 | 44.5 | |
Financial liabilities not measured at fair value | ||||
Bank borrowings | 14,571.1 | 14,571.1 | 14,571.1 | |
Bonds issued | 5,303.4 | 3,460.9 | 1,727.1 | 5,188.0 |
Trade payables | 1,105.9 | 1,105.9 | 1,105.9 | |
Total | 21,069.5 | 3,460.9 | 17,493.2 | 20,954.1 |
As at 31\u00a0December 2021 (in EUR million) | Fair Value | |||
|---|---|---|---|---|
Carrying Value | Level\u00a01 | Level\u00a02 | Total | |
Financial liabilities measured at fair value | ||||
Derivative financial instruments in hedge | 5.0 | 5.0 | 5.0 | |
Derivative financial instruments not in hedge | 6.1 | 6.1 | 6.1 | |
Financial liabilities not measured at fair value | ||||
Bank borrowings | 13,848.6 | 13,848.6 | 13,848.6 | |
Bonds issued | 4,668.7 | 2,720.0 | 1,963.6 | 4,683.6 |
Trade payables | 828.7 | 828.7 | 828.7 | |
Total | 19,357.2 | 2,720.0 | 16,652.1 | 19,372.1 |
The Group analyses financial assets and liabilities by various valuation methods. The different levels have been defined as follows:
The fair value of financial assets and liabilities is measured at amortised cost, except for receivables for which fair value is deemed to be the nominal amount.
The fair value of financial instruments traded in active markets is based on quoted market prices at the balance sheet date. A market is regarded as active if quoted prices are readily and regularly available from an exchange, dealer, broker, industry group, pricing service, or regulatory agency, and those prices represent actual and regularly occurring market transactions on an arm\u2019s length basis. The quoted market price used for financial assets held by the Group is the current bid price. These instruments are included in Level\u00a01. Instruments included in Level\u00a01 comprise primarily cash and cash equivalents and long-term investments (please refer to note\u00a021 \u201cOther non-current and current financial assets\u201d).
The fair value of financial instruments that are not traded in an active market (for example, over-the-counter derivatives) is determined by using valuation techniques. These valuation techniques maximise the use of observable market data where it is available and rely as little as possible on entity specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in Level\u00a02.
If one or more of the significant inputs is not based on observable market data, the instrument is included in Level\u00a03.
Specific valuation techniques used to value financial instruments include:
Refer to note\u00a026 \u201cFinancial assets and liabilities by category\u201d.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFairValueMeasurementExplanatory", "language": "en", "entity": "scheme:969500E7V019H9NP7427", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "corporatings-nesting-hOrtGw-61": { "value": "The preparation of the Group\u2019s consolidated financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods.In preparing the Group\u2019s consolidated financial statements, the significant judgements made by management in applying the Group\u2019s accounting policies and the key sources of estimation of uncertainty were largely the same as those that were applied to the consolidated financial statements for the year ended 31\u00a0December 2021. However, the main assumptions concerning expected credit losses applied during the COVID-19 pandemic have been reviewed to reflect the current economic environment. Further details can be found in note\u00a04 \u201cFinancial risk management\u201d.Estimates relating to residual value risk management have also undergone significant revision due to buoyant used car market conditions. Further details can be found in note\u00a05.1 below.", "dimensions": { "concept": "ifrs-full:ExplanationOfAssumptionAboutFutureWithSignificantRiskOfResultingInMaterialAdjustments", "language": "en", "entity": "scheme:969500E7V019H9NP7427", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "corporatings-nesting-hOrtGw-62": { "value": "The Group tests annually whether goodwill has suffered any impairment, in accordance with the accounting policy stated presented in note\u00a03.9.1 of these consolidated financial statements. The recoverable amounts of cash-generating units have been determined based on value-in-use calculations. These calculations require the use of estimates. The key assumptions calculating the value in use are those regarding discount rates, growth rates and other expected changes in cash flows. The Group uses a five-year business plan for each of the CGUs or group of CGUs identified. The business plans used incorporated assumptions relevant to the current economic climate such as fleet growth, used car market and credit risk.
Based on all the assumptions made by the Group, no need for impairment on goodwill has been identified.
Sensitivity tests are carried out to measure the impact on each CGU\u2019s recoverable value based on certain assumptions. At 31\u00a0December 2021, sensitivities to variations in the cash flows and discount rates were measured.
According to the results in these tests:
In the annual assessment of whether there is any indication that an asset may be impaired, the Group considers both external as well as internal sources of information. If such indication for impairment exists, an analysis is performed to assess whether the carrying value of the asset or cash generating unit under an operating lease exceeds the recoverable amount, being the higher of the fair value less costs to sell and the value in use. The value in use is determined at the present value of the future cash flows expected to be derived from the object or cash generating unit. The management closely monitors residual values, which are reviewed internally at least each financial year, in accordance with internal procedures. The original residual values within internal systems will be compared to the revised residual values expected at contract termination, following a review. The results of this exercise will be used to assess the level of exposure, reserves held and potential impairment required. To prevent impairment on residual values, each country completes a minimum of one annual review of pricing under the supervision of the Group to ensure that assumptions used in pricing reflect expected future market conditions, thus ensuring residual values are predicted with a reasonable degree of accuracy and on a consistent basis going forward.
At the end of 2022, no provision for impairment on rental fleet was required.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForImpairmentOfAssetsExplanatory", "language": "en", "entity": "scheme:969500E7V019H9NP7427", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "corporatings-nesting-hOrtGw-64": { "value": "If the discount rate used were to differ by +0.5% from management\u2019s estimates, the carrying amount of pension obligations would be an estimated EUR\u00a01.0\u00a0million lower.
Further details are provided in note\u00a031 \u201cRetirement benefit obligations and long term benefits\u201d.", "dimensions": { "concept": "ifrs-full:DisclosureOfSensitivityAnalysisOfFairValueMeasurementToChangesInUnobservableInputsLiabilitiesExplanatory", "language": "en", "entity": "scheme:969500E7V019H9NP7427", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "corporatings-nesting-hOrtGw-65": { "value": "Geographically, management considers the performance in Western Europe, Continental and Eastern Europe, Nordic and South America, Africa, Asia and rest of the world.
The central treasury function based in Luxembourg provides funding to 26\u00a0ALD entities located in 20\u00a0countries. The total loans in place to these entities amounts to EUR\u00a016.1\u00a0billion (EUR\u00a015.6\u00a0billion excluding balances of disposal groups classified as held for sale).
Loans by the central treasury to ALD entities are at arm\u2019s length according to OECD guidelines and supported by relevant transfer pricing documentation.
This department is responsible for monitoring the funding requirements and structural risks of the Group. Furthermore, it provides technical advice on financial instruments, including derivatives and on the various securitisations and bond issue program of the Group.
The Group\u2019s Management assesses the performance of the operating segments based on a measure of revenue and profit before tax as presented in consolidated financial statements. They also check to ensure that no customer represents more than 10% of the total revenue.
Sales between segments are carried out at arm\u2019s length. The revenue from external parties reported to the Board of Directors is measured in a manner consistent with that in the income statement.
(in EUR million) | Year ended 31\u00a0December 2022 | Year ended 31\u00a0December 2021 | ||
|---|---|---|---|---|
Profit before tax | Revenue from external customers | Profit before tax | Revenue from external customers | |
Western Europe | 1,249.2 | 8,588.2 | 797.0 | 8,033.7 |
Nordic | 108.4 | 1,015.4 | 104.0 | 1,050.6 |
Continental & Eastern Europe | 229.6 | 1,148.4 | 168.8 | 1,032.5 |
LatAm, Africa, Asia & Rest of world | 65.3 | 466.8 | 49.0 | 362.7 |
Total | 1,652.5 | 11,218.8 | 1,118.7 | 10,479.6 |
(in EUR million) | Year ended 31\u00a0December 2022 | Year ended 31\u00a0December 2021 |
|---|---|---|
Revenue from external customers | Revenue from external customers | |
Leasing contract revenues | 4,803.9 | 4,477.6 |
Service revenues | 2,461.3 | 2,138.3 |
Proceeds of cars sold | 3,953.6 | 3,863.7 |
Total | 11,218.8 | 10,479.6 |
(in EUR million) | Year ended 31\u00a0December 2022 | ||
|---|---|---|---|
Rental fleet\u00a0(1) | Total assets | Net financial debt\u00a0(1)\u00a0(2) | |
Western Europe\u00a0(1) | 19,040.2 | 25,637.4 | 17,278.7 |
Nordic\u00a0(1) | 1,863.1 | 2,080.6 | 101.6 |
Continental & Eastern Europe\u00a0(1) | 2,235.8 | 2,472.7 | 1,379.7 |
LatAm, Africa, Asia & Rest of world | 940.5 | 1,160.4 | 831.8 |
Total | 24,079.6 | 31,351.0 | 19,591.8 |
(in EUR million) | Year ended 31\u00a0December 2021 | ||
|---|---|---|---|
Rental fleet | Total assets | Net financial debt\u00a0(2) | |
Western Europe | 17,226.5 | 22,047.3 | 16,340.7 |
Nordic | 1,885.7 | 2,061.5 | 78.3 |
Continental & Eastern Europe | 1,917.0 | 2,025.9 | 1,289.1 |
LatAm, Africa, Asia & Rest of world | 682.1 | 856.8 | 656.4 |
Total | 21,711.3 | 26,991.4 | 18,364.6 |
Revenue from external customers and Rental Fleet by countries with Revenues in excess of EUR\u00a0500\u00a0million are detailed below:
Year ended 31\u00a0December 2022 | Year ended 31\u00a0December 2021 | Year ended 31\u00a0December 2022 | Year ended 31\u00a0December 2021 | |
|---|---|---|---|---|
Revenue from external customers\u00a0 | Revenue from external customers\u00a0 | Rental Fleet | Rental Fleet | |
France | 2,260.4 | 2,241.7 | 5,495.9 | 4,977.0 |
Italy | 1,257.6 | 1,374.8 | 2,532.1 | 2,224.9 |
UK | 1,116.4 | 1,074.7 | 2,326.7 | 2,238.8 |
Germany | 1,092.4 | 921.8 | 2,282.1 | 2,292.1 |
Spain | 820.1 | 724.1 | 1,959.8 | 1,764.2 |
Netherlands | 686.0 | 679.4 | 1,528.4 | 1,466.8 |
Belgium | 680.6 | 622.9 | 1,604.6 | 1,455.3 |
Other Countries\u00a0(1) | 3,305.2 | 2,840.2 | 6,350.1 | 5,292.2 |
11,218.8 | 10,479.6 | 24,079.6 | 21,711.3 | |
(1)\u00a0\u00a0\u00a0Including balances of disposal groups classified as held for sale (See note\u00a08 for further details). (2)\u00a0\u00a0\u00a0Net financial debt is defined as the sum of Borrowings from financial institutions (non-current and current), together with any related derivatives and obligations under finance leases, minus cash and cash equivalents, as presented in the Group\u2019s consolidated balance sheet. |
(in EUR million) | Year ended 31\u00a0December 2022 | Year ended 31\u00a0December 2021 |
|---|---|---|
Revenue from external customers | Revenue from external customers | |
Leasing contract revenues | 4,803.9 | 4,477.6 |
Service revenues | 2,461.3 | 2,138.3 |
Proceeds of cars sold | 3,953.6 | 3,863.7 |
Total | 11,218.8 | 10,479.6 |
(in EUR million) | Year ended 31\u00a0December 2022 | ||
|---|---|---|---|
Rental fleet\u00a0(1) | Total assets | Net financial debt\u00a0(1)\u00a0(2) | |
Western Europe\u00a0(1) | 19,040.2 | 25,637.4 | 17,278.7 |
Nordic\u00a0(1) | 1,863.1 | 2,080.6 | 101.6 |
Continental & Eastern Europe\u00a0(1) | 2,235.8 | 2,472.7 | 1,379.7 |
LatAm, Africa, Asia & Rest of world | 940.5 | 1,160.4 | 831.8 |
Total | 24,079.6 | 31,351.0 | 19,591.8 |
(in EUR million) | Year ended 31\u00a0December 2021 | ||
|---|---|---|---|
Rental fleet | Total assets | Net financial debt\u00a0(2) | |
Western Europe | 17,226.5 | 22,047.3 | 16,340.7 |
Nordic | 1,885.7 | 2,061.5 | 78.3 |
Continental & Eastern Europe | 1,917.0 | 2,025.9 | 1,289.1 |
LatAm, Africa, Asia & Rest of world | 682.1 | 856.8 | 656.4 |
Total | 21,711.3 | 26,991.4 | 18,364.6 |
Revenue from external customers and Rental Fleet by countries with Revenues in excess of EUR\u00a0500\u00a0million are detailed below:
Year ended 31\u00a0December 2022 | Year ended 31\u00a0December 2021 | Year ended 31\u00a0December 2022 | Year ended 31\u00a0December 2021 | |
|---|---|---|---|---|
Revenue from external customers\u00a0 | Revenue from external customers\u00a0 | Rental Fleet | Rental Fleet | |
France | 2,260.4 | 2,241.7 | 5,495.9 | 4,977.0 |
Italy | 1,257.6 | 1,374.8 | 2,532.1 | 2,224.9 |
UK | 1,116.4 | 1,074.7 | 2,326.7 | 2,238.8 |
Germany | 1,092.4 | 921.8 | 2,282.1 | 2,292.1 |
Spain | 820.1 | 724.1 | 1,959.8 | 1,764.2 |
Netherlands | 686.0 | 679.4 | 1,528.4 | 1,466.8 |
Belgium | 680.6 | 622.9 | 1,604.6 | 1,455.3 |
Other Countries\u00a0(1) | 3,305.2 | 2,840.2 | 6,350.1 | 5,292.2 |
11,218.8 | 10,479.6 | 24,079.6 | 21,711.3 | |
(1)\u00a0\u00a0\u00a0Including balances of disposal groups classified as held for sale (See note\u00a08 for further details). (2)\u00a0\u00a0\u00a0Net financial debt is defined as the sum of Borrowings from financial institutions (non-current and current), together with any related derivatives and obligations under finance leases, minus cash and cash equivalents, as presented in the Group\u2019s consolidated balance sheet. |
(in EUR million) | Year ended 31\u00a0December | |
|---|---|---|
2022 | 2021 | |
Leasing contract revenue \u2013 operating leases | 4,757.2 | 4,439.2 |
Interest income from finance lease | 36.1 | 35.7 |
Other interest income | 10.6 | 2.7 |
Leasing contract revenues | 4,803.9 | 4,477.6 |
Leasing contract costs \u2013 depreciation | (3,433.1) | (3,592.3) |
Leasing contract costs - financing: | ||
Interest charges on loans from financial institutions | (177.6) | (119.5) |
Interest charges on issued bonds | (38.2) | (16.0) |
Other interest charges | (28.3) | 2.9 |
Total interest charges | (244.1) | (132.7) |
Leasing contract costs \u2013 depreciation and financing | (3,677.2) | (3,725.0) |
Trading derivatives | (1.6) | (7.4) |
Imperfectness of derivatives at fair value hedges | \u2212 | 0.3 |
Imperfectness of derivatives at cash flow hedges | (0.2) | (1.3) |
Unrealised gains/losses on derivative financial instruments | (1.8) | (8.4) |
Unrealised Foreign Exchange Gains or Losses | (3.7) | (11.3) |
Hyperinflation - net monetary gain | 59.9 | \u2212 |
Total unrealised gains/losses on financial instruments and other | 54.4 | (19.8) |
Leasing contract margin | 1,181.1 | 732.8 |
\u201cOther interest income\u201d mainly comprises of income received for cash deposits with third party counterparts.
\u201cOther interest charges\u201d mainly comprise of interest charges incurred from asset-backed borrowings, net interest costs on financial instruments, where these instruments are embedded in the same structured funding transaction designed to remove market risk from this transaction, realised gains or losses on translation of financial liabilities and interest expense on lease liabilities.
Leasing contract costs \u2013 depreciation is comprised of both regular depreciation costs and it also includes movement in the provision for excess depreciation which is booked in each entity following the fleet revaluation process which detailed in note\u00a05.1 \u201cFleet Revaluation\u201d
Used vehicles prices have continued to drive exceptionally high profit from the used car sales activity throughout 2022. In the first semester fleet revaluation, used car market was anticipated to normalise in 2023. However, in the second semester\u2019s fleet revaluation this normalisation is now expected to take place from 2024 onwards.
This assessment has now resulted in a reduction in depreciation costs of EUR\u00a0422.4\u00a0million and represents partial recognition of estimated future used car profits.
Revenues and costs are derived from the various service components included within the contractual lease instalments, such as maintenance and tyres, damage risk retention and replacement vehicles.
(in EUR million) | Year ended 31\u00a0December | |
|---|---|---|
2022 | 2021 | |
Services revenue | 2,461.3 | 2,138.3 |
Cost of services revenues | (1,758.1) | (1,488.3) |
Services margin | 703.2 | 650.0 |
(in EUR million) | Year ended 31\u00a0December | |
|---|---|---|
2022 | 2021 | |
Proceeds of cars sold | 3,953.6 | 3,863.7 |
Cost of cars sold\u00a0(1) | (3,205.9) | (3,426.0) |
Used Car Sales result | 747.6 | 437.7 |
(1) Cost of cars sold represents the written down value of the vehicle and any additional disposal costs. |
The used car sector has been positively impacted by the limited production capacity of new cars due to ongoing shortage in the supply of semiconductors as well as shortages of other materials used in car manufacturing as a result of the war in Ukraine. As global demand has increased, these supply-chain issues caused delays in the delivery of new cars, including by ALD.
Revenues that are included within the margins analysed in 9a, 9b and 9c are shown in the following table. They are analysed into Revenues derived from the Rental activity and Proceeds of Cars sold at the end of the leasing period.
(in EUR million) | Year ended 31\u00a0December | |
|---|---|---|
2022 | 2021 | |
Services Revenues | 2,461.3 | 2,138.3 |
Leasing contract revenue - operating leases | 4,757.2 | 4,439.2 |
Interest revenue | 46.7 | 38.4 |
Leasing contract revenues | 4,803.9 | 4,477.6 |
Sub-Total - Revenues from Rental Activity | 7,265.2 | 6,615.9 |
Proceeds of Cars Sold | 3,953.6 | 3,863.7 |
Total Revenues | 11,218.8 | 10,479.6 |
Total Revenues excluding Interest Income | 10,299.2 | 9,629.1 |
Revenues that are included within the margins analysed in 9a, 9b and 9c are shown in the following table. They are analysed into Revenues derived from the Rental activity and Proceeds of Cars sold at the end of the leasing period.
(in EUR million) | Year ended 31\u00a0December | |
|---|---|---|
2022 | 2021 | |
Services Revenues | 2,461.3 | 2,138.3 |
Leasing contract revenue - operating leases | 4,757.2 | 4,439.2 |
Interest revenue | 46.7 | 38.4 |
Leasing contract revenues | 4,803.9 | 4,477.6 |
Sub-Total - Revenues from Rental Activity | 7,265.2 | 6,615.9 |
Proceeds of Cars Sold | 3,953.6 | 3,863.7 |
Total Revenues | 11,218.8 | 10,479.6 |
Total Revenues excluding Interest Income | 10,299.2 | 9,629.1 |
General and administrative expenses mainly include IT costs, professional fees and marketing. ALD continues to accelerate the IT investment programme as part of the Group\u2019s commitment to be the preferred choice for mobility solutions within the market. There has been a specific focus on digital solutions in order to further enhance customer experience, including fleet manager and driver web portals as well as investment in the development of new flexible products for our customers.
As at 31\u00a0December 2022 the Group has incurred EUR 128 million of costs related to the preparation of the LeasePlan acquisition, \u201cTotal Operating Expenses\u201d.", "dimensions": { "concept": "ifrs-full:DisclosureOfGeneralAndAdministrativeExpenseExplanatory", "language": "en", "entity": "scheme:969500E7V019H9NP7427", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "corporatings-nesting-hOrtGw-75": { "value": "(in EUR million) | Notes | Year ended 31\u00a0December | |
|---|---|---|---|
2022 | 2021 | ||
Depreciation of other property and equipment | 16 | (20.2) | (18.2) |
Depreciation of intangible assets | 16 | (25.5) | (27.3) |
Depreciation of right of use asset | 17 | (21.0) | (19.7) |
Total | (66.7) | (65.1) |
(in EUR million) | Year ended 31\u00a0December | |
|---|---|---|
2022 | 2021 | |
Within 1\u00a0year | 766.1\u00a0 | 998.9 |
Between 1\u00a0and 2\u00a0years | 1,768.3\u00a0 | 1,673.1 |
Between 2\u00a0and 3\u00a0years | 2,557.0\u00a0 | 2,599.0 |
Between 3\u00a0and 4\u00a0years | 2,003.8\u00a0 | 1,875.9 |
Between 4\u00a0and 5\u00a0years | 531.1\u00a0 | 496.1 |
Later than 5\u00a0years | 27.2\u00a0 | 37.5 |
Total | 7,653.5 | 7,680.3 |
(in EUR million) | Year ended 31\u00a0December | |
|---|---|---|
2022 | 2021 | |
Long-term investments (10\u00a0years) | 200.5 | 279.9 |
Other current financial assets | 331.6 | 380.7 |
Other | 5.6 | 122.6 |
Total | 537.7 | 783.2 |
Long-term investments are a resource resulting from the policy of the Group and of its main shareholder, Societe Generale, to monitor the Group\u2019s interest rate risk through the matching of assets and liabilities by maturity. Available equity is considered as a long term resource which needs to be matched with long-term assets (refer to Interest rate risks management in financial risk management section above). Equity reinvestments are made in long term amortising deposits within Societe Generale in order to remain within the interest rate sensitivity limit set for each entity (variation in the net present value of the future residual fixed rate positions, surplus or deficit, for a 1% parallel increase in the yield curve). These deposits will roll-out in approximately 4\u00a0years\u2019 time and will not be renewed.
In 2021 Bansabadell Renting and Fleetpool subsidiaries were reported as investments under caption \u201cOther\u201d due to the timing of the acquisitions. These subsidiaries are included in the scope of consolidation as at 31\u00a0December 2022. See note\u00a07 for further detail.", "dimensions": { "concept": "ifrs-full:DisclosureOfFinancialAssetsExplanatory", "language": "en", "entity": "scheme:969500E7V019H9NP7427", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "corporatings-nesting-fix-yFwUWG-485": { "value": "(in EUR million) | As at 31\u00a0December | |
|---|---|---|
2022 | 2021 | |
VAT and other taxes | 388.1 | 276.8 |
Prepaid motor vehicle tax and insurance premiums | 117.4 | 95.4 |
Reclaimable damages | 10.1 | 8.2 |
Prepaid expenses | 424.4 | 346.6 |
Other | 414.8 | 307.6 |
Other receivables and prepayments | 1,354.7 | 1,034.6 |
The majority of the other receivables and prepayments have a maturity of less than one year.
The other receivables balance includes EUR\u00a0249.8\u00a0million (2021: EUR\u00a0193.3\u00a0million) relating to rebates receivable from dealers and manufacturers.
", "dimensions": { "concept": "ifrs-full:DisclosureOfOtherAssetsExplanatory", "language": "en", "entity": "scheme:969500E7V019H9NP7427", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "corporatings-nesting-hOrtGw-89": { "value": "(in EUR million) | As at 31\u00a0December | |
|---|---|---|
2022 | 2021 | |
VAT and other taxes | 388.1 | 276.8 |
Prepaid motor vehicle tax and insurance premiums | 117.4 | 95.4 |
Reclaimable damages | 10.1 | 8.2 |
Prepaid expenses | 424.4 | 346.6 |
Other | 414.8 | 307.6 |
Other receivables and prepayments | 1,354.7 | 1,034.6 |
The majority of the other receivables and prepayments have a maturity of less than one year.
The other receivables balance includes EUR\u00a0249.8\u00a0million (2021: EUR\u00a0193.3\u00a0million) relating to rebates receivable from dealers and manufacturers.
", "dimensions": { "concept": "ifrs-full:DisclosureOfPrepaymentsAndOtherAssetsExplanatory", "language": "en", "entity": "scheme:969500E7V019H9NP7427", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "f28638": { "value": "The Company\u2019s financial assets and liabilities are categorised as follows:
The table below summarises the Group\u2019s financial assets and financial liabilities, of which the derivatives and corporate bonds are measured at fair value and the other financial assets and other financial liabilities are measured at amortised cost on the balance sheet as at 31\u00a0December 2022. For all other financial assets and liabilities, the carrying amount is a reasonable approximation of fair value.
As at 31\u00a0December 2022 (in EUR million) | Fair Value | |||
|---|---|---|---|---|
Carrying Value | Level\u00a01 | Level\u00a02 | Total | |
Financial assets measured at fair value | ||||
Derivative financial instruments in hedge | 82.3 | 82.3 | 82.3 | |
Derivative financial instruments not in hedge | 46.6 | 46.6 | 46.6 | |
Other current financial assets | 237.8 | 237.8 | 237.8 | |
Financial assets not measured at fair value | ||||
Receivables from clients and from financial institutions | 3,157.9 | 3,157.9 | 3,157.9 | |
Investment in associates | 7.9 | |||
Other non current and current financial assets | 299.9 | |||
Cash and cash equivalents | 253.1 | |||
Total | 4,085.5 | 237.8 | 3,286.8 | 3,524.6 |
As at 31\u00a0December 2021 (in EUR million) | Fair Value | |||
|---|---|---|---|---|
Carrying Value | Level\u00a01 | Level\u00a02 | Total | |
Financial assets measured at fair value | ||||
Derivative financial instruments in hedge | 27.4 | 27.4 | 27.4 | |
Derivative financial instruments not in hedge | 11.2 | 11.2 | 11.2 | |
Other current financial assets | 260.3 | 260.3 | 260.3 | |
Financial assets not measured at fair value | ||||
Receivables from clients and from financial institutions | 1,827.6 | 1,827.6 | 1,827.6 | |
Investment in associates | 7.9 | |||
Other non current and current financial assets | 522.9 | |||
Cash and cash equivalents | 152.7 | |||
Total | 2,810.0 | 260.3 | 1,866.2 | 2,126.6 |
As at 31\u00a0December 2022 (in EUR million) | Fair Value | |||
|---|---|---|---|---|
Carrying Value | Level\u00a01 | Level\u00a02 | Total | |
Financial liabilities measured at fair value | ||||
Derivative financial instruments in hedge | 44.5 | 44.5 | 44.5 | |
Derivative financial instruments not in hedge | 44.5 | 44.5 | 44.5 | |
Financial liabilities not measured at fair value | ||||
Bank borrowings | 14,571.1 | 14,571.1 | 14,571.1 | |
Bonds issued | 5,303.4 | 3,460.9 | 1,727.1 | 5,188.0 |
Trade payables | 1,105.9 | 1,105.9 | 1,105.9 | |
Total | 21,069.5 | 3,460.9 | 17,493.2 | 20,954.1 |
As at 31\u00a0December 2021 (in EUR million) | Fair Value | |||
|---|---|---|---|---|
Carrying Value | Level\u00a01 | Level\u00a02 | Total | |
Financial liabilities measured at fair value | ||||
Derivative financial instruments in hedge | 5.0 | 5.0 | 5.0 | |
Derivative financial instruments not in hedge | 6.1 | 6.1 | 6.1 | |
Financial liabilities not measured at fair value | ||||
Bank borrowings | 13,848.6 | 13,848.6 | 13,848.6 | |
Bonds issued | 4,668.7 | 2,720.0 | 1,963.6 | 4,683.6 |
Trade payables | 828.7 | 828.7 | 828.7 | |
Total | 19,357.2 | 2,720.0 | 16,652.1 | 19,372.1 |
Changes in liabilities arising from financing activities are shown in the table below.
(in EUR million) | Balance as at 1\u00a0January 2022 | Financing cash flows | Foreign exchange adjustment | Scope changes | Other non-cash movements | Balance as at 31\u00a0December 2022 |
|---|---|---|---|---|---|---|
Overdraft | 228.4 | (97.3) | (1.6) | \u2212 | \u2212 | 129.5 |
Borrowings from financial institutions excl. overdraft | 13,620.2 | 652.6 | (65.1) | 291.9 | (58.0) | 14,441.6 |
Bonds and notes issued | 4,668.7 | 639.4 | (25.9) | \u2212 | 21.2 | 5,303.4 |
Lease liabilities | 121.4 | (71.1) | (0.9) | 19.7 | 48.1 | 117.2 |
(in EUR million) | Balance as at 1\u00a0January 2021 | Financing cash flows | Foreign exchange adjustment | Scope changes | Other non-cash movements | Balance as at 31\u00a0December 2021 |
|---|---|---|---|---|---|---|
Overdraft | 315.7 | (90.8) | 3.5 | \u2212 | \u2212 | 228.4 |
Borrowings from financial institutions excl. overdraft | 12,418.4 | 1,102.1 | 101.8 | \u2212 | (2.1) | 13,620.2 |
Bonds and notes issued | 4,911.6 | (275.0) | 32.2 | \u2212 | (0.1) | 4,668.7 |
Lease liabilities | 132.7 | (26.9) | 0.8 | \u2212 | 14.8 | 121.4 |
Changes in liabilities arising from financing activities are shown in the table below.
(in EUR million) | Balance as at 1\u00a0January 2022 | Financing cash flows | Foreign exchange adjustment | Scope changes | Other non-cash movements | Balance as at 31\u00a0December 2022 |
|---|---|---|---|---|---|---|
Overdraft | 228.4 | (97.3) | (1.6) | \u2212 | \u2212 | 129.5 |
Borrowings from financial institutions excl. overdraft | 13,620.2 | 652.6 | (65.1) | 291.9 | (58.0) | 14,441.6 |
Bonds and notes issued | 4,668.7 | 639.4 | (25.9) | \u2212 | 21.2 | 5,303.4 |
Lease liabilities | 121.4 | (71.1) | (0.9) | 19.7 | 48.1 | 117.2 |
(in EUR million) | Balance as at 1\u00a0January 2021 | Financing cash flows | Foreign exchange adjustment | Scope changes | Other non-cash movements | Balance as at 31\u00a0December 2021 |
|---|---|---|---|---|---|---|
Overdraft | 315.7 | (90.8) | 3.5 | \u2212 | \u2212 | 228.4 |
Borrowings from financial institutions excl. overdraft | 12,418.4 | 1,102.1 | 101.8 | \u2212 | (2.1) | 13,620.2 |
Bonds and notes issued | 4,911.6 | (275.0) | 32.2 | \u2212 | (0.1) | 4,668.7 |
Lease liabilities | 132.7 | (26.9) | 0.8 | \u2212 | 14.8 | 121.4 |
On 16\u00a0December 2022 ALD successfully completed its capital increase in order to finance cash component of the LeasePlan acquisition . For further information, see note\u00a02.6 \u201cRights Issue\u201d.
At 31\u00a0December 2022, the authorised capital amounted to EUR\u00a0848.6\u00a0million (2021: EUR\u00a0606.2\u00a0million), divided into 565,745,096\u00a0ordinary shares with a nominal value of EUR\u00a01.5 each.
At 31\u00a0December 2022, share premium amounted to EUR\u00a01,328\u00a0million (2021: EUR\u00a0367\u00a0million).
All shares issued by ALD\u00a0SA were fully paid. See note\u00a035 for further information.
The holders of the shares are entitled to receive dividend as declared at Annual General Meetings and are entitled to vote per share at meetings of the Company.
Following the Combined General Meeting held in 2021, 2020, 2019 and 2018, ALD\u00a0SA was authorised to purchase its own shares for the purposes of attributing, covering and paying off any scheme for the allocation of free shares, employee savings scheme and any other form of allocation to employees and executive directors of the Company or of companies related to it under the conditions set out in applicable legislative and regulatory provisions, in particular in terms of sharing in the benefits of the Company\u2019s expansion, the allocation of free shares, all schemes for employee shareholding and to carry out all hedging operations relating to the said employee shareholding schemes.
Number of shares | EUR million | |
|---|---|---|
Opening balance 1\u00a0January 2021 | 1,062,905 | (12.9) |
Acquisition of treasury shares employee share schemes | 214,044 | (2.9) |
Employee share scheme issue | (261,610) | 2.9 |
Liquidity contracts | (14,310) | (0.3) |
Balance at 31\u00a0December 2021 | 1,001,029 | (13.2) |
Opening balance 1\u00a0January 2022 | 1,001,029 | (13.2) |
Acquisition of treasury shares employee share schemes | 400,705 | (5.4) |
Employee share scheme issue | (240,996) | 2.4 |
Liquidity contracts | 13,164 | (0.0) |
Balance at 31\u00a0December 2022 | 1,173,902 | (16.1) |
On 16\u00a0December 2022 ALD successfully completed its capital increase in order to finance cash component of the LeasePlan acquisition . For further information, see note\u00a02.6 \u201cRights Issue\u201d.
At 31\u00a0December 2022, the authorised capital amounted to EUR\u00a0848.6\u00a0million (2021: EUR\u00a0606.2\u00a0million), divided into 565,745,096\u00a0ordinary shares with a nominal value of EUR\u00a01.5 each.
At 31\u00a0December 2022, share premium amounted to EUR\u00a01,328\u00a0million (2021: EUR\u00a0367\u00a0million).
All shares issued by ALD\u00a0SA were fully paid. See note\u00a035 for further information.
The holders of the shares are entitled to receive dividend as declared at Annual General Meetings and are entitled to vote per share at meetings of the Company.
Following the Combined General Meeting held in 2021, 2020, 2019 and 2018, ALD\u00a0SA was authorised to purchase its own shares for the purposes of attributing, covering and paying off any scheme for the allocation of free shares, employee savings scheme and any other form of allocation to employees and executive directors of the Company or of companies related to it under the conditions set out in applicable legislative and regulatory provisions, in particular in terms of sharing in the benefits of the Company\u2019s expansion, the allocation of free shares, all schemes for employee shareholding and to carry out all hedging operations relating to the said employee shareholding schemes.
Number of shares | EUR million | |
|---|---|---|
Opening balance 1\u00a0January 2021 | 1,062,905 | (12.9) |
Acquisition of treasury shares employee share schemes | 214,044 | (2.9) |
Employee share scheme issue | (261,610) | 2.9 |
Liquidity contracts | (14,310) | (0.3) |
Balance at 31\u00a0December 2021 | 1,001,029 | (13.2) |
Opening balance 1\u00a0January 2022 | 1,001,029 | (13.2) |
Acquisition of treasury shares employee share schemes | 400,705 | (5.4) |
Employee share scheme issue | (240,996) | 2.4 |
Liquidity contracts | 13,164 | (0.0) |
Balance at 31\u00a0December 2022 | 1,173,902 | (16.1) |
Following the Combined General Meeting held in 2021, 2020, 2019 and 2018, ALD\u00a0SA was authorised to purchase its own shares for the purposes of attributing, covering and paying off any scheme for the allocation of free shares, employee savings scheme and any other form of allocation to employees and executive directors of the Company or of companies related to it under the conditions set out in applicable legislative and regulatory provisions, in particular in terms of sharing in the benefits of the Company\u2019s expansion, the allocation of free shares, all schemes for employee shareholding and to carry out all hedging operations relating to the said employee shareholding schemes.
Number of shares | EUR million | |
|---|---|---|
Opening balance 1\u00a0January 2021 | 1,062,905 | (12.9) |
Acquisition of treasury shares employee share schemes | 214,044 | (2.9) |
Employee share scheme issue | (261,610) | 2.9 |
Liquidity contracts | (14,310) | (0.3) |
Balance at 31\u00a0December 2021 | 1,001,029 | (13.2) |
Opening balance 1\u00a0January 2022 | 1,001,029 | (13.2) |
Acquisition of treasury shares employee share schemes | 400,705 | (5.4) |
Employee share scheme issue | (240,996) | 2.4 |
Liquidity contracts | 13,164 | (0.0) |
Balance at 31\u00a0December 2022 | 1,173,902 | (16.1) |
(in EUR million) | As at 31\u00a0December | |
|---|---|---|
2022 | 2021 | |
Bank borrowings | 10,613.1 | 9,407.1 |
Non-current borrowings from financial institutions | 10,613.1 | 9,407.1 |
Bank overdrafts | 129.5 | 228.4 |
Bank borrowings | 3,828.5 | 4,213.1 |
Current borrowings from financial institutions | 3,958.0 | 4,441.5 |
Total borrowings from financial institutions | 14,571.1 | 13,848.6 |
Bonds and notes-originated from securitisation transactions | 1,123.4 | 1,628.8 |
Bonds and notes-originated from EMTN programme | 2,450.0 | 1,600.0 |
Other non-current bonds issued | \u2212 | \u2212 |
Non-current bonds and notes issued | 3,573.4 | 3,228.8 |
Bonds and notes-originated from securitisation transactions | 603.7 | 334.8 |
Bonds and notes-originated from EMTN programme | 1,126.3 | 1,105.1 |
Other current bonds issued | \u2212 | \u2212 |
Current bonds and notes issued | 1,729.9 | 1,439.9 |
Total bonds and notes issued | 5,303.4 | 4,668.7 |
Total borrowings from financial institutions and bonds | 19,874.5 | 18,517.3 |
There are no non-cash items from all outstanding sources of borrowings.
(in EUR million) | As at 31\u00a0December | |
|---|---|---|
2022 | 2021 | |
Less than 1\u00a0year | 5,688.0 | 5,881.4 |
1-5\u00a0years | 13,985.5 | 12,581.1 |
Over 5\u00a0years | 201.0 | 54.8 |
Total borrowings and bonds | 19,874.5 | 18,517.3 |
The carrying amounts of the Group\u2019s borrowings are denominated in the following currencies:
(in EUR million) | As at 31\u00a0December | |
|---|---|---|
2022 | 2021 | |
Euro | 14,689.2 | 13,684.7 |
UK Pound | 2,619.7 | 2,543.3 |
Danish Krone | 455.8 | 376.9 |
Swedish Kronor | 349.7 | 388.5 |
Other currencies | 1,760.0 | 1,523.9 |
Total borrowings and bonds | 19,874.5 | 18,517.3 |
Local external banks and third parties provide 31.0% of total funding, representing EUR\u00a06,164\u00a0million (EUR\u00a06,220\u00a0million including loans granted to disposal groups held for sale) at 31\u00a0December 2022 (29.1% and EUR\u00a05,392\u00a0million at 31\u00a0December 2021).
An amount of EUR\u00a0860\u00a0million or 4.3% of total funding (EUR\u00a0917\u00a0million including loans granted to disposal groups held for sale) is provided by external banks. The residual external funding (EUR\u00a05,303\u00a0million) has been raised through asset-backed securitisations and unsecured bonds.
Included within this amount is loan of EUR\u00a0250\u00a0million granted by the European Investment Bank in September\u00a02019. This will enable the Group to develop its range of hybrid and electric vehicles across the EU, particularly in France, Germany, Italy, Spain, Belgium and the Netherlands.
In June\u00a02015 a private securitisation deal was set up in Belgium for EUR\u00a0300\u00a0million. This deal was renewed and increased by EUR\u00a060\u00a0million in June\u00a02018. In June\u00a02020 this EUR\u00a0360\u00a0million deal was renewed for two additional years. In June\u00a02022, this deal was renewed for 3\u00a0additional years and increased by EUR\u00a040\u00a0million.
The private securitisation deal set up in December\u00a02013 in the Netherlands was renewed for EUR\u00a0236\u00a0million in December\u00a02020 for 6\u00a0additional months. In June\u00a02021 this deal was renewed and increased by EUR\u00a0164\u00a0million (reaching an outstanding amount EUR\u00a0400\u00a0million) for two additional years.
A private securitisation deal was set up in the UK in December\u00a02018 for GBP\u00a0414\u00a0million with a revolving period of 1\u00a0year. The deal has been renewed in December\u00a02019 for two additional years and again in December\u00a02021 for a 14\u00a0month period.
A public securitisation deal has been set up in Germany in October\u00a02020 for EUR\u00a0350\u00a0million with a revolving period of 1\u00a0year. The transaction entered the amortisation phase in November\u00a02021.
A public securitisation deal has been set up in France in October\u00a02021 for EUR\u00a0400\u00a0million with a revolving period of 1\u00a0year.
The following debt securities are currently issued:
Programme and special purpose company | Originator | Country | Currency | Amount\u00a0(1) |
|---|---|---|---|---|
ALD Funding Limited | ALD | UK | GBP | 414\u00a0million |
Axus Finance NL B | ALD | Netherlands | EUR | 400\u00a0million |
Axus Finance SPRL | ALD | Belgium | EUR | 400\u00a0million |
Red & Black Auto Lease Germany\u00a0SA, compartment\u00a03 | ALD | Germany | EUR | 108.3\u00a0million |
FCT Red & Black Auto Lease France\u00a01 | ALD | France | EUR | 351.3\u00a0million |
(1) Transaction outstanding amount at 31\u00a0December 2022. |
The maturity of the asset-backed securitisation programmes is as follows:
(in EUR million) | 31\u00a0December 2022 | 31\u00a0December 2021 |
|---|---|---|
Less than 1\u00a0year | 603.7 | 334.8 |
1-5\u00a0years | 1,079.2 | 1,628.8 |
Over 5\u00a0years | 44.2 | \u2212 |
Total securitisation programme | 1,727.1 | 1,963.6 |
Securitisation programmes involve the sale of future lease instalment receivables and, in some cases, related residual value receivables originated by various ALD subsidiaries to special purpose companies which are included in the consolidated financial statements of the Group. ALD continues to retain substantially all of the risks and rewards of the lease receivables as in all asset-backed securitisation programmes they subscribed to the first class of notes which will result in ALD bearing any realised losses. Therefore, ALD continues to recognise the transferred lease assets in their entirety.
(in EUR million) | Receivables from clients | Cash collateral deposited | Total |
|---|---|---|---|
At 31\u00a0December 2022 | |||
Carrying amount of transferred assets | 2,182.6 | 23.3 | 2,205.9 |
Carrying amount of associated liabilities\u00a0(1) | (1,727.1) | ||
Net carrying amount position | 478.8 | ||
Fair value of transferred assets | 2,334.3 | 23.3 | 2,357.6 |
Fair value of associated liabilities\u00a0(1) | (1,727.1) | ||
Net fair value position as at 31\u00a0December 2022 | 630.5 | ||
At 31\u00a0December 2021 | |||
Carrying amount of transferred assets | 2,489.6 | 36.0 | 2,525.6 |
Carrying amount of associated liabilities\u00a0(1) | (1,963.6) | ||
Net carrying amount position | 562.0 | ||
Fair value of transferred assets | 2,543.4 | 36.0 | 2,579.4 |
Fair value of associated liabilities\u00a0(1) | (1,963.6) | ||
Net fair value position as at 31\u00a0December 2021 | 615.8 | ||
(1) Bonds and notes originated from asset-backed securitisation transactions. |
Within this programme, the Group has the following outstanding bonds issued as at 31\u00a0December 2021:
Following the external funding raised in recent years, the funding raised through Societe Generale has remained stable at 69.0% as at 31\u00a0December 2022.
Most of the funding provided by Societe Generale is granted through Societe Generale Luxembourg and Societe Generale Paris. SG Luxembourg and SG Paris funds ALD Group Central Treasury which then grants loans in different currencies to 27\u00a0ALD subsidiaries as well as to the holding companies. The total amount of loans granted by SG Luxembourg and SG Paris amounted to EUR\u00a012,158\u00a0million at 31\u00a0December 2022 (EUR\u00a012,165\u00a0million including loans granted to disposal groups held for sale) for an average maturity of 2.01\u00a0years.
The remaining SG funding is provided either by local SG branches or subsidiaries. As at 31\u00a0December 2022 the total amount of loans granted to the Group by Societe Generale, including local branches and subsidiaries was EUR\u00a013,711\u00a0million (EUR\u00a013,718\u00a0million including loans granted to disposal groups held for sale).
At 31\u00a0December 2022 the Group has undrawn borrowing facilities of EUR\u00a02.6\u00a0billion (EUR\u00a02.4\u00a0billion at 31\u00a0December 2021) of which EUR\u00a0506\u00a0million are committed undrawn borrowing facilities. Providing there is a market liquidity, these facilities are readily available to ALD entities.
A first demand guarantee has been granted to an English Financial institution for an amount of GBP\u00a0108\u00a0million on behalf of ALD Automotive UK, under the conditions negotiated in the frame of the distribution agreement concluded with this financial institution.
A first demand guarantee has been granted to ING Luxembourg for an amount of EUR\u00a052\u00a0million on behalf of Axus Luxembourg\u00a0SA, under the condition negotiated in the frame of the distribution agreement concluded with this financial institution.
A first demand guarantee has been granted to a landlord for an amount of EUR\u00a06.5\u00a0million on behalf of ALD Re DAC Ireland, under the conditions negotiated in the frame of the premises rental agreement concluded with this landlord.", "dimensions": { "concept": "ifrs-full:DisclosureOfBorrowingsExplanatory", "language": "en", "entity": "scheme:969500E7V019H9NP7427", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "corporatings-nesting-hOrtGw-98": { "value": "(in EUR million) | As at 31\u00a0December | |
|---|---|---|
2022 | 2021 | |
Less than 1\u00a0year | 5,688.0 | 5,881.4 |
1-5\u00a0years | 13,985.5 | 12,581.1 |
Over 5\u00a0years | 201.0 | 54.8 |
Total borrowings and bonds | 19,874.5 | 18,517.3 |
The carrying amounts of the Group\u2019s borrowings are denominated in the following currencies:
(in EUR million) | As at 31\u00a0December | |
|---|---|---|
2022 | 2021 | |
Euro | 14,689.2 | 13,684.7 |
UK Pound | 2,619.7 | 2,543.3 |
Danish Krone | 455.8 | 376.9 |
Swedish Kronor | 349.7 | 388.5 |
Other currencies | 1,760.0 | 1,523.9 |
Total borrowings and bonds | 19,874.5 | 18,517.3 |
In June\u00a02015 a private securitisation deal was set up in Belgium for EUR\u00a0300\u00a0million. This deal was renewed and increased by EUR\u00a060\u00a0million in June\u00a02018. In June\u00a02020 this EUR\u00a0360\u00a0million deal was renewed for two additional years. In June\u00a02022, this deal was renewed for 3\u00a0additional years and increased by EUR\u00a040\u00a0million.
The private securitisation deal set up in December\u00a02013 in the Netherlands was renewed for EUR\u00a0236\u00a0million in December\u00a02020 for 6\u00a0additional months. In June\u00a02021 this deal was renewed and increased by EUR\u00a0164\u00a0million (reaching an outstanding amount EUR\u00a0400\u00a0million) for two additional years.
A private securitisation deal was set up in the UK in December\u00a02018 for GBP\u00a0414\u00a0million with a revolving period of 1\u00a0year. The deal has been renewed in December\u00a02019 for two additional years and again in December\u00a02021 for a 14\u00a0month period.
A public securitisation deal has been set up in Germany in October\u00a02020 for EUR\u00a0350\u00a0million with a revolving period of 1\u00a0year. The transaction entered the amortisation phase in November\u00a02021.
A public securitisation deal has been set up in France in October\u00a02021 for EUR\u00a0400\u00a0million with a revolving period of 1\u00a0year.
The following debt securities are currently issued:
Programme and special purpose company | Originator | Country | Currency | Amount\u00a0(1) |
|---|---|---|---|---|
ALD Funding Limited | ALD | UK | GBP | 414\u00a0million |
Axus Finance NL B | ALD | Netherlands | EUR | 400\u00a0million |
Axus Finance SPRL | ALD | Belgium | EUR | 400\u00a0million |
Red & Black Auto Lease Germany\u00a0SA, compartment\u00a03 | ALD | Germany | EUR | 108.3\u00a0million |
FCT Red & Black Auto Lease France\u00a01 | ALD | France | EUR | 351.3\u00a0million |
(1) Transaction outstanding amount at 31\u00a0December 2022. |
The maturity of the asset-backed securitisation programmes is as follows:
(in EUR million) | 31\u00a0December 2022 | 31\u00a0December 2021 |
|---|---|---|
Less than 1\u00a0year | 603.7 | 334.8 |
1-5\u00a0years | 1,079.2 | 1,628.8 |
Over 5\u00a0years | 44.2 | \u2212 |
Total securitisation programme | 1,727.1 | 1,963.6 |
Securitisation programmes involve the sale of future lease instalment receivables and, in some cases, related residual value receivables originated by various ALD subsidiaries to special purpose companies which are included in the consolidated financial statements of the Group. ALD continues to retain substantially all of the risks and rewards of the lease receivables as in all asset-backed securitisation programmes they subscribed to the first class of notes which will result in ALD bearing any realised losses. Therefore, ALD continues to recognise the transferred lease assets in their entirety.
(in EUR million) | Receivables from clients | Cash collateral deposited | Total |
|---|---|---|---|
At 31\u00a0December 2022 | |||
Carrying amount of transferred assets | 2,182.6 | 23.3 | 2,205.9 |
Carrying amount of associated liabilities\u00a0(1) | (1,727.1) | ||
Net carrying amount position | 478.8 | ||
Fair value of transferred assets | 2,334.3 | 23.3 | 2,357.6 |
Fair value of associated liabilities\u00a0(1) | (1,727.1) | ||
Net fair value position as at 31\u00a0December 2022 | 630.5 | ||
At 31\u00a0December 2021 | |||
Carrying amount of transferred assets | 2,489.6 | 36.0 | 2,525.6 |
Carrying amount of associated liabilities\u00a0(1) | (1,963.6) | ||
Net carrying amount position | 562.0 | ||
Fair value of transferred assets | 2,543.4 | 36.0 | 2,579.4 |
Fair value of associated liabilities\u00a0(1) | (1,963.6) | ||
Net fair value position as at 31\u00a0December 2021 | 615.8 | ||
(1) Bonds and notes originated from asset-backed securitisation transactions. |
Within this programme, the Group has the following outstanding bonds issued as at 31\u00a0December 2021:
A first demand guarantee has been granted to an English Financial institution for an amount of GBP\u00a0108\u00a0million on behalf of ALD Automotive UK, under the conditions negotiated in the frame of the distribution agreement concluded with this financial institution.
A first demand guarantee has been granted to ING Luxembourg for an amount of EUR\u00a052\u00a0million on behalf of Axus Luxembourg\u00a0SA, under the condition negotiated in the frame of the distribution agreement concluded with this financial institution.
A first demand guarantee has been granted to a landlord for an amount of EUR\u00a06.5\u00a0million on behalf of ALD Re DAC Ireland, under the conditions negotiated in the frame of the premises rental agreement concluded with this landlord.", "dimensions": { "concept": "ifrs-full:DisclosureOfDebtSecuritiesExplanatory", "language": "en", "entity": "scheme:969500E7V019H9NP7427", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "corporatings-nesting-hOrtGw-101": { "value": "Defined contribution plans limit ALD\u2019s liability to contributions paid to the plan but do not commit ALD to a specific level of future benefits.
Main defined contribution plans provided to employees of the Group are located in France. They include state pension plans and other national pension plans such as ARRCO and AGIRC, as well as pension schemes put in place by some entities of the Group for which the only commitment is to pay annual contributions (PERCO).", "dimensions": { "concept": "ifrs-full:DisclosureOfDefinedContributionPlansExplanatory", "language": "en", "entity": "scheme:969500E7V019H9NP7427", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "corporatings-nesting-hOrtGw-102": { "value": "Defined benefit plans define an amount of pension benefit that an employee will receive on retirement, usually dependent on one or more factors such as age, years of service and compensation.
Main defined benefit plans provided to employees of the Group are located in France, Belgium, Germany, Italy and Switzerland.
The amount recognised in the balance sheet is determined as follows:
(in EUR million) | 31\u00a0December 2022 | 31\u00a0December 2021 |
|---|---|---|
A \u2013 Present value of defined benefit obligations | 17.3 | 21.0 |
B \u2013 Fair Value of plan assets | (13.8) | (14.6) |
C \u2013 Fair value of separate assets | \u2212 | \u2212 |
D \u2013 Change in asset ceiling | \u2212 | \u2212 |
A +\u00a0B -\u00a0C +\u00a0D =\u00a0Net balance recorded in the balance sheet | 3.6 | 6.4 |
Post-employment benefit plans include annuity payments, end-of-career indemnities as well as mixed plans (cash balance). Annuity payments are added to pension plans paid by state and mandatory benefit plans.
The present values of defined benefit obligations have been valued by independent qualified actuaries.
(in EUR million) | 2022 | 2021 |
|---|---|---|
Current service cost including social security contributions | 0.6 | 1.0 |
Employee contributions | (0.2) | (0.1) |
Past service cost/curtailments | \u2212 | \u2212 |
Transfer via the expense | \u2212 | \u2212 |
Net interest | 0.0 | \u2212 |
Components recognised in income statement | 0.5 | 0.9 |
Actuarial gains and losses due to assets\u00a0(1) | 1.6 | (1.2) |
Actuarial gains and losses due to changes in demographic assumptions | \u2212 | (0.1) |
Actuarial gains and losses due to changes in economical and financial assumptions | (6.3) | (2.5) |
Actuarial gains and losses due to experience | 1.9 | (1.7) |
Change in asset ceiling | \u2212 | \u2212 |
Components recognised in unrealised or deferred gains and losses | (2.7) | (5.5) |
Total components of the cost of the defined benefits | (2.2) | (4.6) |
(1) Actuarial gains and losses due to assets from which the actuarial gains and losses due to assets included in the net interest cost is deducted. |
Changes in the present value of defined benefit obligations:
(in EUR million) | 2022 | 2021 |
|---|---|---|
Balance at 1\u00a0January | 21.0 | 24.7 |
Current service cost including social security contributions | 0.6 | 1.0 |
Employee contributions | \u2212 | \u2212 |
Past service cost/curtailments | \u2212 | \u2212 |
Settlement | \u2212 | \u2212 |
Net interest | 0.2 | 0.1 |
Actuarial gains and losses due to changes in demographic assumptions | \u2212 | (0.1) |
Actuarial gains and losses due to changes in economical and financial assumptions | (6.3) | (2.5) |
Actuarial gains and losses due to experience | 1.9 | (1.7) |
Foreign exchange adjustment | \u2212 | 0.1 |
Benefit payments | (0.2) | (1.0) |
Acquisition/(Sale) of subsidiaries | \u2212 | \u2212 |
Transfers and others | 0.1 | 0.5 |
Balance at 31\u00a0December | 17.3 | 21.0 |
Changes in fair value of plan assets and separate assets:
(in EUR million) | 2022 | 2021 |
|---|---|---|
Balance at 1\u00a0January | 14.6 | 13.5 |
Expected return on plan assets | 0.1 | 0.0 |
Expected return on separate assets | \u2212 | \u2212 |
Actuarial gains and losses due to assets | (1.6) | 1.2 |
Foreign exchange adjustment | \u2212 | 0.1 |
Employee contributions | 0.2 | 0.2 |
Employer contributions to plan assets | 0.6 | 0.5 |
Benefit payments | (0.1) | (0.8) |
Acquisition/(Sale) of subsidiaries | \u2212 | \u2212 |
Transfers and others | \u2212 | \u2212 |
Balance at 31\u00a0December | 13.8 | 14.6 |
The breakdown of the fair value of plan assets is as follows: 34% bonds, 41% equities, 4% money market instruments and 21% others.
Employer contributions to be paid to post-employment defined benefit plans for 2023 are estimated at EUR\u00a00.7\u00a0million.
The actual returns on plan and separate assets were:
(in EUR million) | 2022 | 2021 |
|---|---|---|
Plan assets | (1.5) | 1.2 |
Separate assets | \u2212 | \u2212 |
The assumptions on return on assets are presented in the following section.
The significant actuarial assumptions used to determine the pension benefit obligation amount are as follows:
2022 | 2021 | |
|---|---|---|
Discount rate | ||
Europe | 3.5% | 0.8% |
Long-term inflation | ||
Europe | 2.3% | 2.0% |
Future salary increase | ||
Europe | 1.5% | 1.4% |
Average remaining working lifetime of employees (in years) | ||
Europe | 12.3 | 14.1 |
Duration (in years) | ||
Europe | 9.5 | 11.7 |
The assumptions by geographical area are averages weighted by the present value of the liabilities (DBO).
The yield curves used to discount the liabilities are corporate AA yield curves (source: Merrill Lynch) observed in the end of October for GBP and EUR, and corrected at the end of December if the decrease in discount rates had a significant impact.
Inflation rates used are the long-term targets of the central banks of the monetary areas above.
The average remaining working lifetime of employees is calculated taking into account withdrawal assumptions.
The assumptions described above have been applied on post-employment benefit plans.
(Percentage of item measured) | 31\u00a0December 2022 | 31\u00a0December 2021 |
|---|---|---|
Variation of +0.5% in discount rate | ||
Impact on the present value of defined benefit obligations at 31\u00a0December N | -5.7% | -6.7% |
Variation of +0.5% in long term inflation | ||
Impact on the present value of defined benefit obligations at 31\u00a0December N | 2.3% | 3.1% |
Variation of +0.5% in future salary increases | ||
Impact on the present value of defined benefit obligations at 31\u00a0December N | 9.3% | 7.1% |
The disclosed sensitivities are averages of the variations weighted by the present value of defined benefit obligations.
(in EUR million) | 2022 | 2021 |
|---|---|---|
N+1 | 0.4 | 0.4 |
N+2 | 0.5 | 0.4 |
N+3 | 1.2 | 0.4 |
N+4 | 0.8 | 1.1 |
N+5 | 0.9 | 0.8 |
N+6 to N+10 | 8.3 | 5.8 |
The amount recognised in the balance sheet is determined as follows:
(in EUR million) | 31\u00a0December 2022 | 31\u00a0December 2021 |
|---|---|---|
A \u2013 Present value of defined benefit obligations | 17.3 | 21.0 |
B \u2013 Fair Value of plan assets | (13.8) | (14.6) |
C \u2013 Fair value of separate assets | \u2212 | \u2212 |
D \u2013 Change in asset ceiling | \u2212 | \u2212 |
A +\u00a0B -\u00a0C +\u00a0D =\u00a0Net balance recorded in the balance sheet | 3.6 | 6.4 |
Post-employment benefit plans include annuity payments, end-of-career indemnities as well as mixed plans (cash balance). Annuity payments are added to pension plans paid by state and mandatory benefit plans.
The present values of defined benefit obligations have been valued by independent qualified actuaries.", "dimensions": { "concept": "ifrs-full:DisclosureOfNetDefinedBenefitLiabilityAssetExplanatory", "language": "en", "entity": "scheme:969500E7V019H9NP7427", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "corporatings-nesting-hOrtGw-105": { "value": "On 16\u00a0December 2022, ALD successfully completed its capital increase with preferential subscription rights for an amount (including issue premium) of approximately EUR\u00a01.2\u00a0billion.
The final gross proceeds of the rights issue, including the issue premium, amount to approximately EUR\u00a01.2\u00a0billion, corresponding to the issuance of 161,641,456\u00a0new shares with a par value of EUR\u00a01.50 at a subscription price of EUR\u00a07.50 per share.
Following the settlement and delivery of the rights issue, the share capital of ALD comprised of 565,745,096\u00a0shares with a nominal value of EUR\u00a01.50 each.
After the rights issue weighted average number of shares\u2019 calculation for the current year includes:
Weighted average number of shares for the year 2021 has been restated to include effect of the bonus element as though the bonus shares had been issued before the earliest period presented.\u00a0
As at 31\u00a0December | |||
|---|---|---|---|
2022 | 2021 restated | 2021 | |
Net income attributable to owners of the parent (in EUR million) | 1,203.2 | 873.0 | 873.0 |
Weighted average number of ordinary shares with voting rights (in thousands) | 452,168 | 441,872 | 403,072 |
Total basic earnings per share (in EUR) | 2.66 | 1.98 | 2.17 |
As at 31\u00a0December | |||
|---|---|---|---|
2022 | 2021 restated | 2021 | |
Net income attributable to owners of the parent (in EUR million) | 1,203.2 | 873.0 | 873.0 |
Weighted average number of ordinary shares (in thousands) | 453,169 | 442,935 | 404,104 |
Total diluted earnings per share (in EUR) | 2.66 | 1.97 | 2.16 |
Following the combined General Meetings held in 2021, 2020 and 2019 ALD\u00a0SA was authorised to purchase its own shares for the purposes of attributing, covering and paying off any scheme for the allocation of free shares, employee savings scheme and any other form of allocation to employees and executive directors of the Company or of companies related to it under the conditions set out in applicable legislative and regulatory provisions. Total number of shares making up current share capital is 565,745,096. As at 31\u00a0December 2022, total number of shares to which voting rights are attached, excluding shares without voting rights (treasury shares,\u00a0etc.) is 564,571,194.
Rights to free shares granted to employees will be settled with treasury shares under the long-term incentives employee plans. Treasury shares are included in the calculation of diluted earnings per share assuming all outstanding rights will vest.", "dimensions": { "concept": "ifrs-full:DisclosureOfEarningsPerShareExplanatory", "language": "en", "entity": "scheme:969500E7V019H9NP7427", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "corporatings-nesting-hOrtGw-108": { "value": "Key management includes the following members of the Executive Committee: Chief Executive Officer, two Deputy Chief Executive Officers, Chairman of the Board and the Board directors.
The compensation paid or payable to key management for employee services is shown below:
(in EUR million) | As at 31\u00a0December | |
|---|---|---|
2022 | 2021 | |
Salaries and other short-term employment benefits | 2.8 | 2.2 |
Post employment benefits | 0.4 | 0.6 |
Attendance fees for the Board members | 0.3 | 0.2 |
Other long-term benefits | 1.1 | 0.6 |
Total | 4.6 | 3.7 |
The total fees of the Company\u2019s auditors, as charged to the consolidated income statement for the year ended 31\u00a0December 2022, amounted to:
Services other than the certification of the accounts mainly consisted of compliance assignments related to regulatory requirements as well as services specifically and exclusively assigned to statutory auditors. Fees for such services amounted to:
(in %) | As at 31\u00a0December | |
|---|---|---|
2022 | 2021 | |
ALD International\u00a0SA | Parent company | Parent company |
Consolidated companies under global integration | interest % | interest % |
ALD Autoleasing D\u00a0GmbH - GERMANY\u00a0* | 100.00 | 100.00 |
ALD Automotive OOO - RUSSIA | 100.00 | 100.00 |
ALD Automotive A/S - DENMARK | 100.00 | 100.00 |
ALD Automotive\u00a0AB - SWEDEN | 100.00 | 100.00 |
ALD Automotive\u00a0AG - SWITZERLAND | 100.00 | 100.00 |
ALD Automotive\u00a0AS - NORWAY | 100.00 | 100.00 |
ALD Automotive D.O.O. BEOGRAD - SERBIA | 100.00 | 100.00 |
ALD Automotive D.O.O. ZA. Operativni i Financijski Leasing - CROATIA\u00a0* | 100.00 | 100.00 |
ALD Automotive for Cars Rental and Fleet Management\u00a0S.A.E. - EGYPT | 100.00 | 100.00 |
ALD Automotive Fuhrparkmanagement und Leasing\u00a0GmbH - AUSTRIA | 100.00 | 100.00 |
ALD Automotive Group Limited - UK\u00a0* | 100.00 | 100.00 |
ALD Automotive\u00a0S.A. - BRAZIL | 100.00 | 100.00 |
ALD Automotive Magyarorszag Autopark - kezelo es Finanszirozo KFT - HUNGARY\u00a0* | 100.00 | 100.00 |
ALD Automotive Operational Leasing DOO - SLOVENIA | 100.00 | 100.00 |
ALD Automotive Polska Sp z o.o. - POLAND | 100.00 | 100.00 |
ALD Automotive Private Limited - INDIA | 100.00 | 100.00 |
ALD Automotive\u00a0S.A. de C.V. - MEXICO | 100.00 | 100.00 |
ALD Automotive\u00a0S.A. Lease of Cars - GREECE | 100.00 | 100.00 |
ALD Automotive\u00a0SAU - SPAIN\u00a0* | 100.00 | 100.00 |
ALD Automotive SRO - CZECH REPUBLIC | 100.00 | 100.00 |
ALD Automotive Turizm Ticaret Anonim Sirketi - TURKEY | 100.00 | 100.00 |
ALD Fleet\u00a0SA de CV SOFOM ENR | 100.00 | 100.00 |
ALD International\u00a0SAS & CO KG\u00a0* | 100.00 | 100.00 |
ALD Re Designated Activity Company - IRELAND | 100.00 | 100.00 |
Axus Finland\u00a0OY | 100.00 | 100.00 |
ALD Automotive Italia SRL | 100.00 | 100.00 |
Axus Luxembourg\u00a0SA | 100.00 | 100.00 |
Axus Nederland\u00a0BV\u00a0* | 100.00 | 100.00 |
Axus\u00a0SA\u00a0NV - BELGIUM\u00a0* | 100.00 | 100.00 |
ALD Automotive Ukraine Limited Liability Company | 100.00 | 100.00 |
SG ALD Automotive Sociedade Geral de Comercio e Aluguer de Benz sa - PORTUGAL | 100.00 | 100.00 |
TEMSYS - France\u00a0* | 100.00 | 100.00 |
ALD Automotive Algerie\u00a0SPA | 99.99 | 99.99 |
ALD Automotive SRL - ROMANIA | 80.00 | 80.00 |
NF Fleet A/S - DENMARK | 80.00 | 80.00 |
NF Fleet\u00a0OY - FINLAND | 80.00 | 80.00 |
NF fleet\u00a0AB - SWEDEN | 80.00 | 80.00 |
NF Fleet\u00a0AS - NORWAY | 80.00 | 80.00 |
ALD Automotive Eesti\u00a0AS - ESTONIA | 75.01 | 75.01 |
ALD Automotive SIA - LATVIA | 75.00 | 75.00 |
UAB ALD Automotive - LITHUANIA | 75.00 | 75.00 |
ALD Automotive EOOD - BULGARIA | 100.00 | 100.00 |
ALD Automotive Limitada - CHILE | 100.00 | 100.00 |
ALD Automotive Peru\u00a0S.A.C. | 100.00 | 100.00 |
ALD Mul Mobility Services Malaysia SND. BHD. - MALAYSIA | 60.00 | 60.00 |
UK FFM | 50.10 | \u2212 |
ALD Automotive\u00a0LLC (Belarus) | 100.00 | 100.00 |
ALD Automotive Euro Leasing B.V. | 50.10 | \u2212 |
Soluciones De Renting Movilidad S.L. | 100.00 | \u2212 |
Fleetpool Holding\u00a0GmbH | 100.00 | \u2212 |
ALD Automotive\u00a0S.A.S - COLOMBIA | 100.00 | 100.00 |
Merrion Fleet Management Limited | 100.00 | 100.00 |
ALD Automotive Slovakia S.R.O | 100.00 | 100.00 |
ALD International Participations\u00a0SAS | \u2212 | 100.00 |
Consolidated companies under equity method | ||
ALD Automotive\u00a0SA Maroc | 35.00 | 35.00 |
Nedderfeld 95 Immobilien Gmbh & Co. KG | \u2212 | 35.00 |
* Including subsidiaries. |