Ayvens\u00a0refers to ALD (\u201cthe Company\u201d) and its subsidiaries (together \u201cthe Group\u201d). Ayvens is a service leasing and vehicle Fleet Management group with a fleet of around 3.4\u00a0million vehicles. The Group provides financing and management services in 42\u00a0countries in the world as at the date of this Universal Registration Document, including the following businesses:
\u00a0In May\u00a02023 the Group has obtained the regulated status as a Financial Holding Company (\u201cFHC\u201d) and operates under the direct supervision of the European Central Bank. See note\u00a03 for further details.
The Company is a French\u00a0Soci\u00e9t\u00e9 Anonyme\u00a0incorporated in Societe Generale. Its 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\u00a0Societe Generale\u00a0(52.59% 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.
", "dimensions": { "concept": "ifrs-full:DisclosureOfGeneralInformationAboutFinancialStatementsExplanatory", "language": "en", "entity": "scheme:969500E7V019H9NP7427", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fc_9631258a-f1e3-4e70-90f1-aa84820d46b7": { "value": "Ayvens", "dimensions": { "concept": "ifrs-full:NameOfReportingEntityOrOtherMeansOfIdentification", "language": "en", "entity": "scheme:969500E7V019H9NP7427", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "text_block_c66bc020-c0b2-4572-9d2c-a07166c112d5": { "value": "Details of acquisition
On 22\u00a0May 2023, following the approval of ALD\u2019s shareholders and of the relevant regulatory authorities, ALD acquired 100% of LeasePlan for a consideration of EUR\u00a04,897\u00a0million, subject to an additional contingent consideration of an amount up to EUR\u00a0235\u00a0million in cash.
The consideration includes:
On 22\u00a0March 2023, the Group had entered into a share agreement to sell its subsidiaries in Ireland, Portugal and Norway, as well as LeasePlan\u2019s subsidiaries in Luxembourg, Finland and Czech Republic which were all subsequently sold on 1\u00a0August 2023. These disposals were completed to honour the commitments made by ALD in the context of the clearance by the European Commission of the acquisition of LeasePlan, to address concentration risk in the countries concerned. For further information refer to note\u00a07.
Before the completion of the LeasePlan acquisition, Societe Generale held approximately 75.9% of the ALD share capital. Upon completion of the Acquisition, Societe Generale remains the majority shareholder with a stake of 52.59% of the Company. This stake may be reduced to 50.95% in the event of the exercise of the call option of the shares with warrants attached that have been granted to LeasePlan\u2019s former shareholders to allow them to increase their stake up to 32.91% of the Company\u2019s capital. The former LeasePlan shareholders consortium led by TDR capital holds 30.75% of the combined entity, while the free float represents 16.40%.
Details of the Acquisition value are set out in the table below:
(in EUR million) | As at 31\u00a0December 2023 |
|---|---|
Purchase price paid in ALD equity instruments\u00a0(1) | 2,999.5 |
of which: | \u00a0 |
Purchase price paid in ALD shares\u00a0(2) | 2,871.4 |
Fair value of warrants attached to shares | 128.1 |
Purchase price paid in cash | 1,827.5 |
of which: | \u00a0 |
Capital increase | 1,212.0 |
Tier\u00a02 subordinated debt | 615.5 |
Total purchase price | 4,827.0 |
Contingent consideration\u00a0(3) | 69.6 |
Total purchase price including contingent consideration | 4,896.7 |
|
\u00a0
Purchase price allocation
LeasePlan\u2019s identifiable assets and liabilities were measured at fair value at the date of the takeover by ALD.
The purchase price was allocated to newly identified intangible assets including customer relationships and as at 31\u00a0December 2023 the Group has recognised a goodwill of EUR\u00a01,396\u00a0million.
(in EUR million) | Allocations as at acquisition date (historical net book value) | Fair value adjustments | Allocations after fair value adjustments |
|---|---|---|---|
Lease assets - revenue earning fleet\u00a0(1) | 22,431.9 | 373.8 | 22,805.7 |
Other intangible assets | 537.1 | (50.7) | 486.3 |
o/w Customer relationships | 124.4 | 154.6 | 279.0 |
Lease receivables from clients | 683.0 | \u2212 | 683.0 |
Receivables from financial and other institutions | 614.6 | \u2212 | 614.6 |
Cash & Cash equivalents | 3,811.8 | \u2212 | 3,811.8 |
Financial debt | (23,347.3) | 32.9 | (23,314.3) |
Net tax assets and liabilities | (505.0) | (63.9) | (568.9) |
Net other assets and liabilities | (443.4) | (61.1) | (504.5) |
Fair value of assets and liabilities acquired (C) | 3,782.8 | 230.9 | 4,013.7 |
Non-controlling interests\u00a0(2)\u00a0(B) | 513.0 | \u2212 | 513.0 |
Total purchase price (A) | 4,896.7 | \u2212 | 4,896.7 |
Goodwill (A)+(B)-(C) | 1,626.9 | (230.9) | 1,396.0 |
|
\u00a0
Valuation methods
The fair values of the assets acquired and liabilities assumed have been determined using various valuation methods as described below.
The fleet is the Company\u2019s main asset and at the date of the acquisition LeasePlan managed circa 1.6\u00a0million vehicles comprising funded and unfunded fleet. A revaluation has been performed solely on the funded fleet segment as it represents vehicles owned by LeasePlan. Fair value of the fleet is obtained by adding the sum of the future discounted cash flows (DCF) of lease and additional services with the discounted terminal value (residual value of the vehicle which is its expected sales price). The valuation implemented relies on DCF model for each contract and considers regional parameters such as specific tax rates and country risk premia. Fair value of the fleet under IFRS\u00a03 includes both operating and finance leases recorded respectively in the opening balance sheet under captions Rental fleet and Lease receivables from clients.
Customer relationships intangible asset has been recognised separately from goodwill and it materialises the loyalty of B2B fleet customers to LeasePlan. The customer relationships valuation is based on the Multiple Period Excess Earnings Method. This method is based on the concept of value creation: the surplus profit generated by an intangible asset in a given financial year. The method is based on after-tax operating margin, less the capital cost of support assets required for its operation. Amortisation period for customer relationships intangible asset is 15 years.
The valuation of software is based on replacement costs new multiplied by a completion rate by domain. Under this approach, the fair value of LeasePlan\u2019s software is determined by reference to the reproduction or replacement cost new of modern equivalent asset optimized for over-design, over capacity and redundant asset and adjusted to reflect losses in value attributable to physical depreciation and obsolescence. In the framework of the valuation, the Group has estimated the cost that would be incurred to develop each domains needed to have a fully functional technology. In the frame of the PPA, assets have been revalued integrating market participants considerations according to IFRS\u00a03. Consequently, a benchmark of IT landscape of the leasing peers has been performed by the third party provider.
In the context of PPA, inventories including mainly cars to be sold after contract termination, have been revalued using the Net Realisable Value approach in order to have a fair value close to the market value.
A significant part of LeasePlan\u2019s fleet is financed through indebtedness. Given the volatility of the markets, a revaluation has been performed in order to ensure the financial debt is close to actual market conditions. Discounted cash flow valuation approach has been used to establish line by line projection of each cash flows based on observable market data, fixed/floating rate, frequency, maturity and notional amounts.
Tax provisions were reassessed in order to include additional risk provisions as at the acquisition date.
The deferred tax asset/liability arising as a result of fair value adjustments is included within the fair value of LeasePlan\u2019s net assets at acquisition.
The key assumptions and estimates in the valuation methods, to which the assets and liabilities items of the opening balance sheet are sensitive, include, amongst others, margin rate, discount rate of future cash flows, churn rate of customer contracts and future estimated sale prices of vehicles.
LeasePlan's activities have been included in the Group consolidated financial statements since 22\u00a0May 2023. As at 31\u00a0December 2023, the contribution of LeasePlan's activities amounts to EUR\u00a024.1\u00a0million in Net income. This contribution includes significant impacts which relate to either acquisition accounting or exceptional items.
\u00a0
Impacts on income statement
Impacts of these items are recorded in the Group\u2019s Net income in 2023 are presented in the table below:
(in EUR million) | Total Group\u00a0(1) | Contribution | PPA | Adjusted contribution |
Leasing contract margin | 1,261.9 | 72.5 | 5.9 | 66.6 |
Services margin | 1,354.2 | 652.3 | 23.1 | 629.2 |
Used Car Sales result | 349.5 | (47.7) | (192.8) | 145.1 |
Gross operating income | 2,965.6 | 677.1 | (163.8) | 840.9 |
Total Operating Expenses | (1,591.6) | (651.1) | 10.4 | (661.5) |
Impairment charges on receivables | (70.7) | (17.4) | \u2212 | (17.4) |
Other income (expense) | (14.0) | 9.9 | (4.6) | 14.5 |
Operating result | 1,289.3 | 18.5 | (158.0) | 176.5 |
Share of profit of associates and jointly controlled entities | 6.4 | 5.0 | \u2212 | 5.0 |
Profit before tax | 1,295.7 | 23.5 | (158.0) | 181.5 |
Income tax expense | (374.0) | 1.1 | 34.8 | (33.7) |
Profit for the period from continuing operations | 921.7 | 24.6 | (123.1) | 147.8 |
Profit (loss) for the period from discontinued operations | (77.6) | (0.6) | (33.2) | 32.6 |
Net income | 844.1 | 24.1 | (156.3) | 180.4 |
|
\u00a0
Pre-tax impact on the income statement from all PPA adjustments for the year ending 31 December, 2023 is EUR -202.5 million (including amortisation of the customer relationships intangible) offset by the positive impact of Used Car Sales result of EUR 145.1 million \u00a0which was not recognised in the previous reporting periods of 2023.
Leasing contract margin
In addition to the impacts of PPA, Leasing contract margin of LeasePlan is negatively impacted by the mark to market loss of EUR\u00a0201.9\u00a0million on LeasePlan derivatives. LeasePlan holds a book of derivatives, whose purpose is to hedge the interest and foreign exchange rates exposure, when the profile of funding cannot be matched with that of the lease contract portfolio. While the Group is economically hedged, there can be accounting mismatches as operating leases do not qualify for hedge accounting under IFRS and hence derivatives are measured at fair value through the income statement. Mark to market of derivatives results from interest rate movements and reverses towards the derivative\u2019s maturity (pull to par). On acquisition of LeasePlan, micro fair value hedging was in place (through the use of interest rate swaps) as part of the Treasury risk management policy to mitigate exposure to changes in fair value of recognised liabilities, driven by the impact of the interest rate risk component of debt capital market transactions (publicly issued fixed rate bonds). As part of a periodic review of hedging strategy to comply with risk objectives, the Group decided to revoke these fair value hedge designations on 1\u00a0October 2023. As a result, the Group improved the compensation of fair values in its derivatives portfolio. For more details see note\u00a04 \u201cFinancial Risk Management\u201d and note\u00a019 \u201cDerivative financial instruments\u201d.
Used Car Sales result
At the date of the acquisition, the book value of the vehicles sold in the current period included a reduction in depreciation costs compared to the contractual costs where expected sales proceeds were forecast to be in excess of their net book value and for which depreciation had been adjusted or stopped. The impact of this reduction resulted in a further negative impact of EUR 223.9 million.
Operating Expenses
LeasePlan\u2019s operating expenses include costs to achieve integration of EUR\u00a042.3\u00a0million and disposal costs for the remedy countries of EUR\u00a019.4\u00a0million (see note\u00a02.3).
Illustrative impacts on the income statement for 12 months
Had the acquisition taken place on 1\u00a0January 2023 and not on 22\u00a0May 2023, the full integration of LeasePlan would have resulted in an increase in the Group\u2019s Gross operating income (GOI) and profit before tax (PBT) by, respectively EUR\u00a0911\u00a0million and EUR\u00a0506\u00a0million. Methodology used to prepare illustrative GOI and PBT for 12 months has been aligned to the methodology used to prepare the pro forma financial information produced in application of AMF Prospectus regulations. There has been no adjustment to the period of purchase price accounting in terms of purchase price and values of assets and liabilities acquired in the pro forma income statement. The values used in the purchase price allocation exercise were backdated to reflect effects of the acquisition as if it had taken place on 1 January 2024.
Transaction costs and costs to achieve integration
As at 31\u00a0December 2023, the Group recorded EUR\u00a036.2\u00a0million of costs incurred due to the disposal of all remedies (ALD and LeasePlan) and EUR\u00a0170\u00a0million of costs to achieve integration (including EUR 18.5 million of transaction costs directly attributable to the acquisition) in \u201cOperating Expenses\u201d.
Ayvens \u2013 combined entity and global mobility brand
In October 2023, the Group announced Ayvens, its new global mobility brand, which unites the two companies together under a single common identity. The combined entity is the leading multi-brand car leasing company worldwide, covering all customer categories. The integration of LeasePlan started immediately after the closing of the acquisition and is progressing smoothly according to plans. Leveraging on the respective strengths, complementarities and the enhanced scale, the combined entity targets to achieve substantial commercial, operational and supply chain synergies, further improving its position in the industry and reinforcing its resilience through the economic cycle. The main areas of expected synergies are in procurement, facilities, Information Technology (\"IT\") and other operational costs. Synergies have been estimated at EUR 440 million (before tax) and are expected to fully materialize by 2026. Total cumulated costs to achieve integration are estimated at EUR 525 million over 2022-2025.
ALD and LeasePlan serve the same three client segments (large corporates, SMEs, individual consumers), but each of them has specific areas of leadership. LeasePlan has a network of large and very large blue\u2011chip international and national corporate clients and has been particularly strong in this segment in which there is limited customer overlap with ALD. ALD has developed a strong partnership network with more than 200 partners across a large spectrum of sectors. It has allowed the Company to rapidly develop its presence in the SME and individual consumers segments. This is expected to give Ayvens the best footprint across all segments.
ALD\u2019s funding mix and strong credit ratings facilitate efficient access to external funding. LeasePlan also relies on its deposit collection platforms in Germany and the Netherlands. The combined entity therefore has an enlarged and diversified base of funding sources.
In the context of the LeasePlan acquisition completed on 22\u00a0May 2023, ALD has obtained all merger control clearances conditioning the completion of this acquisition. The last clearance was obtained from the European Commission on 25\u00a0November 2022. The European Commission\u2019s approval was 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, and of LeasePlan in the Czech Republic, in Finland and in Luxembourg. On 22\u00a0March 2023, the Group has entered into a share purchase agreement to sell these subsidiaries to Credit Agricole Consumer Finance and Stellantis. The sale completed on 1\u00a0August 2023, resulting in a total loss on disposal of EUR 3.1 million which is recorded in the income statement under the caption of \u201cResult after tax from discontinued operations\u201d (see note\u00a07 for further details).
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.
", "dimensions": { "concept": "ifrs-full:DisclosureOfBusinessCombinationsExplanatory", "language": "en", "entity": "scheme:969500E7V019H9NP7427", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "text_block_b5b2754c-8d00-49d4-b65e-5be956debc26": { "value": "Details of acquisition
On 22\u00a0May 2023, following the approval of ALD\u2019s shareholders and of the relevant regulatory authorities, ALD acquired 100% of LeasePlan for a consideration of EUR\u00a04,897\u00a0million, subject to an additional contingent consideration of an amount up to EUR\u00a0235\u00a0million in cash.
The consideration includes:
On 22\u00a0March 2023, the Group had entered into a share agreement to sell its subsidiaries in Ireland, Portugal and Norway, as well as LeasePlan\u2019s subsidiaries in Luxembourg, Finland and Czech Republic which were all subsequently sold on 1\u00a0August 2023. These disposals were completed to honour the commitments made by ALD in the context of the clearance by the European Commission of the acquisition of LeasePlan, to address concentration risk in the countries concerned. For further information refer to note\u00a07.
Before the completion of the LeasePlan acquisition, Societe Generale held approximately 75.9% of the ALD share capital. Upon completion of the Acquisition, Societe Generale remains the majority shareholder with a stake of 52.59% of the Company. This stake may be reduced to 50.95% in the event of the exercise of the call option of the shares with warrants attached that have been granted to LeasePlan\u2019s former shareholders to allow them to increase their stake up to 32.91% of the Company\u2019s capital. The former LeasePlan shareholders consortium led by TDR capital holds 30.75% of the combined entity, while the free float represents 16.40%.
Details of the Acquisition value are set out in the table below:
(in EUR million) | As at 31\u00a0December 2023 |
|---|---|
Purchase price paid in ALD equity instruments\u00a0(1) | 2,999.5 |
of which: | \u00a0 |
Purchase price paid in ALD shares\u00a0(2) | 2,871.4 |
Fair value of warrants attached to shares | 128.1 |
Purchase price paid in cash | 1,827.5 |
of which: | \u00a0 |
Capital increase | 1,212.0 |
Tier\u00a02 subordinated debt | 615.5 |
Total purchase price | 4,827.0 |
Contingent consideration\u00a0(3) | 69.6 |
Total purchase price including contingent consideration | 4,896.7 |
|
\u00a0
Purchase price allocation
LeasePlan\u2019s identifiable assets and liabilities were measured at fair value at the date of the takeover by ALD.
The purchase price was allocated to newly identified intangible assets including customer relationships and as at 31\u00a0December 2023 the Group has recognised a goodwill of EUR\u00a01,396\u00a0million.
(in EUR million) | Allocations as at acquisition date (historical net book value) | Fair value adjustments | Allocations after fair value adjustments |
|---|---|---|---|
Lease assets - revenue earning fleet\u00a0(1) | 22,431.9 | 373.8 | 22,805.7 |
Other intangible assets | 537.1 | (50.7) | 486.3 |
o/w Customer relationships | 124.4 | 154.6 | 279.0 |
Lease receivables from clients | 683.0 | \u2212 | 683.0 |
Receivables from financial and other institutions | 614.6 | \u2212 | 614.6 |
Cash & Cash equivalents | 3,811.8 | \u2212 | 3,811.8 |
Financial debt | (23,347.3) | 32.9 | (23,314.3) |
Net tax assets and liabilities | (505.0) | (63.9) | (568.9) |
Net other assets and liabilities | (443.4) | (61.1) | (504.5) |
Fair value of assets and liabilities acquired (C) | 3,782.8 | 230.9 | 4,013.7 |
Non-controlling interests\u00a0(2)\u00a0(B) | 513.0 | \u2212 | 513.0 |
Total purchase price (A) | 4,896.7 | \u2212 | 4,896.7 |
Goodwill (A)+(B)-(C) | 1,626.9 | (230.9) | 1,396.0 |
|
\u00a0
Valuation methods
The fair values of the assets acquired and liabilities assumed have been determined using various valuation methods as described below.
The fleet is the Company\u2019s main asset and at the date of the acquisition LeasePlan managed circa 1.6\u00a0million vehicles comprising funded and unfunded fleet. A revaluation has been performed solely on the funded fleet segment as it represents vehicles owned by LeasePlan. Fair value of the fleet is obtained by adding the sum of the future discounted cash flows (DCF) of lease and additional services with the discounted terminal value (residual value of the vehicle which is its expected sales price). The valuation implemented relies on DCF model for each contract and considers regional parameters such as specific tax rates and country risk premia. Fair value of the fleet under IFRS\u00a03 includes both operating and finance leases recorded respectively in the opening balance sheet under captions Rental fleet and Lease receivables from clients.
Customer relationships intangible asset has been recognised separately from goodwill and it materialises the loyalty of B2B fleet customers to LeasePlan. The customer relationships valuation is based on the Multiple Period Excess Earnings Method. This method is based on the concept of value creation: the surplus profit generated by an intangible asset in a given financial year. The method is based on after-tax operating margin, less the capital cost of support assets required for its operation. Amortisation period for customer relationships intangible asset is 15 years.
The valuation of software is based on replacement costs new multiplied by a completion rate by domain. Under this approach, the fair value of LeasePlan\u2019s software is determined by reference to the reproduction or replacement cost new of modern equivalent asset optimized for over-design, over capacity and redundant asset and adjusted to reflect losses in value attributable to physical depreciation and obsolescence. In the framework of the valuation, the Group has estimated the cost that would be incurred to develop each domains needed to have a fully functional technology. In the frame of the PPA, assets have been revalued integrating market participants considerations according to IFRS\u00a03. Consequently, a benchmark of IT landscape of the leasing peers has been performed by the third party provider.
In the context of PPA, inventories including mainly cars to be sold after contract termination, have been revalued using the Net Realisable Value approach in order to have a fair value close to the market value.
A significant part of LeasePlan\u2019s fleet is financed through indebtedness. Given the volatility of the markets, a revaluation has been performed in order to ensure the financial debt is close to actual market conditions. Discounted cash flow valuation approach has been used to establish line by line projection of each cash flows based on observable market data, fixed/floating rate, frequency, maturity and notional amounts.
Tax provisions were reassessed in order to include additional risk provisions as at the acquisition date.
The deferred tax asset/liability arising as a result of fair value adjustments is included within the fair value of LeasePlan\u2019s net assets at acquisition.
The key assumptions and estimates in the valuation methods, to which the assets and liabilities items of the opening balance sheet are sensitive, include, amongst others, margin rate, discount rate of future cash flows, churn rate of customer contracts and future estimated sale prices of vehicles.
LeasePlan's activities have been included in the Group consolidated financial statements since 22\u00a0May 2023. As at 31\u00a0December 2023, the contribution of LeasePlan's activities amounts to EUR\u00a024.1\u00a0million in Net income. This contribution includes significant impacts which relate to either acquisition accounting or exceptional items.
\u00a0
Impacts on income statement
Impacts of these items are recorded in the Group\u2019s Net income in 2023 are presented in the table below:
(in EUR million) | Total Group\u00a0(1) | Contribution | PPA | Adjusted contribution |
Leasing contract margin | 1,261.9 | 72.5 | 5.9 | 66.6 |
Services margin | 1,354.2 | 652.3 | 23.1 | 629.2 |
Used Car Sales result | 349.5 | (47.7) | (192.8) | 145.1 |
Gross operating income | 2,965.6 | 677.1 | (163.8) | 840.9 |
Total Operating Expenses | (1,591.6) | (651.1) | 10.4 | (661.5) |
Impairment charges on receivables | (70.7) | (17.4) | \u2212 | (17.4) |
Other income (expense) | (14.0) | 9.9 | (4.6) | 14.5 |
Operating result | 1,289.3 | 18.5 | (158.0) | 176.5 |
Share of profit of associates and jointly controlled entities | 6.4 | 5.0 | \u2212 | 5.0 |
Profit before tax | 1,295.7 | 23.5 | (158.0) | 181.5 |
Income tax expense | (374.0) | 1.1 | 34.8 | (33.7) |
Profit for the period from continuing operations | 921.7 | 24.6 | (123.1) | 147.8 |
Profit (loss) for the period from discontinued operations | (77.6) | (0.6) | (33.2) | 32.6 |
Net income | 844.1 | 24.1 | (156.3) | 180.4 |
|
\u00a0
Pre-tax impact on the income statement from all PPA adjustments for the year ending 31 December, 2023 is EUR -202.5 million (including amortisation of the customer relationships intangible) offset by the positive impact of Used Car Sales result of EUR 145.1 million \u00a0which was not recognised in the previous reporting periods of 2023.
Leasing contract margin
In addition to the impacts of PPA, Leasing contract margin of LeasePlan is negatively impacted by the mark to market loss of EUR\u00a0201.9\u00a0million on LeasePlan derivatives. LeasePlan holds a book of derivatives, whose purpose is to hedge the interest and foreign exchange rates exposure, when the profile of funding cannot be matched with that of the lease contract portfolio. While the Group is economically hedged, there can be accounting mismatches as operating leases do not qualify for hedge accounting under IFRS and hence derivatives are measured at fair value through the income statement. Mark to market of derivatives results from interest rate movements and reverses towards the derivative\u2019s maturity (pull to par). On acquisition of LeasePlan, micro fair value hedging was in place (through the use of interest rate swaps) as part of the Treasury risk management policy to mitigate exposure to changes in fair value of recognised liabilities, driven by the impact of the interest rate risk component of debt capital market transactions (publicly issued fixed rate bonds). As part of a periodic review of hedging strategy to comply with risk objectives, the Group decided to revoke these fair value hedge designations on 1\u00a0October 2023. As a result, the Group improved the compensation of fair values in its derivatives portfolio. For more details see note\u00a04 \u201cFinancial Risk Management\u201d and note\u00a019 \u201cDerivative financial instruments\u201d.
Used Car Sales result
At the date of the acquisition, the book value of the vehicles sold in the current period included a reduction in depreciation costs compared to the contractual costs where expected sales proceeds were forecast to be in excess of their net book value and for which depreciation had been adjusted or stopped. The impact of this reduction resulted in a further negative impact of EUR 223.9 million.
Operating Expenses
LeasePlan\u2019s operating expenses include costs to achieve integration of EUR\u00a042.3\u00a0million and disposal costs for the remedy countries of EUR\u00a019.4\u00a0million (see note\u00a02.3).
Illustrative impacts on the income statement for 12 months
Had the acquisition taken place on 1\u00a0January 2023 and not on 22\u00a0May 2023, the full integration of LeasePlan would have resulted in an increase in the Group\u2019s Gross operating income (GOI) and profit before tax (PBT) by, respectively EUR\u00a0911\u00a0million and EUR\u00a0506\u00a0million. Methodology used to prepare illustrative GOI and PBT for 12 months has been aligned to the methodology used to prepare the pro forma financial information produced in application of AMF Prospectus regulations. There has been no adjustment to the period of purchase price accounting in terms of purchase price and values of assets and liabilities acquired in the pro forma income statement. The values used in the purchase price allocation exercise were backdated to reflect effects of the acquisition as if it had taken place on 1 January 2024.
Transaction costs and costs to achieve integration
As at 31\u00a0December 2023, the Group recorded EUR\u00a036.2\u00a0million of costs incurred due to the disposal of all remedies (ALD and LeasePlan) and EUR\u00a0170\u00a0million of costs to achieve integration (including EUR 18.5 million of transaction costs directly attributable to the acquisition) in \u201cOperating Expenses\u201d.
Ayvens \u2013 combined entity and global mobility brand
In October 2023, the Group announced Ayvens, its new global mobility brand, which unites the two companies together under a single common identity. The combined entity is the leading multi-brand car leasing company worldwide, covering all customer categories. The integration of LeasePlan started immediately after the closing of the acquisition and is progressing smoothly according to plans. Leveraging on the respective strengths, complementarities and the enhanced scale, the combined entity targets to achieve substantial commercial, operational and supply chain synergies, further improving its position in the industry and reinforcing its resilience through the economic cycle. The main areas of expected synergies are in procurement, facilities, Information Technology (\"IT\") and other operational costs. Synergies have been estimated at EUR 440 million (before tax) and are expected to fully materialize by 2026. Total cumulated costs to achieve integration are estimated at EUR 525 million over 2022-2025.
ALD and LeasePlan serve the same three client segments (large corporates, SMEs, individual consumers), but each of them has specific areas of leadership. LeasePlan has a network of large and very large blue\u2011chip international and national corporate clients and has been particularly strong in this segment in which there is limited customer overlap with ALD. ALD has developed a strong partnership network with more than 200 partners across a large spectrum of sectors. It has allowed the Company to rapidly develop its presence in the SME and individual consumers segments. This is expected to give Ayvens the best footprint across all segments.
ALD\u2019s funding mix and strong credit ratings facilitate efficient access to external funding. LeasePlan also relies on its deposit collection platforms in Germany and the Netherlands. The combined entity therefore has an enlarged and diversified base of funding sources.
On 20\u00a0April 2023 and on 30\u00a0October 2023, the Group completed the disposal of its subsidiaries ALD Russia and ALD Belarus to JSC Tsk. The sale has received clearance from the relevant regulatory authorities. Both entities operated a 13,400\u00a0funded fleet, representing less than 1% of ALD\u2019s Fleet. ALD Russia and ALD Belarus were classified as held for sale in the Group\u2019s consolidated financial statements ending 31\u00a0December 2022. The loss on sale of both subsidiaries amounted to EUR 101.5 million and it is recorded in the income statement under the caption of \u201cResult after tax from discontinued operations\u201d (see note\u00a07 for further details).
In the context of the LeasePlan acquisition completed on 22\u00a0May 2023, ALD has obtained all merger control clearances conditioning the completion of this acquisition. The last clearance was obtained from the European Commission on 25\u00a0November 2022. The European Commission\u2019s approval was 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, and of LeasePlan in the Czech Republic, in Finland and in Luxembourg. On 22\u00a0March 2023, the Group has entered into a share purchase agreement to sell these subsidiaries to Credit Agricole Consumer Finance and Stellantis. The sale completed on 1\u00a0August 2023, resulting in a total loss on disposal of EUR 3.1 million which is recorded in the income statement under the caption of \u201cResult after tax from discontinued operations\u201d (see note\u00a07 for further details).
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 Group\u2019s audited consolidated financial statements as at 31\u00a0December 2023, were authorised for issue by the Board of Directors on 21 March 2024.\u00a0The 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 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.
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Upon the acquisition of LeasePlan, which holds a banking licence allowing it to raise deposits under the Dutch deposit guarantee scheme, the Group has obtained from the European Central Bank (ECB) the regulated status as a Financial Holding Company (\u201cFHC\u201d). As a Financial Holding Company, it has been assessed that Article\u00a0517\u20111 of the French Code mon\u00e9taire et financier, the recommendation no.\u00a02017\u201102 issued by the Autorit\u00e9 des normes comptables, which relates to the reporting format for credit institutions and financing companies, does not apply. Instead, the Group is subject to recommendation no.\u00a02020\u201101 issued by the Autorit\u00e9 des normes comptables, which is the one currently applied to the Group pre-acquisition. Therefore, the consolidated financial information is presented in accordance with the classification of transactions used to prepare the prior year Group\u2019s annual consolidated financial statements, except for specific line items that have been added to the Group\u2019s presentation in relation to acquired LeasePlan\u2019s items with no direct equivalent, i.e. deposits.
The balance sheet of the Group, its cash flows, liquidity position and borrowing facilities are set out in the Group financial statements and notes to the financial statements. Further details of our policy on financial risk management are set out in note\u00a04 to the financial statements. The Group\u2019s net debt at 31\u00a0December 2023 was EUR\u00a045.4\u00a0billion (2022: EUR\u00a019.6\u00a0billion) and the Group liquidity position (defined as cash and undrawn committed facilities) of EUR\u00a05.9\u00a0billion at 31\u00a0December 2023 remains strong. Details of borrowings and facilities are set out in note\u00a029.
The Board is satisfied that the Group\u2019s forecasts and projections, taking account of reasonably possible changes in trading performance, show that the Group will be able to operate within the level of its current facilities for the period of at least 12\u00a0months from the date of approval of the financial statements. For this reason, the Group continues to adopt the going concern basis in preparing its financial statements.
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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 the Group\u2019s Turkish subsidiaries (including the Turkish subsidiary obtained on acquisition of LeasePlan). The financial statements include restatements for changes in the general purchasing power of the Turkish lira to the measuring unit current at the reporting date.
Adjustments are made to the non-monetary assets and liabilities (with biggest impacts in rental fleet, and the Group Consolidated Reserves pertaining to the subsidiaries in Turkey). The carrying amounts of rental fleet are adjusted to reflect the change in the consumer price index (CPI) during 2023 and for LeasePlan subsidiary 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.
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The development of the CPI index in the current and previous reporting periods is as follows:
\u00a0 | 12/2020 | 12/2021 | 12/2022 | 12/2023 |
|---|---|---|---|---|
Conversion coefficient | 443.34 | 603.28 | 990.91 | 1,632.85 |
CPI Index (12\u00a0months) | 14.60 | 36.08 | 64.27 | 64.77 |
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The financial statements of the Turkish subsidiaries are based on a historic cost. Non-monetary items in the financial statements have been restated for the change in CPI from the date of their acquisition or initial recognition to the end of the reporting period.
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, and these are recognised in the income statement in \u201cLeasing contract costs \u2013 depreciation\u201d. Restatement of all components of equity is recorded in the hyperinflation reserve which is reclassified to the translation reserves of the Turkish subsidiaries upon consolidation. Reclassification is done on the basis of the economic interrelationship between the changes in exchange rates and inflation (i.e. as prices measured in hyperinflationary currency increase, their value against other currencies tends to decrease at a rate that reflects the excess of price inflation in the hyperinflationary currency compared to price inflation in other currencies). Translation reserves in 2023 have been positively impacted by such a reclassification of EUR 71 million (2022: 59.3 million).
All items in the statement of cash flows which relate to the Turkish subsidiaries are expressed in terms of the consumer price index at the end of the reporting period.
As at 31\u00a0December 2023 Leasing contract margin includes the gain of EUR\u00a0140.1\u00a0million (2022: EUR\u00a059.9\u00a0million) for the consumer price index inflation applied to the book value of the Turkish subsidiaries fleet of vehicles, share capital and retained earnings. This uplift in book value has resulted in an impairment of EUR\u00a067.2\u00a0million for year ending 31\u00a0December 2023 (2022: nil) relating to recoverability of the fleet assets and additional depreciation on the inflationary increase of EUR\u00a033.7\u00a0million that have been included within the \u201cLeasing contract costs \u2013 depreciation\u201d line in the income statement, so overall the net impact on the Leasing contract margin amount is EUR\u00a039.2\u00a0million. Deferred tax impact from these gains in 2023 is not material due to the change in the Turkish tax legislation which now permits the entities to adjust their financial statements for inflation for tax purposes. For further detail see note\u00a05 \u201cCritical accounting estimates and judgements\u201d.
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The preparation of the financial statements requires the management of both the Group and its subsidiaries to use certain estimates and assumptions that may have an impact on the reported values of assets, liabilities and contingent liabilities at the reporting date and on items of income and expense for the period.
The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ significantly from these estimates if different assumptions or circumstances apply.
The material estimates, assumptions and underlying data that management makes relate to the valuation and impairment of fixed assets from operating leases, including the residual values at the end of the contract date, impairment of finance lease receivables, valuation allowance of inventories (terminated cars on stock), defined benefit pensions obligations, the fair value of derivatives, the assessment of the income tax position, damage risk retention provision and insurance/reinsurance provisions, the impairment of intangibles and goodwill, estimates in revenue recognition, the assessment of restructuring provisions and litigation provisions and customer price index related to hyperinflation. Information on the above-mentioned areas of estimation and judgement is provided in note\u00a05 \u201cCritical accounting estimates, assumptions and judgements\u201d.
The estimates and underlying assumptions are reviewed each financial reporting period. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period of the revision, or in any future periods affected if the revision affects both current and future periods. Disclosure of significant judgements and major sources of estimation uncertainty and related sensitivities is included in the specific notes to the balance sheet.
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At 31\u00a0December 2023, all companies are fully consolidated, except four companies accounted using the equity method. Changes in the scope of consolidation compared to 31\u00a0December 2022 are as follows:
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The Group has adopted the following new standards, amendments and interpretations to published standards for the first time for the financial year starting on 1\u00a0January 2023:
Accounting standards, amendments or Interpretations | Adoption dates |
|---|---|
IFRS\u00a017 \u201cInsurance Contracts\u201d | 1\u00a0January 2023 |
Definition of Accounting Estimates \u2013 Amendments to IAS\u00a08 | 1\u00a0January 2023 |
Disclosure of Accounting Policies - Amendments to IAS\u00a01 and IFRS Practice Statement\u00a02 | 1\u00a0January 2023 |
Deferred Tax related to Assets and Liabilities arising from a Single Transaction \u2013 Amendments to IAS\u00a012 | 1\u00a0January 2023 |
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The amendments listed above did not have any impact on the amounts recognised in prior periods and are not expected to significantly affect the current or future periods, with the exception of IFRS\u00a017 Insurance contracts.
IFRS\u00a017 \u201cInsurance Contracts\u201d, issued on 18\u00a0May 2017 and modified by the 25\u00a0June 2020 and 9\u00a0December 2021 Amendments, replaces IFRS\u00a04 \u201cInsurance Contracts\u201d which allowed, in particular, insurance contracts to be recognised using methods set out by the local accounting regulations.
IFRS\u00a017 is adopted from 1\u00a0January 2023 and is applicable to Group\u2019s insurance subsidiary ALD Re DAC based in Ireland that deals in the reinsurance business as well as LeasePlan insurance (acquired on 22\u00a0May 2023) which is the LeasePlan group of insurance company. On that same date, ALD Re DAC started applying IFRS\u00a09 \u201cFinancial Instruments\u201d for the first time; this application had been delayed as a result of the possibilities offered by the Amendments to IFRS\u00a017 and to IFRS\u00a04 issued by the IASB on 25\u00a0June 2020 and extended by Regulations (EU) 2017/1988 and 2020/2097 of the European Commission.
IFRS\u00a017 establishes specific principles for the recognition and measurement of insurance contracts issued and reinsurance contracts held by the Group. The insurance contracts issued to the customers of ALD are related to the lease services of vehicles and includes for example motor third party liabilities. The adoption of IFRS\u00a017 did not change the classification of the Group\u2019s insurance contracts. The Group was previously permitted under IFRS\u00a04 to continue accounting using its previous local accounting policies.
Under IFRS\u00a017, the Group\u2019s insurance contracts issued, and reinsurance contracts held are all eligible to be measured by applying the premium allocation approach which is discussed below.
Under IFRS\u00a017, the measurement of Insurance Contracts issued are aggregated into homogeneous portfolios, where the contracts are subject to similar risks and managed together. Each portfolio is then required to be disaggregated 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-month period.
Similar requirements apply for Reinsurance Contracts except that the contracts are segregated according to two levels of profitability:
This is a simplified measurement approach 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\u00a0(b) above.
ALD Re DAC have applied the PAA at the first adoption of IFRS\u00a017. The majority of ALD Re DAC\u2019s insurance contracts are for 12\u00a0months of coverage.
The subsidiary entity of LeasePlan acquired on 22\u00a0May 2023 also follows the PAA approach and all assets and liabilities of this subsidiary are presented in accordance with IFRS\u00a017 at the date of the Acquisition.
The PAA provides a simplified approach for measuring the liability for remaining coverage only. The liability for incurred claims is still measured using the General Model (however, only using the discounted best estimate of future cash flows and the risk adjustment building blocks).
The following accounting treatments apply under the PAA approach:
For changes to the presentation in the consolidated statement of financial position, the Group aggregates insurance contracts issued and reinsurance contracts held, respectively in Provisions and Other receivables and prepayments:
There are no changes to the presentation of the consolidated statement of profit or loss. The required separation of insurance expenses and insurance finance expenses are included in the disclosure.
The Group have adopted IFRS\u00a017 on a retrospective basis with comparative figures of 2022 financial year been restated. The difference in the measurement of the insurance assets and liabilities resulting from the retrospective application is recognised directly in opening equity as at 1\u00a0January 2022. The retrospective measurement of these assets and liabilities were subject to a simplified approach where historical data were not available.
The following tables reconciles the impact of IFRS\u00a017 on the balance sheet as at 31\u00a0December 2021 and at 31\u00a0December 2022.
(in EUR million) | Footnote | Balances as at | |
|---|---|---|---|
31\u00a0December 2021 | 31\u00a0December 2022 | ||
Total assets under IAS\u00a04 | \u00a0 | 26,991.4 | 31,351.0 |
Adjustments: | \u00a0 | \u00a0 | \u00a0 |
Receivables from clients and financial institutions | 1 | (56.0) | (52.0) |
Other receivables and prepayments | 2 | 4.8 | 4.6 |
Current and deferred tax | 3 | 1.8 | (1.3) |
Restated total assets under IFRS\u00a017 | \u00a0 | 26,942.0 | 31,302.3 |
Total liabilities under IAS\u00a04 | \u00a0 | 22,145.8 | 24,457.6 |
Adjustments: | \u00a0 | \u00a0 | \u00a0 |
Trade and other payable | 4 | (71.4) | (61.1) |
Provision | 5 | 12.5 | (7.0) |
Current and deferred tax | 3 | 2.8 | 0.4 |
Restated total liabilities under IFRS\u00a017 | \u00a0 | 22,089.7 | 24,389.9 |
Total equity under IAS\u00a04 | \u00a0 | 4,845.6 | 6,893.4 |
Adjustments: | \u00a0 | \u00a0 | \u00a0 |
Adjustment in respect of IFRS\u00a017 for 2021 | 6 | 6.7 | 6.7 |
Adjustment in respect of IFRS\u00a017 for 2022 | 6 | \u00a0 | 12.2 |
Restated total equity under IFRS\u00a017 | \u00a0 | 4,852.3 | 6,912.3 |
Restated total liabilities and equity under IFRS\u00a017 | \u00a0 | 26,942.0 | 31,302.3 |
|
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The below tables reconcile the impact on income statement as published on 31\u00a0December 2022 and as restated under IFRS\u00a017.
(in EUR million) | Footnote | 31\u00a0December 2022 |
|---|---|---|
Net income as reported on 31\u00a0December 2022 under IFRS\u00a04 | \u00a0 | 1,207.9 |
Increase in service margin | 1 | 11.9 |
Decrease in operating expenses | 2 | 1.7 |
Increase in income tax expense | 3 | (1.3) |
Restated Net income as at 31\u00a0December 2022 | \u00a0 | 1,220.2 |
|
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The impacts of transition from IFRS\u00a04 to IFRS\u00a017 are not material to the Group. There is no impact of IFRS\u00a017 on the statement of other comprehensive income.
The initial application of IFRS\u00a09 by the Group\u2019s insurance subsidiaries as at 1\u00a0January 2023 is retrospective along with IFRS\u00a017. The impact of IFRS\u00a09 is in relation to the bond portfolio where expected credit loss provision of EUR\u00a00.3\u00a0million in 2021 and EUR\u00a00.4\u00a0million in 2022 is recognised and is not material to the Group.
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IASB publishes accounting standards, amendments and interpretations, some of which have not been adopted by the European Union as at 31\u00a0December 2023. They are required to be applied from annual periods beginning on 1\u00a0January 2024 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 2023. These amendments are not expected to have a material impact on the entity in the current or future reporting periods and on foreseeable future transactions.
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The consolidated financial statements incorporate the financial statements of the Company and its subsidiaries as listed in note\u00a041. Changes to the entities consolidated in the\u00a0year ended 31\u00a0December 2023\u00a0have been explained in note\u00a03.1.
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.
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.
For non-wholly owned subsidiaries, non-controlling interests are presented in equity separately from the equity attributable to shareholders of the Company. Profit or loss and other comprehensive income are attributed to the shareholders of the Company and to non-controlling interests even if this results in the non-controlling interests having a deficit balance. Changes in ownership interest in subsidiaries that do not result in a change in control are accounted for in equity. The carrying amounts of the controlling and non-controlling interests are adjusted to reflect the changes in their relative interests in the subsidiary. Any difference between the amount by which the non-controlling interest is adjusted and the fair value of the consideration paid or received is recorded directly in equity and attributed to the shareholders of the Company.
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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.
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Associates are investments over which the Group has significant influence, which is the power to participate in the financial and operating policy decisions of the investee, but without the ability to exercise control or joint control. Typically, the Group owns between 20% and 50% of the voting equity of its associates.
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.
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Joint arrangements are arrangements in which the Group shares joint control with one or more parties. Joint control is the contractually agreed sharing of control of an arrangement, and exists only when decisions about the activities that significantly affect the arrangement\u2019s returns require the unanimous consent of the parties sharing control.
Judgement is required in determining this classification through an evaluation of the facts and circumstances arising from each individual arrangement. Joint arrangements are classified as either joint operations or joint ventures based on the rights and obligations of the parties to the arrangement. In joint operations, the parties have rights to the assets and obligations for the liabilities relating to the arrangement, whereas in joint ventures, the parties have rights to the net assets of the arrangement. The Group has assessed the nature of its joint arrangements and determined them to be joint ventures.
Investments in joint ventures are accounted for using the equity method of accounting except when classified as held for sale. The Group\u2019s share of associates\u2019 and joint ventures\u2019 Net income is based on their most recent audited financial statements or unaudited interim statements drawn up to the Group\u2019s balance sheet date. Accounting policies of the joint ventures are modified where necessary to ensure consistency with the policies adopted by the Group.
The total carrying values of investments in joint ventures represent the cost of each investment including the carrying value of goodwill, the share of post-acquisition retained earnings, any other movements in reserves and any long-term debt interests which in substance form part of the Group\u2019s net investment, less any cumulative impairments. The carrying values of associates and joint ventures are reviewed on a regular basis and if there is objective evidence that an impairment in value has occurred as a result of one or more events during the period, the investment is impaired. Investments which have been previously impaired are regularly reviewed for indicators of impairment reversal.
The Group\u2019s share of an associate\u2019s or joint venture\u2019s losses in excess of its interest in that associate or joint venture is not recognised unless the Group has an obligation to fund such losses. Unrealised gains arising from transactions with associates and joint ventures are eliminated against the investment to the extent of the Group\u2019s interest in the investee. Unrealised losses are eliminated in the same way, but only to the extent that there is no evidence of impairment.
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Special purpose companies are companies created to accomplish a narrow and well-defined objective, such as the securitisation of leased assets. Details of our asset-backed securitisation programme are described in note\u00a029 that involve the sale of future lease receivables and related residual value receivables to special purpose companies.
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. These companies are consolidated in the financial statements of the Group based on the substance of the relationship.
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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.
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The results and financial position of all the Group entities (apart from those that operate in a hyperinflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows:
Exchange differences on foreign currency balances with foreign operations for which settlement is neither planned nor likely to occur in the foreseeable future, and therefore form part of the Group\u2019s net investment in these foreign operations, are offset in the cumulative translation adjustment reserve. Cumulative translation differences are recycled from equity and recognised as income or expense on disposal of the operation to which they relate.
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.
Subsidiaries in Turkey which operate in a hyperinflationary economy have been translated wholly at the closing rate.
The main exchange rates used in the consolidated financial statements for the years ended 31\u00a0December 2023 and 31\u00a0December 2022 are based on Paris stock exchange rates and are as follows:
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\u00a0 | 31\u00a0December 2023 | 31\u00a0December 2022 | ||
|---|---|---|---|---|
Period-end Rate | Average Rate | Period-end Rate | Average Rate | |
EUR/Ukrainian Hryvnia | 38.1500 | 36.9156 | 36.9170 | 34.4424 |
EUR/Brazilian Real | 5.3618 | 5.4016 | 5.6386 | 5.4432 |
EUR/Turkish Lira | 32.6531 | 32.6531 | 19.9649 | 19.9649 |
EUR/Mexican Peso | 18.7231 | 19.1897 | 20.8560 | 21.2046 |
EUR/Swedish Krona | 11.0960 | 11.4728 | 11.1218 | 10.6274 |
EUR/Indian Rupee | 91.9045 | 89.3249 | 88.1710 | 82.7145 |
EUR/UK Pound | 0.8691 | 0.8699 | 0.8869 | 0.8526 |
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Ordinary shares are classified as equity. Dividends are recognised as a liability in the balance sheet after approval of the profit distribution by the shareholders.
The proceeds of the issue of AT1 capital securities are available to the Group in perpetuity and are undated, deeply subordinated, resettable and callable. As the payment of distributions is wholly discretionary, the proceeds received and interest coupon, paid on them are recognised in equity. As there is no formal obligation to (re)pay the principal amount or to pay interest coupon, the capital securities are recognised as equity and the distributions paid on these instruments, as well as the transaction costs related to the issuance of the capital securities, are recognised directly in equity.
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As a lessor the Group is required to determine at the inception of each lease contract whether the lease arrangement is an operating leases or finance lease. This assessment considers the substance of the transaction rather than the form of the contract and classification is based on the extent to which the lease transfers the risks and rewards incidental to ownership of the 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 three most important are:
The Group as a lessor presents the assets subject to operating leases under \u201cRental fleet\u201d in the balance sheet and mainly includes vehicles under operating leases, vehicles under short term rental contracts (less than 1\u00a0year) and available for rental vehicles.
The Group leases assets to its clients for durations that normally range between three to four years. In almost all cases, the leased assets are returned to the Group at the end of the contract term. In case of early termination in most of the cases there will be a settlement invoice and the risks are borne by the customer. Under the operating lease classification, the customers are offered various products that have different contractual terms, but where ultimately the risks and rewards incidental to ownership are retained by the Group. A customer may be entitled to receive a portion of the net positive result from factors that have resulted in the vehicle being above its expected residual value at the end of the lease. However, any negative result risk will still be borne by the Group.
Monthly fixed operating lease fees charged to the customer for the use of the vehicle over the duration of the contract period can comprise various components each having its own revenue recognition. Any unpaid lessee receivables are recorded in the balance sheet as \u201cLease receivables from clients\u201d. See the Revenue recognition policy in note\u00a03.5.20 for more details.
Assets under operating lease and rental fleet are measured at cost less accumulated depreciation and impairment losses. The cost of the operating lease cars comprises 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 (e.g. smart phone integration, anti-theft devices,\u00a0etc.). Import duties and non-refundable purchase taxes are included in the purchase price and any trade discounts are deducted when calculating the purchase price. Initial external direct costs include commissions, legal fees and delivery cost where material. 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 operating lease and other leased car assets are depreciated on a straight-line basis over the estimated useful life (normally the contract period for operating leases) to their estimated residual value. The residual value and the useful life of the leased assets are reviewed at least at each financial year-end and, if expectations differ from previous estimates, the changes are accounted for prospectively as a change in accounting estimate (so-called prospective depreciation). Depreciation is recognised in the income statement.
Depreciation is not applied to new vehicles available for lease when these vehicles are not in the condition to be leased to customers. This often applies to vehicles bought for signed lease contracts or vehicles bought with the intention to lease that are temporary stored and not ready to be used.
For the impairment accounting policy refer to note\u00a05 \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 if the intention is to sell the used car or remain within \u201cRental fleet\u201d if the intention is to lease the vehicle for a second term.
Finance leases are recognised in the balance sheet at an amount equal to the present value of the minimum leases payments and the unguaranteed residual value, after deduction of provisions deemed necessary in respect of bad and doubtful debts and any accumulated impairment losses. Initial direct costs and down-payments that are not refundable security deposits are included in the initial measurement of the finance lease receivables. The assets are presented within the category \u2018Receivables from clients on the balance sheet (See note\u00a022 for further details).
The finance lease instalments can comprise various components each having its own revenue recognition. Both invoiced but unpaid amounts and unearned amounts for finance leases are recorded in the balance sheet line as \u201cLease receivables from clients\u201d. See the Revenue recognition policy in note\u00a03.5.20 for more details.
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.
\u00a0
Other property and equipment are measured at cost less accumulated depreciation and accumulated impairment losses. Cost includes expenditures that are directly attributable to the acquisition of the asset. Subsequent expenditure on property and equipment is recognised in the carrying amount of the item only when it increases the future economic benefits embodied in the specific asset to which it relates, and its costs can be measured reliably. All other expenditure, including 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:
When parts of an item of other property and equipment have different useful lives, they are accounted for as separate items (major components). The carrying amount of a replaced part is derecognised when replaced. Residual values, method of depreciation and useful lives of the assets are reviewed annually and adjusted if appropriate. If an indicator of impairment, 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.
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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.
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 the corresponding lease liability recognised, adjusted for any lease payments made at or before the lease commencement date, plus any initial direct costs incurred and an estimate of costs for dismantling, removing, or restoring the underlying asset and less any lease incentives received.
The right-of-use assets are depreciated over 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.
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At the commencement date of the lease, the Group recognises lease liabilities measured at the present value of the expected future lease payments, calculated using the Group\u2019s incremental borrowing rate, adjusted to reflect the length of the lease and country of location.
Lease payments included in the lease liability consist of each of the following:
Variable leasing costs (other than those referred to above and including those linked to usage) and the costs of non-lease components are not included in the lease liability and are charged to Leasing Contract costs as incurred.
The lease liability is measured at amortised cost using the effective interest method. It is remeasured when there is a change to the forecast lease payments or change in lease term. When the lease liability is remeasured, an adjustment is made to the corresponding right-of-use asset.
Leases with a term of less than 12\u00a0months or those with committed payments of less than $5,000 are not recognised in the balance sheet. The Group recognises payments for these leases as an expense on a straight-line basis over the lease term within \u201cGeneral and administrative expenses\u201d.
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\u00a015 \u201cRight-of-use assets and lease liabilities\u201d.
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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:
On 22\u00a0May 2023 the Group completed acquisition of LeasePlan (see note\u00a02). Purchase price allocation exercise was completed shortly after the end of the reporting period and the goodwill recognised on acquisition is yet to be allocated to cash generating units. LeasePlan business continues to be integrated into the Group and the management will finalise allocation of the goodwill in the first semester of 2024 to the relevant CGUs.
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.
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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 of rental fleet impairment, refer to note\u00a05.3 \u201cImpairment of rental fleet\u201d.
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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 income statement.
Additional disclosures relating to the Group\u2019s Discontinued Operations are provided in note\u00a07.
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The Group classifies its financial assets in the following measurement categories:
The classification depends on the entity\u2019s business model for managing the financial assets and the contractual terms of the cash flows. For assets measured at fair value, gains and losses will either be recorded in consolidated income statement or Other Comprehensive Income (OCI). For investments in equity instruments that are not held for trading, this will depend on whether the Group has made an irrevocable election at the time of initial recognition to account for the equity investment at fair value through other comprehensive income (FVOCI). The Group reclassifies debt investments when and only when its business model for managing those assets changes. By default, derivative financial instruments will be classified as subsequently measured at fair value through profit or loss.
The Group has not elected to irrevocably designate any financial liability for FVTPL so all financial liabilities are measured at amortised cost unless they are held for trading, in which case the financial liability will be at FVTPL. Financial liabilities at FVTPL currently only include derivative financial instruments in the Group\u2019s financial statements (refer to derivatives policy and note\u00a03.5.10).
Regular way purchases and sales of financial assets are recognised on the balance sheet:
A financial liability is recognised when the Group becomes party to a contractual obligation to deliver cash or another financial instrument to another entity.
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. 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.
At initial recognition, the Group measures a financial asset or financial liability at its fair value plus or less, in the case of a financial asset not at fair value through profit or loss (FVPL), transaction costs that are directly attributable to the acquisition of the financial asset or financial liability. Transaction costs of financial instruments carried at FVTPL are expensed in the consolidated income statement.
Subsequent measurement of debt instruments depends on the Group\u2019s business model for managing the asset and the cash flow characteristics of the asset. There are three measurement categories into which the Group classifies its debt instruments:
The Group subsequently measures all equity investments at fair value. Where the Group\u2019s management has elected to present fair value gains and losses on equity investments in OCI, there is no subsequent reclassification of fair value gains and losses to the income statement following the derecognition of the investment. Dividends from such investments continue to be recognised in the income statement as other income when the Group\u2019s right to receive payments is established.
Changes in the fair value of financial assets at FVPL are recognised in \u201cother income/(expenses)\u201d in the income statement as applicable. Impairment losses (and reversal of impairment losses) on equity investments measured at FVOCI are not reported separately from other changes in fair value.
Borrowings and other financial liabilities, including debt securities issued and other borrowings, are initially measured at fair value, net of transaction costs. Borrowings and other financial liabilities are subsequently measured at amortised cost using the effective interest method, with interest expense recognised on an effective yield basis. The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments through the expected life of the financial liability, or, where appropriate, a shorter period. Transaction costs are included in amortised cost using the effective interest method.
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 effective interest rate (EIR). The EIR amortisation is included as finance costs in the income. For more information, refer to note\u00a029 \u201cBorrowings from financial institutions, bonds and notes issued\u201d.
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The Group measures financial instruments, such as derivatives, at fair value at each balance sheet date. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:
The principal or the most advantageous market must be accessible to the Group.
The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest. The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data is available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy, described as follows, based on the lowest level of input that is significant to the fair value measurement as a whole:
For assets and liabilities that are recognised in the financial statements on a recurring basis, the Group determines whether transfers have occurred between levels in the hierarchy by re-assessing categorisation (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.
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In order to hedge its exposure to foreign exchange and interest rate, the Group enters into forward, option and swap contracts. None of these contracts meet the own use exemption in IFRS\u00a09 and are accounted for as derivatives. Derivatives are financial instruments, of which the value changes in response to underlying variables. 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. 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.
Derivatives are initially recognised at fair value on the date a derivative contract is entered into (trade date) 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 fair value of cross currency and interest rate swaps is the estimated amount that the Group would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants at the measurement date. The fair values of not-actively traded instruments are calculated using a generally accepted discounted cash flow method, while considering relevant market observable data such as quoted forward prices and interest rates. As a result of having collateral agreements in place for certain of its derivative counterparts, the requirement to reflect other observable market inputs such as CVA, DVA and FVA is eliminated for discounting purposes. The fair values of various derivative instruments used for hedging purposes are disclosed in note\u00a019. Movements on the hedging reserve in other comprehensive income are shown in consolidated statement of changes in equity. The 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.
Changes in the fair value of derivative financial instruments that are designated and effective as hedges of future cash flows (cash flow hedges) are recognised directly in equity through 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. If the cash flow hedge of a firm commitment or forecast transaction results in the recognition of a non-financial asset or liability, then, at the time the asset or liability is recognised, the associated gains or losses on the derivative that had previously been recognised in equity are included in the initial measurement of the asset or liability. For hedges that do not result in the recognition of a non-financial asset or liability, including the effective portion of interest rate swaps hedging variable rate borrowings, amounts deferred in equity are recognised in the income statement in the same period in which the hedged item affects profit or loss.
The Group only applies fair value hedge accounting for hedging fixed interest risk on borrowings. For an effective hedge of an exposure to changes in fair value, the hedged item is adjusted for changes in fair value attributable to the risk being hedged. The corresponding entry and gains or losses arising from remeasuring the associated derivative are recognised in the income statement within \u201cunrealised gains/losses on financial instruments\u201d. Hedge effectiveness is determined at the inception of the hedge relationship, and through periodic prospective effectiveness assessments to ensure that an economic relationship exists between the hedged item and hedging instrument. The Group\u2019s material hedging instruments are interest rate swaps and cross currency swaps that have similar critical terms to the related debt instruments, such as payment dates, maturities and notional amount. As all critical terms matched during the year, there was no material hedge ineffectiveness. The Group also uses cross currency swaps to manage foreign exchange risk associated with borrowings denominated in foreign currencies. Where not designated in an accounting hedge there is a natural offset against foreign exchange movements on associated borrowings.
Hedge accounting is discontinued when the hedging instrument expires or is sold, terminated, exercised, revoked, or no longer qualifies for hedge accounting. At that time, any cumulative gain or loss on the hedging instrument recognised in equity is retained until the forecast transaction occurs. If a hedge transaction is no longer expected to occur, the net cumulative gain or loss previously recognised in equity is recycled to the income statement for the period. Changes in the fair value of any derivative instruments that are not designated in a hedge relationship are recognised immediately in the income statement within \u201cUnrealised gains/(losses) on financial instruments\u201d.
Derivatives embedded in other financial instruments or non-financial host contracts (other than financial assets in the scope of IFRS\u00a09) are treated as separate derivatives when their risks and characteristics are not closely related to those of their host contracts and the host contracts themselves are not carried at fair value with unrealised gains or losses reported in the income statement. Derivatives embedded in contracts which are financial assets in the scope of IFRS\u00a09 are not separated and the whole contract is accounted for at either amortised cost or fair value.
The types of risks that the Group is exposed to and derivatives used to hedge these risks can be found in note\u00a04.1.2 \u201cTreasury Risk\u201d and note\u00a019 \u201cDerivative financial instruments\u201d.
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Inventories are vehicle assets held for sale on the ordinary course of business or in the process of production for such sale. Inventories are measured at the lower of cost and net realisable value. 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. 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, subject to an impairment review, if the intention is to sell the car rather than lease for a second term. At this point no further depreciation is charged.
Other than vehicle inventory assets the Group maintain a certain level of parts for vehicles, gasoline and other accessories for the vehicles that are consumed and used as part of the generation of service revenues for the Group.
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This caption includes:
The receivables are shown after any accumulated impairment losses and are initially measured at fair value and subsequently at amortised cost using the effective interest method. Unearned finance income is the difference between the gross investment in the lease (undiscounted future minimum lease payments and unguaranteed residual value accruing to the Group) and the net investment in the lease.
An expected credit loss (ECL) provision is applied to all receivables from clients that are measured at amortised cost with the exception of those receivables deemed to be out of scope. The Group have applied this scope exemption when the receivable meets the low credit risk exemption criteria. The Group has applied this to receivables on used car sales and insurance receivables, where there is zero or almost no history of credit risk or the amounts due are from financial institutions with an investment grade credit rating.
For the other receivables from clients the Group is currently in the process of aligning the methodologies used to calculate the ECL for the existing ALD Group entities and the newly acquired LeasePlan entities in the year, with the process expected to be complete within 12\u00a0months of the balance sheet date. However, overall, the Group segments the receivables form clients into sound and doubtful receivables (that includes receivables that have met the definition of default) and for sound receivables apply a simplified approach in calculating ECLs from initial recognition of the receivable, which means the Group does not track changes in credit risk, but instead recognises a loss allowance based on lifetime ECLs at each reporting date.
For the ALD entities the Group has established a provision matrix for the sound receivables that is based on its historical credit loss experience by aging categories, 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. To establish the forward-looking element of IFRS\u00a09 provision, the Group uses macroeconomic data and analysis through local uplifts to probability of default and loss given default rates. For the newly acquired LeasePlan entities the calculation for sound receivables is based on the use of models that require assumptions and data about forecast macroeconomic conditions and credit behaviour (including likelihood of customers defaulting and the resulting losses) from a third-party provider that also includes a forward-looking element.
Since obtaining financial holding status, the Group has aligned its definition of default to the ECB Regulatory Capital CRR Article\u00a0178 definition of default. This change applies to historic ALD entities only as LeasePlan entities are already aligned with the Article\u00a0178 definition of default due to holding a banking licence prior to the acquisition. For purposes of assessing, recognising and reporting defaults, a customer shall be considered to be in default when either one or both of the following events occur:
The application of the above guidance is only to the extent of identifying the customers that are in default. There is no change in the method of determining the value of impairment. Where the customer is in default, the whole of the customer balance is classified as doubtful, and impairment is based upon the full outstanding amount, except where we have adjudged there are mitigating circumstances. This definition of default has led to an increase in defaulted customers during 2023 resulting in the increase in the IFRS\u00a09 provision by EUR\u00a05.9\u00a0million on initial application.
Expected credit losses are reassessed at each reporting date and reflect all reasonable information that is available at the reporting date. Judgement is required from management for applying appropriate models and setting assumptions for the measurement of ECL. The methodology, assumptions and data, including any forecasts of future economic conditions, macroeconomic impacts and the Group\u2019s provision matrix are reviewed regularly by management in determining the expected credit losses and the write-off of receivables. Doubtful debts should be written off as soon as the definitive loss is known.
Where the Group have acquired receivables from clients that are originated or purchased credit-impaired, due to an incurred event having a detrimental impact on the estimated cashflows of the asset, the gross receivable is initial recognised at fair value with no carrying impairment allowance. The Group only recognises the cumulative changes in lifetime expected credit losses since initial recognition as a loss allowance for originated purchased credit-impaired financial assets in the income statement.
Disputes often arise in the collection of lease receivables and tend to range from issues relating to the performance of various services under the contract to the amount of end-of-contract billing. A dispute has no impact on the solvency of the customer or the risk of default, and therefore is not a credit loss. As such these amounts are removed from sound receivables and a provision is applied based on our provisions accounting policy. For presentation purposes the provision is netted against the \u2018Receivables from clients\u2019 balance sheet line item.
Details about the assumptions and estimation techniques used in measuring ECL for finance lease receivables and trade receivables from operating lease contracts are provided in the section Credit risk management and disclosure on the impairment provided in note\u00a022 \u201cLease Receivables from Clients\u201d.
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Other receivables and prepayments include prepayments in respect of expenses attributable to a subsequent period plus amounts still to be received. These amounts are valued at cost. For recognition and measurement of Reinsurance assets and Insurance contact assets refer to the insurance policy. For those financial assets measured at amortised cost the Group has excluded them as part of the expected loss model (see Lease receivable from client\u2019s policy) and instead any impairment will be based on observable events.
\u00a0
In the consolidated statement of cash flows and consolidated balance sheet, cash and cash equivalents comprise of cash on hand, central bank deposits, deposits held at call with banks, other short-term highly liquid investments with original maturities of three months or less and bank overdrafts. Bank overdrafts are shown within borrowings in liabilities on the consolidated balance sheet. Cash and 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. Cash and cash equivalents are measured at amortised cost.
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Group companies operate various employee benefit schemes. The schemes are generally funded through payments to insurance companies or trustee-administered funds, determined by periodic actuarial calculations. The Group has defined benefit and defined contribution pension plans as well as other post-employment benefits.
A defined contribution plan is a pension plan under which the Group pays fixed 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 pension contributions have been paid if the fund does not hold sufficient assets to pay all employees the benefits relating to employee service in the current and prior periods. Contributions to defined contribution pension plans are recognised as expenses in the consolidated income statement when they are due. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in the future payments is available.
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 Group\u2019s net obligation in respect of defined benefit pension plans is calculated separately for each plan by estimating the amount of future benefits that employees have earned in return for their services in the current and prior periods. The present value of the defined benefit obligation is calculated annually by independent actuaries using the projected unit credit method. The benefit is discounted at the yield at the balance sheet date on high quality corporate bonds 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.
The net benefit obligation recognised in the balance sheet is the present value of the defined benefit obligation at the balance sheet date together with adjustments for unrecognised past-service costs less the fair value of the plan assets. For determining the pension expense, the expected return on plan assets is determined using a high-quality corporate bond rate identical to the discount rate used in determining the defined benefit 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 consolidated income statement. Past-service costs are recognised immediately in the 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.
Further details are provided in note\u00a031 \u201cRetirement benefit obligations and long-term benefits\u201d.
Some Group companies provide other long-term employment benefits to their employees based on local legal requirements. These benefits mainly comprise medium-term bonus and profit-sharing schemes, and extra leave entitlements.
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.
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.
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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 management\u2019s best estimate of the expenditure expected required to settle the present obligation at the end of the reporting period. The discount rate used to determine the present value is a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. The increase in the provision due to passage of time is recognised as interest expense.
The risk of damage to owned Group vehicles is part of the IFRS\u00a015 allocation of revenue and IAS\u00a037 provisioning, whereas insurance contracts issued to customers for accepting significant insurance risk is subject to IFRS\u00a017 accounting (see Insurance contracts policy). 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 and revenue is recognised on a straight-line basis over the duration of the contract (unless the expected release of risk differs materially from a straight-line basis). Further details are provided in note\u00a08 \u201cRevenues and cost of revenues\u201d. Where the premiums are unearned based on the invoiced amounts, this amount is deferred income included within under \u201cOther receivables, prepayments and contract assets\u201d caption in the consolidated balance sheet (refer to note\u00a024).
Damage services provisions are measured at the amount of the \u201cbest estimate\u201d expected expenditure required to settle the present obligations to repair the damage at the reporting date. An estimate for Incurred But Not Reported (IBNR) and Incurred But Not Enough Reported (IBNER) is made to determine appropriate damage provision levels. These estimates are based on historical data of accident frequency in the local market and the cost per claim updated for current assumptions. The measurement includes a margin for risks and uncertainties that is inherent to the historical data adjusted for recent pricing developments. The damage service provision is expected to be recovered or settled within a maximum of 12\u00a0months. Expenses for damage services are expensed to the income statement when incurred and the best estimate of the provision is updated at each reporting period, with any adjustment recognised along with the expenses incurred in \u201cCost of Services Revenues\u201d caption in the income statement.
Where there is a stop-loss policy in place, limiting the risk of losses above a set level, provisions open 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 the provision for IBNR and IBNER. 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.
The insurance contracts issued are one of the services offered to the customers of the Group in addition to the lease of the vehicles and other related leasing services. Insurance contracts are contracts under which the Group accepts a significant risk \u2013 other than a financial risk \u2013 from a policyholder by agreeing to compensate the beneficiary on the occurrence of an uncertain future event by which he or she will be adversely affected. Contracts that have been classified as insurance at inception are not reclassified subsequently.
For measurement purposes, the insurance contracts are grouped into portfolios of insurance contracts that have similar risks and are managed together. Portfolios are further grouped in year cohorts of issuance and divided based on expected profitability at inception into two categories: onerous contracts and not-onerous contracts. Insurance contracts are recognised at the earlier of the beginning of the coverage period or when it becomes onerous. Insurance contracts are derecognised when the contract is expired, is discharged or cancelled. Modifications to contracts that are not considered changes in estimates and instead the contract is derecognised, and a new contract is recognised instead.
All our insurance contracts issued, and reinsurance contracts held are eligible to be measured by applying the premium allocation approach, which has been fully adopted. Under the premium allocation approach, non-life insurance contract provisions include liabilities for remaining coverage and liabilities for incurred claims. The liability for remaining coverage reflects premiums received less amounts recognised in revenue for insurance contracts provided. As the premiums are received within one year of the coverage period no discounting is applied to reflect financial risk or the time value of money. The liability for incurred claims is determined on a discounted probability-weighted expected value basis and includes an explicit risk adjustment for non-financial risk. The liability includes the Group\u2019s obligation to pay other incurred insurance expenses. The liability for incurred claims is the obligation to pay valid claims for insured events that have already been occurred (IBNR and IBNER), including events that have occurred but for which claims have not been reported (IBNYR). The liability for incurred claims is estimated as the fulfilment cash flows measured as an explicit, unbiased, and probability-weighted estimate (i.e. expected value) of the present value of the future cash outflows minus the present value of the future cash inflows that will arise as the entity fulfils insurance contracts, including a risk adjustment for non-financial risk. The cash outflows include claim handling costs, policy administration and maintenance costs and an allocation of directly attributable fixed and variable overheads to fulfilling insurance contracts.
Revenue is recognised on a straight-line basis over the duration of the contract (unless the expected release of risk differs materially from a straight-line basis). Further details are provided in note\u00a08 \u201cRevenues and cost of revenues\u201d. Expenses for damage services are expensed to the income statement when incurred and the best estimate of the provision is updated at each reporting period, with any adjustment recognised along with the expenses incurred in \u201cCost of Services Revenues\u201d caption in the income statement. Portfolios of contracts in an asset position are reported under \u201cOther receivables, prepayments and contract assets\u201d caption in the consolidated balance sheet (refer to note\u00a024). This includes expenses attributable to a subsequent period plus amounts still to be received and are measured at cost.
Under the premium allocation approach, it is assumed that no contracts in the portfolio are onerous at initial recognition, unless facts and circumstances that are monitored by performance indicators by Group\u2019s management indicate otherwise. Such onerous contracts are separately grouped from other contracts and the Group recognises a loss in profit or loss for the loss component. If during the coverage period, facts and circumstances indicate that a group of insurance contracts is onerous, the Group recognises a loss in the income statement for the net outflow, resulting in the carrying amount of the liability for the Group being equal to the fulfilment cash flows.
The Group measures its reinsurance assets for a group of reinsurance contracts that it holds on the same basis as insurance contracts that it issues adapted to reflect the features of reinsurance contracts held that differ from insurance contracts issued. Where the Group recognises a loss on initial recognition of an onerous group of insurance contracts, the Group establishes a loss-recovery component of the asset for remaining coverage for a group of reinsurance contracts held depicting the recovery of losses.
Annually the Group assesses whether its amounts recoverable under a reinsurance contract are subject to impairment. Reinsurance assets are impaired if there is objective evidence, because of an event that occurred after initial recognition of the reinsurance asset, that not all amounts due under the terms of the contract may be received. The carrying value is reduced to this calculated recoverable value, and the impairment loss recognised in the income statement.
\u00a0\u00a0
Trade and other payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. If payment is due within one year or less (or in the normal operating cycle of the business if longer) these will be presented as current obligations, but otherwise will be 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 Group recognises a liability and an expense for variable remuneration to employees based on an assessment of the relevant performance of variable remuneration criteria (see Share-based payments accounting policy). The Group recognises an accrual where contractually obliged or where there is a past practice that has created a constructive obligation.
\u00a0
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.
\u00a0
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.
Current and deferred taxes are recognised in the income statement under Income tax. Deferred taxes related to remeasurement of retirement benefit, cash flow hedges and gains or losses on fair value of debt securities are recognised in other comprehensive income.
\u00a0
Revenues represent the fair value of the consideration received or receivable for the sale of goods and services in the Group\u2019s ordinary course of business.
Contracts relating to vehicle leasing and service products can take the form of operating leases, finance leases and service agreements. To determine whether a contract conveys a lease agreement for a period of time, the Group has assessed whether, throughout the period of use, the customer has both of the following:
If a contract relating to an asset fails to give the customer both of the above rights, the Group accounts for the agreement as a revenue contract. In situations where management services unrelated to an asset contract are provided, the Group accounts for the contract as a revenue contract.
In certain situations a lease and service contracts are entered into at the same or as a single contract with our customers. Where the customer is charged a monthly fee that both relates to the rental price of the vehicle (including depreciation and interest) and various other products and services that the customer can subscribe to, the standalone tariffed elements will be recognised as separate performance obligations if the good or service is distinct by meeting both 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.
The lease classification, that is determined on a contract-by-contract basis, will determine if revenue recognition is on an operating lease or finance lease basis (see Rental fleet policy for determining classification).
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.
Charges to clients may include passed on costs such as fuel, road taxes and other taxes which do not represent the inflow of economic benefits and/or are collected on behalf of third parties and are therefore not presented as revenues.
Upfront payments from customers at the beginning of the lease agreement are recognised in the balance sheet and amortised on a straight-line basis over the period of the lease agreement. Amounts paid or value provided to lessees as lease incentives are capitalised (e.g. upfront cash payments to the lessee, reimbursement or absorption of costs by the lessor or free or reduced rents given at the beginning of the lease term). Lease incentives are amortised on a straight-line basis over the term of the related lease as a reduction in revenue.
Where a customer retains the car for a period beyond the normal return date (informal extension), the rent continues to be charged to the customer and the related contractual depreciation will continue to be recognised.
Regarding finance leases, IFRS\u00a016\u00a0standard 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 income statement in each period using the effective interest rate method 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:
Upfront payments and initial direct costs are taken into consideration in calculating the implicit interest rate in the lease and recognised evenly over the life of the lease as an adjustment of yield.
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 five\u00a0steps process required by IFRS\u00a015 for non-lease components is summarised as follows:
Revenue from Fleet Management services is recognised on a straight-line basis over the term of the Fleet Management agreement.
Income related to repair & maintenance services is recognised over the term of the lease contract. The allocation of income over the term is based on the normal repair and maintenance cost profile supported by historical statistics and expected service costs. The difference between the amounts charged to clients and amounts recognised as income is accounted for as deferred leasing income. Cost profiles are reviewed periodically to ensure they remain a fair representation of historical repair and maintenance expenditures, adjusted for reasonable expectations of changes in cost profiles. Where an accurate or reliable estimate of the cost curve is not available revenue is recognised based on an estimate of expected completion of the performance obligation using an alternative input method.
If income related to services surrounding contracts is not certain until final settlement takes place, this income is not recognised until that time and is presented within the sales result. For all other contracts, expected losses are recognised as an expense immediately when it is probable that total contract costs will exceed total contract revenues.
Revenue is recognised on a straight-line basis over the term of the management agreement.
Flex fleet revenues are recognised on a straight-line basis over the term of the rental agreement.
The revenue from the risk retention schemes is recognised based on the monthly lease instalment. This applies for third-party liability and own damage insurance products. Revenue recognition will cease when the contract is terminated by a client or at the end of the contractual term.
Where interest on late payment is billed to customers, the related revenue is only recognised when settlements are made by customers.
Revenues also include the proceeds of the sale of vehicles from terminated lease contracts and rental revenues from end of contract billing such as repair costs recharged to the customer. The proceeds from the sale of vehicles are recognised when the vehicles are sold and control of the vehicles is transferred. End of contract fees may consist of fees charged to clients for mileage variation adjustments and excessive wear and tear of the vehicle. Revenues also included charges arising from deviations from the contractual terms, where the fees are recognised upon termination of the lease contract.
\u00a0
Direct 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). Any (volume related) bonuses related to these expenses are credited directly to expenses. Bonuses received on purchases of objects for operating lease contracts are deducted from the purchase consideration and as such result in lower depreciation. Bonuses received on purchases of objects for finance lease contracts are recognised immediately in the consolidated income statement.
Cost of revenues also includes the carrying amount of the sold vehicles and the costs associated with the rental activities, finance costs for interest-bearing liabilities, impairment charges on loans and receivables and unrealised (gains)/losses on financial instruments.
\u00a0
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 \u201cLeasing contract revenue \u2013 operating lease\u201d also on a straight line basis.
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.
\u00a0
This item includes office overheads, automation costs, advertising costs, professional fees and other general expenses.
\u00a0
Employees (including senior executives) of the Group receive remuneration in the form of share-based payments via the Group long-term incentive plans and employee share schemes, whereby employees render services in exchange for equity-settled transactions and cash-settled transactions. Information relating to these schemes is set out in note\u00a028.
The fair value of shares granted under the Group 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 has variable remuneration awards for the identified staff that consists of a direct payment in cash and a deferred payment in cash and Phantom Share Units (PSUs). The PSUs represent the underlying value of the Company shares which entitle the participant to a payment in cash after a specified period and are recognised as a cash-settled share-based payment arrangement. The PSU part of the deferred award is revalued annually by estimating the Company\u2019s equity value for determining the fair value of the outstanding PSU awards.
Liabilities recognised for PSUs are measured at the estimated fair value. This fair value is established once a year by the (Remuneration Committee of the) Supervisory Board and is based on comparing financial performance of the Company to publicly available valuation and financial performance of a selected peer group of comparable companies. All changes to the PSUs\u2019 liabilities are recognised in the statement of profit or loss under staff expenses.
\u00a0
Basic EPS is calculated by dividing the profit for the year attributable to ordinary equity holders of the parent (after adjusting for interest on the AT1 capital) by the weighted average number of ordinary shares outstanding during the year.
Diluted EPS is calculated by dividing the profit attributable to ordinary equity holders of the parent (after adjusting for interest on the AT1 capital) by the weighted average number of ordinary shares outstanding during the year plus the weighted average number of ordinary shares that would be issued on conversion of all the dilutive potential ordinary shares into ordinary shares.
The basis for the depreciation of an operating lease contract and rental contracts is the investment value at cost less the estimated residual value as included in the contract, in combination with the estimated contract duration. A change in the estimated residual value and/or contract duration leads to a change in depreciation that has an effect in the current period and/or in subsequent periods. Statistical models and calculations (regression analysis) covering a reference period of 24\u00a0months are used to calculate a vehicle\u2019s future value as accurately as possible.
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 Group level. 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.
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. The Group also considered centrally assumptions which could affect future sales proceeds linked to the lack of market data on used electric vehicle sales. This resulted in management applying an additional stress on the expected sales proceeds of Battery Electric Vehicles (BEV) and Plug-In Hybrids (PHEV).
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 high profit from the used car sales activity throughout 2023 but, as previously predicted, the used car market has started to normalise in the first semester of 2023 with a further decline observed in the second semester of 2023.
This assessment continues to result in a reduction in depreciation costs of EUR\u00a0553.2\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 2023 was EUR\u00a0312.2\u00a0million.
+Increase/-decrease in expected sales proceeds per vehicle | Income statement net Impact (in EUR million) |
|---|---|
-EUR\u00a01,000 | (138.1) |
+EUR\u00a01,000 | 122.3 |
\u00a0
The impacts of the sensitivity analysis are not linear.
In determining whether goodwill is impaired requires an estimation of the value in use of the groups of cash generating units to which the goodwill assets have been allocated. The key assumptions calculating the value in use are those regarding discount rates, growth rates and other expected changes in cash flows. The estimates and assumptions used are disclosed in note\u00a03.5.6 of these consolidated financial statements.
The Group tests annually whether goodwill has suffered any impairment, in accordance with the accounting policy stated presented in note\u00a03.5.7 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 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, impairment of goodwill was identified in the German subsidiary Fleetpool Holding\u00a0GmbH for EUR\u00a023.7\u00a0million (see note\u00a016 for further detail).
For goodwill, sensitivity tests are carried out to measure the impact on each CGU\u2019s recoverable value based on certain assumptions. At 31\u00a0December 2023, 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, due to it being an important input in determining value in use. 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 2023, an impairment provision of EUR\u00a067.2\u00a0million was recognised for the rental fleet of the Group\u2019s Turkish subsidiaries. As Turkey is a hyperinflation economy, under the requirements of IAS\u00a029 \u201cFinancial Reporting in Hyperinflationary Economies\u201d non-monetary balances at the end of the period are restated to reflect a price index that is current at the balance sheet date. In applying this to the non-monetary book value balance of rental fleet the Group have used the Consumer Price Index (CPI) as announced by the Turkish Statistical Institute as the price index. However, for the leasing contracts originated in Turkey, despite the continued increase carrying amount of vehicles in line with IAS\u00a029, the actual market value of these vehicles and used vehicles started to decline in Q4\u00a02023 after all-time high prices, which resulted in an indicator of impairment. Using a discounted cash flow model, with the recoverable amount determined by value in use, the Turkish subsidiaries rental fleet has been impaired down to the recoverable amount.
For litigation, when there is a legal or constructive obligation and it is more likely than not that there will be an outflow of benefits which can be measured reliably, the best estimate of the future outflow of resources has been recognised. In extremely rare situations where no reliable estimate can be made yet on claims expected, no provision will be recognised in the balance sheet but information about a contingent liability will be disclosed.
Following the acquisition of LeasePlan, a new leadership team has been appointed where the members of the Executive Committee hold supervisory responsibilities for various geographical regions and countries (see Section 2.1.2.4 of this Universal Registration Document).
The Group\u2019s segmentation remains unchanged in this disclosure and has the same geographical regions as those in the Group annual financial statements at 31\u00a0December 2022:
All subsidiaries of LeasePlan are included in the segments\u2019 performance.
The performance of the operating segments is assessed based on a measure of revenue and profit before tax as presented in the consolidated financial statements. None of the Group\u2019s customers represent more than 10% of the total revenue.
In\u00a0December 2022 the Group successfully completed its capital increase (rights issue) in order to finance the cash component of the LeasePlan acquisition in 2023 (see note\u00a02).
At 31\u00a0December 2023, the authorised capital amounted to EUR\u00a01,225.4\u00a0million (2022: EUR\u00a0848.6\u00a0million), divided into 816,960,428\u00a0ordinary shares with a nominal value of EUR\u00a01.50 each.
At 31\u00a0December 2023, share premium amounted to EUR\u00a03,819.4\u00a0million (2022: EUR\u00a01,327.9\u00a0million).
On 22\u00a0May 2023, the Group completed a share issue for 251,215,332\u00a0ordinary shares with a nominal value of EUR\u00a01.50 each. This issue represented 30.75% of the total ordinary shares of the Group at the transaction date. The newly created Group shares were issued to finance the share component of the acquisition of LeasePlan. As required under IFRS\u00a03, the share component is measured based on the fair value of the Group\u2019s shares of EUR\u00a011.43 each at the Completion Date. Based on this, the share component of the acquisition amounts to EUR\u00a02,871.4\u00a0million. The share premium includes the amount paid in excess of the nominal value of the share capital. All shares issued by the Group have been fully paid.
The holders of the shares are entitled to receive dividend as declared at Annual General Meetings and are entitled to vote at meetings of the Company.
\u00a0
At General Meeting held in prior years, the Group 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. Treasury shares held by the Group amount to 1,268,887\u00a0shares at 31\u00a0December 2023 (2022: 1,173,902\u00a0shares). Treasury shares do not have any voting rights attached to them.
", "dimensions": { "concept": "ifrs-full:DisclosureOfMaterialAccountingPolicyInformationExplanatory", "language": "en", "entity": "scheme:969500E7V019H9NP7427", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "text_block_dda72431-41d2-4459-bac6-ac9233f281b7": { "value": "Details of acquisition
On 22\u00a0May 2023, following the approval of ALD\u2019s shareholders and of the relevant regulatory authorities, ALD acquired 100% of LeasePlan for a consideration of EUR\u00a04,897\u00a0million, subject to an additional contingent consideration of an amount up to EUR\u00a0235\u00a0million in cash.
The consideration includes:
On 22\u00a0March 2023, the Group had entered into a share agreement to sell its subsidiaries in Ireland, Portugal and Norway, as well as LeasePlan\u2019s subsidiaries in Luxembourg, Finland and Czech Republic which were all subsequently sold on 1\u00a0August 2023. These disposals were completed to honour the commitments made by ALD in the context of the clearance by the European Commission of the acquisition of LeasePlan, to address concentration risk in the countries concerned. For further information refer to note\u00a07.
Before the completion of the LeasePlan acquisition, Societe Generale held approximately 75.9% of the ALD share capital. Upon completion of the Acquisition, Societe Generale remains the majority shareholder with a stake of 52.59% of the Company. This stake may be reduced to 50.95% in the event of the exercise of the call option of the shares with warrants attached that have been granted to LeasePlan\u2019s former shareholders to allow them to increase their stake up to 32.91% of the Company\u2019s capital. The former LeasePlan shareholders consortium led by TDR capital holds 30.75% of the combined entity, while the free float represents 16.40%.
Details of the Acquisition value are set out in the table below:
(in EUR million) | As at 31\u00a0December 2023 |
|---|---|
Purchase price paid in ALD equity instruments\u00a0(1) | 2,999.5 |
of which: | \u00a0 |
Purchase price paid in ALD shares\u00a0(2) | 2,871.4 |
Fair value of warrants attached to shares | 128.1 |
Purchase price paid in cash | 1,827.5 |
of which: | \u00a0 |
Capital increase | 1,212.0 |
Tier\u00a02 subordinated debt | 615.5 |
Total purchase price | 4,827.0 |
Contingent consideration\u00a0(3) | 69.6 |
Total purchase price including contingent consideration | 4,896.7 |
|
\u00a0
Purchase price allocation
LeasePlan\u2019s identifiable assets and liabilities were measured at fair value at the date of the takeover by ALD.
The purchase price was allocated to newly identified intangible assets including customer relationships and as at 31\u00a0December 2023 the Group has recognised a goodwill of EUR\u00a01,396\u00a0million.
(in EUR million) | Allocations as at acquisition date (historical net book value) | Fair value adjustments | Allocations after fair value adjustments |
|---|---|---|---|
Lease assets - revenue earning fleet\u00a0(1) | 22,431.9 | 373.8 | 22,805.7 |
Other intangible assets | 537.1 | (50.7) | 486.3 |
o/w Customer relationships | 124.4 | 154.6 | 279.0 |
Lease receivables from clients | 683.0 | \u2212 | 683.0 |
Receivables from financial and other institutions | 614.6 | \u2212 | 614.6 |
Cash & Cash equivalents | 3,811.8 | \u2212 | 3,811.8 |
Financial debt | (23,347.3) | 32.9 | (23,314.3) |
Net tax assets and liabilities | (505.0) | (63.9) | (568.9) |
Net other assets and liabilities | (443.4) | (61.1) | (504.5) |
Fair value of assets and liabilities acquired (C) | 3,782.8 | 230.9 | 4,013.7 |
Non-controlling interests\u00a0(2)\u00a0(B) | 513.0 | \u2212 | 513.0 |
Total purchase price (A) | 4,896.7 | \u2212 | 4,896.7 |
Goodwill (A)+(B)-(C) | 1,626.9 | (230.9) | 1,396.0 |
|
\u00a0
Valuation methods
The fair values of the assets acquired and liabilities assumed have been determined using various valuation methods as described below.
The fleet is the Company\u2019s main asset and at the date of the acquisition LeasePlan managed circa 1.6\u00a0million vehicles comprising funded and unfunded fleet. A revaluation has been performed solely on the funded fleet segment as it represents vehicles owned by LeasePlan. Fair value of the fleet is obtained by adding the sum of the future discounted cash flows (DCF) of lease and additional services with the discounted terminal value (residual value of the vehicle which is its expected sales price). The valuation implemented relies on DCF model for each contract and considers regional parameters such as specific tax rates and country risk premia. Fair value of the fleet under IFRS\u00a03 includes both operating and finance leases recorded respectively in the opening balance sheet under captions Rental fleet and Lease receivables from clients.
Customer relationships intangible asset has been recognised separately from goodwill and it materialises the loyalty of B2B fleet customers to LeasePlan. The customer relationships valuation is based on the Multiple Period Excess Earnings Method. This method is based on the concept of value creation: the surplus profit generated by an intangible asset in a given financial year. The method is based on after-tax operating margin, less the capital cost of support assets required for its operation. Amortisation period for customer relationships intangible asset is 15 years.
The valuation of software is based on replacement costs new multiplied by a completion rate by domain. Under this approach, the fair value of LeasePlan\u2019s software is determined by reference to the reproduction or replacement cost new of modern equivalent asset optimized for over-design, over capacity and redundant asset and adjusted to reflect losses in value attributable to physical depreciation and obsolescence. In the framework of the valuation, the Group has estimated the cost that would be incurred to develop each domains needed to have a fully functional technology. In the frame of the PPA, assets have been revalued integrating market participants considerations according to IFRS\u00a03. Consequently, a benchmark of IT landscape of the leasing peers has been performed by the third party provider.
In the context of PPA, inventories including mainly cars to be sold after contract termination, have been revalued using the Net Realisable Value approach in order to have a fair value close to the market value.
A significant part of LeasePlan\u2019s fleet is financed through indebtedness. Given the volatility of the markets, a revaluation has been performed in order to ensure the financial debt is close to actual market conditions. Discounted cash flow valuation approach has been used to establish line by line projection of each cash flows based on observable market data, fixed/floating rate, frequency, maturity and notional amounts.
Tax provisions were reassessed in order to include additional risk provisions as at the acquisition date.
The deferred tax asset/liability arising as a result of fair value adjustments is included within the fair value of LeasePlan\u2019s net assets at acquisition.
The key assumptions and estimates in the valuation methods, to which the assets and liabilities items of the opening balance sheet are sensitive, include, amongst others, margin rate, discount rate of future cash flows, churn rate of customer contracts and future estimated sale prices of vehicles.
LeasePlan's activities have been included in the Group consolidated financial statements since 22\u00a0May 2023. As at 31\u00a0December 2023, the contribution of LeasePlan's activities amounts to EUR\u00a024.1\u00a0million in Net income. This contribution includes significant impacts which relate to either acquisition accounting or exceptional items.
\u00a0
Impacts on income statement
Impacts of these items are recorded in the Group\u2019s Net income in 2023 are presented in the table below:
(in EUR million) | Total Group\u00a0(1) | Contribution | PPA | Adjusted contribution |
Leasing contract margin | 1,261.9 | 72.5 | 5.9 | 66.6 |
Services margin | 1,354.2 | 652.3 | 23.1 | 629.2 |
Used Car Sales result | 349.5 | (47.7) | (192.8) | 145.1 |
Gross operating income | 2,965.6 | 677.1 | (163.8) | 840.9 |
Total Operating Expenses | (1,591.6) | (651.1) | 10.4 | (661.5) |
Impairment charges on receivables | (70.7) | (17.4) | \u2212 | (17.4) |
Other income (expense) | (14.0) | 9.9 | (4.6) | 14.5 |
Operating result | 1,289.3 | 18.5 | (158.0) | 176.5 |
Share of profit of associates and jointly controlled entities | 6.4 | 5.0 | \u2212 | 5.0 |
Profit before tax | 1,295.7 | 23.5 | (158.0) | 181.5 |
Income tax expense | (374.0) | 1.1 | 34.8 | (33.7) |
Profit for the period from continuing operations | 921.7 | 24.6 | (123.1) | 147.8 |
Profit (loss) for the period from discontinued operations | (77.6) | (0.6) | (33.2) | 32.6 |
Net income | 844.1 | 24.1 | (156.3) | 180.4 |
|
\u00a0
Pre-tax impact on the income statement from all PPA adjustments for the year ending 31 December, 2023 is EUR -202.5 million (including amortisation of the customer relationships intangible) offset by the positive impact of Used Car Sales result of EUR 145.1 million \u00a0which was not recognised in the previous reporting periods of 2023.
Leasing contract margin
In addition to the impacts of PPA, Leasing contract margin of LeasePlan is negatively impacted by the mark to market loss of EUR\u00a0201.9\u00a0million on LeasePlan derivatives. LeasePlan holds a book of derivatives, whose purpose is to hedge the interest and foreign exchange rates exposure, when the profile of funding cannot be matched with that of the lease contract portfolio. While the Group is economically hedged, there can be accounting mismatches as operating leases do not qualify for hedge accounting under IFRS and hence derivatives are measured at fair value through the income statement. Mark to market of derivatives results from interest rate movements and reverses towards the derivative\u2019s maturity (pull to par). On acquisition of LeasePlan, micro fair value hedging was in place (through the use of interest rate swaps) as part of the Treasury risk management policy to mitigate exposure to changes in fair value of recognised liabilities, driven by the impact of the interest rate risk component of debt capital market transactions (publicly issued fixed rate bonds). As part of a periodic review of hedging strategy to comply with risk objectives, the Group decided to revoke these fair value hedge designations on 1\u00a0October 2023. As a result, the Group improved the compensation of fair values in its derivatives portfolio. For more details see note\u00a04 \u201cFinancial Risk Management\u201d and note\u00a019 \u201cDerivative financial instruments\u201d.
Used Car Sales result
At the date of the acquisition, the book value of the vehicles sold in the current period included a reduction in depreciation costs compared to the contractual costs where expected sales proceeds were forecast to be in excess of their net book value and for which depreciation had been adjusted or stopped. The impact of this reduction resulted in a further negative impact of EUR 223.9 million.
Operating Expenses
LeasePlan\u2019s operating expenses include costs to achieve integration of EUR\u00a042.3\u00a0million and disposal costs for the remedy countries of EUR\u00a019.4\u00a0million (see note\u00a02.3).
Illustrative impacts on the income statement for 12 months
Had the acquisition taken place on 1\u00a0January 2023 and not on 22\u00a0May 2023, the full integration of LeasePlan would have resulted in an increase in the Group\u2019s Gross operating income (GOI) and profit before tax (PBT) by, respectively EUR\u00a0911\u00a0million and EUR\u00a0506\u00a0million. Methodology used to prepare illustrative GOI and PBT for 12 months has been aligned to the methodology used to prepare the pro forma financial information produced in application of AMF Prospectus regulations. There has been no adjustment to the period of purchase price accounting in terms of purchase price and values of assets and liabilities acquired in the pro forma income statement. The values used in the purchase price allocation exercise were backdated to reflect effects of the acquisition as if it had taken place on 1 January 2024.
Transaction costs and costs to achieve integration
As at 31\u00a0December 2023, the Group recorded EUR\u00a036.2\u00a0million of costs incurred due to the disposal of all remedies (ALD and LeasePlan) and EUR\u00a0170\u00a0million of costs to achieve integration (including EUR 18.5 million of transaction costs directly attributable to the acquisition) in \u201cOperating Expenses\u201d.
Ayvens \u2013 combined entity and global mobility brand
In October 2023, the Group announced Ayvens, its new global mobility brand, which unites the two companies together under a single common identity. The combined entity is the leading multi-brand car leasing company worldwide, covering all customer categories. The integration of LeasePlan started immediately after the closing of the acquisition and is progressing smoothly according to plans. Leveraging on the respective strengths, complementarities and the enhanced scale, the combined entity targets to achieve substantial commercial, operational and supply chain synergies, further improving its position in the industry and reinforcing its resilience through the economic cycle. The main areas of expected synergies are in procurement, facilities, Information Technology (\"IT\") and other operational costs. Synergies have been estimated at EUR 440 million (before tax) and are expected to fully materialize by 2026. Total cumulated costs to achieve integration are estimated at EUR 525 million over 2022-2025.
ALD and LeasePlan serve the same three client segments (large corporates, SMEs, individual consumers), but each of them has specific areas of leadership. LeasePlan has a network of large and very large blue\u2011chip international and national corporate clients and has been particularly strong in this segment in which there is limited customer overlap with ALD. ALD has developed a strong partnership network with more than 200 partners across a large spectrum of sectors. It has allowed the Company to rapidly develop its presence in the SME and individual consumers segments. This is expected to give Ayvens the best footprint across all segments.
ALD\u2019s funding mix and strong credit ratings facilitate efficient access to external funding. LeasePlan also relies on its deposit collection platforms in Germany and the Netherlands. The combined entity therefore has an enlarged and diversified base of funding sources.
In the context of the LeasePlan acquisition completed on 22\u00a0May 2023, ALD has obtained all merger control clearances conditioning the completion of this acquisition. The last clearance was obtained from the European Commission on 25\u00a0November 2022. The European Commission\u2019s approval was 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, and of LeasePlan in the Czech Republic, in Finland and in Luxembourg. On 22\u00a0March 2023, the Group has entered into a share purchase agreement to sell these subsidiaries to Credit Agricole Consumer Finance and Stellantis. The sale completed on 1\u00a0August 2023, resulting in a total loss on disposal of EUR 3.1 million which is recorded in the income statement under the caption of \u201cResult after tax from discontinued operations\u201d (see note\u00a07 for further details).
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.
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:
On 22\u00a0May 2023 the Group completed acquisition of LeasePlan (see note\u00a02). Purchase price allocation exercise was completed shortly after the end of the reporting period and the goodwill recognised on acquisition is yet to be allocated to cash generating units. LeasePlan business continues to be integrated into the Group and the management will finalise allocation of the goodwill in the first semester of 2024 to the relevant CGUs.
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.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForBusinessCombinationsAndGoodwillExplanatory", "language": "en", "entity": "scheme:969500E7V019H9NP7427", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "text_block_ef8d4b7a-5d54-4318-96ab-8b31d7b16b36": { "value": "Details of acquisition
On 22\u00a0May 2023, following the approval of ALD\u2019s shareholders and of the relevant regulatory authorities, ALD acquired 100% of LeasePlan for a consideration of EUR\u00a04,897\u00a0million, subject to an additional contingent consideration of an amount up to EUR\u00a0235\u00a0million in cash.
The consideration includes:
On 22\u00a0March 2023, the Group had entered into a share agreement to sell its subsidiaries in Ireland, Portugal and Norway, as well as LeasePlan\u2019s subsidiaries in Luxembourg, Finland and Czech Republic which were all subsequently sold on 1\u00a0August 2023. These disposals were completed to honour the commitments made by ALD in the context of the clearance by the European Commission of the acquisition of LeasePlan, to address concentration risk in the countries concerned. For further information refer to note\u00a07.
Before the completion of the LeasePlan acquisition, Societe Generale held approximately 75.9% of the ALD share capital. Upon completion of the Acquisition, Societe Generale remains the majority shareholder with a stake of 52.59% of the Company. This stake may be reduced to 50.95% in the event of the exercise of the call option of the shares with warrants attached that have been granted to LeasePlan\u2019s former shareholders to allow them to increase their stake up to 32.91% of the Company\u2019s capital. The former LeasePlan shareholders consortium led by TDR capital holds 30.75% of the combined entity, while the free float represents 16.40%.
Details of the Acquisition value are set out in the table below:
(in EUR million) | As at 31\u00a0December 2023 |
|---|---|
Purchase price paid in ALD equity instruments\u00a0(1) | 2,999.5 |
of which: | \u00a0 |
Purchase price paid in ALD shares\u00a0(2) | 2,871.4 |
Fair value of warrants attached to shares | 128.1 |
Purchase price paid in cash | 1,827.5 |
of which: | \u00a0 |
Capital increase | 1,212.0 |
Tier\u00a02 subordinated debt | 615.5 |
Total purchase price | 4,827.0 |
Contingent consideration\u00a0(3) | 69.6 |
Total purchase price including contingent consideration | 4,896.7 |
|
\u00a0
Purchase price allocation
LeasePlan\u2019s identifiable assets and liabilities were measured at fair value at the date of the takeover by ALD.
The purchase price was allocated to newly identified intangible assets including customer relationships and as at 31\u00a0December 2023 the Group has recognised a goodwill of EUR\u00a01,396\u00a0million.
(in EUR million) | Allocations as at acquisition date (historical net book value) | Fair value adjustments | Allocations after fair value adjustments |
|---|---|---|---|
Lease assets - revenue earning fleet\u00a0(1) | 22,431.9 | 373.8 | 22,805.7 |
Other intangible assets | 537.1 | (50.7) | 486.3 |
o/w Customer relationships | 124.4 | 154.6 | 279.0 |
Lease receivables from clients | 683.0 | \u2212 | 683.0 |
Receivables from financial and other institutions | 614.6 | \u2212 | 614.6 |
Cash & Cash equivalents | 3,811.8 | \u2212 | 3,811.8 |
Financial debt | (23,347.3) | 32.9 | (23,314.3) |
Net tax assets and liabilities | (505.0) | (63.9) | (568.9) |
Net other assets and liabilities | (443.4) | (61.1) | (504.5) |
Fair value of assets and liabilities acquired (C) | 3,782.8 | 230.9 | 4,013.7 |
Non-controlling interests\u00a0(2)\u00a0(B) | 513.0 | \u2212 | 513.0 |
Total purchase price (A) | 4,896.7 | \u2212 | 4,896.7 |
Goodwill (A)+(B)-(C) | 1,626.9 | (230.9) | 1,396.0 |
|
\u00a0
Valuation methods
The fair values of the assets acquired and liabilities assumed have been determined using various valuation methods as described below.
The fleet is the Company\u2019s main asset and at the date of the acquisition LeasePlan managed circa 1.6\u00a0million vehicles comprising funded and unfunded fleet. A revaluation has been performed solely on the funded fleet segment as it represents vehicles owned by LeasePlan. Fair value of the fleet is obtained by adding the sum of the future discounted cash flows (DCF) of lease and additional services with the discounted terminal value (residual value of the vehicle which is its expected sales price). The valuation implemented relies on DCF model for each contract and considers regional parameters such as specific tax rates and country risk premia. Fair value of the fleet under IFRS\u00a03 includes both operating and finance leases recorded respectively in the opening balance sheet under captions Rental fleet and Lease receivables from clients.
Customer relationships intangible asset has been recognised separately from goodwill and it materialises the loyalty of B2B fleet customers to LeasePlan. The customer relationships valuation is based on the Multiple Period Excess Earnings Method. This method is based on the concept of value creation: the surplus profit generated by an intangible asset in a given financial year. The method is based on after-tax operating margin, less the capital cost of support assets required for its operation. Amortisation period for customer relationships intangible asset is 15 years.
The valuation of software is based on replacement costs new multiplied by a completion rate by domain. Under this approach, the fair value of LeasePlan\u2019s software is determined by reference to the reproduction or replacement cost new of modern equivalent asset optimized for over-design, over capacity and redundant asset and adjusted to reflect losses in value attributable to physical depreciation and obsolescence. In the framework of the valuation, the Group has estimated the cost that would be incurred to develop each domains needed to have a fully functional technology. In the frame of the PPA, assets have been revalued integrating market participants considerations according to IFRS\u00a03. Consequently, a benchmark of IT landscape of the leasing peers has been performed by the third party provider.
In the context of PPA, inventories including mainly cars to be sold after contract termination, have been revalued using the Net Realisable Value approach in order to have a fair value close to the market value.
A significant part of LeasePlan\u2019s fleet is financed through indebtedness. Given the volatility of the markets, a revaluation has been performed in order to ensure the financial debt is close to actual market conditions. Discounted cash flow valuation approach has been used to establish line by line projection of each cash flows based on observable market data, fixed/floating rate, frequency, maturity and notional amounts.
Tax provisions were reassessed in order to include additional risk provisions as at the acquisition date.
The deferred tax asset/liability arising as a result of fair value adjustments is included within the fair value of LeasePlan\u2019s net assets at acquisition.
The key assumptions and estimates in the valuation methods, to which the assets and liabilities items of the opening balance sheet are sensitive, include, amongst others, margin rate, discount rate of future cash flows, churn rate of customer contracts and future estimated sale prices of vehicles.
LeasePlan's activities have been included in the Group consolidated financial statements since 22\u00a0May 2023. As at 31\u00a0December 2023, the contribution of LeasePlan's activities amounts to EUR\u00a024.1\u00a0million in Net income. This contribution includes significant impacts which relate to either acquisition accounting or exceptional items.
\u00a0
Impacts on income statement
Impacts of these items are recorded in the Group\u2019s Net income in 2023 are presented in the table below:
(in EUR million) | Total Group\u00a0(1) | Contribution | PPA | Adjusted contribution |
Leasing contract margin | 1,261.9 | 72.5 | 5.9 | 66.6 |
Services margin | 1,354.2 | 652.3 | 23.1 | 629.2 |
Used Car Sales result | 349.5 | (47.7) | (192.8) | 145.1 |
Gross operating income | 2,965.6 | 677.1 | (163.8) | 840.9 |
Total Operating Expenses | (1,591.6) | (651.1) | 10.4 | (661.5) |
Impairment charges on receivables | (70.7) | (17.4) | \u2212 | (17.4) |
Other income (expense) | (14.0) | 9.9 | (4.6) | 14.5 |
Operating result | 1,289.3 | 18.5 | (158.0) | 176.5 |
Share of profit of associates and jointly controlled entities | 6.4 | 5.0 | \u2212 | 5.0 |
Profit before tax | 1,295.7 | 23.5 | (158.0) | 181.5 |
Income tax expense | (374.0) | 1.1 | 34.8 | (33.7) |
Profit for the period from continuing operations | 921.7 | 24.6 | (123.1) | 147.8 |
Profit (loss) for the period from discontinued operations | (77.6) | (0.6) | (33.2) | 32.6 |
Net income | 844.1 | 24.1 | (156.3) | 180.4 |
|
\u00a0
Pre-tax impact on the income statement from all PPA adjustments for the year ending 31 December, 2023 is EUR -202.5 million (including amortisation of the customer relationships intangible) offset by the positive impact of Used Car Sales result of EUR 145.1 million \u00a0which was not recognised in the previous reporting periods of 2023.
Leasing contract margin
In addition to the impacts of PPA, Leasing contract margin of LeasePlan is negatively impacted by the mark to market loss of EUR\u00a0201.9\u00a0million on LeasePlan derivatives. LeasePlan holds a book of derivatives, whose purpose is to hedge the interest and foreign exchange rates exposure, when the profile of funding cannot be matched with that of the lease contract portfolio. While the Group is economically hedged, there can be accounting mismatches as operating leases do not qualify for hedge accounting under IFRS and hence derivatives are measured at fair value through the income statement. Mark to market of derivatives results from interest rate movements and reverses towards the derivative\u2019s maturity (pull to par). On acquisition of LeasePlan, micro fair value hedging was in place (through the use of interest rate swaps) as part of the Treasury risk management policy to mitigate exposure to changes in fair value of recognised liabilities, driven by the impact of the interest rate risk component of debt capital market transactions (publicly issued fixed rate bonds). As part of a periodic review of hedging strategy to comply with risk objectives, the Group decided to revoke these fair value hedge designations on 1\u00a0October 2023. As a result, the Group improved the compensation of fair values in its derivatives portfolio. For more details see note\u00a04 \u201cFinancial Risk Management\u201d and note\u00a019 \u201cDerivative financial instruments\u201d.
Used Car Sales result
At the date of the acquisition, the book value of the vehicles sold in the current period included a reduction in depreciation costs compared to the contractual costs where expected sales proceeds were forecast to be in excess of their net book value and for which depreciation had been adjusted or stopped. The impact of this reduction resulted in a further negative impact of EUR 223.9 million.
Operating Expenses
LeasePlan\u2019s operating expenses include costs to achieve integration of EUR\u00a042.3\u00a0million and disposal costs for the remedy countries of EUR\u00a019.4\u00a0million (see note\u00a02.3).
Illustrative impacts on the income statement for 12 months
Had the acquisition taken place on 1\u00a0January 2023 and not on 22\u00a0May 2023, the full integration of LeasePlan would have resulted in an increase in the Group\u2019s Gross operating income (GOI) and profit before tax (PBT) by, respectively EUR\u00a0911\u00a0million and EUR\u00a0506\u00a0million. Methodology used to prepare illustrative GOI and PBT for 12 months has been aligned to the methodology used to prepare the pro forma financial information produced in application of AMF Prospectus regulations. There has been no adjustment to the period of purchase price accounting in terms of purchase price and values of assets and liabilities acquired in the pro forma income statement. The values used in the purchase price allocation exercise were backdated to reflect effects of the acquisition as if it had taken place on 1 January 2024.
Transaction costs and costs to achieve integration
As at 31\u00a0December 2023, the Group recorded EUR\u00a036.2\u00a0million of costs incurred due to the disposal of all remedies (ALD and LeasePlan) and EUR\u00a0170\u00a0million of costs to achieve integration (including EUR 18.5 million of transaction costs directly attributable to the acquisition) in \u201cOperating Expenses\u201d.
Ayvens \u2013 combined entity and global mobility brand
In October 2023, the Group announced Ayvens, its new global mobility brand, which unites the two companies together under a single common identity. The combined entity is the leading multi-brand car leasing company worldwide, covering all customer categories. The integration of LeasePlan started immediately after the closing of the acquisition and is progressing smoothly according to plans. Leveraging on the respective strengths, complementarities and the enhanced scale, the combined entity targets to achieve substantial commercial, operational and supply chain synergies, further improving its position in the industry and reinforcing its resilience through the economic cycle. The main areas of expected synergies are in procurement, facilities, Information Technology (\"IT\") and other operational costs. Synergies have been estimated at EUR 440 million (before tax) and are expected to fully materialize by 2026. Total cumulated costs to achieve integration are estimated at EUR 525 million over 2022-2025.
ALD and LeasePlan serve the same three client segments (large corporates, SMEs, individual consumers), but each of them has specific areas of leadership. LeasePlan has a network of large and very large blue\u2011chip international and national corporate clients and has been particularly strong in this segment in which there is limited customer overlap with ALD. ALD has developed a strong partnership network with more than 200 partners across a large spectrum of sectors. It has allowed the Company to rapidly develop its presence in the SME and individual consumers segments. This is expected to give Ayvens the best footprint across all segments.
ALD\u2019s funding mix and strong credit ratings facilitate efficient access to external funding. LeasePlan also relies on its deposit collection platforms in Germany and the Netherlands. The combined entity therefore has an enlarged and diversified base of funding sources.
In the context of the LeasePlan acquisition completed on 22\u00a0May 2023, ALD has obtained all merger control clearances conditioning the completion of this acquisition. The last clearance was obtained from the European Commission on 25\u00a0November 2022. The European Commission\u2019s approval was 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, and of LeasePlan in the Czech Republic, in Finland and in Luxembourg. On 22\u00a0March 2023, the Group has entered into a share purchase agreement to sell these subsidiaries to Credit Agricole Consumer Finance and Stellantis. The sale completed on 1\u00a0August 2023, resulting in a total loss on disposal of EUR 3.1 million which is recorded in the income statement under the caption of \u201cResult after tax from discontinued operations\u201d (see note\u00a07 for further details).
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.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForBusinessCombinationsExplanatory", "language": "en", "entity": "scheme:969500E7V019H9NP7427", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "text_block_ec463ada-e1ac-4a34-84e1-045e0a6bdbd7": { "value": "On 20\u00a0April 2023 and on 30\u00a0October 2023, the Group completed the disposal of its subsidiaries ALD Russia and ALD Belarus to JSC Tsk. The sale has received clearance from the relevant regulatory authorities. Both entities operated a 13,400\u00a0funded fleet, representing less than 1% of ALD\u2019s Fleet. ALD Russia and ALD Belarus were classified as held for sale in the Group\u2019s consolidated financial statements ending 31\u00a0December 2022. The loss on sale of both subsidiaries amounted to EUR 101.5 million and it is recorded in the income statement under the caption of \u201cResult after tax from discontinued operations\u201d (see note\u00a07 for further details).
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 income statement.
Additional disclosures relating to the Group\u2019s Discontinued Operations are provided in note\u00a07.
In the context of the LeasePlan acquisition completed on 22\u00a0May 2023, ALD has obtained all merger control clearances conditioning the completion of this acquisition. The last clearance was obtained from the European Commission on 25\u00a0November 2022. The European Commission\u2019s approval was conditional on the divestiture of the subsidiaries carrying on the full-service leasing and Fleet Management business of ALD in Portugal, in Ireland and in Norway, and of LeasePlan in the Czech Republic, in Finland and in Luxembourg. On 22\u00a0March 2023, the Group has entered into a share purchase agreement to sell these subsidiaries to Credit Agricole Consumer Finance and Stellantis. The sale completed on 1\u00a0August 2023.
On 20\u00a0April 2023 and on 30\u00a0October 2023, the Group completed the disposal of its subsidiaries ALD Russia and ALD Belarus to JSC Tsk respectively. The sale has received clearance from the relevant regulatory authorities. Both entities operated a 13,400\u00a0funded fleet, representing less than 1% of ALD\u2019s fleet. ALD Russia and ALD Belarus were classified as held for sale in the Group\u2019s consolidated financial statements ending 31\u00a0December 2022.\u00a0
The impacts of all sales are recorded in the income statement as at 31\u00a0December 2023 under the caption of \u201cResult after tax from discontinued operations\u201d.
\u00a0
(in EUR million) | 2023 |
|---|---|
Assets | \u00a0 |
External revenue | 208.9 |
External expenses | (175.7) |
Income tax expenses | (6.2) |
Net results from operating activities | 27.1 |
Cash and cash equivalents at the beginning of the period | 92.8 |
Net cash inflow/(outflow) from operating activities | 44.2 |
Net cash inflow/(outflow) from investing activities | 4.4 |
Net cash inflow/(outflow) from financing activities\u00a0(1) | (81.0) |
Exchange gains/(losses) on cash and cash equivalents | (8.2) |
Net movement in cash and balances with bank | (40.6) |
Cash and cash equivalents sold as part of the discontinued operation | 52.2 |
|
\u00a0
(in EUR million) | \u00a0 |
|---|---|
Disposal consideration received (cash) | 442.0 |
Carrying amount of net assets sold | (462.4) |
Loss on sale before income tax and reclassification of foreign currency translation reserve | (20.3) |
Reclassification of foreign currency translation reserve | (80.2) |
Income tax expense | (4.0) |
Loss on sale after income tax | (104.6) |
Net result for the period from operating activities of the discontinued operation | 27.1 |
Result after tax from discontinued operations | (77.6) |
The net cash flows generated from the sale of subsidiary are as follows: | \u00a0 |
Cash received from the sale of the discontinued operations | 442.0 |
Cash sold as a part of discontinued operations | (52.2) |
Net cash inflow on the date of disposal | 389.8 |
Basic earnings per share from discontinued operations (in cents) | 0.02 |
Diluted earnings per share from discontinued operations (in cents) | 0.02 |
On 20\u00a0April 2023 and on 30\u00a0October 2023, the Group completed the disposal of its subsidiaries ALD Russia and ALD Belarus to JSC Tsk. The sale has received clearance from the relevant regulatory authorities. Both entities operated a 13,400\u00a0funded fleet, representing less than 1% of ALD\u2019s Fleet. ALD Russia and ALD Belarus were classified as held for sale in the Group\u2019s consolidated financial statements ending 31\u00a0December 2022. The loss on sale of both subsidiaries amounted to EUR 101.5 million and it is recorded in the income statement under the caption of \u201cResult after tax from discontinued operations\u201d (see note\u00a07 for further details).
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 income statement.
Additional disclosures relating to the Group\u2019s Discontinued Operations are provided in note\u00a07.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForNoncurrentAssetsOrDisposalGroupsClassifiedAsHeldForSaleAndDiscontinuedOperationsExplanatory", "language": "en", "entity": "scheme:969500E7V019H9NP7427", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "text_block_1a9833f0-138c-458e-a9b3-8945835ff959": { "value": "On 20\u00a0April 2023 and on 30\u00a0October 2023, the Group completed the disposal of its subsidiaries ALD Russia and ALD Belarus to JSC Tsk. The sale has received clearance from the relevant regulatory authorities. Both entities operated a 13,400\u00a0funded fleet, representing less than 1% of ALD\u2019s Fleet. ALD Russia and ALD Belarus were classified as held for sale in the Group\u2019s consolidated financial statements ending 31\u00a0December 2022. The loss on sale of both subsidiaries amounted to EUR 101.5 million and it is recorded in the income statement under the caption of \u201cResult after tax from discontinued operations\u201d (see note\u00a07 for further details).
In the context of the LeasePlan acquisition completed on 22\u00a0May 2023, ALD has obtained all merger control clearances conditioning the completion of this acquisition. The last clearance was obtained from the European Commission on 25\u00a0November 2022. The European Commission\u2019s approval was conditional on the divestiture of the subsidiaries carrying on the full-service leasing and Fleet Management business of ALD in Portugal, in Ireland and in Norway, and of LeasePlan in the Czech Republic, in Finland and in Luxembourg. On 22\u00a0March 2023, the Group has entered into a share purchase agreement to sell these subsidiaries to Credit Agricole Consumer Finance and Stellantis. The sale completed on 1\u00a0August 2023.
On 20\u00a0April 2023 and on 30\u00a0October 2023, the Group completed the disposal of its subsidiaries ALD Russia and ALD Belarus to JSC Tsk respectively. The sale has received clearance from the relevant regulatory authorities. Both entities operated a 13,400\u00a0funded fleet, representing less than 1% of ALD\u2019s fleet. ALD Russia and ALD Belarus were classified as held for sale in the Group\u2019s consolidated financial statements ending 31\u00a0December 2022.\u00a0
The impacts of all sales are recorded in the income statement as at 31\u00a0December 2023 under the caption of \u201cResult after tax from discontinued operations\u201d.
\u00a0
(in EUR million) | 2023 |
|---|---|
Assets | \u00a0 |
External revenue | 208.9 |
External expenses | (175.7) |
Income tax expenses | (6.2) |
Net results from operating activities | 27.1 |
Cash and cash equivalents at the beginning of the period | 92.8 |
Net cash inflow/(outflow) from operating activities | 44.2 |
Net cash inflow/(outflow) from investing activities | 4.4 |
Net cash inflow/(outflow) from financing activities\u00a0(1) | (81.0) |
Exchange gains/(losses) on cash and cash equivalents | (8.2) |
Net movement in cash and balances with bank | (40.6) |
Cash and cash equivalents sold as part of the discontinued operation | 52.2 |
|
\u00a0
(in EUR million) | \u00a0 |
|---|---|
Disposal consideration received (cash) | 442.0 |
Carrying amount of net assets sold | (462.4) |
Loss on sale before income tax and reclassification of foreign currency translation reserve | (20.3) |
Reclassification of foreign currency translation reserve | (80.2) |
Income tax expense | (4.0) |
Loss on sale after income tax | (104.6) |
Net result for the period from operating activities of the discontinued operation | 27.1 |
Result after tax from discontinued operations | (77.6) |
The net cash flows generated from the sale of subsidiary are as follows: | \u00a0 |
Cash received from the sale of the discontinued operations | 442.0 |
Cash sold as a part of discontinued operations | (52.2) |
Net cash inflow on the date of disposal | 389.8 |
Basic earnings per share from discontinued operations (in cents) | 0.02 |
Diluted earnings per share from discontinued operations (in cents) | 0.02 |
On 20\u00a0April 2023 and on 30\u00a0October 2023, the Group completed the disposal of its subsidiaries ALD Russia and ALD Belarus to JSC Tsk. The sale has received clearance from the relevant regulatory authorities. Both entities operated a 13,400\u00a0funded fleet, representing less than 1% of ALD\u2019s Fleet. ALD Russia and ALD Belarus were classified as held for sale in the Group\u2019s consolidated financial statements ending 31\u00a0December 2022. The loss on sale of both subsidiaries amounted to EUR 101.5 million and it is recorded in the income statement under the caption of \u201cResult after tax from discontinued operations\u201d (see note\u00a07 for further details).
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForDiscontinuedOperationsExplanatory", "language": "en", "entity": "scheme:969500E7V019H9NP7427", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "text_block_a6c7d021-0f13-4048-9125-d568fe6fb6bb": { "value": "The balance sheet of the Group, its cash flows, liquidity position and borrowing facilities are set out in the Group financial statements and notes to the financial statements. Further details of our policy on financial risk management are set out in note\u00a04 to the financial statements. The Group\u2019s net debt at 31\u00a0December 2023 was EUR\u00a045.4\u00a0billion (2022: EUR\u00a019.6\u00a0billion) and the Group liquidity position (defined as cash and undrawn committed facilities) of EUR\u00a05.9\u00a0billion at 31\u00a0December 2023 remains strong. Details of borrowings and facilities are set out in note\u00a029.
The Board is satisfied that the Group\u2019s forecasts and projections, taking account of reasonably possible changes in trading performance, show that the Group will be able to operate within the level of its current facilities for the period of at least 12\u00a0months from the date of approval of the financial statements. For this reason, the Group continues to adopt the going concern basis in preparing its financial statements.
", "dimensions": { "concept": "ifrs-full:DisclosureOfGoingConcernExplanatory", "language": "en", "entity": "scheme:969500E7V019H9NP7427", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "text_block_806ff248-4040-407c-befe-ff47fe9d1022": { "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 the Group\u2019s Turkish subsidiaries (including the Turkish subsidiary obtained on acquisition of LeasePlan). The financial statements include restatements for changes in the general purchasing power of the Turkish lira to the measuring unit current at the reporting date.
Adjustments are made to the non-monetary assets and liabilities (with biggest impacts in rental fleet, and the Group Consolidated Reserves pertaining to the subsidiaries in Turkey). The carrying amounts of rental fleet are adjusted to reflect the change in the consumer price index (CPI) during 2023 and for LeasePlan subsidiary 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.
\u00a0
The development of the CPI index in the current and previous reporting periods is as follows:
\u00a0 | 12/2020 | 12/2021 | 12/2022 | 12/2023 |
|---|---|---|---|---|
Conversion coefficient | 443.34 | 603.28 | 990.91 | 1,632.85 |
CPI Index (12\u00a0months) | 14.60 | 36.08 | 64.27 | 64.77 |
\u00a0
The financial statements of the Turkish subsidiaries are based on a historic cost. Non-monetary items in the financial statements have been restated for the change in CPI from the date of their acquisition or initial recognition to the end of the reporting period.
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, and these are recognised in the income statement in \u201cLeasing contract costs \u2013 depreciation\u201d. Restatement of all components of equity is recorded in the hyperinflation reserve which is reclassified to the translation reserves of the Turkish subsidiaries upon consolidation. Reclassification is done on the basis of the economic interrelationship between the changes in exchange rates and inflation (i.e. as prices measured in hyperinflationary currency increase, their value against other currencies tends to decrease at a rate that reflects the excess of price inflation in the hyperinflationary currency compared to price inflation in other currencies). Translation reserves in 2023 have been positively impacted by such a reclassification of EUR 71 million (2022: 59.3 million).
All items in the statement of cash flows which relate to the Turkish subsidiaries are expressed in terms of the consumer price index at the end of the reporting period.
As at 31\u00a0December 2023 Leasing contract margin includes the gain of EUR\u00a0140.1\u00a0million (2022: EUR\u00a059.9\u00a0million) for the consumer price index inflation applied to the book value of the Turkish subsidiaries fleet of vehicles, share capital and retained earnings. This uplift in book value has resulted in an impairment of EUR\u00a067.2\u00a0million for year ending 31\u00a0December 2023 (2022: nil) relating to recoverability of the fleet assets and additional depreciation on the inflationary increase of EUR\u00a033.7\u00a0million that have been included within the \u201cLeasing contract costs \u2013 depreciation\u201d line in the income statement, so overall the net impact on the Leasing contract margin amount is EUR\u00a039.2\u00a0million. Deferred tax impact from these gains in 2023 is not material due to the change in the Turkish tax legislation which now permits the entities to adjust their financial statements for inflation for tax purposes. For further detail see note\u00a05 \u201cCritical accounting estimates and judgements\u201d.
", "dimensions": { "concept": "ifrs-full:DisclosureOfHyperinflationaryReportingExplanatory", "language": "en", "entity": "scheme:969500E7V019H9NP7427", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "text_block_3fb767e9-2c76-4861-830d-e1397eef2220": { "value": "The preparation of the financial statements requires the management of both the Group and its subsidiaries to use certain estimates and assumptions that may have an impact on the reported values of assets, liabilities and contingent liabilities at the reporting date and on items of income and expense for the period.
The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ significantly from these estimates if different assumptions or circumstances apply.
The material estimates, assumptions and underlying data that management makes relate to the valuation and impairment of fixed assets from operating leases, including the residual values at the end of the contract date, impairment of finance lease receivables, valuation allowance of inventories (terminated cars on stock), defined benefit pensions obligations, the fair value of derivatives, the assessment of the income tax position, damage risk retention provision and insurance/reinsurance provisions, the impairment of intangibles and goodwill, estimates in revenue recognition, the assessment of restructuring provisions and litigation provisions and customer price index related to hyperinflation. Information on the above-mentioned areas of estimation and judgement is provided in note\u00a05 \u201cCritical accounting estimates, assumptions and judgements\u201d.
The estimates and underlying assumptions are reviewed each financial reporting period. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period of the revision, or in any future periods affected if the revision affects both current and future periods. Disclosure of significant judgements and major sources of estimation uncertainty and related sensitivities is included in the specific notes to the balance sheet.
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 2022. However, the estimates and assumptions are updated in case of significant impacts, such as a global crisis, and the key sources of estimation uncertainty are investigated in more depth in specific notes to the consolidated balance sheet.
The basis for the depreciation of an operating lease contract and rental contracts is the investment value at cost less the estimated residual value as included in the contract, in combination with the estimated contract duration. A change in the estimated residual value and/or contract duration leads to a change in depreciation that has an effect in the current period and/or in subsequent periods. Statistical models and calculations (regression analysis) covering a reference period of 24\u00a0months are used to calculate a vehicle\u2019s future value as accurately as possible.
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 Group level. 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.
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. The Group also considered centrally assumptions which could affect future sales proceeds linked to the lack of market data on used electric vehicle sales. This resulted in management applying an additional stress on the expected sales proceeds of Battery Electric Vehicles (BEV) and Plug-In Hybrids (PHEV).
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 high profit from the used car sales activity throughout 2023 but, as previously predicted, the used car market has started to normalise in the first semester of 2023 with a further decline observed in the second semester of 2023.
This assessment continues to result in a reduction in depreciation costs of EUR\u00a0553.2\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 2023 was EUR\u00a0312.2\u00a0million.
+Increase/-decrease in expected sales proceeds per vehicle | Income statement net Impact (in EUR million) |
|---|---|
-EUR\u00a01,000 | (138.1) |
+EUR\u00a01,000 | 122.3 |
\u00a0
The impacts of the sensitivity analysis are not linear.
\u00a0
In determining whether goodwill is impaired requires an estimation of the value in use of the groups of cash generating units to which the goodwill assets have been allocated. The key assumptions calculating the value in use are those regarding discount rates, growth rates and other expected changes in cash flows. The estimates and assumptions used are disclosed in note\u00a03.5.6 of these consolidated financial statements.
The Group tests annually whether goodwill has suffered any impairment, in accordance with the accounting policy stated presented in note\u00a03.5.7 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 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, impairment of goodwill was identified in the German subsidiary Fleetpool Holding\u00a0GmbH for EUR\u00a023.7\u00a0million (see note\u00a016 for further detail).
For goodwill, sensitivity tests are carried out to measure the impact on each CGU\u2019s recoverable value based on certain assumptions. At 31\u00a0December 2023, sensitivities to variations in the cash flows and discount rates were measured.
According to the results in these tests:
\u00a0\u00a0
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, due to it being an important input in determining value in use. 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 2023, an impairment provision of EUR\u00a067.2\u00a0million was recognised for the rental fleet of the Group\u2019s Turkish subsidiaries. As Turkey is a hyperinflation economy, under the requirements of IAS\u00a029 \u201cFinancial Reporting in Hyperinflationary Economies\u201d non-monetary balances at the end of the period are restated to reflect a price index that is current at the balance sheet date. In applying this to the non-monetary book value balance of rental fleet the Group have used the Consumer Price Index (CPI) as announced by the Turkish Statistical Institute as the price index. However, for the leasing contracts originated in Turkey, despite the continued increase carrying amount of vehicles in line with IAS\u00a029, the actual market value of these vehicles and used vehicles started to decline in Q4\u00a02023 after all-time high prices, which resulted in an indicator of impairment. Using a discounted cash flow model, with the recoverable amount determined by value in use, the Turkish subsidiaries rental fleet has been impaired down to the recoverable amount.
\u00a0
The fair value of certain financial instruments is determined by using valuation techniques. The Group uses its judgement 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.
Details about the methodology in measuring ECL for finance lease receivables and trade receivables from operating lease contracts are provided in the note\u00a022. Expected credit losses are reassessed at each reporting date and reflect all reasonable information that is available at the reporting date. Judgement is required from management for applying appropriate models and setting assumptions for the measurement of ECL. The methodology, assumptions and data, including any forecasts of future economic conditions, macroeconomic impacts and the Group\u2019s provision matrix are reviewed regularly by management in determining the expected credit losses and the write-off of receivables.
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, inflation, expected return on plan assets, salary rises and mortality rates. Any changes in these assumptions will impact the carrying amount of pension obligations, but the discount rate is the most significant factor that will change year on year.
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\u00a02.7\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 current and deferred tax. There are many transactions and calculations for which the ultimate tax determination is uncertain during the ordinary course of business. The Group assumes in the estimates that all tax positions that are not yet final will be examined by tax authorities, that have all relevant information available. The Group recognises deferred tax assets only to the extent that it is probable that future taxable profits will be available. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences are analysed and will impact the income tax and deferred tax provisions in the year in which such determination is made.
The own damage reserve is based on estimations with respect to incurred but not reported claims. Techniques applied are statistical modelling based on empirical data and assumptions on future claim development, policyholder behaviour and inflation. The assumptions may differ from the actual data as a result of changes in economic and market conditions.
Income related to lease services is recognised over the term of the contract based on historical statistics and on assumptions regarding expected service costs. The assumptions may differ from the actual data as a result of changes in economic and market conditions and are periodically back tested and adjusted if considered necessary. For details in relation to the accounting of revenue recognition, please refer to note\u00a03.5.20.
For litigation, when there is a legal or constructive obligation and it is more likely than not that there will be an outflow of benefits which can be measured reliably, the best estimate of the future outflow of resources has been recognised. In extremely rare situations where no reliable estimate can be made yet on claims expected, no provision will be recognised in the balance sheet but information about a contingent liability will be disclosed.
", "dimensions": { "concept": "ifrs-full:DisclosureOfAccountingJudgementsAndEstimatesExplanatory", "language": "en", "entity": "scheme:969500E7V019H9NP7427", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "text_block_c14ca855-00a0-4bf2-8a51-fbde9e428448": { "value": "At 31\u00a0December 2023, all companies are fully consolidated, except four companies accounted using the equity method. Changes in the scope of consolidation compared to 31\u00a0December 2022 are as follows:
\u00a0
The consolidated financial statements incorporate the financial statements of the Company and its subsidiaries as listed in note\u00a041. Changes to the entities consolidated in the\u00a0year ended 31\u00a0December 2023\u00a0have been explained in note\u00a03.1.
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.
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.
For non-wholly owned subsidiaries, non-controlling interests are presented in equity separately from the equity attributable to shareholders of the Company. Profit or loss and other comprehensive income are attributed to the shareholders of the Company and to non-controlling interests even if this results in the non-controlling interests having a deficit balance. Changes in ownership interest in subsidiaries that do not result in a change in control are accounted for in equity. The carrying amounts of the controlling and non-controlling interests are adjusted to reflect the changes in their relative interests in the subsidiary. Any difference between the amount by which the non-controlling interest is adjusted and the fair value of the consideration paid or received is recorded directly in equity and attributed to the shareholders of the Company.
\u00a0\u00a0
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.
\u00a0
Associates are investments over which the Group has significant influence, which is the power to participate in the financial and operating policy decisions of the investee, but without the ability to exercise control or joint control. Typically, the Group owns between 20% and 50% of the voting equity of its associates.
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.
\u00a0
Joint arrangements are arrangements in which the Group shares joint control with one or more parties. Joint control is the contractually agreed sharing of control of an arrangement, and exists only when decisions about the activities that significantly affect the arrangement\u2019s returns require the unanimous consent of the parties sharing control.
Judgement is required in determining this classification through an evaluation of the facts and circumstances arising from each individual arrangement. Joint arrangements are classified as either joint operations or joint ventures based on the rights and obligations of the parties to the arrangement. In joint operations, the parties have rights to the assets and obligations for the liabilities relating to the arrangement, whereas in joint ventures, the parties have rights to the net assets of the arrangement. The Group has assessed the nature of its joint arrangements and determined them to be joint ventures.
Investments in joint ventures are accounted for using the equity method of accounting except when classified as held for sale. The Group\u2019s share of associates\u2019 and joint ventures\u2019 Net income is based on their most recent audited financial statements or unaudited interim statements drawn up to the Group\u2019s balance sheet date. Accounting policies of the joint ventures are modified where necessary to ensure consistency with the policies adopted by the Group.
The total carrying values of investments in joint ventures represent the cost of each investment including the carrying value of goodwill, the share of post-acquisition retained earnings, any other movements in reserves and any long-term debt interests which in substance form part of the Group\u2019s net investment, less any cumulative impairments. The carrying values of associates and joint ventures are reviewed on a regular basis and if there is objective evidence that an impairment in value has occurred as a result of one or more events during the period, the investment is impaired. Investments which have been previously impaired are regularly reviewed for indicators of impairment reversal.
The Group\u2019s share of an associate\u2019s or joint venture\u2019s losses in excess of its interest in that associate or joint venture is not recognised unless the Group has an obligation to fund such losses. Unrealised gains arising from transactions with associates and joint ventures are eliminated against the investment to the extent of the Group\u2019s interest in the investee. Unrealised losses are eliminated in the same way, but only to the extent that there is no evidence of impairment.
\u00a0
Special purpose companies are companies created to accomplish a narrow and well-defined objective, such as the securitisation of leased assets. Details of our asset-backed securitisation programme are described in note\u00a029 that involve the sale of future lease receivables and related residual value receivables to special purpose companies.
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. These companies are consolidated in the financial statements of the Group based on the substance of the relationship.
(in %) | As at 31\u00a0December | |
|---|---|---|
2023 | 2022 | |
ALD International\u00a0SA | Parent company | Parent company |
Consolidated companies under global integration | interest % | interest % |
ALD Autoleasing D\u00a0GmbH \u2013 GERMANY\u00a0(1) | 100.00 | 100.00 |
ALD Automotive A/S - DENMARK | 100.00 | 100.00 |
ALD Automotive\u00a0AB - SWEDEN | 100.00 | 100.00 |
ALD Automotive\u00a0AG \u2013 SWITZERLAND | 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 \u2013 CROATIA\u00a0(1) | 100.00 | \u2212 |
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 \u2013 UK\u00a0(1) | 100.00 | 100.00 |
ALD Automotive\u00a0SA \u2013 BRAZIL | 100.00 | 100.00 |
ALD Automotive Magyarorszag Autopark - kezelo es Finanszirozo KFT \u2013 HUNGARY\u00a0(1) | 100.00 | 100.00 |
ALD Automotive Operational Leasing DOO \u2013 SLOVENIA | 100.00 | 100.00 |
ALD Automotive Polska Sp z o.o. \u2013 POLAND | 100.00 | 100.00 |
ALD Automotive Private Limited \u2013 INDIA | 100.00 | 100.00 |
ALD Automotive\u00a0SA de CV \u2013 MEXICO | 100.00 | 100.00 |
ALD Automotive\u00a0SA Lease of Cars - GREECE | 100.00 | 100.00 |
ALD Automotive\u00a0SAU \u2013 SPAIN\u00a0(1) | 100.00 | 100.00 |
ALD Automotive SRO \u2013 CZECH REPUBLIC | 100.00 | 100.00 |
ALD Automotive Turizm Ticaret Anonim Sirketi \u2013 TURKEY | 100.00 | 100.00 |
ALD Fleet\u00a0SA de CV SOFOM ENR | 100.00 | 100.00 |
ALD International\u00a0SAS & CO KG\u00a0(1) | 100.00 | 100.00 |
ALD Re Designated Activity Company \u2013 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(1) | 100.00 | 100.00 |
AXUS\u00a0SA\u00a0NV \u2013 BELGIUM\u00a0(1) | 100.00 | 100.00 |
ALD Automotive Ukraine Limited Liability Company | 100.00 | 100.00 |
Temsys \u2013 France\u00a0(1) | 100.00 | 100.00 |
ALD Automotive Algerie\u00a0SPA | 99.99 | 99.99 |
ALD Automotive SRL \u2013 ROMANIA | 80.00 | 80.00 |
NF Fleet A/S \u2013 DENMARK | 80.00 | 80.00 |
NF Fleet\u00a0OY \u2013 FINLAND | 80.00 | 80.00 |
NF Fleet\u00a0AB \u2013 SWEDEN | 80.00 | 80.00 |
NF Fleet\u00a0AS \u2013 NORWAY | 80.00 | 80.00 |
ALD Automotive Eesti\u00a0AS \u2013 ESTONIA | 75.01 | 75.01 |
ALD Automotive SIA \u2013 LATVIA | 75.00 | 75.00 |
UAB ALD Automotive \u2013 LITHUANIA | 75.00 | 75.00 |
ALD Automotive EOOD \u2013 BULGARIA | 100.00 | 100.00 |
ALD Automotive Limitada \u2013 CHILE | 100.00 | 100.00 |
ALD Automotive Peru\u00a0S.A.C. | 100.00 | 100.00 |
ALD Mul Mobility Services Malaysia SND. BHD. \u2013 MALAYSIA | 60.00 | 60.00 |
UK FFM | 50.10 | 50.10 |
ALD Automotive\u00a0LLC (Belarus) | 100.00 | 100.00 |
ALD Automotive Euro Leasing B.V. | 50.10 | 50.10 |
Soluciones De Renting Movilidad S.L. | 100.00 | 100.00 |
Fleetpool Holding\u00a0GmbH | 100.00 | 100.00 |
ALD Automotive\u00a0SAS \u2013 COLOMBIA | 100.00 | 100.00 |
ALD Automotive Slovakia S.R.O | 100.00 | 100.00 |
ALD Automotive OOO \u2013 RUSSIA\u00a0(2) | \u2212 | 100.00 |
ALD Automotive\u00a0AS \u2013 NORWAY\u00a0(2) | \u2212 | 100.00 |
SG ALD Automotive Sociedade Geral de Comercio e Aluguer de Benz sa \u2013 Portugal\u00a0(2) | \u2212 | 100.00 |
Merrion Fleet Management Limited\u00a0(2) | \u2212 | 100.00 |
\u00a0
(in %) | As at 31\u00a0December | |
|---|---|---|
2023 | 2022 | |
ALD International\u00a0SA | Parent company | Parent company |
Consolidated companies under global integration | interest % | interest % |
LeasePlan Brasil\u00a0Ltda. | 100.00 | \u2212 |
LeasePlan Danmark A/S, Denmark | 100.00 | \u2212 |
LeasePlan Deutschland\u00a0GmbH | 100.00 | \u2212 |
LeasePlan Digital B.V. | 100.00 | \u2212 |
LeasePlan Fleet Management N.V. | 100.00 | \u2212 |
LeasePlan Fleet Management (Polsk\u00e1) Sp. z.o.o. | 100.00 | \u2212 |
LeasePlan Fleet Management Services Ireland Limited | 100.00 | \u2212 |
LeasePlan France\u00a0S.A.S. | 100.00 | \u2212 |
LeasePlan Hellas\u00a0S.A. | 100.00 | \u2212 |
LeasePlan Hung\u00e1ria G\u00e9pj\u00e1rm\u0171park Kezel\u00f6 \u00e9s Finansz\u00edroz\u00f3 Z\u00e1rtk\u00f6r\u0171 R\u00e9szv\u00e9nyt\u00e1rsas\u00e1g | 100.00 | \u2212 |
LeasePlan India Private Limited | 100.00 | \u2212 |
LeasePlan Italia\u00a0S.p.A. | 100.00 | \u2212 |
LeasePlan M\u00e9xico\u00a0S.A. de C.V. | 100.00 | \u2212 |
LeasePlan Nederland N.V. | 100.00 | \u2212 |
LeasePlan Norge A/S | 100.00 | \u2212 |
LeasePlan \u00d6sterreich Fuhrparkmanagement\u00a0GmbH | 100.00 | \u2212 |
LeasePlan Portugal Com\u00e9rcio e Aluguer de Autom\u00f3veis e Equipamentos Unipessoal Lda. | 100.00 | \u2212 |
LeasePlan Romania S.R.L. | 100.00 | \u2212 |
LeasePlan Rus\u00a0LLC | 100.00 | \u2212 |
LeasePlan (Schweiz)\u00a0AG, Switzerland | 100.00 | \u2212 |
LeasePlan Service Center | 100.00 | \u2212 |
LeasePlan Servicios\u00a0S.A. | 100.00 | \u2212 |
LeasePlan Slovakia s.r.o. | 100.00 | \u2212 |
LeasePlan Sverige\u00a0AB | 100.00 | \u2212 |
LeasePlan Otomotive Servis ve Ticaret A.\u0218. | 100.00 | \u2212 |
LeasePlan UK Limited | 100.00 | \u2212 |
Euro Insurances Designated Activity Company | 100.00 | \u2212 |
LeasePlan Finance B.V. | 100.00 | \u2212 |
LeasePlan Global B.V. | 100.00 | \u2212 |
LeasePlan \u010cesk\u00e1 republika s.r.o.\u00a0(2) | \u2212 | \u2212 |
LeasePlan Finland Oy\u00a0(2) | \u2212 | \u2212 |
LeasePlan Luxembourg\u00a0S.A.\u00a0(2) | \u2212 | \u2212 |
LeasePlan USA,\u00a0Inc.\u00a0(2) | \u2212 | \u2212 |
The Group has adopted the following new standards, amendments and interpretations to published standards for the first time for the financial year starting on 1\u00a0January 2023:
Accounting standards, amendments or Interpretations | Adoption dates |
|---|---|
IFRS\u00a017 \u201cInsurance Contracts\u201d | 1\u00a0January 2023 |
Definition of Accounting Estimates \u2013 Amendments to IAS\u00a08 | 1\u00a0January 2023 |
Disclosure of Accounting Policies - Amendments to IAS\u00a01 and IFRS Practice Statement\u00a02 | 1\u00a0January 2023 |
Deferred Tax related to Assets and Liabilities arising from a Single Transaction \u2013 Amendments to IAS\u00a012 | 1\u00a0January 2023 |
\u00a0
The amendments listed above did not have any impact on the amounts recognised in prior periods and are not expected to significantly affect the current or future periods, with the exception of IFRS\u00a017 Insurance contracts.
IFRS\u00a017 \u201cInsurance Contracts\u201d, issued on 18\u00a0May 2017 and modified by the 25\u00a0June 2020 and 9\u00a0December 2021 Amendments, replaces IFRS\u00a04 \u201cInsurance Contracts\u201d which allowed, in particular, insurance contracts to be recognised using methods set out by the local accounting regulations.
IFRS\u00a017 is adopted from 1\u00a0January 2023 and is applicable to Group\u2019s insurance subsidiary ALD Re DAC based in Ireland that deals in the reinsurance business as well as LeasePlan insurance (acquired on 22\u00a0May 2023) which is the LeasePlan group of insurance company. On that same date, ALD Re DAC started applying IFRS\u00a09 \u201cFinancial Instruments\u201d for the first time; this application had been delayed as a result of the possibilities offered by the Amendments to IFRS\u00a017 and to IFRS\u00a04 issued by the IASB on 25\u00a0June 2020 and extended by Regulations (EU) 2017/1988 and 2020/2097 of the European Commission.
IFRS\u00a017 establishes specific principles for the recognition and measurement of insurance contracts issued and reinsurance contracts held by the Group. The insurance contracts issued to the customers of ALD are related to the lease services of vehicles and includes for example motor third party liabilities. The adoption of IFRS\u00a017 did not change the classification of the Group\u2019s insurance contracts. The Group was previously permitted under IFRS\u00a04 to continue accounting using its previous local accounting policies.
Under IFRS\u00a017, the Group\u2019s insurance contracts issued, and reinsurance contracts held are all eligible to be measured by applying the premium allocation approach which is discussed below.
Under IFRS\u00a017, the measurement of Insurance Contracts issued are aggregated into homogeneous portfolios, where the contracts are subject to similar risks and managed together. Each portfolio is then required to be disaggregated 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-month period.
Similar requirements apply for Reinsurance Contracts except that the contracts are segregated according to two levels of profitability:
This is a simplified measurement approach 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\u00a0(b) above.
ALD Re DAC have applied the PAA at the first adoption of IFRS\u00a017. The majority of ALD Re DAC\u2019s insurance contracts are for 12\u00a0months of coverage.
The subsidiary entity of LeasePlan acquired on 22\u00a0May 2023 also follows the PAA approach and all assets and liabilities of this subsidiary are presented in accordance with IFRS\u00a017 at the date of the Acquisition.
The PAA provides a simplified approach for measuring the liability for remaining coverage only. The liability for incurred claims is still measured using the General Model (however, only using the discounted best estimate of future cash flows and the risk adjustment building blocks).
The following accounting treatments apply under the PAA approach:
For changes to the presentation in the consolidated statement of financial position, the Group aggregates insurance contracts issued and reinsurance contracts held, respectively in Provisions and Other receivables and prepayments:
There are no changes to the presentation of the consolidated statement of profit or loss. The required separation of insurance expenses and insurance finance expenses are included in the disclosure.
The Group have adopted IFRS\u00a017 on a retrospective basis with comparative figures of 2022 financial year been restated. The difference in the measurement of the insurance assets and liabilities resulting from the retrospective application is recognised directly in opening equity as at 1\u00a0January 2022. The retrospective measurement of these assets and liabilities were subject to a simplified approach where historical data were not available.
The following tables reconciles the impact of IFRS\u00a017 on the balance sheet as at 31\u00a0December 2021 and at 31\u00a0December 2022.
(in EUR million) | Footnote | Balances as at | |
|---|---|---|---|
31\u00a0December 2021 | 31\u00a0December 2022 | ||
Total assets under IAS\u00a04 | \u00a0 | 26,991.4 | 31,351.0 |
Adjustments: | \u00a0 | \u00a0 | \u00a0 |
Receivables from clients and financial institutions | 1 | (56.0) | (52.0) |
Other receivables and prepayments | 2 | 4.8 | 4.6 |
Current and deferred tax | 3 | 1.8 | (1.3) |
Restated total assets under IFRS\u00a017 | \u00a0 | 26,942.0 | 31,302.3 |
Total liabilities under IAS\u00a04 | \u00a0 | 22,145.8 | 24,457.6 |
Adjustments: | \u00a0 | \u00a0 | \u00a0 |
Trade and other payable | 4 | (71.4) | (61.1) |
Provision | 5 | 12.5 | (7.0) |
Current and deferred tax | 3 | 2.8 | 0.4 |
Restated total liabilities under IFRS\u00a017 | \u00a0 | 22,089.7 | 24,389.9 |
Total equity under IAS\u00a04 | \u00a0 | 4,845.6 | 6,893.4 |
Adjustments: | \u00a0 | \u00a0 | \u00a0 |
Adjustment in respect of IFRS\u00a017 for 2021 | 6 | 6.7 | 6.7 |
Adjustment in respect of IFRS\u00a017 for 2022 | 6 | \u00a0 | 12.2 |
Restated total equity under IFRS\u00a017 | \u00a0 | 4,852.3 | 6,912.3 |
Restated total liabilities and equity under IFRS\u00a017 | \u00a0 | 26,942.0 | 31,302.3 |
|
\u00a0
The below tables reconcile the impact on income statement as published on 31\u00a0December 2022 and as restated under IFRS\u00a017.
(in EUR million) | Footnote | 31\u00a0December 2022 |
|---|---|---|
Net income as reported on 31\u00a0December 2022 under IFRS\u00a04 | \u00a0 | 1,207.9 |
Increase in service margin | 1 | 11.9 |
Decrease in operating expenses | 2 | 1.7 |
Increase in income tax expense | 3 | (1.3) |
Restated Net income as at 31\u00a0December 2022 | \u00a0 | 1,220.2 |
|
\u00a0
The impacts of transition from IFRS\u00a04 to IFRS\u00a017 are not material to the Group. There is no impact of IFRS\u00a017 on the statement of other comprehensive income.
The initial application of IFRS\u00a09 by the Group\u2019s insurance subsidiaries as at 1\u00a0January 2023 is retrospective along with IFRS\u00a017. The impact of IFRS\u00a09 is in relation to the bond portfolio where expected credit loss provision of EUR\u00a00.3\u00a0million in 2021 and EUR\u00a00.4\u00a0million in 2022 is recognised and is not material to the Group.
\u00a0
IASB publishes accounting standards, amendments and interpretations, some of which have not been adopted by the European Union as at 31\u00a0December 2023. They are required to be applied from annual periods beginning on 1\u00a0January 2024 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 2023. These amendments are not expected to have a material impact on the entity in the current or future reporting periods and on foreseeable future transactions.
", "dimensions": { "concept": "ifrs-full:DisclosureOfChangesInAccountingPoliciesAccountingEstimatesAndErrorsExplanatory", "language": "en", "entity": "scheme:969500E7V019H9NP7427", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "text_block_d1d9b1f1-7d95-4b4e-bd74-49d8ffcb3af8": { "value": "The Group has adopted the following new standards, amendments and interpretations to published standards for the first time for the financial year starting on 1\u00a0January 2023:
Accounting standards, amendments or Interpretations | Adoption dates |
|---|---|
IFRS\u00a017 \u201cInsurance Contracts\u201d | 1\u00a0January 2023 |
Definition of Accounting Estimates \u2013 Amendments to IAS\u00a08 | 1\u00a0January 2023 |
Disclosure of Accounting Policies - Amendments to IAS\u00a01 and IFRS Practice Statement\u00a02 | 1\u00a0January 2023 |
Deferred Tax related to Assets and Liabilities arising from a Single Transaction \u2013 Amendments to IAS\u00a012 | 1\u00a0January 2023 |
\u00a0
The amendments listed above did not have any impact on the amounts recognised in prior periods and are not expected to significantly affect the current or future periods, with the exception of IFRS\u00a017 Insurance contracts.
IFRS\u00a017 \u201cInsurance Contracts\u201d, issued on 18\u00a0May 2017 and modified by the 25\u00a0June 2020 and 9\u00a0December 2021 Amendments, replaces IFRS\u00a04 \u201cInsurance Contracts\u201d which allowed, in particular, insurance contracts to be recognised using methods set out by the local accounting regulations.
IFRS\u00a017 is adopted from 1\u00a0January 2023 and is applicable to Group\u2019s insurance subsidiary ALD Re DAC based in Ireland that deals in the reinsurance business as well as LeasePlan insurance (acquired on 22\u00a0May 2023) which is the LeasePlan group of insurance company. On that same date, ALD Re DAC started applying IFRS\u00a09 \u201cFinancial Instruments\u201d for the first time; this application had been delayed as a result of the possibilities offered by the Amendments to IFRS\u00a017 and to IFRS\u00a04 issued by the IASB on 25\u00a0June 2020 and extended by Regulations (EU) 2017/1988 and 2020/2097 of the European Commission.
IFRS\u00a017 establishes specific principles for the recognition and measurement of insurance contracts issued and reinsurance contracts held by the Group. The insurance contracts issued to the customers of ALD are related to the lease services of vehicles and includes for example motor third party liabilities. The adoption of IFRS\u00a017 did not change the classification of the Group\u2019s insurance contracts. The Group was previously permitted under IFRS\u00a04 to continue accounting using its previous local accounting policies.
Under IFRS\u00a017, the Group\u2019s insurance contracts issued, and reinsurance contracts held are all eligible to be measured by applying the premium allocation approach which is discussed below.
Under IFRS\u00a017, the measurement of Insurance Contracts issued are aggregated into homogeneous portfolios, where the contracts are subject to similar risks and managed together. Each portfolio is then required to be disaggregated 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-month period.
Similar requirements apply for Reinsurance Contracts except that the contracts are segregated according to two levels of profitability:
This is a simplified measurement approach 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\u00a0(b) above.
ALD Re DAC have applied the PAA at the first adoption of IFRS\u00a017. The majority of ALD Re DAC\u2019s insurance contracts are for 12\u00a0months of coverage.
The subsidiary entity of LeasePlan acquired on 22\u00a0May 2023 also follows the PAA approach and all assets and liabilities of this subsidiary are presented in accordance with IFRS\u00a017 at the date of the Acquisition.
The PAA provides a simplified approach for measuring the liability for remaining coverage only. The liability for incurred claims is still measured using the General Model (however, only using the discounted best estimate of future cash flows and the risk adjustment building blocks).
The following accounting treatments apply under the PAA approach:
For changes to the presentation in the consolidated statement of financial position, the Group aggregates insurance contracts issued and reinsurance contracts held, respectively in Provisions and Other receivables and prepayments:
There are no changes to the presentation of the consolidated statement of profit or loss. The required separation of insurance expenses and insurance finance expenses are included in the disclosure.
The Group have adopted IFRS\u00a017 on a retrospective basis with comparative figures of 2022 financial year been restated. The difference in the measurement of the insurance assets and liabilities resulting from the retrospective application is recognised directly in opening equity as at 1\u00a0January 2022. The retrospective measurement of these assets and liabilities were subject to a simplified approach where historical data were not available.
The following tables reconciles the impact of IFRS\u00a017 on the balance sheet as at 31\u00a0December 2021 and at 31\u00a0December 2022.
(in EUR million) | Footnote | Balances as at | |
|---|---|---|---|
31\u00a0December 2021 | 31\u00a0December 2022 | ||
Total assets under IAS\u00a04 | \u00a0 | 26,991.4 | 31,351.0 |
Adjustments: | \u00a0 | \u00a0 | \u00a0 |
Receivables from clients and financial institutions | 1 | (56.0) | (52.0) |
Other receivables and prepayments | 2 | 4.8 | 4.6 |
Current and deferred tax | 3 | 1.8 | (1.3) |
Restated total assets under IFRS\u00a017 | \u00a0 | 26,942.0 | 31,302.3 |
Total liabilities under IAS\u00a04 | \u00a0 | 22,145.8 | 24,457.6 |
Adjustments: | \u00a0 | \u00a0 | \u00a0 |
Trade and other payable | 4 | (71.4) | (61.1) |
Provision | 5 | 12.5 | (7.0) |
Current and deferred tax | 3 | 2.8 | 0.4 |
Restated total liabilities under IFRS\u00a017 | \u00a0 | 22,089.7 | 24,389.9 |
Total equity under IAS\u00a04 | \u00a0 | 4,845.6 | 6,893.4 |
Adjustments: | \u00a0 | \u00a0 | \u00a0 |
Adjustment in respect of IFRS\u00a017 for 2021 | 6 | 6.7 | 6.7 |
Adjustment in respect of IFRS\u00a017 for 2022 | 6 | \u00a0 | 12.2 |
Restated total equity under IFRS\u00a017 | \u00a0 | 4,852.3 | 6,912.3 |
Restated total liabilities and equity under IFRS\u00a017 | \u00a0 | 26,942.0 | 31,302.3 |
|
\u00a0
The below tables reconcile the impact on income statement as published on 31\u00a0December 2022 and as restated under IFRS\u00a017.
(in EUR million) | Footnote | 31\u00a0December 2022 |
|---|---|---|
Net income as reported on 31\u00a0December 2022 under IFRS\u00a04 | \u00a0 | 1,207.9 |
Increase in service margin | 1 | 11.9 |
Decrease in operating expenses | 2 | 1.7 |
Increase in income tax expense | 3 | (1.3) |
Restated Net income as at 31\u00a0December 2022 | \u00a0 | 1,220.2 |
|
\u00a0
The impacts of transition from IFRS\u00a04 to IFRS\u00a017 are not material to the Group. There is no impact of IFRS\u00a017 on the statement of other comprehensive income.
The initial application of IFRS\u00a09 by the Group\u2019s insurance subsidiaries as at 1\u00a0January 2023 is retrospective along with IFRS\u00a017. The impact of IFRS\u00a09 is in relation to the bond portfolio where expected credit loss provision of EUR\u00a00.3\u00a0million in 2021 and EUR\u00a00.4\u00a0million in 2022 is recognised and is not material to the Group.
\u00a0
IASB publishes accounting standards, amendments and interpretations, some of which have not been adopted by the European Union as at 31\u00a0December 2023. They are required to be applied from annual periods beginning on 1\u00a0January 2024 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 2023. These amendments are not expected to have a material impact on the entity in the current or future reporting periods and on foreseeable future transactions.
", "dimensions": { "concept": "ifrs-full:DisclosureOfChangesInAccountingPoliciesExplanatory", "language": "en", "entity": "scheme:969500E7V019H9NP7427", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "text_block_9b7bd338-6dd6-4454-adcd-f30c72d7e884": { "value": "The Group has adopted the following new standards, amendments and interpretations to published standards for the first time for the financial year starting on 1\u00a0January 2023:
Accounting standards, amendments or Interpretations | Adoption dates |
|---|---|
IFRS\u00a017 \u201cInsurance Contracts\u201d | 1\u00a0January 2023 |
Definition of Accounting Estimates \u2013 Amendments to IAS\u00a08 | 1\u00a0January 2023 |
Disclosure of Accounting Policies - Amendments to IAS\u00a01 and IFRS Practice Statement\u00a02 | 1\u00a0January 2023 |
Deferred Tax related to Assets and Liabilities arising from a Single Transaction \u2013 Amendments to IAS\u00a012 | 1\u00a0January 2023 |
\u00a0
The amendments listed above did not have any impact on the amounts recognised in prior periods and are not expected to significantly affect the current or future periods, with the exception of IFRS\u00a017 Insurance contracts.
IFRS\u00a017 \u201cInsurance Contracts\u201d, issued on 18\u00a0May 2017 and modified by the 25\u00a0June 2020 and 9\u00a0December 2021 Amendments, replaces IFRS\u00a04 \u201cInsurance Contracts\u201d which allowed, in particular, insurance contracts to be recognised using methods set out by the local accounting regulations.
IFRS\u00a017 is adopted from 1\u00a0January 2023 and is applicable to Group\u2019s insurance subsidiary ALD Re DAC based in Ireland that deals in the reinsurance business as well as LeasePlan insurance (acquired on 22\u00a0May 2023) which is the LeasePlan group of insurance company. On that same date, ALD Re DAC started applying IFRS\u00a09 \u201cFinancial Instruments\u201d for the first time; this application had been delayed as a result of the possibilities offered by the Amendments to IFRS\u00a017 and to IFRS\u00a04 issued by the IASB on 25\u00a0June 2020 and extended by Regulations (EU) 2017/1988 and 2020/2097 of the European Commission.
IFRS\u00a017 establishes specific principles for the recognition and measurement of insurance contracts issued and reinsurance contracts held by the Group. The insurance contracts issued to the customers of ALD are related to the lease services of vehicles and includes for example motor third party liabilities. The adoption of IFRS\u00a017 did not change the classification of the Group\u2019s insurance contracts. The Group was previously permitted under IFRS\u00a04 to continue accounting using its previous local accounting policies.
Under IFRS\u00a017, the Group\u2019s insurance contracts issued, and reinsurance contracts held are all eligible to be measured by applying the premium allocation approach which is discussed below.
Under IFRS\u00a017, the measurement of Insurance Contracts issued are aggregated into homogeneous portfolios, where the contracts are subject to similar risks and managed together. Each portfolio is then required to be disaggregated 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-month period.
Similar requirements apply for Reinsurance Contracts except that the contracts are segregated according to two levels of profitability:
This is a simplified measurement approach 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\u00a0(b) above.
ALD Re DAC have applied the PAA at the first adoption of IFRS\u00a017. The majority of ALD Re DAC\u2019s insurance contracts are for 12\u00a0months of coverage.
The subsidiary entity of LeasePlan acquired on 22\u00a0May 2023 also follows the PAA approach and all assets and liabilities of this subsidiary are presented in accordance with IFRS\u00a017 at the date of the Acquisition.
The PAA provides a simplified approach for measuring the liability for remaining coverage only. The liability for incurred claims is still measured using the General Model (however, only using the discounted best estimate of future cash flows and the risk adjustment building blocks).
The following accounting treatments apply under the PAA approach:
For changes to the presentation in the consolidated statement of financial position, the Group aggregates insurance contracts issued and reinsurance contracts held, respectively in Provisions and Other receivables and prepayments:
There are no changes to the presentation of the consolidated statement of profit or loss. The required separation of insurance expenses and insurance finance expenses are included in the disclosure.
The Group have adopted IFRS\u00a017 on a retrospective basis with comparative figures of 2022 financial year been restated. The difference in the measurement of the insurance assets and liabilities resulting from the retrospective application is recognised directly in opening equity as at 1\u00a0January 2022. The retrospective measurement of these assets and liabilities were subject to a simplified approach where historical data were not available.
The following tables reconciles the impact of IFRS\u00a017 on the balance sheet as at 31\u00a0December 2021 and at 31\u00a0December 2022.
(in EUR million) | Footnote | Balances as at | |
|---|---|---|---|
31\u00a0December 2021 | 31\u00a0December 2022 | ||
Total assets under IAS\u00a04 | \u00a0 | 26,991.4 | 31,351.0 |
Adjustments: | \u00a0 | \u00a0 | \u00a0 |
Receivables from clients and financial institutions | 1 | (56.0) | (52.0) |
Other receivables and prepayments | 2 | 4.8 | 4.6 |
Current and deferred tax | 3 | 1.8 | (1.3) |
Restated total assets under IFRS\u00a017 | \u00a0 | 26,942.0 | 31,302.3 |
Total liabilities under IAS\u00a04 | \u00a0 | 22,145.8 | 24,457.6 |
Adjustments: | \u00a0 | \u00a0 | \u00a0 |
Trade and other payable | 4 | (71.4) | (61.1) |
Provision | 5 | 12.5 | (7.0) |
Current and deferred tax | 3 | 2.8 | 0.4 |
Restated total liabilities under IFRS\u00a017 | \u00a0 | 22,089.7 | 24,389.9 |
Total equity under IAS\u00a04 | \u00a0 | 4,845.6 | 6,893.4 |
Adjustments: | \u00a0 | \u00a0 | \u00a0 |
Adjustment in respect of IFRS\u00a017 for 2021 | 6 | 6.7 | 6.7 |
Adjustment in respect of IFRS\u00a017 for 2022 | 6 | \u00a0 | 12.2 |
Restated total equity under IFRS\u00a017 | \u00a0 | 4,852.3 | 6,912.3 |
Restated total liabilities and equity under IFRS\u00a017 | \u00a0 | 26,942.0 | 31,302.3 |
|
\u00a0
The below tables reconcile the impact on income statement as published on 31\u00a0December 2022 and as restated under IFRS\u00a017.
(in EUR million) | Footnote | 31\u00a0December 2022 |
|---|---|---|
Net income as reported on 31\u00a0December 2022 under IFRS\u00a04 | \u00a0 | 1,207.9 |
Increase in service margin | 1 | 11.9 |
Decrease in operating expenses | 2 | 1.7 |
Increase in income tax expense | 3 | (1.3) |
Restated Net income as at 31\u00a0December 2022 | \u00a0 | 1,220.2 |
|
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The impacts of transition from IFRS\u00a04 to IFRS\u00a017 are not material to the Group. There is no impact of IFRS\u00a017 on the statement of other comprehensive income.
The initial application of IFRS\u00a09 by the Group\u2019s insurance subsidiaries as at 1\u00a0January 2023 is retrospective along with IFRS\u00a017. The impact of IFRS\u00a09 is in relation to the bond portfolio where expected credit loss provision of EUR\u00a00.3\u00a0million in 2021 and EUR\u00a00.4\u00a0million in 2022 is recognised and is not material to the Group.
", "dimensions": { "concept": "ifrs-full:DisclosureOfFirstTimeAdoptionExplanatory", "language": "en", "entity": "scheme:969500E7V019H9NP7427", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fc_90177aa5-5dcf-4a9a-a409-613e34712296": { "value": "year ended 31\u00a0December 2023", "dimensions": { "concept": "ifrs-full:PeriodCoveredByFinancialStatements", "language": "en", "entity": "scheme:969500E7V019H9NP7427", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "text_block_b1a1ee78-ace9-494f-b45a-332934058158": { "value": "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.
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.
For non-wholly owned subsidiaries, non-controlling interests are presented in equity separately from the equity attributable to shareholders of the Company. Profit or loss and other comprehensive income are attributed to the shareholders of the Company and to non-controlling interests even if this results in the non-controlling interests having a deficit balance. Changes in ownership interest in subsidiaries that do not result in a change in control are accounted for in equity. The carrying amounts of the controlling and non-controlling interests are adjusted to reflect the changes in their relative interests in the subsidiary. Any difference between the amount by which the non-controlling interest is adjusted and the fair value of the consideration paid or received is recorded directly in equity and attributed to the shareholders of the Company.
Associates are investments over which the Group has significant influence, which is the power to participate in the financial and operating policy decisions of the investee, but without the ability to exercise control or joint control. Typically, the Group owns between 20% and 50% of the voting equity of its associates.
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.
Joint arrangements are arrangements in which the Group shares joint control with one or more parties. Joint control is the contractually agreed sharing of control of an arrangement, and exists only when decisions about the activities that significantly affect the arrangement\u2019s returns require the unanimous consent of the parties sharing control.
Judgement is required in determining this classification through an evaluation of the facts and circumstances arising from each individual arrangement. Joint arrangements are classified as either joint operations or joint ventures based on the rights and obligations of the parties to the arrangement. In joint operations, the parties have rights to the assets and obligations for the liabilities relating to the arrangement, whereas in joint ventures, the parties have rights to the net assets of the arrangement. The Group has assessed the nature of its joint arrangements and determined them to be joint ventures.
Investments in joint ventures are accounted for using the equity method of accounting except when classified as held for sale. The Group\u2019s share of associates\u2019 and joint ventures\u2019 Net income is based on their most recent audited financial statements or unaudited interim statements drawn up to the Group\u2019s balance sheet date. Accounting policies of the joint ventures are modified where necessary to ensure consistency with the policies adopted by the Group.
The total carrying values of investments in joint ventures represent the cost of each investment including the carrying value of goodwill, the share of post-acquisition retained earnings, any other movements in reserves and any long-term debt interests which in substance form part of the Group\u2019s net investment, less any cumulative impairments. The carrying values of associates and joint ventures are reviewed on a regular basis and if there is objective evidence that an impairment in value has occurred as a result of one or more events during the period, the investment is impaired. Investments which have been previously impaired are regularly reviewed for indicators of impairment reversal.
The Group\u2019s share of an associate\u2019s or joint venture\u2019s losses in excess of its interest in that associate or joint venture is not recognised unless the Group has an obligation to fund such losses. Unrealised gains arising from transactions with associates and joint ventures are eliminated against the investment to the extent of the Group\u2019s interest in the investee. Unrealised losses are eliminated in the same way, but only to the extent that there is no evidence of impairment.
Name | Country | Activity | Type of equity investment | Carrying value | %\u00a0 |
|---|---|---|---|---|---|
ALD Automotive\u00a0SA Morocco | Morocco | Leasing | Associate | 9.5 | 35% |
LeasePlan Emirates L.L.C. | Emirate of Abu Dhabi | Leasing | Joint venture | 17.1 | 49% |
Flottenmanagement\u00a0GmbH | Austria | Leasing | Joint venture | 2.0 | 49% |
PLease S.C.S. | France | Leasing | Joint venture | 28.1 | 99% |
\u00a0
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. Until this point the 35% interest was accounted for using equity method.
\u00a0
(in EUR million) | As at 31\u00a0December | |||||
2023 | 2022 | |||||
Associates | Joint Ventures | Total | Associates | Joint Ventures | Total | |
Balance as at 1\u00a0January | 7.9 | \u2212 | 7.9 | 7.9 | \u2212 | 7.9 |
Share of result for the year | 1.4 | 5.0 | 6.4 | 1.7 | \u2212 | 1.7 |
Dividends paid | (0.0) | (6.3) | (6.3) | \u2212 | \u2212 | \u2212 |
Currency translation differences | 0.2 | (0.1) | 0.1 | (0.4) | \u2212 | (0.4) |
Scope changes | \u2212 | 48.7 | 48.7 | (1.2) | \u2212 | (1.2) |
Balance as at 31\u00a0December | 9.5 | 47.2 | 56.7 | 7.9 | \u2212 | 7.9 |
\u00a0
The summarised statement of comprehensive income below does not represent the proportionate share of entity, but the actual amount included for the material interests in investments accounted for using the equity method.
\u00a0
(in EUR million) | Year ended 31\u00a0December | |||||
2022 | 2022 | |||||
Associates | Joint Ventures | Total | Associates | Joint Ventures | Total | |
Income Statement | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Revenues | 63.3 | 172.0 | 235.3 | 61.2 | \u2212 | 61.2 |
Direct costs | (53.6) | (145.0) | (198.6) | (51.3) | \u2212 | (51.3) |
Gross operating income | 9.7 | 27.0 | 36.7 | 9.8 | \u2212 | 9.8 |
Total operating costs | (4.6) | (15.0) | (19.6) | (4.5) | \u2212 | (4.5) |
Other income/costs | (0.6) | - | (0.6) | (0.9) | \u2212 | (0.9) |
Income tax | (0.5) | (1.0) | (1.5) | 0.3 | \u2212 | 0.3 |
Profit for the period | 4.0 | 11.0 | 15.0 | 4.8 | \u2212 | 4.8 |
Total comprehensive income at 100% | 4.0 | 11.0 | 15.0 | 4.8 | \u2212 | 4.8 |
Group share of profit for the year | 1.4 | 5.0 | 6.4 | 1.7 | \u2212 | 1.7 |
\u00a0
The summarised financial information below does not represent the proportionate share of the entity, but the actual amount included in the separate financial statements of the material interests in investments accounted for using the equity method.
(in EUR million) | As at 31\u00a0December | |||||
2023 | 2022 | |||||
Associates | Joint Ventures | Total | Associates | Joint Ventures | Total | |
Balance Sheet | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Current assets | 26.0 | 28.0 | 54.0 | 20.0 | \u2212 | 20.0 |
Non-current assets | 149.1 | 397.1 | 546.2 | 120.9 | \u2212 | 120.9 |
Current liabilities | (61.1) | (112.3) | (173.4) | (65.0) | \u2212 | (65.0) |
Non-current liabilities | (86.8) | (245.6) | (332.4) | (53.3) | \u2212 | (53.3) |
Equity/Net assets at 100% | 27.2 | 67.2 | 94.4 | 22.6 | \u2212 | 22.6 |
Group Carrying value | 9.5 | 47.2 | 56.7 | 7.9 | \u2212 | 7.9 |
\u00a0
The loans to investments accounted for using the equity method are accounted for at amortised cost (less impairment) and the maturity analysis is as follows:
(in EUR million) | As at 31\u00a0December | |||||
2023 | 2022 | |||||
Associates | Joint Ventures | Total | Associates | Joint Ventures | Total | |
Loan to associates and joint ventures | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Balance as at 1\u00a0January | \u2212 | \u2212 | \u2212 | \u2212 | \u2212 | \u2212 |
Addition | 2.0 | \u2212 | 2.0 | \u2212 | \u2212 | \u2212 |
Repayment | \u2212 | (39.0) | (39.0) | \u2212 | \u2212 | \u2212 |
Scope changes | \u2212 | 78.5 | 78.5 | \u2212 | \u2212 | \u2212 |
Balance as at 31\u00a0December | 2.0 | 39.5 | 41.5 | \u2212 | \u2212 | \u2212 |
\u00a0
Credit facilities of EUR\u00a039.5\u00a0million (2022: Nil) have been advanced to investments accounted for using the equity method of which EUR\u00a039.5\u00a0million was drawn down on (2022: Nil) as at 31\u00a0December 2023.
Non-controlling interests in the consolidated balance sheet and statement of changes in equity are as follows:
(in EUR million) | Total |
|---|---|
Balance as at 1\u00a0January 2022 | 33.8 |
Currency translation differences | (0.6) |
Net income | 4.7 |
Dividends | (9.9) |
Scope change | 8.9 |
Balance as at 31\u00a0December 2022 | 36.8 |
Currency translation differences | 0.1 |
Net income\u00a0(1) | 27.9 |
Dividends | (8.6) |
Scope change | 506.2 |
Dividend payment on AT1 capital | (36.9) |
Balance as at 31\u00a0December 2023 | 525.6 |
|
At the date of acquisition of LeasePlan, on 22\u00a0May 2023, the acquired net assets of LeasePlan include AT1 capital for EUR\u00a0513\u00a0million recorded in scope change line (including EUR\u00a018.4\u00a0million of accrued interest) which was previously issued by LeasePlan Corporation N.V. in 2019. These capital securities qualify as an equity instrument and are undated, deeply subordinated, resettable and callable. Redemption is discretionary to LeasePlan Corporation N.V. five years after the issue date, unless permitted by applicable banking regulations or on each interest payment date thereafter at their prevailing principal amount, together with unpaid interest. There is a fixed interest coupon of 7.375% per annum, payable semi-annually.
Interest on the AT1 capital issued by LeasePlan Corporation N.V. is non-cumulative and fully at the discretion of the Group so any failure by the issuer to pay interest or the prevailing principal amount when due in respect of the capital securities shall not constitute an event of default and does not give holders any right to demand repayment of the prevailing principal amount.
Interest coupon in the year ending 31\u00a0December 2023 on these AT1 capital securities amounts to EUR\u00a040.2\u00a0million of which an amount of EUR\u00a036.9\u00a0million was paid. The remaining part of EUR\u00a03.3\u00a0million is payable in May\u00a02024.
(in %) | As at 31\u00a0December | |
|---|---|---|
2023 | 2022 | |
ALD International\u00a0SA | Parent company | Parent company |
Consolidated companies under global integration | interest % | interest % |
ALD Autoleasing D\u00a0GmbH \u2013 GERMANY\u00a0(1) | 100.00 | 100.00 |
ALD Automotive A/S - DENMARK | 100.00 | 100.00 |
ALD Automotive\u00a0AB - SWEDEN | 100.00 | 100.00 |
ALD Automotive\u00a0AG \u2013 SWITZERLAND | 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 \u2013 CROATIA\u00a0(1) | 100.00 | \u2212 |
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 \u2013 UK\u00a0(1) | 100.00 | 100.00 |
ALD Automotive\u00a0SA \u2013 BRAZIL | 100.00 | 100.00 |
ALD Automotive Magyarorszag Autopark - kezelo es Finanszirozo KFT \u2013 HUNGARY\u00a0(1) | 100.00 | 100.00 |
ALD Automotive Operational Leasing DOO \u2013 SLOVENIA | 100.00 | 100.00 |
ALD Automotive Polska Sp z o.o. \u2013 POLAND | 100.00 | 100.00 |
ALD Automotive Private Limited \u2013 INDIA | 100.00 | 100.00 |
ALD Automotive\u00a0SA de CV \u2013 MEXICO | 100.00 | 100.00 |
ALD Automotive\u00a0SA Lease of Cars - GREECE | 100.00 | 100.00 |
ALD Automotive\u00a0SAU \u2013 SPAIN\u00a0(1) | 100.00 | 100.00 |
ALD Automotive SRO \u2013 CZECH REPUBLIC | 100.00 | 100.00 |
ALD Automotive Turizm Ticaret Anonim Sirketi \u2013 TURKEY | 100.00 | 100.00 |
ALD Fleet\u00a0SA de CV SOFOM ENR | 100.00 | 100.00 |
ALD International\u00a0SAS & CO KG\u00a0(1) | 100.00 | 100.00 |
ALD Re Designated Activity Company \u2013 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(1) | 100.00 | 100.00 |
AXUS\u00a0SA\u00a0NV \u2013 BELGIUM\u00a0(1) | 100.00 | 100.00 |
ALD Automotive Ukraine Limited Liability Company | 100.00 | 100.00 |
Temsys \u2013 France\u00a0(1) | 100.00 | 100.00 |
ALD Automotive Algerie\u00a0SPA | 99.99 | 99.99 |
ALD Automotive SRL \u2013 ROMANIA | 80.00 | 80.00 |
NF Fleet A/S \u2013 DENMARK | 80.00 | 80.00 |
NF Fleet\u00a0OY \u2013 FINLAND | 80.00 | 80.00 |
NF Fleet\u00a0AB \u2013 SWEDEN | 80.00 | 80.00 |
NF Fleet\u00a0AS \u2013 NORWAY | 80.00 | 80.00 |
ALD Automotive Eesti\u00a0AS \u2013 ESTONIA | 75.01 | 75.01 |
ALD Automotive SIA \u2013 LATVIA | 75.00 | 75.00 |
UAB ALD Automotive \u2013 LITHUANIA | 75.00 | 75.00 |
ALD Automotive EOOD \u2013 BULGARIA | 100.00 | 100.00 |
ALD Automotive Limitada \u2013 CHILE | 100.00 | 100.00 |
ALD Automotive Peru\u00a0S.A.C. | 100.00 | 100.00 |
ALD Mul Mobility Services Malaysia SND. BHD. \u2013 MALAYSIA | 60.00 | 60.00 |
UK FFM | 50.10 | 50.10 |
ALD Automotive\u00a0LLC (Belarus) | 100.00 | 100.00 |
ALD Automotive Euro Leasing B.V. | 50.10 | 50.10 |
Soluciones De Renting Movilidad S.L. | 100.00 | 100.00 |
Fleetpool Holding\u00a0GmbH | 100.00 | 100.00 |
ALD Automotive\u00a0SAS \u2013 COLOMBIA | 100.00 | 100.00 |
ALD Automotive Slovakia S.R.O | 100.00 | 100.00 |
ALD Automotive OOO \u2013 RUSSIA\u00a0(2) | \u2212 | 100.00 |
ALD Automotive\u00a0AS \u2013 NORWAY\u00a0(2) | \u2212 | 100.00 |
SG ALD Automotive Sociedade Geral de Comercio e Aluguer de Benz sa \u2013 Portugal\u00a0(2) | \u2212 | 100.00 |
Merrion Fleet Management Limited\u00a0(2) | \u2212 | 100.00 |
\u00a0
(in %) | As at 31\u00a0December | |
|---|---|---|
2023 | 2022 | |
ALD International\u00a0SA | Parent company | Parent company |
Consolidated companies under global integration | interest % | interest % |
LeasePlan Brasil\u00a0Ltda. | 100.00 | \u2212 |
LeasePlan Danmark A/S, Denmark | 100.00 | \u2212 |
LeasePlan Deutschland\u00a0GmbH | 100.00 | \u2212 |
LeasePlan Digital B.V. | 100.00 | \u2212 |
LeasePlan Fleet Management N.V. | 100.00 | \u2212 |
LeasePlan Fleet Management (Polsk\u00e1) Sp. z.o.o. | 100.00 | \u2212 |
LeasePlan Fleet Management Services Ireland Limited | 100.00 | \u2212 |
LeasePlan France\u00a0S.A.S. | 100.00 | \u2212 |
LeasePlan Hellas\u00a0S.A. | 100.00 | \u2212 |
LeasePlan Hung\u00e1ria G\u00e9pj\u00e1rm\u0171park Kezel\u00f6 \u00e9s Finansz\u00edroz\u00f3 Z\u00e1rtk\u00f6r\u0171 R\u00e9szv\u00e9nyt\u00e1rsas\u00e1g | 100.00 | \u2212 |
LeasePlan India Private Limited | 100.00 | \u2212 |
LeasePlan Italia\u00a0S.p.A. | 100.00 | \u2212 |
LeasePlan M\u00e9xico\u00a0S.A. de C.V. | 100.00 | \u2212 |
LeasePlan Nederland N.V. | 100.00 | \u2212 |
LeasePlan Norge A/S | 100.00 | \u2212 |
LeasePlan \u00d6sterreich Fuhrparkmanagement\u00a0GmbH | 100.00 | \u2212 |
LeasePlan Portugal Com\u00e9rcio e Aluguer de Autom\u00f3veis e Equipamentos Unipessoal Lda. | 100.00 | \u2212 |
LeasePlan Romania S.R.L. | 100.00 | \u2212 |
LeasePlan Rus\u00a0LLC | 100.00 | \u2212 |
LeasePlan (Schweiz)\u00a0AG, Switzerland | 100.00 | \u2212 |
LeasePlan Service Center | 100.00 | \u2212 |
LeasePlan Servicios\u00a0S.A. | 100.00 | \u2212 |
LeasePlan Slovakia s.r.o. | 100.00 | \u2212 |
LeasePlan Sverige\u00a0AB | 100.00 | \u2212 |
LeasePlan Otomotive Servis ve Ticaret A.\u0218. | 100.00 | \u2212 |
LeasePlan UK Limited | 100.00 | \u2212 |
Euro Insurances Designated Activity Company | 100.00 | \u2212 |
LeasePlan Finance B.V. | 100.00 | \u2212 |
LeasePlan Global B.V. | 100.00 | \u2212 |
LeasePlan \u010cesk\u00e1 republika s.r.o.\u00a0(2) | \u2212 | \u2212 |
LeasePlan Finland Oy\u00a0(2) | \u2212 | \u2212 |
LeasePlan Luxembourg\u00a0S.A.\u00a0(2) | \u2212 | \u2212 |
LeasePlan USA,\u00a0Inc.\u00a0(2) | \u2212 | \u2212 |
\u00a0\u00a0
(in %) | As at 31\u00a0December | |
|---|---|---|
2023 | 2022 | |
ALD Automotive\u00a0SA Maroc | 35.00 | 35.00 |
PLease S.C.S Flottenmanagement\u00a0GmbH\u00a0(3) | 99.30 | \u2212 |
LeasePlan Emirates Fleet Management \u2013 LeasePlan Emirates\u00a0LLC1 | 49.00 | \u2212 |
Flottenmanagement\u00a0GmbH | 49.00 | \u2212 |
|
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.
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.
For non-wholly owned subsidiaries, non-controlling interests are presented in equity separately from the equity attributable to shareholders of the Company. Profit or loss and other comprehensive income are attributed to the shareholders of the Company and to non-controlling interests even if this results in the non-controlling interests having a deficit balance. Changes in ownership interest in subsidiaries that do not result in a change in control are accounted for in equity. The carrying amounts of the controlling and non-controlling interests are adjusted to reflect the changes in their relative interests in the subsidiary. Any difference between the amount by which the non-controlling interest is adjusted and the fair value of the consideration paid or received is recorded directly in equity and attributed to the shareholders of the Company.
", "dimensions": { "concept": "ifrs-full:DisclosureOfInvestmentsOtherThanInvestmentsAccountedForUsingEquityMethodExplanatory", "language": "en", "entity": "scheme:969500E7V019H9NP7427", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "text_block_0a3f6cc6-b79d-4f19-8f67-0b338d032ed2": { "value": "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.
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.
For non-wholly owned subsidiaries, non-controlling interests are presented in equity separately from the equity attributable to shareholders of the Company. Profit or loss and other comprehensive income are attributed to the shareholders of the Company and to non-controlling interests even if this results in the non-controlling interests having a deficit balance. Changes in ownership interest in subsidiaries that do not result in a change in control are accounted for in equity. The carrying amounts of the controlling and non-controlling interests are adjusted to reflect the changes in their relative interests in the subsidiary. Any difference between the amount by which the non-controlling interest is adjusted and the fair value of the consideration paid or received is recorded directly in equity and attributed to the shareholders of the Company.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForInvestmentsOtherThanInvestmentsAccountedForUsingEquityMethodExplanatory", "language": "en", "entity": "scheme:969500E7V019H9NP7427", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "text_block_50024758-2aaf-4e5c-97ec-52b0211240e0": { "value": "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.
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.
For non-wholly owned subsidiaries, non-controlling interests are presented in equity separately from the equity attributable to shareholders of the Company. Profit or loss and other comprehensive income are attributed to the shareholders of the Company and to non-controlling interests even if this results in the non-controlling interests having a deficit balance. Changes in ownership interest in subsidiaries that do not result in a change in control are accounted for in equity. The carrying amounts of the controlling and non-controlling interests are adjusted to reflect the changes in their relative interests in the subsidiary. Any difference between the amount by which the non-controlling interest is adjusted and the fair value of the consideration paid or received is recorded directly in equity and attributed to the shareholders of the Company.
Non-controlling interests in the consolidated balance sheet and statement of changes in equity are as follows:
(in EUR million) | Total |
|---|---|
Balance as at 1\u00a0January 2022 | 33.8 |
Currency translation differences | (0.6) |
Net income | 4.7 |
Dividends | (9.9) |
Scope change | 8.9 |
Balance as at 31\u00a0December 2022 | 36.8 |
Currency translation differences | 0.1 |
Net income\u00a0(1) | 27.9 |
Dividends | (8.6) |
Scope change | 506.2 |
Dividend payment on AT1 capital | (36.9) |
Balance as at 31\u00a0December 2023 | 525.6 |
|
At the date of acquisition of LeasePlan, on 22\u00a0May 2023, the acquired net assets of LeasePlan include AT1 capital for EUR\u00a0513\u00a0million recorded in scope change line (including EUR\u00a018.4\u00a0million of accrued interest) which was previously issued by LeasePlan Corporation N.V. in 2019. These capital securities qualify as an equity instrument and are undated, deeply subordinated, resettable and callable. Redemption is discretionary to LeasePlan Corporation N.V. five years after the issue date, unless permitted by applicable banking regulations or on each interest payment date thereafter at their prevailing principal amount, together with unpaid interest. There is a fixed interest coupon of 7.375% per annum, payable semi-annually.
Interest on the AT1 capital issued by LeasePlan Corporation N.V. is non-cumulative and fully at the discretion of the Group so any failure by the issuer to pay interest or the prevailing principal amount when due in respect of the capital securities shall not constitute an event of default and does not give holders any right to demand repayment of the prevailing principal amount.
Interest coupon in the year ending 31\u00a0December 2023 on these AT1 capital securities amounts to EUR\u00a040.2\u00a0million of which an amount of EUR\u00a036.9\u00a0million was paid. The remaining part of EUR\u00a03.3\u00a0million is payable in May\u00a02024.
(in %) | As at 31\u00a0December | |
|---|---|---|
2023 | 2022 | |
ALD International\u00a0SA | Parent company | Parent company |
Consolidated companies under global integration | interest % | interest % |
ALD Autoleasing D\u00a0GmbH \u2013 GERMANY\u00a0(1) | 100.00 | 100.00 |
ALD Automotive A/S - DENMARK | 100.00 | 100.00 |
ALD Automotive\u00a0AB - SWEDEN | 100.00 | 100.00 |
ALD Automotive\u00a0AG \u2013 SWITZERLAND | 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 \u2013 CROATIA\u00a0(1) | 100.00 | \u2212 |
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 \u2013 UK\u00a0(1) | 100.00 | 100.00 |
ALD Automotive\u00a0SA \u2013 BRAZIL | 100.00 | 100.00 |
ALD Automotive Magyarorszag Autopark - kezelo es Finanszirozo KFT \u2013 HUNGARY\u00a0(1) | 100.00 | 100.00 |
ALD Automotive Operational Leasing DOO \u2013 SLOVENIA | 100.00 | 100.00 |
ALD Automotive Polska Sp z o.o. \u2013 POLAND | 100.00 | 100.00 |
ALD Automotive Private Limited \u2013 INDIA | 100.00 | 100.00 |
ALD Automotive\u00a0SA de CV \u2013 MEXICO | 100.00 | 100.00 |
ALD Automotive\u00a0SA Lease of Cars - GREECE | 100.00 | 100.00 |
ALD Automotive\u00a0SAU \u2013 SPAIN\u00a0(1) | 100.00 | 100.00 |
ALD Automotive SRO \u2013 CZECH REPUBLIC | 100.00 | 100.00 |
ALD Automotive Turizm Ticaret Anonim Sirketi \u2013 TURKEY | 100.00 | 100.00 |
ALD Fleet\u00a0SA de CV SOFOM ENR | 100.00 | 100.00 |
ALD International\u00a0SAS & CO KG\u00a0(1) | 100.00 | 100.00 |
ALD Re Designated Activity Company \u2013 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(1) | 100.00 | 100.00 |
AXUS\u00a0SA\u00a0NV \u2013 BELGIUM\u00a0(1) | 100.00 | 100.00 |
ALD Automotive Ukraine Limited Liability Company | 100.00 | 100.00 |
Temsys \u2013 France\u00a0(1) | 100.00 | 100.00 |
ALD Automotive Algerie\u00a0SPA | 99.99 | 99.99 |
ALD Automotive SRL \u2013 ROMANIA | 80.00 | 80.00 |
NF Fleet A/S \u2013 DENMARK | 80.00 | 80.00 |
NF Fleet\u00a0OY \u2013 FINLAND | 80.00 | 80.00 |
NF Fleet\u00a0AB \u2013 SWEDEN | 80.00 | 80.00 |
NF Fleet\u00a0AS \u2013 NORWAY | 80.00 | 80.00 |
ALD Automotive Eesti\u00a0AS \u2013 ESTONIA | 75.01 | 75.01 |
ALD Automotive SIA \u2013 LATVIA | 75.00 | 75.00 |
UAB ALD Automotive \u2013 LITHUANIA | 75.00 | 75.00 |
ALD Automotive EOOD \u2013 BULGARIA | 100.00 | 100.00 |
ALD Automotive Limitada \u2013 CHILE | 100.00 | 100.00 |
ALD Automotive Peru\u00a0S.A.C. | 100.00 | 100.00 |
ALD Mul Mobility Services Malaysia SND. BHD. \u2013 MALAYSIA | 60.00 | 60.00 |
UK FFM | 50.10 | 50.10 |
ALD Automotive\u00a0LLC (Belarus) | 100.00 | 100.00 |
ALD Automotive Euro Leasing B.V. | 50.10 | 50.10 |
Soluciones De Renting Movilidad S.L. | 100.00 | 100.00 |
Fleetpool Holding\u00a0GmbH | 100.00 | 100.00 |
ALD Automotive\u00a0SAS \u2013 COLOMBIA | 100.00 | 100.00 |
ALD Automotive Slovakia S.R.O | 100.00 | 100.00 |
ALD Automotive OOO \u2013 RUSSIA\u00a0(2) | \u2212 | 100.00 |
ALD Automotive\u00a0AS \u2013 NORWAY\u00a0(2) | \u2212 | 100.00 |
SG ALD Automotive Sociedade Geral de Comercio e Aluguer de Benz sa \u2013 Portugal\u00a0(2) | \u2212 | 100.00 |
Merrion Fleet Management Limited\u00a0(2) | \u2212 | 100.00 |
\u00a0
(in %) | As at 31\u00a0December | |
|---|---|---|
2023 | 2022 | |
ALD International\u00a0SA | Parent company | Parent company |
Consolidated companies under global integration | interest % | interest % |
LeasePlan Brasil\u00a0Ltda. | 100.00 | \u2212 |
LeasePlan Danmark A/S, Denmark | 100.00 | \u2212 |
LeasePlan Deutschland\u00a0GmbH | 100.00 | \u2212 |
LeasePlan Digital B.V. | 100.00 | \u2212 |
LeasePlan Fleet Management N.V. | 100.00 | \u2212 |
LeasePlan Fleet Management (Polsk\u00e1) Sp. z.o.o. | 100.00 | \u2212 |
LeasePlan Fleet Management Services Ireland Limited | 100.00 | \u2212 |
LeasePlan France\u00a0S.A.S. | 100.00 | \u2212 |
LeasePlan Hellas\u00a0S.A. | 100.00 | \u2212 |
LeasePlan Hung\u00e1ria G\u00e9pj\u00e1rm\u0171park Kezel\u00f6 \u00e9s Finansz\u00edroz\u00f3 Z\u00e1rtk\u00f6r\u0171 R\u00e9szv\u00e9nyt\u00e1rsas\u00e1g | 100.00 | \u2212 |
LeasePlan India Private Limited | 100.00 | \u2212 |
LeasePlan Italia\u00a0S.p.A. | 100.00 | \u2212 |
LeasePlan M\u00e9xico\u00a0S.A. de C.V. | 100.00 | \u2212 |
LeasePlan Nederland N.V. | 100.00 | \u2212 |
LeasePlan Norge A/S | 100.00 | \u2212 |
LeasePlan \u00d6sterreich Fuhrparkmanagement\u00a0GmbH | 100.00 | \u2212 |
LeasePlan Portugal Com\u00e9rcio e Aluguer de Autom\u00f3veis e Equipamentos Unipessoal Lda. | 100.00 | \u2212 |
LeasePlan Romania S.R.L. | 100.00 | \u2212 |
LeasePlan Rus\u00a0LLC | 100.00 | \u2212 |
LeasePlan (Schweiz)\u00a0AG, Switzerland | 100.00 | \u2212 |
LeasePlan Service Center | 100.00 | \u2212 |
LeasePlan Servicios\u00a0S.A. | 100.00 | \u2212 |
LeasePlan Slovakia s.r.o. | 100.00 | \u2212 |
LeasePlan Sverige\u00a0AB | 100.00 | \u2212 |
LeasePlan Otomotive Servis ve Ticaret A.\u0218. | 100.00 | \u2212 |
LeasePlan UK Limited | 100.00 | \u2212 |
Euro Insurances Designated Activity Company | 100.00 | \u2212 |
LeasePlan Finance B.V. | 100.00 | \u2212 |
LeasePlan Global B.V. | 100.00 | \u2212 |
LeasePlan \u010cesk\u00e1 republika s.r.o.\u00a0(2) | \u2212 | \u2212 |
LeasePlan Finland Oy\u00a0(2) | \u2212 | \u2212 |
LeasePlan Luxembourg\u00a0S.A.\u00a0(2) | \u2212 | \u2212 |
LeasePlan USA,\u00a0Inc.\u00a0(2) | \u2212 | \u2212 |
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.
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.
For non-wholly owned subsidiaries, non-controlling interests are presented in equity separately from the equity attributable to shareholders of the Company. Profit or loss and other comprehensive income are attributed to the shareholders of the Company and to non-controlling interests even if this results in the non-controlling interests having a deficit balance. Changes in ownership interest in subsidiaries that do not result in a change in control are accounted for in equity. The carrying amounts of the controlling and non-controlling interests are adjusted to reflect the changes in their relative interests in the subsidiary. Any difference between the amount by which the non-controlling interest is adjusted and the fair value of the consideration paid or received is recorded directly in equity and attributed to the shareholders of the Company.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForSubsidiariesExplanatory", "language": "en", "entity": "scheme:969500E7V019H9NP7427", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "text_block_f8c821cc-9c1b-4a83-8687-e7c246c57099": { "value": "Associates are investments over which the Group has significant influence, which is the power to participate in the financial and operating policy decisions of the investee, but without the ability to exercise control or joint control. Typically, the Group owns between 20% and 50% of the voting equity of its associates.
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.
Joint arrangements are arrangements in which the Group shares joint control with one or more parties. Joint control is the contractually agreed sharing of control of an arrangement, and exists only when decisions about the activities that significantly affect the arrangement\u2019s returns require the unanimous consent of the parties sharing control.
Judgement is required in determining this classification through an evaluation of the facts and circumstances arising from each individual arrangement. Joint arrangements are classified as either joint operations or joint ventures based on the rights and obligations of the parties to the arrangement. In joint operations, the parties have rights to the assets and obligations for the liabilities relating to the arrangement, whereas in joint ventures, the parties have rights to the net assets of the arrangement. The Group has assessed the nature of its joint arrangements and determined them to be joint ventures.
Investments in joint ventures are accounted for using the equity method of accounting except when classified as held for sale. The Group\u2019s share of associates\u2019 and joint ventures\u2019 Net income is based on their most recent audited financial statements or unaudited interim statements drawn up to the Group\u2019s balance sheet date. Accounting policies of the joint ventures are modified where necessary to ensure consistency with the policies adopted by the Group.
The total carrying values of investments in joint ventures represent the cost of each investment including the carrying value of goodwill, the share of post-acquisition retained earnings, any other movements in reserves and any long-term debt interests which in substance form part of the Group\u2019s net investment, less any cumulative impairments. The carrying values of associates and joint ventures are reviewed on a regular basis and if there is objective evidence that an impairment in value has occurred as a result of one or more events during the period, the investment is impaired. Investments which have been previously impaired are regularly reviewed for indicators of impairment reversal.
The Group\u2019s share of an associate\u2019s or joint venture\u2019s losses in excess of its interest in that associate or joint venture is not recognised unless the Group has an obligation to fund such losses. Unrealised gains arising from transactions with associates and joint ventures are eliminated against the investment to the extent of the Group\u2019s interest in the investee. Unrealised losses are eliminated in the same way, but only to the extent that there is no evidence of impairment.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForInvestmentInAssociatesAndJointVenturesExplanatory", "language": "en", "entity": "scheme:969500E7V019H9NP7427", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "text_block_c589d077-9125-4d72-9a27-097c6f285383": { "value": "Associates are investments over which the Group has significant influence, which is the power to participate in the financial and operating policy decisions of the investee, but without the ability to exercise control or joint control. Typically, the Group owns between 20% and 50% of the voting equity of its associates.
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.
Joint arrangements are arrangements in which the Group shares joint control with one or more parties. Joint control is the contractually agreed sharing of control of an arrangement, and exists only when decisions about the activities that significantly affect the arrangement\u2019s returns require the unanimous consent of the parties sharing control.
Judgement is required in determining this classification through an evaluation of the facts and circumstances arising from each individual arrangement. Joint arrangements are classified as either joint operations or joint ventures based on the rights and obligations of the parties to the arrangement. In joint operations, the parties have rights to the assets and obligations for the liabilities relating to the arrangement, whereas in joint ventures, the parties have rights to the net assets of the arrangement. The Group has assessed the nature of its joint arrangements and determined them to be joint ventures.
Investments in joint ventures are accounted for using the equity method of accounting except when classified as held for sale. The Group\u2019s share of associates\u2019 and joint ventures\u2019 Net income is based on their most recent audited financial statements or unaudited interim statements drawn up to the Group\u2019s balance sheet date. Accounting policies of the joint ventures are modified where necessary to ensure consistency with the policies adopted by the Group.
The total carrying values of investments in joint ventures represent the cost of each investment including the carrying value of goodwill, the share of post-acquisition retained earnings, any other movements in reserves and any long-term debt interests which in substance form part of the Group\u2019s net investment, less any cumulative impairments. The carrying values of associates and joint ventures are reviewed on a regular basis and if there is objective evidence that an impairment in value has occurred as a result of one or more events during the period, the investment is impaired. Investments which have been previously impaired are regularly reviewed for indicators of impairment reversal.
The Group\u2019s share of an associate\u2019s or joint venture\u2019s losses in excess of its interest in that associate or joint venture is not recognised unless the Group has an obligation to fund such losses. Unrealised gains arising from transactions with associates and joint ventures are eliminated against the investment to the extent of the Group\u2019s interest in the investee. Unrealised losses are eliminated in the same way, but only to the extent that there is no evidence of impairment.
Name | Country | Activity | Type of equity investment | Carrying value | %\u00a0 |
|---|---|---|---|---|---|
ALD Automotive\u00a0SA Morocco | Morocco | Leasing | Associate | 9.5 | 35% |
LeasePlan Emirates L.L.C. | Emirate of Abu Dhabi | Leasing | Joint venture | 17.1 | 49% |
Flottenmanagement\u00a0GmbH | Austria | Leasing | Joint venture | 2.0 | 49% |
PLease S.C.S. | France | Leasing | Joint venture | 28.1 | 99% |
\u00a0
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. Until this point the 35% interest was accounted for using equity method.
\u00a0
(in EUR million) | As at 31\u00a0December | |||||
2023 | 2022 | |||||
Associates | Joint Ventures | Total | Associates | Joint Ventures | Total | |
Balance as at 1\u00a0January | 7.9 | \u2212 | 7.9 | 7.9 | \u2212 | 7.9 |
Share of result for the year | 1.4 | 5.0 | 6.4 | 1.7 | \u2212 | 1.7 |
Dividends paid | (0.0) | (6.3) | (6.3) | \u2212 | \u2212 | \u2212 |
Currency translation differences | 0.2 | (0.1) | 0.1 | (0.4) | \u2212 | (0.4) |
Scope changes | \u2212 | 48.7 | 48.7 | (1.2) | \u2212 | (1.2) |
Balance as at 31\u00a0December | 9.5 | 47.2 | 56.7 | 7.9 | \u2212 | 7.9 |
\u00a0
The summarised statement of comprehensive income below does not represent the proportionate share of entity, but the actual amount included for the material interests in investments accounted for using the equity method.
\u00a0
(in EUR million) | Year ended 31\u00a0December | |||||
2022 | 2022 | |||||
Associates | Joint Ventures | Total | Associates | Joint Ventures | Total | |
Income Statement | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Revenues | 63.3 | 172.0 | 235.3 | 61.2 | \u2212 | 61.2 |
Direct costs | (53.6) | (145.0) | (198.6) | (51.3) | \u2212 | (51.3) |
Gross operating income | 9.7 | 27.0 | 36.7 | 9.8 | \u2212 | 9.8 |
Total operating costs | (4.6) | (15.0) | (19.6) | (4.5) | \u2212 | (4.5) |
Other income/costs | (0.6) | - | (0.6) | (0.9) | \u2212 | (0.9) |
Income tax | (0.5) | (1.0) | (1.5) | 0.3 | \u2212 | 0.3 |
Profit for the period | 4.0 | 11.0 | 15.0 | 4.8 | \u2212 | 4.8 |
Total comprehensive income at 100% | 4.0 | 11.0 | 15.0 | 4.8 | \u2212 | 4.8 |
Group share of profit for the year | 1.4 | 5.0 | 6.4 | 1.7 | \u2212 | 1.7 |
\u00a0
The summarised financial information below does not represent the proportionate share of the entity, but the actual amount included in the separate financial statements of the material interests in investments accounted for using the equity method.
(in EUR million) | As at 31\u00a0December | |||||
2023 | 2022 | |||||
Associates | Joint Ventures | Total | Associates | Joint Ventures | Total | |
Balance Sheet | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Current assets | 26.0 | 28.0 | 54.0 | 20.0 | \u2212 | 20.0 |
Non-current assets | 149.1 | 397.1 | 546.2 | 120.9 | \u2212 | 120.9 |
Current liabilities | (61.1) | (112.3) | (173.4) | (65.0) | \u2212 | (65.0) |
Non-current liabilities | (86.8) | (245.6) | (332.4) | (53.3) | \u2212 | (53.3) |
Equity/Net assets at 100% | 27.2 | 67.2 | 94.4 | 22.6 | \u2212 | 22.6 |
Group Carrying value | 9.5 | 47.2 | 56.7 | 7.9 | \u2212 | 7.9 |
\u00a0
The loans to investments accounted for using the equity method are accounted for at amortised cost (less impairment) and the maturity analysis is as follows:
(in EUR million) | As at 31\u00a0December | |||||
2023 | 2022 | |||||
Associates | Joint Ventures | Total | Associates | Joint Ventures | Total | |
Loan to associates and joint ventures | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Balance as at 1\u00a0January | \u2212 | \u2212 | \u2212 | \u2212 | \u2212 | \u2212 |
Addition | 2.0 | \u2212 | 2.0 | \u2212 | \u2212 | \u2212 |
Repayment | \u2212 | (39.0) | (39.0) | \u2212 | \u2212 | \u2212 |
Scope changes | \u2212 | 78.5 | 78.5 | \u2212 | \u2212 | \u2212 |
Balance as at 31\u00a0December | 2.0 | 39.5 | 41.5 | \u2212 | \u2212 | \u2212 |
\u00a0
Credit facilities of EUR\u00a039.5\u00a0million (2022: Nil) have been advanced to investments accounted for using the equity method of which EUR\u00a039.5\u00a0million was drawn down on (2022: Nil) as at 31\u00a0December 2023.
(in %) | As at 31\u00a0December | |
|---|---|---|
2023 | 2022 | |
ALD Automotive\u00a0SA Maroc | 35.00 | 35.00 |
PLease S.C.S Flottenmanagement\u00a0GmbH\u00a0(3) | 99.30 | \u2212 |
LeasePlan Emirates Fleet Management \u2013 LeasePlan Emirates\u00a0LLC1 | 49.00 | \u2212 |
Flottenmanagement\u00a0GmbH | 49.00 | \u2212 |
|
Associates are investments over which the Group has significant influence, which is the power to participate in the financial and operating policy decisions of the investee, but without the ability to exercise control or joint control. Typically, the Group owns between 20% and 50% of the voting equity of its associates.
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.
Name | Country | Activity | Type of equity investment | Carrying value | %\u00a0 |
|---|---|---|---|---|---|
ALD Automotive\u00a0SA Morocco | Morocco | Leasing | Associate | 9.5 | 35% |
LeasePlan Emirates L.L.C. | Emirate of Abu Dhabi | Leasing | Joint venture | 17.1 | 49% |
Flottenmanagement\u00a0GmbH | Austria | Leasing | Joint venture | 2.0 | 49% |
PLease S.C.S. | France | Leasing | Joint venture | 28.1 | 99% |
\u00a0
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. Until this point the 35% interest was accounted for using equity method.
\u00a0
(in EUR million) | As at 31\u00a0December | |||||
2023 | 2022 | |||||
Associates | Joint Ventures | Total | Associates | Joint Ventures | Total | |
Balance as at 1\u00a0January | 7.9 | \u2212 | 7.9 | 7.9 | \u2212 | 7.9 |
Share of result for the year | 1.4 | 5.0 | 6.4 | 1.7 | \u2212 | 1.7 |
Dividends paid | (0.0) | (6.3) | (6.3) | \u2212 | \u2212 | \u2212 |
Currency translation differences | 0.2 | (0.1) | 0.1 | (0.4) | \u2212 | (0.4) |
Scope changes | \u2212 | 48.7 | 48.7 | (1.2) | \u2212 | (1.2) |
Balance as at 31\u00a0December | 9.5 | 47.2 | 56.7 | 7.9 | \u2212 | 7.9 |
\u00a0
The summarised statement of comprehensive income below does not represent the proportionate share of entity, but the actual amount included for the material interests in investments accounted for using the equity method.
\u00a0
(in EUR million) | Year ended 31\u00a0December | |||||
2022 | 2022 | |||||
Associates | Joint Ventures | Total | Associates | Joint Ventures | Total | |
Income Statement | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Revenues | 63.3 | 172.0 | 235.3 | 61.2 | \u2212 | 61.2 |
Direct costs | (53.6) | (145.0) | (198.6) | (51.3) | \u2212 | (51.3) |
Gross operating income | 9.7 | 27.0 | 36.7 | 9.8 | \u2212 | 9.8 |
Total operating costs | (4.6) | (15.0) | (19.6) | (4.5) | \u2212 | (4.5) |
Other income/costs | (0.6) | - | (0.6) | (0.9) | \u2212 | (0.9) |
Income tax | (0.5) | (1.0) | (1.5) | 0.3 | \u2212 | 0.3 |
Profit for the period | 4.0 | 11.0 | 15.0 | 4.8 | \u2212 | 4.8 |
Total comprehensive income at 100% | 4.0 | 11.0 | 15.0 | 4.8 | \u2212 | 4.8 |
Group share of profit for the year | 1.4 | 5.0 | 6.4 | 1.7 | \u2212 | 1.7 |
\u00a0
The summarised financial information below does not represent the proportionate share of the entity, but the actual amount included in the separate financial statements of the material interests in investments accounted for using the equity method.
(in EUR million) | As at 31\u00a0December | |||||
2023 | 2022 | |||||
Associates | Joint Ventures | Total | Associates | Joint Ventures | Total | |
Balance Sheet | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Current assets | 26.0 | 28.0 | 54.0 | 20.0 | \u2212 | 20.0 |
Non-current assets | 149.1 | 397.1 | 546.2 | 120.9 | \u2212 | 120.9 |
Current liabilities | (61.1) | (112.3) | (173.4) | (65.0) | \u2212 | (65.0) |
Non-current liabilities | (86.8) | (245.6) | (332.4) | (53.3) | \u2212 | (53.3) |
Equity/Net assets at 100% | 27.2 | 67.2 | 94.4 | 22.6 | \u2212 | 22.6 |
Group Carrying value | 9.5 | 47.2 | 56.7 | 7.9 | \u2212 | 7.9 |
\u00a0
The loans to investments accounted for using the equity method are accounted for at amortised cost (less impairment) and the maturity analysis is as follows:
(in EUR million) | As at 31\u00a0December | |||||
2023 | 2022 | |||||
Associates | Joint Ventures | Total | Associates | Joint Ventures | Total | |
Loan to associates and joint ventures | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Balance as at 1\u00a0January | \u2212 | \u2212 | \u2212 | \u2212 | \u2212 | \u2212 |
Addition | 2.0 | \u2212 | 2.0 | \u2212 | \u2212 | \u2212 |
Repayment | \u2212 | (39.0) | (39.0) | \u2212 | \u2212 | \u2212 |
Scope changes | \u2212 | 78.5 | 78.5 | \u2212 | \u2212 | \u2212 |
Balance as at 31\u00a0December | 2.0 | 39.5 | 41.5 | \u2212 | \u2212 | \u2212 |
\u00a0
Credit facilities of EUR\u00a039.5\u00a0million (2022: Nil) have been advanced to investments accounted for using the equity method of which EUR\u00a039.5\u00a0million was drawn down on (2022: Nil) as at 31\u00a0December 2023.
(in %) | As at 31\u00a0December | |
|---|---|---|
2023 | 2022 | |
ALD Automotive\u00a0SA Maroc | 35.00 | 35.00 |
PLease S.C.S Flottenmanagement\u00a0GmbH\u00a0(3) | 99.30 | \u2212 |
LeasePlan Emirates Fleet Management \u2013 LeasePlan Emirates\u00a0LLC1 | 49.00 | \u2212 |
Flottenmanagement\u00a0GmbH | 49.00 | \u2212 |
|
Associates are investments over which the Group has significant influence, which is the power to participate in the financial and operating policy decisions of the investee, but without the ability to exercise control or joint control. Typically, the Group owns between 20% and 50% of the voting equity of its associates.
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.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForInvestmentInAssociates", "language": "en", "entity": "scheme:969500E7V019H9NP7427", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "text_block_a2d86369-b848-4c6c-8a7e-7c493954a0d2": { "value": "Joint arrangements are arrangements in which the Group shares joint control with one or more parties. Joint control is the contractually agreed sharing of control of an arrangement, and exists only when decisions about the activities that significantly affect the arrangement\u2019s returns require the unanimous consent of the parties sharing control.
Judgement is required in determining this classification through an evaluation of the facts and circumstances arising from each individual arrangement. Joint arrangements are classified as either joint operations or joint ventures based on the rights and obligations of the parties to the arrangement. In joint operations, the parties have rights to the assets and obligations for the liabilities relating to the arrangement, whereas in joint ventures, the parties have rights to the net assets of the arrangement. The Group has assessed the nature of its joint arrangements and determined them to be joint ventures.
Investments in joint ventures are accounted for using the equity method of accounting except when classified as held for sale. The Group\u2019s share of associates\u2019 and joint ventures\u2019 Net income is based on their most recent audited financial statements or unaudited interim statements drawn up to the Group\u2019s balance sheet date. Accounting policies of the joint ventures are modified where necessary to ensure consistency with the policies adopted by the Group.
The total carrying values of investments in joint ventures represent the cost of each investment including the carrying value of goodwill, the share of post-acquisition retained earnings, any other movements in reserves and any long-term debt interests which in substance form part of the Group\u2019s net investment, less any cumulative impairments. The carrying values of associates and joint ventures are reviewed on a regular basis and if there is objective evidence that an impairment in value has occurred as a result of one or more events during the period, the investment is impaired. Investments which have been previously impaired are regularly reviewed for indicators of impairment reversal.
The Group\u2019s share of an associate\u2019s or joint venture\u2019s losses in excess of its interest in that associate or joint venture is not recognised unless the Group has an obligation to fund such losses. Unrealised gains arising from transactions with associates and joint ventures are eliminated against the investment to the extent of the Group\u2019s interest in the investee. Unrealised losses are eliminated in the same way, but only to the extent that there is no evidence of impairment.
Name | Country | Activity | Type of equity investment | Carrying value | %\u00a0 |
|---|---|---|---|---|---|
ALD Automotive\u00a0SA Morocco | Morocco | Leasing | Associate | 9.5 | 35% |
LeasePlan Emirates L.L.C. | Emirate of Abu Dhabi | Leasing | Joint venture | 17.1 | 49% |
Flottenmanagement\u00a0GmbH | Austria | Leasing | Joint venture | 2.0 | 49% |
PLease S.C.S. | France | Leasing | Joint venture | 28.1 | 99% |
\u00a0
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. Until this point the 35% interest was accounted for using equity method.
\u00a0
(in EUR million) | As at 31\u00a0December | |||||
2023 | 2022 | |||||
Associates | Joint Ventures | Total | Associates | Joint Ventures | Total | |
Balance as at 1\u00a0January | 7.9 | \u2212 | 7.9 | 7.9 | \u2212 | 7.9 |
Share of result for the year | 1.4 | 5.0 | 6.4 | 1.7 | \u2212 | 1.7 |
Dividends paid | (0.0) | (6.3) | (6.3) | \u2212 | \u2212 | \u2212 |
Currency translation differences | 0.2 | (0.1) | 0.1 | (0.4) | \u2212 | (0.4) |
Scope changes | \u2212 | 48.7 | 48.7 | (1.2) | \u2212 | (1.2) |
Balance as at 31\u00a0December | 9.5 | 47.2 | 56.7 | 7.9 | \u2212 | 7.9 |
\u00a0
The summarised statement of comprehensive income below does not represent the proportionate share of entity, but the actual amount included for the material interests in investments accounted for using the equity method.
\u00a0
(in EUR million) | Year ended 31\u00a0December | |||||
2022 | 2022 | |||||
Associates | Joint Ventures | Total | Associates | Joint Ventures | Total | |
Income Statement | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Revenues | 63.3 | 172.0 | 235.3 | 61.2 | \u2212 | 61.2 |
Direct costs | (53.6) | (145.0) | (198.6) | (51.3) | \u2212 | (51.3) |
Gross operating income | 9.7 | 27.0 | 36.7 | 9.8 | \u2212 | 9.8 |
Total operating costs | (4.6) | (15.0) | (19.6) | (4.5) | \u2212 | (4.5) |
Other income/costs | (0.6) | - | (0.6) | (0.9) | \u2212 | (0.9) |
Income tax | (0.5) | (1.0) | (1.5) | 0.3 | \u2212 | 0.3 |
Profit for the period | 4.0 | 11.0 | 15.0 | 4.8 | \u2212 | 4.8 |
Total comprehensive income at 100% | 4.0 | 11.0 | 15.0 | 4.8 | \u2212 | 4.8 |
Group share of profit for the year | 1.4 | 5.0 | 6.4 | 1.7 | \u2212 | 1.7 |
\u00a0
The summarised financial information below does not represent the proportionate share of the entity, but the actual amount included in the separate financial statements of the material interests in investments accounted for using the equity method.
(in EUR million) | As at 31\u00a0December | |||||
2023 | 2022 | |||||
Associates | Joint Ventures | Total | Associates | Joint Ventures | Total | |
Balance Sheet | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Current assets | 26.0 | 28.0 | 54.0 | 20.0 | \u2212 | 20.0 |
Non-current assets | 149.1 | 397.1 | 546.2 | 120.9 | \u2212 | 120.9 |
Current liabilities | (61.1) | (112.3) | (173.4) | (65.0) | \u2212 | (65.0) |
Non-current liabilities | (86.8) | (245.6) | (332.4) | (53.3) | \u2212 | (53.3) |
Equity/Net assets at 100% | 27.2 | 67.2 | 94.4 | 22.6 | \u2212 | 22.6 |
Group Carrying value | 9.5 | 47.2 | 56.7 | 7.9 | \u2212 | 7.9 |
\u00a0
The loans to investments accounted for using the equity method are accounted for at amortised cost (less impairment) and the maturity analysis is as follows:
(in EUR million) | As at 31\u00a0December | |||||
2023 | 2022 | |||||
Associates | Joint Ventures | Total | Associates | Joint Ventures | Total | |
Loan to associates and joint ventures | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Balance as at 1\u00a0January | \u2212 | \u2212 | \u2212 | \u2212 | \u2212 | \u2212 |
Addition | 2.0 | \u2212 | 2.0 | \u2212 | \u2212 | \u2212 |
Repayment | \u2212 | (39.0) | (39.0) | \u2212 | \u2212 | \u2212 |
Scope changes | \u2212 | 78.5 | 78.5 | \u2212 | \u2212 | \u2212 |
Balance as at 31\u00a0December | 2.0 | 39.5 | 41.5 | \u2212 | \u2212 | \u2212 |
\u00a0
Credit facilities of EUR\u00a039.5\u00a0million (2022: Nil) have been advanced to investments accounted for using the equity method of which EUR\u00a039.5\u00a0million was drawn down on (2022: Nil) as at 31\u00a0December 2023.
(in %) | As at 31\u00a0December | |
|---|---|---|
2023 | 2022 | |
ALD Automotive\u00a0SA Maroc | 35.00 | 35.00 |
PLease S.C.S Flottenmanagement\u00a0GmbH\u00a0(3) | 99.30 | \u2212 |
LeasePlan Emirates Fleet Management \u2013 LeasePlan Emirates\u00a0LLC1 | 49.00 | \u2212 |
Flottenmanagement\u00a0GmbH | 49.00 | \u2212 |
|
Joint arrangements are arrangements in which the Group shares joint control with one or more parties. Joint control is the contractually agreed sharing of control of an arrangement, and exists only when decisions about the activities that significantly affect the arrangement\u2019s returns require the unanimous consent of the parties sharing control.
Judgement is required in determining this classification through an evaluation of the facts and circumstances arising from each individual arrangement. Joint arrangements are classified as either joint operations or joint ventures based on the rights and obligations of the parties to the arrangement. In joint operations, the parties have rights to the assets and obligations for the liabilities relating to the arrangement, whereas in joint ventures, the parties have rights to the net assets of the arrangement. The Group has assessed the nature of its joint arrangements and determined them to be joint ventures.
Investments in joint ventures are accounted for using the equity method of accounting except when classified as held for sale. The Group\u2019s share of associates\u2019 and joint ventures\u2019 Net income is based on their most recent audited financial statements or unaudited interim statements drawn up to the Group\u2019s balance sheet date. Accounting policies of the joint ventures are modified where necessary to ensure consistency with the policies adopted by the Group.
The total carrying values of investments in joint ventures represent the cost of each investment including the carrying value of goodwill, the share of post-acquisition retained earnings, any other movements in reserves and any long-term debt interests which in substance form part of the Group\u2019s net investment, less any cumulative impairments. The carrying values of associates and joint ventures are reviewed on a regular basis and if there is objective evidence that an impairment in value has occurred as a result of one or more events during the period, the investment is impaired. Investments which have been previously impaired are regularly reviewed for indicators of impairment reversal.
The Group\u2019s share of an associate\u2019s or joint venture\u2019s losses in excess of its interest in that associate or joint venture is not recognised unless the Group has an obligation to fund such losses. Unrealised gains arising from transactions with associates and joint ventures are eliminated against the investment to the extent of the Group\u2019s interest in the investee. Unrealised losses are eliminated in the same way, but only to the extent that there is no evidence of impairment.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForInvestmentsInJointVentures", "language": "en", "entity": "scheme:969500E7V019H9NP7427", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "text_block_3717d5f5-1025-4db9-863b-6d42010f692d": { "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.
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.
\u00a0
The results and financial position of all the Group entities (apart from those that operate in a hyperinflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows:
Exchange differences on foreign currency balances with foreign operations for which settlement is neither planned nor likely to occur in the foreseeable future, and therefore form part of the Group\u2019s net investment in these foreign operations, are offset in the cumulative translation adjustment reserve. Cumulative translation differences are recycled from equity and recognised as income or expense on disposal of the operation to which they relate.
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.
Subsidiaries in Turkey which operate in a hyperinflationary economy have been translated wholly at the closing rate.
The main exchange rates used in the consolidated financial statements for the years ended 31\u00a0December 2023 and 31\u00a0December 2022 are based on Paris stock exchange rates and are as follows:
\u00a0
\u00a0 | 31\u00a0December 2023 | 31\u00a0December 2022 | ||
|---|---|---|---|---|
Period-end Rate | Average Rate | Period-end Rate | Average Rate | |
EUR/Ukrainian Hryvnia | 38.1500 | 36.9156 | 36.9170 | 34.4424 |
EUR/Brazilian Real | 5.3618 | 5.4016 | 5.6386 | 5.4432 |
EUR/Turkish Lira | 32.6531 | 32.6531 | 19.9649 | 19.9649 |
EUR/Mexican Peso | 18.7231 | 19.1897 | 20.8560 | 21.2046 |
EUR/Swedish Krona | 11.0960 | 11.4728 | 11.1218 | 10.6274 |
EUR/Indian Rupee | 91.9045 | 89.3249 | 88.1710 | 82.7145 |
EUR/UK Pound | 0.8691 | 0.8699 | 0.8869 | 0.8526 |
\u00a0
", "dimensions": { "concept": "ifrs-full:DisclosureOfEffectOfChangesInForeignExchangeRatesExplanatory", "language": "en", "entity": "scheme:969500E7V019H9NP7427", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "text_block_cd9b0a7d-1f1a-4239-b071-027b276934db": { "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.
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.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFunctionalCurrencyExplanatory", "language": "en", "entity": "scheme:969500E7V019H9NP7427", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "text_block_cfea359e-1f7d-4530-b3fe-20840eb9d9a9": { "value": "The results and financial position of all the Group entities (apart from those that operate in a hyperinflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows:
Exchange differences on foreign currency balances with foreign operations for which settlement is neither planned nor likely to occur in the foreseeable future, and therefore form part of the Group\u2019s net investment in these foreign operations, are offset in the cumulative translation adjustment reserve. Cumulative translation differences are recycled from equity and recognised as income or expense on disposal of the operation to which they relate.
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.
Subsidiaries in Turkey which operate in a hyperinflationary economy have been translated wholly at the closing rate.
The main exchange rates used in the consolidated financial statements for the years ended 31\u00a0December 2023 and 31\u00a0December 2022 are based on Paris stock exchange rates and are as follows:
\u00a0
\u00a0 | 31\u00a0December 2023 | 31\u00a0December 2022 | ||
|---|---|---|---|---|
Period-end Rate | Average Rate | Period-end Rate | Average Rate | |
EUR/Ukrainian Hryvnia | 38.1500 | 36.9156 | 36.9170 | 34.4424 |
EUR/Brazilian Real | 5.3618 | 5.4016 | 5.6386 | 5.4432 |
EUR/Turkish Lira | 32.6531 | 32.6531 | 19.9649 | 19.9649 |
EUR/Mexican Peso | 18.7231 | 19.1897 | 20.8560 | 21.2046 |
EUR/Swedish Krona | 11.0960 | 11.4728 | 11.1218 | 10.6274 |
EUR/Indian Rupee | 91.9045 | 89.3249 | 88.1710 | 82.7145 |
EUR/UK Pound | 0.8691 | 0.8699 | 0.8869 | 0.8526 |
\u00a0
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForForeignCurrencyTranslationExplanatory", "language": "en", "entity": "scheme:969500E7V019H9NP7427", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "text_block_a6bbe433-e581-42ec-877d-8fc610333d40": { "value": "Ordinary shares are classified as equity. Dividends are recognised as a liability in the balance sheet after approval of the profit distribution by the shareholders.
The proceeds of the issue of AT1 capital securities are available to the Group in perpetuity and are undated, deeply subordinated, resettable and callable. As the payment of distributions is wholly discretionary, the proceeds received and interest coupon, paid on them are recognised in equity. As there is no formal obligation to (re)pay the principal amount or to pay interest coupon, the capital securities are recognised as equity and the distributions paid on these instruments, as well as the transaction costs related to the issuance of the capital securities, are recognised directly in equity.
\u00a0
A dividend related to the period ended 31\u00a0December 2022 for an amount of EUR\u00a0598.9\u00a0million (EUR\u00a01.06\u00a0per share) was paid to ALD shareholders on 2\u00a0June 2023 of which the dividend paid to Societe Generale was EUR\u00a0456.9\u00a0million (2022: a dividend relating to 31\u00a0December 2021 of EUR\u00a0435.2\u00a0million (EUR\u00a01.08 per share) was paid to ALD shareholders on 1\u00a0June 2022 of which the dividend paid to Societe Generale was EUR\u00a0348.3\u00a0million). A dividend related to the period ended 31\u00a0December 2023 for an amount of EUR\u00a07.8\u00a0million was paid to AT1 capital holders (see note\u00a027 for further details).
", "dimensions": { "concept": "ifrs-full:DisclosureOfDividendsExplanatory", "language": "en", "entity": "scheme:969500E7V019H9NP7427", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "text_block_51090176-b25f-45aa-88e9-406c0a095df1": { "value": "Ordinary shares are classified as equity. Dividends are recognised as a liability in the balance sheet after approval of the profit distribution by the shareholders.
The proceeds of the issue of AT1 capital securities are available to the Group in perpetuity and are undated, deeply subordinated, resettable and callable. As the payment of distributions is wholly discretionary, the proceeds received and interest coupon, paid on them are recognised in equity. As there is no formal obligation to (re)pay the principal amount or to pay interest coupon, the capital securities are recognised as equity and the distributions paid on these instruments, as well as the transaction costs related to the issuance of the capital securities, are recognised directly in equity.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForDividendsExplanatory", "language": "en", "entity": "scheme:969500E7V019H9NP7427", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "text_block_47dd1857-84e1-46a6-a85e-65ae41031bdf": { "value": "As a lessor the Group is required to determine at the inception of each lease contract whether the lease arrangement is an operating leases or finance lease. This assessment considers the substance of the transaction rather than the form of the contract and classification is based on the extent to which the lease transfers the risks and rewards incidental to ownership of the 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 three most important are:
The Group as a lessor presents the assets subject to operating leases under \u201cRental fleet\u201d in the balance sheet and mainly includes vehicles under operating leases, vehicles under short term rental contracts (less than 1\u00a0year) and available for rental vehicles.
The Group leases assets to its clients for durations that normally range between three to four years. In almost all cases, the leased assets are returned to the Group at the end of the contract term. In case of early termination in most of the cases there will be a settlement invoice and the risks are borne by the customer. Under the operating lease classification, the customers are offered various products that have different contractual terms, but where ultimately the risks and rewards incidental to ownership are retained by the Group. A customer may be entitled to receive a portion of the net positive result from factors that have resulted in the vehicle being above its expected residual value at the end of the lease. However, any negative result risk will still be borne by the Group.
Monthly fixed operating lease fees charged to the customer for the use of the vehicle over the duration of the contract period can comprise various components each having its own revenue recognition. Any unpaid lessee receivables are recorded in the balance sheet as \u201cLease receivables from clients\u201d. See the Revenue recognition policy in note\u00a03.5.20 for more details.
Assets under operating lease and rental fleet are measured at cost less accumulated depreciation and impairment losses. The cost of the operating lease cars comprises 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 (e.g. smart phone integration, anti-theft devices,\u00a0etc.). Import duties and non-refundable purchase taxes are included in the purchase price and any trade discounts are deducted when calculating the purchase price. Initial external direct costs include commissions, legal fees and delivery cost where material. 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 operating lease and other leased car assets are depreciated on a straight-line basis over the estimated useful life (normally the contract period for operating leases) to their estimated residual value. The residual value and the useful life of the leased assets are reviewed at least at each financial year-end and, if expectations differ from previous estimates, the changes are accounted for prospectively as a change in accounting estimate (so-called prospective depreciation). Depreciation is recognised in the income statement.
Depreciation is not applied to new vehicles available for lease when these vehicles are not in the condition to be leased to customers. This often applies to vehicles bought for signed lease contracts or vehicles bought with the intention to lease that are temporary stored and not ready to be used.
For the impairment accounting policy refer to note\u00a05 \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 if the intention is to sell the used car or remain within \u201cRental fleet\u201d if the intention is to lease the vehicle for a second term.
Finance leases are recognised in the balance sheet at an amount equal to the present value of the minimum leases payments and the unguaranteed residual value, after deduction of provisions deemed necessary in respect of bad and doubtful debts and any accumulated impairment losses. Initial direct costs and down-payments that are not refundable security deposits are included in the initial measurement of the finance lease receivables. The assets are presented within the category \u2018Receivables from clients on the balance sheet (See note\u00a022 for further details).
The finance lease instalments can comprise various components each having its own revenue recognition. Both invoiced but unpaid amounts and unearned amounts for finance leases are recorded in the balance sheet line as \u201cLease receivables from clients\u201d. See the Revenue recognition policy in note\u00a03.5.20 for more details.
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.
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.
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 the corresponding lease liability recognised, adjusted for any lease payments made at or before the lease commencement date, plus any initial direct costs incurred and an estimate of costs for dismantling, removing, or restoring the underlying asset and less any lease incentives received.
The right-of-use assets are depreciated over 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.
\u00a0
At the commencement date of the lease, the Group recognises lease liabilities measured at the present value of the expected future lease payments, calculated using the Group\u2019s incremental borrowing rate, adjusted to reflect the length of the lease and country of location.
Lease payments included in the lease liability consist of each of the following:
Variable leasing costs (other than those referred to above and including those linked to usage) and the costs of non-lease components are not included in the lease liability and are charged to Leasing Contract costs as incurred.
The lease liability is measured at amortised cost using the effective interest method. It is remeasured when there is a change to the forecast lease payments or change in lease term. When the lease liability is remeasured, an adjustment is made to the corresponding right-of-use asset.
Leases with a term of less than 12\u00a0months or those with committed payments of less than $5,000 are not recognised in the balance sheet. The Group recognises payments for these leases as an expense on a straight-line basis over the lease term within \u201cGeneral and administrative expenses\u201d.
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\u00a015 \u201cRight-of-use assets and lease liabilities\u201d.
(in EUR million) | Rental fleet |
|---|---|
At 1\u00a0January 2022 | \u00a0 |
Cost | 29,917.0 |
Accumulated depreciation & impairment | (8,205.7) |
Carrying amount as at 1\u00a0January 2022 | 21,711.3 |
Year ended 31\u00a0December 2022 | \u00a0 |
Opening net book amount | 21,711.3 |
Additions | 9,554.0 |
Disposals | (3,102.1) |
Scope changes | 340.8 |
Depreciation charge | (3,573.6) |
Transfer to inventories | (814.5) |
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 | \u00a0 |
Cost | 31,771.7 |
Accumulated depreciation & impairment | (8,544.4) |
Carrying amount as at 31\u00a0December 2022 | 23,227.4 |
Year ended 31\u00a0December 2023 | \u00a0 |
Opening net book amount | 23,227.4 |
Additions | 18,426.0 |
Disposals | (5,660.7) |
Scope changes | 21,405.3 |
Depreciation charge | (6,030.2) |
Impairment | (67.7) |
Transfer to inventories | (1,664.8) |
Hyperinflation adjustment | 299.7 |
Currency translation differences | (169.8) |
Closing net book amount as at 31\u00a0December 2023 | 49,765.2 |
At 31\u00a0December 2023 | \u00a0 |
Cost | 66,498.0 |
Accumulated depreciation & impairment | (16,732.8) |
Carrying amount as at 31\u00a0December 2023 | 49,765.2 |
\u00a0
Minimum undiscounted lease payments receivable on operating leases are as follows:
(in EUR million) | As at 31\u00a0December | |
|---|---|---|
2023 | 2022 | |
Within 1\u00a0year | 4,871.5 | 766.1 |
Between 1\u00a0and 2\u00a0years | 4,951.7 | 1,768.3 |
Between 2\u00a0and 3\u00a0years | 5,565.3 | 2,557.0 |
Between 3\u00a0and 4\u00a0years | 4,491.4 | 2,003.8 |
Between 4\u00a0and 5\u00a0years | 1,389.0 | 531.1 |
Later than 5\u00a0years | 144.7 | 27.2 |
Total | 21,413.6 | 7,653.5 |
\u00a0
As at 31\u00a0December 2023 and 2022, all the carrying amounts represent owned vehicles that are intended to be leased.
The hyperinflation adjustment reflects the consumer price index inflation applied to the book value of the Turkish subsidiaries fleet of vehicles (see note\u00a03 for more details). As a result of this inflation being above the recoverable amount for the Turkish fleet of vehicles there has been an impairment of EUR\u00a067.2\u00a0million for the year ending 31\u00a0December 2023. In the year ending 31\u00a0December 2022 there was no impairment on the \u201cRental fleet\u201d. See note\u00a05 \u201cImpairment of rental fleet\u201d.
Used vehicles prices have continued to drive high profits from the used car sales activity in 2023. This has resulted in an upward adjustment of the residual values of the rental fleet and a reduction in depreciation costs compared to the original contract depreciation of EUR\u00a0553.2\u00a0million in the year ending 31\u00a0December 2023 (2022: 422.4\u00a0million) which also represents partial recognition of estimated future used car sales profits.
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 Group subsidiaries to special purpose companies which are included in the consolidated financial statements of the Group. For further details on the securitisation transactions and transferred assets reference is made to the note\u00a029. As a result of this sale, net book value of securitised operating lease assets amount to EUR\u00a06,062\u00a0million at 31\u00a0December 2023, (EUR\u00a02,173\u00a0million at 31\u00a0December 2022) and present value of transferred lease receivables derived from these assets is EUR\u00a06,286\u00a0million (EUR\u00a02,313\u00a0million at 31\u00a0December 2022). The transferred lease receivables cannot be sold.
\u00a0
(in EUR million) | Right-of-use assets\u00a0 | Right-of-use assets\u00a0 | Lease liabilities |
|---|---|---|---|
As at 1\u00a0January 2022 | \u2212 | 117.3 | 121.4 |
Additions | 40.9 | 21.3 | 63.5 |
Disposals | (1.0) | (11.6) | (12.6) |
Depreciation charge | (27.6) | (25.7) | - |
Transfer to assets held for sale | \u2212 | (2.8) | (2.8) |
Scope changes | 17.1 | 5.2 | 18.4 |
Interest | \u2212 | - | 1.3 |
Payments | \u2212 | - | (71.1) |
Currency translation differences | \u2212 | (0.9) | (0.9) |
As at 31\u00a0December 2022 | 29.4 | 102.8 | 117.2 |
As at 1\u00a0January 2023 | 29.4 | 102.8 | 117.2 |
Additions | 18.7 | 42.6 | 64.1 |
Disposals | (25.8) | (17.5) | (44.3) |
Depreciation charge | (17.2) | (51.8) | - |
Scope changes | 4.3 | 148.1 | 162.9 |
Interest | \u2212 | \u2212 | 3.4 |
Payments | \u2212 | \u2212 | (51.9) |
Currency translation differences | 0.0 | 0.9 | 0.9 |
As at 31\u00a0December 2023 | 9.4 | 225.2 | 252.3 |
\u00a0
The consolidated balance sheet shows the above amounts for right-of-use leases and lease liabilities. These property leases are generally for office spaces and car storage and range from 1\u00a0to 12\u00a0years while the vehicle leases are for vehicles leases to customers and range from three\u00a0to five\u00a0years.
Lease liabilities balance and maturity analysis:
(in EUR million) | As at 31\u00a0December | |
|---|---|---|
2023 | 2022 | |
Not later than one year | 66.2 | 38.7 |
1-2\u00a0years | 55.1 | 21.5 |
2-3\u00a0years | 43.2 | 19.0 |
3-4\u00a0years | 34.7 | 15.2 |
4-5\u00a0years | 25.5 | 10.5 |
Later than five years | 40.6 | 17.4 |
Total | 265.3 | 122.3 |
Effect of discounting | (13.0) | (5.1) |
Lease liability | 252.3 | 117.2 |
The income statement shows the following amounts relating to lease. The cost of leases other than short term leases less than 12\u00a0months, variable leasing costs and leases of low value assets are allocated between the depreciation of right-of-use assets and a finance charge representing the unwind of the discount on lease liabilities.
(in EUR million) | Year ended 31\u00a0December | |
|---|---|---|
2023 | 2022 | |
Depreciation of right-of-use assets\u00a0(1) | (69.0) | (53.3) |
Interest expense | (4.1) | (1.3) |
Income from sub-leasing right-of-use assets | 1.7 | 1.5 |
Expense relating to short term leases less than 12\u00a0months, variable leasing costs and leases of low value | (11.8) | (7.4) |
|
\u00a0
For the year ended 31\u00a0December 2023, the total amount of cash paid in respect of leases recognised on\u00a0the consolidated balance sheet is EUR\u00a051.9\u00a0million (2022: EUR\u00a071.1\u00a0million).
", "dimensions": { "concept": "ifrs-full:DisclosureOfLeasesExplanatory", "language": "en", "entity": "scheme:969500E7V019H9NP7427", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "text_block_a1972f17-d9ee-4491-92bd-503f5b7f89fe": { "value": "As a lessor the Group is required to determine at the inception of each lease contract whether the lease arrangement is an operating leases or finance lease. This assessment considers the substance of the transaction rather than the form of the contract and classification is based on the extent to which the lease transfers the risks and rewards incidental to ownership of the 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 three most important are:
The Group as a lessor presents the assets subject to operating leases under \u201cRental fleet\u201d in the balance sheet and mainly includes vehicles under operating leases, vehicles under short term rental contracts (less than 1\u00a0year) and available for rental vehicles.
The Group leases assets to its clients for durations that normally range between three to four years. In almost all cases, the leased assets are returned to the Group at the end of the contract term. In case of early termination in most of the cases there will be a settlement invoice and the risks are borne by the customer. Under the operating lease classification, the customers are offered various products that have different contractual terms, but where ultimately the risks and rewards incidental to ownership are retained by the Group. A customer may be entitled to receive a portion of the net positive result from factors that have resulted in the vehicle being above its expected residual value at the end of the lease. However, any negative result risk will still be borne by the Group.
Monthly fixed operating lease fees charged to the customer for the use of the vehicle over the duration of the contract period can comprise various components each having its own revenue recognition. Any unpaid lessee receivables are recorded in the balance sheet as \u201cLease receivables from clients\u201d. See the Revenue recognition policy in note\u00a03.5.20 for more details.
Assets under operating lease and rental fleet are measured at cost less accumulated depreciation and impairment losses. The cost of the operating lease cars comprises 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 (e.g. smart phone integration, anti-theft devices,\u00a0etc.). Import duties and non-refundable purchase taxes are included in the purchase price and any trade discounts are deducted when calculating the purchase price. Initial external direct costs include commissions, legal fees and delivery cost where material. 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 operating lease and other leased car assets are depreciated on a straight-line basis over the estimated useful life (normally the contract period for operating leases) to their estimated residual value. The residual value and the useful life of the leased assets are reviewed at least at each financial year-end and, if expectations differ from previous estimates, the changes are accounted for prospectively as a change in accounting estimate (so-called prospective depreciation). Depreciation is recognised in the income statement.
Depreciation is not applied to new vehicles available for lease when these vehicles are not in the condition to be leased to customers. This often applies to vehicles bought for signed lease contracts or vehicles bought with the intention to lease that are temporary stored and not ready to be used.
For the impairment accounting policy refer to note\u00a05 \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 if the intention is to sell the used car or remain within \u201cRental fleet\u201d if the intention is to lease the vehicle for a second term.
Finance leases are recognised in the balance sheet at an amount equal to the present value of the minimum leases payments and the unguaranteed residual value, after deduction of provisions deemed necessary in respect of bad and doubtful debts and any accumulated impairment losses. Initial direct costs and down-payments that are not refundable security deposits are included in the initial measurement of the finance lease receivables. The assets are presented within the category \u2018Receivables from clients on the balance sheet (See note\u00a022 for further details).
The finance lease instalments can comprise various components each having its own revenue recognition. Both invoiced but unpaid amounts and unearned amounts for finance leases are recorded in the balance sheet line as \u201cLease receivables from clients\u201d. See the Revenue recognition policy in note\u00a03.5.20 for more details.
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.
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.
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 the corresponding lease liability recognised, adjusted for any lease payments made at or before the lease commencement date, plus any initial direct costs incurred and an estimate of costs for dismantling, removing, or restoring the underlying asset and less any lease incentives received.
The right-of-use assets are depreciated over 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.
\u00a0
At the commencement date of the lease, the Group recognises lease liabilities measured at the present value of the expected future lease payments, calculated using the Group\u2019s incremental borrowing rate, adjusted to reflect the length of the lease and country of location.
Lease payments included in the lease liability consist of each of the following:
Variable leasing costs (other than those referred to above and including those linked to usage) and the costs of non-lease components are not included in the lease liability and are charged to Leasing Contract costs as incurred.
The lease liability is measured at amortised cost using the effective interest method. It is remeasured when there is a change to the forecast lease payments or change in lease term. When the lease liability is remeasured, an adjustment is made to the corresponding right-of-use asset.
Leases with a term of less than 12\u00a0months or those with committed payments of less than $5,000 are not recognised in the balance sheet. The Group recognises payments for these leases as an expense on a straight-line basis over the lease term within \u201cGeneral and administrative expenses\u201d.
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\u00a015 \u201cRight-of-use assets and lease liabilities\u201d.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForLeasesExplanatory", "language": "en", "entity": "scheme:969500E7V019H9NP7427", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "text_block_a14bb386-05d1-4ab1-8827-7c1c5a54279f": { "value": "Other property and equipment are measured at cost less accumulated depreciation and accumulated impairment losses. Cost includes expenditures that are directly attributable to the acquisition of the asset. Subsequent expenditure on property and equipment is recognised in the carrying amount of the item only when it increases the future economic benefits embodied in the specific asset to which it relates, and its costs can be measured reliably. All other expenditure, including 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:
When parts of an item of other property and equipment have different useful lives, they are accounted for as separate items (major components). The carrying amount of a replaced part is derecognised when replaced. Residual values, method of depreciation and useful lives of the assets are reviewed annually and adjusted if appropriate. If an indicator of impairment, 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.
(in EUR million) | Land | Property | Equipment | Total |
|---|---|---|---|---|
At 1\u00a0January 2022 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Cost | 4.5 | 66.0 | 103.3 | 173.8 |
Accumulated depreciation & impairment | \u00a0 | (35.8) | (53.0) | (88.8) |
Carrying amount as at 1\u00a0January 2022 | 4.5 | 30.2 | 50.3 | 85.0 |
Year ended 31\u00a0December 2022 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
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 | \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 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Cost | 11.4 | 67.9 | 114.4 | 193.7 |
Accumulated depreciation & impairment | \u00a0 | (39.5) | (57.3) | (96.8) |
Carrying amount as at 31\u00a0December 2022 | 11.4 | 28.3 | 57.2 | 96.9 |
Opening net book amount | 11.4 | 28.3 | 57.2 | 96.9 |
Additions | \u2212 | 3.6 | 73.3 | 76.9 |
Disposals | \u2212 | (0.7) | (37.1) | (37.8) |
Depreciation charge | \u2212 | (6.9) | (29.4) | (36.3) |
Transfer to assets qualified as held-for-sale | \u2212 | 0.0 | (0.0) | 0.0 |
Scope changes | 0.8 | 4.5 | 89.3 | 94.6 |
Hyperinflation adjustment\u00a0(1) | \u2212 | \u2212 | (0.0) | (0.0) |
Currency translation differences | \u2212 | 0.0 | 0.0 | 0.0 |
Closing net book amount as at 31\u00a0December 2023 | 12.2 | 28.9 | 153.2 | 194.2 |
At 31\u00a0December 2023 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Cost | 12.2 | 81.4 | 331.0 | 424.6 |
Accumulated depreciation & impairment | \u00a0 | (52.5) | (177.9) | (230.4) |
Carrying amount as at 31\u00a0December 2023 | 12.2 | 28.9 | 153.2 | 194.2 |
|
\u00a0
The title to the other property and equipment is not restricted and these assets are not pledged as security for liabilities.
At 31\u00a0December 2022 and 2023 there was no impairment on the \u201cOther property and equipment\u201d.
", "dimensions": { "concept": "ifrs-full:DisclosureOfPropertyPlantAndEquipmentExplanatory", "language": "en", "entity": "scheme:969500E7V019H9NP7427", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "text_block_aa974287-5714-49b6-977e-f7d8408d2200": { "value": "Other property and equipment are measured at cost less accumulated depreciation and accumulated impairment losses. Cost includes expenditures that are directly attributable to the acquisition of the asset. Subsequent expenditure on property and equipment is recognised in the carrying amount of the item only when it increases the future economic benefits embodied in the specific asset to which it relates, and its costs can be measured reliably. All other expenditure, including 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:
When parts of an item of other property and equipment have different useful lives, they are accounted for as separate items (major components). The carrying amount of a replaced part is derecognised when replaced. Residual values, method of depreciation and useful lives of the assets are reviewed annually and adjusted if appropriate. If an indicator of impairment, 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.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForPropertyPlantAndEquipmentExplanatory", "language": "en", "entity": "scheme:969500E7V019H9NP7427", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "text_block_1bc929bd-e88d-4972-b180-01756d1ad439": { "value": "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:When parts of an item of other property and equipment have different useful lives, they are accounted for as separate items (major components). The carrying amount of a replaced part is derecognised when replaced. Residual values, method of depreciation and useful lives of the assets are reviewed annually and adjusted if appropriate. If an indicator of impairment, 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.
The right-of-use assets are depreciated over 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 basis for the depreciation of an operating lease contract and rental contracts is the investment value at cost less the estimated residual value as included in the contract, in combination with the estimated contract duration. A change in the estimated residual value and/or contract duration leads to a change in depreciation that has an effect in the current period and/or in subsequent periods. Statistical models and calculations (regression analysis) covering a reference period of 24\u00a0months are used to calculate a vehicle\u2019s future value as accurately as possible.
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 Group level. 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.
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. The Group also considered centrally assumptions which could affect future sales proceeds linked to the lack of market data on used electric vehicle sales. This resulted in management applying an additional stress on the expected sales proceeds of Battery Electric Vehicles (BEV) and Plug-In Hybrids (PHEV).
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 high profit from the used car sales activity throughout 2023 but, as previously predicted, the used car market has started to normalise in the first semester of 2023 with a further decline observed in the second semester of 2023.
This assessment continues to result in a reduction in depreciation costs of EUR\u00a0553.2\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 2023 was EUR\u00a0312.2\u00a0million.
+Increase/-decrease in expected sales proceeds per vehicle | Income statement net Impact (in EUR million) |
|---|---|
-EUR\u00a01,000 | (138.1) |
+EUR\u00a01,000 | 122.3 |
\u00a0
The impacts of the sensitivity analysis are not linear.
\u00a0
(in EUR million) | Notes | Year ended 31\u00a0December | |
|---|---|---|---|
2023 | 2022 | ||
Depreciation of other property and equipment | 14 | (34.7) | (20.2) |
Depreciation of intangible assets | 17 | (59.3) | (25.5) |
Depreciation of right of use assets\u00a0(1) | 15 | (42.0) | (21.0) |
Total | \u00a0 | (136.0) | (66.7) |
|
(in EUR million) | Software (internally generated) | Software licences (external) | Customer relationships | Assets under construction | Other | Total |
|---|---|---|---|---|---|---|
At 1\u00a0January 2022 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Cost | 79.8 | 90.3 | 10.0 | 18.8 | 4.8 | 203.6 |
Accumulated amortisation and impairment | (39.6) | (71.2) | (3.8) | \u2212 | (0.3) | (114.8) |
Carrying amount as at 1\u00a0January 2022 | 40.2 | 19.1 | 6.1 | 18.8 | 4.5 | 88.7 |
Year ended 31\u00a0December 2022 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Opening net book amount | 40.2 | 19.1 | 6.1 | 18.8 | 4.5 | 88.7 |
Additions | 31.1 | 12.9 | \u2212 | 13.0 | 11.3 | 68.3 |
Divestments | \u2212 | (4.2) | \u2212 | \u2212 | (11.8) | (16.0) |
Amortisation | (13.0) | (10.2) | (2.1) | \u2212 | (0.3) | (25.5) |
Transfer to assets qualified as held-for-sale | (0.4) | (0.2) | \u2212 | \u2212 | \u2212 | (0.6) |
Scope changes | 1.7 | 0.4 | 10.3 | \u2212 | \u00a0 | 12.4 |
Currency translation differences | (0.8) | 0.0 | \u2212 | \u2212 | \u2212 | (0.8) |
Closing net book amount as at 31\u00a0December 2022 | 58.8 | 17.9 | 14.4 | 31.9 | 3.7 | 126.6 |
At 31\u00a0December 2022 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Cost | 104.6 | 84.6 | 20.3 | 31.9 | 3.7 | 245.0 |
Accumulated amortisation and impairment | (45.8) | (66.7) | (5.9) | \u2212 | (0.0) | (118.4) |
Carrying amount as at 31\u00a0December 2022 | 58.8 | 17.9 | 14.4 | 31.9 | 3.7 | 126.6 |
Year ended 31\u00a0December 2023 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Opening net book amount | 58.8 | 17.9 | 14.4 | 31.9 | 3.7 | 126.6 |
Additions\u00a0(1) | 71.1 | 16.2 | 279.0 | 112.8 | 0.1 | 479.3 |
Divestments | (0.0) | (2.1) | \u2212 | (18.5) | (3.6) | (24.1) |
Impairment | (1.6) | \u2212 | - | \u2212 | \u2212 | (1.6) |
Amortisation | (54.8) | (10.9) | (13.3) | \u2212 | (4.8) | (83.8) |
Scope changes\u00a0(1) | 36.0 | 18.0 | (0.0) | 143.8 | 9.6 | 207.4 |
Currency translation differences | 0.3 | (0.1) | \u2212 | \u2212 | 0.0 | 0.2 |
Closing net book amount as at 31\u00a0December 2023 | 109.7 | 39.0 | 280.1 | 270.0 | 5.1 | 703.9 |
At 31\u00a0December 2023 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Cost | 475.9 | 152.7 | 299.3 | 270.0 | 9.8 | 1,207.7 |
Accumulated amortisation and impairment | (366.2) | (113.7) | (19.2) | \u2212 | (4.7) | (503.8) |
Carrying amount as at 31\u00a0December 2023 | 109.7 | 39.0 | 280.1 | 270.0 | 5.1 | 703.9 |
|
\u00a0
LeasePlan\u2019s Next Generation Digital Architecture programme, launched in 2019 to deliver a harmonized and standardized global digital architecture, was scaled down to 3 entities after the signature of the acquisition MoU in January 2022. The Group started a thorough review of this programme immediately after the acquisition closing. In the context of the LeasePlan purchase price allocation, taking into account the significant delay in deployment and the articulation with rest of the IT architecture, the Group decided to stop new developments, while re-using assets of value and leveraging with ALD\u2019s strong back-office systems. As a result, at the date of the acquisition, this intangible asset was marked down by EUR 203 million (net book value as at end 2023: EUR 262 million).\u00a0
", "dimensions": { "concept": "ifrs-full:DisclosureOfDepreciationAndAmortisationExpenseExplanatory", "language": "en", "entity": "scheme:969500E7V019H9NP7427", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "text_block_62b47e90-d29f-47ee-891c-8e7910a24a9b": { "value": "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:When parts of an item of other property and equipment have different useful lives, they are accounted for as separate items (major components). The carrying amount of a replaced part is derecognised when replaced. Residual values, method of depreciation and useful lives of the assets are reviewed annually and adjusted if appropriate. If an indicator of impairment, 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.
The right-of-use assets are depreciated over 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 basis for the depreciation of an operating lease contract and rental contracts is the investment value at cost less the estimated residual value as included in the contract, in combination with the estimated contract duration. A change in the estimated residual value and/or contract duration leads to a change in depreciation that has an effect in the current period and/or in subsequent periods. Statistical models and calculations (regression analysis) covering a reference period of 24\u00a0months are used to calculate a vehicle\u2019s future value as accurately as possible.
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 Group level. 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.
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. The Group also considered centrally assumptions which could affect future sales proceeds linked to the lack of market data on used electric vehicle sales. This resulted in management applying an additional stress on the expected sales proceeds of Battery Electric Vehicles (BEV) and Plug-In Hybrids (PHEV).
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 high profit from the used car sales activity throughout 2023 but, as previously predicted, the used car market has started to normalise in the first semester of 2023 with a further decline observed in the second semester of 2023.
This assessment continues to result in a reduction in depreciation costs of EUR\u00a0553.2\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 2023 was EUR\u00a0312.2\u00a0million.
+Increase/-decrease in expected sales proceeds per vehicle | Income statement net Impact (in EUR million) |
|---|---|
-EUR\u00a01,000 | (138.1) |
+EUR\u00a01,000 | 122.3 |
\u00a0
The impacts of the sensitivity analysis are not linear.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForDepreciationExpenseExplanatory", "language": "en", "entity": "scheme:969500E7V019H9NP7427", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "text_block_0f11e93a-029e-4c35-bb58-149495c1a87a": { "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:
On 22\u00a0May 2023 the Group completed acquisition of LeasePlan (see note\u00a02). Purchase price allocation exercise was completed shortly after the end of the reporting period and the goodwill recognised on acquisition is yet to be allocated to cash generating units. LeasePlan business continues to be integrated into the Group and the management will finalise allocation of the goodwill in the first semester of 2024 to the relevant CGUs.
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.
(in EUR million) | Goodwill |
|---|---|
At 1\u00a0January 2022 | \u00a0 |
Cost | 576.0 |
Accumulated impairment | \u2212 |
Carrying amount as at 1\u00a0January 2022 | 576.0 |
Year ended 31\u00a0December 2022 | \u00a0 |
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 | \u00a0 |
Cost | 621.3 |
Accumulated impairment | (2.7) |
Carrying amount as at 31\u00a0December 2022 | 618.6 |
Year ended 31\u00a0December 2023 | \u00a0 |
Opening net book amount | 618.6 |
Impairment | (23.7) |
Scope changes\u00a0(1) | 1,396.0 |
Closing net book amount as at 31\u00a0December 2023 | 1,990.9 |
At 31\u00a0December 2023 | \u00a0 |
Cost | 2,014.6 |
Accumulated impairment | (23.7) |
Carrying amount as at 31\u00a0December 2023 | 1,990.9 |
|
\u00a0
(in EUR million) | As at 1\u00a0January 2023 | Addition | Impairment | As at 31\u00a0December 2023 |
|---|---|---|---|---|
France | 212.0 | \u2212 | \u2212 | 212.0 |
Germany | 35.2 | \u2212 | \u2212 | 35.2 |
Germany (Fleetpool) | 53.0 | \u2212 | (23.7) | 29.3 |
Italy | 50.2 | \u2212 | \u2212 | 50.2 |
Spain | 128.0 | \u2212 | \u2212 | 128.0 |
UK | 22.6 | \u2212 | \u2212 | 22.6 |
Benelux | 56.9 | \u2212 | \u2212 | 56.9 |
Nordics Hub | 18.3 | \u2212 | \u2212 | 18.3 |
South Eastern Europe Hub | 9.5 | \u2212 | \u2212 | 9.5 |
North Eastern Europe Hub | 1.4 | \u2212 | \u2212 | 1.4 |
Central Europe Hub | 31.5 | \u2212 | \u2212 | 31.5 |
LeasePlan | \u2212 | 1,396.0 | \u2212 | 1,396.0 |
Total | 618.5 | 1,396.0 | (23.7) | 1,990.9 |
On an annual basis, the Group 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 2023, the Group booked an impairment of goodwill in the German subsidiary Fleetpool Holding\u00a0GmbH for EUR\u00a023.7\u00a0million. While the volume of active contracts in Fleetpool remained stable over 2023, difficult local procurement conditions, logistical issues in the management of the stock of vehicles, and difficulties in the German subscription market led to a deterioration of the Company\u2019s financial prospects, materially delaying the expansion plan. Several mitigating initiatives have now been undertaken to accelerate the integration of Fleetpool\u2019s operations and technology with other Group entities.
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, other than goodwill in Fleetpool Holding\u00a0GmbH, has been identified in 2023. There was an impairment of goodwill for the amount of EUR\u00a02.7\u00a0million in 2022. It related to the ALD Russia subsidiary, which was subsequently sold in 2023.
\u00a0
The key assumptions used for value-in-use calculations in 2023 and 2022 are as follows:
\u00a0 | Discount Factor 2023 | Discount Factor 2022 | Perpetuity rate |
|---|---|---|---|
France | 10.6% | 10.0% | 2.0% |
Germany | 10.6% | 10.0% | 2.0% |
Italy | 14.2% | 12.1% | 2.0% |
Spain | 12.2% | 10.6% | 2.0% |
UK | 10.7% | 10.0% | 2.0% |
Benelux | 10.6% | 10.0% | 2.0% |
Nordics Hub | 15.3% | 13.6% | 2.0% |
South Eastern Europe Hub | 25.5% | 21.8% | 2.0% |
North Eastern Europe Hub | 10.6% | 10.0% | 2.0% |
Central Europe Hub | 20.2% | 19.2% | 2.0% |
\u00a0
On 22\u00a0May 2023, the Group completed the acquisition of LeasePlan (see note\u00a02 for detail). Purchase price allocation exercise was completed shortly after the end of the reporting period and there was EUR\u00a01,396\u00a0million of goodwill recognised on acquisition which is yet to be allocated to cash generating units. LeasePlan business continues to be integrated into the Group and the management will finalise allocation of the goodwill in the first semester of 2024 to the relevant CGUs.\u00a0
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) | Software (internally generated) | Software licences (external) | Customer relationships | Assets under construction | Other | Total |
|---|---|---|---|---|---|---|
At 1\u00a0January 2022 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Cost | 79.8 | 90.3 | 10.0 | 18.8 | 4.8 | 203.6 |
Accumulated amortisation and impairment | (39.6) | (71.2) | (3.8) | \u2212 | (0.3) | (114.8) |
Carrying amount as at 1\u00a0January 2022 | 40.2 | 19.1 | 6.1 | 18.8 | 4.5 | 88.7 |
Year ended 31\u00a0December 2022 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Opening net book amount | 40.2 | 19.1 | 6.1 | 18.8 | 4.5 | 88.7 |
Additions | 31.1 | 12.9 | \u2212 | 13.0 | 11.3 | 68.3 |
Divestments | \u2212 | (4.2) | \u2212 | \u2212 | (11.8) | (16.0) |
Amortisation | (13.0) | (10.2) | (2.1) | \u2212 | (0.3) | (25.5) |
Transfer to assets qualified as held-for-sale | (0.4) | (0.2) | \u2212 | \u2212 | \u2212 | (0.6) |
Scope changes | 1.7 | 0.4 | 10.3 | \u2212 | \u00a0 | 12.4 |
Currency translation differences | (0.8) | 0.0 | \u2212 | \u2212 | \u2212 | (0.8) |
Closing net book amount as at 31\u00a0December 2022 | 58.8 | 17.9 | 14.4 | 31.9 | 3.7 | 126.6 |
At 31\u00a0December 2022 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Cost | 104.6 | 84.6 | 20.3 | 31.9 | 3.7 | 245.0 |
Accumulated amortisation and impairment | (45.8) | (66.7) | (5.9) | \u2212 | (0.0) | (118.4) |
Carrying amount as at 31\u00a0December 2022 | 58.8 | 17.9 | 14.4 | 31.9 | 3.7 | 126.6 |
Year ended 31\u00a0December 2023 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Opening net book amount | 58.8 | 17.9 | 14.4 | 31.9 | 3.7 | 126.6 |
Additions\u00a0(1) | 71.1 | 16.2 | 279.0 | 112.8 | 0.1 | 479.3 |
Divestments | (0.0) | (2.1) | \u2212 | (18.5) | (3.6) | (24.1) |
Impairment | (1.6) | \u2212 | - | \u2212 | \u2212 | (1.6) |
Amortisation | (54.8) | (10.9) | (13.3) | \u2212 | (4.8) | (83.8) |
Scope changes\u00a0(1) | 36.0 | 18.0 | (0.0) | 143.8 | 9.6 | 207.4 |
Currency translation differences | 0.3 | (0.1) | \u2212 | \u2212 | 0.0 | 0.2 |
Closing net book amount as at 31\u00a0December 2023 | 109.7 | 39.0 | 280.1 | 270.0 | 5.1 | 703.9 |
At 31\u00a0December 2023 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Cost | 475.9 | 152.7 | 299.3 | 270.0 | 9.8 | 1,207.7 |
Accumulated amortisation and impairment | (366.2) | (113.7) | (19.2) | \u2212 | (4.7) | (503.8) |
Carrying amount as at 31\u00a0December 2023 | 109.7 | 39.0 | 280.1 | 270.0 | 5.1 | 703.9 |
|
\u00a0
LeasePlan\u2019s Next Generation Digital Architecture programme, launched in 2019 to deliver a harmonized and standardized global digital architecture, was scaled down to 3 entities after the signature of the acquisition MoU in January 2022. The Group started a thorough review of this programme immediately after the acquisition closing. In the context of the LeasePlan purchase price allocation, taking into account the significant delay in deployment and the articulation with rest of the IT architecture, the Group decided to stop new developments, while re-using assets of value and leveraging with ALD\u2019s strong back-office systems. As a result, at the date of the acquisition, this intangible asset was marked down by EUR 203 million (net book value as at end 2023: EUR 262 million).\u00a0
", "dimensions": { "concept": "ifrs-full:DisclosureOfIntangibleAssetsAndGoodwillExplanatory", "language": "en", "entity": "scheme:969500E7V019H9NP7427", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "text_block_f814c87d-6e40-4061-801a-151e59cc8229": { "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:
On 22\u00a0May 2023 the Group completed acquisition of LeasePlan (see note\u00a02). Purchase price allocation exercise was completed shortly after the end of the reporting period and the goodwill recognised on acquisition is yet to be allocated to cash generating units. LeasePlan business continues to be integrated into the Group and the management will finalise allocation of the goodwill in the first semester of 2024 to the relevant CGUs.
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.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForIntangibleAssetsAndGoodwillExplanatory", "language": "en", "entity": "scheme:969500E7V019H9NP7427", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "text_block_b091320d-8761-4a71-84b2-9ca323667a6c": { "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:
On 22\u00a0May 2023 the Group completed acquisition of LeasePlan (see note\u00a02). Purchase price allocation exercise was completed shortly after the end of the reporting period and the goodwill recognised on acquisition is yet to be allocated to cash generating units. LeasePlan business continues to be integrated into the Group and the management will finalise allocation of the goodwill in the first semester of 2024 to the relevant CGUs.
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.
(in EUR million) | Goodwill |
|---|---|
At 1\u00a0January 2022 | \u00a0 |
Cost | 576.0 |
Accumulated impairment | \u2212 |
Carrying amount as at 1\u00a0January 2022 | 576.0 |
Year ended 31\u00a0December 2022 | \u00a0 |
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 | \u00a0 |
Cost | 621.3 |
Accumulated impairment | (2.7) |
Carrying amount as at 31\u00a0December 2022 | 618.6 |
Year ended 31\u00a0December 2023 | \u00a0 |
Opening net book amount | 618.6 |
Impairment | (23.7) |
Scope changes\u00a0(1) | 1,396.0 |
Closing net book amount as at 31\u00a0December 2023 | 1,990.9 |
At 31\u00a0December 2023 | \u00a0 |
Cost | 2,014.6 |
Accumulated impairment | (23.7) |
Carrying amount as at 31\u00a0December 2023 | 1,990.9 |
|
\u00a0
(in EUR million) | As at 1\u00a0January 2023 | Addition | Impairment | As at 31\u00a0December 2023 |
|---|---|---|---|---|
France | 212.0 | \u2212 | \u2212 | 212.0 |
Germany | 35.2 | \u2212 | \u2212 | 35.2 |
Germany (Fleetpool) | 53.0 | \u2212 | (23.7) | 29.3 |
Italy | 50.2 | \u2212 | \u2212 | 50.2 |
Spain | 128.0 | \u2212 | \u2212 | 128.0 |
UK | 22.6 | \u2212 | \u2212 | 22.6 |
Benelux | 56.9 | \u2212 | \u2212 | 56.9 |
Nordics Hub | 18.3 | \u2212 | \u2212 | 18.3 |
South Eastern Europe Hub | 9.5 | \u2212 | \u2212 | 9.5 |
North Eastern Europe Hub | 1.4 | \u2212 | \u2212 | 1.4 |
Central Europe Hub | 31.5 | \u2212 | \u2212 | 31.5 |
LeasePlan | \u2212 | 1,396.0 | \u2212 | 1,396.0 |
Total | 618.5 | 1,396.0 | (23.7) | 1,990.9 |
On an annual basis, the Group 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 2023, the Group booked an impairment of goodwill in the German subsidiary Fleetpool Holding\u00a0GmbH for EUR\u00a023.7\u00a0million. While the volume of active contracts in Fleetpool remained stable over 2023, difficult local procurement conditions, logistical issues in the management of the stock of vehicles, and difficulties in the German subscription market led to a deterioration of the Company\u2019s financial prospects, materially delaying the expansion plan. Several mitigating initiatives have now been undertaken to accelerate the integration of Fleetpool\u2019s operations and technology with other Group entities.
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, other than goodwill in Fleetpool Holding\u00a0GmbH, has been identified in 2023. There was an impairment of goodwill for the amount of EUR\u00a02.7\u00a0million in 2022. It related to the ALD Russia subsidiary, which was subsequently sold in 2023.
\u00a0
The key assumptions used for value-in-use calculations in 2023 and 2022 are as follows:
\u00a0 | Discount Factor 2023 | Discount Factor 2022 | Perpetuity rate |
|---|---|---|---|
France | 10.6% | 10.0% | 2.0% |
Germany | 10.6% | 10.0% | 2.0% |
Italy | 14.2% | 12.1% | 2.0% |
Spain | 12.2% | 10.6% | 2.0% |
UK | 10.7% | 10.0% | 2.0% |
Benelux | 10.6% | 10.0% | 2.0% |
Nordics Hub | 15.3% | 13.6% | 2.0% |
South Eastern Europe Hub | 25.5% | 21.8% | 2.0% |
North Eastern Europe Hub | 10.6% | 10.0% | 2.0% |
Central Europe Hub | 20.2% | 19.2% | 2.0% |
\u00a0
On 22\u00a0May 2023, the Group completed the acquisition of LeasePlan (see note\u00a02 for detail). Purchase price allocation exercise was completed shortly after the end of the reporting period and there was EUR\u00a01,396\u00a0million of goodwill recognised on acquisition which is yet to be allocated to cash generating units. LeasePlan business continues to be integrated into the Group and the management will finalise allocation of the goodwill in the first semester of 2024 to the relevant CGUs.\u00a0
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.
", "dimensions": { "concept": "ifrs-full:DisclosureOfGoodwillExplanatory", "language": "en", "entity": "scheme:969500E7V019H9NP7427", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "text_block_17a42a5a-0294-40a0-b8fa-1b7638556017": { "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:
On 22\u00a0May 2023 the Group completed acquisition of LeasePlan (see note\u00a02). Purchase price allocation exercise was completed shortly after the end of the reporting period and the goodwill recognised on acquisition is yet to be allocated to cash generating units. LeasePlan business continues to be integrated into the Group and the management will finalise allocation of the goodwill in the first semester of 2024 to the relevant CGUs.
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.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForGoodwillExplanatory", "language": "en", "entity": "scheme:969500E7V019H9NP7427", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "text_block_062ee346-f2b5-4b7e-ae6a-192768fa618e": { "value": "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.
(in EUR million) | Software (internally generated) | Software licences (external) | Customer relationships | Assets under construction | Other | Total |
|---|---|---|---|---|---|---|
At 1\u00a0January 2022 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Cost | 79.8 | 90.3 | 10.0 | 18.8 | 4.8 | 203.6 |
Accumulated amortisation and impairment | (39.6) | (71.2) | (3.8) | \u2212 | (0.3) | (114.8) |
Carrying amount as at 1\u00a0January 2022 | 40.2 | 19.1 | 6.1 | 18.8 | 4.5 | 88.7 |
Year ended 31\u00a0December 2022 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Opening net book amount | 40.2 | 19.1 | 6.1 | 18.8 | 4.5 | 88.7 |
Additions | 31.1 | 12.9 | \u2212 | 13.0 | 11.3 | 68.3 |
Divestments | \u2212 | (4.2) | \u2212 | \u2212 | (11.8) | (16.0) |
Amortisation | (13.0) | (10.2) | (2.1) | \u2212 | (0.3) | (25.5) |
Transfer to assets qualified as held-for-sale | (0.4) | (0.2) | \u2212 | \u2212 | \u2212 | (0.6) |
Scope changes | 1.7 | 0.4 | 10.3 | \u2212 | \u00a0 | 12.4 |
Currency translation differences | (0.8) | 0.0 | \u2212 | \u2212 | \u2212 | (0.8) |
Closing net book amount as at 31\u00a0December 2022 | 58.8 | 17.9 | 14.4 | 31.9 | 3.7 | 126.6 |
At 31\u00a0December 2022 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Cost | 104.6 | 84.6 | 20.3 | 31.9 | 3.7 | 245.0 |
Accumulated amortisation and impairment | (45.8) | (66.7) | (5.9) | \u2212 | (0.0) | (118.4) |
Carrying amount as at 31\u00a0December 2022 | 58.8 | 17.9 | 14.4 | 31.9 | 3.7 | 126.6 |
Year ended 31\u00a0December 2023 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Opening net book amount | 58.8 | 17.9 | 14.4 | 31.9 | 3.7 | 126.6 |
Additions\u00a0(1) | 71.1 | 16.2 | 279.0 | 112.8 | 0.1 | 479.3 |
Divestments | (0.0) | (2.1) | \u2212 | (18.5) | (3.6) | (24.1) |
Impairment | (1.6) | \u2212 | - | \u2212 | \u2212 | (1.6) |
Amortisation | (54.8) | (10.9) | (13.3) | \u2212 | (4.8) | (83.8) |
Scope changes\u00a0(1) | 36.0 | 18.0 | (0.0) | 143.8 | 9.6 | 207.4 |
Currency translation differences | 0.3 | (0.1) | \u2212 | \u2212 | 0.0 | 0.2 |
Closing net book amount as at 31\u00a0December 2023 | 109.7 | 39.0 | 280.1 | 270.0 | 5.1 | 703.9 |
At 31\u00a0December 2023 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Cost | 475.9 | 152.7 | 299.3 | 270.0 | 9.8 | 1,207.7 |
Accumulated amortisation and impairment | (366.2) | (113.7) | (19.2) | \u2212 | (4.7) | (503.8) |
Carrying amount as at 31\u00a0December 2023 | 109.7 | 39.0 | 280.1 | 270.0 | 5.1 | 703.9 |
|
\u00a0
LeasePlan\u2019s Next Generation Digital Architecture programme, launched in 2019 to deliver a harmonized and standardized global digital architecture, was scaled down to 3 entities after the signature of the acquisition MoU in January 2022. The Group started a thorough review of this programme immediately after the acquisition closing. In the context of the LeasePlan purchase price allocation, taking into account the significant delay in deployment and the articulation with rest of the IT architecture, the Group decided to stop new developments, while re-using assets of value and leveraging with ALD\u2019s strong back-office systems. As a result, at the date of the acquisition, this intangible asset was marked down by EUR 203 million (net book value as at end 2023: EUR 262 million).\u00a0
", "dimensions": { "concept": "ifrs-full:DisclosureOfIntangibleAssetsExplanatory", "language": "en", "entity": "scheme:969500E7V019H9NP7427", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "text_block_4f7c31ce-454c-4397-b906-955c4e5b4b4c": { "value": "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.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForIntangibleAssetsOtherThanGoodwillExplanatory", "language": "en", "entity": "scheme:969500E7V019H9NP7427", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "text_block_39fcb6c8-6128-490d-9900-dd6f7cd88df3": { "value": "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 of rental fleet impairment, refer to note\u00a05.3 \u201cImpairment of rental fleet\u201d.
An expected credit loss (ECL) provision is applied to all receivables from clients that are measured at amortised cost with the exception of those receivables deemed to be out of scope. The Group have applied this scope exemption when the receivable meets the low credit risk exemption criteria. The Group has applied this to receivables on used car sales and insurance receivables, where there is zero or almost no history of credit risk or the amounts due are from financial institutions with an investment grade credit rating.
For the other receivables from clients the Group is currently in the process of aligning the methodologies used to calculate the ECL for the existing ALD Group entities and the newly acquired LeasePlan entities in the year, with the process expected to be complete within 12\u00a0months of the balance sheet date. However, overall, the Group segments the receivables form clients into sound and doubtful receivables (that includes receivables that have met the definition of default) and for sound receivables apply a simplified approach in calculating ECLs from initial recognition of the receivable, which means the Group does not track changes in credit risk, but instead recognises a loss allowance based on lifetime ECLs at each reporting date.
For the ALD entities the Group has established a provision matrix for the sound receivables that is based on its historical credit loss experience by aging categories, 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. To establish the forward-looking element of IFRS\u00a09 provision, the Group uses macroeconomic data and analysis through local uplifts to probability of default and loss given default rates. For the newly acquired LeasePlan entities the calculation for sound receivables is based on the use of models that require assumptions and data about forecast macroeconomic conditions and credit behaviour (including likelihood of customers defaulting and the resulting losses) from a third-party provider that also includes a forward-looking element.
Since obtaining financial holding status, the Group has aligned its definition of default to the ECB Regulatory Capital CRR Article\u00a0178 definition of default. This change applies to historic ALD entities only as LeasePlan entities are already aligned with the Article\u00a0178 definition of default due to holding a banking licence prior to the acquisition. For purposes of assessing, recognising and reporting defaults, a customer shall be considered to be in default when either one or both of the following events occur:
The application of the above guidance is only to the extent of identifying the customers that are in default. There is no change in the method of determining the value of impairment. Where the customer is in default, the whole of the customer balance is classified as doubtful, and impairment is based upon the full outstanding amount, except where we have adjudged there are mitigating circumstances. This definition of default has led to an increase in defaulted customers during 2023 resulting in the increase in the IFRS\u00a09 provision by EUR\u00a05.9\u00a0million on initial application.
Expected credit losses are reassessed at each reporting date and reflect all reasonable information that is available at the reporting date. Judgement is required from management for applying appropriate models and setting assumptions for the measurement of ECL. The methodology, assumptions and data, including any forecasts of future economic conditions, macroeconomic impacts and the Group\u2019s provision matrix are reviewed regularly by management in determining the expected credit losses and the write-off of receivables. Doubtful debts should be written off as soon as the definitive loss is known.
Where the Group have acquired receivables from clients that are originated or purchased credit-impaired, due to an incurred event having a detrimental impact on the estimated cashflows of the asset, the gross receivable is initial recognised at fair value with no carrying impairment allowance. The Group only recognises the cumulative changes in lifetime expected credit losses since initial recognition as a loss allowance for originated purchased credit-impaired financial assets in the income statement.
Disputes often arise in the collection of lease receivables and tend to range from issues relating to the performance of various services under the contract to the amount of end-of-contract billing. A dispute has no impact on the solvency of the customer or the risk of default, and therefore is not a credit loss. As such these amounts are removed from sound receivables and a provision is applied based on our provisions accounting policy. For presentation purposes the provision is netted against the \u2018Receivables from clients\u2019 balance sheet line item.
Details about the assumptions and estimation techniques used in measuring ECL for finance lease receivables and trade receivables from operating lease contracts are provided in the section Credit risk management and disclosure on the impairment provided in note\u00a022 \u201cLease Receivables from Clients\u201d.
In determining whether goodwill is impaired requires an estimation of the value in use of the groups of cash generating units to which the goodwill assets have been allocated. The key assumptions calculating the value in use are those regarding discount rates, growth rates and other expected changes in cash flows. The estimates and assumptions used are disclosed in note\u00a03.5.6 of these consolidated financial statements.
The Group tests annually whether goodwill has suffered any impairment, in accordance with the accounting policy stated presented in note\u00a03.5.7 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 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, impairment of goodwill was identified in the German subsidiary Fleetpool Holding\u00a0GmbH for EUR\u00a023.7\u00a0million (see note\u00a016 for further detail).
For goodwill, sensitivity tests are carried out to measure the impact on each CGU\u2019s recoverable value based on certain assumptions. At 31\u00a0December 2023, 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, due to it being an important input in determining value in use. 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 2023, an impairment provision of EUR\u00a067.2\u00a0million was recognised for the rental fleet of the Group\u2019s Turkish subsidiaries. As Turkey is a hyperinflation economy, under the requirements of IAS\u00a029 \u201cFinancial Reporting in Hyperinflationary Economies\u201d non-monetary balances at the end of the period are restated to reflect a price index that is current at the balance sheet date. In applying this to the non-monetary book value balance of rental fleet the Group have used the Consumer Price Index (CPI) as announced by the Turkish Statistical Institute as the price index. However, for the leasing contracts originated in Turkey, despite the continued increase carrying amount of vehicles in line with IAS\u00a029, the actual market value of these vehicles and used vehicles started to decline in Q4\u00a02023 after all-time high prices, which resulted in an indicator of impairment. Using a discounted cash flow model, with the recoverable amount determined by value in use, the Turkish subsidiaries rental fleet has been impaired down to the recoverable amount.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForImpairmentOfAssetsExplanatory", "language": "en", "entity": "scheme:969500E7V019H9NP7427", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "text_block_a225ae9d-55db-4ca9-8b69-8ceb972f8556": { "value": "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 of rental fleet impairment, refer to note\u00a05.3 \u201cImpairment of rental fleet\u201d.
In determining whether goodwill is impaired requires an estimation of the value in use of the groups of cash generating units to which the goodwill assets have been allocated. The key assumptions calculating the value in use are those regarding discount rates, growth rates and other expected changes in cash flows. The estimates and assumptions used are disclosed in note\u00a03.5.6 of these consolidated financial statements.
The Group tests annually whether goodwill has suffered any impairment, in accordance with the accounting policy stated presented in note\u00a03.5.7 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 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, impairment of goodwill was identified in the German subsidiary Fleetpool Holding\u00a0GmbH for EUR\u00a023.7\u00a0million (see note\u00a016 for further detail).
For goodwill, sensitivity tests are carried out to measure the impact on each CGU\u2019s recoverable value based on certain assumptions. At 31\u00a0December 2023, sensitivities to variations in the cash flows and discount rates were measured.
According to the results in these tests:
(in EUR million) | Note | Year ended 31\u00a0December | |
|---|---|---|---|
2023 | 2022 | ||
Impairment | \u00a0 | (168.6) | (125.2) |
Reversal of impairment\u00a0(1) | \u00a0 | 97.9 | 79.1 |
Impairment charges on receivables | \u00a0 | (70.7) | (46.1) |
|
(in EUR million) | Goodwill |
|---|---|
At 1\u00a0January 2022 | \u00a0 |
Cost | 576.0 |
Accumulated impairment | \u2212 |
Carrying amount as at 1\u00a0January 2022 | 576.0 |
Year ended 31\u00a0December 2022 | \u00a0 |
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 | \u00a0 |
Cost | 621.3 |
Accumulated impairment | (2.7) |
Carrying amount as at 31\u00a0December 2022 | 618.6 |
Year ended 31\u00a0December 2023 | \u00a0 |
Opening net book amount | 618.6 |
Impairment | (23.7) |
Scope changes\u00a0(1) | 1,396.0 |
Closing net book amount as at 31\u00a0December 2023 | 1,990.9 |
At 31\u00a0December 2023 | \u00a0 |
Cost | 2,014.6 |
Accumulated impairment | (23.7) |
Carrying amount as at 31\u00a0December 2023 | 1,990.9 |
|
\u00a0
(in EUR million) | As at 1\u00a0January 2023 | Addition | Impairment | As at 31\u00a0December 2023 |
|---|---|---|---|---|
France | 212.0 | \u2212 | \u2212 | 212.0 |
Germany | 35.2 | \u2212 | \u2212 | 35.2 |
Germany (Fleetpool) | 53.0 | \u2212 | (23.7) | 29.3 |
Italy | 50.2 | \u2212 | \u2212 | 50.2 |
Spain | 128.0 | \u2212 | \u2212 | 128.0 |
UK | 22.6 | \u2212 | \u2212 | 22.6 |
Benelux | 56.9 | \u2212 | \u2212 | 56.9 |
Nordics Hub | 18.3 | \u2212 | \u2212 | 18.3 |
South Eastern Europe Hub | 9.5 | \u2212 | \u2212 | 9.5 |
North Eastern Europe Hub | 1.4 | \u2212 | \u2212 | 1.4 |
Central Europe Hub | 31.5 | \u2212 | \u2212 | 31.5 |
LeasePlan | \u2212 | 1,396.0 | \u2212 | 1,396.0 |
Total | 618.5 | 1,396.0 | (23.7) | 1,990.9 |
On an annual basis, the Group 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 2023, the Group booked an impairment of goodwill in the German subsidiary Fleetpool Holding\u00a0GmbH for EUR\u00a023.7\u00a0million. While the volume of active contracts in Fleetpool remained stable over 2023, difficult local procurement conditions, logistical issues in the management of the stock of vehicles, and difficulties in the German subscription market led to a deterioration of the Company\u2019s financial prospects, materially delaying the expansion plan. Several mitigating initiatives have now been undertaken to accelerate the integration of Fleetpool\u2019s operations and technology with other Group entities.
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, other than goodwill in Fleetpool Holding\u00a0GmbH, has been identified in 2023. There was an impairment of goodwill for the amount of EUR\u00a02.7\u00a0million in 2022. It related to the ALD Russia subsidiary, which was subsequently sold in 2023.
\u00a0
The key assumptions used for value-in-use calculations in 2023 and 2022 are as follows:
\u00a0 | Discount Factor 2023 | Discount Factor 2022 | Perpetuity rate |
|---|---|---|---|
France | 10.6% | 10.0% | 2.0% |
Germany | 10.6% | 10.0% | 2.0% |
Italy | 14.2% | 12.1% | 2.0% |
Spain | 12.2% | 10.6% | 2.0% |
UK | 10.7% | 10.0% | 2.0% |
Benelux | 10.6% | 10.0% | 2.0% |
Nordics Hub | 15.3% | 13.6% | 2.0% |
South Eastern Europe Hub | 25.5% | 21.8% | 2.0% |
North Eastern Europe Hub | 10.6% | 10.0% | 2.0% |
Central Europe Hub | 20.2% | 19.2% | 2.0% |
\u00a0
On 22\u00a0May 2023, the Group completed the acquisition of LeasePlan (see note\u00a02 for detail). Purchase price allocation exercise was completed shortly after the end of the reporting period and there was EUR\u00a01,396\u00a0million of goodwill recognised on acquisition which is yet to be allocated to cash generating units. LeasePlan business continues to be integrated into the Group and the management will finalise allocation of the goodwill in the first semester of 2024 to the relevant CGUs.\u00a0
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.
", "dimensions": { "concept": "ifrs-full:DisclosureOfImpairmentOfAssetsExplanatory", "language": "en", "entity": "scheme:969500E7V019H9NP7427", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "text_block_3aa3700e-2e02-4cfa-bf46-c72b33a8ff33": { "value": "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 of rental fleet impairment, refer to note\u00a05.3 \u201cImpairment of rental fleet\u201d.
In determining whether goodwill is impaired requires an estimation of the value in use of the groups of cash generating units to which the goodwill assets have been allocated. The key assumptions calculating the value in use are those regarding discount rates, growth rates and other expected changes in cash flows. The estimates and assumptions used are disclosed in note\u00a03.5.6 of these consolidated financial statements.
The Group tests annually whether goodwill has suffered any impairment, in accordance with the accounting policy stated presented in note\u00a03.5.7 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 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, impairment of goodwill was identified in the German subsidiary Fleetpool Holding\u00a0GmbH for EUR\u00a023.7\u00a0million (see note\u00a016 for further detail).
For goodwill, sensitivity tests are carried out to measure the impact on each CGU\u2019s recoverable value based on certain assumptions. At 31\u00a0December 2023, sensitivities to variations in the cash flows and discount rates were measured.
According to the results in these tests:
The Group classifies its financial assets in the following measurement categories:
The classification depends on the entity\u2019s business model for managing the financial assets and the contractual terms of the cash flows. For assets measured at fair value, gains and losses will either be recorded in consolidated income statement or Other Comprehensive Income (OCI). For investments in equity instruments that are not held for trading, this will depend on whether the Group has made an irrevocable election at the time of initial recognition to account for the equity investment at fair value through other comprehensive income (FVOCI). The Group reclassifies debt investments when and only when its business model for managing those assets changes. By default, derivative financial instruments will be classified as subsequently measured at fair value through profit or loss.
The Group has not elected to irrevocably designate any financial liability for FVTPL so all financial liabilities are measured at amortised cost unless they are held for trading, in which case the financial liability will be at FVTPL. Financial liabilities at FVTPL currently only include derivative financial instruments in the Group\u2019s financial statements (refer to derivatives policy and note\u00a03.5.10).
Regular way purchases and sales of financial assets are recognised on the balance sheet:
A financial liability is recognised when the Group becomes party to a contractual obligation to deliver cash or another financial instrument to another entity.
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. 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.
At initial recognition, the Group measures a financial asset or financial liability at its fair value plus or less, in the case of a financial asset not at fair value through profit or loss (FVPL), transaction costs that are directly attributable to the acquisition of the financial asset or financial liability. Transaction costs of financial instruments carried at FVTPL are expensed in the consolidated income statement.
Subsequent measurement of debt instruments depends on the Group\u2019s business model for managing the asset and the cash flow characteristics of the asset. There are three measurement categories into which the Group classifies its debt instruments:
The Group subsequently measures all equity investments at fair value. Where the Group\u2019s management has elected to present fair value gains and losses on equity investments in OCI, there is no subsequent reclassification of fair value gains and losses to the income statement following the derecognition of the investment. Dividends from such investments continue to be recognised in the income statement as other income when the Group\u2019s right to receive payments is established.
Changes in the fair value of financial assets at FVPL are recognised in \u201cother income/(expenses)\u201d in the income statement as applicable. Impairment losses (and reversal of impairment losses) on equity investments measured at FVOCI are not reported separately from other changes in fair value.
Borrowings and other financial liabilities, including debt securities issued and other borrowings, are initially measured at fair value, net of transaction costs. Borrowings and other financial liabilities are subsequently measured at amortised cost using the effective interest method, with interest expense recognised on an effective yield basis. The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments through the expected life of the financial liability, or, where appropriate, a shorter period. Transaction costs are included in amortised cost using the effective interest method.
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 effective interest rate (EIR). The EIR amortisation is included as finance costs in the income. For more information, refer to note\u00a029 \u201cBorrowings from financial institutions, bonds and notes issued\u201d.
\u00a0\u00a0
The Group measures financial instruments, such as derivatives, at fair value at each balance sheet date. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:
The principal or the most advantageous market must be accessible to the Group.
The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest. The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data is available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy, described as follows, based on the lowest level of input that is significant to the fair value measurement as a whole:
For assets and liabilities that are recognised in the financial statements on a recurring basis, the Group determines whether transfers have occurred between levels in the hierarchy by re-assessing categorisation (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.
In order to hedge its exposure to foreign exchange and interest rate, the Group enters into forward, option and swap contracts. None of these contracts meet the own use exemption in IFRS\u00a09 and are accounted for as derivatives. Derivatives are financial instruments, of which the value changes in response to underlying variables. 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. 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.
Derivatives are initially recognised at fair value on the date a derivative contract is entered into (trade date) 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 fair value of cross currency and interest rate swaps is the estimated amount that the Group would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants at the measurement date. The fair values of not-actively traded instruments are calculated using a generally accepted discounted cash flow method, while considering relevant market observable data such as quoted forward prices and interest rates. As a result of having collateral agreements in place for certain of its derivative counterparts, the requirement to reflect other observable market inputs such as CVA, DVA and FVA is eliminated for discounting purposes. The fair values of various derivative instruments used for hedging purposes are disclosed in note\u00a019. Movements on the hedging reserve in other comprehensive income are shown in consolidated statement of changes in equity. The 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.
Changes in the fair value of derivative financial instruments that are designated and effective as hedges of future cash flows (cash flow hedges) are recognised directly in equity through 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. If the cash flow hedge of a firm commitment or forecast transaction results in the recognition of a non-financial asset or liability, then, at the time the asset or liability is recognised, the associated gains or losses on the derivative that had previously been recognised in equity are included in the initial measurement of the asset or liability. For hedges that do not result in the recognition of a non-financial asset or liability, including the effective portion of interest rate swaps hedging variable rate borrowings, amounts deferred in equity are recognised in the income statement in the same period in which the hedged item affects profit or loss.
The Group only applies fair value hedge accounting for hedging fixed interest risk on borrowings. For an effective hedge of an exposure to changes in fair value, the hedged item is adjusted for changes in fair value attributable to the risk being hedged. The corresponding entry and gains or losses arising from remeasuring the associated derivative are recognised in the income statement within \u201cunrealised gains/losses on financial instruments\u201d. Hedge effectiveness is determined at the inception of the hedge relationship, and through periodic prospective effectiveness assessments to ensure that an economic relationship exists between the hedged item and hedging instrument. The Group\u2019s material hedging instruments are interest rate swaps and cross currency swaps that have similar critical terms to the related debt instruments, such as payment dates, maturities and notional amount. As all critical terms matched during the year, there was no material hedge ineffectiveness. The Group also uses cross currency swaps to manage foreign exchange risk associated with borrowings denominated in foreign currencies. Where not designated in an accounting hedge there is a natural offset against foreign exchange movements on associated borrowings.
Hedge accounting is discontinued when the hedging instrument expires or is sold, terminated, exercised, revoked, or no longer qualifies for hedge accounting. At that time, any cumulative gain or loss on the hedging instrument recognised in equity is retained until the forecast transaction occurs. If a hedge transaction is no longer expected to occur, the net cumulative gain or loss previously recognised in equity is recycled to the income statement for the period. Changes in the fair value of any derivative instruments that are not designated in a hedge relationship are recognised immediately in the income statement within \u201cUnrealised gains/(losses) on financial instruments\u201d.
Derivatives embedded in other financial instruments or non-financial host contracts (other than financial assets in the scope of IFRS\u00a09) are treated as separate derivatives when their risks and characteristics are not closely related to those of their host contracts and the host contracts themselves are not carried at fair value with unrealised gains or losses reported in the income statement. Derivatives embedded in contracts which are financial assets in the scope of IFRS\u00a09 are not separated and the whole contract is accounted for at either amortised cost or fair value.
The types of risks that the Group is exposed to and derivatives used to hedge these risks can be found in note\u00a04.1.2 \u201cTreasury Risk\u201d and note\u00a019 \u201cDerivative financial instruments\u201d.
An expected credit loss (ECL) provision is applied to all receivables from clients that are measured at amortised cost with the exception of those receivables deemed to be out of scope. The Group have applied this scope exemption when the receivable meets the low credit risk exemption criteria. The Group has applied this to receivables on used car sales and insurance receivables, where there is zero or almost no history of credit risk or the amounts due are from financial institutions with an investment grade credit rating.
For the other receivables from clients the Group is currently in the process of aligning the methodologies used to calculate the ECL for the existing ALD Group entities and the newly acquired LeasePlan entities in the year, with the process expected to be complete within 12\u00a0months of the balance sheet date. However, overall, the Group segments the receivables form clients into sound and doubtful receivables (that includes receivables that have met the definition of default) and for sound receivables apply a simplified approach in calculating ECLs from initial recognition of the receivable, which means the Group does not track changes in credit risk, but instead recognises a loss allowance based on lifetime ECLs at each reporting date.
For the ALD entities the Group has established a provision matrix for the sound receivables that is based on its historical credit loss experience by aging categories, 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. To establish the forward-looking element of IFRS\u00a09 provision, the Group uses macroeconomic data and analysis through local uplifts to probability of default and loss given default rates. For the newly acquired LeasePlan entities the calculation for sound receivables is based on the use of models that require assumptions and data about forecast macroeconomic conditions and credit behaviour (including likelihood of customers defaulting and the resulting losses) from a third-party provider that also includes a forward-looking element.
Since obtaining financial holding status, the Group has aligned its definition of default to the ECB Regulatory Capital CRR Article\u00a0178 definition of default. This change applies to historic ALD entities only as LeasePlan entities are already aligned with the Article\u00a0178 definition of default due to holding a banking licence prior to the acquisition. For purposes of assessing, recognising and reporting defaults, a customer shall be considered to be in default when either one or both of the following events occur:
The application of the above guidance is only to the extent of identifying the customers that are in default. There is no change in the method of determining the value of impairment. Where the customer is in default, the whole of the customer balance is classified as doubtful, and impairment is based upon the full outstanding amount, except where we have adjudged there are mitigating circumstances. This definition of default has led to an increase in defaulted customers during 2023 resulting in the increase in the IFRS\u00a09 provision by EUR\u00a05.9\u00a0million on initial application.
Expected credit losses are reassessed at each reporting date and reflect all reasonable information that is available at the reporting date. Judgement is required from management for applying appropriate models and setting assumptions for the measurement of ECL. The methodology, assumptions and data, including any forecasts of future economic conditions, macroeconomic impacts and the Group\u2019s provision matrix are reviewed regularly by management in determining the expected credit losses and the write-off of receivables. Doubtful debts should be written off as soon as the definitive loss is known.
Where the Group have acquired receivables from clients that are originated or purchased credit-impaired, due to an incurred event having a detrimental impact on the estimated cashflows of the asset, the gross receivable is initial recognised at fair value with no carrying impairment allowance. The Group only recognises the cumulative changes in lifetime expected credit losses since initial recognition as a loss allowance for originated purchased credit-impaired financial assets in the income statement.
Disputes often arise in the collection of lease receivables and tend to range from issues relating to the performance of various services under the contract to the amount of end-of-contract billing. A dispute has no impact on the solvency of the customer or the risk of default, and therefore is not a credit loss. As such these amounts are removed from sound receivables and a provision is applied based on our provisions accounting policy. For presentation purposes the provision is netted against the \u2018Receivables from clients\u2019 balance sheet line item.
Details about the assumptions and estimation techniques used in measuring ECL for finance lease receivables and trade receivables from operating lease contracts are provided in the section Credit risk management and disclosure on the impairment provided in note\u00a022 \u201cLease Receivables from Clients\u201d.
Credit risk refers to the risk of losses resulting from the inability of Group customers, issuers or other counterparties to meet their financial commitments. Credit risk may be aggravated by concentration risk, resulting from a high exposure to a given risk or to one or more counterparties, or to one or more groups of similar counterparties. In addition to the risk of lessees not making payments for the leased vehicles, the Group is exposed to credit risk originating from its banking and treasury activities, which includes deposits and investments placed with financial institutions and hedging instruments, such as derivatives and reinsurance activities. The Group\u2019s maximum exposure to credit risk primarily arises from these financial assets and is as follows:
\u00a0
(in EUR million) | As at 31\u00a0December | |
|---|---|---|
2023 | 2022 | |
Cash and cash equivalents | 3,997.0 | 253.1 |
Lease receivables from clients | 4,545.2 | 1,849.1 |
Other receivables, prepayments and contract assets\u00a0(1) | 1,217.0 | 429.4 |
Investment in debt and equity securities\u00a0(1) | 118.9 | 18.7 |
Derivative financial assets | 383.3 | 128.9 |
Total exposure | 10,261.3 | 2,679.4 |
|
\u00a0
The Group\u2019s definition of default for the purpose of determining ECLs, and for internal credit risk management purposes aligns to the ECB Regulatory Capital CRR Article\u00a0178 definition of default, to maintain a consistent approach with IFRS\u00a09 and associated regulatory guidance.
The Group has issued policies and standards which regulate the governance of the local credit risk management organisation. All Group entities must 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 assessment process. Each subsidiary has a specific credit authority approved by the Group General Management and the Risk Department of Societe Generale, that is determined by 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 and concentration 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 the Group 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. However, the primary responsibility for debt collection remains with the Group subsidiaries that have dedicated teams in charge of recovering unpaid invoices in compliance with local regulations and market practices. These local processes are required to be compliant with the corporate instructions and guidelines. 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. Each local entity is required to maintain a watch list, which is based on credit rating and other available information. These lists are reviewed in regular meetings by the Credit Committees. A qualitative analysis of total credit exposures, defaults and losses is reported on a monthly basis and discussed on a quarterly basis to the Entity Risk Committee locally and Credit Risk Committee centrally.
The Group limits credit risk on liquid funds and derivative financial instruments through diversification of exposures with a range of financial institutions. Counterparty limits are set for each financial institution with reference to credit ratings assigned by Standard & Poor\u2019s and Moody\u2019s. Limits are set on a legal entity basis and are included in the Group\u2019s risk appetite and approved on a yearly basis. The Group\u2019s treasury risk management monitors the exposures, against the approved limits, on an ongoing basis.
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. The Group is currently in the process of aligning the methodologies used to calculate the expected credit loss (ECL) in the existing ALD Group entities and the newly acquired LeasePlan entities in the year, a project that should be completed within the next 12\u00a0months.
For existing ALD entities where trade receivables and finance lease receivables are not in default, 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. 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 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 and 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. When in default, the receivables from leases with customers are provisioned at 100%.
For the LeasePlan entities acquired, the amount of ECL for lease receivables is measured at the contract level as the probability weighted present value of all cash shortfalls over the expected life of the financial asset discounted at the original implicit interest rate embedded in the lease contract. The cash shortfall is the difference between all contractual cash flows that are due to the Group and all the cash flows that the Group expects to receive. The Group determines the ECL for lease receivables based on sophisticated models. These models include forward-looking macro-economic scenarios and multi-year forecast over the lifetime of the lease contracts. PD, LGD and EAD forecasts are combined to produce the ECL estimate. As such, ECL is highly dependent on the credit quality of counterparties in the portfolio at the reporting date, the types, and characteristics of vehicles in the portfolio, the expected maturities and repayment terms of the contracts, the forecasts of future macro-economic variables in various scenarios, the forecast market developments and residual values for used vehicles in various scenarios, and the probability weight assigned to each forecast scenario.
Expected credit losses are reassessed at each reporting date and reflect all reasonable information that is available at the reporting date and management consider 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. Further information on the expected loss provision on receivables from leases is include in note\u00a022. Given the diverse nature of the Group\u2019s operations (both in relation to customer type and geographically), the Group does not have significant concentration of credit risk in respect of lease receivables from clients, with exposure spread over a large number of customers.
For other financial assets listed above where there is zero or almost no history of credit risk or the amounts due are from financial institutions with an investment grade credit rating, no provision has been applied. For all other counterparties the ECL is based on the General Approach, where the expected credit loss model is calculated by multiplying the PD, LGD and the Exposure at Default (EAD), but the level of provisioning is dependent on the credit deterioration of the asset. If in stage\u00a01, and no deterioration since inception, then based on 12-month ECL, if there is significant deterioration in credit rating, then at stage\u00a02 with a lifetime ECL, and if observable evidence of impairment, then at stage\u00a03 and provisioned based on asset being credit impaired.
The Group central treasury monitors the Group\u2019s interest rate risk exposure and advises subsidiaries to implement adequate hedging operations based on a monthly report measuring interest risk exposure. Each entity and the Group as a whole are subject to sensitivity thresholds and limits validated by the Asset-Liability Committee (ALCO). The Group structural risks are discussed on a quarterly basis during ALCO meetings.
The Group matches the interest rate risk profile of the lease contract portfolio with a corresponding interest rate funding profile to minimise the interest rate risk, where the IRRBB model takes into account lease client behaviour instead of the contractual interest rate risk profile. The Group investigate whether its IRRBB model appropriately reflects its economic reality and the applicable regulatory framework.
\u00a0
For the Group, the sensitivity metric used is the variation in the net present value of the future residual fixed-rate positions (surplus or deficit) for non-stressed shocks of +10\u00a0bps and -10\u00a0bps in the yield curve. The table below reflects the balance sheet exposure of the Group\u2019s financial liabilities to interest rate risk:
NPV sensitivity impact (in EUR million)\u00a0(1) | As at 31\u00a0December | |
|---|---|---|
2023 | 2022 | |
+10\u00a0bps | 0.7 | 13.0 |
-10\u00a0bps | (0.8) | (13.1) |
|
\u00a0
A positive NPV sensitivity for a +10bps represents an excess of fixed rate resources. At the end of 2022, the excess of fixed rate resources is mainly explained by the use of equity for financing the fleet activity and the capital increase of ALD in anticipation of the acquisition of LeasePlan (equity being considered as a long-term resource at fixed rate, whilst the fleet is a medium-term asset and the cash from the capital increase was replaced with a short-term deposit). At the end of 2023, the excess of fixed rate resources has been reduced. It is mainly explained by the acquisition of LeasePlan partially financed with floating subordinated debt (Tier 2) and fixed AT1 capital callable at five years (equity shares being considered as long term assets at fixed rate). See note 29 for further details.
The Group\u2019s functional currency and the reporting currency for its consolidated financial statements is the euro. However, because of its presence in a significant number of countries outside the Euro zone, the Group has substantial assets, liabilities, revenues and costs denominated in currencies other than the euro. The global nature of the Group\u2019s operations therefore exposes the Group to exchange rate volatility as a result of potential mismatches between the currencies in which assets and liabilities are denominated, and as a result of the translation effect on its reported earnings, cash flow and financial condition. The Group is exposed to transactional foreign exchange rate risk when a subsidiary enters into a transaction in a currency other than the subsidiary\u2019s functional currency. The Group seeks to manage its transactional foreign exchange rate risk by attempting to limit the Group\u2019s exposure to the effects of fluctuations in currencies on its statement of financial condition and cash flows through funding its debt directly or through derivatives in the currency in which assets are originated and allocating capital in the currencies in which assets are denominated.
In short, the Group has the following risk management approach regarding currency risk:
Based on the currency risk management approach the Group\u2019s capital adequacy ratio is minimally exposed to changes in the exchange rates it is exposed to. In order to monitor and manage its currency risk exposure, the Group has defined triggers and limits on its structural risk exposure, in accordance with EBA Guidelines.
The Group 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.
The following table shows the net currency position of foreign currencies which the Group is most exposed to as at 31\u00a0December 2023, and with all other variables remaining constant, the impact if the euro strengthen or weakened by 10% against these foreign currencies positions held by the Group:
(in EUR million) | 2023 Net exposure (2) | 2023 +10% (2) | 2023 -10% (2) |
|---|---|---|---|
\u00a0Pound Sterling (GBP) | 549.4 | (49.9) | 61.0 |
Turkish Lira (TRY) | 579.3 | (52.7) | 64.4 |
Brazilian Real (BRL) | 162.1 | (14.7) | 18.0 |
Czech Koruna (CZK) | 131.3 | (11.9) | 14.6 |
Swedish Krona (SEK) | 114.4 | (10.4) | 12.7 |
Norwegian Krone (NOK) | 114.0 | (10.4) | 12.7 |
Danish Krone (DKK) | 113.2 | (10.3) | 12.6 |
Other\u00a0(1) | 597.9 | (48.9) | 59.7 |
|
\u00a0
The 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.
The liquidity risk appetite and tolerance levels are based on the following key principles:
The 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 the Group Treasury Department, by assessing the matching of the run-off of the existing leased assets with the remaining liabilities. Any deviation from the sensitivity threshold is corrected under the supervision of the Group central Treasury.
Note\u00a029 details the maturity of the Group borrowing and debt issued.\u00a0
\u00a0
As a precaution to the risk of not having continued access to financial markets for funding, the Group maintains a liquidity buffer. This buffer includes unencumbered cash and committed (standby) credit facilities to reduce the Group\u2019s liquidity risk. The liquidity buffer as per 31\u00a0December is specified as follows:
(in EUR million) | As at 31\u00a0December | |
|---|---|---|
2023 | 2022 | |
Unencumbered cash at banks | 146.1 | 123.6 |
Unencumbered cash at Central bank | 3,535.6 | \u2212 |
Total on balance liquidity buffer | 3,681.6 | 123.6 |
Undrawn committed facilities | 1,951.0 | 989.7 |
Total | 5,632.6 | 1,113.3 |
\u00a0
The Group holds total revolving credit facilities with a consortium of banks as at 31\u00a0December 2023, of which EUR\u00a01.95\u00a0billion is undrawn.
Upon the acquisition of LeasePlan, which holds a banking licence, the Group became a Financial Holding Company regulated by the European Central Bank (ECB). The European Central Bank set out minimum liquidity level requirements on LeasePlan, demanding that available liquidity exceeds required liquidity at all times as well as a Liquidity Coverage Ratio (LCR) and Net Stable Funding Ratio (NSFR) above 100%. These minimum liquidity requirements are complied with.
The Group\u2019s liquidity stress testing programme includes the integration of risk drivers and review of stress scenarios, governance, tools used and documentation of the stress testing process.\u00a0
Derivatives are used to mitigate the interest rate and currency exposures associated with the funding of lease contracts. Interest rate swaps cover interest rate positions between lease contracts and borrowed funds and currency interest rate swaps cover currency exposures between lease contracts and borrowed funds. The extent of exposure management is in line with internal risk appetite and limits determined by the Group risk management and reviewed on a regular basis. The Group uses a mixture of one-to-one relationships (for fair value hedging), as well as many-to-many macro hedging (for cash flow hedging).
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 and are made up as follows:
(in EUR million) | Year ended 31\u00a0December 2023 | Year ended 31\u00a0December 2022 | ||||
|---|---|---|---|---|---|---|
Notional amounts | Assets | Liabilities | Notional amounts | Assets | Liabilities | |
Cash flow hedges | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Interest rate swaps | 2,999.4 | 24.1 | 11.5 | 1,630.3 | 61.6 | 0.0 |
Foreign exchange swaps | 519.4 | 2.7 | 91.9 | 491.0 | 20.8 | 44.5 |
Total derivatives in hedge | 3,518.8 | 26.7 | 103.4 | 2,121.3 | 82.3 | 44.5 |
Interest rate swaps | 31,332.8 | 235.3 | 392.1 | 3,452.9 | 46.6 | 44.5 |
Foreign exchange swaps | 4,042.9 | 121.2 | 150.3 | \u00a0 | \u2212 | \u2212 |
Total derivatives not in hedge | 35,375.7 | 356.5 | 542.4 | 3,452.9 | 46.6 | 44.5 |
Total | 38,894.5 | 383.3 | 645.8 | 5,574.2 | 128.9 | 89.0 |
Less non-current portion: | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Interest rate swaps \u2013 hedged | \u00a0 | 24.1 | 11.5 | \u00a0 | 61.6 | 0.0 |
Foreign exchange swaps \u2013 hedged | \u00a0 | 2.2 | 52.2 | \u00a0 | 13.1 | 34.3 |
Interest rate swaps \u2013 not hedged | \u00a0 | 157.2 | 353.4 | \u00a0 | 44.3 | 43.8 |
Foreign exchange swaps \u2013 not hedged | \u00a0 | 43.1 | 54.6 | \u00a0 | \u2212 | \u2212 |
Total non-current portion | \u00a0 | 226.6 | 471.7 | \u00a0 | 118.9 | 78.1 |
Current portion | \u00a0 | 156.6 | 174.1 | \u00a0 | 10.0 | 10.9 |
\u00a0
Upon the acquisition of LeasePlan, fair value hedging was in place (through the use of interest rate swaps) as part of the Treasury risk management policy to mitigate exposure to changes in fair value of recognised liabilities, driven by the impact of the interest rate risk component of debt capital market transactions (publicly issued fixed rate bonds). As part of a periodic review of hedging strategy to comply with risk objectives, the Group decided to revoke these fair value hedge designations on 1\u00a0October 2023. Before de-designation, any fair value changes were recognised in the income line item \u201cUnrealised gains/losses on financial instruments and other\u201d and the amortisation of the impact on de-designation, that will be smoothed over the residual lifetime of the debt are included in the same income statement line item and amounted to EUR\u00a038\u00a0million for the year ending 31\u00a0December 2023.
\u00a0
The impact on the income statement of derivatives is summarised below:
(in EUR million) | Year ended 31\u00a0December | |
|---|---|---|
2023 | 2022 | |
Derivatives not in hedges | (152.0) | (1.6) |
Hedge ineffectiveness - fair value hedges | (35.5) | \u2212 |
Of which: | \u00a0 | \u00a0 |
| 32.7 | \u2212 |
| (68.2) | \u2212 |
Hedge ineffectiveness \u2013 cash flow hedges | 1.5 | (0.2) |
Unrealised gains/(losses) on derivative financial instruments | (186.0) | (1.8) |
(in EUR million) | As at 31\u00a0December | |
|---|---|---|
2023 | 2022 | |
Investment in debt securities | 329.4 | 219.1 |
Investment in equity securities | 35.0 | 18.7 |
Long-term investments | 223.5 | 280.1 |
Guarantee deposits | 414.5 | 14.2 |
Other | 8.8 | 5.6 |
Total | 1,011.2 | 537.7 |
Current portion | 766.5 | 331.6 |
Non-current portion | 244.7 | 206.0 |
\u00a0
Investment in debt securities includes bonds and notes held at fair value (through profit and loss or other comprehensive income) and bonds and notes held at amortised cost.
Investment in equity securities includes the interest in SG Fleet Group and the interest in Constellation Automotive Holdings S.a.r.l. Refer to note\u00a026 \u201cFinancial Instruments\u201d for more information on the method of valuation and related assumptions. No impairment or expected credit loss has been booked for the period ending 31\u00a0December 2023 and 2022.
Long-term investments result 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 three\u00a0years\u2019 time and will not be renewed.
The guarantee deposits mainly include:
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 | |
|---|---|---|
2023 | 2022\u00a0(1) | |
Amounts receivable under finance lease contracts | 2,282.3 | 727.2 |
Provision for impairment of receivables under finance lease contracts | (22.6) | (11.6) |
Of which | \u00a0 | \u00a0 |
| (6.8) | (6.0) |
| (15.8) | (5.6) |
Trade receivables | 2,545.9 | 1,327.8 |
Provision for impairment of trade receivables | (239.4) | (174.6) |
Of which | \u00a0 | \u00a0 |
| (217.3) | (151.7) |
| (22.1) | (22.9) |
Provision for customer disputes | (21.0) | (19.6) |
Total receivables | 4,545.2 | 1,849.1 |
|
\u00a0
The fair value of receivables is equivalent to the carrying value.
\u00a0
The below table presents the analysis of receivables which are in and out of scope of the simplified approach of IFRS\u00a09 for sound customers. The Group considers some specific receivable types as out of scope (see note\u00a03).
(in EUR million) | As at 31\u00a0December 2023 | As at 31\u00a0December 2022 | ||||
|---|---|---|---|---|---|---|
In scope | Out of scope | Total | In scope | Out of scope | Total | |
Amounts receivable under finance lease contracts | 2,233.4\u00a0(1) | 49.0\u00a0(2) | 2,282.3 | 714.3\u00a0(1) | 12.8\u00a0(2) | 727.2 |
Provision for impairment of receivables under finance lease contract\u00a0(3) | (15.8) | (6.8) | (22.6) | (5.6) | (6.0) | (11.6) |
Trade receivables | 1,512.4 | 1,033.5\u00a0(2) | 2,545.9 | 651.5 | 676.3\u00a0(2) | 1,327.8 |
Provision for impairment of trade receivables\u00a0(3) | (22.1) | (217.3) | (239.4) | (22.9) | (151.7) | (174.6) |
Provision for customer disputes | \u2212 | (21.0) | (21.0) | \u2212 | (19.6) | (19.6) |
Total receivables | 3,707.9 | 837.4 | 4,545.2 | 1,337.3 | 511.8 | 1,849.1 |
|
Based on the receivables which are in the scope, as at 31\u00a0December 2023 the ALD sound receivables amount to EUR\u00a01,483.5\u00a0million (2022: 1,365.8\u00a0million) with a provision of EUR\u00a025.5\u00a0million (2022: 28.5\u00a0million) and the newly acquired LeasePlan sound receivables amount to EUR\u00a02,262.2\u00a0million with a provision of EUR\u00a012.3\u00a0million.
For ALD entities the loss allowance as at 31\u00a0December 2023 and 31\u00a0December 2022 was determined as follows for both trade and finance lease sound receivables:
\u00a0
(in EUR million) | Not past | 0-30\u00a0days | 31-60\u00a0days past due | 61-90\u00a0days past due | >90\u00a0days | Total |
|---|---|---|---|---|---|---|
Loss rate | 1% | 3% | 9% | 7% | 15% | \u00a0 |
Gross carrying amount of receivables in IFRS\u00a09 scope | 1,251.0 | 167.3 | 33.0 | 12.5 | 19.7 | 1,483.5 |
Loss Allowance | (14.3) | (4.5) | (2.8) | (0.9) | (3.0) | (25.5) |
Net carrying amount of receivables in IFRS\u00a09 scope | 1,236.7 | 162.8 | 30.2 | 11.6 | 16.8 | 1,458.0 |
\u00a0
\u00a0
(in EUR million) | Not past | 0-30\u00a0days | 31-60\u00a0days past due | 61-90\u00a0days past due | >90\u00a0days
| Total |
|---|---|---|---|---|---|---|
Loss rate | 1% | 4% | 8% | 16% | 22% | \u00a0 |
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 | 1,337.3 |
\u00a0
For newly acquired LeasePlan entities the loss allowance as at 31\u00a0December 2023 was determined as follows for both trade and finance lease sound receivables:
(in EUR million) | As at 31\u00a0December 2023 | ||||
|---|---|---|---|---|---|
Banks | Corporate | Small and Medium Enterprises | Private | Total | |
Loss rate | 0% | 0% | 1% | 1% | \u00a0 |
Gross carrying amount of receivables in IFRS\u00a09 scope | 7.7 | 1,406.0 | 790.9 | 57.7 | 2,262.2 |
Loss Allowance | (0.0) | (2.5) | (9.2) | (0.6) | (12.3) |
Net carrying amount of receivables in IFRS\u00a09 scope | 7.7 | 1,403.5 | 781.6 | 57.1 | 2,249.9 |
\u00a0
The movement in impairment of finance lease receivables is as follows:
(in EUR million) | As at 31\u00a0December | |
|---|---|---|
2023 | 2022 | |
Balance at 1\u00a0January | (11.6) | (13.0) |
Purchased credit impaired receivables\u00a0(1) | (1.3) | \u2212 |
Net Impairment charges\u00a0(2) | 0.2 | 0.1 |
Receivables written off | 2.3 | 1.0 |
Scope changes\u00a0(3) | (12.0) | \u2212 |
Other and currency translation differences | (0.2) | 0.2 |
Balance at 31\u00a0December | (22.6) | (11.6) |
|
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 2023 | |||||
|---|---|---|---|---|---|---|
Loans and receivables to customers | ||||||
Banks | Corporates | Small and medium enterprises | Credit to individuals | Very small companies | Total | |
Amounts not past due | 8.4 | 1,149.9 | 624.5 | 84.7 | 157.9 | 2,025.3 |
Amounts including past due between 1\u00a0to 30\u00a0days | 0.1 | 22.7 | 36.4 | 1.7 | 11.4 | 72.4 |
Amounts including past due between 31\u00a0to 60\u00a0days | 0.2 | 8.0 | 11.3 | 0.2 | 2.9 | 22.5 |
Amounts including past due between 61\u00a0to 90\u00a0days | \u2212 | 1.6 | 4.8 | 0.1 | 2.5 | 8.9 |
Amounts including past due between 91\u00a0to 180\u00a0days | 0.3 | 97.4 | 0.1 | 0.1 | 1.6 | 99.5 |
Amounts including past due between 181\u00a0days to 1\u00a0year | \u2212 | 2.6 | \u2212 | 0.0 | 0.6 | 3.2 |
Amounts including past due over 1\u00a0year | \u2212 | 1.1 | \u2212 | 0.0 | 0.4 | 1.5 |
Total | 9.0 | 1,283.3 | 677.1 | 86.7 | 177.3 | 2,233.4 |
\u00a0
(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 |
\u00a0
The increase in amounts past due is related to the acquisition of LeasePlan, which has also increased the amounts not past due relating to increased remaining capital for finance leases.
A full description of the impairment policy is contained in the Credit risk measurement section of the note\u00a04 \u201cFinancial Risk Management\u201d.
The movement in impairment of trade receivables is as follows:
(in EUR million) | As at 31\u00a0December | |
|---|---|---|
2023 | 2022 | |
Balance at 1\u00a0January | (174.6) | (171.8) |
Purchased credit impaired receivables\u00a0(1) | (39.4) | 0.0 |
Net Impairment charges\u00a0(2) | (70.9) | (46.1) |
Receivables written off | 44.6 | 47.9 |
Transfer of disposal groups to assets held for sale | 0.0 | 5.6 |
Scope changes\u00a0(3) | (0.9) | (10.6) |
Other and currency translation differences | 1.9 | 0.3 |
Balance at 31\u00a0December | (239.4) | (174.6) |
|
The maturity analysis is as follows:
(in EUR million) | As at 31\u00a0December | |
|---|---|---|
2023 | 2022 | |
Trade receivables not overdue | 2,134.1 | 986.0 |
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 | 2,545.9 | 1,327.8 |
\u00a0
The improvement in the past due over 180\u00a0days maturity profile is due to higher focus on collection procedures, outsourcing of payment collections and direct debit payments implemented by Group entities.
The amounts receivable from clients include finance lease receivables, which can be analysed as follows:
(in EUR million) | As at 31\u00a0December | |
|---|---|---|
2023 | 2022 | |
Less than one year | 611.9 | 194.0 |
1-2\u00a0years | 523.2 | 122.5 |
2-3\u00a0years | 403.0 | 88.1 |
3-4\u00a0years | 211.1 | 45.9 |
4-5\u00a0years | 88.6 | 10.5 |
More than 5\u00a0years | 34.4 | 1.6 |
Gross investment in finance lease payments | 1,872.0 | 462.5 |
Unguaranteed residual value | 635.3 | 300.8 |
Unearned finance income | (225.0) | (36.2) |
Net investment in finance leases | 2,282.3 | 727.2 |
\u00a0
(in EUR million) | As at 31\u00a0December | |
|---|---|---|
2023 | 2022 | |
Current | 746.0 | 221.4 |
Non-current | 1,536.4 | 505.8 |
Net investment in finance leases | 2,282.3 | 727.2 |
\u00a0
A part of the finance lease assets is encumbered (securitised) because of the asset backed securitisation transactions concluded by the Group. The total value of the securitised finance lease assets amounts to EUR\u00a04,256.2\u00a0million (2022: EUR\u00a01,727.1\u00a0million). For further details on the transactions refer to note\u00a029 of the consolidated financial statements
In the event of legal proceeding taken against a customer that is in default, the vehicle would be recovered and as such the fair value of that vehicle less costs to recover would be considered collateral and reduce significantly any loss on default.
(in EUR million) | As at 31\u00a0December | |
|---|---|---|
2023 | 2022 | |
Cash and balances at central banks | 3,535.6 | \u2212 |
Cash at bank and on hand | 370.8 | 195.9 |
Short-term bank deposits | 90.6 | 57.3 |
Cash and cash equivalents excl. bank overdrafts | 3,997.0 | 253.1 |
Bank overdrafts | (315.3) | (129.5) |
Cash and cash equivalents, net of bank overdrafts | 3,681.6 | 123.6 |
Cash at bank and short-term bank deposits attributable to disposal group held for sale\u00a0(1) | \u2212 | 92.8 |
Balance as at 31\u00a0December 2023 for the purpose of the statement of cash flows | 3,681.6 | 216.4 |
|
\u00a0
All cash and balances at central banks are available at call except for the mandatory reserve deposits at the Dutch Central Bank. These reserve cash deposits are the so-called minimum reserves required to be held with respective national banks for successive periods of four to five weeks as part of the monetary policy of the European Central Bank. Thanks to cash reserve requirements, banks depend on the European Central Bank\u2019s liquidity-providing mechanism for their liquidity needs. The mandatory reserve deposits amounting to EUR\u00a0107.3\u00a0million (2022: EUR\u00a099\u00a0million) form part of \u201cCash and balances at central banks\u201d.
As the Group operates its own insurance and re-insurance programme, the cash balance includes funds required for this business.
The average interest rate on the outstanding cash and balances at central banks is 3.8% (2022: 2.0%).\u00a0
Cash and cash equivalent amounts are only held with financial institutions that have an investment grade credit rating, so the low-risk exemption has been applied and no expected credit loss has been applied to these balances.
The Group has pledged part of its short-term deposits to fulfil collateral requirements. Refer to note\u00a029 for further details.
For financial assets and liabilities which are traded on an active market, such as listed investments or listed debt instruments, fair value is determined by reference to market value. For non-traded financial assets and liabilities, fair value is calculated using discounted cash flows, considered to be reasonable and consistent with those that would be used by a market participant, and based on observable market data where available (for example forward exchange rate or interest rate), unless carrying value is considered to approximate fair value.
Where discounted cash flow models based on management\u2019s assumptions are used, the resulting fair value measurements are considered to be at level\u00a03 in the fair value hierarchy, as defined in IFRS\u00a013 Fair Value Measurement, as they depend to a significant extent on unobservable valuation inputs.
All derivatives that have been designated into hedge relationships have been separately disclosed.
The Company\u2019s financial assets and liabilities are categorised as below. Where the financial instrument does not include fair value information, it is due to the carrying amount being a reasonable approximation of fair value.
As at 31\u00a0December 2023 (in EUR million) | \u00a0 | Fair Value | |||
|---|---|---|---|---|---|
Carrying Value | Level\u00a01 | Level\u00a02 | Level\u00a03 | Total | |
Financial assets measured at FVTPL | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Derivative financial instruments in hedge | 26.7 | \u00a0 | 26.7 | \u00a0 | 26.7 |
Derivative financial instruments not in hedge | 356.5 | \u00a0 | 356.5 | \u00a0 | 356.5 |
Investment in equity securities | 35.0 | 19.6 | \u00a0 | 15.4 | 35.0 |
Financial assets measured at FVOCI | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Investment in debt securities | 245.5 | 245.5 | \u00a0 | \u00a0 | 245.5 |
Financial assets measured at amortised cost | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Cash and cash equivalents | 3,997.0 | \u00a0 | \u00a0 | \u00a0 | \u2212 |
Investment in debt securities | 83.9 | 83.9 | \u00a0 | \u00a0 | 83.9 |
Other financial instruments | 646.8 | \u00a0 | \u00a0 | \u00a0 | \u2212 |
Lease receivables from clients | 4,545.2 | \u00a0 | 4,545.2 | \u00a0 | 4,545.2 |
Receivables from credit and other institutions | 3,061.9 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Loans to associates and jointly controlled entities | 41.5 | \u00a0 | 41.5 | \u00a0 | 41.5 |
Total | 13,040.0 | 349.0 | 4,970.0 | 15.4 | 5,334.4 |
\u00a0
As at 31\u00a0December 2022 (in EUR million) | \u00a0 | Fair Value | |||
|---|---|---|---|---|---|
Carrying Value | Level\u00a01 | Level\u00a02 | Level\u00a03 | Total | |
Financial assets measured at FVTPL | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Derivative financial instruments in hedge | 82.3 | \u00a0 | 82.3 | \u00a0 | 82.3 |
Derivative financial instruments not in hedge | 46.6 | \u00a0 | 46.6 | \u00a0 | 46.6 |
Investment in equity securities | 18.7 | 18.7 | \u00a0 | \u2212 | 18.7 |
Financial assets measured at FVOCI | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Investment in debt securities | 219.1 | 219.1 | \u00a0 | \u00a0 | 219.1 |
Financial assets measured at amortised cost | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Cash and cash equivalents | 253.1 | \u00a0 | \u00a0 | \u00a0 | \u2212 |
Other financial instruments | 299.9 | \u00a0 | \u00a0 | \u00a0 | \u2212 |
Lease receivables from clients | 1,849.1 | \u00a0 | 1,849.1 | \u2212 | 1,849.1 |
Receivables from credit and other institutions | 1,256.8 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Total | 4,025.7 | 237.8 | 1,978.1 | \u2212 | 2,215.9 |
\u00a0
\u00a0
As at 31\u00a0December 2023 (in EUR million) | \u00a0 | Fair Value | |||
|---|---|---|---|---|---|
Carrying Value | Level\u00a01 | Level\u00a02 | Level\u00a03 | Total | |
Financial liabilities measured at FVTPL | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Derivative financial instruments in hedge | 103.4 | \u00a0 | 103.4 | \u00a0 | 103.4 |
Derivative financial instruments not in hedge | 542.4 | \u00a0 | 542.4 | \u00a0 | 542.4 |
Financial liabilities measured at amortised cost | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Trade and other payables | 2,560.4 | \u00a0 | 2,560.4 | \u2212 | 2,560.4 |
Deposits | 11,784.7 | \u00a0 | 11,822.4 | \u00a0 | 11,822.4 |
Borrowings from financial institutions | 21,488.4 | \u00a0 | 21,488.4 | \u2212 | 21,488.4 |
Bonds issued | 16,138.3 | 6,902.8 | 9,246.4 | \u2212 | 16,149.2 |
Total | 52,617.7 | 6,902.8 | 45,763.5 | \u2212 | 52,666.3 |
As at 31\u00a0December 2022 (in EUR million) | \u00a0 | Fair Value | |||
|---|---|---|---|---|---|
Carrying Value | Level\u00a01 | Level\u00a02 | Level\u00a03 | Total | |
Financial liabilities measured at FVTPL | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Derivative financial instruments in hedge | 44.5 | \u00a0 | 44.5 | \u00a0 | 44.5 |
Derivative financial instruments not in hedge | 44.5 | \u00a0 | 44.5 | \u00a0 | 44.5 |
Financial liabilities measured at amortised cost | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Trade and other payables | 1,045.8 | \u00a0 | 1,045.8 | \u2212 | 1,045.8 |
Borrowings from financial institutions | 14,571.1 | \u00a0 | 14,571.1 | \u2212 | 14,571.1 |
Bonds issued | 5,303.4 | 3,460.9 | 1,727.1 | \u00a0 | 5,188.0 |
Total | 21,009.3 | 3,460.9 | 17,433.0 | \u2212 | 20,893.9 |
\u00a0
Level\u00a01 \u2013 for the equity instruments measured at this level, the Group has used the current bid price for the equity instrument in a quoted market while for financial asset debt securities the Group has used the quoted government bond price in an active market.
Level\u00a02 - loans to associates and jointly controlled entities have been fair valued using a discounted cashflow model using market observable inputs for the discount rate while the key inputs used in valuing the derivative hedge and hedging instruments are directly observable inputs including forward exchange rates, yield curves and spot rates. For details on lease receivables fair value measurement see note\u00a022.
Level\u00a03 \u2013 the Group have an equity investment in Constellation Automotive Holdings S.a.r.l., where the discounted cashflow valuation model has a significant part of the inputs that are not market observable. Unobservable in this context means that there is little or no current market data available from which to derive a price that an unrelated, informed buyer would be expected to purchase the asset or liability.
For each level there has been no change to the valuation techniques used during the period. For financial instruments that are recognised at fair value on a recurring basis, the Group determines whether transfers have occurred between Levels in the hierarchy by re-assessing categorisation (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting year. There were no transfers between the different levels during the current reporting or prior period.
Other financial assets and liabilities not measured at fair value have a carrying amount which is a reasonable approximation of fair value, due to being short-term in nature.
\u00a0
The movements in the fair value of the level\u00a03 financial assets and liabilities are shown as follows:
Level\u00a03 financial asset (in EUR million) | 2023 |
|---|---|
At 1\u00a0January | \u00a0 |
Net profit/(loss) recorded in the income statement | (1.0) |
Change in scope | 16.4 |
At 31\u00a0December | 15.4 |
\u00a0
In May\u00a02023, LeasePlan transferred part of the shares in Constellation Automotive Holdings S.a.r.l. to Lincoln Financing Holdings Pte. Limited (former shareholder of LeasePlan), reducing the carrying amount of the equity instrument to EUR\u00a015.4\u00a0million. The Group does not consider that a significant change in the estimates for the inputs would materially impact the fair value for the Group.
(in EUR million) | As at 31\u00a0December | |
|---|---|---|
2023 | 2022 | |
Bank borrowings | 13,123.6 | 10,613.1 |
Tier\u00a02 subordinated debt | 1,500.0 | \u2212 |
Non-current borrowings from financial institutions | 14,623.6 | 10,613.1 |
Bank overdrafts | 315.3 | 129.5 |
Bank borrowings | 6,537.3 | 3,828.5 |
Tier\u00a02 subordinated debt | 12.2 | \u2212 |
Current borrowings from financial institutions | 6,864.9 | 3,958.0 |
Total borrowings from financial institutions | 21,488.4 | 14,571.1 |
Bonds and notes-originated from securitisation transactions | 2,870.9 | 1,123.4 |
Bonds and notes-originated from EMTN and other programmes | 10,070.3 | 2,450.0 |
Bonds and notes - fair value adjustment | (163.8) | \u2212 |
Non-current bonds and notes issued | 12,777.3 | 3,573.4 |
Bonds and notes-originated from securitisation transactions | 1,385.4 | 603.7 |
Bonds and notes-originated from EMTN and other programmes | 2,053.9 | 1,126.3 |
Bonds and notes - fair value adjustment | (78.4) | \u2212 |
Current bonds and notes issued | 3,360.9 | 1,729.9 |
Total bonds and notes issued | 16,138.3 | 5,303.4 |
Total borrowings from financial institutions and bonds | 37,626.7 | 19,874.5 |
Non-current deposits | 4,041.5 | \u2212 |
Current deposits | 7,743.2 | \u2212 |
Total deposits\u00a0(1) | 11,784.7 | 26.3 |
Total non-current financial debt | 31,442.5 | 14,186.5 |
Total current financial debt | 17,969.0 | 5,688.0 |
Total financial debt | 49,411.5 | 19,874.5 |
|
\u00a0
Following an increase in external funding and acquisition of LeasePlan, the share of funding raised through Societe Generale has decreased to 32.9% as at 31\u00a0December 2023 (2022: 69.0%).
Most of the funding provided by the 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 the Group subsidiaries and holding companies. The total amount of loans granted by SG Luxembourg and Societe Generale Paris amounted to EUR\u00a015,087.9\u00a0million at 31\u00a0December 2023 (2022: 12,158\u00a0million) with an average maturity of 2.1\u00a0years excluding maturity of the subordinated debt (see below).
The remaining SG funding is provided either by local SG branches or subsidiaries. As at 31\u00a0December 2023, the total amount of loans granted to the Group by Societe Generale, including local branches and subsidiaries, was EUR\u00a016,236.4\u00a0million (2022: EUR\u00a013,711\u00a0million).
Included in SG funding is Tier\u00a02 subordinated debt which has been issued at a variable rate of (Euribor 3-month +336bps margin) and has a 10\u00a0year maturity with a non-cancellable period of 5\u00a0years. As the instrument qualifies as a debt instrument measured at amortised cost, interest is accounted for using the effective interest rate method. Debt issue costs were deducted from the initial fair value of the liability. Tier\u00a02 subordinated debt has been partially used to fund the acquisition of LeasePlan (EUR\u00a0615.5\u00a0million).
Tier\u00a01 subordinated debt (AT1 capital) qualifies as an equity instrument under IFRS. For further information on Tier\u00a01 debt, see note\u00a027.
Local external banks and third parties provide 43.3% of total funding, representing EUR\u00a021,390.2\u00a0million at 31\u00a0December 2023 (2022: 31.0% at EUR\u00a06,614\u00a0million). An amount of EUR\u00a05,252.0\u00a0million or 10.6% of total funding is provided by external banks. The residual external funding EUR\u00a016,138.3\u00a0million has been raised through asset-backed securitisations and unsecured bonds (8.6% and 24.0% respectively of the total funding).
Included within this amount are loans granted by the European Investment Bank of EUR\u00a0250\u00a0million in September\u00a02019 and EUR\u00a0300\u00a0million in April\u00a02023. This enables the Group to develop its range of hybrid and electric vehicles across the EU, particularly in France, Germany, Italy, Spain, Belgium and the Netherlands.
Deposits represent 23.9% of the total funding (EUR\u00a011,784.7\u00a0million at 31\u00a0December 2023). For further information, see section \u201cDeposits\u201d below.
\u00a0
(in EUR million) | As at 31\u00a0December | |
|---|---|---|
2023 | 2022 | |
Less than 1\u00a0year | 6,864.9 | 3,958.0 |
1-5\u00a0years | 12,923.8 | 10,456.3 |
Over 5\u00a0years | 1,699.7 | 156.8 |
Total borrowings | 21,488.4 | 14,571.0 |
\u00a0
The carrying amounts of the Group\u2019s borrowings are denominated in the following currencies:
(in EUR million) | As at 31\u00a0December | |
|---|---|---|
2023 | 2022 | |
Euro | 15,616.0 | 9,852.4 |
UK Pound | 2,389.8 | 2,153.0 |
Danish Krone | 625.7 | 455.8 |
Swedish Krona | 440.2 | 349.7 |
Norwegian Krona | 163.3 | \u2212 |
Turkish Lira | 0.3 | \u2212 |
Other currencies | 2,253.1 | 1,760.0 |
Total borrowings | 21,488.4 | 14,571.0 |
Within this programme, the Group has the following outstanding bonds issued as at 31\u00a0December 2023:
Issue date | Maturity date | Amount | Rate |
|---|---|---|---|
ALD | \u00a0 | \u00a0 | \u00a0 |
July\u00a02019 | July\u00a02023 | 500 | 0.375% |
October\u00a02020 | October\u00a02023 | 600 | 0.375% |
February\u00a02021 | February\u00a02024 | 500 | 0.000% |
February\u00a02022 | March\u00a02026 | 700 | 1.250% |
July\u00a02022 | July\u00a02027 | 500 | 4.000% |
October\u00a02022 | October\u00a02025 | 750 | 4.750% |
January\u00a02023 | January\u00a02027 | 750 | 4.250% |
February\u00a02023 | February\u00a02025 | 500 | Euribor 3M +0.55 |
June\u00a02023 | February\u00a02025 | 600 | Euribor 3M +0.55 |
October\u00a02023 | October\u00a02025 | 1000 | Euribor 3M +0.65 |
October\u00a02023 | October\u00a02028 | 1000 | 4.875% |
November\u00a02023 | November\u00a02026 | 500 | 4.375% |
LeasePlan(1) | \u00a0 | \u00a0 | \u00a0 |
March\u00a02019 | March\u00a02024 | 500 | 1.380% |
April\u00a02020 | April\u00a02025 | 500 | 3.500% |
February\u00a02021 | February\u00a02026 | 1000 | 0.250% |
September\u00a02021 | September\u00a02026 | 1000 | 0.250% |
May\u00a02022 | May\u00a02025 | 750 | 2.130% |
\u00a0
(in EUR million) | As at 31\u00a0December | |
|---|---|---|
2023 | 2022 | |
Less than 1\u00a0year | 1,975.6 | 1,126.3 |
1-5\u00a0years | 9,844.0 | 2,450.0 |
Over 5\u00a0years | 62.5 | \u2212 |
Total bonds | 11,882.1 | 3,576.3 |
\u00a0
The carrying amounts of the Group\u2019s bonds are denominated in the following currencies:
(in EUR million) | As at 31\u00a0December | |
|---|---|---|
2023 | 2022 | |
Euro | 10,766.9 | 3,576.3 |
Swedish Krona | 36.6 | \u2212 |
Norwegian Krona | 317.7 | \u2212 |
Other currencies | 760.9 | \u2212 |
Total bonds | 11,882.1 | 3,576.3 |
In LeasePlan, a number of fixed rate bonds were included in a fair value hedge whereby the bonds (hedged items) are measured at amortised cost and are constantly being adjusted for gains/losses attributable to the risk being hedged. As part of a periodic review of hedging strategy to comply with risk objectives, the Group decided to revoke these fair value hedge designations on 1\u00a0October 2023. Before de-designation any fair value changes were recognised in the income line item \u2018Unrealised gains/losses on financial instruments and other\u2019 and the amortisation of the impact on de-designation, that will be smoothed over the residual lifetime of these bonds and included in the same income statement line item, amounted to EUR\u00a038\u00a0million for the year ending 31\u00a0December 2023.
\u00a0
The following debt securities are currently issued:
Programme and special purpose company | Deal type | Country | Currency | Amount (in million)(1) | Set up/Renewal date |
|---|---|---|---|---|---|
ALD Funding Limited | Private | UK | GBP | 414 | February\u00a02023 |
Axus Finance NL B | Private | The Netherlands | EUR | 500 | June\u00a02023 |
Axus Finance SPRL | Private | Belgium | EUR | 400 | June\u00a02022 |
FCT Red & Black Auto Lease France 1 | Public | France | EUR | 123 | October\u00a02021 |
FCT Red & Black Auto Lease France 2 | Public | France | EUR | 500 | June\u00a02023 |
Bumper BE\u00a0NV/SA No.\u00a001 | Public | Belgium | EUR | 293 | October\u00a02021 |
Bumper FR 2022-1 FCT | Public | France | EUR | 380 | April\u00a02022 |
Bumper NL 2020-1 B.V. | Public | The Netherlands | EUR | 85 | June\u00a02020 |
Bumper NL 2022-1 B.V. | Private | The Netherlands | EUR | 450 | October\u00a02022 |
Bumper NL 2023-1 B.V. | Private | The Netherlands | EUR | 500 | September\u00a02023 |
Bumper UK 2021-1 Finance\u00a0PLC | Public | UK | GBP | 43 | March\u00a02021 |
Bumper DE\u00a0S.A.\u00a02023-1 | Public | Germany | GBP | 434 | February\u00a02023 |
|
\u00a0
The interest outstanding at the balance sheet date was EUR\u00a0135.8\u00a0million (2022: 27.1\u00a0million).
The maturity of the asset-backed securitisation programmes is as follows:
(in EUR million) | As at 31\u00a0December | |
|---|---|---|
2023 | 2022 | |
Less than 1\u00a0year | 1,385.4 | 603.7 |
1-5\u00a0years | 2,870.9 | 1,079.2 |
Over 5\u00a0years | \u2212 | 44.2 |
Total securitisation programme | 4,256.2 | 1,727.1 |
\u00a0
The carrying amounts of the Group\u2019s asset-backed securitisation programmes are denominated in the following currencies:
(in EUR million) | As at 31\u00a0December | |
|---|---|---|
2023 | 2022 | |
Euro | 3,730.0 | 1,260.4 |
UK Pound | 526.2 | 466.7 |
Total securitisation programme | 4,256.2 | 1,727.1 |
\u00a0
Securitisation programmes involve the sale of future lease instalment receivables and, in some cases, related residual value receivables originated by various Group subsidiaries to special purpose companies which are included in the consolidated financial statements of the Group. Debt securities were issued by these special purpose companies to finance these transactions. The special purpose companies are responsible for making interest and principal payments to the note holders. The Group 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 the Group bearing any realised losses. Therefore, the Group continues to recognise the transferred lease assets in their entirety.
\u00a0
(in EUR million) | Receivables from clients | Cash collateral deposited | Total |
|---|---|---|---|
At 31\u00a0December 2023 | \u00a0 | \u00a0 | \u00a0 |
Carrying amount of transferred assets | 6,061.8 | 69.3 | 6,137.5 |
Carrying amount of associated liabilities\u00a0(1) | \u00a0 | \u00a0 | (4,256.2) |
Net carrying amount position | \u00a0 | \u00a0 | 1,881.3 |
Fair value of transferred assets | 6,286.3 | 69.3 | 6,362.0 |
Fair value of associated liabilities\u00a0(1) | \u00a0 | \u00a0 | (4,256.2) |
Net fair value position as at 31\u00a0December 2023 | \u00a0 | \u00a0 | 2,105.8 |
At 31\u00a0December 2022 | \u00a0 | \u00a0 | \u00a0 |
Carrying amount of transferred assets | 2,182.6 | 23.3 | 2,205.9 |
Carrying amount of associated liabilities\u00a0(1) | \u00a0 | \u00a0 | (1,727.1) |
Net carrying amount position | \u00a0 | \u00a0 | 478.8 |
Fair value of transferred assets | 2,334.3 | 23.3 | 2,357.6 |
Fair value of associated liabilities\u00a0(1) | \u00a0 | \u00a0 | (1,727.1) |
Net fair value position as at 31\u00a0December 2022 | \u00a0 | \u00a0 | 630.5 |
|
\u00a0
Saving deposits raised by LeasePlan Bank amount to EUR\u00a011.8\u00a0billion of which 31.7% are deposited for a fixed term. LeasePlan Bank is the brand name under which savings deposits are raised by LeasePlan Corporation N.V. which holds a banking licence in the Netherlands. LeasePlan Bank also operates on the German savings deposit market with a cross border offering from the Netherlands.
The maturity analysis of these deposits is as follows:
(in EUR million) | As at 31\u00a0December | |
|---|---|---|
2023 | 2022 | |
Deposits\u00a0(1) | 11,729.2 | \u2212 |
Payables related to deposits | 55.5 | \u2212 |
Total | 11,784.7 | \u2212 |
of which: | \u00a0 | \u00a0 |
Less than 1\u00a0year | 7,743.2 | \u2212 |
1-5\u00a0years | 3,925.0 | \u2212 |
Over 5\u00a0years | 116.6 | \u2212 |
|
The average interest rates on the outstanding balances of the fixed term savings deposits in original maturity terms are as follows:
\u00a0 | Year ended 31\u00a0December | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | |||
|---|---|---|---|---|---|---|---|---|---|
2023 | 2022 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | |
Three months or less\u00a0 | 1.60% | \u2212 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Longer than three months, less than a\u00a0year | 2.71% | \u2212 | |||||||
Longer than a year, less than 5\u00a0years | 1.53% | \u2212 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
\u00a0
The interest of the on-demand accounts is set monthly. The interest outstanding at the balance sheet date was EUR\u00a055.5\u00a0million.
\u00a0
At 31\u00a0December 2023, the Group has undrawn committed borrowing facilities of EUR\u00a01.95\u00a0billion (2022: EUR\u00a01.0\u00a0billion).\u00a0
A guarantee at first demand has been granted to ING Luxembourg for an amount of EUR\u00a050\u00a0million on behalf of Axus Luxembourg\u00a0SA, under the condition negotiated in the frame of the distribution agreement concluded with this financial institution.
A guarantee at has been granted to Peugeot\u00a0SA for an amount of EUR\u00a020\u00a0million on behalf of Fleetpool, under the condition negotiated in the frame of the distribution agreement concluded with this financial institution.
The Group has issued guarantees to the total value of EUR\u00a0364.8\u00a0million of which EUR\u00a0363.0\u00a0million is related to residual value guarantees issued to clients.
\u00a0
\u00a0
Changes in liabilities arising from financing activities are shown in the table below.
(in EUR million) | Balance as at 1\u00a0January 2023 | Financing | Interest accrued | Movement | Foreign exchange adjustment | Scope | Other | Balance as at 31\u00a0December 2023 |
|---|---|---|---|---|---|---|---|---|
Overdraft | 129.5 | 157.6 | \u2212 | \u2212 | 1.5 | 26.6 | \u2212 | 315.3 |
Borrowings from financial institutions excl. overdraft | 14,441.6 | 3,868.2 | 63.9 | \u2212 | 101.0 | 2,698.5 | \u2212 | 21,173.1 |
Bonds and notes issued | 5,303.4 | 1,366.3 | 68.8 | 68.2 | 12.2 | 9,319.3 | 0.0 | 16,138.3 |
Deposits | \u2212 | 451.9 | 31.2 | \u2212 | \u2212 | 11,301.7 | \u2212 | 11,784.7 |
Lease liabilities | 117.2 | (52.0) | 3.4 | \u2212 | 0.9 | 163.0 | 19.7 | 252.3 |
\u00a0
(in EUR million) | Balance as at 1\u00a0January 2022 | Financing | Interest accrued | Movement | Foreign exchange adjustment | Scope | Other | Balance as at 31\u00a0December 2022 |
|---|---|---|---|---|---|---|---|---|
Overdraft | 228.4 | (97.3) | \u2212 | \u2212 | (1.6) | \u2212 | \u2212 | 129.5 |
Borrowings from financial institutions excl. overdraft | 13,620.2 | 652.6 | 5.3 | \u2212 | (65.1) | 291.9 | (63.3) | 14,441.6 |
Bonds and notes issued | 4,668.7 | 639.4 | 21.2 | \u2212 | (25.9) | \u2212 | (0.0) | 5,303.4 |
Lease liabilities | 121.4 | (71.1) | \u2212 | \u2212 | (0.9) | 19.7 | 48.1 | 117.2 |
The Group classifies its financial assets in the following measurement categories:
The classification depends on the entity\u2019s business model for managing the financial assets and the contractual terms of the cash flows. For assets measured at fair value, gains and losses will either be recorded in consolidated income statement or Other Comprehensive Income (OCI). For investments in equity instruments that are not held for trading, this will depend on whether the Group has made an irrevocable election at the time of initial recognition to account for the equity investment at fair value through other comprehensive income (FVOCI). The Group reclassifies debt investments when and only when its business model for managing those assets changes. By default, derivative financial instruments will be classified as subsequently measured at fair value through profit or loss.
The Group has not elected to irrevocably designate any financial liability for FVTPL so all financial liabilities are measured at amortised cost unless they are held for trading, in which case the financial liability will be at FVTPL. Financial liabilities at FVTPL currently only include derivative financial instruments in the Group\u2019s financial statements (refer to derivatives policy and note\u00a03.5.10).
Regular way purchases and sales of financial assets are recognised on the balance sheet:
A financial liability is recognised when the Group becomes party to a contractual obligation to deliver cash or another financial instrument to another entity.
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. 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.
At initial recognition, the Group measures a financial asset or financial liability at its fair value plus or less, in the case of a financial asset not at fair value through profit or loss (FVPL), transaction costs that are directly attributable to the acquisition of the financial asset or financial liability. Transaction costs of financial instruments carried at FVTPL are expensed in the consolidated income statement.
Subsequent measurement of debt instruments depends on the Group\u2019s business model for managing the asset and the cash flow characteristics of the asset. There are three measurement categories into which the Group classifies its debt instruments:
The Group subsequently measures all equity investments at fair value. Where the Group\u2019s management has elected to present fair value gains and losses on equity investments in OCI, there is no subsequent reclassification of fair value gains and losses to the income statement following the derecognition of the investment. Dividends from such investments continue to be recognised in the income statement as other income when the Group\u2019s right to receive payments is established.
Changes in the fair value of financial assets at FVPL are recognised in \u201cother income/(expenses)\u201d in the income statement as applicable. Impairment losses (and reversal of impairment losses) on equity investments measured at FVOCI are not reported separately from other changes in fair value.
Borrowings and other financial liabilities, including debt securities issued and other borrowings, are initially measured at fair value, net of transaction costs. Borrowings and other financial liabilities are subsequently measured at amortised cost using the effective interest method, with interest expense recognised on an effective yield basis. The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments through the expected life of the financial liability, or, where appropriate, a shorter period. Transaction costs are included in amortised cost using the effective interest method.
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 effective interest rate (EIR). The EIR amortisation is included as finance costs in the income. For more information, refer to note\u00a029 \u201cBorrowings from financial institutions, bonds and notes issued\u201d.
\u00a0\u00a0
The Group measures financial instruments, such as derivatives, at fair value at each balance sheet date. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:
The principal or the most advantageous market must be accessible to the Group.
The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest. The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data is available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy, described as follows, based on the lowest level of input that is significant to the fair value measurement as a whole:
For assets and liabilities that are recognised in the financial statements on a recurring basis, the Group determines whether transfers have occurred between levels in the hierarchy by re-assessing categorisation (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.
In order to hedge its exposure to foreign exchange and interest rate, the Group enters into forward, option and swap contracts. None of these contracts meet the own use exemption in IFRS\u00a09 and are accounted for as derivatives. Derivatives are financial instruments, of which the value changes in response to underlying variables. 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. 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.
Derivatives are initially recognised at fair value on the date a derivative contract is entered into (trade date) 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 fair value of cross currency and interest rate swaps is the estimated amount that the Group would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants at the measurement date. The fair values of not-actively traded instruments are calculated using a generally accepted discounted cash flow method, while considering relevant market observable data such as quoted forward prices and interest rates. As a result of having collateral agreements in place for certain of its derivative counterparts, the requirement to reflect other observable market inputs such as CVA, DVA and FVA is eliminated for discounting purposes. The fair values of various derivative instruments used for hedging purposes are disclosed in note\u00a019. Movements on the hedging reserve in other comprehensive income are shown in consolidated statement of changes in equity. The 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.
Changes in the fair value of derivative financial instruments that are designated and effective as hedges of future cash flows (cash flow hedges) are recognised directly in equity through 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. If the cash flow hedge of a firm commitment or forecast transaction results in the recognition of a non-financial asset or liability, then, at the time the asset or liability is recognised, the associated gains or losses on the derivative that had previously been recognised in equity are included in the initial measurement of the asset or liability. For hedges that do not result in the recognition of a non-financial asset or liability, including the effective portion of interest rate swaps hedging variable rate borrowings, amounts deferred in equity are recognised in the income statement in the same period in which the hedged item affects profit or loss.
The Group only applies fair value hedge accounting for hedging fixed interest risk on borrowings. For an effective hedge of an exposure to changes in fair value, the hedged item is adjusted for changes in fair value attributable to the risk being hedged. The corresponding entry and gains or losses arising from remeasuring the associated derivative are recognised in the income statement within \u201cunrealised gains/losses on financial instruments\u201d. Hedge effectiveness is determined at the inception of the hedge relationship, and through periodic prospective effectiveness assessments to ensure that an economic relationship exists between the hedged item and hedging instrument. The Group\u2019s material hedging instruments are interest rate swaps and cross currency swaps that have similar critical terms to the related debt instruments, such as payment dates, maturities and notional amount. As all critical terms matched during the year, there was no material hedge ineffectiveness. The Group also uses cross currency swaps to manage foreign exchange risk associated with borrowings denominated in foreign currencies. Where not designated in an accounting hedge there is a natural offset against foreign exchange movements on associated borrowings.
Hedge accounting is discontinued when the hedging instrument expires or is sold, terminated, exercised, revoked, or no longer qualifies for hedge accounting. At that time, any cumulative gain or loss on the hedging instrument recognised in equity is retained until the forecast transaction occurs. If a hedge transaction is no longer expected to occur, the net cumulative gain or loss previously recognised in equity is recycled to the income statement for the period. Changes in the fair value of any derivative instruments that are not designated in a hedge relationship are recognised immediately in the income statement within \u201cUnrealised gains/(losses) on financial instruments\u201d.
Derivatives embedded in other financial instruments or non-financial host contracts (other than financial assets in the scope of IFRS\u00a09) are treated as separate derivatives when their risks and characteristics are not closely related to those of their host contracts and the host contracts themselves are not carried at fair value with unrealised gains or losses reported in the income statement. Derivatives embedded in contracts which are financial assets in the scope of IFRS\u00a09 are not separated and the whole contract is accounted for at either amortised cost or fair value.
The types of risks that the Group is exposed to and derivatives used to hedge these risks can be found in note\u00a04.1.2 \u201cTreasury Risk\u201d and note\u00a019 \u201cDerivative financial instruments\u201d.
An expected credit loss (ECL) provision is applied to all receivables from clients that are measured at amortised cost with the exception of those receivables deemed to be out of scope. The Group have applied this scope exemption when the receivable meets the low credit risk exemption criteria. The Group has applied this to receivables on used car sales and insurance receivables, where there is zero or almost no history of credit risk or the amounts due are from financial institutions with an investment grade credit rating.
For the other receivables from clients the Group is currently in the process of aligning the methodologies used to calculate the ECL for the existing ALD Group entities and the newly acquired LeasePlan entities in the year, with the process expected to be complete within 12\u00a0months of the balance sheet date. However, overall, the Group segments the receivables form clients into sound and doubtful receivables (that includes receivables that have met the definition of default) and for sound receivables apply a simplified approach in calculating ECLs from initial recognition of the receivable, which means the Group does not track changes in credit risk, but instead recognises a loss allowance based on lifetime ECLs at each reporting date.
For the ALD entities the Group has established a provision matrix for the sound receivables that is based on its historical credit loss experience by aging categories, 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. To establish the forward-looking element of IFRS\u00a09 provision, the Group uses macroeconomic data and analysis through local uplifts to probability of default and loss given default rates. For the newly acquired LeasePlan entities the calculation for sound receivables is based on the use of models that require assumptions and data about forecast macroeconomic conditions and credit behaviour (including likelihood of customers defaulting and the resulting losses) from a third-party provider that also includes a forward-looking element.
Since obtaining financial holding status, the Group has aligned its definition of default to the ECB Regulatory Capital CRR Article\u00a0178 definition of default. This change applies to historic ALD entities only as LeasePlan entities are already aligned with the Article\u00a0178 definition of default due to holding a banking licence prior to the acquisition. For purposes of assessing, recognising and reporting defaults, a customer shall be considered to be in default when either one or both of the following events occur:
The application of the above guidance is only to the extent of identifying the customers that are in default. There is no change in the method of determining the value of impairment. Where the customer is in default, the whole of the customer balance is classified as doubtful, and impairment is based upon the full outstanding amount, except where we have adjudged there are mitigating circumstances. This definition of default has led to an increase in defaulted customers during 2023 resulting in the increase in the IFRS\u00a09 provision by EUR\u00a05.9\u00a0million on initial application.
Expected credit losses are reassessed at each reporting date and reflect all reasonable information that is available at the reporting date. Judgement is required from management for applying appropriate models and setting assumptions for the measurement of ECL. The methodology, assumptions and data, including any forecasts of future economic conditions, macroeconomic impacts and the Group\u2019s provision matrix are reviewed regularly by management in determining the expected credit losses and the write-off of receivables. Doubtful debts should be written off as soon as the definitive loss is known.
Where the Group have acquired receivables from clients that are originated or purchased credit-impaired, due to an incurred event having a detrimental impact on the estimated cashflows of the asset, the gross receivable is initial recognised at fair value with no carrying impairment allowance. The Group only recognises the cumulative changes in lifetime expected credit losses since initial recognition as a loss allowance for originated purchased credit-impaired financial assets in the income statement.
Disputes often arise in the collection of lease receivables and tend to range from issues relating to the performance of various services under the contract to the amount of end-of-contract billing. A dispute has no impact on the solvency of the customer or the risk of default, and therefore is not a credit loss. As such these amounts are removed from sound receivables and a provision is applied based on our provisions accounting policy. For presentation purposes the provision is netted against the \u2018Receivables from clients\u2019 balance sheet line item.
Details about the assumptions and estimation techniques used in measuring ECL for finance lease receivables and trade receivables from operating lease contracts are provided in the section Credit risk management and disclosure on the impairment provided in note\u00a022 \u201cLease Receivables from Clients\u201d.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFinancialInstrumentsExplanatory", "language": "en", "entity": "scheme:969500E7V019H9NP7427", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "text_block_44cfc817-2189-4205-93d5-3fabb0719eee": { "value": "Borrowings and other financial liabilities, including debt securities issued and other borrowings, are initially measured at fair value, net of transaction costs. Borrowings and other financial liabilities are subsequently measured at amortised cost using the effective interest method, with interest expense recognised on an effective yield basis. The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments through the expected life of the financial liability, or, where appropriate, a shorter period. Transaction costs are included in amortised cost using the effective interest method.
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 effective interest rate (EIR). The EIR amortisation is included as finance costs in the income. For more information, refer to note\u00a029 \u201cBorrowings from financial institutions, bonds and notes issued\u201d.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFinancialLiabilitiesExplanatory", "language": "en", "entity": "scheme:969500E7V019H9NP7427", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "text_block_24694d39-ea00-4e25-975e-f89976795a68": { "value": "Borrowings and other financial liabilities, including debt securities issued and other borrowings, are initially measured at fair value, net of transaction costs. Borrowings and other financial liabilities are subsequently measured at amortised cost using the effective interest method, with interest expense recognised on an effective yield basis. The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments through the expected life of the financial liability, or, where appropriate, a shorter period. Transaction costs are included in amortised cost using the effective interest method.
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 effective interest rate (EIR). The EIR amortisation is included as finance costs in the income. For more information, refer to note\u00a029 \u201cBorrowings from financial institutions, bonds and notes issued\u201d.
(in EUR million) | As at 31\u00a0December | |
|---|---|---|
2023 | 2022 | |
Bank borrowings | 13,123.6 | 10,613.1 |
Tier\u00a02 subordinated debt | 1,500.0 | \u2212 |
Non-current borrowings from financial institutions | 14,623.6 | 10,613.1 |
Bank overdrafts | 315.3 | 129.5 |
Bank borrowings | 6,537.3 | 3,828.5 |
Tier\u00a02 subordinated debt | 12.2 | \u2212 |
Current borrowings from financial institutions | 6,864.9 | 3,958.0 |
Total borrowings from financial institutions | 21,488.4 | 14,571.1 |
Bonds and notes-originated from securitisation transactions | 2,870.9 | 1,123.4 |
Bonds and notes-originated from EMTN and other programmes | 10,070.3 | 2,450.0 |
Bonds and notes - fair value adjustment | (163.8) | \u2212 |
Non-current bonds and notes issued | 12,777.3 | 3,573.4 |
Bonds and notes-originated from securitisation transactions | 1,385.4 | 603.7 |
Bonds and notes-originated from EMTN and other programmes | 2,053.9 | 1,126.3 |
Bonds and notes - fair value adjustment | (78.4) | \u2212 |
Current bonds and notes issued | 3,360.9 | 1,729.9 |
Total bonds and notes issued | 16,138.3 | 5,303.4 |
Total borrowings from financial institutions and bonds | 37,626.7 | 19,874.5 |
Non-current deposits | 4,041.5 | \u2212 |
Current deposits | 7,743.2 | \u2212 |
Total deposits\u00a0(1) | 11,784.7 | 26.3 |
Total non-current financial debt | 31,442.5 | 14,186.5 |
Total current financial debt | 17,969.0 | 5,688.0 |
Total financial debt | 49,411.5 | 19,874.5 |
|
\u00a0
Following an increase in external funding and acquisition of LeasePlan, the share of funding raised through Societe Generale has decreased to 32.9% as at 31\u00a0December 2023 (2022: 69.0%).
Most of the funding provided by the 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 the Group subsidiaries and holding companies. The total amount of loans granted by SG Luxembourg and Societe Generale Paris amounted to EUR\u00a015,087.9\u00a0million at 31\u00a0December 2023 (2022: 12,158\u00a0million) with an average maturity of 2.1\u00a0years excluding maturity of the subordinated debt (see below).
The remaining SG funding is provided either by local SG branches or subsidiaries. As at 31\u00a0December 2023, the total amount of loans granted to the Group by Societe Generale, including local branches and subsidiaries, was EUR\u00a016,236.4\u00a0million (2022: EUR\u00a013,711\u00a0million).
Included in SG funding is Tier\u00a02 subordinated debt which has been issued at a variable rate of (Euribor 3-month +336bps margin) and has a 10\u00a0year maturity with a non-cancellable period of 5\u00a0years. As the instrument qualifies as a debt instrument measured at amortised cost, interest is accounted for using the effective interest rate method. Debt issue costs were deducted from the initial fair value of the liability. Tier\u00a02 subordinated debt has been partially used to fund the acquisition of LeasePlan (EUR\u00a0615.5\u00a0million).
Tier\u00a01 subordinated debt (AT1 capital) qualifies as an equity instrument under IFRS. For further information on Tier\u00a01 debt, see note\u00a027.
Local external banks and third parties provide 43.3% of total funding, representing EUR\u00a021,390.2\u00a0million at 31\u00a0December 2023 (2022: 31.0% at EUR\u00a06,614\u00a0million). An amount of EUR\u00a05,252.0\u00a0million or 10.6% of total funding is provided by external banks. The residual external funding EUR\u00a016,138.3\u00a0million has been raised through asset-backed securitisations and unsecured bonds (8.6% and 24.0% respectively of the total funding).
Included within this amount are loans granted by the European Investment Bank of EUR\u00a0250\u00a0million in September\u00a02019 and EUR\u00a0300\u00a0million in April\u00a02023. This enables the Group to develop its range of hybrid and electric vehicles across the EU, particularly in France, Germany, Italy, Spain, Belgium and the Netherlands.
Deposits represent 23.9% of the total funding (EUR\u00a011,784.7\u00a0million at 31\u00a0December 2023). For further information, see section \u201cDeposits\u201d below.
\u00a0
(in EUR million) | As at 31\u00a0December | |
|---|---|---|
2023 | 2022 | |
Less than 1\u00a0year | 6,864.9 | 3,958.0 |
1-5\u00a0years | 12,923.8 | 10,456.3 |
Over 5\u00a0years | 1,699.7 | 156.8 |
Total borrowings | 21,488.4 | 14,571.0 |
\u00a0
The carrying amounts of the Group\u2019s borrowings are denominated in the following currencies:
(in EUR million) | As at 31\u00a0December | |
|---|---|---|
2023 | 2022 | |
Euro | 15,616.0 | 9,852.4 |
UK Pound | 2,389.8 | 2,153.0 |
Danish Krone | 625.7 | 455.8 |
Swedish Krona | 440.2 | 349.7 |
Norwegian Krona | 163.3 | \u2212 |
Turkish Lira | 0.3 | \u2212 |
Other currencies | 2,253.1 | 1,760.0 |
Total borrowings | 21,488.4 | 14,571.0 |
Within this programme, the Group has the following outstanding bonds issued as at 31\u00a0December 2023:
Issue date | Maturity date | Amount | Rate |
|---|---|---|---|
ALD | \u00a0 | \u00a0 | \u00a0 |
July\u00a02019 | July\u00a02023 | 500 | 0.375% |
October\u00a02020 | October\u00a02023 | 600 | 0.375% |
February\u00a02021 | February\u00a02024 | 500 | 0.000% |
February\u00a02022 | March\u00a02026 | 700 | 1.250% |
July\u00a02022 | July\u00a02027 | 500 | 4.000% |
October\u00a02022 | October\u00a02025 | 750 | 4.750% |
January\u00a02023 | January\u00a02027 | 750 | 4.250% |
February\u00a02023 | February\u00a02025 | 500 | Euribor 3M +0.55 |
June\u00a02023 | February\u00a02025 | 600 | Euribor 3M +0.55 |
October\u00a02023 | October\u00a02025 | 1000 | Euribor 3M +0.65 |
October\u00a02023 | October\u00a02028 | 1000 | 4.875% |
November\u00a02023 | November\u00a02026 | 500 | 4.375% |
LeasePlan(1) | \u00a0 | \u00a0 | \u00a0 |
March\u00a02019 | March\u00a02024 | 500 | 1.380% |
April\u00a02020 | April\u00a02025 | 500 | 3.500% |
February\u00a02021 | February\u00a02026 | 1000 | 0.250% |
September\u00a02021 | September\u00a02026 | 1000 | 0.250% |
May\u00a02022 | May\u00a02025 | 750 | 2.130% |
\u00a0
(in EUR million) | As at 31\u00a0December | |
|---|---|---|
2023 | 2022 | |
Less than 1\u00a0year | 1,975.6 | 1,126.3 |
1-5\u00a0years | 9,844.0 | 2,450.0 |
Over 5\u00a0years | 62.5 | \u2212 |
Total bonds | 11,882.1 | 3,576.3 |
\u00a0
The carrying amounts of the Group\u2019s bonds are denominated in the following currencies:
(in EUR million) | As at 31\u00a0December | |
|---|---|---|
2023 | 2022 | |
Euro | 10,766.9 | 3,576.3 |
Swedish Krona | 36.6 | \u2212 |
Norwegian Krona | 317.7 | \u2212 |
Other currencies | 760.9 | \u2212 |
Total bonds | 11,882.1 | 3,576.3 |
In LeasePlan, a number of fixed rate bonds were included in a fair value hedge whereby the bonds (hedged items) are measured at amortised cost and are constantly being adjusted for gains/losses attributable to the risk being hedged. As part of a periodic review of hedging strategy to comply with risk objectives, the Group decided to revoke these fair value hedge designations on 1\u00a0October 2023. Before de-designation any fair value changes were recognised in the income line item \u2018Unrealised gains/losses on financial instruments and other\u2019 and the amortisation of the impact on de-designation, that will be smoothed over the residual lifetime of these bonds and included in the same income statement line item, amounted to EUR\u00a038\u00a0million for the year ending 31\u00a0December 2023.
\u00a0
The following debt securities are currently issued:
Programme and special purpose company | Deal type | Country | Currency | Amount (in million)(1) | Set up/Renewal date |
|---|---|---|---|---|---|
ALD Funding Limited | Private | UK | GBP | 414 | February\u00a02023 |
Axus Finance NL B | Private | The Netherlands | EUR | 500 | June\u00a02023 |
Axus Finance SPRL | Private | Belgium | EUR | 400 | June\u00a02022 |
FCT Red & Black Auto Lease France 1 | Public | France | EUR | 123 | October\u00a02021 |
FCT Red & Black Auto Lease France 2 | Public | France | EUR | 500 | June\u00a02023 |
Bumper BE\u00a0NV/SA No.\u00a001 | Public | Belgium | EUR | 293 | October\u00a02021 |
Bumper FR 2022-1 FCT | Public | France | EUR | 380 | April\u00a02022 |
Bumper NL 2020-1 B.V. | Public | The Netherlands | EUR | 85 | June\u00a02020 |
Bumper NL 2022-1 B.V. | Private | The Netherlands | EUR | 450 | October\u00a02022 |
Bumper NL 2023-1 B.V. | Private | The Netherlands | EUR | 500 | September\u00a02023 |
Bumper UK 2021-1 Finance\u00a0PLC | Public | UK | GBP | 43 | March\u00a02021 |
Bumper DE\u00a0S.A.\u00a02023-1 | Public | Germany | GBP | 434 | February\u00a02023 |
|
\u00a0
The interest outstanding at the balance sheet date was EUR\u00a0135.8\u00a0million (2022: 27.1\u00a0million).
The maturity of the asset-backed securitisation programmes is as follows:
(in EUR million) | As at 31\u00a0December | |
|---|---|---|
2023 | 2022 | |
Less than 1\u00a0year | 1,385.4 | 603.7 |
1-5\u00a0years | 2,870.9 | 1,079.2 |
Over 5\u00a0years | \u2212 | 44.2 |
Total securitisation programme | 4,256.2 | 1,727.1 |
\u00a0
The carrying amounts of the Group\u2019s asset-backed securitisation programmes are denominated in the following currencies:
(in EUR million) | As at 31\u00a0December | |
|---|---|---|
2023 | 2022 | |
Euro | 3,730.0 | 1,260.4 |
UK Pound | 526.2 | 466.7 |
Total securitisation programme | 4,256.2 | 1,727.1 |
\u00a0
Securitisation programmes involve the sale of future lease instalment receivables and, in some cases, related residual value receivables originated by various Group subsidiaries to special purpose companies which are included in the consolidated financial statements of the Group. Debt securities were issued by these special purpose companies to finance these transactions. The special purpose companies are responsible for making interest and principal payments to the note holders. The Group 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 the Group bearing any realised losses. Therefore, the Group continues to recognise the transferred lease assets in their entirety.
\u00a0
(in EUR million) | Receivables from clients | Cash collateral deposited | Total |
|---|---|---|---|
At 31\u00a0December 2023 | \u00a0 | \u00a0 | \u00a0 |
Carrying amount of transferred assets | 6,061.8 | 69.3 | 6,137.5 |
Carrying amount of associated liabilities\u00a0(1) | \u00a0 | \u00a0 | (4,256.2) |
Net carrying amount position | \u00a0 | \u00a0 | 1,881.3 |
Fair value of transferred assets | 6,286.3 | 69.3 | 6,362.0 |
Fair value of associated liabilities\u00a0(1) | \u00a0 | \u00a0 | (4,256.2) |
Net fair value position as at 31\u00a0December 2023 | \u00a0 | \u00a0 | 2,105.8 |
At 31\u00a0December 2022 | \u00a0 | \u00a0 | \u00a0 |
Carrying amount of transferred assets | 2,182.6 | 23.3 | 2,205.9 |
Carrying amount of associated liabilities\u00a0(1) | \u00a0 | \u00a0 | (1,727.1) |
Net carrying amount position | \u00a0 | \u00a0 | 478.8 |
Fair value of transferred assets | 2,334.3 | 23.3 | 2,357.6 |
Fair value of associated liabilities\u00a0(1) | \u00a0 | \u00a0 | (1,727.1) |
Net fair value position as at 31\u00a0December 2022 | \u00a0 | \u00a0 | 630.5 |
|
\u00a0
Saving deposits raised by LeasePlan Bank amount to EUR\u00a011.8\u00a0billion of which 31.7% are deposited for a fixed term. LeasePlan Bank is the brand name under which savings deposits are raised by LeasePlan Corporation N.V. which holds a banking licence in the Netherlands. LeasePlan Bank also operates on the German savings deposit market with a cross border offering from the Netherlands.
The maturity analysis of these deposits is as follows:
(in EUR million) | As at 31\u00a0December | |
|---|---|---|
2023 | 2022 | |
Deposits\u00a0(1) | 11,729.2 | \u2212 |
Payables related to deposits | 55.5 | \u2212 |
Total | 11,784.7 | \u2212 |
of which: | \u00a0 | \u00a0 |
Less than 1\u00a0year | 7,743.2 | \u2212 |
1-5\u00a0years | 3,925.0 | \u2212 |
Over 5\u00a0years | 116.6 | \u2212 |
|
The average interest rates on the outstanding balances of the fixed term savings deposits in original maturity terms are as follows:
\u00a0 | Year ended 31\u00a0December | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | |||
|---|---|---|---|---|---|---|---|---|---|
2023 | 2022 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | |
Three months or less\u00a0 | 1.60% | \u2212 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Longer than three months, less than a\u00a0year | 2.71% | \u2212 | |||||||
Longer than a year, less than 5\u00a0years | 1.53% | \u2212 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
\u00a0
The interest of the on-demand accounts is set monthly. The interest outstanding at the balance sheet date was EUR\u00a055.5\u00a0million.
\u00a0
At 31\u00a0December 2023, the Group has undrawn committed borrowing facilities of EUR\u00a01.95\u00a0billion (2022: EUR\u00a01.0\u00a0billion).\u00a0
A guarantee at first demand has been granted to ING Luxembourg for an amount of EUR\u00a050\u00a0million on behalf of Axus Luxembourg\u00a0SA, under the condition negotiated in the frame of the distribution agreement concluded with this financial institution.
A guarantee at has been granted to Peugeot\u00a0SA for an amount of EUR\u00a020\u00a0million on behalf of Fleetpool, under the condition negotiated in the frame of the distribution agreement concluded with this financial institution.
The Group has issued guarantees to the total value of EUR\u00a0364.8\u00a0million of which EUR\u00a0363.0\u00a0million is related to residual value guarantees issued to clients.
\u00a0
\u00a0
Changes in liabilities arising from financing activities are shown in the table below.
(in EUR million) | Balance as at 1\u00a0January 2023 | Financing | Interest accrued | Movement | Foreign exchange adjustment | Scope | Other | Balance as at 31\u00a0December 2023 |
|---|---|---|---|---|---|---|---|---|
Overdraft | 129.5 | 157.6 | \u2212 | \u2212 | 1.5 | 26.6 | \u2212 | 315.3 |
Borrowings from financial institutions excl. overdraft | 14,441.6 | 3,868.2 | 63.9 | \u2212 | 101.0 | 2,698.5 | \u2212 | 21,173.1 |
Bonds and notes issued | 5,303.4 | 1,366.3 | 68.8 | 68.2 | 12.2 | 9,319.3 | 0.0 | 16,138.3 |
Deposits | \u2212 | 451.9 | 31.2 | \u2212 | \u2212 | 11,301.7 | \u2212 | 11,784.7 |
Lease liabilities | 117.2 | (52.0) | 3.4 | \u2212 | 0.9 | 163.0 | 19.7 | 252.3 |
\u00a0
(in EUR million) | Balance as at 1\u00a0January 2022 | Financing | Interest accrued | Movement | Foreign exchange adjustment | Scope | Other | Balance as at 31\u00a0December 2022 |
|---|---|---|---|---|---|---|---|---|
Overdraft | 228.4 | (97.3) | \u2212 | \u2212 | (1.6) | \u2212 | \u2212 | 129.5 |
Borrowings from financial institutions excl. overdraft | 13,620.2 | 652.6 | 5.3 | \u2212 | (65.1) | 291.9 | (63.3) | 14,441.6 |
Bonds and notes issued | 4,668.7 | 639.4 | 21.2 | \u2212 | (25.9) | \u2212 | (0.0) | 5,303.4 |
Lease liabilities | 121.4 | (71.1) | \u2212 | \u2212 | (0.9) | 19.7 | 48.1 | 117.2 |
Borrowings and other financial liabilities, including debt securities issued and other borrowings, are initially measured at fair value, net of transaction costs. Borrowings and other financial liabilities are subsequently measured at amortised cost using the effective interest method, with interest expense recognised on an effective yield basis. The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments through the expected life of the financial liability, or, where appropriate, a shorter period. Transaction costs are included in amortised cost using the effective interest method.
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 effective interest rate (EIR). The EIR amortisation is included as finance costs in the income. For more information, refer to note\u00a029 \u201cBorrowings from financial institutions, bonds and notes issued\u201d.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForBorrowingsExplanatory", "language": "en", "entity": "scheme:969500E7V019H9NP7427", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "text_block_bf7535e4-9a0f-421e-84be-b10e3272aee6": { "value": "The Group measures financial instruments, such as derivatives, at fair value at each balance sheet date. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:
The principal or the most advantageous market must be accessible to the Group.
The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest. The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data is available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy, described as follows, based on the lowest level of input that is significant to the fair value measurement as a whole:
For assets and liabilities that are recognised in the financial statements on a recurring basis, the Group determines whether transfers have occurred between levels in the hierarchy by re-assessing categorisation (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.
(in EUR million) | As at 31\u00a0December | |
|---|---|---|
2023 | 2022 | |
Cash and balances at central banks | 3,535.6 | \u2212 |
Cash at bank and on hand | 370.8 | 195.9 |
Short-term bank deposits | 90.6 | 57.3 |
Cash and cash equivalents excl. bank overdrafts | 3,997.0 | 253.1 |
Bank overdrafts | (315.3) | (129.5) |
Cash and cash equivalents, net of bank overdrafts | 3,681.6 | 123.6 |
Cash at bank and short-term bank deposits attributable to disposal group held for sale\u00a0(1) | \u2212 | 92.8 |
Balance as at 31\u00a0December 2023 for the purpose of the statement of cash flows | 3,681.6 | 216.4 |
|
\u00a0
All cash and balances at central banks are available at call except for the mandatory reserve deposits at the Dutch Central Bank. These reserve cash deposits are the so-called minimum reserves required to be held with respective national banks for successive periods of four to five weeks as part of the monetary policy of the European Central Bank. Thanks to cash reserve requirements, banks depend on the European Central Bank\u2019s liquidity-providing mechanism for their liquidity needs. The mandatory reserve deposits amounting to EUR\u00a0107.3\u00a0million (2022: EUR\u00a099\u00a0million) form part of \u201cCash and balances at central banks\u201d.
As the Group operates its own insurance and re-insurance programme, the cash balance includes funds required for this business.
The average interest rate on the outstanding cash and balances at central banks is 3.8% (2022: 2.0%).\u00a0
Cash and cash equivalent amounts are only held with financial institutions that have an investment grade credit rating, so the low-risk exemption has been applied and no expected credit loss has been applied to these balances.
The Group has pledged part of its short-term deposits to fulfil collateral requirements. Refer to note\u00a029 for further details.
For financial assets and liabilities which are traded on an active market, such as listed investments or listed debt instruments, fair value is determined by reference to market value. For non-traded financial assets and liabilities, fair value is calculated using discounted cash flows, considered to be reasonable and consistent with those that would be used by a market participant, and based on observable market data where available (for example forward exchange rate or interest rate), unless carrying value is considered to approximate fair value.
Where discounted cash flow models based on management\u2019s assumptions are used, the resulting fair value measurements are considered to be at level\u00a03 in the fair value hierarchy, as defined in IFRS\u00a013 Fair Value Measurement, as they depend to a significant extent on unobservable valuation inputs.
All derivatives that have been designated into hedge relationships have been separately disclosed.
The Company\u2019s financial assets and liabilities are categorised as below. Where the financial instrument does not include fair value information, it is due to the carrying amount being a reasonable approximation of fair value.
As at 31\u00a0December 2023 (in EUR million) | \u00a0 | Fair Value | |||
|---|---|---|---|---|---|
Carrying Value | Level\u00a01 | Level\u00a02 | Level\u00a03 | Total | |
Financial assets measured at FVTPL | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Derivative financial instruments in hedge | 26.7 | \u00a0 | 26.7 | \u00a0 | 26.7 |
Derivative financial instruments not in hedge | 356.5 | \u00a0 | 356.5 | \u00a0 | 356.5 |
Investment in equity securities | 35.0 | 19.6 | \u00a0 | 15.4 | 35.0 |
Financial assets measured at FVOCI | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Investment in debt securities | 245.5 | 245.5 | \u00a0 | \u00a0 | 245.5 |
Financial assets measured at amortised cost | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Cash and cash equivalents | 3,997.0 | \u00a0 | \u00a0 | \u00a0 | \u2212 |
Investment in debt securities | 83.9 | 83.9 | \u00a0 | \u00a0 | 83.9 |
Other financial instruments | 646.8 | \u00a0 | \u00a0 | \u00a0 | \u2212 |
Lease receivables from clients | 4,545.2 | \u00a0 | 4,545.2 | \u00a0 | 4,545.2 |
Receivables from credit and other institutions | 3,061.9 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Loans to associates and jointly controlled entities | 41.5 | \u00a0 | 41.5 | \u00a0 | 41.5 |
Total | 13,040.0 | 349.0 | 4,970.0 | 15.4 | 5,334.4 |
\u00a0
As at 31\u00a0December 2022 (in EUR million) | \u00a0 | Fair Value | |||
|---|---|---|---|---|---|
Carrying Value | Level\u00a01 | Level\u00a02 | Level\u00a03 | Total | |
Financial assets measured at FVTPL | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Derivative financial instruments in hedge | 82.3 | \u00a0 | 82.3 | \u00a0 | 82.3 |
Derivative financial instruments not in hedge | 46.6 | \u00a0 | 46.6 | \u00a0 | 46.6 |
Investment in equity securities | 18.7 | 18.7 | \u00a0 | \u2212 | 18.7 |
Financial assets measured at FVOCI | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Investment in debt securities | 219.1 | 219.1 | \u00a0 | \u00a0 | 219.1 |
Financial assets measured at amortised cost | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Cash and cash equivalents | 253.1 | \u00a0 | \u00a0 | \u00a0 | \u2212 |
Other financial instruments | 299.9 | \u00a0 | \u00a0 | \u00a0 | \u2212 |
Lease receivables from clients | 1,849.1 | \u00a0 | 1,849.1 | \u2212 | 1,849.1 |
Receivables from credit and other institutions | 1,256.8 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Total | 4,025.7 | 237.8 | 1,978.1 | \u2212 | 2,215.9 |
\u00a0
\u00a0
As at 31\u00a0December 2023 (in EUR million) | \u00a0 | Fair Value | |||
|---|---|---|---|---|---|
Carrying Value | Level\u00a01 | Level\u00a02 | Level\u00a03 | Total | |
Financial liabilities measured at FVTPL | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Derivative financial instruments in hedge | 103.4 | \u00a0 | 103.4 | \u00a0 | 103.4 |
Derivative financial instruments not in hedge | 542.4 | \u00a0 | 542.4 | \u00a0 | 542.4 |
Financial liabilities measured at amortised cost | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Trade and other payables | 2,560.4 | \u00a0 | 2,560.4 | \u2212 | 2,560.4 |
Deposits | 11,784.7 | \u00a0 | 11,822.4 | \u00a0 | 11,822.4 |
Borrowings from financial institutions | 21,488.4 | \u00a0 | 21,488.4 | \u2212 | 21,488.4 |
Bonds issued | 16,138.3 | 6,902.8 | 9,246.4 | \u2212 | 16,149.2 |
Total | 52,617.7 | 6,902.8 | 45,763.5 | \u2212 | 52,666.3 |
As at 31\u00a0December 2022 (in EUR million) | \u00a0 | Fair Value | |||
|---|---|---|---|---|---|
Carrying Value | Level\u00a01 | Level\u00a02 | Level\u00a03 | Total | |
Financial liabilities measured at FVTPL | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Derivative financial instruments in hedge | 44.5 | \u00a0 | 44.5 | \u00a0 | 44.5 |
Derivative financial instruments not in hedge | 44.5 | \u00a0 | 44.5 | \u00a0 | 44.5 |
Financial liabilities measured at amortised cost | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Trade and other payables | 1,045.8 | \u00a0 | 1,045.8 | \u2212 | 1,045.8 |
Borrowings from financial institutions | 14,571.1 | \u00a0 | 14,571.1 | \u2212 | 14,571.1 |
Bonds issued | 5,303.4 | 3,460.9 | 1,727.1 | \u00a0 | 5,188.0 |
Total | 21,009.3 | 3,460.9 | 17,433.0 | \u2212 | 20,893.9 |
\u00a0
Level\u00a01 \u2013 for the equity instruments measured at this level, the Group has used the current bid price for the equity instrument in a quoted market while for financial asset debt securities the Group has used the quoted government bond price in an active market.
Level\u00a02 - loans to associates and jointly controlled entities have been fair valued using a discounted cashflow model using market observable inputs for the discount rate while the key inputs used in valuing the derivative hedge and hedging instruments are directly observable inputs including forward exchange rates, yield curves and spot rates. For details on lease receivables fair value measurement see note\u00a022.
Level\u00a03 \u2013 the Group have an equity investment in Constellation Automotive Holdings S.a.r.l., where the discounted cashflow valuation model has a significant part of the inputs that are not market observable. Unobservable in this context means that there is little or no current market data available from which to derive a price that an unrelated, informed buyer would be expected to purchase the asset or liability.
For each level there has been no change to the valuation techniques used during the period. For financial instruments that are recognised at fair value on a recurring basis, the Group determines whether transfers have occurred between Levels in the hierarchy by re-assessing categorisation (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting year. There were no transfers between the different levels during the current reporting or prior period.
Other financial assets and liabilities not measured at fair value have a carrying amount which is a reasonable approximation of fair value, due to being short-term in nature.
\u00a0
The movements in the fair value of the level\u00a03 financial assets and liabilities are shown as follows:
Level\u00a03 financial asset (in EUR million) | 2023 |
|---|---|
At 1\u00a0January | \u00a0 |
Net profit/(loss) recorded in the income statement | (1.0) |
Change in scope | 16.4 |
At 31\u00a0December | 15.4 |
\u00a0
In May\u00a02023, LeasePlan transferred part of the shares in Constellation Automotive Holdings S.a.r.l. to Lincoln Financing Holdings Pte. Limited (former shareholder of LeasePlan), reducing the carrying amount of the equity instrument to EUR\u00a015.4\u00a0million. The Group does not consider that a significant change in the estimates for the inputs would materially impact the fair value for the Group.
", "dimensions": { "concept": "ifrs-full:DisclosureOfFairValueMeasurementExplanatory", "language": "en", "entity": "scheme:969500E7V019H9NP7427", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "text_block_e93898ff-a010-4cae-9ecf-d9a252dc9622": { "value": "The Group measures financial instruments, such as derivatives, at fair value at each balance sheet date. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:
The principal or the most advantageous market must be accessible to the Group.
The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest. The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data is available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy, described as follows, based on the lowest level of input that is significant to the fair value measurement as a whole:
For assets and liabilities that are recognised in the financial statements on a recurring basis, the Group determines whether transfers have occurred between levels in the hierarchy by re-assessing categorisation (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFairValueMeasurementExplanatory", "language": "en", "entity": "scheme:969500E7V019H9NP7427", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "text_block_07d324b0-6760-4939-b5df-05adc1ebc250": { "value": "In order to hedge its exposure to foreign exchange and interest rate, the Group enters into forward, option and swap contracts. None of these contracts meet the own use exemption in IFRS\u00a09 and are accounted for as derivatives. Derivatives are financial instruments, of which the value changes in response to underlying variables. 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. 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.
Derivatives are initially recognised at fair value on the date a derivative contract is entered into (trade date) 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 fair value of cross currency and interest rate swaps is the estimated amount that the Group would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants at the measurement date. The fair values of not-actively traded instruments are calculated using a generally accepted discounted cash flow method, while considering relevant market observable data such as quoted forward prices and interest rates. As a result of having collateral agreements in place for certain of its derivative counterparts, the requirement to reflect other observable market inputs such as CVA, DVA and FVA is eliminated for discounting purposes. The fair values of various derivative instruments used for hedging purposes are disclosed in note\u00a019. Movements on the hedging reserve in other comprehensive income are shown in consolidated statement of changes in equity. The 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.
Changes in the fair value of derivative financial instruments that are designated and effective as hedges of future cash flows (cash flow hedges) are recognised directly in equity through 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. If the cash flow hedge of a firm commitment or forecast transaction results in the recognition of a non-financial asset or liability, then, at the time the asset or liability is recognised, the associated gains or losses on the derivative that had previously been recognised in equity are included in the initial measurement of the asset or liability. For hedges that do not result in the recognition of a non-financial asset or liability, including the effective portion of interest rate swaps hedging variable rate borrowings, amounts deferred in equity are recognised in the income statement in the same period in which the hedged item affects profit or loss.
The Group only applies fair value hedge accounting for hedging fixed interest risk on borrowings. For an effective hedge of an exposure to changes in fair value, the hedged item is adjusted for changes in fair value attributable to the risk being hedged. The corresponding entry and gains or losses arising from remeasuring the associated derivative are recognised in the income statement within \u201cunrealised gains/losses on financial instruments\u201d. Hedge effectiveness is determined at the inception of the hedge relationship, and through periodic prospective effectiveness assessments to ensure that an economic relationship exists between the hedged item and hedging instrument. The Group\u2019s material hedging instruments are interest rate swaps and cross currency swaps that have similar critical terms to the related debt instruments, such as payment dates, maturities and notional amount. As all critical terms matched during the year, there was no material hedge ineffectiveness. The Group also uses cross currency swaps to manage foreign exchange risk associated with borrowings denominated in foreign currencies. Where not designated in an accounting hedge there is a natural offset against foreign exchange movements on associated borrowings.
Hedge accounting is discontinued when the hedging instrument expires or is sold, terminated, exercised, revoked, or no longer qualifies for hedge accounting. At that time, any cumulative gain or loss on the hedging instrument recognised in equity is retained until the forecast transaction occurs. If a hedge transaction is no longer expected to occur, the net cumulative gain or loss previously recognised in equity is recycled to the income statement for the period. Changes in the fair value of any derivative instruments that are not designated in a hedge relationship are recognised immediately in the income statement within \u201cUnrealised gains/(losses) on financial instruments\u201d.
Derivatives embedded in other financial instruments or non-financial host contracts (other than financial assets in the scope of IFRS\u00a09) are treated as separate derivatives when their risks and characteristics are not closely related to those of their host contracts and the host contracts themselves are not carried at fair value with unrealised gains or losses reported in the income statement. Derivatives embedded in contracts which are financial assets in the scope of IFRS\u00a09 are not separated and the whole contract is accounted for at either amortised cost or fair value.
The types of risks that the Group is exposed to and derivatives used to hedge these risks can be found in note\u00a04.1.2 \u201cTreasury Risk\u201d and note\u00a019 \u201cDerivative financial instruments\u201d.
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 and are made up as follows:
(in EUR million) | Year ended 31\u00a0December 2023 | Year ended 31\u00a0December 2022 | ||||
|---|---|---|---|---|---|---|
Notional amounts | Assets | Liabilities | Notional amounts | Assets | Liabilities | |
Cash flow hedges | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Interest rate swaps | 2,999.4 | 24.1 | 11.5 | 1,630.3 | 61.6 | 0.0 |
Foreign exchange swaps | 519.4 | 2.7 | 91.9 | 491.0 | 20.8 | 44.5 |
Total derivatives in hedge | 3,518.8 | 26.7 | 103.4 | 2,121.3 | 82.3 | 44.5 |
Interest rate swaps | 31,332.8 | 235.3 | 392.1 | 3,452.9 | 46.6 | 44.5 |
Foreign exchange swaps | 4,042.9 | 121.2 | 150.3 | \u00a0 | \u2212 | \u2212 |
Total derivatives not in hedge | 35,375.7 | 356.5 | 542.4 | 3,452.9 | 46.6 | 44.5 |
Total | 38,894.5 | 383.3 | 645.8 | 5,574.2 | 128.9 | 89.0 |
Less non-current portion: | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Interest rate swaps \u2013 hedged | \u00a0 | 24.1 | 11.5 | \u00a0 | 61.6 | 0.0 |
Foreign exchange swaps \u2013 hedged | \u00a0 | 2.2 | 52.2 | \u00a0 | 13.1 | 34.3 |
Interest rate swaps \u2013 not hedged | \u00a0 | 157.2 | 353.4 | \u00a0 | 44.3 | 43.8 |
Foreign exchange swaps \u2013 not hedged | \u00a0 | 43.1 | 54.6 | \u00a0 | \u2212 | \u2212 |
Total non-current portion | \u00a0 | 226.6 | 471.7 | \u00a0 | 118.9 | 78.1 |
Current portion | \u00a0 | 156.6 | 174.1 | \u00a0 | 10.0 | 10.9 |
\u00a0
Upon the acquisition of LeasePlan, fair value hedging was in place (through the use of interest rate swaps) as part of the Treasury risk management policy to mitigate exposure to changes in fair value of recognised liabilities, driven by the impact of the interest rate risk component of debt capital market transactions (publicly issued fixed rate bonds). As part of a periodic review of hedging strategy to comply with risk objectives, the Group decided to revoke these fair value hedge designations on 1\u00a0October 2023. Before de-designation, any fair value changes were recognised in the income line item \u201cUnrealised gains/losses on financial instruments and other\u201d and the amortisation of the impact on de-designation, that will be smoothed over the residual lifetime of the debt are included in the same income statement line item and amounted to EUR\u00a038\u00a0million for the year ending 31\u00a0December 2023.
\u00a0
The impact on the income statement of derivatives is summarised below:
(in EUR million) | Year ended 31\u00a0December | |
|---|---|---|
2023 | 2022 | |
Derivatives not in hedges | (152.0) | (1.6) |
Hedge ineffectiveness - fair value hedges | (35.5) | \u2212 |
Of which: | \u00a0 | \u00a0 |
| 32.7 | \u2212 |
| (68.2) | \u2212 |
Hedge ineffectiveness \u2013 cash flow hedges | 1.5 | (0.2) |
Unrealised gains/(losses) on derivative financial instruments | (186.0) | (1.8) |
In order to hedge its exposure to foreign exchange and interest rate, the Group enters into forward, option and swap contracts. None of these contracts meet the own use exemption in IFRS\u00a09 and are accounted for as derivatives. Derivatives are financial instruments, of which the value changes in response to underlying variables. 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. 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.
Derivatives are initially recognised at fair value on the date a derivative contract is entered into (trade date) 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 fair value of cross currency and interest rate swaps is the estimated amount that the Group would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants at the measurement date. The fair values of not-actively traded instruments are calculated using a generally accepted discounted cash flow method, while considering relevant market observable data such as quoted forward prices and interest rates. As a result of having collateral agreements in place for certain of its derivative counterparts, the requirement to reflect other observable market inputs such as CVA, DVA and FVA is eliminated for discounting purposes. The fair values of various derivative instruments used for hedging purposes are disclosed in note\u00a019. Movements on the hedging reserve in other comprehensive income are shown in consolidated statement of changes in equity. The 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.
Changes in the fair value of derivative financial instruments that are designated and effective as hedges of future cash flows (cash flow hedges) are recognised directly in equity through 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. If the cash flow hedge of a firm commitment or forecast transaction results in the recognition of a non-financial asset or liability, then, at the time the asset or liability is recognised, the associated gains or losses on the derivative that had previously been recognised in equity are included in the initial measurement of the asset or liability. For hedges that do not result in the recognition of a non-financial asset or liability, including the effective portion of interest rate swaps hedging variable rate borrowings, amounts deferred in equity are recognised in the income statement in the same period in which the hedged item affects profit or loss.
The Group only applies fair value hedge accounting for hedging fixed interest risk on borrowings. For an effective hedge of an exposure to changes in fair value, the hedged item is adjusted for changes in fair value attributable to the risk being hedged. The corresponding entry and gains or losses arising from remeasuring the associated derivative are recognised in the income statement within \u201cunrealised gains/losses on financial instruments\u201d. Hedge effectiveness is determined at the inception of the hedge relationship, and through periodic prospective effectiveness assessments to ensure that an economic relationship exists between the hedged item and hedging instrument. The Group\u2019s material hedging instruments are interest rate swaps and cross currency swaps that have similar critical terms to the related debt instruments, such as payment dates, maturities and notional amount. As all critical terms matched during the year, there was no material hedge ineffectiveness. The Group also uses cross currency swaps to manage foreign exchange risk associated with borrowings denominated in foreign currencies. Where not designated in an accounting hedge there is a natural offset against foreign exchange movements on associated borrowings.
Hedge accounting is discontinued when the hedging instrument expires or is sold, terminated, exercised, revoked, or no longer qualifies for hedge accounting. At that time, any cumulative gain or loss on the hedging instrument recognised in equity is retained until the forecast transaction occurs. If a hedge transaction is no longer expected to occur, the net cumulative gain or loss previously recognised in equity is recycled to the income statement for the period. Changes in the fair value of any derivative instruments that are not designated in a hedge relationship are recognised immediately in the income statement within \u201cUnrealised gains/(losses) on financial instruments\u201d.
Derivatives embedded in other financial instruments or non-financial host contracts (other than financial assets in the scope of IFRS\u00a09) are treated as separate derivatives when their risks and characteristics are not closely related to those of their host contracts and the host contracts themselves are not carried at fair value with unrealised gains or losses reported in the income statement. Derivatives embedded in contracts which are financial assets in the scope of IFRS\u00a09 are not separated and the whole contract is accounted for at either amortised cost or fair value.
The types of risks that the Group is exposed to and derivatives used to hedge these risks can be found in note\u00a04.1.2 \u201cTreasury Risk\u201d and note\u00a019 \u201cDerivative financial instruments\u201d.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForDerivativeFinancialInstrumentsAndHedgingExplanatory", "language": "en", "entity": "scheme:969500E7V019H9NP7427", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "text_block_333e7901-4eb9-4335-a010-db888da5d14f": { "value": "Inventories are vehicle assets held for sale on the ordinary course of business or in the process of production for such sale. Inventories are measured at the lower of cost and net realisable value. 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. 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, subject to an impairment review, if the intention is to sell the car rather than lease for a second term. At this point no further depreciation is charged.
Other than vehicle inventory assets the Group maintain a certain level of parts for vehicles, gasoline and other accessories for the vehicles that are consumed and used as part of the generation of service revenues for the Group.
(in EUR million) | As at 31\u00a0December | |
|---|---|---|
2023 | 2022 | |
Inventories \u2013 gross value | 832.4 | 407.3 |
Valuation allowance | (25.8) | (11.9) |
Inventories net | 806.6 | 395.3 |
\u00a0
Inventories are stated at the lower of cost or net realisable value. The allowance represents the impact of the write down to the lower net realisable value for vehicle inventories on transfer from rental fleet or if held for over 90\u00a0days.
", "dimensions": { "concept": "ifrs-full:DisclosureOfInventoriesExplanatory", "language": "en", "entity": "scheme:969500E7V019H9NP7427", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "text_block_22f25ae8-e1ae-4ef8-ac2c-eea155ec5cf1": { "value": "Inventories are vehicle assets held for sale on the ordinary course of business or in the process of production for such sale. Inventories are measured at the lower of cost and net realisable value. 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. 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, subject to an impairment review, if the intention is to sell the car rather than lease for a second term. At this point no further depreciation is charged.
Other than vehicle inventory assets the Group maintain a certain level of parts for vehicles, gasoline and other accessories for the vehicles that are consumed and used as part of the generation of service revenues for the Group.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForMeasuringInventories", "language": "en", "entity": "scheme:969500E7V019H9NP7427", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "text_block_79be7219-e643-42fb-94e2-124807eb9ebf": { "value": "This caption includes:
The receivables are shown after any accumulated impairment losses and are initially measured at fair value and subsequently at amortised cost using the effective interest method. Unearned finance income is the difference between the gross investment in the lease (undiscounted future minimum lease payments and unguaranteed residual value accruing to the Group) and the net investment in the lease.
An expected credit loss (ECL) provision is applied to all receivables from clients that are measured at amortised cost with the exception of those receivables deemed to be out of scope. The Group have applied this scope exemption when the receivable meets the low credit risk exemption criteria. The Group has applied this to receivables on used car sales and insurance receivables, where there is zero or almost no history of credit risk or the amounts due are from financial institutions with an investment grade credit rating.
For the other receivables from clients the Group is currently in the process of aligning the methodologies used to calculate the ECL for the existing ALD Group entities and the newly acquired LeasePlan entities in the year, with the process expected to be complete within 12\u00a0months of the balance sheet date. However, overall, the Group segments the receivables form clients into sound and doubtful receivables (that includes receivables that have met the definition of default) and for sound receivables apply a simplified approach in calculating ECLs from initial recognition of the receivable, which means the Group does not track changes in credit risk, but instead recognises a loss allowance based on lifetime ECLs at each reporting date.
For the ALD entities the Group has established a provision matrix for the sound receivables that is based on its historical credit loss experience by aging categories, 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. To establish the forward-looking element of IFRS\u00a09 provision, the Group uses macroeconomic data and analysis through local uplifts to probability of default and loss given default rates. For the newly acquired LeasePlan entities the calculation for sound receivables is based on the use of models that require assumptions and data about forecast macroeconomic conditions and credit behaviour (including likelihood of customers defaulting and the resulting losses) from a third-party provider that also includes a forward-looking element.
Since obtaining financial holding status, the Group has aligned its definition of default to the ECB Regulatory Capital CRR Article\u00a0178 definition of default. This change applies to historic ALD entities only as LeasePlan entities are already aligned with the Article\u00a0178 definition of default due to holding a banking licence prior to the acquisition. For purposes of assessing, recognising and reporting defaults, a customer shall be considered to be in default when either one or both of the following events occur:
The application of the above guidance is only to the extent of identifying the customers that are in default. There is no change in the method of determining the value of impairment. Where the customer is in default, the whole of the customer balance is classified as doubtful, and impairment is based upon the full outstanding amount, except where we have adjudged there are mitigating circumstances. This definition of default has led to an increase in defaulted customers during 2023 resulting in the increase in the IFRS\u00a09 provision by EUR\u00a05.9\u00a0million on initial application.
Expected credit losses are reassessed at each reporting date and reflect all reasonable information that is available at the reporting date. Judgement is required from management for applying appropriate models and setting assumptions for the measurement of ECL. The methodology, assumptions and data, including any forecasts of future economic conditions, macroeconomic impacts and the Group\u2019s provision matrix are reviewed regularly by management in determining the expected credit losses and the write-off of receivables. Doubtful debts should be written off as soon as the definitive loss is known.
Where the Group have acquired receivables from clients that are originated or purchased credit-impaired, due to an incurred event having a detrimental impact on the estimated cashflows of the asset, the gross receivable is initial recognised at fair value with no carrying impairment allowance. The Group only recognises the cumulative changes in lifetime expected credit losses since initial recognition as a loss allowance for originated purchased credit-impaired financial assets in the income statement.
Disputes often arise in the collection of lease receivables and tend to range from issues relating to the performance of various services under the contract to the amount of end-of-contract billing. A dispute has no impact on the solvency of the customer or the risk of default, and therefore is not a credit loss. As such these amounts are removed from sound receivables and a provision is applied based on our provisions accounting policy. For presentation purposes the provision is netted against the \u2018Receivables from clients\u2019 balance sheet line item.
Details about the assumptions and estimation techniques used in measuring ECL for finance lease receivables and trade receivables from operating lease contracts are provided in the section Credit risk management and disclosure on the impairment provided in note\u00a022 \u201cLease Receivables from Clients\u201d.
\u00a0
Other receivables and prepayments include prepayments in respect of expenses attributable to a subsequent period plus amounts still to be received. These amounts are valued at cost. For recognition and measurement of Reinsurance assets and Insurance contact assets refer to the insurance policy. For those financial assets measured at amortised cost the Group has excluded them as part of the expected loss model (see Lease receivable from client\u2019s policy) and instead any impairment will be based on observable events.
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 | |
|---|---|---|
2023 | 2022\u00a0(1) | |
Amounts receivable under finance lease contracts | 2,282.3 | 727.2 |
Provision for impairment of receivables under finance lease contracts | (22.6) | (11.6) |
Of which | \u00a0 | \u00a0 |
| (6.8) | (6.0) |
| (15.8) | (5.6) |
Trade receivables | 2,545.9 | 1,327.8 |
Provision for impairment of trade receivables | (239.4) | (174.6) |
Of which | \u00a0 | \u00a0 |
| (217.3) | (151.7) |
| (22.1) | (22.9) |
Provision for customer disputes | (21.0) | (19.6) |
Total receivables | 4,545.2 | 1,849.1 |
|
\u00a0
The fair value of receivables is equivalent to the carrying value.
\u00a0
The below table presents the analysis of receivables which are in and out of scope of the simplified approach of IFRS\u00a09 for sound customers. The Group considers some specific receivable types as out of scope (see note\u00a03).
(in EUR million) | As at 31\u00a0December 2023 | As at 31\u00a0December 2022 | ||||
|---|---|---|---|---|---|---|
In scope | Out of scope | Total | In scope | Out of scope | Total | |
Amounts receivable under finance lease contracts | 2,233.4\u00a0(1) | 49.0\u00a0(2) | 2,282.3 | 714.3\u00a0(1) | 12.8\u00a0(2) | 727.2 |
Provision for impairment of receivables under finance lease contract\u00a0(3) | (15.8) | (6.8) | (22.6) | (5.6) | (6.0) | (11.6) |
Trade receivables | 1,512.4 | 1,033.5\u00a0(2) | 2,545.9 | 651.5 | 676.3\u00a0(2) | 1,327.8 |
Provision for impairment of trade receivables\u00a0(3) | (22.1) | (217.3) | (239.4) | (22.9) | (151.7) | (174.6) |
Provision for customer disputes | \u2212 | (21.0) | (21.0) | \u2212 | (19.6) | (19.6) |
Total receivables | 3,707.9 | 837.4 | 4,545.2 | 1,337.3 | 511.8 | 1,849.1 |
|
Based on the receivables which are in the scope, as at 31\u00a0December 2023 the ALD sound receivables amount to EUR\u00a01,483.5\u00a0million (2022: 1,365.8\u00a0million) with a provision of EUR\u00a025.5\u00a0million (2022: 28.5\u00a0million) and the newly acquired LeasePlan sound receivables amount to EUR\u00a02,262.2\u00a0million with a provision of EUR\u00a012.3\u00a0million.
For ALD entities the loss allowance as at 31\u00a0December 2023 and 31\u00a0December 2022 was determined as follows for both trade and finance lease sound receivables:
\u00a0
(in EUR million) | Not past | 0-30\u00a0days | 31-60\u00a0days past due | 61-90\u00a0days past due | >90\u00a0days | Total |
|---|---|---|---|---|---|---|
Loss rate | 1% | 3% | 9% | 7% | 15% | \u00a0 |
Gross carrying amount of receivables in IFRS\u00a09 scope | 1,251.0 | 167.3 | 33.0 | 12.5 | 19.7 | 1,483.5 |
Loss Allowance | (14.3) | (4.5) | (2.8) | (0.9) | (3.0) | (25.5) |
Net carrying amount of receivables in IFRS\u00a09 scope | 1,236.7 | 162.8 | 30.2 | 11.6 | 16.8 | 1,458.0 |
\u00a0
\u00a0
(in EUR million) | Not past | 0-30\u00a0days | 31-60\u00a0days past due | 61-90\u00a0days past due | >90\u00a0days
| Total |
|---|---|---|---|---|---|---|
Loss rate | 1% | 4% | 8% | 16% | 22% | \u00a0 |
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 | 1,337.3 |
\u00a0
For newly acquired LeasePlan entities the loss allowance as at 31\u00a0December 2023 was determined as follows for both trade and finance lease sound receivables:
(in EUR million) | As at 31\u00a0December 2023 | ||||
|---|---|---|---|---|---|
Banks | Corporate | Small and Medium Enterprises | Private | Total | |
Loss rate | 0% | 0% | 1% | 1% | \u00a0 |
Gross carrying amount of receivables in IFRS\u00a09 scope | 7.7 | 1,406.0 | 790.9 | 57.7 | 2,262.2 |
Loss Allowance | (0.0) | (2.5) | (9.2) | (0.6) | (12.3) |
Net carrying amount of receivables in IFRS\u00a09 scope | 7.7 | 1,403.5 | 781.6 | 57.1 | 2,249.9 |
\u00a0
The movement in impairment of finance lease receivables is as follows:
(in EUR million) | As at 31\u00a0December | |
|---|---|---|
2023 | 2022 | |
Balance at 1\u00a0January | (11.6) | (13.0) |
Purchased credit impaired receivables\u00a0(1) | (1.3) | \u2212 |
Net Impairment charges\u00a0(2) | 0.2 | 0.1 |
Receivables written off | 2.3 | 1.0 |
Scope changes\u00a0(3) | (12.0) | \u2212 |
Other and currency translation differences | (0.2) | 0.2 |
Balance at 31\u00a0December | (22.6) | (11.6) |
|
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 2023 | |||||
|---|---|---|---|---|---|---|
Loans and receivables to customers | ||||||
Banks | Corporates | Small and medium enterprises | Credit to individuals | Very small companies | Total | |
Amounts not past due | 8.4 | 1,149.9 | 624.5 | 84.7 | 157.9 | 2,025.3 |
Amounts including past due between 1\u00a0to 30\u00a0days | 0.1 | 22.7 | 36.4 | 1.7 | 11.4 | 72.4 |
Amounts including past due between 31\u00a0to 60\u00a0days | 0.2 | 8.0 | 11.3 | 0.2 | 2.9 | 22.5 |
Amounts including past due between 61\u00a0to 90\u00a0days | \u2212 | 1.6 | 4.8 | 0.1 | 2.5 | 8.9 |
Amounts including past due between 91\u00a0to 180\u00a0days | 0.3 | 97.4 | 0.1 | 0.1 | 1.6 | 99.5 |
Amounts including past due between 181\u00a0days to 1\u00a0year | \u2212 | 2.6 | \u2212 | 0.0 | 0.6 | 3.2 |
Amounts including past due over 1\u00a0year | \u2212 | 1.1 | \u2212 | 0.0 | 0.4 | 1.5 |
Total | 9.0 | 1,283.3 | 677.1 | 86.7 | 177.3 | 2,233.4 |
\u00a0
(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 |
\u00a0
The increase in amounts past due is related to the acquisition of LeasePlan, which has also increased the amounts not past due relating to increased remaining capital for finance leases.
A full description of the impairment policy is contained in the Credit risk measurement section of the note\u00a04 \u201cFinancial Risk Management\u201d.
The movement in impairment of trade receivables is as follows:
(in EUR million) | As at 31\u00a0December | |
|---|---|---|
2023 | 2022 | |
Balance at 1\u00a0January | (174.6) | (171.8) |
Purchased credit impaired receivables\u00a0(1) | (39.4) | 0.0 |
Net Impairment charges\u00a0(2) | (70.9) | (46.1) |
Receivables written off | 44.6 | 47.9 |
Transfer of disposal groups to assets held for sale | 0.0 | 5.6 |
Scope changes\u00a0(3) | (0.9) | (10.6) |
Other and currency translation differences | 1.9 | 0.3 |
Balance at 31\u00a0December | (239.4) | (174.6) |
|
The maturity analysis is as follows:
(in EUR million) | As at 31\u00a0December | |
|---|---|---|
2023 | 2022 | |
Trade receivables not overdue | 2,134.1 | 986.0 |
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 | 2,545.9 | 1,327.8 |
\u00a0
The improvement in the past due over 180\u00a0days maturity profile is due to higher focus on collection procedures, outsourcing of payment collections and direct debit payments implemented by Group entities.
The amounts receivable from clients include finance lease receivables, which can be analysed as follows:
(in EUR million) | As at 31\u00a0December | |
|---|---|---|
2023 | 2022 | |
Less than one year | 611.9 | 194.0 |
1-2\u00a0years | 523.2 | 122.5 |
2-3\u00a0years | 403.0 | 88.1 |
3-4\u00a0years | 211.1 | 45.9 |
4-5\u00a0years | 88.6 | 10.5 |
More than 5\u00a0years | 34.4 | 1.6 |
Gross investment in finance lease payments | 1,872.0 | 462.5 |
Unguaranteed residual value | 635.3 | 300.8 |
Unearned finance income | (225.0) | (36.2) |
Net investment in finance leases | 2,282.3 | 727.2 |
\u00a0
(in EUR million) | As at 31\u00a0December | |
|---|---|---|
2023 | 2022 | |
Current | 746.0 | 221.4 |
Non-current | 1,536.4 | 505.8 |
Net investment in finance leases | 2,282.3 | 727.2 |
\u00a0
A part of the finance lease assets is encumbered (securitised) because of the asset backed securitisation transactions concluded by the Group. The total value of the securitised finance lease assets amounts to EUR\u00a04,256.2\u00a0million (2022: EUR\u00a01,727.1\u00a0million). For further details on the transactions refer to note\u00a029 of the consolidated financial statements
In the event of legal proceeding taken against a customer that is in default, the vehicle would be recovered and as such the fair value of that vehicle less costs to recover would be considered collateral and reduce significantly any loss on default.
(in EUR million) | As at 31\u00a0December | |
|---|---|---|
2023 | Restated 2022\u00a0(1) | |
VAT and other taxes | 852.8 | 388.1 |
Prepaid motor vehicle tax and insurance premiums | 236.2 | 117.4 |
Reclaimable damages | 16.3 | 10.1 |
Prepaid expenses and accrued income | 645.0 | 424.4 |
Reinsurance contract assets\u00a0(2) | 52.3 | 10.3 |
Insurance contract assets\u00a0(2) | 0.8 | 0.7 |
Rebates from dealers and manufacturers | 612.3 | 249.8 |
Other | 535.3 | 158.6 |
Total | 2,951.0 | 1,359.3 |
|
\u00a0
Balances written-off from other receivables were not significant for the year ending 31\u00a0December 2023 and 2022.
The Expected Credit Losses for Rebates and bonuses and commission receivable, Reclaimable damages, Reinsurance assets and Insurance Contract assets amount to EUR\u00a08\u00a0million. These credit losses are based on observable events during the period.
", "dimensions": { "concept": "ifrs-full:DisclosureOfTradeAndOtherReceivablesExplanatory", "language": "en", "entity": "scheme:969500E7V019H9NP7427", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "text_block_eb03df90-bb82-46c5-99ba-87e26213864c": { "value": "This caption includes:
The receivables are shown after any accumulated impairment losses and are initially measured at fair value and subsequently at amortised cost using the effective interest method. Unearned finance income is the difference between the gross investment in the lease (undiscounted future minimum lease payments and unguaranteed residual value accruing to the Group) and the net investment in the lease.
An expected credit loss (ECL) provision is applied to all receivables from clients that are measured at amortised cost with the exception of those receivables deemed to be out of scope. The Group have applied this scope exemption when the receivable meets the low credit risk exemption criteria. The Group has applied this to receivables on used car sales and insurance receivables, where there is zero or almost no history of credit risk or the amounts due are from financial institutions with an investment grade credit rating.
For the other receivables from clients the Group is currently in the process of aligning the methodologies used to calculate the ECL for the existing ALD Group entities and the newly acquired LeasePlan entities in the year, with the process expected to be complete within 12\u00a0months of the balance sheet date. However, overall, the Group segments the receivables form clients into sound and doubtful receivables (that includes receivables that have met the definition of default) and for sound receivables apply a simplified approach in calculating ECLs from initial recognition of the receivable, which means the Group does not track changes in credit risk, but instead recognises a loss allowance based on lifetime ECLs at each reporting date.
For the ALD entities the Group has established a provision matrix for the sound receivables that is based on its historical credit loss experience by aging categories, 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. To establish the forward-looking element of IFRS\u00a09 provision, the Group uses macroeconomic data and analysis through local uplifts to probability of default and loss given default rates. For the newly acquired LeasePlan entities the calculation for sound receivables is based on the use of models that require assumptions and data about forecast macroeconomic conditions and credit behaviour (including likelihood of customers defaulting and the resulting losses) from a third-party provider that also includes a forward-looking element.
Since obtaining financial holding status, the Group has aligned its definition of default to the ECB Regulatory Capital CRR Article\u00a0178 definition of default. This change applies to historic ALD entities only as LeasePlan entities are already aligned with the Article\u00a0178 definition of default due to holding a banking licence prior to the acquisition. For purposes of assessing, recognising and reporting defaults, a customer shall be considered to be in default when either one or both of the following events occur:
The application of the above guidance is only to the extent of identifying the customers that are in default. There is no change in the method of determining the value of impairment. Where the customer is in default, the whole of the customer balance is classified as doubtful, and impairment is based upon the full outstanding amount, except where we have adjudged there are mitigating circumstances. This definition of default has led to an increase in defaulted customers during 2023 resulting in the increase in the IFRS\u00a09 provision by EUR\u00a05.9\u00a0million on initial application.
Expected credit losses are reassessed at each reporting date and reflect all reasonable information that is available at the reporting date. Judgement is required from management for applying appropriate models and setting assumptions for the measurement of ECL. The methodology, assumptions and data, including any forecasts of future economic conditions, macroeconomic impacts and the Group\u2019s provision matrix are reviewed regularly by management in determining the expected credit losses and the write-off of receivables. Doubtful debts should be written off as soon as the definitive loss is known.
Where the Group have acquired receivables from clients that are originated or purchased credit-impaired, due to an incurred event having a detrimental impact on the estimated cashflows of the asset, the gross receivable is initial recognised at fair value with no carrying impairment allowance. The Group only recognises the cumulative changes in lifetime expected credit losses since initial recognition as a loss allowance for originated purchased credit-impaired financial assets in the income statement.
Disputes often arise in the collection of lease receivables and tend to range from issues relating to the performance of various services under the contract to the amount of end-of-contract billing. A dispute has no impact on the solvency of the customer or the risk of default, and therefore is not a credit loss. As such these amounts are removed from sound receivables and a provision is applied based on our provisions accounting policy. For presentation purposes the provision is netted against the \u2018Receivables from clients\u2019 balance sheet line item.
Details about the assumptions and estimation techniques used in measuring ECL for finance lease receivables and trade receivables from operating lease contracts are provided in the section Credit risk management and disclosure on the impairment provided in note\u00a022 \u201cLease Receivables from Clients\u201d.
\u00a0
Other receivables and prepayments include prepayments in respect of expenses attributable to a subsequent period plus amounts still to be received. These amounts are valued at cost. For recognition and measurement of Reinsurance assets and Insurance contact assets refer to the insurance policy. For those financial assets measured at amortised cost the Group has excluded them as part of the expected loss model (see Lease receivable from client\u2019s policy) and instead any impairment will be based on observable events.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForTradeAndOtherReceivablesExplanatory", "language": "en", "entity": "scheme:969500E7V019H9NP7427", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "text_block_26ccaaf6-8fc0-4d29-882a-835f26edfca6": { "value": "An expected credit loss (ECL) provision is applied to all receivables from clients that are measured at amortised cost with the exception of those receivables deemed to be out of scope. The Group have applied this scope exemption when the receivable meets the low credit risk exemption criteria. The Group has applied this to receivables on used car sales and insurance receivables, where there is zero or almost no history of credit risk or the amounts due are from financial institutions with an investment grade credit rating.
For the other receivables from clients the Group is currently in the process of aligning the methodologies used to calculate the ECL for the existing ALD Group entities and the newly acquired LeasePlan entities in the year, with the process expected to be complete within 12\u00a0months of the balance sheet date. However, overall, the Group segments the receivables form clients into sound and doubtful receivables (that includes receivables that have met the definition of default) and for sound receivables apply a simplified approach in calculating ECLs from initial recognition of the receivable, which means the Group does not track changes in credit risk, but instead recognises a loss allowance based on lifetime ECLs at each reporting date.
For the ALD entities the Group has established a provision matrix for the sound receivables that is based on its historical credit loss experience by aging categories, 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. To establish the forward-looking element of IFRS\u00a09 provision, the Group uses macroeconomic data and analysis through local uplifts to probability of default and loss given default rates. For the newly acquired LeasePlan entities the calculation for sound receivables is based on the use of models that require assumptions and data about forecast macroeconomic conditions and credit behaviour (including likelihood of customers defaulting and the resulting losses) from a third-party provider that also includes a forward-looking element.
Since obtaining financial holding status, the Group has aligned its definition of default to the ECB Regulatory Capital CRR Article\u00a0178 definition of default. This change applies to historic ALD entities only as LeasePlan entities are already aligned with the Article\u00a0178 definition of default due to holding a banking licence prior to the acquisition. For purposes of assessing, recognising and reporting defaults, a customer shall be considered to be in default when either one or both of the following events occur:
The application of the above guidance is only to the extent of identifying the customers that are in default. There is no change in the method of determining the value of impairment. Where the customer is in default, the whole of the customer balance is classified as doubtful, and impairment is based upon the full outstanding amount, except where we have adjudged there are mitigating circumstances. This definition of default has led to an increase in defaulted customers during 2023 resulting in the increase in the IFRS\u00a09 provision by EUR\u00a05.9\u00a0million on initial application.
Expected credit losses are reassessed at each reporting date and reflect all reasonable information that is available at the reporting date. Judgement is required from management for applying appropriate models and setting assumptions for the measurement of ECL. The methodology, assumptions and data, including any forecasts of future economic conditions, macroeconomic impacts and the Group\u2019s provision matrix are reviewed regularly by management in determining the expected credit losses and the write-off of receivables. Doubtful debts should be written off as soon as the definitive loss is known.
Where the Group have acquired receivables from clients that are originated or purchased credit-impaired, due to an incurred event having a detrimental impact on the estimated cashflows of the asset, the gross receivable is initial recognised at fair value with no carrying impairment allowance. The Group only recognises the cumulative changes in lifetime expected credit losses since initial recognition as a loss allowance for originated purchased credit-impaired financial assets in the income statement.
Disputes often arise in the collection of lease receivables and tend to range from issues relating to the performance of various services under the contract to the amount of end-of-contract billing. A dispute has no impact on the solvency of the customer or the risk of default, and therefore is not a credit loss. As such these amounts are removed from sound receivables and a provision is applied based on our provisions accounting policy. For presentation purposes the provision is netted against the \u2018Receivables from clients\u2019 balance sheet line item.
Details about the assumptions and estimation techniques used in measuring ECL for finance lease receivables and trade receivables from operating lease contracts are provided in the section Credit risk management and disclosure on the impairment provided in note\u00a022 \u201cLease Receivables from Clients\u201d.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFinancialAssetsExplanatory", "language": "en", "entity": "scheme:969500E7V019H9NP7427", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "text_block_873835e3-90a3-429f-8385-a4bdea608259": { "value": "An expected credit loss (ECL) provision is applied to all receivables from clients that are measured at amortised cost with the exception of those receivables deemed to be out of scope. The Group have applied this scope exemption when the receivable meets the low credit risk exemption criteria. The Group has applied this to receivables on used car sales and insurance receivables, where there is zero or almost no history of credit risk or the amounts due are from financial institutions with an investment grade credit rating.
For the other receivables from clients the Group is currently in the process of aligning the methodologies used to calculate the ECL for the existing ALD Group entities and the newly acquired LeasePlan entities in the year, with the process expected to be complete within 12\u00a0months of the balance sheet date. However, overall, the Group segments the receivables form clients into sound and doubtful receivables (that includes receivables that have met the definition of default) and for sound receivables apply a simplified approach in calculating ECLs from initial recognition of the receivable, which means the Group does not track changes in credit risk, but instead recognises a loss allowance based on lifetime ECLs at each reporting date.
For the ALD entities the Group has established a provision matrix for the sound receivables that is based on its historical credit loss experience by aging categories, 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. To establish the forward-looking element of IFRS\u00a09 provision, the Group uses macroeconomic data and analysis through local uplifts to probability of default and loss given default rates. For the newly acquired LeasePlan entities the calculation for sound receivables is based on the use of models that require assumptions and data about forecast macroeconomic conditions and credit behaviour (including likelihood of customers defaulting and the resulting losses) from a third-party provider that also includes a forward-looking element.
Since obtaining financial holding status, the Group has aligned its definition of default to the ECB Regulatory Capital CRR Article\u00a0178 definition of default. This change applies to historic ALD entities only as LeasePlan entities are already aligned with the Article\u00a0178 definition of default due to holding a banking licence prior to the acquisition. For purposes of assessing, recognising and reporting defaults, a customer shall be considered to be in default when either one or both of the following events occur:
The application of the above guidance is only to the extent of identifying the customers that are in default. There is no change in the method of determining the value of impairment. Where the customer is in default, the whole of the customer balance is classified as doubtful, and impairment is based upon the full outstanding amount, except where we have adjudged there are mitigating circumstances. This definition of default has led to an increase in defaulted customers during 2023 resulting in the increase in the IFRS\u00a09 provision by EUR\u00a05.9\u00a0million on initial application.
Expected credit losses are reassessed at each reporting date and reflect all reasonable information that is available at the reporting date. Judgement is required from management for applying appropriate models and setting assumptions for the measurement of ECL. The methodology, assumptions and data, including any forecasts of future economic conditions, macroeconomic impacts and the Group\u2019s provision matrix are reviewed regularly by management in determining the expected credit losses and the write-off of receivables. Doubtful debts should be written off as soon as the definitive loss is known.
Where the Group have acquired receivables from clients that are originated or purchased credit-impaired, due to an incurred event having a detrimental impact on the estimated cashflows of the asset, the gross receivable is initial recognised at fair value with no carrying impairment allowance. The Group only recognises the cumulative changes in lifetime expected credit losses since initial recognition as a loss allowance for originated purchased credit-impaired financial assets in the income statement.
Disputes often arise in the collection of lease receivables and tend to range from issues relating to the performance of various services under the contract to the amount of end-of-contract billing. A dispute has no impact on the solvency of the customer or the risk of default, and therefore is not a credit loss. As such these amounts are removed from sound receivables and a provision is applied based on our provisions accounting policy. For presentation purposes the provision is netted against the \u2018Receivables from clients\u2019 balance sheet line item.
Details about the assumptions and estimation techniques used in measuring ECL for finance lease receivables and trade receivables from operating lease contracts are provided in the section Credit risk management and disclosure on the impairment provided in note\u00a022 \u201cLease Receivables from Clients\u201d.
Credit risk refers to the risk of losses resulting from the inability of Group customers, issuers or other counterparties to meet their financial commitments. Credit risk may be aggravated by concentration risk, resulting from a high exposure to a given risk or to one or more counterparties, or to one or more groups of similar counterparties. In addition to the risk of lessees not making payments for the leased vehicles, the Group is exposed to credit risk originating from its banking and treasury activities, which includes deposits and investments placed with financial institutions and hedging instruments, such as derivatives and reinsurance activities. The Group\u2019s maximum exposure to credit risk primarily arises from these financial assets and is as follows:
\u00a0
(in EUR million) | As at 31\u00a0December | |
|---|---|---|
2023 | 2022 | |
Cash and cash equivalents | 3,997.0 | 253.1 |
Lease receivables from clients | 4,545.2 | 1,849.1 |
Other receivables, prepayments and contract assets\u00a0(1) | 1,217.0 | 429.4 |
Investment in debt and equity securities\u00a0(1) | 118.9 | 18.7 |
Derivative financial assets | 383.3 | 128.9 |
Total exposure | 10,261.3 | 2,679.4 |
|
\u00a0
The Group\u2019s definition of default for the purpose of determining ECLs, and for internal credit risk management purposes aligns to the ECB Regulatory Capital CRR Article\u00a0178 definition of default, to maintain a consistent approach with IFRS\u00a09 and associated regulatory guidance.
The Group has issued policies and standards which regulate the governance of the local credit risk management organisation. All Group entities must 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 assessment process. Each subsidiary has a specific credit authority approved by the Group General Management and the Risk Department of Societe Generale, that is determined by 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 and concentration 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 the Group 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. However, the primary responsibility for debt collection remains with the Group subsidiaries that have dedicated teams in charge of recovering unpaid invoices in compliance with local regulations and market practices. These local processes are required to be compliant with the corporate instructions and guidelines. 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. Each local entity is required to maintain a watch list, which is based on credit rating and other available information. These lists are reviewed in regular meetings by the Credit Committees. A qualitative analysis of total credit exposures, defaults and losses is reported on a monthly basis and discussed on a quarterly basis to the Entity Risk Committee locally and Credit Risk Committee centrally.
The Group limits credit risk on liquid funds and derivative financial instruments through diversification of exposures with a range of financial institutions. Counterparty limits are set for each financial institution with reference to credit ratings assigned by Standard & Poor\u2019s and Moody\u2019s. Limits are set on a legal entity basis and are included in the Group\u2019s risk appetite and approved on a yearly basis. The Group\u2019s treasury risk management monitors the exposures, against the approved limits, on an ongoing basis.
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. The Group is currently in the process of aligning the methodologies used to calculate the expected credit loss (ECL) in the existing ALD Group entities and the newly acquired LeasePlan entities in the year, a project that should be completed within the next 12\u00a0months.
For existing ALD entities where trade receivables and finance lease receivables are not in default, 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. 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 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 and 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. When in default, the receivables from leases with customers are provisioned at 100%.
For the LeasePlan entities acquired, the amount of ECL for lease receivables is measured at the contract level as the probability weighted present value of all cash shortfalls over the expected life of the financial asset discounted at the original implicit interest rate embedded in the lease contract. The cash shortfall is the difference between all contractual cash flows that are due to the Group and all the cash flows that the Group expects to receive. The Group determines the ECL for lease receivables based on sophisticated models. These models include forward-looking macro-economic scenarios and multi-year forecast over the lifetime of the lease contracts. PD, LGD and EAD forecasts are combined to produce the ECL estimate. As such, ECL is highly dependent on the credit quality of counterparties in the portfolio at the reporting date, the types, and characteristics of vehicles in the portfolio, the expected maturities and repayment terms of the contracts, the forecasts of future macro-economic variables in various scenarios, the forecast market developments and residual values for used vehicles in various scenarios, and the probability weight assigned to each forecast scenario.
Expected credit losses are reassessed at each reporting date and reflect all reasonable information that is available at the reporting date and management consider 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. Further information on the expected loss provision on receivables from leases is include in note\u00a022. Given the diverse nature of the Group\u2019s operations (both in relation to customer type and geographically), the Group does not have significant concentration of credit risk in respect of lease receivables from clients, with exposure spread over a large number of customers.
For other financial assets listed above where there is zero or almost no history of credit risk or the amounts due are from financial institutions with an investment grade credit rating, no provision has been applied. For all other counterparties the ECL is based on the General Approach, where the expected credit loss model is calculated by multiplying the PD, LGD and the Exposure at Default (EAD), but the level of provisioning is dependent on the credit deterioration of the asset. If in stage\u00a01, and no deterioration since inception, then based on 12-month ECL, if there is significant deterioration in credit rating, then at stage\u00a02 with a lifetime ECL, and if observable evidence of impairment, then at stage\u00a03 and provisioned based on asset being credit impaired.
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 | |
|---|---|---|
2023 | 2022\u00a0(1) | |
Amounts receivable under finance lease contracts | 2,282.3 | 727.2 |
Provision for impairment of receivables under finance lease contracts | (22.6) | (11.6) |
Of which | \u00a0 | \u00a0 |
| (6.8) | (6.0) |
| (15.8) | (5.6) |
Trade receivables | 2,545.9 | 1,327.8 |
Provision for impairment of trade receivables | (239.4) | (174.6) |
Of which | \u00a0 | \u00a0 |
| (217.3) | (151.7) |
| (22.1) | (22.9) |
Provision for customer disputes | (21.0) | (19.6) |
Total receivables | 4,545.2 | 1,849.1 |
|
\u00a0
The fair value of receivables is equivalent to the carrying value.
\u00a0
The below table presents the analysis of receivables which are in and out of scope of the simplified approach of IFRS\u00a09 for sound customers. The Group considers some specific receivable types as out of scope (see note\u00a03).
(in EUR million) | As at 31\u00a0December 2023 | As at 31\u00a0December 2022 | ||||
|---|---|---|---|---|---|---|
In scope | Out of scope | Total | In scope | Out of scope | Total | |
Amounts receivable under finance lease contracts | 2,233.4\u00a0(1) | 49.0\u00a0(2) | 2,282.3 | 714.3\u00a0(1) | 12.8\u00a0(2) | 727.2 |
Provision for impairment of receivables under finance lease contract\u00a0(3) | (15.8) | (6.8) | (22.6) | (5.6) | (6.0) | (11.6) |
Trade receivables | 1,512.4 | 1,033.5\u00a0(2) | 2,545.9 | 651.5 | 676.3\u00a0(2) | 1,327.8 |
Provision for impairment of trade receivables\u00a0(3) | (22.1) | (217.3) | (239.4) | (22.9) | (151.7) | (174.6) |
Provision for customer disputes | \u2212 | (21.0) | (21.0) | \u2212 | (19.6) | (19.6) |
Total receivables | 3,707.9 | 837.4 | 4,545.2 | 1,337.3 | 511.8 | 1,849.1 |
|
Based on the receivables which are in the scope, as at 31\u00a0December 2023 the ALD sound receivables amount to EUR\u00a01,483.5\u00a0million (2022: 1,365.8\u00a0million) with a provision of EUR\u00a025.5\u00a0million (2022: 28.5\u00a0million) and the newly acquired LeasePlan sound receivables amount to EUR\u00a02,262.2\u00a0million with a provision of EUR\u00a012.3\u00a0million.
For ALD entities the loss allowance as at 31\u00a0December 2023 and 31\u00a0December 2022 was determined as follows for both trade and finance lease sound receivables:
\u00a0
(in EUR million) | Not past | 0-30\u00a0days | 31-60\u00a0days past due | 61-90\u00a0days past due | >90\u00a0days | Total |
|---|---|---|---|---|---|---|
Loss rate | 1% | 3% | 9% | 7% | 15% | \u00a0 |
Gross carrying amount of receivables in IFRS\u00a09 scope | 1,251.0 | 167.3 | 33.0 | 12.5 | 19.7 | 1,483.5 |
Loss Allowance | (14.3) | (4.5) | (2.8) | (0.9) | (3.0) | (25.5) |
Net carrying amount of receivables in IFRS\u00a09 scope | 1,236.7 | 162.8 | 30.2 | 11.6 | 16.8 | 1,458.0 |
\u00a0
\u00a0
(in EUR million) | Not past | 0-30\u00a0days | 31-60\u00a0days past due | 61-90\u00a0days past due | >90\u00a0days
| Total |
|---|---|---|---|---|---|---|
Loss rate | 1% | 4% | 8% | 16% | 22% | \u00a0 |
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 | 1,337.3 |
\u00a0
For newly acquired LeasePlan entities the loss allowance as at 31\u00a0December 2023 was determined as follows for both trade and finance lease sound receivables:
(in EUR million) | As at 31\u00a0December 2023 | ||||
|---|---|---|---|---|---|
Banks | Corporate | Small and Medium Enterprises | Private | Total | |
Loss rate | 0% | 0% | 1% | 1% | \u00a0 |
Gross carrying amount of receivables in IFRS\u00a09 scope | 7.7 | 1,406.0 | 790.9 | 57.7 | 2,262.2 |
Loss Allowance | (0.0) | (2.5) | (9.2) | (0.6) | (12.3) |
Net carrying amount of receivables in IFRS\u00a09 scope | 7.7 | 1,403.5 | 781.6 | 57.1 | 2,249.9 |
\u00a0
The movement in impairment of finance lease receivables is as follows:
(in EUR million) | As at 31\u00a0December | |
|---|---|---|
2023 | 2022 | |
Balance at 1\u00a0January | (11.6) | (13.0) |
Purchased credit impaired receivables\u00a0(1) | (1.3) | \u2212 |
Net Impairment charges\u00a0(2) | 0.2 | 0.1 |
Receivables written off | 2.3 | 1.0 |
Scope changes\u00a0(3) | (12.0) | \u2212 |
Other and currency translation differences | (0.2) | 0.2 |
Balance at 31\u00a0December | (22.6) | (11.6) |
|
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 2023 | |||||
|---|---|---|---|---|---|---|
Loans and receivables to customers | ||||||
Banks | Corporates | Small and medium enterprises | Credit to individuals | Very small companies | Total | |
Amounts not past due | 8.4 | 1,149.9 | 624.5 | 84.7 | 157.9 | 2,025.3 |
Amounts including past due between 1\u00a0to 30\u00a0days | 0.1 | 22.7 | 36.4 | 1.7 | 11.4 | 72.4 |
Amounts including past due between 31\u00a0to 60\u00a0days | 0.2 | 8.0 | 11.3 | 0.2 | 2.9 | 22.5 |
Amounts including past due between 61\u00a0to 90\u00a0days | \u2212 | 1.6 | 4.8 | 0.1 | 2.5 | 8.9 |
Amounts including past due between 91\u00a0to 180\u00a0days | 0.3 | 97.4 | 0.1 | 0.1 | 1.6 | 99.5 |
Amounts including past due between 181\u00a0days to 1\u00a0year | \u2212 | 2.6 | \u2212 | 0.0 | 0.6 | 3.2 |
Amounts including past due over 1\u00a0year | \u2212 | 1.1 | \u2212 | 0.0 | 0.4 | 1.5 |
Total | 9.0 | 1,283.3 | 677.1 | 86.7 | 177.3 | 2,233.4 |
\u00a0
(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 |
\u00a0
The increase in amounts past due is related to the acquisition of LeasePlan, which has also increased the amounts not past due relating to increased remaining capital for finance leases.
A full description of the impairment policy is contained in the Credit risk measurement section of the note\u00a04 \u201cFinancial Risk Management\u201d.
The movement in impairment of trade receivables is as follows:
(in EUR million) | As at 31\u00a0December | |
|---|---|---|
2023 | 2022 | |
Balance at 1\u00a0January | (174.6) | (171.8) |
Purchased credit impaired receivables\u00a0(1) | (39.4) | 0.0 |
Net Impairment charges\u00a0(2) | (70.9) | (46.1) |
Receivables written off | 44.6 | 47.9 |
Transfer of disposal groups to assets held for sale | 0.0 | 5.6 |
Scope changes\u00a0(3) | (0.9) | (10.6) |
Other and currency translation differences | 1.9 | 0.3 |
Balance at 31\u00a0December | (239.4) | (174.6) |
|
The maturity analysis is as follows:
(in EUR million) | As at 31\u00a0December | |
|---|---|---|
2023 | 2022 | |
Trade receivables not overdue | 2,134.1 | 986.0 |
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 | 2,545.9 | 1,327.8 |
\u00a0
The improvement in the past due over 180\u00a0days maturity profile is due to higher focus on collection procedures, outsourcing of payment collections and direct debit payments implemented by Group entities.
The amounts receivable from clients include finance lease receivables, which can be analysed as follows:
(in EUR million) | As at 31\u00a0December | |
|---|---|---|
2023 | 2022 | |
Less than one year | 611.9 | 194.0 |
1-2\u00a0years | 523.2 | 122.5 |
2-3\u00a0years | 403.0 | 88.1 |
3-4\u00a0years | 211.1 | 45.9 |
4-5\u00a0years | 88.6 | 10.5 |
More than 5\u00a0years | 34.4 | 1.6 |
Gross investment in finance lease payments | 1,872.0 | 462.5 |
Unguaranteed residual value | 635.3 | 300.8 |
Unearned finance income | (225.0) | (36.2) |
Net investment in finance leases | 2,282.3 | 727.2 |
\u00a0
(in EUR million) | As at 31\u00a0December | |
|---|---|---|
2023 | 2022 | |
Current | 746.0 | 221.4 |
Non-current | 1,536.4 | 505.8 |
Net investment in finance leases | 2,282.3 | 727.2 |
\u00a0
A part of the finance lease assets is encumbered (securitised) because of the asset backed securitisation transactions concluded by the Group. The total value of the securitised finance lease assets amounts to EUR\u00a04,256.2\u00a0million (2022: EUR\u00a01,727.1\u00a0million). For further details on the transactions refer to note\u00a029 of the consolidated financial statements
In the event of legal proceeding taken against a customer that is in default, the vehicle would be recovered and as such the fair value of that vehicle less costs to recover would be considered collateral and reduce significantly any loss on default.
", "dimensions": { "concept": "ifrs-full:DisclosureOfCreditRiskExplanatory", "language": "en", "entity": "scheme:969500E7V019H9NP7427", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "text_block_ec4b1f52-8201-42bb-84b4-3b1a7aba6dfd": { "value": "An expected credit loss (ECL) provision is applied to all receivables from clients that are measured at amortised cost with the exception of those receivables deemed to be out of scope. The Group have applied this scope exemption when the receivable meets the low credit risk exemption criteria. The Group has applied this to receivables on used car sales and insurance receivables, where there is zero or almost no history of credit risk or the amounts due are from financial institutions with an investment grade credit rating.
For the other receivables from clients the Group is currently in the process of aligning the methodologies used to calculate the ECL for the existing ALD Group entities and the newly acquired LeasePlan entities in the year, with the process expected to be complete within 12\u00a0months of the balance sheet date. However, overall, the Group segments the receivables form clients into sound and doubtful receivables (that includes receivables that have met the definition of default) and for sound receivables apply a simplified approach in calculating ECLs from initial recognition of the receivable, which means the Group does not track changes in credit risk, but instead recognises a loss allowance based on lifetime ECLs at each reporting date.
For the ALD entities the Group has established a provision matrix for the sound receivables that is based on its historical credit loss experience by aging categories, 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. To establish the forward-looking element of IFRS\u00a09 provision, the Group uses macroeconomic data and analysis through local uplifts to probability of default and loss given default rates. For the newly acquired LeasePlan entities the calculation for sound receivables is based on the use of models that require assumptions and data about forecast macroeconomic conditions and credit behaviour (including likelihood of customers defaulting and the resulting losses) from a third-party provider that also includes a forward-looking element.
Since obtaining financial holding status, the Group has aligned its definition of default to the ECB Regulatory Capital CRR Article\u00a0178 definition of default. This change applies to historic ALD entities only as LeasePlan entities are already aligned with the Article\u00a0178 definition of default due to holding a banking licence prior to the acquisition. For purposes of assessing, recognising and reporting defaults, a customer shall be considered to be in default when either one or both of the following events occur:
The application of the above guidance is only to the extent of identifying the customers that are in default. There is no change in the method of determining the value of impairment. Where the customer is in default, the whole of the customer balance is classified as doubtful, and impairment is based upon the full outstanding amount, except where we have adjudged there are mitigating circumstances. This definition of default has led to an increase in defaulted customers during 2023 resulting in the increase in the IFRS\u00a09 provision by EUR\u00a05.9\u00a0million on initial application.
Expected credit losses are reassessed at each reporting date and reflect all reasonable information that is available at the reporting date. Judgement is required from management for applying appropriate models and setting assumptions for the measurement of ECL. The methodology, assumptions and data, including any forecasts of future economic conditions, macroeconomic impacts and the Group\u2019s provision matrix are reviewed regularly by management in determining the expected credit losses and the write-off of receivables. Doubtful debts should be written off as soon as the definitive loss is known.
Where the Group have acquired receivables from clients that are originated or purchased credit-impaired, due to an incurred event having a detrimental impact on the estimated cashflows of the asset, the gross receivable is initial recognised at fair value with no carrying impairment allowance. The Group only recognises the cumulative changes in lifetime expected credit losses since initial recognition as a loss allowance for originated purchased credit-impaired financial assets in the income statement.
Disputes often arise in the collection of lease receivables and tend to range from issues relating to the performance of various services under the contract to the amount of end-of-contract billing. A dispute has no impact on the solvency of the customer or the risk of default, and therefore is not a credit loss. As such these amounts are removed from sound receivables and a provision is applied based on our provisions accounting policy. For presentation purposes the provision is netted against the \u2018Receivables from clients\u2019 balance sheet line item.
Details about the assumptions and estimation techniques used in measuring ECL for finance lease receivables and trade receivables from operating lease contracts are provided in the section Credit risk management and disclosure on the impairment provided in note\u00a022 \u201cLease Receivables from Clients\u201d.
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 | |
|---|---|---|
2023 | 2022\u00a0(1) | |
Amounts receivable under finance lease contracts | 2,282.3 | 727.2 |
Provision for impairment of receivables under finance lease contracts | (22.6) | (11.6) |
Of which | \u00a0 | \u00a0 |
| (6.8) | (6.0) |
| (15.8) | (5.6) |
Trade receivables | 2,545.9 | 1,327.8 |
Provision for impairment of trade receivables | (239.4) | (174.6) |
Of which | \u00a0 | \u00a0 |
| (217.3) | (151.7) |
| (22.1) | (22.9) |
Provision for customer disputes | (21.0) | (19.6) |
Total receivables | 4,545.2 | 1,849.1 |
|
\u00a0
The fair value of receivables is equivalent to the carrying value.
\u00a0
The below table presents the analysis of receivables which are in and out of scope of the simplified approach of IFRS\u00a09 for sound customers. The Group considers some specific receivable types as out of scope (see note\u00a03).
(in EUR million) | As at 31\u00a0December 2023 | As at 31\u00a0December 2022 | ||||
|---|---|---|---|---|---|---|
In scope | Out of scope | Total | In scope | Out of scope | Total | |
Amounts receivable under finance lease contracts | 2,233.4\u00a0(1) | 49.0\u00a0(2) | 2,282.3 | 714.3\u00a0(1) | 12.8\u00a0(2) | 727.2 |
Provision for impairment of receivables under finance lease contract\u00a0(3) | (15.8) | (6.8) | (22.6) | (5.6) | (6.0) | (11.6) |
Trade receivables | 1,512.4 | 1,033.5\u00a0(2) | 2,545.9 | 651.5 | 676.3\u00a0(2) | 1,327.8 |
Provision for impairment of trade receivables\u00a0(3) | (22.1) | (217.3) | (239.4) | (22.9) | (151.7) | (174.6) |
Provision for customer disputes | \u2212 | (21.0) | (21.0) | \u2212 | (19.6) | (19.6) |
Total receivables | 3,707.9 | 837.4 | 4,545.2 | 1,337.3 | 511.8 | 1,849.1 |
|
Based on the receivables which are in the scope, as at 31\u00a0December 2023 the ALD sound receivables amount to EUR\u00a01,483.5\u00a0million (2022: 1,365.8\u00a0million) with a provision of EUR\u00a025.5\u00a0million (2022: 28.5\u00a0million) and the newly acquired LeasePlan sound receivables amount to EUR\u00a02,262.2\u00a0million with a provision of EUR\u00a012.3\u00a0million.
For ALD entities the loss allowance as at 31\u00a0December 2023 and 31\u00a0December 2022 was determined as follows for both trade and finance lease sound receivables:
\u00a0
(in EUR million) | Not past | 0-30\u00a0days | 31-60\u00a0days past due | 61-90\u00a0days past due | >90\u00a0days | Total |
|---|---|---|---|---|---|---|
Loss rate | 1% | 3% | 9% | 7% | 15% | \u00a0 |
Gross carrying amount of receivables in IFRS\u00a09 scope | 1,251.0 | 167.3 | 33.0 | 12.5 | 19.7 | 1,483.5 |
Loss Allowance | (14.3) | (4.5) | (2.8) | (0.9) | (3.0) | (25.5) |
Net carrying amount of receivables in IFRS\u00a09 scope | 1,236.7 | 162.8 | 30.2 | 11.6 | 16.8 | 1,458.0 |
\u00a0
\u00a0
(in EUR million) | Not past | 0-30\u00a0days | 31-60\u00a0days past due | 61-90\u00a0days past due | >90\u00a0days
| Total |
|---|---|---|---|---|---|---|
Loss rate | 1% | 4% | 8% | 16% | 22% | \u00a0 |
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 | 1,337.3 |
\u00a0
For newly acquired LeasePlan entities the loss allowance as at 31\u00a0December 2023 was determined as follows for both trade and finance lease sound receivables:
(in EUR million) | As at 31\u00a0December 2023 | ||||
|---|---|---|---|---|---|
Banks | Corporate | Small and Medium Enterprises | Private | Total | |
Loss rate | 0% | 0% | 1% | 1% | \u00a0 |
Gross carrying amount of receivables in IFRS\u00a09 scope | 7.7 | 1,406.0 | 790.9 | 57.7 | 2,262.2 |
Loss Allowance | (0.0) | (2.5) | (9.2) | (0.6) | (12.3) |
Net carrying amount of receivables in IFRS\u00a09 scope | 7.7 | 1,403.5 | 781.6 | 57.1 | 2,249.9 |
\u00a0
The movement in impairment of finance lease receivables is as follows:
(in EUR million) | As at 31\u00a0December | |
|---|---|---|
2023 | 2022 | |
Balance at 1\u00a0January | (11.6) | (13.0) |
Purchased credit impaired receivables\u00a0(1) | (1.3) | \u2212 |
Net Impairment charges\u00a0(2) | 0.2 | 0.1 |
Receivables written off | 2.3 | 1.0 |
Scope changes\u00a0(3) | (12.0) | \u2212 |
Other and currency translation differences | (0.2) | 0.2 |
Balance at 31\u00a0December | (22.6) | (11.6) |
|
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 2023 | |||||
|---|---|---|---|---|---|---|
Loans and receivables to customers | ||||||
Banks | Corporates | Small and medium enterprises | Credit to individuals | Very small companies | Total | |
Amounts not past due | 8.4 | 1,149.9 | 624.5 | 84.7 | 157.9 | 2,025.3 |
Amounts including past due between 1\u00a0to 30\u00a0days | 0.1 | 22.7 | 36.4 | 1.7 | 11.4 | 72.4 |
Amounts including past due between 31\u00a0to 60\u00a0days | 0.2 | 8.0 | 11.3 | 0.2 | 2.9 | 22.5 |
Amounts including past due between 61\u00a0to 90\u00a0days | \u2212 | 1.6 | 4.8 | 0.1 | 2.5 | 8.9 |
Amounts including past due between 91\u00a0to 180\u00a0days | 0.3 | 97.4 | 0.1 | 0.1 | 1.6 | 99.5 |
Amounts including past due between 181\u00a0days to 1\u00a0year | \u2212 | 2.6 | \u2212 | 0.0 | 0.6 | 3.2 |
Amounts including past due over 1\u00a0year | \u2212 | 1.1 | \u2212 | 0.0 | 0.4 | 1.5 |
Total | 9.0 | 1,283.3 | 677.1 | 86.7 | 177.3 | 2,233.4 |
\u00a0
(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 |
\u00a0
The increase in amounts past due is related to the acquisition of LeasePlan, which has also increased the amounts not past due relating to increased remaining capital for finance leases.
A full description of the impairment policy is contained in the Credit risk measurement section of the note\u00a04 \u201cFinancial Risk Management\u201d.
The movement in impairment of trade receivables is as follows:
(in EUR million) | As at 31\u00a0December | |
|---|---|---|
2023 | 2022 | |
Balance at 1\u00a0January | (174.6) | (171.8) |
Purchased credit impaired receivables\u00a0(1) | (39.4) | 0.0 |
Net Impairment charges\u00a0(2) | (70.9) | (46.1) |
Receivables written off | 44.6 | 47.9 |
Transfer of disposal groups to assets held for sale | 0.0 | 5.6 |
Scope changes\u00a0(3) | (0.9) | (10.6) |
Other and currency translation differences | 1.9 | 0.3 |
Balance at 31\u00a0December | (239.4) | (174.6) |
|
The maturity analysis is as follows:
(in EUR million) | As at 31\u00a0December | |
|---|---|---|
2023 | 2022 | |
Trade receivables not overdue | 2,134.1 | 986.0 |
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 | 2,545.9 | 1,327.8 |
\u00a0
The improvement in the past due over 180\u00a0days maturity profile is due to higher focus on collection procedures, outsourcing of payment collections and direct debit payments implemented by Group entities.
The amounts receivable from clients include finance lease receivables, which can be analysed as follows:
(in EUR million) | As at 31\u00a0December | |
|---|---|---|
2023 | 2022 | |
Less than one year | 611.9 | 194.0 |
1-2\u00a0years | 523.2 | 122.5 |
2-3\u00a0years | 403.0 | 88.1 |
3-4\u00a0years | 211.1 | 45.9 |
4-5\u00a0years | 88.6 | 10.5 |
More than 5\u00a0years | 34.4 | 1.6 |
Gross investment in finance lease payments | 1,872.0 | 462.5 |
Unguaranteed residual value | 635.3 | 300.8 |
Unearned finance income | (225.0) | (36.2) |
Net investment in finance leases | 2,282.3 | 727.2 |
\u00a0
(in EUR million) | As at 31\u00a0December | |
|---|---|---|
2023 | 2022 | |
Current | 746.0 | 221.4 |
Non-current | 1,536.4 | 505.8 |
Net investment in finance leases | 2,282.3 | 727.2 |
\u00a0
A part of the finance lease assets is encumbered (securitised) because of the asset backed securitisation transactions concluded by the Group. The total value of the securitised finance lease assets amounts to EUR\u00a04,256.2\u00a0million (2022: EUR\u00a01,727.1\u00a0million). For further details on the transactions refer to note\u00a029 of the consolidated financial statements
In the event of legal proceeding taken against a customer that is in default, the vehicle would be recovered and as such the fair value of that vehicle less costs to recover would be considered collateral and reduce significantly any loss on default.
", "dimensions": { "concept": "ifrs-full:DisclosureOfAllowanceForCreditLossesExplanatory", "language": "en", "entity": "scheme:969500E7V019H9NP7427", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "text_block_8cf3c0d0-a228-44a0-afa1-a86bf75668a0": { "value": "An expected credit loss (ECL) provision is applied to all receivables from clients that are measured at amortised cost with the exception of those receivables deemed to be out of scope. The Group have applied this scope exemption when the receivable meets the low credit risk exemption criteria. The Group has applied this to receivables on used car sales and insurance receivables, where there is zero or almost no history of credit risk or the amounts due are from financial institutions with an investment grade credit rating.
For the other receivables from clients the Group is currently in the process of aligning the methodologies used to calculate the ECL for the existing ALD Group entities and the newly acquired LeasePlan entities in the year, with the process expected to be complete within 12\u00a0months of the balance sheet date. However, overall, the Group segments the receivables form clients into sound and doubtful receivables (that includes receivables that have met the definition of default) and for sound receivables apply a simplified approach in calculating ECLs from initial recognition of the receivable, which means the Group does not track changes in credit risk, but instead recognises a loss allowance based on lifetime ECLs at each reporting date.
For the ALD entities the Group has established a provision matrix for the sound receivables that is based on its historical credit loss experience by aging categories, 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. To establish the forward-looking element of IFRS\u00a09 provision, the Group uses macroeconomic data and analysis through local uplifts to probability of default and loss given default rates. For the newly acquired LeasePlan entities the calculation for sound receivables is based on the use of models that require assumptions and data about forecast macroeconomic conditions and credit behaviour (including likelihood of customers defaulting and the resulting losses) from a third-party provider that also includes a forward-looking element.
Since obtaining financial holding status, the Group has aligned its definition of default to the ECB Regulatory Capital CRR Article\u00a0178 definition of default. This change applies to historic ALD entities only as LeasePlan entities are already aligned with the Article\u00a0178 definition of default due to holding a banking licence prior to the acquisition. For purposes of assessing, recognising and reporting defaults, a customer shall be considered to be in default when either one or both of the following events occur:
The application of the above guidance is only to the extent of identifying the customers that are in default. There is no change in the method of determining the value of impairment. Where the customer is in default, the whole of the customer balance is classified as doubtful, and impairment is based upon the full outstanding amount, except where we have adjudged there are mitigating circumstances. This definition of default has led to an increase in defaulted customers during 2023 resulting in the increase in the IFRS\u00a09 provision by EUR\u00a05.9\u00a0million on initial application.
Expected credit losses are reassessed at each reporting date and reflect all reasonable information that is available at the reporting date. Judgement is required from management for applying appropriate models and setting assumptions for the measurement of ECL. The methodology, assumptions and data, including any forecasts of future economic conditions, macroeconomic impacts and the Group\u2019s provision matrix are reviewed regularly by management in determining the expected credit losses and the write-off of receivables. Doubtful debts should be written off as soon as the definitive loss is known.
Where the Group have acquired receivables from clients that are originated or purchased credit-impaired, due to an incurred event having a detrimental impact on the estimated cashflows of the asset, the gross receivable is initial recognised at fair value with no carrying impairment allowance. The Group only recognises the cumulative changes in lifetime expected credit losses since initial recognition as a loss allowance for originated purchased credit-impaired financial assets in the income statement.
Disputes often arise in the collection of lease receivables and tend to range from issues relating to the performance of various services under the contract to the amount of end-of-contract billing. A dispute has no impact on the solvency of the customer or the risk of default, and therefore is not a credit loss. As such these amounts are removed from sound receivables and a provision is applied based on our provisions accounting policy. For presentation purposes the provision is netted against the \u2018Receivables from clients\u2019 balance sheet line item.
Details about the assumptions and estimation techniques used in measuring ECL for finance lease receivables and trade receivables from operating lease contracts are provided in the section Credit risk management and disclosure on the impairment provided in note\u00a022 \u201cLease Receivables from Clients\u201d.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForImpairmentOfFinancialAssetsExplanatory", "language": "en", "entity": "scheme:969500E7V019H9NP7427", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "text_block_82d6d1d8-dd69-470f-bd0a-1c3cb609e848": { "value": "In the consolidated statement of cash flows and consolidated balance sheet, cash and cash equivalents comprise of cash on hand, central bank deposits, deposits held at call with banks, other short-term highly liquid investments with original maturities of three months or less and bank overdrafts. Bank overdrafts are shown within borrowings in liabilities on the consolidated balance sheet. Cash and 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. Cash and cash equivalents are measured at amortised cost.
(in EUR million) | As at 31\u00a0December | |
|---|---|---|
2023 | 2022 | |
Cash and balances at central banks | 3,535.6 | \u2212 |
Cash at bank and on hand | 370.8 | 195.9 |
Short-term bank deposits | 90.6 | 57.3 |
Cash and cash equivalents excl. bank overdrafts | 3,997.0 | 253.1 |
Bank overdrafts | (315.3) | (129.5) |
Cash and cash equivalents, net of bank overdrafts | 3,681.6 | 123.6 |
Cash at bank and short-term bank deposits attributable to disposal group held for sale\u00a0(1) | \u2212 | 92.8 |
Balance as at 31\u00a0December 2023 for the purpose of the statement of cash flows | 3,681.6 | 216.4 |
|
\u00a0
All cash and balances at central banks are available at call except for the mandatory reserve deposits at the Dutch Central Bank. These reserve cash deposits are the so-called minimum reserves required to be held with respective national banks for successive periods of four to five weeks as part of the monetary policy of the European Central Bank. Thanks to cash reserve requirements, banks depend on the European Central Bank\u2019s liquidity-providing mechanism for their liquidity needs. The mandatory reserve deposits amounting to EUR\u00a0107.3\u00a0million (2022: EUR\u00a099\u00a0million) form part of \u201cCash and balances at central banks\u201d.
As the Group operates its own insurance and re-insurance programme, the cash balance includes funds required for this business.
The average interest rate on the outstanding cash and balances at central banks is 3.8% (2022: 2.0%).\u00a0
Cash and cash equivalent amounts are only held with financial institutions that have an investment grade credit rating, so the low-risk exemption has been applied and no expected credit loss has been applied to these balances.
The Group has pledged part of its short-term deposits to fulfil collateral requirements. Refer to note\u00a029 for further details.
", "dimensions": { "concept": "ifrs-full:DisclosureOfCashAndCashEquivalentsExplanatory", "language": "en", "entity": "scheme:969500E7V019H9NP7427", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "text_block_76f9db09-7757-4544-b8bf-1e31c165c32c": { "value": "In the consolidated statement of cash flows and consolidated balance sheet, cash and cash equivalents comprise of cash on hand, central bank deposits, deposits held at call with banks, other short-term highly liquid investments with original maturities of three months or less and bank overdrafts. Bank overdrafts are shown within borrowings in liabilities on the consolidated balance sheet. Cash and 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. Cash and cash equivalents are measured at amortised cost.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyToDetermineComponentsOfCashAndCashEquivalents", "language": "en", "entity": "scheme:969500E7V019H9NP7427", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "text_block_3dceb298-b21a-4ef7-927b-c64d33e5d707": { "value": "Group companies operate various employee benefit schemes. The schemes are generally funded through payments to insurance companies or trustee-administered funds, determined by periodic actuarial calculations. The Group has defined benefit and defined contribution pension plans as well as other post-employment benefits.
A defined contribution plan is a pension plan under which the Group pays fixed 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 pension contributions have been paid if the fund does not hold sufficient assets to pay all employees the benefits relating to employee service in the current and prior periods. Contributions to defined contribution pension plans are recognised as expenses in the consolidated income statement when they are due. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in the future payments is available.
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 Group\u2019s net obligation in respect of defined benefit pension plans is calculated separately for each plan by estimating the amount of future benefits that employees have earned in return for their services in the current and prior periods. The present value of the defined benefit obligation is calculated annually by independent actuaries using the projected unit credit method. The benefit is discounted at the yield at the balance sheet date on high quality corporate bonds 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.
The net benefit obligation recognised in the balance sheet is the present value of the defined benefit obligation at the balance sheet date together with adjustments for unrecognised past-service costs less the fair value of the plan assets. For determining the pension expense, the expected return on plan assets is determined using a high-quality corporate bond rate identical to the discount rate used in determining the defined benefit 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 consolidated income statement. Past-service costs are recognised immediately in the 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.
Further details are provided in note\u00a031 \u201cRetirement benefit obligations and long-term benefits\u201d.
Some Group companies provide other long-term employment benefits to their employees based on local legal requirements. These benefits mainly comprise medium-term bonus and profit-sharing schemes, and extra leave entitlements.
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.
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 breakdown of staff expenses is as follows:
(in EUR million) | Year ended 31\u00a0December | |
|---|---|---|
2023 | Restated 2022\u00a0(1) | |
Wages and salaries | (659.3) | (418.4) |
Social security charges | (120.8) | (76.0) |
Defined benefit post-employment costs | (4.3) | (0.8) |
Other staff costs | (151.7) | (22.5) |
Total | (936.1) | (517.8) |
|
\u00a0
The average number of staff employed (including temporary staff) by the Group during the year was 12,505 (2022: 7,154). At year-end, the full time equivalent number of staff employed by the Group was 14,578 (2022: 7,529).
The breakdown of the components of the defined benefit pension cost is identified in note\u00a031.
\u00a0
The Group operates a number of defined contribution and defined benefit pension plans with the most significant plans being in France, Belgium, Germany, Italy and Switzerland. It also operates post-employment benefit plans, the majority of which are unfunded, where the Group meets the benefit payment obligation as it falls due. The post-employment benefit plans are for legally required termination indemnities, which are payable at either the retirement date or the date the employee leaves the Group. The amount of the benefit depends on the length of service of the employee at the dismissal or retirement date.
The 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).
The Group has sponsored defined benefits plans that are final salary pension plans, which provide benefits to members in the form of a guaranteed level of pension payable for life. The level of benefits provided depends on members\u2019 length of service and their salary in the final years leading up to retirement. In the plans, pensions generally do not receive inflationary increases once in payment.
The charge for the year for defined contribution pension plans (net of amounts capitalised) was EUR\u00a03.5\u00a0million (2022: EUR\u00a00.7\u00a0million).
The majority of the defined benefit pension plans are unfunded. The assets of these plans are held separately from those of the Group, in independently administered funds, in accordance with statutory requirements or local practice in the relevant jurisdiction. The responsibility for the governance of the funded retirement benefit plans, including investment and funding decisions, lies with the Trustees of each scheme.
Employer contributions are made in accordance with the terms of each plan and may vary from year to year. Employer contributions made to funded pension plans in the year ended 31\u00a0December 2023 were EUR\u00a03.3\u00a0million (2022: EUR\u00a00.6\u00a0million). The Group expects to contribute EUR\u00a02.4\u00a0million to its pension plans in 2024.
\u00a0
(in EUR million) | Year ended 31\u00a0December | |
|---|---|---|
2023 | 2022 | |
Current service cost including social security contributions | 2.2 | 0.6 |
Employee contributions | (0.2) | (0.2) |
Net interest | 0.4 | \u2212 |
Components recognised in income statement | 2.3 | 0.5 |
Actuarial gains and losses due to assets\u00a0(1) | 0.4 | 1.6 |
Actuarial gains and losses due to changes in demographic assumptions | (0.4) | - |
Actuarial gains and losses due to changes in economical and financial assumptions | 0.7 | (6.3) |
Actuarial gains and losses due to experience | 3.4 | 1.9 |
Components recognised in unrealised or deferred gains and losses | 4.1 | (2.7) |
Total components of the cost of the defined benefits | 6.5 | (2.2) |
|
A summary of the net pension plan assets and retirement benefit obligations on the consolidated balance sheet is as follows:
(in EUR million) | As at 31\u00a0December | |
|---|---|---|
2023 | 2022 | |
A \u2013 Present value of defined benefit obligations | 60.0 | 17.3 |
B \u2013 Fair value of plan assets | (51.9) | (13.8) |
C \u2013 Asset ceiling | \u00a0 | \u00a0 |
D =\u00a0A -\u00a0B +\u00a0C =\u00a0Deficit of funded plans recorded in the balance sheet | 8.2 | 3.6 |
E - Present value of unfunded defined benefit obligations | 9.8 | \u00a0 |
D +\u00a0E =\u00a0Total deficit recorded in the balance sheet | 18.0 | 3.6 |
\u00a0
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 on an annual basis.
\u00a0
Changes in the present value of defined benefit obligations:
(in EUR million) | As at 31\u00a0December | |
|---|---|---|
2023 | 2022 | |
Balance at 1\u00a0January | 17.3 | 21.0 |
Current service cost including social security contributions | 2.1 | 0.6 |
Employee contributions | 0.4 | \u2212 |
Net interest | 1.8 | 0.2 |
Actuarial gains and losses due to assets | 1.0 | - |
Actuarial gains and losses due to changes in demographic assumptions | (0.4) | - |
Actuarial gains and losses due to changes in economical and financial assumptions | 0.7 | (6.3) |
Actuarial gains and losses due to experience | 3.2 | 1.9 |
Benefit payments | (8.0) | (0.2) |
Change in scope | 51.6 | \u2212 |
Transfers and others | \u00a0 | 0.1 |
Balance at 31\u00a0December | 69.8 | 17.3 |
\u00a0
Changes in fair value of plan assets and separate assets:
(in EUR million) | As at 31\u00a0December | |
|---|---|---|
2023 | 2022 | |
Balance at 1\u00a0January | 13.8 | 14.6 |
Expected return on plan assets | 1.5 | 0.1 |
Actuarial gains and losses due to assets | (0.4) | \u00a0 |
Actuarial gains and losses due to experience | (0.2) | (1.6) |
Foreign exchange adjustment | 0.6 | \u2212 |
Employee contributions | 0.6 | 0.2 |
Employer contributions to plan assets | 3.3 | 0.6 |
Benefit payments | (7.3) | (0.1) |
Change in scope | 40.0 | \u2212 |
Balance at 31\u00a0December | 51.9 | 13.8 |
Funds only contain quoted investments, the breakdown of the plan assets is as follows:
\u00a0 | As at 31\u00a0December | |
|---|---|---|
2023 | 2022 | |
Bonds | 17.6% | 34.0% |
Equities | 17.3% | 41.0% |
Money market instruments | 1.5% | 4.0% |
Property | 4.2% | 0.0% |
Other | 59.4% | 21.0% |
\u00a0
The fair value of assets is used to determine the funding level of the plans to enable them to be sufficient to cover the benefits that have accrued to Group members after allowing for expected increases in future earnings and pensions. The actual returns on plan and separate assets were:
(in EUR million) | As at 31\u00a0December | |
|---|---|---|
2023 | 2022 | |
Plan assets | 0.9 | (1.5) |
Separate assets | \u00a0 | \u2212 |
\u00a0
The assumptions on return on assets are presented in the following section. The expected return on plan assets is determined by considering the current level of expected returns on risk free investments (primarily government bonds), the historical level of the risk-free premium associated with the respective asset classes and the expectations for future returns on each asset class. The expected return for each asset class was then weighted based on the target asset allocation to develop the expected long-term rate of return on assets. The expected returns of the individual plans have been weighted based on the fair value of the assets of the plans to determine the average expected return on plan assets.
The principal assumptions used to determine the actuarial present value of benefit obligations and pension charges and credits are detailed below (shown as weighted averages):
\u00a0 | As at 31\u00a0December | |
|---|---|---|
2023 | 2022 | |
Discount rate | \u00a0 | \u00a0 |
Europe | 3.5% | 3.5% |
Long-term inflation | \u00a0 | \u00a0 |
Europe | 2.3% | 2.3% |
Future salary increase | \u00a0 | \u00a0 |
Europe | 0.4% | 1.5% |
Average remaining working lifetime of employees (in years) | \u00a0 | \u00a0 |
Europe | 9.4 | 12.3 |
Duration (in years) | \u00a0 | \u00a0 |
Europe | 9.5 | 9.5 |
\u00a0
The assumptions described above have been applied on post-employment benefit plans.
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.
Significant actuarial assumptions for the determination of pension plan liabilities are the discount rate, inflation rate and salary increase. The sensitivity analysis below has been provided by local actuaries on an approximate basis based on changes in the assumptions occurring at the end of the year, assuming that all other assumptions are held constant, and the effect of interrelationships is excluded. The effect on plan liabilities is as follows:
(in percentage of item measured) | As at 31\u00a0December | |
|---|---|---|
2023 | 2022 | |
Variation of +0.5% in discount rate | \u00a0 | \u00a0 |
Impact on the present value of defined benefit obligations at 31\u00a0December, N | -3.9% | -5.7% |
Variation of +0.5% in long-term inflation | \u00a0 | \u00a0 |
Impact on the present value of defined benefit obligations at 31\u00a0December N | 2.5% | 2.3% |
Variation of +0.5% in future salary increases | \u00a0 | \u00a0 |
Impact on the present value of defined benefit obligations at 31\u00a0December N | 2.8% | 9.3% |
\u00a0
The disclosed sensitivities are averages of the variations weighted by the present value of defined benefit obligations.
The expected maturity analysis of undiscounted post-employment benefits is:
(in EUR million) | As at 31\u00a0December | |
|---|---|---|
2023 | 2022 | |
N+1 | 3.3 | 0.4 |
N+2 | 4.5 | 0.5 |
N+3 | 3.6 | 1.2 |
N+4 | 5.0 | 0.8 |
N+5 | 5.6 | 0.9 |
N+6 to N+10 | 29.0 | 8.3 |
\u00a0
Some entities of the Group 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 recorded in the balance sheet as at 31\u00a0December 2023 is EUR\u00a016.2\u00a0million (2022: EUR\u00a010.3\u00a0million). The total amount of charges for other long-term benefits in the income statement for the period ending 31\u00a0December 2023 is EUR\u00a01.9\u00a0million (2022: EUR\u00a01.1\u00a0million).
", "dimensions": { "concept": "ifrs-full:DisclosureOfEmployeeBenefitsExplanatory", "language": "en", "entity": "scheme:969500E7V019H9NP7427", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "text_block_7d624f3d-ba10-4fae-84fe-ddba6d2f9a6f": { "value": "Group companies operate various employee benefit schemes. The schemes are generally funded through payments to insurance companies or trustee-administered funds, determined by periodic actuarial calculations. The Group has defined benefit and defined contribution pension plans as well as other post-employment benefits.
A defined contribution plan is a pension plan under which the Group pays fixed 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 pension contributions have been paid if the fund does not hold sufficient assets to pay all employees the benefits relating to employee service in the current and prior periods. Contributions to defined contribution pension plans are recognised as expenses in the consolidated income statement when they are due. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in the future payments is available.
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 Group\u2019s net obligation in respect of defined benefit pension plans is calculated separately for each plan by estimating the amount of future benefits that employees have earned in return for their services in the current and prior periods. The present value of the defined benefit obligation is calculated annually by independent actuaries using the projected unit credit method. The benefit is discounted at the yield at the balance sheet date on high quality corporate bonds 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.
The net benefit obligation recognised in the balance sheet is the present value of the defined benefit obligation at the balance sheet date together with adjustments for unrecognised past-service costs less the fair value of the plan assets. For determining the pension expense, the expected return on plan assets is determined using a high-quality corporate bond rate identical to the discount rate used in determining the defined benefit 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 consolidated income statement. Past-service costs are recognised immediately in the 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.
Further details are provided in note\u00a031 \u201cRetirement benefit obligations and long-term benefits\u201d.
Some Group companies provide other long-term employment benefits to their employees based on local legal requirements. These benefits mainly comprise medium-term bonus and profit-sharing schemes, and extra leave entitlements.
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.
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:DescriptionOfAccountingPolicyForEmployeeBenefitsExplanatory", "language": "en", "entity": "scheme:969500E7V019H9NP7427", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "text_block_a634e0c8-7787-4870-8a36-2e0169d47c8c": { "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": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "text_block_a2e75bd1-ac71-46f7-ab73-dd2dda600341": { "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 management\u2019s best estimate of the expenditure expected required to settle the present obligation at the end of the reporting period. The discount rate used to determine the present value is a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. The increase in the provision due to passage of time is recognised as interest expense.
The risk of damage to owned Group vehicles is part of the IFRS\u00a015 allocation of revenue and IAS\u00a037 provisioning, whereas insurance contracts issued to customers for accepting significant insurance risk is subject to IFRS\u00a017 accounting (see Insurance contracts policy). 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 and revenue is recognised on a straight-line basis over the duration of the contract (unless the expected release of risk differs materially from a straight-line basis). Further details are provided in note\u00a08 \u201cRevenues and cost of revenues\u201d. Where the premiums are unearned based on the invoiced amounts, this amount is deferred income included within under \u201cOther receivables, prepayments and contract assets\u201d caption in the consolidated balance sheet (refer to note\u00a024).
Damage services provisions are measured at the amount of the \u201cbest estimate\u201d expected expenditure required to settle the present obligations to repair the damage at the reporting date. An estimate for Incurred But Not Reported (IBNR) and Incurred But Not Enough Reported (IBNER) is made to determine appropriate damage provision levels. These estimates are based on historical data of accident frequency in the local market and the cost per claim updated for current assumptions. The measurement includes a margin for risks and uncertainties that is inherent to the historical data adjusted for recent pricing developments. The damage service provision is expected to be recovered or settled within a maximum of 12\u00a0months. Expenses for damage services are expensed to the income statement when incurred and the best estimate of the provision is updated at each reporting period, with any adjustment recognised along with the expenses incurred in \u201cCost of Services Revenues\u201d caption in the income statement.
Where there is a stop-loss policy in place, limiting the risk of losses above a set level, provisions open 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 the provision for IBNR and IBNER. 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.
The insurance contracts issued are one of the services offered to the customers of the Group in addition to the lease of the vehicles and other related leasing services. Insurance contracts are contracts under which the Group accepts a significant risk \u2013 other than a financial risk \u2013 from a policyholder by agreeing to compensate the beneficiary on the occurrence of an uncertain future event by which he or she will be adversely affected. Contracts that have been classified as insurance at inception are not reclassified subsequently.
For measurement purposes, the insurance contracts are grouped into portfolios of insurance contracts that have similar risks and are managed together. Portfolios are further grouped in year cohorts of issuance and divided based on expected profitability at inception into two categories: onerous contracts and not-onerous contracts. Insurance contracts are recognised at the earlier of the beginning of the coverage period or when it becomes onerous. Insurance contracts are derecognised when the contract is expired, is discharged or cancelled. Modifications to contracts that are not considered changes in estimates and instead the contract is derecognised, and a new contract is recognised instead.
All our insurance contracts issued, and reinsurance contracts held are eligible to be measured by applying the premium allocation approach, which has been fully adopted. Under the premium allocation approach, non-life insurance contract provisions include liabilities for remaining coverage and liabilities for incurred claims. The liability for remaining coverage reflects premiums received less amounts recognised in revenue for insurance contracts provided. As the premiums are received within one year of the coverage period no discounting is applied to reflect financial risk or the time value of money. The liability for incurred claims is determined on a discounted probability-weighted expected value basis and includes an explicit risk adjustment for non-financial risk. The liability includes the Group\u2019s obligation to pay other incurred insurance expenses. The liability for incurred claims is the obligation to pay valid claims for insured events that have already been occurred (IBNR and IBNER), including events that have occurred but for which claims have not been reported (IBNYR). The liability for incurred claims is estimated as the fulfilment cash flows measured as an explicit, unbiased, and probability-weighted estimate (i.e. expected value) of the present value of the future cash outflows minus the present value of the future cash inflows that will arise as the entity fulfils insurance contracts, including a risk adjustment for non-financial risk. The cash outflows include claim handling costs, policy administration and maintenance costs and an allocation of directly attributable fixed and variable overheads to fulfilling insurance contracts.
Revenue is recognised on a straight-line basis over the duration of the contract (unless the expected release of risk differs materially from a straight-line basis). Further details are provided in note\u00a08 \u201cRevenues and cost of revenues\u201d. Expenses for damage services are expensed to the income statement when incurred and the best estimate of the provision is updated at each reporting period, with any adjustment recognised along with the expenses incurred in \u201cCost of Services Revenues\u201d caption in the income statement. Portfolios of contracts in an asset position are reported under \u201cOther receivables, prepayments and contract assets\u201d caption in the consolidated balance sheet (refer to note\u00a024). This includes expenses attributable to a subsequent period plus amounts still to be received and are measured at cost.
Under the premium allocation approach, it is assumed that no contracts in the portfolio are onerous at initial recognition, unless facts and circumstances that are monitored by performance indicators by Group\u2019s management indicate otherwise. Such onerous contracts are separately grouped from other contracts and the Group recognises a loss in profit or loss for the loss component. If during the coverage period, facts and circumstances indicate that a group of insurance contracts is onerous, the Group recognises a loss in the income statement for the net outflow, resulting in the carrying amount of the liability for the Group being equal to the fulfilment cash flows.
The Group measures its reinsurance assets for a group of reinsurance contracts that it holds on the same basis as insurance contracts that it issues adapted to reflect the features of reinsurance contracts held that differ from insurance contracts issued. Where the Group recognises a loss on initial recognition of an onerous group of insurance contracts, the Group establishes a loss-recovery component of the asset for remaining coverage for a group of reinsurance contracts held depicting the recovery of losses.
Annually the Group assesses whether its amounts recoverable under a reinsurance contract are subject to impairment. Reinsurance assets are impaired if there is objective evidence, because of an event that occurred after initial recognition of the reinsurance asset, that not all amounts due under the terms of the contract may be received. The carrying value is reduced to this calculated recoverable value, and the impairment loss recognised in the income statement.
For litigation, when there is a legal or constructive obligation and it is more likely than not that there will be an outflow of benefits which can be measured reliably, the best estimate of the future outflow of resources has been recognised. In extremely rare situations where no reliable estimate can be made yet on claims expected, no provision will be recognised in the balance sheet but information about a contingent liability will be disclosed.
The Group operates a number of defined contribution and defined benefit pension plans with the most significant plans being in France, Belgium, Germany, Italy and Switzerland. It also operates post-employment benefit plans, the majority of which are unfunded, where the Group meets the benefit payment obligation as it falls due. The post-employment benefit plans are for legally required termination indemnities, which are payable at either the retirement date or the date the employee leaves the Group. The amount of the benefit depends on the length of service of the employee at the dismissal or retirement date.
The 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).
The Group has sponsored defined benefits plans that are final salary pension plans, which provide benefits to members in the form of a guaranteed level of pension payable for life. The level of benefits provided depends on members\u2019 length of service and their salary in the final years leading up to retirement. In the plans, pensions generally do not receive inflationary increases once in payment.
The charge for the year for defined contribution pension plans (net of amounts capitalised) was EUR\u00a03.5\u00a0million (2022: EUR\u00a00.7\u00a0million).
The majority of the defined benefit pension plans are unfunded. The assets of these plans are held separately from those of the Group, in independently administered funds, in accordance with statutory requirements or local practice in the relevant jurisdiction. The responsibility for the governance of the funded retirement benefit plans, including investment and funding decisions, lies with the Trustees of each scheme.
Employer contributions are made in accordance with the terms of each plan and may vary from year to year. Employer contributions made to funded pension plans in the year ended 31\u00a0December 2023 were EUR\u00a03.3\u00a0million (2022: EUR\u00a00.6\u00a0million). The Group expects to contribute EUR\u00a02.4\u00a0million to its pension plans in 2024.
\u00a0
(in EUR million) | Year ended 31\u00a0December | |
|---|---|---|
2023 | 2022 | |
Current service cost including social security contributions | 2.2 | 0.6 |
Employee contributions | (0.2) | (0.2) |
Net interest | 0.4 | \u2212 |
Components recognised in income statement | 2.3 | 0.5 |
Actuarial gains and losses due to assets\u00a0(1) | 0.4 | 1.6 |
Actuarial gains and losses due to changes in demographic assumptions | (0.4) | - |
Actuarial gains and losses due to changes in economical and financial assumptions | 0.7 | (6.3) |
Actuarial gains and losses due to experience | 3.4 | 1.9 |
Components recognised in unrealised or deferred gains and losses | 4.1 | (2.7) |
Total components of the cost of the defined benefits | 6.5 | (2.2) |
|
A summary of the net pension plan assets and retirement benefit obligations on the consolidated balance sheet is as follows:
(in EUR million) | As at 31\u00a0December | |
|---|---|---|
2023 | 2022 | |
A \u2013 Present value of defined benefit obligations | 60.0 | 17.3 |
B \u2013 Fair value of plan assets | (51.9) | (13.8) |
C \u2013 Asset ceiling | \u00a0 | \u00a0 |
D =\u00a0A -\u00a0B +\u00a0C =\u00a0Deficit of funded plans recorded in the balance sheet | 8.2 | 3.6 |
E - Present value of unfunded defined benefit obligations | 9.8 | \u00a0 |
D +\u00a0E =\u00a0Total deficit recorded in the balance sheet | 18.0 | 3.6 |
\u00a0
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 on an annual basis.
\u00a0
Changes in the present value of defined benefit obligations:
(in EUR million) | As at 31\u00a0December | |
|---|---|---|
2023 | 2022 | |
Balance at 1\u00a0January | 17.3 | 21.0 |
Current service cost including social security contributions | 2.1 | 0.6 |
Employee contributions | 0.4 | \u2212 |
Net interest | 1.8 | 0.2 |
Actuarial gains and losses due to assets | 1.0 | - |
Actuarial gains and losses due to changes in demographic assumptions | (0.4) | - |
Actuarial gains and losses due to changes in economical and financial assumptions | 0.7 | (6.3) |
Actuarial gains and losses due to experience | 3.2 | 1.9 |
Benefit payments | (8.0) | (0.2) |
Change in scope | 51.6 | \u2212 |
Transfers and others | \u00a0 | 0.1 |
Balance at 31\u00a0December | 69.8 | 17.3 |
\u00a0
Changes in fair value of plan assets and separate assets:
(in EUR million) | As at 31\u00a0December | |
|---|---|---|
2023 | 2022 | |
Balance at 1\u00a0January | 13.8 | 14.6 |
Expected return on plan assets | 1.5 | 0.1 |
Actuarial gains and losses due to assets | (0.4) | \u00a0 |
Actuarial gains and losses due to experience | (0.2) | (1.6) |
Foreign exchange adjustment | 0.6 | \u2212 |
Employee contributions | 0.6 | 0.2 |
Employer contributions to plan assets | 3.3 | 0.6 |
Benefit payments | (7.3) | (0.1) |
Change in scope | 40.0 | \u2212 |
Balance at 31\u00a0December | 51.9 | 13.8 |
Funds only contain quoted investments, the breakdown of the plan assets is as follows:
\u00a0 | As at 31\u00a0December | |
|---|---|---|
2023 | 2022 | |
Bonds | 17.6% | 34.0% |
Equities | 17.3% | 41.0% |
Money market instruments | 1.5% | 4.0% |
Property | 4.2% | 0.0% |
Other | 59.4% | 21.0% |
\u00a0
The fair value of assets is used to determine the funding level of the plans to enable them to be sufficient to cover the benefits that have accrued to Group members after allowing for expected increases in future earnings and pensions. The actual returns on plan and separate assets were:
(in EUR million) | As at 31\u00a0December | |
|---|---|---|
2023 | 2022 | |
Plan assets | 0.9 | (1.5) |
Separate assets | \u00a0 | \u2212 |
\u00a0
The assumptions on return on assets are presented in the following section. The expected return on plan assets is determined by considering the current level of expected returns on risk free investments (primarily government bonds), the historical level of the risk-free premium associated with the respective asset classes and the expectations for future returns on each asset class. The expected return for each asset class was then weighted based on the target asset allocation to develop the expected long-term rate of return on assets. The expected returns of the individual plans have been weighted based on the fair value of the assets of the plans to determine the average expected return on plan assets.
The principal assumptions used to determine the actuarial present value of benefit obligations and pension charges and credits are detailed below (shown as weighted averages):
\u00a0 | As at 31\u00a0December | |
|---|---|---|
2023 | 2022 | |
Discount rate | \u00a0 | \u00a0 |
Europe | 3.5% | 3.5% |
Long-term inflation | \u00a0 | \u00a0 |
Europe | 2.3% | 2.3% |
Future salary increase | \u00a0 | \u00a0 |
Europe | 0.4% | 1.5% |
Average remaining working lifetime of employees (in years) | \u00a0 | \u00a0 |
Europe | 9.4 | 12.3 |
Duration (in years) | \u00a0 | \u00a0 |
Europe | 9.5 | 9.5 |
\u00a0
The assumptions described above have been applied on post-employment benefit plans.
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.
Significant actuarial assumptions for the determination of pension plan liabilities are the discount rate, inflation rate and salary increase. The sensitivity analysis below has been provided by local actuaries on an approximate basis based on changes in the assumptions occurring at the end of the year, assuming that all other assumptions are held constant, and the effect of interrelationships is excluded. The effect on plan liabilities is as follows:
(in percentage of item measured) | As at 31\u00a0December | |
|---|---|---|
2023 | 2022 | |
Variation of +0.5% in discount rate | \u00a0 | \u00a0 |
Impact on the present value of defined benefit obligations at 31\u00a0December, N | -3.9% | -5.7% |
Variation of +0.5% in long-term inflation | \u00a0 | \u00a0 |
Impact on the present value of defined benefit obligations at 31\u00a0December N | 2.5% | 2.3% |
Variation of +0.5% in future salary increases | \u00a0 | \u00a0 |
Impact on the present value of defined benefit obligations at 31\u00a0December N | 2.8% | 9.3% |
\u00a0
The disclosed sensitivities are averages of the variations weighted by the present value of defined benefit obligations.
The expected maturity analysis of undiscounted post-employment benefits is:
(in EUR million) | As at 31\u00a0December | |
|---|---|---|
2023 | 2022 | |
N+1 | 3.3 | 0.4 |
N+2 | 4.5 | 0.5 |
N+3 | 3.6 | 1.2 |
N+4 | 5.0 | 0.8 |
N+5 | 5.6 | 0.9 |
N+6 to N+10 | 29.0 | 8.3 |
\u00a0
Some entities of the Group 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 recorded in the balance sheet as at 31\u00a0December 2023 is EUR\u00a016.2\u00a0million (2022: EUR\u00a010.3\u00a0million). The total amount of charges for other long-term benefits in the income statement for the period ending 31\u00a0December 2023 is EUR\u00a01.9\u00a0million (2022: EUR\u00a01.1\u00a0million).
The Group provisions are split as below for General and Damage risk provisions recognised under IAS\u00a037 and insurance provisions recognised in accordance with IFRS\u00a017.
(in EUR million) | As at 31\u00a0December | |
|---|---|---|
2023 | 2022 | |
Damage risk and Legal & other | 302.4 | 136.9 |
Insurance contracts | 607.1 | 164.4 |
Total | 909.5 | 301.3 |
\u00a0
(in EUR million) | Damage risk | Legal & Other | Total |
|---|---|---|---|
At 1\u00a0January 2023 | 80.5 | 56.4 | 136.9 |
Scope changes | 48.6 | 87.2 | 135.8 |
Charge to income statement | 15.8 | 26.3 | 42.1 |
Utilised and released | (7.7) | (5.2) | (12.9) |
Reclass | 0.2 | (0.2) | \u2212 |
Currency translation differences | 0.0 | 0.5 | 0.5 |
At 31\u00a0December 2023 | 137.5 | 165.0 | 302.4 |
Current | 68.4 | 83.3 | 151.7 |
Non-current | 69.0 | 81.7 | 150.7 |
At 31\u00a0December 2023 | 137.5 | 165.0 | 302.4 |
\u00a0
(in EUR million) | Damage risk | Legal & Other | Total |
|---|---|---|---|
At 1\u00a0January 2022 | 220.5 | 61.2 | 281.7 |
Charge to income statement | 62.1 | 3.4 | 65.5 |
Utilised and released | (43.2) | (3.1) | (46.3) |
Reclass | 11.1 | (3.7) | 7.4 |
Change policy | (170.3) | \u2212 | (170.3) |
Currency translation differences | 0.2 | (1.4) | (1.2) |
At 31\u00a0December 2022 | 80.5 | 56.4 | 299.8 |
Current | 32.1 | 13.4 | 45.5 |
Non-current | 48.4 | 43.0 | 91.4 |
At 31\u00a0December 2022 | 80.5 | 56.4 | 136.9 |
\u00a0
The provision for damage risk is the \u2018best estimate\u2019 expected expenditure required to settle the present obligations to repair the damage at the reporting date based on IBNR and IBNER (see policy note\u00a03.5.17). The majority of damage service provisions are expected to be recovered or settled within 12\u00a0months.
Litigation provisions have been set up to cover legal and administrative proceedings that arise in the ordinary course of business. These provisions are not employee related. Legal provisions depend on court proceedings, so no assumptions related to future events have been disclosed.
Other provisions mainly consists of provisions for profit sharing arrangements that the Group have with manufacturers, dealers and customers; indemnities to be paid at the end of contracts with agents/brokers; and various VAT litigation with various tax authorities.
The insurance provision breaks down as follows:
(in EUR million) | As at 31\u00a0December 2023 | As at 31\u00a0December 2022 | ||||
|---|---|---|---|---|---|---|
Gross | Reinsurance | Net | Gross | Reinsurance | Net | |
Insurance liabilities | (606.6) | 52.3 | (554.3) | (164.0) | 10.3 | (153.7) |
Insurance asset | 0.8 | (0.5) | 0.3 | 0.7 | (0.5) | 0.2 |
Net Insurance provisions | (605.9) | 51.9 | (554.0) | (163.2) | 9.8 | (153.4) |
\u00a0
The following table provides a reconciliation of the net insurance liability for all insurance products issued by the Group:
(in EUR million) | Liabilities for remaining coverage | Liabilities for incurred claims | |||
|---|---|---|---|---|---|
Excluding loss component | Loss | Estimates | Risk | Total | |
Insurance contract liabilities as at 1\u00a0January 2023 | 21.2 | (0.2) | (181.0) | (4.0) | (164.0) |
Insurance contract assets as at 1\u00a0January 2023 | 2.3 | \u2212 | (1.6) | (0.0) | 0.7 |
Net insurance contract (net assets/(liabilities) | 23.6 | (0.2) | (182.6) | (4.0) | (163.2) |
Insurance contract liabilities | (1.7) | (3.2) | (385.9) | (13.0) | (403.7) |
Insurance contract assets | \u2212 | \u2212 | \u2212 | \u2212 | \u2212 |
Net insurance liabilities on acquisition | (1.7) | (3.2) | (385.9) | (13.0) | (403.7) |
Insurance revenue | 433.4 | \u2212 | \u2212 | \u2212 | 433.4 |
Insurance expenses | (15.9) | (5.5) | (307.2) | (7.1) | (335.6) |
Incurred claims and other expenses | \u2212 | \u2212 | (425.1) | (8.4) | (433.5) |
Losses on onerous contracts and reversals of those loses | \u2212 | (5.5) | \u2212 | \u2212 | (5.5) |
Insurance acquisition cash flows amortisation | (15.9) | \u2212 | \u2212 | \u2212 | (15.9) |
Changes to liabilities for incurred claims | \u2212 | \u2212 | 118.0 | 1.2 | 119.2 |
Insurance result | 417.5 | (5.5) | (307.2) | (7.1) | 97.8 |
Insurance finance expenses | \u2212 | (0.0) | (8.0) | \u2212 | (8.0) |
Effect of movements in exchange rates | 12.0 | (0.1) | 4.1 | (0.0) | 16.0 |
Total changes in the statement\u00a0 | 429.5 | (5.6) | (311.1) | (7.1) | 105.8 |
Premiums received/paid | (408.4) | \u2212 | \u2212 | \u2212 | (408.4) |
Claims and other expenses paid | \u2212 | \u2212 | 261.4 | \u2212 | 261.4 |
Insurance acquisition costs | 2.1 | \u2212 | \u2212 | \u2212 | 2.1 |
Total cash flows | (406.3) | \u2212 | 261.4 | \u2212 | (144.9) |
Other movements | \u2212 | \u2212 | 0.2 | \u2212 | 0.2 |
Net insurance contract (net assets/(liabilities)\u00a0 | 45.1 | (9.0) | (617.9) | (24.1) | (605.9) |
Insurance contract liabilities as at 31\u00a0December 2023 | 42.3 | (9.0) | (615.9) | (24.0) | (606.6) |
Insurance contract assets as at 31\u00a0December 2023 | 2.8 | \u2212 | (2.0) | (0.0) | 0.8 |
Net insurance contract (net assets/(liabilities) as at 31\u00a0December 2023) | 45.1 | (9.0) | (617.9) | (24.1) | (605.9) |
The following table provides a reconciliation of the reinsurance liability for reinsurance contracts issued by the Group:
(in EUR million) | Liabilities for remaining coverage | Liabilities for incurred claims | ||
|---|---|---|---|---|
Remaining\u00a0 | Estimates of the present value of future cash flows | Risk adjustment | Total | |
Reinsurance contract liabilities as at 1\u00a0January 2023 | (0.5) | \u2212 | \u2212 | (0.5) |
Reinsurance contract assets as at 1\u00a0January 2023 | 0.4 | 9.7 | 0.2 | 10.3 |
Net Reinsurance contract (net assets/(liabilities) as at 1\u00a0January 2023 | (0.1) | 9.7 | 0.2 | 9.8 |
Reinsurance contract liabilities | \u2212 | \u2212 | \u2212 | \u2212 |
Reinsurance contract assets | 1.4 | 32.2 | 1.2 | 34.8 |
Net Reinsurance contract assets on Acquisition | 1.4 | 32.2 | 1.2 | 34.8 |
Reinsurance expenses | (2.6) | \u2212 | \u2212 | (2.6) |
Claims recovered | 14.9 | 1.4 | 1.2 | 17.6 |
Effect of changes in the risk of reinsurers non-performance | \u2212 | 0.0 | \u2212 | 0.0 |
Changes that relate to past service - adjustments to insurred claims | \u2212 | (9.0) | 0.0 | (9.0) |
Net income/(Expenses) from Reinsurance contracts held | 12.4 | (7.6) | 1.2 | 5.9 |
Finance income from reinsurance contracts held | \u2212 | 0.4 | \u2212 | 0.4 |
Total changes in the statement of comprehensive income | 12.4 | (7.2) | 1.2 | 6.3 |
Premiums paid | 1.0 | \u2212 | \u2212 | 1.0 |
Recoveries from reinsurance | \u2212 | (1.4) | \u2212 | (1.4) |
Total cash flows | 1.0 | (1.4) | \u2212 | (0.5) |
Other movements | 1.4 | (0.0) | 0.0 | 1.4 |
Net reinsurance contract (net assets/(liabilities) as at 31\u00a0December 2023) | 16.1 | 33.2 | 2.6 | 51.9 |
Reinsurance contract liabilities as at 31\u00a0December 2023 | (0.5) | \u2212 | \u2212 | (0.5) |
Reinsurance contract assets as at 31\u00a0December 2023 | 16.5 | 33.2 | 2.6 | 52.3 |
Net reinsurance contract (net assets/(liabilities) as at 31\u00a0December 2023) | 16.1 | 33.2 | 2.6 | 51.9 |
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 management\u2019s best estimate of the expenditure expected required to settle the present obligation at the end of the reporting period. The discount rate used to determine the present value is a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. The increase in the provision due to passage of time is recognised as interest expense.
The risk of damage to owned Group vehicles is part of the IFRS\u00a015 allocation of revenue and IAS\u00a037 provisioning, whereas insurance contracts issued to customers for accepting significant insurance risk is subject to IFRS\u00a017 accounting (see Insurance contracts policy). 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 and revenue is recognised on a straight-line basis over the duration of the contract (unless the expected release of risk differs materially from a straight-line basis). Further details are provided in note\u00a08 \u201cRevenues and cost of revenues\u201d. Where the premiums are unearned based on the invoiced amounts, this amount is deferred income included within under \u201cOther receivables, prepayments and contract assets\u201d caption in the consolidated balance sheet (refer to note\u00a024).
Damage services provisions are measured at the amount of the \u201cbest estimate\u201d expected expenditure required to settle the present obligations to repair the damage at the reporting date. An estimate for Incurred But Not Reported (IBNR) and Incurred But Not Enough Reported (IBNER) is made to determine appropriate damage provision levels. These estimates are based on historical data of accident frequency in the local market and the cost per claim updated for current assumptions. The measurement includes a margin for risks and uncertainties that is inherent to the historical data adjusted for recent pricing developments. The damage service provision is expected to be recovered or settled within a maximum of 12\u00a0months. Expenses for damage services are expensed to the income statement when incurred and the best estimate of the provision is updated at each reporting period, with any adjustment recognised along with the expenses incurred in \u201cCost of Services Revenues\u201d caption in the income statement.
Where there is a stop-loss policy in place, limiting the risk of losses above a set level, provisions open 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 the provision for IBNR and IBNER. 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.
The insurance contracts issued are one of the services offered to the customers of the Group in addition to the lease of the vehicles and other related leasing services. Insurance contracts are contracts under which the Group accepts a significant risk \u2013 other than a financial risk \u2013 from a policyholder by agreeing to compensate the beneficiary on the occurrence of an uncertain future event by which he or she will be adversely affected. Contracts that have been classified as insurance at inception are not reclassified subsequently.
For measurement purposes, the insurance contracts are grouped into portfolios of insurance contracts that have similar risks and are managed together. Portfolios are further grouped in year cohorts of issuance and divided based on expected profitability at inception into two categories: onerous contracts and not-onerous contracts. Insurance contracts are recognised at the earlier of the beginning of the coverage period or when it becomes onerous. Insurance contracts are derecognised when the contract is expired, is discharged or cancelled. Modifications to contracts that are not considered changes in estimates and instead the contract is derecognised, and a new contract is recognised instead.
All our insurance contracts issued, and reinsurance contracts held are eligible to be measured by applying the premium allocation approach, which has been fully adopted. Under the premium allocation approach, non-life insurance contract provisions include liabilities for remaining coverage and liabilities for incurred claims. The liability for remaining coverage reflects premiums received less amounts recognised in revenue for insurance contracts provided. As the premiums are received within one year of the coverage period no discounting is applied to reflect financial risk or the time value of money. The liability for incurred claims is determined on a discounted probability-weighted expected value basis and includes an explicit risk adjustment for non-financial risk. The liability includes the Group\u2019s obligation to pay other incurred insurance expenses. The liability for incurred claims is the obligation to pay valid claims for insured events that have already been occurred (IBNR and IBNER), including events that have occurred but for which claims have not been reported (IBNYR). The liability for incurred claims is estimated as the fulfilment cash flows measured as an explicit, unbiased, and probability-weighted estimate (i.e. expected value) of the present value of the future cash outflows minus the present value of the future cash inflows that will arise as the entity fulfils insurance contracts, including a risk adjustment for non-financial risk. The cash outflows include claim handling costs, policy administration and maintenance costs and an allocation of directly attributable fixed and variable overheads to fulfilling insurance contracts.
Revenue is recognised on a straight-line basis over the duration of the contract (unless the expected release of risk differs materially from a straight-line basis). Further details are provided in note\u00a08 \u201cRevenues and cost of revenues\u201d. Expenses for damage services are expensed to the income statement when incurred and the best estimate of the provision is updated at each reporting period, with any adjustment recognised along with the expenses incurred in \u201cCost of Services Revenues\u201d caption in the income statement. Portfolios of contracts in an asset position are reported under \u201cOther receivables, prepayments and contract assets\u201d caption in the consolidated balance sheet (refer to note\u00a024). This includes expenses attributable to a subsequent period plus amounts still to be received and are measured at cost.
Under the premium allocation approach, it is assumed that no contracts in the portfolio are onerous at initial recognition, unless facts and circumstances that are monitored by performance indicators by Group\u2019s management indicate otherwise. Such onerous contracts are separately grouped from other contracts and the Group recognises a loss in profit or loss for the loss component. If during the coverage period, facts and circumstances indicate that a group of insurance contracts is onerous, the Group recognises a loss in the income statement for the net outflow, resulting in the carrying amount of the liability for the Group being equal to the fulfilment cash flows.
The Group measures its reinsurance assets for a group of reinsurance contracts that it holds on the same basis as insurance contracts that it issues adapted to reflect the features of reinsurance contracts held that differ from insurance contracts issued. Where the Group recognises a loss on initial recognition of an onerous group of insurance contracts, the Group establishes a loss-recovery component of the asset for remaining coverage for a group of reinsurance contracts held depicting the recovery of losses.
Annually the Group assesses whether its amounts recoverable under a reinsurance contract are subject to impairment. Reinsurance assets are impaired if there is objective evidence, because of an event that occurred after initial recognition of the reinsurance asset, that not all amounts due under the terms of the contract may be received. The carrying value is reduced to this calculated recoverable value, and the impairment loss recognised in the income statement.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForProvisionsExplanatory", "language": "en", "entity": "scheme:969500E7V019H9NP7427", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "text_block_7dd70d16-deba-4be9-9625-bd1a7a327e89": { "value": "The insurance contracts issued are one of the services offered to the customers of the Group in addition to the lease of the vehicles and other related leasing services. Insurance contracts are contracts under which the Group accepts a significant risk \u2013 other than a financial risk \u2013 from a policyholder by agreeing to compensate the beneficiary on the occurrence of an uncertain future event by which he or she will be adversely affected. Contracts that have been classified as insurance at inception are not reclassified subsequently.
For measurement purposes, the insurance contracts are grouped into portfolios of insurance contracts that have similar risks and are managed together. Portfolios are further grouped in year cohorts of issuance and divided based on expected profitability at inception into two categories: onerous contracts and not-onerous contracts. Insurance contracts are recognised at the earlier of the beginning of the coverage period or when it becomes onerous. Insurance contracts are derecognised when the contract is expired, is discharged or cancelled. Modifications to contracts that are not considered changes in estimates and instead the contract is derecognised, and a new contract is recognised instead.
All our insurance contracts issued, and reinsurance contracts held are eligible to be measured by applying the premium allocation approach, which has been fully adopted. Under the premium allocation approach, non-life insurance contract provisions include liabilities for remaining coverage and liabilities for incurred claims. The liability for remaining coverage reflects premiums received less amounts recognised in revenue for insurance contracts provided. As the premiums are received within one year of the coverage period no discounting is applied to reflect financial risk or the time value of money. The liability for incurred claims is determined on a discounted probability-weighted expected value basis and includes an explicit risk adjustment for non-financial risk. The liability includes the Group\u2019s obligation to pay other incurred insurance expenses. The liability for incurred claims is the obligation to pay valid claims for insured events that have already been occurred (IBNR and IBNER), including events that have occurred but for which claims have not been reported (IBNYR). The liability for incurred claims is estimated as the fulfilment cash flows measured as an explicit, unbiased, and probability-weighted estimate (i.e. expected value) of the present value of the future cash outflows minus the present value of the future cash inflows that will arise as the entity fulfils insurance contracts, including a risk adjustment for non-financial risk. The cash outflows include claim handling costs, policy administration and maintenance costs and an allocation of directly attributable fixed and variable overheads to fulfilling insurance contracts.
Revenue is recognised on a straight-line basis over the duration of the contract (unless the expected release of risk differs materially from a straight-line basis). Further details are provided in note\u00a08 \u201cRevenues and cost of revenues\u201d. Expenses for damage services are expensed to the income statement when incurred and the best estimate of the provision is updated at each reporting period, with any adjustment recognised along with the expenses incurred in \u201cCost of Services Revenues\u201d caption in the income statement. Portfolios of contracts in an asset position are reported under \u201cOther receivables, prepayments and contract assets\u201d caption in the consolidated balance sheet (refer to note\u00a024). This includes expenses attributable to a subsequent period plus amounts still to be received and are measured at cost.
Under the premium allocation approach, it is assumed that no contracts in the portfolio are onerous at initial recognition, unless facts and circumstances that are monitored by performance indicators by Group\u2019s management indicate otherwise. Such onerous contracts are separately grouped from other contracts and the Group recognises a loss in profit or loss for the loss component. If during the coverage period, facts and circumstances indicate that a group of insurance contracts is onerous, the Group recognises a loss in the income statement for the net outflow, resulting in the carrying amount of the liability for the Group being equal to the fulfilment cash flows.
The Group measures its reinsurance assets for a group of reinsurance contracts that it holds on the same basis as insurance contracts that it issues adapted to reflect the features of reinsurance contracts held that differ from insurance contracts issued. Where the Group recognises a loss on initial recognition of an onerous group of insurance contracts, the Group establishes a loss-recovery component of the asset for remaining coverage for a group of reinsurance contracts held depicting the recovery of losses.
Annually the Group assesses whether its amounts recoverable under a reinsurance contract are subject to impairment. Reinsurance assets are impaired if there is objective evidence, because of an event that occurred after initial recognition of the reinsurance asset, that not all amounts due under the terms of the contract may be received. The carrying value is reduced to this calculated recoverable value, and the impairment loss recognised in the income statement.
The insurance provision breaks down as follows:
(in EUR million) | As at 31\u00a0December 2023 | As at 31\u00a0December 2022 | ||||
|---|---|---|---|---|---|---|
Gross | Reinsurance | Net | Gross | Reinsurance | Net | |
Insurance liabilities | (606.6) | 52.3 | (554.3) | (164.0) | 10.3 | (153.7) |
Insurance asset | 0.8 | (0.5) | 0.3 | 0.7 | (0.5) | 0.2 |
Net Insurance provisions | (605.9) | 51.9 | (554.0) | (163.2) | 9.8 | (153.4) |
\u00a0
The following table provides a reconciliation of the net insurance liability for all insurance products issued by the Group:
(in EUR million) | Liabilities for remaining coverage | Liabilities for incurred claims | |||
|---|---|---|---|---|---|
Excluding loss component | Loss | Estimates | Risk | Total | |
Insurance contract liabilities as at 1\u00a0January 2023 | 21.2 | (0.2) | (181.0) | (4.0) | (164.0) |
Insurance contract assets as at 1\u00a0January 2023 | 2.3 | \u2212 | (1.6) | (0.0) | 0.7 |
Net insurance contract (net assets/(liabilities) | 23.6 | (0.2) | (182.6) | (4.0) | (163.2) |
Insurance contract liabilities | (1.7) | (3.2) | (385.9) | (13.0) | (403.7) |
Insurance contract assets | \u2212 | \u2212 | \u2212 | \u2212 | \u2212 |
Net insurance liabilities on acquisition | (1.7) | (3.2) | (385.9) | (13.0) | (403.7) |
Insurance revenue | 433.4 | \u2212 | \u2212 | \u2212 | 433.4 |
Insurance expenses | (15.9) | (5.5) | (307.2) | (7.1) | (335.6) |
Incurred claims and other expenses | \u2212 | \u2212 | (425.1) | (8.4) | (433.5) |
Losses on onerous contracts and reversals of those loses | \u2212 | (5.5) | \u2212 | \u2212 | (5.5) |
Insurance acquisition cash flows amortisation | (15.9) | \u2212 | \u2212 | \u2212 | (15.9) |
Changes to liabilities for incurred claims | \u2212 | \u2212 | 118.0 | 1.2 | 119.2 |
Insurance result | 417.5 | (5.5) | (307.2) | (7.1) | 97.8 |
Insurance finance expenses | \u2212 | (0.0) | (8.0) | \u2212 | (8.0) |
Effect of movements in exchange rates | 12.0 | (0.1) | 4.1 | (0.0) | 16.0 |
Total changes in the statement\u00a0 | 429.5 | (5.6) | (311.1) | (7.1) | 105.8 |
Premiums received/paid | (408.4) | \u2212 | \u2212 | \u2212 | (408.4) |
Claims and other expenses paid | \u2212 | \u2212 | 261.4 | \u2212 | 261.4 |
Insurance acquisition costs | 2.1 | \u2212 | \u2212 | \u2212 | 2.1 |
Total cash flows | (406.3) | \u2212 | 261.4 | \u2212 | (144.9) |
Other movements | \u2212 | \u2212 | 0.2 | \u2212 | 0.2 |
Net insurance contract (net assets/(liabilities)\u00a0 | 45.1 | (9.0) | (617.9) | (24.1) | (605.9) |
Insurance contract liabilities as at 31\u00a0December 2023 | 42.3 | (9.0) | (615.9) | (24.0) | (606.6) |
Insurance contract assets as at 31\u00a0December 2023 | 2.8 | \u2212 | (2.0) | (0.0) | 0.8 |
Net insurance contract (net assets/(liabilities) as at 31\u00a0December 2023) | 45.1 | (9.0) | (617.9) | (24.1) | (605.9) |
The following table provides a reconciliation of the reinsurance liability for reinsurance contracts issued by the Group:
(in EUR million) | Liabilities for remaining coverage | Liabilities for incurred claims | ||
|---|---|---|---|---|
Remaining\u00a0 | Estimates of the present value of future cash flows | Risk adjustment | Total | |
Reinsurance contract liabilities as at 1\u00a0January 2023 | (0.5) | \u2212 | \u2212 | (0.5) |
Reinsurance contract assets as at 1\u00a0January 2023 | 0.4 | 9.7 | 0.2 | 10.3 |
Net Reinsurance contract (net assets/(liabilities) as at 1\u00a0January 2023 | (0.1) | 9.7 | 0.2 | 9.8 |
Reinsurance contract liabilities | \u2212 | \u2212 | \u2212 | \u2212 |
Reinsurance contract assets | 1.4 | 32.2 | 1.2 | 34.8 |
Net Reinsurance contract assets on Acquisition | 1.4 | 32.2 | 1.2 | 34.8 |
Reinsurance expenses | (2.6) | \u2212 | \u2212 | (2.6) |
Claims recovered | 14.9 | 1.4 | 1.2 | 17.6 |
Effect of changes in the risk of reinsurers non-performance | \u2212 | 0.0 | \u2212 | 0.0 |
Changes that relate to past service - adjustments to insurred claims | \u2212 | (9.0) | 0.0 | (9.0) |
Net income/(Expenses) from Reinsurance contracts held | 12.4 | (7.6) | 1.2 | 5.9 |
Finance income from reinsurance contracts held | \u2212 | 0.4 | \u2212 | 0.4 |
Total changes in the statement of comprehensive income | 12.4 | (7.2) | 1.2 | 6.3 |
Premiums paid | 1.0 | \u2212 | \u2212 | 1.0 |
Recoveries from reinsurance | \u2212 | (1.4) | \u2212 | (1.4) |
Total cash flows | 1.0 | (1.4) | \u2212 | (0.5) |
Other movements | 1.4 | (0.0) | 0.0 | 1.4 |
Net reinsurance contract (net assets/(liabilities) as at 31\u00a0December 2023) | 16.1 | 33.2 | 2.6 | 51.9 |
Reinsurance contract liabilities as at 31\u00a0December 2023 | (0.5) | \u2212 | \u2212 | (0.5) |
Reinsurance contract assets as at 31\u00a0December 2023 | 16.5 | 33.2 | 2.6 | 52.3 |
Net reinsurance contract (net assets/(liabilities) as at 31\u00a0December 2023) | 16.1 | 33.2 | 2.6 | 51.9 |
The insurance contracts issued are one of the services offered to the customers of the Group in addition to the lease of the vehicles and other related leasing services. Insurance contracts are contracts under which the Group accepts a significant risk \u2013 other than a financial risk \u2013 from a policyholder by agreeing to compensate the beneficiary on the occurrence of an uncertain future event by which he or she will be adversely affected. Contracts that have been classified as insurance at inception are not reclassified subsequently.
For measurement purposes, the insurance contracts are grouped into portfolios of insurance contracts that have similar risks and are managed together. Portfolios are further grouped in year cohorts of issuance and divided based on expected profitability at inception into two categories: onerous contracts and not-onerous contracts. Insurance contracts are recognised at the earlier of the beginning of the coverage period or when it becomes onerous. Insurance contracts are derecognised when the contract is expired, is discharged or cancelled. Modifications to contracts that are not considered changes in estimates and instead the contract is derecognised, and a new contract is recognised instead.
All our insurance contracts issued, and reinsurance contracts held are eligible to be measured by applying the premium allocation approach, which has been fully adopted. Under the premium allocation approach, non-life insurance contract provisions include liabilities for remaining coverage and liabilities for incurred claims. The liability for remaining coverage reflects premiums received less amounts recognised in revenue for insurance contracts provided. As the premiums are received within one year of the coverage period no discounting is applied to reflect financial risk or the time value of money. The liability for incurred claims is determined on a discounted probability-weighted expected value basis and includes an explicit risk adjustment for non-financial risk. The liability includes the Group\u2019s obligation to pay other incurred insurance expenses. The liability for incurred claims is the obligation to pay valid claims for insured events that have already been occurred (IBNR and IBNER), including events that have occurred but for which claims have not been reported (IBNYR). The liability for incurred claims is estimated as the fulfilment cash flows measured as an explicit, unbiased, and probability-weighted estimate (i.e. expected value) of the present value of the future cash outflows minus the present value of the future cash inflows that will arise as the entity fulfils insurance contracts, including a risk adjustment for non-financial risk. The cash outflows include claim handling costs, policy administration and maintenance costs and an allocation of directly attributable fixed and variable overheads to fulfilling insurance contracts.
Revenue is recognised on a straight-line basis over the duration of the contract (unless the expected release of risk differs materially from a straight-line basis). Further details are provided in note\u00a08 \u201cRevenues and cost of revenues\u201d. Expenses for damage services are expensed to the income statement when incurred and the best estimate of the provision is updated at each reporting period, with any adjustment recognised along with the expenses incurred in \u201cCost of Services Revenues\u201d caption in the income statement. Portfolios of contracts in an asset position are reported under \u201cOther receivables, prepayments and contract assets\u201d caption in the consolidated balance sheet (refer to note\u00a024). This includes expenses attributable to a subsequent period plus amounts still to be received and are measured at cost.
Under the premium allocation approach, it is assumed that no contracts in the portfolio are onerous at initial recognition, unless facts and circumstances that are monitored by performance indicators by Group\u2019s management indicate otherwise. Such onerous contracts are separately grouped from other contracts and the Group recognises a loss in profit or loss for the loss component. If during the coverage period, facts and circumstances indicate that a group of insurance contracts is onerous, the Group recognises a loss in the income statement for the net outflow, resulting in the carrying amount of the liability for the Group being equal to the fulfilment cash flows.
The Group measures its reinsurance assets for a group of reinsurance contracts that it holds on the same basis as insurance contracts that it issues adapted to reflect the features of reinsurance contracts held that differ from insurance contracts issued. Where the Group recognises a loss on initial recognition of an onerous group of insurance contracts, the Group establishes a loss-recovery component of the asset for remaining coverage for a group of reinsurance contracts held depicting the recovery of losses.
Annually the Group assesses whether its amounts recoverable under a reinsurance contract are subject to impairment. Reinsurance assets are impaired if there is objective evidence, because of an event that occurred after initial recognition of the reinsurance asset, that not all amounts due under the terms of the contract may be received. The carrying value is reduced to this calculated recoverable value, and the impairment loss recognised in the income statement.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForInsuranceContracts", "language": "en", "entity": "scheme:969500E7V019H9NP7427", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "text_block_634d20ad-607c-458c-8a80-d5ffef91fb14": { "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. If payment is due within one year or less (or in the normal operating cycle of the business if longer) these will be presented as current obligations, but otherwise will be 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 Group recognises a liability and an expense for variable remuneration to employees based on an assessment of the relevant performance of variable remuneration criteria (see Share-based payments accounting policy). The Group recognises an accrual where contractually obliged or where there is a past practice that has created a constructive obligation.
(in EUR million) | As at 31\u00a0December | |
|---|---|---|
2023 | 2022 | |
Trade payables | 2,560.4 | 1,045.8 |
Deferred leasing income\u00a0(1) | 732.1 | 363.7 |
Other accruals and other deferred income(2) | 1,060.2 | 611.5 |
Advance lease instalments received | 808.6 | 448.3 |
Accruals for contract settlements | 472.8 | 214.9 |
VAT and other taxes | 332.1 | 243.6 |
Other | 68.4 | 0.7 |
Trade and other payables | 6,034.7 | 2,928.6 |
|
\u00a0
\u00a0
The majority of the trade and other payables and deferred income, except for deferred leasing income, have a remaining maturity of less than one year. The increase in other is primarily attributable to cash collateral deposited for derivative financial instruments and originates from Credit Support Annexes (CSAs) to International Swaps and Derivatives Association (ISDA) master agreements.
Other accruals and other deferred amounts owed contain accruals for a number of different staff expenses, including for the variable remuneration. The accrual for variable remuneration also contains the liability for Phantom Share Units (\u201cPSUs\u201d) in LeasePlan.\u00a0The variable remuneration award for the Identified Staff consists of a direct payment in cash and a deferred payment in cash and Phantom Share Units (PSUs). The PSUs represent the underlying value of the Company shares which entitle the participant to a payment in cash after a specified period and are recognised as cash-settled share-based payment arrangement. The PSU part of the deferred award is revalued annually by estimating the Company\u2019s equity value for determining the fair value of the outstanding PSU awards. Liabilities recognised for PSUs are measured at the estimated fair value. The accrual for variable remuneration also contains the liability for Phantom Share Units (\u201cPSUs\u201d). The fair value of the accrual is EUR\u00a023.9\u00a0million as at 31\u00a0December 2023. As this obligation was purchased as part of the LeasePlan acquisition in the year there was no impact to the Group in 2022.
", "dimensions": { "concept": "ifrs-full:DisclosureOfTradeAndOtherPayablesExplanatory", "language": "en", "entity": "scheme:969500E7V019H9NP7427", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "text_block_24f03001-df21-4707-bd2f-18eb54e3832f": { "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. If payment is due within one year or less (or in the normal operating cycle of the business if longer) these will be presented as current obligations, but otherwise will be 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 Group recognises a liability and an expense for variable remuneration to employees based on an assessment of the relevant performance of variable remuneration criteria (see Share-based payments accounting policy). The Group recognises an accrual where contractually obliged or where there is a past practice that has created a constructive obligation.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForTradeAndOtherPayablesExplanatory", "language": "en", "entity": "scheme:969500E7V019H9NP7427", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "text_block_f49858d2-2cb9-4074-b9e9-27d0c6b18964": { "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.
Current and deferred taxes are recognised in the income statement under Income tax. Deferred taxes related to remeasurement of retirement benefit, cash flow hedges and gains or losses on fair value of debt securities are recognised in other comprehensive income.
(in EUR million) | Year ended 31\u00a0December | |
|---|---|---|
2023 | 2022 | |
Current tax | (355.0) | (225.5) |
Deferred tax | (19.0) | (220.4) |
Income tax expense | (374.0) | (445.9) |
\u00a0
Increase in current tax in 2023 is attributable to contribution of LeasePlan to taxable profits from the date of the acquisition and taxation of the capital gains as a result of the intra group operations.
Deferred tax variation in 2023 is mainly caused by the following movements in temporary differences between accounting and tax bases of assets and liabilities:
\u00a0
The deferred tax charge/credit relating to components of other comprehensive income is as follows:
(in EUR million) | Year ended 31\u00a0December | |
|---|---|---|
2023 | 2022 | |
Cashflow hedges | 25.7 | (12.0) |
Debt instruments at fair value through OCI | (1.2) | 2.2 |
Remeasurement of retirement benefit | 1.0 | (0.4) |
Deferred tax charged to OCI | 25.5 | (10.2) |
(in EUR million) | Year ended 31\u00a0December | |
|---|---|---|
2023 | 2022 | |
Profit before tax | 1,295.7 | 1,666.1 |
Standard tax rate in France | 25.83% | 25.83% |
Tax expense at standard rate | (334.6) | (430.3) |
Tax calculated at domestic tax rates applicable to profits in the respective countries | 28.6 | 46.4 |
Tax effects of: | \u00a0 | \u00a0 |
Associates\u2019 results reported net of tax | 1.7 | 0.5 |
Income not subject to tax | (14.7) | (11.8) |
Expenses not deductible for tax purposes | (12.8) | (30.2) |
Utilisation of previously unrecognised tax losses | 2.6 | \u2212 |
Tax losses for which no deferred income tax asset was recognised | (6.5) | (1.4) |
Changes in the measurement of deferred tax assets/liabilities | (25.1) | 0.7 |
Adjustment in respect of prior years | 9.5 | (6.9) |
Other\u00a0(1) | (22.7) | (12.9) |
Total | (374.0) | (445.9) |
Effective rate of income tax | 28.87% | 26.76% |
|
\u00a0
Year on year change in the measurement of deferred tax is mainly attributable to an increase in tax rate in the Group\u2019s subsidiaries in Turkey whilst adjustment in respect of prior years has been driven by the change in Turkish tax legislation which now permits the entities to adjust their financial statements for inflation for tax purposes.
Of the tax calculated at domestic rates applicable to profits in the respective countries in 2023, the major contributors are Ireland, Luxembourg, Germany, Italy, UK and Hungary where effective tax rates are lower or higher than in France (with applicable tax rates of 12.5%, 7.61%, 32.28%, 24%, 23.5% and 9% respectively).
\u00a0
The gross movement on the net deferred tax account is as follows:
(in EUR million) | Year ended 31\u00a0December | |
|---|---|---|
2023 | 2022 | |
Net deferred tax liabilities at 1\u00a0January | (547.0) | (322.9) |
Income statement charge | (19.0) | (220.4) |
Tax charged/(credited) directly to equity | 23.1 | (12.4) |
Hyperinflation adjustment (FTA) charged directly to equity | \u2212 | (9.4) |
Exchange differences | 54.9 | 2.5 |
Scope changes\u00a0(1) | (491.8) | (8.0) |
Transfer to assets held for sale | 0.0 | 24.6 |
Other | (0.6) | (1.0) |
Net deferred tax liabilities at 31\u00a0December | (980.4) | (547.1) |
|
(in EUR million) | Year ended 31\u00a0December | |
|---|---|---|
2023 | 2022 | |
Accelerated tax depreciation | (1,300.5) | (777.5) |
Provisions | 110.8 | 104.7 |
Impairment losses | 30.2 | 25.4 |
Tax losses | 219.2 | 55.7 |
Fair value gains | 9.1 | (8.8) |
Retirement benefit obligation | 6.1 | 2.2 |
Other timing differences | (55.2) | 51.2 |
Net deferred tax asset/(liability) | (980.4) | (547.1) |
\u00a0
The Group performs an annual review of its capacity to use tax loss carry-forwards, taking into account the tax system applicable to each tax entity concerned and a realistic forecast of its tax results. For this purpose, the tax results are determined based on the projected performance of the businesses. The tax results also take into consideration the accounting and tax adjustments (including the reversal of the deferred tax assets and liabilities based on temporary differences) applicable to the entities and jurisdictions concerned. These adjustments are determined on the basis of historical tax results and on the entity\u2019s tax expertise. An extrapolation of the tax result is performed from 2024 on and over a timeframe considered reasonable and depending on the nature of the activities carried out within each tax entity.
\u00a0
The tax losses carried forward for the year are attributable to:
(in EUR million) | Year ended 31\u00a0December | |
|---|---|---|
2023 | 2022 | |
Netherlands | 74.1 | \u2212 |
France | 46.7 | 24.6 |
Italy | 27.6 | \u2212 |
India | 26.3 | \u2212 |
Norway | 12.9 | 10.0 |
Greece | 8.8 | 5.7 |
Chile | 8.6 | 3.9 |
Belgium | 7.0 | 8.7 |
UK | 6.4 | \u2212 |
Others | 0.9 | 2.8 |
Total | 219.2 | 55.7 |
\u00a0
Increase of EUR\u00a0144.2\u00a0million in tax losses is attributable to the acquisition of LeasePlan. Most of the entities utilised the strategy of accelerated depreciation which led 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.
\u00a0
Expected recovery periods of the losses carried forward can be illustrated as follows:
(in EUR million) | Year ended 31\u00a0December | |
|---|---|---|
2023 | 2022 | |
Within 1\u00a0year | 9.2 | 10.0 |
Within 1-5\u00a0years | 10.3 | 1.2 |
More than 5\u00a0years | \u2212 | \u2212 |
Without expiry | 199.6 | 44.4 |
Total | 219.2 | 55.7 |
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.
Current and deferred taxes are recognised in the income statement under Income tax. Deferred taxes related to remeasurement of retirement benefit, cash flow hedges and gains or losses on fair value of debt securities are recognised in other comprehensive income.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForIncomeTaxExplanatory", "language": "en", "entity": "scheme:969500E7V019H9NP7427", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "text_block_e1b55a41-b375-4b74-b875-19194f2dbea9": { "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.
Current and deferred taxes are recognised in the income statement under Income tax. Deferred taxes related to remeasurement of retirement benefit, cash flow hedges and gains or losses on fair value of debt securities are recognised in other comprehensive income.
(in EUR million) | Year ended 31\u00a0December | |
|---|---|---|
2023 | 2022 | |
Current tax | (355.0) | (225.5) |
Deferred tax | (19.0) | (220.4) |
Income tax expense | (374.0) | (445.9) |
\u00a0
Increase in current tax in 2023 is attributable to contribution of LeasePlan to taxable profits from the date of the acquisition and taxation of the capital gains as a result of the intra group operations.
Deferred tax variation in 2023 is mainly caused by the following movements in temporary differences between accounting and tax bases of assets and liabilities:
\u00a0
The deferred tax charge/credit relating to components of other comprehensive income is as follows:
(in EUR million) | Year ended 31\u00a0December | |
|---|---|---|
2023 | 2022 | |
Cashflow hedges | 25.7 | (12.0) |
Debt instruments at fair value through OCI | (1.2) | 2.2 |
Remeasurement of retirement benefit | 1.0 | (0.4) |
Deferred tax charged to OCI | 25.5 | (10.2) |
(in EUR million) | Year ended 31\u00a0December | |
|---|---|---|
2023 | 2022 | |
Profit before tax | 1,295.7 | 1,666.1 |
Standard tax rate in France | 25.83% | 25.83% |
Tax expense at standard rate | (334.6) | (430.3) |
Tax calculated at domestic tax rates applicable to profits in the respective countries | 28.6 | 46.4 |
Tax effects of: | \u00a0 | \u00a0 |
Associates\u2019 results reported net of tax | 1.7 | 0.5 |
Income not subject to tax | (14.7) | (11.8) |
Expenses not deductible for tax purposes | (12.8) | (30.2) |
Utilisation of previously unrecognised tax losses | 2.6 | \u2212 |
Tax losses for which no deferred income tax asset was recognised | (6.5) | (1.4) |
Changes in the measurement of deferred tax assets/liabilities | (25.1) | 0.7 |
Adjustment in respect of prior years | 9.5 | (6.9) |
Other\u00a0(1) | (22.7) | (12.9) |
Total | (374.0) | (445.9) |
Effective rate of income tax | 28.87% | 26.76% |
|
\u00a0
Year on year change in the measurement of deferred tax is mainly attributable to an increase in tax rate in the Group\u2019s subsidiaries in Turkey whilst adjustment in respect of prior years has been driven by the change in Turkish tax legislation which now permits the entities to adjust their financial statements for inflation for tax purposes.
Of the tax calculated at domestic rates applicable to profits in the respective countries in 2023, the major contributors are Ireland, Luxembourg, Germany, Italy, UK and Hungary where effective tax rates are lower or higher than in France (with applicable tax rates of 12.5%, 7.61%, 32.28%, 24%, 23.5% and 9% respectively).
\u00a0
The gross movement on the net deferred tax account is as follows:
(in EUR million) | Year ended 31\u00a0December | |
|---|---|---|
2023 | 2022 | |
Net deferred tax liabilities at 1\u00a0January | (547.0) | (322.9) |
Income statement charge | (19.0) | (220.4) |
Tax charged/(credited) directly to equity | 23.1 | (12.4) |
Hyperinflation adjustment (FTA) charged directly to equity | \u2212 | (9.4) |
Exchange differences | 54.9 | 2.5 |
Scope changes\u00a0(1) | (491.8) | (8.0) |
Transfer to assets held for sale | 0.0 | 24.6 |
Other | (0.6) | (1.0) |
Net deferred tax liabilities at 31\u00a0December | (980.4) | (547.1) |
|
(in EUR million) | Year ended 31\u00a0December | |
|---|---|---|
2023 | 2022 | |
Accelerated tax depreciation | (1,300.5) | (777.5) |
Provisions | 110.8 | 104.7 |
Impairment losses | 30.2 | 25.4 |
Tax losses | 219.2 | 55.7 |
Fair value gains | 9.1 | (8.8) |
Retirement benefit obligation | 6.1 | 2.2 |
Other timing differences | (55.2) | 51.2 |
Net deferred tax asset/(liability) | (980.4) | (547.1) |
\u00a0
The Group performs an annual review of its capacity to use tax loss carry-forwards, taking into account the tax system applicable to each tax entity concerned and a realistic forecast of its tax results. For this purpose, the tax results are determined based on the projected performance of the businesses. The tax results also take into consideration the accounting and tax adjustments (including the reversal of the deferred tax assets and liabilities based on temporary differences) applicable to the entities and jurisdictions concerned. These adjustments are determined on the basis of historical tax results and on the entity\u2019s tax expertise. An extrapolation of the tax result is performed from 2024 on and over a timeframe considered reasonable and depending on the nature of the activities carried out within each tax entity.
\u00a0
The tax losses carried forward for the year are attributable to:
(in EUR million) | Year ended 31\u00a0December | |
|---|---|---|
2023 | 2022 | |
Netherlands | 74.1 | \u2212 |
France | 46.7 | 24.6 |
Italy | 27.6 | \u2212 |
India | 26.3 | \u2212 |
Norway | 12.9 | 10.0 |
Greece | 8.8 | 5.7 |
Chile | 8.6 | 3.9 |
Belgium | 7.0 | 8.7 |
UK | 6.4 | \u2212 |
Others | 0.9 | 2.8 |
Total | 219.2 | 55.7 |
\u00a0
Increase of EUR\u00a0144.2\u00a0million in tax losses is attributable to the acquisition of LeasePlan. Most of the entities utilised the strategy of accelerated depreciation which led 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.
\u00a0
Expected recovery periods of the losses carried forward can be illustrated as follows:
(in EUR million) | Year ended 31\u00a0December | |
|---|---|---|
2023 | 2022 | |
Within 1\u00a0year | 9.2 | 10.0 |
Within 1-5\u00a0years | 10.3 | 1.2 |
More than 5\u00a0years | \u2212 | \u2212 |
Without expiry | 199.6 | 44.4 |
Total | 219.2 | 55.7 |
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.
Current and deferred taxes are recognised in the income statement under Income tax. Deferred taxes related to remeasurement of retirement benefit, cash flow hedges and gains or losses on fair value of debt securities are recognised in other comprehensive income.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForDeferredIncomeTaxExplanatory", "language": "en", "entity": "scheme:969500E7V019H9NP7427", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "text_block_37be6663-1802-461b-83aa-8523d7145a42": { "value": "Revenues represent the fair value of the consideration received or receivable for the sale of goods and services in the Group\u2019s ordinary course of business.
Contracts relating to vehicle leasing and service products can take the form of operating leases, finance leases and service agreements. To determine whether a contract conveys a lease agreement for a period of time, the Group has assessed whether, throughout the period of use, the customer has both of the following:
If a contract relating to an asset fails to give the customer both of the above rights, the Group accounts for the agreement as a revenue contract. In situations where management services unrelated to an asset contract are provided, the Group accounts for the contract as a revenue contract.
In certain situations a lease and service contracts are entered into at the same or as a single contract with our customers. Where the customer is charged a monthly fee that both relates to the rental price of the vehicle (including depreciation and interest) and various other products and services that the customer can subscribe to, the standalone tariffed elements will be recognised as separate performance obligations if the good or service is distinct by meeting both 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.
The lease classification, that is determined on a contract-by-contract basis, will determine if revenue recognition is on an operating lease or finance lease basis (see Rental fleet policy for determining classification).
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.
Charges to clients may include passed on costs such as fuel, road taxes and other taxes which do not represent the inflow of economic benefits and/or are collected on behalf of third parties and are therefore not presented as revenues.
Upfront payments from customers at the beginning of the lease agreement are recognised in the balance sheet and amortised on a straight-line basis over the period of the lease agreement. Amounts paid or value provided to lessees as lease incentives are capitalised (e.g. upfront cash payments to the lessee, reimbursement or absorption of costs by the lessor or free or reduced rents given at the beginning of the lease term). Lease incentives are amortised on a straight-line basis over the term of the related lease as a reduction in revenue.
Where a customer retains the car for a period beyond the normal return date (informal extension), the rent continues to be charged to the customer and the related contractual depreciation will continue to be recognised.
Regarding finance leases, IFRS\u00a016\u00a0standard 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 income statement in each period using the effective interest rate method 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:
Upfront payments and initial direct costs are taken into consideration in calculating the implicit interest rate in the lease and recognised evenly over the life of the lease as an adjustment of yield.
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 five\u00a0steps process required by IFRS\u00a015 for non-lease components is summarised as follows:
Revenue from Fleet Management services is recognised on a straight-line basis over the term of the Fleet Management agreement.
Income related to repair & maintenance services is recognised over the term of the lease contract. The allocation of income over the term is based on the normal repair and maintenance cost profile supported by historical statistics and expected service costs. The difference between the amounts charged to clients and amounts recognised as income is accounted for as deferred leasing income. Cost profiles are reviewed periodically to ensure they remain a fair representation of historical repair and maintenance expenditures, adjusted for reasonable expectations of changes in cost profiles. Where an accurate or reliable estimate of the cost curve is not available revenue is recognised based on an estimate of expected completion of the performance obligation using an alternative input method.
If income related to services surrounding contracts is not certain until final settlement takes place, this income is not recognised until that time and is presented within the sales result. For all other contracts, expected losses are recognised as an expense immediately when it is probable that total contract costs will exceed total contract revenues.
Revenue is recognised on a straight-line basis over the term of the management agreement.
Flex fleet revenues are recognised on a straight-line basis over the term of the rental agreement.
The revenue from the risk retention schemes is recognised based on the monthly lease instalment. This applies for third-party liability and own damage insurance products. Revenue recognition will cease when the contract is terminated by a client or at the end of the contractual term.
Where interest on late payment is billed to customers, the related revenue is only recognised when settlements are made by customers.
Revenues also include the proceeds of the sale of vehicles from terminated lease contracts and rental revenues from end of contract billing such as repair costs recharged to the customer. The proceeds from the sale of vehicles are recognised when the vehicles are sold and control of the vehicles is transferred. End of contract fees may consist of fees charged to clients for mileage variation adjustments and excessive wear and tear of the vehicle. Revenues also included charges arising from deviations from the contractual terms, where the fees are recognised upon termination of the lease contract.
(in EUR million) | Year ended 31\u00a0December | |
|---|---|---|
2023 | Restated 2022\u00a0(1) | |
Leasing contract revenue - operating leases | 7,795.3 | 4,757.2 |
Interest income from finance lease | 90.4 | 36.1 |
Other interest income | 148.0 | 10.6 |
Leasing contract revenues | 8,033.7 | 4,803.9 |
Leasing contract costs - depreciation | (5,685.7) | (3,433.1) |
Leasing contract costs - financing: | \u00a0 | \u00a0 |
Interest charges on loans from financial institutions\u00a0(2) | (445.2) | (177.6) |
Interest charges on deposits | (169.0) | \u2212 |
Interest charges on issued bonds | (225.3) | (38.2) |
Other interest charges | (205.2) | (28.3) |
Total interest charges | (1,044.7) | (244.1) |
Leasing contract costs - depreciation and financing | (6,730.4) | (3,677.2) |
Derivatives not in hedges | (152.0) | (1.6) |
Hedge ineffectiveness - fair value hedges | (35.5) | \u2212 |
Hedge ineffectiveness - cash flow hedges | 1.5 | (0.2) |
Unrealised gains/losses on derivative financial instruments | (186.0) | (1.8) |
Unrealised Foreign Exchange Gains or Losses | 4.5 | (3.6) |
Hyperinflation - net monetary gain | 140.1 | 59.9 |
Total Unrealised gains/losses on financial instruments and other | (41.4) | 54.5 |
Leasing contract margin | 1,261.9 | 1,181.2 |
|
\u00a0
\u201cOther interest income\u201d comprises income received from financial instruments, income received for cash deposits with central banks and other third parties.
\u201cOther interest charges\u201d mainly comprise of interest charges incurred from asset-backed borrowings, net interest costs on derivative financial instruments, realised gains or losses on translation of financial liabilities and interest expense on lease liabilities.
\u201cLeasing contract costs \u2013 depreciation\u201d 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.
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:
Used vehicles prices have continued to drive high profit from the used car sales activity throughout 2023 but, as previously predicted, the used car market has started to normalise in the first semester of 2023 with a further decline observed in the second semester of 2023.
This assessment continues to result in a reduction in depreciation costs of EUR\u00a0553.2\u00a0million and represents partial recognition of estimated future used car profits.
Total interest charges have increased significantly in the year ending 31\u00a0December 2023. \u201cInterest charge on loans from financial institutions\u201d has increased with the acquisition of LeasePlan, which has external funding arrangements and borrowing from central bank institutions as part of its banking operations. The new charge of \u201cInterest charges on deposits\u201d is also a result of interest paid on fixed term savings deposits, raised by LeasePlan in the Netherlands and in Germany. \u201cInterest charges on issued bonds\u201d has increased due to the issuance of new EMTN bonds in the year to finance the operations of the combined group, while the increase in \u201cOther interest charges\u201d are due to the additional asset-backed securitisation funding acquired on acquisition of LeasePlan. For more details of the funding changes from the acquisition of LeasePlan see note\u00a029 \u201cBorrowings from financial institutions, Bonds and notes issued\u201d.
Leasing contract margin is negatively impacted by the mark to market loss of EUR\u00a0201.9\u00a0million on LeasePlan derivatives that are not hedged for accounting purposes. The Group\u2019s activities are principally related to vehicle leasing and Fleet Management. The Group accepts and offers lease contracts to clients at both fixed and floating interest rates, for various periods and in various currencies. For a major part of the funding of the LeasePlan cars, the Group has entered into borrowings from external parties or issued notes to third parties. To mitigate the Group exposure towards future movements in interest rates and currency exchange rates the Group have entered into interest rate swaps and cross currency swap and forward arrangements. While as a result of these arrangements the Group mitigates interest rate risk and currency risk from an economic perspective, these derivatives do not always qualify for hedge accounting from an accounting perspective that due to the accounting treatment of derivative financial instruments exposes the Group to some volatility in its income statement. For more details see note\u00a04 \u201cFinancial Risk Management\u201d and note\u00a019 \u201cDerivative financial instruments\u201d.
The \u201cHyperinflation \u2013 net monetary gain\u201d in the \u201cUnrealised gains/losses on financial instruments and other\u201d line in the income statement, includes the gain for the consumer price index inflation applied to the book value of the Turkish subsidiaries fleet of vehicles, share capital and retained earnings. This uplift in book value of the vehicles has resulted in an impairment of EUR\u00a067.2\u00a0million for year ending 31\u00a0December 2023 (2022: nil) and additional depreciation on the inflationary increase of EUR\u00a033.7\u00a0million that have been included within the \u201cLeasing contract costs \u2013 depreciation\u201d line in the income statement, so overall the net impact on the Leasing contract margin amount is EUR\u00a039.2\u00a0million. For further detail see note\u00a05 \u201cCritical accounting estimates and judgements\u201d.
\u00a0
\u00a0\u00a0\u00a0\u00a0\u00a0
(in EUR million) | Year ended 31\u00a0December | |
|---|---|---|
2023 | Restated 2022\u00a0(1) | |
Services revenue | 4,391.2 | 2,657.4 |
Cost of services revenues | (3,037.0) | (1,942.3) |
Services margin | 1,354.2 | 715.1 |
|
\u00a0
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.
Services margin for the year ended 31\u00a0December 2023 includes an amount of EUR\u00a084.4\u00a0million related to insurance and reinsurance services.
\u00a0
(in EUR million) | Year ended 31\u00a0December | |
|---|---|---|
2023 | 2022 | |
Proceeds of cars sold | 6,458.8 | 3,953.6 |
Cost of cars sold\u00a0(1) | (6,109.3) | (3,205.9) |
Used Car Sales result | 349.5 | 747.6 |
|
\u00a0
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 2023 was EUR\u00a0312.2\u00a0million.
\u00a0
Revenues that are included within the margins analysed in\u00a08a, 8b and\u00a08c 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 | |
|---|---|---|
2023 | 2022 | |
Services Revenues | 4,391.2 | 2,657.4 |
Leasing contract revenue - operating leases | 7,795.3 | 4,757.2 |
Interest revenue | 238.4 | 46.7 |
Leasing contract revenues | 8,033.7 | 4,803.9 |
Sub-Total - Revenues from Rental Activity | 12,424.9 | 7,461.3 |
Proceeds of Cars Sold | 6,458.8 | 3,953.6 |
Total Revenues | 18,883.7 | 11,414.8 |
Total Revenues excluding Interest Income | 17,006.3 | 10,495.2 |
Revenues represent the fair value of the consideration received or receivable for the sale of goods and services in the Group\u2019s ordinary course of business.
Contracts relating to vehicle leasing and service products can take the form of operating leases, finance leases and service agreements. To determine whether a contract conveys a lease agreement for a period of time, the Group has assessed whether, throughout the period of use, the customer has both of the following:
If a contract relating to an asset fails to give the customer both of the above rights, the Group accounts for the agreement as a revenue contract. In situations where management services unrelated to an asset contract are provided, the Group accounts for the contract as a revenue contract.
In certain situations a lease and service contracts are entered into at the same or as a single contract with our customers. Where the customer is charged a monthly fee that both relates to the rental price of the vehicle (including depreciation and interest) and various other products and services that the customer can subscribe to, the standalone tariffed elements will be recognised as separate performance obligations if the good or service is distinct by meeting both 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.
The lease classification, that is determined on a contract-by-contract basis, will determine if revenue recognition is on an operating lease or finance lease basis (see Rental fleet policy for determining classification).
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.
Charges to clients may include passed on costs such as fuel, road taxes and other taxes which do not represent the inflow of economic benefits and/or are collected on behalf of third parties and are therefore not presented as revenues.
Upfront payments from customers at the beginning of the lease agreement are recognised in the balance sheet and amortised on a straight-line basis over the period of the lease agreement. Amounts paid or value provided to lessees as lease incentives are capitalised (e.g. upfront cash payments to the lessee, reimbursement or absorption of costs by the lessor or free or reduced rents given at the beginning of the lease term). Lease incentives are amortised on a straight-line basis over the term of the related lease as a reduction in revenue.
Where a customer retains the car for a period beyond the normal return date (informal extension), the rent continues to be charged to the customer and the related contractual depreciation will continue to be recognised.
Regarding finance leases, IFRS\u00a016\u00a0standard 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 income statement in each period using the effective interest rate method 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:
Upfront payments and initial direct costs are taken into consideration in calculating the implicit interest rate in the lease and recognised evenly over the life of the lease as an adjustment of yield.
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 five\u00a0steps process required by IFRS\u00a015 for non-lease components is summarised as follows:
Revenue from Fleet Management services is recognised on a straight-line basis over the term of the Fleet Management agreement.
Income related to repair & maintenance services is recognised over the term of the lease contract. The allocation of income over the term is based on the normal repair and maintenance cost profile supported by historical statistics and expected service costs. The difference between the amounts charged to clients and amounts recognised as income is accounted for as deferred leasing income. Cost profiles are reviewed periodically to ensure they remain a fair representation of historical repair and maintenance expenditures, adjusted for reasonable expectations of changes in cost profiles. Where an accurate or reliable estimate of the cost curve is not available revenue is recognised based on an estimate of expected completion of the performance obligation using an alternative input method.
If income related to services surrounding contracts is not certain until final settlement takes place, this income is not recognised until that time and is presented within the sales result. For all other contracts, expected losses are recognised as an expense immediately when it is probable that total contract costs will exceed total contract revenues.
Revenue is recognised on a straight-line basis over the term of the management agreement.
Flex fleet revenues are recognised on a straight-line basis over the term of the rental agreement.
The revenue from the risk retention schemes is recognised based on the monthly lease instalment. This applies for third-party liability and own damage insurance products. Revenue recognition will cease when the contract is terminated by a client or at the end of the contractual term.
Where interest on late payment is billed to customers, the related revenue is only recognised when settlements are made by customers.
Revenues also include the proceeds of the sale of vehicles from terminated lease contracts and rental revenues from end of contract billing such as repair costs recharged to the customer. The proceeds from the sale of vehicles are recognised when the vehicles are sold and control of the vehicles is transferred. End of contract fees may consist of fees charged to clients for mileage variation adjustments and excessive wear and tear of the vehicle. Revenues also included charges arising from deviations from the contractual terms, where the fees are recognised upon termination of the lease contract.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForRecognitionOfRevenue", "language": "en", "entity": "scheme:969500E7V019H9NP7427", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "text_block_7dd890f6-e12b-450d-8b91-3dac675031c3": { "value": "Direct 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). Any (volume related) bonuses related to these expenses are credited directly to expenses. Bonuses received on purchases of objects for operating lease contracts are deducted from the purchase consideration and as such result in lower depreciation. Bonuses received on purchases of objects for finance lease contracts are recognised immediately in the consolidated income statement.
Cost of revenues also includes the carrying amount of the sold vehicles and the costs associated with the rental activities, finance costs for interest-bearing liabilities, impairment charges on loans and receivables and unrealised (gains)/losses on financial instruments.
(in EUR million) | Year ended 31\u00a0December | |
|---|---|---|
2023 | Restated 2022\u00a0(1) | |
Leasing contract revenue - operating leases | 7,795.3 | 4,757.2 |
Interest income from finance lease | 90.4 | 36.1 |
Other interest income | 148.0 | 10.6 |
Leasing contract revenues | 8,033.7 | 4,803.9 |
Leasing contract costs - depreciation | (5,685.7) | (3,433.1) |
Leasing contract costs - financing: | \u00a0 | \u00a0 |
Interest charges on loans from financial institutions\u00a0(2) | (445.2) | (177.6) |
Interest charges on deposits | (169.0) | \u2212 |
Interest charges on issued bonds | (225.3) | (38.2) |
Other interest charges | (205.2) | (28.3) |
Total interest charges | (1,044.7) | (244.1) |
Leasing contract costs - depreciation and financing | (6,730.4) | (3,677.2) |
Derivatives not in hedges | (152.0) | (1.6) |
Hedge ineffectiveness - fair value hedges | (35.5) | \u2212 |
Hedge ineffectiveness - cash flow hedges | 1.5 | (0.2) |
Unrealised gains/losses on derivative financial instruments | (186.0) | (1.8) |
Unrealised Foreign Exchange Gains or Losses | 4.5 | (3.6) |
Hyperinflation - net monetary gain | 140.1 | 59.9 |
Total Unrealised gains/losses on financial instruments and other | (41.4) | 54.5 |
Leasing contract margin | 1,261.9 | 1,181.2 |
|
\u00a0
\u201cOther interest income\u201d comprises income received from financial instruments, income received for cash deposits with central banks and other third parties.
\u201cOther interest charges\u201d mainly comprise of interest charges incurred from asset-backed borrowings, net interest costs on derivative financial instruments, realised gains or losses on translation of financial liabilities and interest expense on lease liabilities.
\u201cLeasing contract costs \u2013 depreciation\u201d 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.
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:
Used vehicles prices have continued to drive high profit from the used car sales activity throughout 2023 but, as previously predicted, the used car market has started to normalise in the first semester of 2023 with a further decline observed in the second semester of 2023.
This assessment continues to result in a reduction in depreciation costs of EUR\u00a0553.2\u00a0million and represents partial recognition of estimated future used car profits.
Total interest charges have increased significantly in the year ending 31\u00a0December 2023. \u201cInterest charge on loans from financial institutions\u201d has increased with the acquisition of LeasePlan, which has external funding arrangements and borrowing from central bank institutions as part of its banking operations. The new charge of \u201cInterest charges on deposits\u201d is also a result of interest paid on fixed term savings deposits, raised by LeasePlan in the Netherlands and in Germany. \u201cInterest charges on issued bonds\u201d has increased due to the issuance of new EMTN bonds in the year to finance the operations of the combined group, while the increase in \u201cOther interest charges\u201d are due to the additional asset-backed securitisation funding acquired on acquisition of LeasePlan. For more details of the funding changes from the acquisition of LeasePlan see note\u00a029 \u201cBorrowings from financial institutions, Bonds and notes issued\u201d.
Leasing contract margin is negatively impacted by the mark to market loss of EUR\u00a0201.9\u00a0million on LeasePlan derivatives that are not hedged for accounting purposes. The Group\u2019s activities are principally related to vehicle leasing and Fleet Management. The Group accepts and offers lease contracts to clients at both fixed and floating interest rates, for various periods and in various currencies. For a major part of the funding of the LeasePlan cars, the Group has entered into borrowings from external parties or issued notes to third parties. To mitigate the Group exposure towards future movements in interest rates and currency exchange rates the Group have entered into interest rate swaps and cross currency swap and forward arrangements. While as a result of these arrangements the Group mitigates interest rate risk and currency risk from an economic perspective, these derivatives do not always qualify for hedge accounting from an accounting perspective that due to the accounting treatment of derivative financial instruments exposes the Group to some volatility in its income statement. For more details see note\u00a04 \u201cFinancial Risk Management\u201d and note\u00a019 \u201cDerivative financial instruments\u201d.
The \u201cHyperinflation \u2013 net monetary gain\u201d in the \u201cUnrealised gains/losses on financial instruments and other\u201d line in the income statement, includes the gain for the consumer price index inflation applied to the book value of the Turkish subsidiaries fleet of vehicles, share capital and retained earnings. This uplift in book value of the vehicles has resulted in an impairment of EUR\u00a067.2\u00a0million for year ending 31\u00a0December 2023 (2022: nil) and additional depreciation on the inflationary increase of EUR\u00a033.7\u00a0million that have been included within the \u201cLeasing contract costs \u2013 depreciation\u201d line in the income statement, so overall the net impact on the Leasing contract margin amount is EUR\u00a039.2\u00a0million. For further detail see note\u00a05 \u201cCritical accounting estimates and judgements\u201d.
\u00a0
\u00a0\u00a0\u00a0\u00a0\u00a0
(in EUR million) | Year ended 31\u00a0December | |
|---|---|---|
2023 | Restated 2022\u00a0(1) | |
Services revenue | 4,391.2 | 2,657.4 |
Cost of services revenues | (3,037.0) | (1,942.3) |
Services margin | 1,354.2 | 715.1 |
|
\u00a0
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.
Services margin for the year ended 31\u00a0December 2023 includes an amount of EUR\u00a084.4\u00a0million related to insurance and reinsurance services.
\u00a0
(in EUR million) | Year ended 31\u00a0December | |
|---|---|---|
2023 | 2022 | |
Proceeds of cars sold | 6,458.8 | 3,953.6 |
Cost of cars sold\u00a0(1) | (6,109.3) | (3,205.9) |
Used Car Sales result | 349.5 | 747.6 |
|
\u00a0
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 2023 was EUR\u00a0312.2\u00a0million.
\u00a0
Revenues that are included within the margins analysed in\u00a08a, 8b and\u00a08c 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 | |
|---|---|---|
2023 | 2022 | |
Services Revenues | 4,391.2 | 2,657.4 |
Leasing contract revenue - operating leases | 7,795.3 | 4,757.2 |
Interest revenue | 238.4 | 46.7 |
Leasing contract revenues | 8,033.7 | 4,803.9 |
Sub-Total - Revenues from Rental Activity | 12,424.9 | 7,461.3 |
Proceeds of Cars Sold | 6,458.8 | 3,953.6 |
Total Revenues | 18,883.7 | 11,414.8 |
Total Revenues excluding Interest Income | 17,006.3 | 10,495.2 |
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 \u201cLeasing contract revenue \u2013 operating lease\u201d also on a straight line basis.
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.
(in EUR million) | Year ended 31\u00a0December | |
|---|---|---|
2023 | Restated 2022\u00a0(1) | |
Leasing contract revenue - operating leases | 7,795.3 | 4,757.2 |
Interest income from finance lease | 90.4 | 36.1 |
Other interest income | 148.0 | 10.6 |
Leasing contract revenues | 8,033.7 | 4,803.9 |
Leasing contract costs - depreciation | (5,685.7) | (3,433.1) |
Leasing contract costs - financing: | \u00a0 | \u00a0 |
Interest charges on loans from financial institutions\u00a0(2) | (445.2) | (177.6) |
Interest charges on deposits | (169.0) | \u2212 |
Interest charges on issued bonds | (225.3) | (38.2) |
Other interest charges | (205.2) | (28.3) |
Total interest charges | (1,044.7) | (244.1) |
Leasing contract costs - depreciation and financing | (6,730.4) | (3,677.2) |
Derivatives not in hedges | (152.0) | (1.6) |
Hedge ineffectiveness - fair value hedges | (35.5) | \u2212 |
Hedge ineffectiveness - cash flow hedges | 1.5 | (0.2) |
Unrealised gains/losses on derivative financial instruments | (186.0) | (1.8) |
Unrealised Foreign Exchange Gains or Losses | 4.5 | (3.6) |
Hyperinflation - net monetary gain | 140.1 | 59.9 |
Total Unrealised gains/losses on financial instruments and other | (41.4) | 54.5 |
Leasing contract margin | 1,261.9 | 1,181.2 |
|
\u00a0
\u201cOther interest income\u201d comprises income received from financial instruments, income received for cash deposits with central banks and other third parties.
\u201cOther interest charges\u201d mainly comprise of interest charges incurred from asset-backed borrowings, net interest costs on derivative financial instruments, realised gains or losses on translation of financial liabilities and interest expense on lease liabilities.
\u201cLeasing contract costs \u2013 depreciation\u201d 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.
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:
Used vehicles prices have continued to drive high profit from the used car sales activity throughout 2023 but, as previously predicted, the used car market has started to normalise in the first semester of 2023 with a further decline observed in the second semester of 2023.
This assessment continues to result in a reduction in depreciation costs of EUR\u00a0553.2\u00a0million and represents partial recognition of estimated future used car profits.
Total interest charges have increased significantly in the year ending 31\u00a0December 2023. \u201cInterest charge on loans from financial institutions\u201d has increased with the acquisition of LeasePlan, which has external funding arrangements and borrowing from central bank institutions as part of its banking operations. The new charge of \u201cInterest charges on deposits\u201d is also a result of interest paid on fixed term savings deposits, raised by LeasePlan in the Netherlands and in Germany. \u201cInterest charges on issued bonds\u201d has increased due to the issuance of new EMTN bonds in the year to finance the operations of the combined group, while the increase in \u201cOther interest charges\u201d are due to the additional asset-backed securitisation funding acquired on acquisition of LeasePlan. For more details of the funding changes from the acquisition of LeasePlan see note\u00a029 \u201cBorrowings from financial institutions, Bonds and notes issued\u201d.
Leasing contract margin is negatively impacted by the mark to market loss of EUR\u00a0201.9\u00a0million on LeasePlan derivatives that are not hedged for accounting purposes. The Group\u2019s activities are principally related to vehicle leasing and Fleet Management. The Group accepts and offers lease contracts to clients at both fixed and floating interest rates, for various periods and in various currencies. For a major part of the funding of the LeasePlan cars, the Group has entered into borrowings from external parties or issued notes to third parties. To mitigate the Group exposure towards future movements in interest rates and currency exchange rates the Group have entered into interest rate swaps and cross currency swap and forward arrangements. While as a result of these arrangements the Group mitigates interest rate risk and currency risk from an economic perspective, these derivatives do not always qualify for hedge accounting from an accounting perspective that due to the accounting treatment of derivative financial instruments exposes the Group to some volatility in its income statement. For more details see note\u00a04 \u201cFinancial Risk Management\u201d and note\u00a019 \u201cDerivative financial instruments\u201d.
The \u201cHyperinflation \u2013 net monetary gain\u201d in the \u201cUnrealised gains/losses on financial instruments and other\u201d line in the income statement, includes the gain for the consumer price index inflation applied to the book value of the Turkish subsidiaries fleet of vehicles, share capital and retained earnings. This uplift in book value of the vehicles has resulted in an impairment of EUR\u00a067.2\u00a0million for year ending 31\u00a0December 2023 (2022: nil) and additional depreciation on the inflationary increase of EUR\u00a033.7\u00a0million that have been included within the \u201cLeasing contract costs \u2013 depreciation\u201d line in the income statement, so overall the net impact on the Leasing contract margin amount is EUR\u00a039.2\u00a0million. For further detail see note\u00a05 \u201cCritical accounting estimates and judgements\u201d.
\u00a0
", "dimensions": { "concept": "ifrs-full:DisclosureOfFinanceIncomeExpenseExplanatory", "language": "en", "entity": "scheme:969500E7V019H9NP7427", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "text_block_b341a04f-f5f3-4e5f-ab83-67fea3f7a03a": { "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 \u201cLeasing contract revenue \u2013 operating lease\u201d also on a straight line basis.
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:DescriptionOfAccountingPolicyForFinanceIncomeAndCostsExplanatory", "language": "en", "entity": "scheme:969500E7V019H9NP7427", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "text_block_f3039162-bc5b-48cd-a9ab-4e6ae76c8213": { "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 \u201cLeasing contract revenue \u2013 operating lease\u201d also on a straight line basis.
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.
(in EUR million) | Year ended 31\u00a0December | |
|---|---|---|
2023 | Restated 2022\u00a0(1) | |
Leasing contract revenue - operating leases | 7,795.3 | 4,757.2 |
Interest income from finance lease | 90.4 | 36.1 |
Other interest income | 148.0 | 10.6 |
Leasing contract revenues | 8,033.7 | 4,803.9 |
Leasing contract costs - depreciation | (5,685.7) | (3,433.1) |
Leasing contract costs - financing: | \u00a0 | \u00a0 |
Interest charges on loans from financial institutions\u00a0(2) | (445.2) | (177.6) |
Interest charges on deposits | (169.0) | \u2212 |
Interest charges on issued bonds | (225.3) | (38.2) |
Other interest charges | (205.2) | (28.3) |
Total interest charges | (1,044.7) | (244.1) |
Leasing contract costs - depreciation and financing | (6,730.4) | (3,677.2) |
Derivatives not in hedges | (152.0) | (1.6) |
Hedge ineffectiveness - fair value hedges | (35.5) | \u2212 |
Hedge ineffectiveness - cash flow hedges | 1.5 | (0.2) |
Unrealised gains/losses on derivative financial instruments | (186.0) | (1.8) |
Unrealised Foreign Exchange Gains or Losses | 4.5 | (3.6) |
Hyperinflation - net monetary gain | 140.1 | 59.9 |
Total Unrealised gains/losses on financial instruments and other | (41.4) | 54.5 |
Leasing contract margin | 1,261.9 | 1,181.2 |
|
\u00a0
\u201cOther interest income\u201d comprises income received from financial instruments, income received for cash deposits with central banks and other third parties.
\u201cOther interest charges\u201d mainly comprise of interest charges incurred from asset-backed borrowings, net interest costs on derivative financial instruments, realised gains or losses on translation of financial liabilities and interest expense on lease liabilities.
\u201cLeasing contract costs \u2013 depreciation\u201d 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.
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:
Used vehicles prices have continued to drive high profit from the used car sales activity throughout 2023 but, as previously predicted, the used car market has started to normalise in the first semester of 2023 with a further decline observed in the second semester of 2023.
This assessment continues to result in a reduction in depreciation costs of EUR\u00a0553.2\u00a0million and represents partial recognition of estimated future used car profits.
Total interest charges have increased significantly in the year ending 31\u00a0December 2023. \u201cInterest charge on loans from financial institutions\u201d has increased with the acquisition of LeasePlan, which has external funding arrangements and borrowing from central bank institutions as part of its banking operations. The new charge of \u201cInterest charges on deposits\u201d is also a result of interest paid on fixed term savings deposits, raised by LeasePlan in the Netherlands and in Germany. \u201cInterest charges on issued bonds\u201d has increased due to the issuance of new EMTN bonds in the year to finance the operations of the combined group, while the increase in \u201cOther interest charges\u201d are due to the additional asset-backed securitisation funding acquired on acquisition of LeasePlan. For more details of the funding changes from the acquisition of LeasePlan see note\u00a029 \u201cBorrowings from financial institutions, Bonds and notes issued\u201d.
Leasing contract margin is negatively impacted by the mark to market loss of EUR\u00a0201.9\u00a0million on LeasePlan derivatives that are not hedged for accounting purposes. The Group\u2019s activities are principally related to vehicle leasing and Fleet Management. The Group accepts and offers lease contracts to clients at both fixed and floating interest rates, for various periods and in various currencies. For a major part of the funding of the LeasePlan cars, the Group has entered into borrowings from external parties or issued notes to third parties. To mitigate the Group exposure towards future movements in interest rates and currency exchange rates the Group have entered into interest rate swaps and cross currency swap and forward arrangements. While as a result of these arrangements the Group mitigates interest rate risk and currency risk from an economic perspective, these derivatives do not always qualify for hedge accounting from an accounting perspective that due to the accounting treatment of derivative financial instruments exposes the Group to some volatility in its income statement. For more details see note\u00a04 \u201cFinancial Risk Management\u201d and note\u00a019 \u201cDerivative financial instruments\u201d.
The \u201cHyperinflation \u2013 net monetary gain\u201d in the \u201cUnrealised gains/losses on financial instruments and other\u201d line in the income statement, includes the gain for the consumer price index inflation applied to the book value of the Turkish subsidiaries fleet of vehicles, share capital and retained earnings. This uplift in book value of the vehicles has resulted in an impairment of EUR\u00a067.2\u00a0million for year ending 31\u00a0December 2023 (2022: nil) and additional depreciation on the inflationary increase of EUR\u00a033.7\u00a0million that have been included within the \u201cLeasing contract costs \u2013 depreciation\u201d line in the income statement, so overall the net impact on the Leasing contract margin amount is EUR\u00a039.2\u00a0million. For further detail see note\u00a05 \u201cCritical accounting estimates and judgements\u201d.
\u00a0
", "dimensions": { "concept": "ifrs-full:DisclosureOfInterestIncomeExpenseExplanatory", "language": "en", "entity": "scheme:969500E7V019H9NP7427", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "text_block_939038da-0cbd-469e-899b-55665dc6ce0c": { "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 \u201cLeasing contract revenue \u2013 operating lease\u201d also on a straight line basis.
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": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "text_block_d6bde894-30aa-41bb-87e7-d24a10be927d": { "value": "This item includes office overheads, automation costs, advertising costs, professional fees and other general expenses.
\u00a0
The breakdown of staff expenses is as follows:
(in EUR million) | Year ended 31\u00a0December | |
|---|---|---|
2023 | Restated 2022\u00a0(1) | |
Wages and salaries | (659.3) | (418.4) |
Social security charges | (120.8) | (76.0) |
Defined benefit post-employment costs | (4.3) | (0.8) |
Other staff costs | (151.7) | (22.5) |
Total | (936.1) | (517.8) |
|
\u00a0
The average number of staff employed (including temporary staff) by the Group during the year was 12,505 (2022: 7,154). At year-end, the full time equivalent number of staff employed by the Group was 14,578 (2022: 7,529).
The breakdown of the components of the defined benefit pension cost is identified in note\u00a031.
\u00a0
\u00a0
The breakdown of general and administrative expenses is as follows:
(in EUR million) | Year ended 31\u00a0December | |
|---|---|---|
2023 | Restated 2022\u00a0(1) | |
Professional services expenses | (210.6) | (150.7) |
Facilities | (176.3) | (69.1) |
Marketing and sales | (34.8) | (13.9) |
Other general and administrative expenses | (97.7) | (64.5) |
Total | (519.5) | (298.1) |
|
\u00a0
\u00a0
(in EUR million) | Notes | Year ended 31\u00a0December | |
|---|---|---|---|
2023 | 2022 | ||
Depreciation of other property and equipment | 14 | (34.7) | (20.2) |
Depreciation of intangible assets | 17 | (59.3) | (25.5) |
Depreciation of right of use assets\u00a0(1) | 15 | (42.0) | (21.0) |
Total | \u00a0 | (136.0) | (66.7) |
|
\u00a0
Ayvens continues to invest in IT 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 the Group's customers.
Increase throughout all lines of operating expenses is mainly due to scope changes related to the acquisition of LeasePlan on 22\u00a0May 2023 (see note\u00a02 for further details).
", "dimensions": { "concept": "ifrs-full:DisclosureOfExpensesExplanatory", "language": "en", "entity": "scheme:969500E7V019H9NP7427", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "text_block_0d445892-ec87-4816-96e8-4be63a3b6b5d": { "value": "This item includes office overheads, automation costs, advertising costs, professional fees and other general expenses.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForExpensesExplanatory", "language": "en", "entity": "scheme:969500E7V019H9NP7427", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "text_block_6f73dab9-8836-4353-9b02-cc197c389fe7": { "value": "Employees (including senior executives) of the Group receive remuneration in the form of share-based payments via the Group long-term incentive plans and employee share schemes, whereby employees render services in exchange for equity-settled transactions and cash-settled transactions. Information relating to these schemes is set out in note\u00a028.
The fair value of shares granted under the Group 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 has variable remuneration awards for the identified staff that consists of a direct payment in cash and a deferred payment in cash and Phantom Share Units (PSUs). The PSUs represent the underlying value of the Company shares which entitle the participant to a payment in cash after a specified period and are recognised as a cash-settled share-based payment arrangement. The PSU part of the deferred award is revalued annually by estimating the Company\u2019s equity value for determining the fair value of the outstanding PSU awards.
Liabilities recognised for PSUs are measured at the estimated fair value. This fair value is established once a year by the (Remuneration Committee of the) Supervisory Board and is based on comparing financial performance of the Company to publicly available valuation and financial performance of a selected peer group of comparable companies. All changes to the PSUs\u2019 liabilities are recognised in the statement of profit or loss under staff expenses.
In 2023, three new equity-settled share-based payment plans were approved by the 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 its 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.
\u00a0
\u00a0 | Plan\u00a011 | Plan\u00a012.A | Plan\u00a012.B |
|---|---|---|---|
Date of Board Meeting | 23\u00a0March 2023 | 23\u00a0March 2023 | 23\u00a0March 2023 |
Total number of shares granted | 395,017 | 19,123 | 19,127 |
Vesting date | 31\u00a0March 2026 | 31\u00a0March 2026 | 31\u00a0March 2027 |
Holding period end date | no holding period | 30\u00a0September 2026 | 30\u00a0September 2027 |
Fair value (in EUR) | 8.31 | 8.31 | 8.31 |
Number of employees in the plan | 393 | 6 | 6 |
\u00a0
\u00a0
\u00a0 | 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 | 9.51 | 9.51 |
Number of employees in the plan | 374 | 6 | 6 |
\u00a0
\u00a0 | 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 |
\u00a0
Vesting conditions are based on ALD\u2019s profitability, as measured by the average Group Net income over the 4, 3 or 2\u00a0years of the vesting period. The ALD Group Net income corresponds to the published ALD Group Net income.
At 31\u00a0December 2023, 728\u00a0employees (600\u00a0employees as at 31\u00a0December 2022) 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.
\u00a0
\u00a0 | Number of shares |
|---|---|
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 |
As at 1\u00a0January 2023 | 1,028,767 |
Granted during the year | 433,267 |
Vested during the year | (373,694) |
Forfeited during the year | (45,251) |
As at 31\u00a0December 2023 | 1,043,089 |
\u00a0
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.
\u00a0
(in EUR million) | 31\u00a0December 2023 | 31\u00a0December 2022 |
|---|---|---|
Net expenses from free share ALD plans | (3.2) | (2.9) |
\u00a0
In the newly acquired LeasePlan entities, there are variable remuneration schemes. The maximum amount is capped at 50% of fixed remuneration for employees and 20% for employees who work for the Dutch operating entity.
Variable remuneration for senior management consists of cash (50%) and non-cash elements (50%), i.e. PSUs. 50% of the variable remuneration of senior management is paid upfront and 50% of the variable remuneration is deferred for a period of four years, whereby every year one-fourth vests. The Managing Board has a deferral period of five years and 60% is deferred. PSUs have a retention period of one year after vesting.
The expense during the year ended 31\u00a0December 2023 is included in the \u201cStaff expenses\u201d and is not material to the Group.
", "dimensions": { "concept": "ifrs-full:DisclosureOfSharebasedPaymentArrangementsExplanatory", "language": "en", "entity": "scheme:969500E7V019H9NP7427", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "text_block_283fe882-2e74-498a-8f9f-ed9b5ef9d518": { "value": "Employees (including senior executives) of the Group receive remuneration in the form of share-based payments via the Group long-term incentive plans and employee share schemes, whereby employees render services in exchange for equity-settled transactions and cash-settled transactions. Information relating to these schemes is set out in note\u00a028.
The fair value of shares granted under the Group 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 has variable remuneration awards for the identified staff that consists of a direct payment in cash and a deferred payment in cash and Phantom Share Units (PSUs). The PSUs represent the underlying value of the Company shares which entitle the participant to a payment in cash after a specified period and are recognised as a cash-settled share-based payment arrangement. The PSU part of the deferred award is revalued annually by estimating the Company\u2019s equity value for determining the fair value of the outstanding PSU awards.
Liabilities recognised for PSUs are measured at the estimated fair value. This fair value is established once a year by the (Remuneration Committee of the) Supervisory Board and is based on comparing financial performance of the Company to publicly available valuation and financial performance of a selected peer group of comparable companies. All changes to the PSUs\u2019 liabilities are recognised in the statement of profit or loss under staff expenses.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForSharebasedPaymentTransactionsExplanatory", "language": "en", "entity": "scheme:969500E7V019H9NP7427", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "text_block_839606e0-3e96-4717-b286-d1c670134a57": { "value": "Basic EPS is calculated by dividing the profit for the year attributable to ordinary equity holders of the parent (after adjusting for interest on the AT1 capital) by the weighted average number of ordinary shares outstanding during the year.
Diluted EPS is calculated by dividing the profit attributable to ordinary equity holders of the parent (after adjusting for interest on the AT1 capital) by the weighted average number of ordinary shares outstanding during the year plus the weighted average number of ordinary shares that would be issued on conversion of all the dilutive potential ordinary shares into ordinary shares.
Weighted average number of shares for the year 2022 has been restated to include effect of the bonus element which represents number of shares in the rights issue deemed to be issued without consideration.
In 2023, weighted average number of shares outstanding in the computation of diluted earnings per share includes the number of shares to be issued for the warrants at no consideration adjusted for deduction of the ordinary shares that would be purchased in the open market using the expected proceeds.
The Group is 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. Rights to free ordinary 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.
\u00a0
\u00a0 | As at 31\u00a0December | |
|---|---|---|
2023 | Restated 2022 | |
Net income Group share (in EUR million) | 816.2 | 1,215.5 |
Result after tax from discontinued operations (in EUR million) | 77.6 | \u2212 |
Attributable remuneration to AT1 capital holders (in EUR million) | (45.0) | \u2212 |
Net income from continuing operations Group share (in EUR million) | 848.8 | 1,215.5 |
Weighted average number of ordinary shares with voting rights (in thousands) | 711,058 | 451,995 |
Basic earnings per share from continuing operations (in cents) | 1.19 | 2.69 |
Net income Group share (in EUR million) | 816.2 | 1,215.5 |
Attributable remuneration to AT1 capital holders (in EUR million) | (45.0) | \u2212 |
Net income Group share (in EUR million) | 771.2 | 1,215.5 |
Weighted average number of ordinary shares with voting rights (in thousands) | 711,058 | 451,995 |
Basic earnings per share (in cents) | 1.08 | 2.69 |
\u00a0
\u00a0 | As at 31\u00a0December | |
|---|---|---|
2023 | Restated 2022 | |
Net income from continuing operations Group share (in EUR million) | 848.8 | 1,215.5 |
Weighted average number of ordinary shares (in thousands) | 722,914 | 453,169 |
Diluted earnings per share from continuing operations (in EUR) | 1.17 | 2.68 |
Net income Group share (in EUR million) | 771.2 | 1,215.5 |
Weighted average number of ordinary shares (in thousands) | 722,914 | 453,169 |
Diluted earnings per share (in cents) | 1.07 | 2.68 |
Basic EPS is calculated by dividing the profit for the year attributable to ordinary equity holders of the parent (after adjusting for interest on the AT1 capital) by the weighted average number of ordinary shares outstanding during the year.
Diluted EPS is calculated by dividing the profit attributable to ordinary equity holders of the parent (after adjusting for interest on the AT1 capital) by the weighted average number of ordinary shares outstanding during the year plus the weighted average number of ordinary shares that would be issued on conversion of all the dilutive potential ordinary shares into ordinary shares.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForEarningsPerShareExplanatory", "language": "en", "entity": "scheme:969500E7V019H9NP7427", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "text_block_2174c54b-e27d-4ae1-8dfa-f385eb87b298": { "value": "\u00a0
Credit risk refers to the risk of losses resulting from the inability of Group customers, issuers or other counterparties to meet their financial commitments. Credit risk may be aggravated by concentration risk, resulting from a high exposure to a given risk or to one or more counterparties, or to one or more groups of similar counterparties. In addition to the risk of lessees not making payments for the leased vehicles, the Group is exposed to credit risk originating from its banking and treasury activities, which includes deposits and investments placed with financial institutions and hedging instruments, such as derivatives and reinsurance activities. The Group\u2019s maximum exposure to credit risk primarily arises from these financial assets and is as follows:
\u00a0
(in EUR million) | As at 31\u00a0December | |
|---|---|---|
2023 | 2022 | |
Cash and cash equivalents | 3,997.0 | 253.1 |
Lease receivables from clients | 4,545.2 | 1,849.1 |
Other receivables, prepayments and contract assets\u00a0(1) | 1,217.0 | 429.4 |
Investment in debt and equity securities\u00a0(1) | 118.9 | 18.7 |
Derivative financial assets | 383.3 | 128.9 |
Total exposure | 10,261.3 | 2,679.4 |
|
\u00a0
The Group\u2019s definition of default for the purpose of determining ECLs, and for internal credit risk management purposes aligns to the ECB Regulatory Capital CRR Article\u00a0178 definition of default, to maintain a consistent approach with IFRS\u00a09 and associated regulatory guidance.
The Group has issued policies and standards which regulate the governance of the local credit risk management organisation. All Group entities must 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 assessment process. Each subsidiary has a specific credit authority approved by the Group General Management and the Risk Department of Societe Generale, that is determined by 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 and concentration 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 the Group 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. However, the primary responsibility for debt collection remains with the Group subsidiaries that have dedicated teams in charge of recovering unpaid invoices in compliance with local regulations and market practices. These local processes are required to be compliant with the corporate instructions and guidelines. 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. Each local entity is required to maintain a watch list, which is based on credit rating and other available information. These lists are reviewed in regular meetings by the Credit Committees. A qualitative analysis of total credit exposures, defaults and losses is reported on a monthly basis and discussed on a quarterly basis to the Entity Risk Committee locally and Credit Risk Committee centrally.
The Group limits credit risk on liquid funds and derivative financial instruments through diversification of exposures with a range of financial institutions. Counterparty limits are set for each financial institution with reference to credit ratings assigned by Standard & Poor\u2019s and Moody\u2019s. Limits are set on a legal entity basis and are included in the Group\u2019s risk appetite and approved on a yearly basis. The Group\u2019s treasury risk management monitors the exposures, against the approved limits, on an ongoing basis.
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. The Group is currently in the process of aligning the methodologies used to calculate the expected credit loss (ECL) in the existing ALD Group entities and the newly acquired LeasePlan entities in the year, a project that should be completed within the next 12\u00a0months.
For existing ALD entities where trade receivables and finance lease receivables are not in default, 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. 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 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 and 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. When in default, the receivables from leases with customers are provisioned at 100%.
For the LeasePlan entities acquired, the amount of ECL for lease receivables is measured at the contract level as the probability weighted present value of all cash shortfalls over the expected life of the financial asset discounted at the original implicit interest rate embedded in the lease contract. The cash shortfall is the difference between all contractual cash flows that are due to the Group and all the cash flows that the Group expects to receive. The Group determines the ECL for lease receivables based on sophisticated models. These models include forward-looking macro-economic scenarios and multi-year forecast over the lifetime of the lease contracts. PD, LGD and EAD forecasts are combined to produce the ECL estimate. As such, ECL is highly dependent on the credit quality of counterparties in the portfolio at the reporting date, the types, and characteristics of vehicles in the portfolio, the expected maturities and repayment terms of the contracts, the forecasts of future macro-economic variables in various scenarios, the forecast market developments and residual values for used vehicles in various scenarios, and the probability weight assigned to each forecast scenario.
Expected credit losses are reassessed at each reporting date and reflect all reasonable information that is available at the reporting date and management consider 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. Further information on the expected loss provision on receivables from leases is include in note\u00a022. Given the diverse nature of the Group\u2019s operations (both in relation to customer type and geographically), the Group does not have significant concentration of credit risk in respect of lease receivables from clients, with exposure spread over a large number of customers.
For other financial assets listed above where there is zero or almost no history of credit risk or the amounts due are from financial institutions with an investment grade credit rating, no provision has been applied. For all other counterparties the ECL is based on the General Approach, where the expected credit loss model is calculated by multiplying the PD, LGD and the Exposure at Default (EAD), but the level of provisioning is dependent on the credit deterioration of the asset. If in stage\u00a01, and no deterioration since inception, then based on 12-month ECL, if there is significant deterioration in credit rating, then at stage\u00a02 with a lifetime ECL, and if observable evidence of impairment, then at stage\u00a03 and provisioned based on asset being credit impaired.
\u00a0
Treasury risk consists of three individual risks, being liquidity risk, interest rate risk and currency risk. Liquidity risk is the risk that the Group is not able to meet its cash outflow obligations when they fall due, because of a mismatch between its assets and liabilities. Interest rate risk is the risk that the profitability and shareholders\u2019 equity of the Group are affected by movements in interest rates. Currency risk is the risk that currency fluctuations have an adverse impact on the Group\u2019s capital ratios, result and shareholders\u2019 equity.
After the acquisition of LeasePlan, the newly acquired LeasePlan entities have continued to apply their treasury risk hedging policies established pre-acquisition until integration of the LeasePlan entities. Upon integration the acquired entities will follow the standard Group treasury risk policies that are consistent with prior year but will be updated to reflect the risk appetite of the combined entity.
Group Treasury risk management policy consists of 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 at the Group level by the central treasury, which reports on a quarterly basis to the management team of the Group 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.
The Group accepts and offers lease contracts to clients at both fixed and floating interest rates, for various durations and in various currencies. Most lease contracts are on a fixed interest rate basis. Interest rate risk within the Group is managed separately for:
The interest rate risk policy is to match the interest rate risk profile of the lease contract portfolio with a corresponding interest rate funding profile to minimise the interest rate risk as measured by interest rate gap reports per Group entity. Group entities carry interest-bearing assets on their balance sheet, funded by interest-bearing liabilities (loans and other indebtedness). Where interest-bearing liabilities fall short to cover interest-bearing assets, non-interest-bearing working capital and subsidiaries\u2019 equity can cover interest-bearing assets, as part of the matched funding policy.
The Group central treasury monitors the Group\u2019s interest rate risk exposure and advises subsidiaries to implement adequate hedging operations based on a monthly report measuring interest risk exposure. Each entity and the Group as a whole are subject to sensitivity thresholds and limits validated by the Asset-Liability Committee (ALCO). The Group structural risks are discussed on a quarterly basis during ALCO meetings.
The Group matches the interest rate risk profile of the lease contract portfolio with a corresponding interest rate funding profile to minimise the interest rate risk, where the IRRBB model takes into account lease client behaviour instead of the contractual interest rate risk profile. The Group investigate whether its IRRBB model appropriately reflects its economic reality and the applicable regulatory framework.
\u00a0
For the Group, the sensitivity metric used is the variation in the net present value of the future residual fixed-rate positions (surplus or deficit) for non-stressed shocks of +10\u00a0bps and -10\u00a0bps in the yield curve. The table below reflects the balance sheet exposure of the Group\u2019s financial liabilities to interest rate risk:
NPV sensitivity impact (in EUR million)\u00a0(1) | As at 31\u00a0December | |
|---|---|---|
2023 | 2022 | |
+10\u00a0bps | 0.7 | 13.0 |
-10\u00a0bps | (0.8) | (13.1) |
|
\u00a0
A positive NPV sensitivity for a +10bps represents an excess of fixed rate resources. At the end of 2022, the excess of fixed rate resources is mainly explained by the use of equity for financing the fleet activity and the capital increase of ALD in anticipation of the acquisition of LeasePlan (equity being considered as a long-term resource at fixed rate, whilst the fleet is a medium-term asset and the cash from the capital increase was replaced with a short-term deposit). At the end of 2023, the excess of fixed rate resources has been reduced. It is mainly explained by the acquisition of LeasePlan partially financed with floating subordinated debt (Tier 2) and fixed AT1 capital callable at five years (equity shares being considered as long term assets at fixed rate). See note 29 for further details.
The Group\u2019s functional currency and the reporting currency for its consolidated financial statements is the euro. However, because of its presence in a significant number of countries outside the Euro zone, the Group has substantial assets, liabilities, revenues and costs denominated in currencies other than the euro. The global nature of the Group\u2019s operations therefore exposes the Group to exchange rate volatility as a result of potential mismatches between the currencies in which assets and liabilities are denominated, and as a result of the translation effect on its reported earnings, cash flow and financial condition. The Group is exposed to transactional foreign exchange rate risk when a subsidiary enters into a transaction in a currency other than the subsidiary\u2019s functional currency. The Group seeks to manage its transactional foreign exchange rate risk by attempting to limit the Group\u2019s exposure to the effects of fluctuations in currencies on its statement of financial condition and cash flows through funding its debt directly or through derivatives in the currency in which assets are originated and allocating capital in the currencies in which assets are denominated.
In short, the Group has the following risk management approach regarding currency risk:
Based on the currency risk management approach the Group\u2019s capital adequacy ratio is minimally exposed to changes in the exchange rates it is exposed to. In order to monitor and manage its currency risk exposure, the Group has defined triggers and limits on its structural risk exposure, in accordance with EBA Guidelines.
The Group 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.
The following table shows the net currency position of foreign currencies which the Group is most exposed to as at 31\u00a0December 2023, and with all other variables remaining constant, the impact if the euro strengthen or weakened by 10% against these foreign currencies positions held by the Group:
(in EUR million) | 2023 Net exposure (2) | 2023 +10% (2) | 2023 -10% (2) |
|---|---|---|---|
\u00a0Pound Sterling (GBP) | 549.4 | (49.9) | 61.0 |
Turkish Lira (TRY) | 579.3 | (52.7) | 64.4 |
Brazilian Real (BRL) | 162.1 | (14.7) | 18.0 |
Czech Koruna (CZK) | 131.3 | (11.9) | 14.6 |
Swedish Krona (SEK) | 114.4 | (10.4) | 12.7 |
Norwegian Krone (NOK) | 114.0 | (10.4) | 12.7 |
Danish Krone (DKK) | 113.2 | (10.3) | 12.6 |
Other\u00a0(1) | 597.9 | (48.9) | 59.7 |
|
\u00a0
\u00a0
The 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.
The liquidity risk appetite and tolerance levels are based on the following key principles:
The 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 the Group Treasury Department, by assessing the matching of the run-off of the existing leased assets with the remaining liabilities. Any deviation from the sensitivity threshold is corrected under the supervision of the Group central Treasury.
Note\u00a029 details the maturity of the Group borrowing and debt issued.\u00a0
\u00a0
As a precaution to the risk of not having continued access to financial markets for funding, the Group maintains a liquidity buffer. This buffer includes unencumbered cash and committed (standby) credit facilities to reduce the Group\u2019s liquidity risk. The liquidity buffer as per 31\u00a0December is specified as follows:
(in EUR million) | As at 31\u00a0December | |
|---|---|---|
2023 | 2022 | |
Unencumbered cash at banks | 146.1 | 123.6 |
Unencumbered cash at Central bank | 3,535.6 | \u2212 |
Total on balance liquidity buffer | 3,681.6 | 123.6 |
Undrawn committed facilities | 1,951.0 | 989.7 |
Total | 5,632.6 | 1,113.3 |
\u00a0
The Group holds total revolving credit facilities with a consortium of banks as at 31\u00a0December 2023, of which EUR\u00a01.95\u00a0billion is undrawn.
Upon the acquisition of LeasePlan, which holds a banking licence, the Group became a Financial Holding Company regulated by the European Central Bank (ECB). The European Central Bank set out minimum liquidity level requirements on LeasePlan, demanding that available liquidity exceeds required liquidity at all times as well as a Liquidity Coverage Ratio (LCR) and Net Stable Funding Ratio (NSFR) above 100%. These minimum liquidity requirements are complied with.
The Group\u2019s liquidity stress testing programme includes the integration of risk drivers and review of stress scenarios, governance, tools used and documentation of the stress testing process.\u00a0
Derivatives are used to mitigate the interest rate and currency exposures associated with the funding of lease contracts. Interest rate swaps cover interest rate positions between lease contracts and borrowed funds and currency interest rate swaps cover currency exposures between lease contracts and borrowed funds. The extent of exposure management is in line with internal risk appetite and limits determined by the Group risk management and reviewed on a regular basis. The Group uses a mixture of one-to-one relationships (for fair value hedging), as well as many-to-many macro hedging (for cash flow hedging).
\u00a0
Based on the strategic planning process, a forecast of the regulatory Common Equity Tier 1 (CET1), Tier 1 (T1) and Total Capital (TC) ratios is prepared. The projections of the CET1, T1 and TC ratios are performed to ensure ongoing compliance with the minimum requirements set by the ECB. Next to the projections of the capital ratios, a forecast of the development of the minimum requirement \u00a0which takes into account the requirements of the ECB; based on the latest estimates the Group will remain above the minimum CET1, T1 and TC requirement.
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 is considered the main asset risk and is defined as the risk of a loss of value due to the changes in the price of vehicles on second-hand markets. The resale price of the vehicles is estimated at inception of the leasing contract. The resale price may differ from this estimated value, thus generating a gain or a loss. This risk is managed in the Group through robust internal procedures applied to all Group 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. The calculation is based on refined market segmentation and on statistical models using internal used car sales data for each market segment as well as Guide Book Value references and country specific factors (inflation, market sector adjustments, life cycle,\u00a0etc.). As part of this process, current external variations are analysed in order to apply a stress factor to the valuation of the current fleet.
Technical valuation and price setting of vehicles is directly overseen by the local and central Asset Risk Committees.
Residual value setting is reviewed by local general management during a local Pricing Committee held at least twice a year (once a year for smaller subsidiaries with less than 5,000\u00a0vehicles), and then reviewed and approved at Group level. 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.
Fleet reviews are conducted once or twice annually to accelerate depreciation in countries where losses are expected. During these reviews the residual value of the active fleet is compared to updated market estimates.
The Group is currently exposed to residual value risk of the total lease portfolio across 42\u00a0countries. This geographical diversification, in conjunction with being an independent multi-brand company with a well-diversified brand portfolio, also partly mitigates the risk related to residual values.
The Group\u2019s residual value position in relation to the total operational lease assets can be illustrated as follows:
\u00a0
(in EUR million) | As at 31\u00a0December | |
|---|---|---|
2023 | 2022 | |
Residual value | 32,828.8 | 15,868.5 |
\u00a0
New contracts post-acquisition was managed under the Group\u2019s residual value procedures. There is no change in the residual value risk management policy since the prior year.
Further details on the residual value risk management and fleet revaluation are disclosed in note\u00a05.1.
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 the Group. A global review of the maintenance margins is done 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), own damage, or other ancillary products, such as legal defence, passenger indemnity or used car guarantee. 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 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 entities managing any material damage risk must comply with strict internal procedures in terms of risk selection, and reserve setting. Material own damages reserves includes the Group\u2019s obligation to pay other incurred insurance expenses. The liability for incurred claims is the obligation to pay valid claims for insured events that have already occurred, including events that have occurred but for which claims have not been reported (IBNER). This IBNER is based on statistical analysis of damage frequency and amounts. An independent review of the level of technical reserves held by the Group Insurance and Reinsurance entities is conducted to validate that reserves held are adequate to meet future obligations.
The Group also selectively retains some motor risks (material damages, passenger insurance and TPL risks) within its own insurance and reinsurance companies. Both entities are based in Ireland and regulated by the Central Bank of Ireland. These entities reinsure TPL, material damages and related ancillary covers for approximately 0.5\u00a0million vehicles. The (Re)insurance entities strictly monitor their 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 minimise the financial impact of a single event, the (Re) insurance entities purchase reinsurance protection for claims above a specified amount. This reinsurance strategy is reviewed at least annually.
Settlement of damages is either handled internally or outsourced to specialised independent damage handling companies, in accordance with service level agreements. Settlement of damages is performed by specialised damage handling teams, within the Group.
To clearly identify, monitor, manage and limit the risks, principles are laid down in a motor insurance risk policy and standard, that must be adhered to by all acquired LeasePlan entities. The main requirements are the existence of a risk function, which oversees insurance risk, within all LeasePlan entities, as well as the existence of a local Risk Committee to monitor insurance risk, which is required to monitor exposure and discuss trends and developments within the portfolio. Clear authorisation structures are in place for intended launches of and changes in insurance structures and programmes. (Re)insurers are selected based on their financial strength, price, capacity and service and are monitored, in respect of credit ratings, on a quarterly basis.
The Group monitors the damage and insurance risk acceptance process and the financial performance using actuarial and statistical methods for estimating liabilities and determining adequate pricing levels. Regular analysis of damage, loss ratio statistics, and insurance risk pricing ensure a healthy balance between revenues and damages at both an aggregate level and an individual fleet level. The provision for damages is regularly assessed and reviewed.
The price for acceptance of damage and insurance risk is set in each market based on prevailing local market conditions after determining appropriate levels of reinsurance cover, programme costs and the expected costs of managing and settling damages (including IBN(E)R provisions).
Under the motor insurance risk policy, Group entities measure and monitor their motor insurance risk on a quarterly basis and the Insurance entities and Group entities measure and report their risk exposures by means of premium developments and loss ratio developments to central management. These loss ratios are consolidated and monitored against the Group\u2019s risk appetite.
", "dimensions": { "concept": "ifrs-full:DisclosureOfFinancialRiskManagementExplanatory", "language": "en", "entity": "scheme:969500E7V019H9NP7427", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "text_block_351ea701-f9ad-41e1-aa05-6f57d51da3b4": { "value": "The Group central treasury monitors the Group\u2019s interest rate risk exposure and advises subsidiaries to implement adequate hedging operations based on a monthly report measuring interest risk exposure. Each entity and the Group as a whole are subject to sensitivity thresholds and limits validated by the Asset-Liability Committee (ALCO). The Group structural risks are discussed on a quarterly basis during ALCO meetings.
The Group matches the interest rate risk profile of the lease contract portfolio with a corresponding interest rate funding profile to minimise the interest rate risk, where the IRRBB model takes into account lease client behaviour instead of the contractual interest rate risk profile. The Group investigate whether its IRRBB model appropriately reflects its economic reality and the applicable regulatory framework.
\u00a0
For the Group, the sensitivity metric used is the variation in the net present value of the future residual fixed-rate positions (surplus or deficit) for non-stressed shocks of +10\u00a0bps and -10\u00a0bps in the yield curve. The table below reflects the balance sheet exposure of the Group\u2019s financial liabilities to interest rate risk:
NPV sensitivity impact (in EUR million)\u00a0(1) | As at 31\u00a0December | |
|---|---|---|
2023 | 2022 | |
+10\u00a0bps | 0.7 | 13.0 |
-10\u00a0bps | (0.8) | (13.1) |
|
\u00a0
A positive NPV sensitivity for a +10bps represents an excess of fixed rate resources. At the end of 2022, the excess of fixed rate resources is mainly explained by the use of equity for financing the fleet activity and the capital increase of ALD in anticipation of the acquisition of LeasePlan (equity being considered as a long-term resource at fixed rate, whilst the fleet is a medium-term asset and the cash from the capital increase was replaced with a short-term deposit). At the end of 2023, the excess of fixed rate resources has been reduced. It is mainly explained by the acquisition of LeasePlan partially financed with floating subordinated debt (Tier 2) and fixed AT1 capital callable at five years (equity shares being considered as long term assets at fixed rate). See note 29 for further details.
The Group\u2019s functional currency and the reporting currency for its consolidated financial statements is the euro. However, because of its presence in a significant number of countries outside the Euro zone, the Group has substantial assets, liabilities, revenues and costs denominated in currencies other than the euro. The global nature of the Group\u2019s operations therefore exposes the Group to exchange rate volatility as a result of potential mismatches between the currencies in which assets and liabilities are denominated, and as a result of the translation effect on its reported earnings, cash flow and financial condition. The Group is exposed to transactional foreign exchange rate risk when a subsidiary enters into a transaction in a currency other than the subsidiary\u2019s functional currency. The Group seeks to manage its transactional foreign exchange rate risk by attempting to limit the Group\u2019s exposure to the effects of fluctuations in currencies on its statement of financial condition and cash flows through funding its debt directly or through derivatives in the currency in which assets are originated and allocating capital in the currencies in which assets are denominated.
In short, the Group has the following risk management approach regarding currency risk:
Based on the currency risk management approach the Group\u2019s capital adequacy ratio is minimally exposed to changes in the exchange rates it is exposed to. In order to monitor and manage its currency risk exposure, the Group has defined triggers and limits on its structural risk exposure, in accordance with EBA Guidelines.
The Group 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.
The following table shows the net currency position of foreign currencies which the Group is most exposed to as at 31\u00a0December 2023, and with all other variables remaining constant, the impact if the euro strengthen or weakened by 10% against these foreign currencies positions held by the Group:
(in EUR million) | 2023 Net exposure (2) | 2023 +10% (2) | 2023 -10% (2) |
|---|---|---|---|
\u00a0Pound Sterling (GBP) | 549.4 | (49.9) | 61.0 |
Turkish Lira (TRY) | 579.3 | (52.7) | 64.4 |
Brazilian Real (BRL) | 162.1 | (14.7) | 18.0 |
Czech Koruna (CZK) | 131.3 | (11.9) | 14.6 |
Swedish Krona (SEK) | 114.4 | (10.4) | 12.7 |
Norwegian Krone (NOK) | 114.0 | (10.4) | 12.7 |
Danish Krone (DKK) | 113.2 | (10.3) | 12.6 |
Other\u00a0(1) | 597.9 | (48.9) | 59.7 |
|
\u00a0
", "dimensions": { "concept": "ifrs-full:DisclosureOfMarketRiskExplanatory", "language": "en", "entity": "scheme:969500E7V019H9NP7427", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "text_block_6733468a-55a6-4eec-8dfa-1e90a8560aeb": { "value": "The 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.
The liquidity risk appetite and tolerance levels are based on the following key principles:
The 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 the Group Treasury Department, by assessing the matching of the run-off of the existing leased assets with the remaining liabilities. Any deviation from the sensitivity threshold is corrected under the supervision of the Group central Treasury.
Note\u00a029 details the maturity of the Group borrowing and debt issued.\u00a0
\u00a0
As a precaution to the risk of not having continued access to financial markets for funding, the Group maintains a liquidity buffer. This buffer includes unencumbered cash and committed (standby) credit facilities to reduce the Group\u2019s liquidity risk. The liquidity buffer as per 31\u00a0December is specified as follows:
(in EUR million) | As at 31\u00a0December | |
|---|---|---|
2023 | 2022 | |
Unencumbered cash at banks | 146.1 | 123.6 |
Unencumbered cash at Central bank | 3,535.6 | \u2212 |
Total on balance liquidity buffer | 3,681.6 | 123.6 |
Undrawn committed facilities | 1,951.0 | 989.7 |
Total | 5,632.6 | 1,113.3 |
\u00a0
The Group holds total revolving credit facilities with a consortium of banks as at 31\u00a0December 2023, of which EUR\u00a01.95\u00a0billion is undrawn.
Upon the acquisition of LeasePlan, which holds a banking licence, the Group became a Financial Holding Company regulated by the European Central Bank (ECB). The European Central Bank set out minimum liquidity level requirements on LeasePlan, demanding that available liquidity exceeds required liquidity at all times as well as a Liquidity Coverage Ratio (LCR) and Net Stable Funding Ratio (NSFR) above 100%. These minimum liquidity requirements are complied with.
The Group\u2019s liquidity stress testing programme includes the integration of risk drivers and review of stress scenarios, governance, tools used and documentation of the stress testing process.\u00a0
Derivatives are used to mitigate the interest rate and currency exposures associated with the funding of lease contracts. Interest rate swaps cover interest rate positions between lease contracts and borrowed funds and currency interest rate swaps cover currency exposures between lease contracts and borrowed funds. The extent of exposure management is in line with internal risk appetite and limits determined by the Group risk management and reviewed on a regular basis. The Group uses a mixture of one-to-one relationships (for fair value hedging), as well as many-to-many macro hedging (for cash flow hedging).
", "dimensions": { "concept": "ifrs-full:DisclosureOfLiquidityRiskExplanatory", "language": "en", "entity": "scheme:969500E7V019H9NP7427", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "text_block_2f60d246-205c-40db-b38a-f02a589d3adc": { "value": "In determining whether goodwill is impaired requires an estimation of the value in use of the groups of cash generating units to which the goodwill assets have been allocated. The key assumptions calculating the value in use are those regarding discount rates, growth rates and other expected changes in cash flows. The estimates and assumptions used are disclosed in note\u00a03.5.6 of these consolidated financial statements.
The Group tests annually whether goodwill has suffered any impairment, in accordance with the accounting policy stated presented in note\u00a03.5.7 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 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, impairment of goodwill was identified in the German subsidiary Fleetpool Holding\u00a0GmbH for EUR\u00a023.7\u00a0million (see note\u00a016 for further detail).
For goodwill, sensitivity tests are carried out to measure the impact on each CGU\u2019s recoverable value based on certain assumptions. At 31\u00a0December 2023, sensitivities to variations in the cash flows and discount rates were measured.
According to the results in these tests:
For litigation, when there is a legal or constructive obligation and it is more likely than not that there will be an outflow of benefits which can be measured reliably, the best estimate of the future outflow of resources has been recognised. In extremely rare situations where no reliable estimate can be made yet on claims expected, no provision will be recognised in the balance sheet but information about a contingent liability will be disclosed.
The Group provisions are split as below for General and Damage risk provisions recognised under IAS\u00a037 and insurance provisions recognised in accordance with IFRS\u00a017.
(in EUR million) | As at 31\u00a0December | |
|---|---|---|
2023 | 2022 | |
Damage risk and Legal & other | 302.4 | 136.9 |
Insurance contracts | 607.1 | 164.4 |
Total | 909.5 | 301.3 |
\u00a0
(in EUR million) | Damage risk | Legal & Other | Total |
|---|---|---|---|
At 1\u00a0January 2023 | 80.5 | 56.4 | 136.9 |
Scope changes | 48.6 | 87.2 | 135.8 |
Charge to income statement | 15.8 | 26.3 | 42.1 |
Utilised and released | (7.7) | (5.2) | (12.9) |
Reclass | 0.2 | (0.2) | \u2212 |
Currency translation differences | 0.0 | 0.5 | 0.5 |
At 31\u00a0December 2023 | 137.5 | 165.0 | 302.4 |
Current | 68.4 | 83.3 | 151.7 |
Non-current | 69.0 | 81.7 | 150.7 |
At 31\u00a0December 2023 | 137.5 | 165.0 | 302.4 |
\u00a0
(in EUR million) | Damage risk | Legal & Other | Total |
|---|---|---|---|
At 1\u00a0January 2022 | 220.5 | 61.2 | 281.7 |
Charge to income statement | 62.1 | 3.4 | 65.5 |
Utilised and released | (43.2) | (3.1) | (46.3) |
Reclass | 11.1 | (3.7) | 7.4 |
Change policy | (170.3) | \u2212 | (170.3) |
Currency translation differences | 0.2 | (1.4) | (1.2) |
At 31\u00a0December 2022 | 80.5 | 56.4 | 299.8 |
Current | 32.1 | 13.4 | 45.5 |
Non-current | 48.4 | 43.0 | 91.4 |
At 31\u00a0December 2022 | 80.5 | 56.4 | 136.9 |
\u00a0
The provision for damage risk is the \u2018best estimate\u2019 expected expenditure required to settle the present obligations to repair the damage at the reporting date based on IBNR and IBNER (see policy note\u00a03.5.17). The majority of damage service provisions are expected to be recovered or settled within 12\u00a0months.
Litigation provisions have been set up to cover legal and administrative proceedings that arise in the ordinary course of business. These provisions are not employee related. Legal provisions depend on court proceedings, so no assumptions related to future events have been disclosed.
Other provisions mainly consists of provisions for profit sharing arrangements that the Group have with manufacturers, dealers and customers; indemnities to be paid at the end of contracts with agents/brokers; and various VAT litigation with various tax authorities.
The insurance provision breaks down as follows:
(in EUR million) | As at 31\u00a0December 2023 | As at 31\u00a0December 2022 | ||||
|---|---|---|---|---|---|---|
Gross | Reinsurance | Net | Gross | Reinsurance | Net | |
Insurance liabilities | (606.6) | 52.3 | (554.3) | (164.0) | 10.3 | (153.7) |
Insurance asset | 0.8 | (0.5) | 0.3 | 0.7 | (0.5) | 0.2 |
Net Insurance provisions | (605.9) | 51.9 | (554.0) | (163.2) | 9.8 | (153.4) |
\u00a0
The following table provides a reconciliation of the net insurance liability for all insurance products issued by the Group:
(in EUR million) | Liabilities for remaining coverage | Liabilities for incurred claims | |||
|---|---|---|---|---|---|
Excluding loss component | Loss | Estimates | Risk | Total | |
Insurance contract liabilities as at 1\u00a0January 2023 | 21.2 | (0.2) | (181.0) | (4.0) | (164.0) |
Insurance contract assets as at 1\u00a0January 2023 | 2.3 | \u2212 | (1.6) | (0.0) | 0.7 |
Net insurance contract (net assets/(liabilities) | 23.6 | (0.2) | (182.6) | (4.0) | (163.2) |
Insurance contract liabilities | (1.7) | (3.2) | (385.9) | (13.0) | (403.7) |
Insurance contract assets | \u2212 | \u2212 | \u2212 | \u2212 | \u2212 |
Net insurance liabilities on acquisition | (1.7) | (3.2) | (385.9) | (13.0) | (403.7) |
Insurance revenue | 433.4 | \u2212 | \u2212 | \u2212 | 433.4 |
Insurance expenses | (15.9) | (5.5) | (307.2) | (7.1) | (335.6) |
Incurred claims and other expenses | \u2212 | \u2212 | (425.1) | (8.4) | (433.5) |
Losses on onerous contracts and reversals of those loses | \u2212 | (5.5) | \u2212 | \u2212 | (5.5) |
Insurance acquisition cash flows amortisation | (15.9) | \u2212 | \u2212 | \u2212 | (15.9) |
Changes to liabilities for incurred claims | \u2212 | \u2212 | 118.0 | 1.2 | 119.2 |
Insurance result | 417.5 | (5.5) | (307.2) | (7.1) | 97.8 |
Insurance finance expenses | \u2212 | (0.0) | (8.0) | \u2212 | (8.0) |
Effect of movements in exchange rates | 12.0 | (0.1) | 4.1 | (0.0) | 16.0 |
Total changes in the statement\u00a0 | 429.5 | (5.6) | (311.1) | (7.1) | 105.8 |
Premiums received/paid | (408.4) | \u2212 | \u2212 | \u2212 | (408.4) |
Claims and other expenses paid | \u2212 | \u2212 | 261.4 | \u2212 | 261.4 |
Insurance acquisition costs | 2.1 | \u2212 | \u2212 | \u2212 | 2.1 |
Total cash flows | (406.3) | \u2212 | 261.4 | \u2212 | (144.9) |
Other movements | \u2212 | \u2212 | 0.2 | \u2212 | 0.2 |
Net insurance contract (net assets/(liabilities)\u00a0 | 45.1 | (9.0) | (617.9) | (24.1) | (605.9) |
Insurance contract liabilities as at 31\u00a0December 2023 | 42.3 | (9.0) | (615.9) | (24.0) | (606.6) |
Insurance contract assets as at 31\u00a0December 2023 | 2.8 | \u2212 | (2.0) | (0.0) | 0.8 |
Net insurance contract (net assets/(liabilities) as at 31\u00a0December 2023) | 45.1 | (9.0) | (617.9) | (24.1) | (605.9) |
The following table provides a reconciliation of the reinsurance liability for reinsurance contracts issued by the Group:
(in EUR million) | Liabilities for remaining coverage | Liabilities for incurred claims | ||
|---|---|---|---|---|
Remaining\u00a0 | Estimates of the present value of future cash flows | Risk adjustment | Total | |
Reinsurance contract liabilities as at 1\u00a0January 2023 | (0.5) | \u2212 | \u2212 | (0.5) |
Reinsurance contract assets as at 1\u00a0January 2023 | 0.4 | 9.7 | 0.2 | 10.3 |
Net Reinsurance contract (net assets/(liabilities) as at 1\u00a0January 2023 | (0.1) | 9.7 | 0.2 | 9.8 |
Reinsurance contract liabilities | \u2212 | \u2212 | \u2212 | \u2212 |
Reinsurance contract assets | 1.4 | 32.2 | 1.2 | 34.8 |
Net Reinsurance contract assets on Acquisition | 1.4 | 32.2 | 1.2 | 34.8 |
Reinsurance expenses | (2.6) | \u2212 | \u2212 | (2.6) |
Claims recovered | 14.9 | 1.4 | 1.2 | 17.6 |
Effect of changes in the risk of reinsurers non-performance | \u2212 | 0.0 | \u2212 | 0.0 |
Changes that relate to past service - adjustments to insurred claims | \u2212 | (9.0) | 0.0 | (9.0) |
Net income/(Expenses) from Reinsurance contracts held | 12.4 | (7.6) | 1.2 | 5.9 |
Finance income from reinsurance contracts held | \u2212 | 0.4 | \u2212 | 0.4 |
Total changes in the statement of comprehensive income | 12.4 | (7.2) | 1.2 | 6.3 |
Premiums paid | 1.0 | \u2212 | \u2212 | 1.0 |
Recoveries from reinsurance | \u2212 | (1.4) | \u2212 | (1.4) |
Total cash flows | 1.0 | (1.4) | \u2212 | (0.5) |
Other movements | 1.4 | (0.0) | 0.0 | 1.4 |
Net reinsurance contract (net assets/(liabilities) as at 31\u00a0December 2023) | 16.1 | 33.2 | 2.6 | 51.9 |
Reinsurance contract liabilities as at 31\u00a0December 2023 | (0.5) | \u2212 | \u2212 | (0.5) |
Reinsurance contract assets as at 31\u00a0December 2023 | 16.5 | 33.2 | 2.6 | 52.3 |
Net reinsurance contract (net assets/(liabilities) as at 31\u00a0December 2023) | 16.1 | 33.2 | 2.6 | 51.9 |
For litigation, when there is a legal or constructive obligation and it is more likely than not that there will be an outflow of benefits which can be measured reliably, the best estimate of the future outflow of resources has been recognised. In extremely rare situations where no reliable estimate can be made yet on claims expected, no provision will be recognised in the balance sheet but information about a contingent liability will be disclosed.
\u00a0
The Group has entered into commitments relating to the forward purchase of property and equipment under operating lease and rental fleet amounting to EUR\u00a09.5\u00a0billion (2022: EUR\u00a06.3\u00a0billion) as at the balance sheet date. These commitments are entered into in the ordinary course of business and the majority is back-to-back matched with lease contracts entered into with customers.
", "dimensions": { "concept": "ifrs-full:DisclosureOfCommitmentsAndContingentLiabilitiesExplanatory", "language": "en", "entity": "scheme:969500E7V019H9NP7427", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "text_block_c69495dd-95b6-4f5d-8cba-e959182b765e": { "value": "For litigation, when there is a legal or constructive obligation and it is more likely than not that there will be an outflow of benefits which can be measured reliably, the best estimate of the future outflow of resources has been recognised. In extremely rare situations where no reliable estimate can be made yet on claims expected, no provision will be recognised in the balance sheet but information about a contingent liability will be disclosed.
", "dimensions": { "concept": "ifrs-full:DisclosureOfContingentLiabilitiesExplanatory", "language": "en", "entity": "scheme:969500E7V019H9NP7427", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "text_block_523e69af-0953-40c2-9163-8035bcd41624": { "value": "For litigation, when there is a legal or constructive obligation and it is more likely than not that there will be an outflow of benefits which can be measured reliably, the best estimate of the future outflow of resources has been recognised. In extremely rare situations where no reliable estimate can be made yet on claims expected, no provision will be recognised in the balance sheet but information about a contingent liability will be disclosed.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForContingentLiabilitiesAndContingentAssetsExplanatory", "language": "en", "entity": "scheme:969500E7V019H9NP7427", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "text_block_f45785b1-0255-4d73-8534-5c7159a3259c": { "value": "\u00a0
Following the acquisition of LeasePlan, a new leadership team has been appointed where the members of the Executive Committee hold supervisory responsibilities for various geographical regions and countries (see Section 2.1.2.4 of this Universal Registration Document).
The Group\u2019s segmentation remains unchanged in this disclosure and has the same geographical regions as those in the Group annual financial statements at 31\u00a0December 2022:
All subsidiaries of LeasePlan are included in the segments\u2019 performance.
The performance of the operating segments is assessed based on a measure of revenue and profit before tax as presented in the consolidated financial statements. None of the Group\u2019s customers represent more than 10% of the total revenue.
\u00a0
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. There has been no inter-segment revenue for year ending 31\u00a0December 2023.
Figures presented below have been restated for the impacts of IFRS\u00a017 in the segment of Western Europe for the period ended 31\u00a0December 2022.
\u00a0
(in EUR million) | Year ended 31\u00a0December 2023 | Year ended 31\u00a0December 2022 | ||
|---|---|---|---|---|
Profit before tax | Revenue from external customers | Profit\u00a0 | Revenue\u00a0 | |
Western Europe | 787.2 | 14,609.8 | 1,262.9 | 8,784.2 |
Nordic | 136.3 | 1,456.0 | 108.4 | 1,015.4 |
Central & Eastern Europe | 295.7 | 1,985.1 | 229.6 | 1,148.4 |
LatAm, Africa, Asia & Rest of world\u00a0(1) | 76.5 | 832.8 | 65.3 | 466.8 |
Total | 1,295.7 | 18,883.7 | 1,666.1 | 11,414.8 |
\u00a0
\u00a0
(in EUR million) | Year ended 31\u00a0December 2023 | Year ended 31\u00a0December 2022 |
|---|---|---|
Revenue from external customers | Revenue from external customers | |
Leasing contract revenues | 8,033.7 | 4,803.9 |
Service revenues | 4,391.2 | 2,657.4 |
Proceeds of cars sold | 6,458.8 | 3,953.6 |
Total | 18,883.7 | 11,414.8 |
\u00a0
(in EUR million) | Year ended 31\u00a0December 2023 | ||
|---|---|---|---|
Rental fleet | Total assets | Net financial debt\u00a0(2) | |
Western Europe | 38,648.7 | 57,371.7 | 38,008.8 |
Nordic | 3,613.9 | 4,209.0 | 1,766.6 |
Central & Eastern Europe | 5,653.9 | 6,367.0 | 4,025.3 |
LatAm, Africa, Asia & Rest of world | 1,848.7 | 2,313.4 | 1,613.8 |
Total | 49,765.2 | 70,261.1 | 45,414.5 |
\u00a0
\u00a0
(in EUR million) | Year ended 31\u00a0December 2022 | ||
|---|---|---|---|
Rental fleet\u00a0(1) | Total assets\u00a0(1) | Net financial debt\u00a0(1)\u00a0(2) | |
Western Europe | 19,040.2 | 25,588.6 | 17,278.7 |
Nordic | 1,863.1 | 2,080.6 | 101.6 |
Central & Eastern Europe | 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 | 31,302.3 | 19,591.8 |
\u00a0
\u00a0
Revenue from external customers and rental fleet by countries with Revenues in excess of EUR\u00a01\u00a0billion are detailed below:
(in EUR million) | Year ended 31\u00a0December 2023 | Year ended 31\u00a0December 2022 | Year ended 31\u00a0December 2023 | Year ended 31\u00a0December 2022 |
|---|---|---|---|---|
Revenue from external customers\u00a0 | Revenue from external | Rental fleet\u00a0(1) | Rental fleet\u00a0(1) | |
France | 3,003.1 | 2,260.4 | 8,139.0 | 5,495.9 |
Italy | 2,198.8 | 1,257.6 | 6,303.0 | 2,532.1 |
UK | 2,004.0 | 1,116.4 | 5,520.3 | 2,326.7 |
Germany | 1,925.1 | 1,092.4 | 4,084.1 | 2,282.1 |
Spain | 1,553.2 | 820.1 | 3,967.0 | 1,959.8 |
Netherlands | 1,726.9 | 686.0 | 5,389.9 | 1,528.4 |
Belgium | 1,157.3 | 680.6 | 3,340.5 | 1,604.6 |
Other Countries\u00a0(1) | 5,315.3 | 3,501.3 | 13,021.4 | 6,350.1 |
\u00a0 | 18,883.7 | 11,414.8 | 49,765.2 | 24,079.6 |
|
Following the acquisition of LeasePlan, a new leadership team has been appointed where the members of the Executive Committee hold supervisory responsibilities for various geographical regions and countries (see Section 2.1.2.4 of this Universal Registration Document).
The Group\u2019s segmentation remains unchanged in this disclosure and has the same geographical regions as those in the Group annual financial statements at 31\u00a0December 2022:
All subsidiaries of LeasePlan are included in the segments\u2019 performance.
The performance of the operating segments is assessed based on a measure of revenue and profit before tax as presented in the consolidated financial statements. None of the Group\u2019s customers represent more than 10% of the total revenue.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForSegmentReportingExplanatory", "language": "en", "entity": "scheme:969500E7V019H9NP7427", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "text_block_f4146e94-c34e-465a-9ffc-5272e17e84e9": { "value": "In the context of the LeasePlan acquisition completed on 22\u00a0May 2023, ALD has obtained all merger control clearances conditioning the completion of this acquisition. The last clearance was obtained from the European Commission on 25\u00a0November 2022. The European Commission\u2019s approval was conditional on the divestiture of the subsidiaries carrying on the full-service leasing and Fleet Management business of ALD in Portugal, in Ireland and in Norway, and of LeasePlan in the Czech Republic, in Finland and in Luxembourg. On 22\u00a0March 2023, the Group has entered into a share purchase agreement to sell these subsidiaries to Credit Agricole Consumer Finance and Stellantis. The sale completed on 1\u00a0August 2023.
On 20\u00a0April 2023 and on 30\u00a0October 2023, the Group completed the disposal of its subsidiaries ALD Russia and ALD Belarus to JSC Tsk respectively. The sale has received clearance from the relevant regulatory authorities. Both entities operated a 13,400\u00a0funded fleet, representing less than 1% of ALD\u2019s fleet. ALD Russia and ALD Belarus were classified as held for sale in the Group\u2019s consolidated financial statements ending 31\u00a0December 2022.\u00a0
The impacts of all sales are recorded in the income statement as at 31\u00a0December 2023 under the caption of \u201cResult after tax from discontinued operations\u201d.
\u00a0
(in EUR million) | 2023 |
|---|---|
Assets | \u00a0 |
External revenue | 208.9 |
External expenses | (175.7) |
Income tax expenses | (6.2) |
Net results from operating activities | 27.1 |
Cash and cash equivalents at the beginning of the period | 92.8 |
Net cash inflow/(outflow) from operating activities | 44.2 |
Net cash inflow/(outflow) from investing activities | 4.4 |
Net cash inflow/(outflow) from financing activities\u00a0(1) | (81.0) |
Exchange gains/(losses) on cash and cash equivalents | (8.2) |
Net movement in cash and balances with bank | (40.6) |
Cash and cash equivalents sold as part of the discontinued operation | 52.2 |
|
\u00a0
(in EUR million) | \u00a0 |
|---|---|
Disposal consideration received (cash) | 442.0 |
Carrying amount of net assets sold | (462.4) |
Loss on sale before income tax and reclassification of foreign currency translation reserve | (20.3) |
Reclassification of foreign currency translation reserve | (80.2) |
Income tax expense | (4.0) |
Loss on sale after income tax | (104.6) |
Net result for the period from operating activities of the discontinued operation | 27.1 |
Result after tax from discontinued operations | (77.6) |
The net cash flows generated from the sale of subsidiary are as follows: | \u00a0 |
Cash received from the sale of the discontinued operations | 442.0 |
Cash sold as a part of discontinued operations | (52.2) |
Net cash inflow on the date of disposal | 389.8 |
Basic earnings per share from discontinued operations (in cents) | 0.02 |
Diluted earnings per share from discontinued operations (in cents) | 0.02 |
(in EUR million) | Year ended 31\u00a0December | |
|---|---|---|
2023 | Restated 2022\u00a0(1) | |
Leasing contract revenue - operating leases | 7,795.3 | 4,757.2 |
Interest income from finance lease | 90.4 | 36.1 |
Other interest income | 148.0 | 10.6 |
Leasing contract revenues | 8,033.7 | 4,803.9 |
Leasing contract costs - depreciation | (5,685.7) | (3,433.1) |
Leasing contract costs - financing: | \u00a0 | \u00a0 |
Interest charges on loans from financial institutions\u00a0(2) | (445.2) | (177.6) |
Interest charges on deposits | (169.0) | \u2212 |
Interest charges on issued bonds | (225.3) | (38.2) |
Other interest charges | (205.2) | (28.3) |
Total interest charges | (1,044.7) | (244.1) |
Leasing contract costs - depreciation and financing | (6,730.4) | (3,677.2) |
Derivatives not in hedges | (152.0) | (1.6) |
Hedge ineffectiveness - fair value hedges | (35.5) | \u2212 |
Hedge ineffectiveness - cash flow hedges | 1.5 | (0.2) |
Unrealised gains/losses on derivative financial instruments | (186.0) | (1.8) |
Unrealised Foreign Exchange Gains or Losses | 4.5 | (3.6) |
Hyperinflation - net monetary gain | 140.1 | 59.9 |
Total Unrealised gains/losses on financial instruments and other | (41.4) | 54.5 |
Leasing contract margin | 1,261.9 | 1,181.2 |
|
\u00a0
\u201cOther interest income\u201d comprises income received from financial instruments, income received for cash deposits with central banks and other third parties.
\u201cOther interest charges\u201d mainly comprise of interest charges incurred from asset-backed borrowings, net interest costs on derivative financial instruments, realised gains or losses on translation of financial liabilities and interest expense on lease liabilities.
\u201cLeasing contract costs \u2013 depreciation\u201d 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.
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:
Used vehicles prices have continued to drive high profit from the used car sales activity throughout 2023 but, as previously predicted, the used car market has started to normalise in the first semester of 2023 with a further decline observed in the second semester of 2023.
This assessment continues to result in a reduction in depreciation costs of EUR\u00a0553.2\u00a0million and represents partial recognition of estimated future used car profits.
Total interest charges have increased significantly in the year ending 31\u00a0December 2023. \u201cInterest charge on loans from financial institutions\u201d has increased with the acquisition of LeasePlan, which has external funding arrangements and borrowing from central bank institutions as part of its banking operations. The new charge of \u201cInterest charges on deposits\u201d is also a result of interest paid on fixed term savings deposits, raised by LeasePlan in the Netherlands and in Germany. \u201cInterest charges on issued bonds\u201d has increased due to the issuance of new EMTN bonds in the year to finance the operations of the combined group, while the increase in \u201cOther interest charges\u201d are due to the additional asset-backed securitisation funding acquired on acquisition of LeasePlan. For more details of the funding changes from the acquisition of LeasePlan see note\u00a029 \u201cBorrowings from financial institutions, Bonds and notes issued\u201d.
Leasing contract margin is negatively impacted by the mark to market loss of EUR\u00a0201.9\u00a0million on LeasePlan derivatives that are not hedged for accounting purposes. The Group\u2019s activities are principally related to vehicle leasing and Fleet Management. The Group accepts and offers lease contracts to clients at both fixed and floating interest rates, for various periods and in various currencies. For a major part of the funding of the LeasePlan cars, the Group has entered into borrowings from external parties or issued notes to third parties. To mitigate the Group exposure towards future movements in interest rates and currency exchange rates the Group have entered into interest rate swaps and cross currency swap and forward arrangements. While as a result of these arrangements the Group mitigates interest rate risk and currency risk from an economic perspective, these derivatives do not always qualify for hedge accounting from an accounting perspective that due to the accounting treatment of derivative financial instruments exposes the Group to some volatility in its income statement. For more details see note\u00a04 \u201cFinancial Risk Management\u201d and note\u00a019 \u201cDerivative financial instruments\u201d.
The \u201cHyperinflation \u2013 net monetary gain\u201d in the \u201cUnrealised gains/losses on financial instruments and other\u201d line in the income statement, includes the gain for the consumer price index inflation applied to the book value of the Turkish subsidiaries fleet of vehicles, share capital and retained earnings. This uplift in book value of the vehicles has resulted in an impairment of EUR\u00a067.2\u00a0million for year ending 31\u00a0December 2023 (2022: nil) and additional depreciation on the inflationary increase of EUR\u00a033.7\u00a0million that have been included within the \u201cLeasing contract costs \u2013 depreciation\u201d line in the income statement, so overall the net impact on the Leasing contract margin amount is EUR\u00a039.2\u00a0million. For further detail see note\u00a05 \u201cCritical accounting estimates and judgements\u201d.
\u00a0
", "dimensions": { "concept": "ifrs-full:DisclosureOfFinanceCostExplanatory", "language": "en", "entity": "scheme:969500E7V019H9NP7427", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "text_block_068651e3-18d8-4c82-9d02-ee1aa782c46e": { "value": "(in EUR million) | Year ended 31\u00a0December | |
|---|---|---|
2023 | Restated 2022\u00a0(1) | |
Leasing contract revenue - operating leases | 7,795.3 | 4,757.2 |
Interest income from finance lease | 90.4 | 36.1 |
Other interest income | 148.0 | 10.6 |
Leasing contract revenues | 8,033.7 | 4,803.9 |
Leasing contract costs - depreciation | (5,685.7) | (3,433.1) |
Leasing contract costs - financing: | \u00a0 | \u00a0 |
Interest charges on loans from financial institutions\u00a0(2) | (445.2) | (177.6) |
Interest charges on deposits | (169.0) | \u2212 |
Interest charges on issued bonds | (225.3) | (38.2) |
Other interest charges | (205.2) | (28.3) |
Total interest charges | (1,044.7) | (244.1) |
Leasing contract costs - depreciation and financing | (6,730.4) | (3,677.2) |
Derivatives not in hedges | (152.0) | (1.6) |
Hedge ineffectiveness - fair value hedges | (35.5) | \u2212 |
Hedge ineffectiveness - cash flow hedges | 1.5 | (0.2) |
Unrealised gains/losses on derivative financial instruments | (186.0) | (1.8) |
Unrealised Foreign Exchange Gains or Losses | 4.5 | (3.6) |
Hyperinflation - net monetary gain | 140.1 | 59.9 |
Total Unrealised gains/losses on financial instruments and other | (41.4) | 54.5 |
Leasing contract margin | 1,261.9 | 1,181.2 |
|
\u00a0
\u201cOther interest income\u201d comprises income received from financial instruments, income received for cash deposits with central banks and other third parties.
\u201cOther interest charges\u201d mainly comprise of interest charges incurred from asset-backed borrowings, net interest costs on derivative financial instruments, realised gains or losses on translation of financial liabilities and interest expense on lease liabilities.
\u201cLeasing contract costs \u2013 depreciation\u201d 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.
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:
Used vehicles prices have continued to drive high profit from the used car sales activity throughout 2023 but, as previously predicted, the used car market has started to normalise in the first semester of 2023 with a further decline observed in the second semester of 2023.
This assessment continues to result in a reduction in depreciation costs of EUR\u00a0553.2\u00a0million and represents partial recognition of estimated future used car profits.
Total interest charges have increased significantly in the year ending 31\u00a0December 2023. \u201cInterest charge on loans from financial institutions\u201d has increased with the acquisition of LeasePlan, which has external funding arrangements and borrowing from central bank institutions as part of its banking operations. The new charge of \u201cInterest charges on deposits\u201d is also a result of interest paid on fixed term savings deposits, raised by LeasePlan in the Netherlands and in Germany. \u201cInterest charges on issued bonds\u201d has increased due to the issuance of new EMTN bonds in the year to finance the operations of the combined group, while the increase in \u201cOther interest charges\u201d are due to the additional asset-backed securitisation funding acquired on acquisition of LeasePlan. For more details of the funding changes from the acquisition of LeasePlan see note\u00a029 \u201cBorrowings from financial institutions, Bonds and notes issued\u201d.
Leasing contract margin is negatively impacted by the mark to market loss of EUR\u00a0201.9\u00a0million on LeasePlan derivatives that are not hedged for accounting purposes. The Group\u2019s activities are principally related to vehicle leasing and Fleet Management. The Group accepts and offers lease contracts to clients at both fixed and floating interest rates, for various periods and in various currencies. For a major part of the funding of the LeasePlan cars, the Group has entered into borrowings from external parties or issued notes to third parties. To mitigate the Group exposure towards future movements in interest rates and currency exchange rates the Group have entered into interest rate swaps and cross currency swap and forward arrangements. While as a result of these arrangements the Group mitigates interest rate risk and currency risk from an economic perspective, these derivatives do not always qualify for hedge accounting from an accounting perspective that due to the accounting treatment of derivative financial instruments exposes the Group to some volatility in its income statement. For more details see note\u00a04 \u201cFinancial Risk Management\u201d and note\u00a019 \u201cDerivative financial instruments\u201d.
The \u201cHyperinflation \u2013 net monetary gain\u201d in the \u201cUnrealised gains/losses on financial instruments and other\u201d line in the income statement, includes the gain for the consumer price index inflation applied to the book value of the Turkish subsidiaries fleet of vehicles, share capital and retained earnings. This uplift in book value of the vehicles has resulted in an impairment of EUR\u00a067.2\u00a0million for year ending 31\u00a0December 2023 (2022: nil) and additional depreciation on the inflationary increase of EUR\u00a033.7\u00a0million that have been included within the \u201cLeasing contract costs \u2013 depreciation\u201d line in the income statement, so overall the net impact on the Leasing contract margin amount is EUR\u00a039.2\u00a0million. For further detail see note\u00a05 \u201cCritical accounting estimates and judgements\u201d.
\u00a0
", "dimensions": { "concept": "ifrs-full:DisclosureOfFinanceIncomeExplanatory", "language": "en", "entity": "scheme:969500E7V019H9NP7427", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "text_block_3e51b3c8-84fc-442a-8d0b-c8916f8f336a": { "value": "(in EUR million) | Year ended 31\u00a0December | |
|---|---|---|
2023 | Restated 2022\u00a0(1) | |
Leasing contract revenue - operating leases | 7,795.3 | 4,757.2 |
Interest income from finance lease | 90.4 | 36.1 |
Other interest income | 148.0 | 10.6 |
Leasing contract revenues | 8,033.7 | 4,803.9 |
Leasing contract costs - depreciation | (5,685.7) | (3,433.1) |
Leasing contract costs - financing: | \u00a0 | \u00a0 |
Interest charges on loans from financial institutions\u00a0(2) | (445.2) | (177.6) |
Interest charges on deposits | (169.0) | \u2212 |
Interest charges on issued bonds | (225.3) | (38.2) |
Other interest charges | (205.2) | (28.3) |
Total interest charges | (1,044.7) | (244.1) |
Leasing contract costs - depreciation and financing | (6,730.4) | (3,677.2) |
Derivatives not in hedges | (152.0) | (1.6) |
Hedge ineffectiveness - fair value hedges | (35.5) | \u2212 |
Hedge ineffectiveness - cash flow hedges | 1.5 | (0.2) |
Unrealised gains/losses on derivative financial instruments | (186.0) | (1.8) |
Unrealised Foreign Exchange Gains or Losses | 4.5 | (3.6) |
Hyperinflation - net monetary gain | 140.1 | 59.9 |
Total Unrealised gains/losses on financial instruments and other | (41.4) | 54.5 |
Leasing contract margin | 1,261.9 | 1,181.2 |
|
\u00a0
\u201cOther interest income\u201d comprises income received from financial instruments, income received for cash deposits with central banks and other third parties.
\u201cOther interest charges\u201d mainly comprise of interest charges incurred from asset-backed borrowings, net interest costs on derivative financial instruments, realised gains or losses on translation of financial liabilities and interest expense on lease liabilities.
\u201cLeasing contract costs \u2013 depreciation\u201d 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.
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:
Used vehicles prices have continued to drive high profit from the used car sales activity throughout 2023 but, as previously predicted, the used car market has started to normalise in the first semester of 2023 with a further decline observed in the second semester of 2023.
This assessment continues to result in a reduction in depreciation costs of EUR\u00a0553.2\u00a0million and represents partial recognition of estimated future used car profits.
Total interest charges have increased significantly in the year ending 31\u00a0December 2023. \u201cInterest charge on loans from financial institutions\u201d has increased with the acquisition of LeasePlan, which has external funding arrangements and borrowing from central bank institutions as part of its banking operations. The new charge of \u201cInterest charges on deposits\u201d is also a result of interest paid on fixed term savings deposits, raised by LeasePlan in the Netherlands and in Germany. \u201cInterest charges on issued bonds\u201d has increased due to the issuance of new EMTN bonds in the year to finance the operations of the combined group, while the increase in \u201cOther interest charges\u201d are due to the additional asset-backed securitisation funding acquired on acquisition of LeasePlan. For more details of the funding changes from the acquisition of LeasePlan see note\u00a029 \u201cBorrowings from financial institutions, Bonds and notes issued\u201d.
Leasing contract margin is negatively impacted by the mark to market loss of EUR\u00a0201.9\u00a0million on LeasePlan derivatives that are not hedged for accounting purposes. The Group\u2019s activities are principally related to vehicle leasing and Fleet Management. The Group accepts and offers lease contracts to clients at both fixed and floating interest rates, for various periods and in various currencies. For a major part of the funding of the LeasePlan cars, the Group has entered into borrowings from external parties or issued notes to third parties. To mitigate the Group exposure towards future movements in interest rates and currency exchange rates the Group have entered into interest rate swaps and cross currency swap and forward arrangements. While as a result of these arrangements the Group mitigates interest rate risk and currency risk from an economic perspective, these derivatives do not always qualify for hedge accounting from an accounting perspective that due to the accounting treatment of derivative financial instruments exposes the Group to some volatility in its income statement. For more details see note\u00a04 \u201cFinancial Risk Management\u201d and note\u00a019 \u201cDerivative financial instruments\u201d.
The \u201cHyperinflation \u2013 net monetary gain\u201d in the \u201cUnrealised gains/losses on financial instruments and other\u201d line in the income statement, includes the gain for the consumer price index inflation applied to the book value of the Turkish subsidiaries fleet of vehicles, share capital and retained earnings. This uplift in book value of the vehicles has resulted in an impairment of EUR\u00a067.2\u00a0million for year ending 31\u00a0December 2023 (2022: nil) and additional depreciation on the inflationary increase of EUR\u00a033.7\u00a0million that have been included within the \u201cLeasing contract costs \u2013 depreciation\u201d line in the income statement, so overall the net impact on the Leasing contract margin amount is EUR\u00a039.2\u00a0million. For further detail see note\u00a05 \u201cCritical accounting estimates and judgements\u201d.
\u00a0
", "dimensions": { "concept": "ifrs-full:DisclosureOfInterestIncomeExplanatory", "language": "en", "entity": "scheme:969500E7V019H9NP7427", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "text_block_f61e15b6-d636-44fe-aff1-a1c2f2d3a1c8": { "value": "(in EUR million) | Year ended 31\u00a0December | |
|---|---|---|
2023 | Restated 2022\u00a0(1) | |
Leasing contract revenue - operating leases | 7,795.3 | 4,757.2 |
Interest income from finance lease | 90.4 | 36.1 |
Other interest income | 148.0 | 10.6 |
Leasing contract revenues | 8,033.7 | 4,803.9 |
Leasing contract costs - depreciation | (5,685.7) | (3,433.1) |
Leasing contract costs - financing: | \u00a0 | \u00a0 |
Interest charges on loans from financial institutions\u00a0(2) | (445.2) | (177.6) |
Interest charges on deposits | (169.0) | \u2212 |
Interest charges on issued bonds | (225.3) | (38.2) |
Other interest charges | (205.2) | (28.3) |
Total interest charges | (1,044.7) | (244.1) |
Leasing contract costs - depreciation and financing | (6,730.4) | (3,677.2) |
Derivatives not in hedges | (152.0) | (1.6) |
Hedge ineffectiveness - fair value hedges | (35.5) | \u2212 |
Hedge ineffectiveness - cash flow hedges | 1.5 | (0.2) |
Unrealised gains/losses on derivative financial instruments | (186.0) | (1.8) |
Unrealised Foreign Exchange Gains or Losses | 4.5 | (3.6) |
Hyperinflation - net monetary gain | 140.1 | 59.9 |
Total Unrealised gains/losses on financial instruments and other | (41.4) | 54.5 |
Leasing contract margin | 1,261.9 | 1,181.2 |
|
\u00a0
\u201cOther interest income\u201d comprises income received from financial instruments, income received for cash deposits with central banks and other third parties.
\u201cOther interest charges\u201d mainly comprise of interest charges incurred from asset-backed borrowings, net interest costs on derivative financial instruments, realised gains or losses on translation of financial liabilities and interest expense on lease liabilities.
\u201cLeasing contract costs \u2013 depreciation\u201d 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.
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:
Used vehicles prices have continued to drive high profit from the used car sales activity throughout 2023 but, as previously predicted, the used car market has started to normalise in the first semester of 2023 with a further decline observed in the second semester of 2023.
This assessment continues to result in a reduction in depreciation costs of EUR\u00a0553.2\u00a0million and represents partial recognition of estimated future used car profits.
Total interest charges have increased significantly in the year ending 31\u00a0December 2023. \u201cInterest charge on loans from financial institutions\u201d has increased with the acquisition of LeasePlan, which has external funding arrangements and borrowing from central bank institutions as part of its banking operations. The new charge of \u201cInterest charges on deposits\u201d is also a result of interest paid on fixed term savings deposits, raised by LeasePlan in the Netherlands and in Germany. \u201cInterest charges on issued bonds\u201d has increased due to the issuance of new EMTN bonds in the year to finance the operations of the combined group, while the increase in \u201cOther interest charges\u201d are due to the additional asset-backed securitisation funding acquired on acquisition of LeasePlan. For more details of the funding changes from the acquisition of LeasePlan see note\u00a029 \u201cBorrowings from financial institutions, Bonds and notes issued\u201d.
Leasing contract margin is negatively impacted by the mark to market loss of EUR\u00a0201.9\u00a0million on LeasePlan derivatives that are not hedged for accounting purposes. The Group\u2019s activities are principally related to vehicle leasing and Fleet Management. The Group accepts and offers lease contracts to clients at both fixed and floating interest rates, for various periods and in various currencies. For a major part of the funding of the LeasePlan cars, the Group has entered into borrowings from external parties or issued notes to third parties. To mitigate the Group exposure towards future movements in interest rates and currency exchange rates the Group have entered into interest rate swaps and cross currency swap and forward arrangements. While as a result of these arrangements the Group mitigates interest rate risk and currency risk from an economic perspective, these derivatives do not always qualify for hedge accounting from an accounting perspective that due to the accounting treatment of derivative financial instruments exposes the Group to some volatility in its income statement. For more details see note\u00a04 \u201cFinancial Risk Management\u201d and note\u00a019 \u201cDerivative financial instruments\u201d.
The \u201cHyperinflation \u2013 net monetary gain\u201d in the \u201cUnrealised gains/losses on financial instruments and other\u201d line in the income statement, includes the gain for the consumer price index inflation applied to the book value of the Turkish subsidiaries fleet of vehicles, share capital and retained earnings. This uplift in book value of the vehicles has resulted in an impairment of EUR\u00a067.2\u00a0million for year ending 31\u00a0December 2023 (2022: nil) and additional depreciation on the inflationary increase of EUR\u00a033.7\u00a0million that have been included within the \u201cLeasing contract costs \u2013 depreciation\u201d line in the income statement, so overall the net impact on the Leasing contract margin amount is EUR\u00a039.2\u00a0million. For further detail see note\u00a05 \u201cCritical accounting estimates and judgements\u201d.
\u00a0
", "dimensions": { "concept": "ifrs-full:DisclosureOfInterestExpenseExplanatory", "language": "en", "entity": "scheme:969500E7V019H9NP7427", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "text_block_0fcae2ee-93c9-4cb9-8c08-612a18e59e4c": { "value": "\u00a0
Revenues that are included within the margins analysed in\u00a08a, 8b and\u00a08c 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 | |
|---|---|---|
2023 | 2022 | |
Services Revenues | 4,391.2 | 2,657.4 |
Leasing contract revenue - operating leases | 7,795.3 | 4,757.2 |
Interest revenue | 238.4 | 46.7 |
Leasing contract revenues | 8,033.7 | 4,803.9 |
Sub-Total - Revenues from Rental Activity | 12,424.9 | 7,461.3 |
Proceeds of Cars Sold | 6,458.8 | 3,953.6 |
Total Revenues | 18,883.7 | 11,414.8 |
Total Revenues excluding Interest Income | 17,006.3 | 10,495.2 |
\u00a0
The breakdown of staff expenses is as follows:
(in EUR million) | Year ended 31\u00a0December | |
|---|---|---|
2023 | Restated 2022\u00a0(1) | |
Wages and salaries | (659.3) | (418.4) |
Social security charges | (120.8) | (76.0) |
Defined benefit post-employment costs | (4.3) | (0.8) |
Other staff costs | (151.7) | (22.5) |
Total | (936.1) | (517.8) |
|
\u00a0
The average number of staff employed (including temporary staff) by the Group during the year was 12,505 (2022: 7,154). At year-end, the full time equivalent number of staff employed by the Group was 14,578 (2022: 7,529).
The breakdown of the components of the defined benefit pension cost is identified in note\u00a031.
\u00a0
\u00a0
The breakdown of general and administrative expenses is as follows:
(in EUR million) | Year ended 31\u00a0December | |
|---|---|---|
2023 | Restated 2022\u00a0(1) | |
Professional services expenses | (210.6) | (150.7) |
Facilities | (176.3) | (69.1) |
Marketing and sales | (34.8) | (13.9) |
Other general and administrative expenses | (97.7) | (64.5) |
Total | (519.5) | (298.1) |
|
\u00a0
\u00a0
(in EUR million) | Notes | Year ended 31\u00a0December | |
|---|---|---|---|
2023 | 2022 | ||
Depreciation of other property and equipment | 14 | (34.7) | (20.2) |
Depreciation of intangible assets | 17 | (59.3) | (25.5) |
Depreciation of right of use assets\u00a0(1) | 15 | (42.0) | (21.0) |
Total | \u00a0 | (136.0) | (66.7) |
|
\u00a0
Ayvens continues to invest in IT 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 the Group's customers.
Increase throughout all lines of operating expenses is mainly due to scope changes related to the acquisition of LeasePlan on 22\u00a0May 2023 (see note\u00a02 for further details).
", "dimensions": { "concept": "ifrs-full:DisclosureOfExpensesByNatureExplanatory", "language": "en", "entity": "scheme:969500E7V019H9NP7427", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "text_block_ac1fa777-3746-49a6-a4c7-c0ae99ec8e1a": { "value": "The average number of staff employed (including temporary staff) by the Group during the year was 12,505 (2022: 7,154). At year-end, the full time equivalent number of staff employed by the Group was 14,578 (2022: 7,529).", "dimensions": { "concept": "ifrs-full:DisclosureOfInformationAboutEmployeesExplanatory", "language": "en", "entity": "scheme:969500E7V019H9NP7427", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "text_block_79dc8b37-ec6a-4a78-90da-238430a547bd": { "value": "The breakdown of general and administrative expenses is as follows:
(in EUR million) | Year ended 31\u00a0December | |
|---|---|---|
2023 | Restated 2022\u00a0(1) | |
Professional services expenses | (210.6) | (150.7) |
Facilities | (176.3) | (69.1) |
Marketing and sales | (34.8) | (13.9) |
Other general and administrative expenses | (97.7) | (64.5) |
Total | (519.5) | (298.1) |
|
(in EUR million) | Year ended 31\u00a0December | |
|---|---|---|
2023 | 2022 | |
Fair value gain on the investment in equity instruments | 10.9 | \u2212 |
Dividend income from equity instruments | 0.9 | \u2212 |
Impairment of goodwill | (23.7) | \u2212 |
Impairment of disposal group | \u2212 | (50.6) |
Other income/(expenses) | (2.1) | \u2212 |
Total | (14.0) | (50.6) |
\u00a0
This caption includes the positive fair value adjustment on the investment in equity instruments related to SG Fleet Group and Constellation Group, the dividend income from these investments and the impairment of goodwill (see note\u00a016 for further details).
", "dimensions": { "concept": "ifrs-full:DisclosureOfOtherOperatingIncomeExpenseExplanatory", "language": "en", "entity": "scheme:969500E7V019H9NP7427", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "text_block_22e3df6e-3eb5-401b-87b2-184b21ca17df": { "value": "(in EUR million) | Year ended 31\u00a0December | |
|---|---|---|
2023 | 2022 | |
Fair value gain on the investment in equity instruments | 10.9 | \u2212 |
Dividend income from equity instruments | 0.9 | \u2212 |
Impairment of goodwill | (23.7) | \u2212 |
Impairment of disposal group | \u2212 | (50.6) |
Other income/(expenses) | (2.1) | \u2212 |
Total | (14.0) | (50.6) |
\u00a0
This caption includes the positive fair value adjustment on the investment in equity instruments related to SG Fleet Group and Constellation Group, the dividend income from these investments and the impairment of goodwill (see note\u00a016 for further details).
", "dimensions": { "concept": "ifrs-full:DisclosureOfOtherOperatingIncomeExplanatory", "language": "en", "entity": "scheme:969500E7V019H9NP7427", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "text_block_a714d67a-eb00-4755-af5e-e279223ac6e9": { "value": "(in EUR million) | Year ended 31\u00a0December | |
|---|---|---|
2023 | 2022 | |
Fair value gain on the investment in equity instruments | 10.9 | \u2212 |
Dividend income from equity instruments | 0.9 | \u2212 |
Impairment of goodwill | (23.7) | \u2212 |
Impairment of disposal group | \u2212 | (50.6) |
Other income/(expenses) | (2.1) | \u2212 |
Total | (14.0) | (50.6) |
\u00a0
This caption includes the positive fair value adjustment on the investment in equity instruments related to SG Fleet Group and Constellation Group, the dividend income from these investments and the impairment of goodwill (see note\u00a016 for further details).
", "dimensions": { "concept": "ifrs-full:DisclosureOfOtherOperatingExpenseExplanatory", "language": "en", "entity": "scheme:969500E7V019H9NP7427", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "text_block_cd21420e-8790-4ec8-9f71-c86942699427": { "value": "\u00a0
For the year ended 31\u00a0December 2023, the total amount of cash paid in respect of leases recognised on\u00a0the consolidated balance sheet is EUR\u00a051.9\u00a0million (2022: EUR\u00a071.1\u00a0million).
", "dimensions": { "concept": "ifrs-full:DisclosureOfLeasePrepaymentsExplanatory", "language": "en", "entity": "scheme:969500E7V019H9NP7427", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "text_block_7e993021-6e95-48bd-8261-ae48c82977f3": { "value": "(in EUR million) | As at 31\u00a0December | |
|---|---|---|
2023 | 2022 | |
Investment in debt securities | 329.4 | 219.1 |
Investment in equity securities | 35.0 | 18.7 |
Long-term investments | 223.5 | 280.1 |
Guarantee deposits | 414.5 | 14.2 |
Other | 8.8 | 5.6 |
Total | 1,011.2 | 537.7 |
Current portion | 766.5 | 331.6 |
Non-current portion | 244.7 | 206.0 |
\u00a0
Investment in debt securities includes bonds and notes held at fair value (through profit and loss or other comprehensive income) and bonds and notes held at amortised cost.
Investment in equity securities includes the interest in SG Fleet Group and the interest in Constellation Automotive Holdings S.a.r.l. Refer to note\u00a026 \u201cFinancial Instruments\u201d for more information on the method of valuation and related assumptions. No impairment or expected credit loss has been booked for the period ending 31\u00a0December 2023 and 2022.
Long-term investments result 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 three\u00a0years\u2019 time and will not be renewed.
The guarantee deposits mainly include:
(in EUR million) | As at 31\u00a0December | |
|---|---|---|
2023 | Restated 2022\u00a0(1) | |
VAT and other taxes | 852.8 | 388.1 |
Prepaid motor vehicle tax and insurance premiums | 236.2 | 117.4 |
Reclaimable damages | 16.3 | 10.1 |
Prepaid expenses and accrued income | 645.0 | 424.4 |
Reinsurance contract assets\u00a0(2) | 52.3 | 10.3 |
Insurance contract assets\u00a0(2) | 0.8 | 0.7 |
Rebates from dealers and manufacturers | 612.3 | 249.8 |
Other | 535.3 | 158.6 |
Total | 2,951.0 | 1,359.3 |
|
\u00a0
Balances written-off from other receivables were not significant for the year ending 31\u00a0December 2023 and 2022.
The Expected Credit Losses for Rebates and bonuses and commission receivable, Reclaimable damages, Reinsurance assets and Insurance Contract assets amount to EUR\u00a08\u00a0million. These credit losses are based on observable events during the period.
", "dimensions": { "concept": "ifrs-full:DisclosureOfOtherAssetsExplanatory", "language": "en", "entity": "scheme:969500E7V019H9NP7427", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "text_block_ba353b80-43f9-4889-9bce-2f2cf5f8f8b4": { "value": "(in EUR million) | As at 31\u00a0December | |
|---|---|---|
2023 | 2022 | |
Investment in debt securities | 329.4 | 219.1 |
Investment in equity securities | 35.0 | 18.7 |
Long-term investments | 223.5 | 280.1 |
Guarantee deposits | 414.5 | 14.2 |
Other | 8.8 | 5.6 |
Total | 1,011.2 | 537.7 |
Current portion | 766.5 | 331.6 |
Non-current portion | 244.7 | 206.0 |
\u00a0
Investment in debt securities includes bonds and notes held at fair value (through profit and loss or other comprehensive income) and bonds and notes held at amortised cost.
Investment in equity securities includes the interest in SG Fleet Group and the interest in Constellation Automotive Holdings S.a.r.l. Refer to note\u00a026 \u201cFinancial Instruments\u201d for more information on the method of valuation and related assumptions. No impairment or expected credit loss has been booked for the period ending 31\u00a0December 2023 and 2022.
Long-term investments result 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 three\u00a0years\u2019 time and will not be renewed.
The guarantee deposits mainly include:
(in EUR million) | As at 31\u00a0December | |
|---|---|---|
2023 | 2022 | |
Investment in debt securities | 329.4 | 219.1 |
Investment in equity securities | 35.0 | 18.7 |
Long-term investments | 223.5 | 280.1 |
Guarantee deposits | 414.5 | 14.2 |
Other | 8.8 | 5.6 |
Total | 1,011.2 | 537.7 |
Current portion | 766.5 | 331.6 |
Non-current portion | 244.7 | 206.0 |
\u00a0
Investment in debt securities includes bonds and notes held at fair value (through profit and loss or other comprehensive income) and bonds and notes held at amortised cost.
Investment in equity securities includes the interest in SG Fleet Group and the interest in Constellation Automotive Holdings S.a.r.l. Refer to note\u00a026 \u201cFinancial Instruments\u201d for more information on the method of valuation and related assumptions. No impairment or expected credit loss has been booked for the period ending 31\u00a0December 2023 and 2022.
Long-term investments result 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 three\u00a0years\u2019 time and will not be renewed.
The guarantee deposits mainly include:
(in EUR million) | As at 31\u00a0December | |
|---|---|---|
2023 | 2022 | |
Amounts receivable from credit institutions | 545.0 | \u2212 |
Loans and receivables from related parties | 2,504.5 | 1,253.0 |
Loans to joint ventures and associates | 41.6 | \u2212 |
Other\u00a0(1) | 12.3 | 3.7 |
Total | 3,103.4 | 1,256.8 |
|
\u00a0
These financial assets are all recorded at amortised cost and only held with financial institutions that have an investment grade credit rating. Receivables from credit institutions include amounts from Dutch and foreign banks with fixed or determinable payments, where banking operations were acquired on acquisition of LeasePlan. Loans and receivables from related parties are those due from Societe Generale and inter-group in nature. As such the low-risk exemption has been applied or out of scope where inter-group in nature and no expected credit loss has been applied to these balances.
For loans to joint ventures and associates, refer to note\u00a018 that provides the movement analysis. These were acquired as part of the LeasePlan acquisition and therefore ther was no balance as at 31\u00a0December 2022.
\u00a0
", "dimensions": { "concept": "ifrs-full:DisclosureOfLoansAndAdvancesToBanksExplanatory", "language": "en", "entity": "scheme:969500E7V019H9NP7427", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "text_block_add9034f-2ee2-448b-82eb-bc92d62e20ff": { "value": "(in EUR million) | As at 31\u00a0December | |
|---|---|---|
2023 | Restated 2022\u00a0(1) | |
VAT and other taxes | 852.8 | 388.1 |
Prepaid motor vehicle tax and insurance premiums | 236.2 | 117.4 |
Reclaimable damages | 16.3 | 10.1 |
Prepaid expenses and accrued income | 645.0 | 424.4 |
Reinsurance contract assets\u00a0(2) | 52.3 | 10.3 |
Insurance contract assets\u00a0(2) | 0.8 | 0.7 |
Rebates from dealers and manufacturers | 612.3 | 249.8 |
Other | 535.3 | 158.6 |
Total | 2,951.0 | 1,359.3 |
|
\u00a0
Balances written-off from other receivables were not significant for the year ending 31\u00a0December 2023 and 2022.
The Expected Credit Losses for Rebates and bonuses and commission receivable, Reclaimable damages, Reinsurance assets and Insurance Contract assets amount to EUR\u00a08\u00a0million. These credit losses are based on observable events during the period.
", "dimensions": { "concept": "ifrs-full:DisclosureOfPrepaymentsAndOtherAssetsExplanatory", "language": "en", "entity": "scheme:969500E7V019H9NP7427", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "text_block_9bc08dad-68db-4c91-ba3d-db509a994181": { "value": "(in EUR million) | As at 31\u00a0December | |
|---|---|---|
2023 | 2022 | |
Cash and balances at central banks | 3,535.6 | \u2212 |
Cash at bank and on hand | 370.8 | 195.9 |
Short-term bank deposits | 90.6 | 57.3 |
Cash and cash equivalents excl. bank overdrafts | 3,997.0 | 253.1 |
Bank overdrafts | (315.3) | (129.5) |
Cash and cash equivalents, net of bank overdrafts | 3,681.6 | 123.6 |
Cash at bank and short-term bank deposits attributable to disposal group held for sale\u00a0(1) | \u2212 | 92.8 |
Balance as at 31\u00a0December 2023 for the purpose of the statement of cash flows | 3,681.6 | 216.4 |
|
\u00a0
All cash and balances at central banks are available at call except for the mandatory reserve deposits at the Dutch Central Bank. These reserve cash deposits are the so-called minimum reserves required to be held with respective national banks for successive periods of four to five weeks as part of the monetary policy of the European Central Bank. Thanks to cash reserve requirements, banks depend on the European Central Bank\u2019s liquidity-providing mechanism for their liquidity needs. The mandatory reserve deposits amounting to EUR\u00a0107.3\u00a0million (2022: EUR\u00a099\u00a0million) form part of \u201cCash and balances at central banks\u201d.
As the Group operates its own insurance and re-insurance programme, the cash balance includes funds required for this business.
The average interest rate on the outstanding cash and balances at central banks is 3.8% (2022: 2.0%).\u00a0
Cash and cash equivalent amounts are only held with financial institutions that have an investment grade credit rating, so the low-risk exemption has been applied and no expected credit loss has been applied to these balances.
The Group has pledged part of its short-term deposits to fulfil collateral requirements. Refer to note\u00a029 for further details.
For financial assets and liabilities which are traded on an active market, such as listed investments or listed debt instruments, fair value is determined by reference to market value. For non-traded financial assets and liabilities, fair value is calculated using discounted cash flows, considered to be reasonable and consistent with those that would be used by a market participant, and based on observable market data where available (for example forward exchange rate or interest rate), unless carrying value is considered to approximate fair value.
Where discounted cash flow models based on management\u2019s assumptions are used, the resulting fair value measurements are considered to be at level\u00a03 in the fair value hierarchy, as defined in IFRS\u00a013 Fair Value Measurement, as they depend to a significant extent on unobservable valuation inputs.
All derivatives that have been designated into hedge relationships have been separately disclosed.
The Company\u2019s financial assets and liabilities are categorised as below. Where the financial instrument does not include fair value information, it is due to the carrying amount being a reasonable approximation of fair value.
As at 31\u00a0December 2023 (in EUR million) | \u00a0 | Fair Value | |||
|---|---|---|---|---|---|
Carrying Value | Level\u00a01 | Level\u00a02 | Level\u00a03 | Total | |
Financial assets measured at FVTPL | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Derivative financial instruments in hedge | 26.7 | \u00a0 | 26.7 | \u00a0 | 26.7 |
Derivative financial instruments not in hedge | 356.5 | \u00a0 | 356.5 | \u00a0 | 356.5 |
Investment in equity securities | 35.0 | 19.6 | \u00a0 | 15.4 | 35.0 |
Financial assets measured at FVOCI | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Investment in debt securities | 245.5 | 245.5 | \u00a0 | \u00a0 | 245.5 |
Financial assets measured at amortised cost | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Cash and cash equivalents | 3,997.0 | \u00a0 | \u00a0 | \u00a0 | \u2212 |
Investment in debt securities | 83.9 | 83.9 | \u00a0 | \u00a0 | 83.9 |
Other financial instruments | 646.8 | \u00a0 | \u00a0 | \u00a0 | \u2212 |
Lease receivables from clients | 4,545.2 | \u00a0 | 4,545.2 | \u00a0 | 4,545.2 |
Receivables from credit and other institutions | 3,061.9 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Loans to associates and jointly controlled entities | 41.5 | \u00a0 | 41.5 | \u00a0 | 41.5 |
Total | 13,040.0 | 349.0 | 4,970.0 | 15.4 | 5,334.4 |
\u00a0
As at 31\u00a0December 2022 (in EUR million) | \u00a0 | Fair Value | |||
|---|---|---|---|---|---|
Carrying Value | Level\u00a01 | Level\u00a02 | Level\u00a03 | Total | |
Financial assets measured at FVTPL | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Derivative financial instruments in hedge | 82.3 | \u00a0 | 82.3 | \u00a0 | 82.3 |
Derivative financial instruments not in hedge | 46.6 | \u00a0 | 46.6 | \u00a0 | 46.6 |
Investment in equity securities | 18.7 | 18.7 | \u00a0 | \u2212 | 18.7 |
Financial assets measured at FVOCI | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Investment in debt securities | 219.1 | 219.1 | \u00a0 | \u00a0 | 219.1 |
Financial assets measured at amortised cost | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Cash and cash equivalents | 253.1 | \u00a0 | \u00a0 | \u00a0 | \u2212 |
Other financial instruments | 299.9 | \u00a0 | \u00a0 | \u00a0 | \u2212 |
Lease receivables from clients | 1,849.1 | \u00a0 | 1,849.1 | \u2212 | 1,849.1 |
Receivables from credit and other institutions | 1,256.8 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Total | 4,025.7 | 237.8 | 1,978.1 | \u2212 | 2,215.9 |
\u00a0
\u00a0
As at 31\u00a0December 2023 (in EUR million) | \u00a0 | Fair Value | |||
|---|---|---|---|---|---|
Carrying Value | Level\u00a01 | Level\u00a02 | Level\u00a03 | Total | |
Financial liabilities measured at FVTPL | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Derivative financial instruments in hedge | 103.4 | \u00a0 | 103.4 | \u00a0 | 103.4 |
Derivative financial instruments not in hedge | 542.4 | \u00a0 | 542.4 | \u00a0 | 542.4 |
Financial liabilities measured at amortised cost | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Trade and other payables | 2,560.4 | \u00a0 | 2,560.4 | \u2212 | 2,560.4 |
Deposits | 11,784.7 | \u00a0 | 11,822.4 | \u00a0 | 11,822.4 |
Borrowings from financial institutions | 21,488.4 | \u00a0 | 21,488.4 | \u2212 | 21,488.4 |
Bonds issued | 16,138.3 | 6,902.8 | 9,246.4 | \u2212 | 16,149.2 |
Total | 52,617.7 | 6,902.8 | 45,763.5 | \u2212 | 52,666.3 |
As at 31\u00a0December 2022 (in EUR million) | \u00a0 | Fair Value | |||
|---|---|---|---|---|---|
Carrying Value | Level\u00a01 | Level\u00a02 | Level\u00a03 | Total | |
Financial liabilities measured at FVTPL | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Derivative financial instruments in hedge | 44.5 | \u00a0 | 44.5 | \u00a0 | 44.5 |
Derivative financial instruments not in hedge | 44.5 | \u00a0 | 44.5 | \u00a0 | 44.5 |
Financial liabilities measured at amortised cost | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Trade and other payables | 1,045.8 | \u00a0 | 1,045.8 | \u2212 | 1,045.8 |
Borrowings from financial institutions | 14,571.1 | \u00a0 | 14,571.1 | \u2212 | 14,571.1 |
Bonds issued | 5,303.4 | 3,460.9 | 1,727.1 | \u00a0 | 5,188.0 |
Total | 21,009.3 | 3,460.9 | 17,433.0 | \u2212 | 20,893.9 |
\u00a0
Level\u00a01 \u2013 for the equity instruments measured at this level, the Group has used the current bid price for the equity instrument in a quoted market while for financial asset debt securities the Group has used the quoted government bond price in an active market.
Level\u00a02 - loans to associates and jointly controlled entities have been fair valued using a discounted cashflow model using market observable inputs for the discount rate while the key inputs used in valuing the derivative hedge and hedging instruments are directly observable inputs including forward exchange rates, yield curves and spot rates. For details on lease receivables fair value measurement see note\u00a022.
Level\u00a03 \u2013 the Group have an equity investment in Constellation Automotive Holdings S.a.r.l., where the discounted cashflow valuation model has a significant part of the inputs that are not market observable. Unobservable in this context means that there is little or no current market data available from which to derive a price that an unrelated, informed buyer would be expected to purchase the asset or liability.
For each level there has been no change to the valuation techniques used during the period. For financial instruments that are recognised at fair value on a recurring basis, the Group determines whether transfers have occurred between Levels in the hierarchy by re-assessing categorisation (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting year. There were no transfers between the different levels during the current reporting or prior period.
Other financial assets and liabilities not measured at fair value have a carrying amount which is a reasonable approximation of fair value, due to being short-term in nature.
\u00a0
The movements in the fair value of the level\u00a03 financial assets and liabilities are shown as follows:
Level\u00a03 financial asset (in EUR million) | 2023 |
|---|---|
At 1\u00a0January | \u00a0 |
Net profit/(loss) recorded in the income statement | (1.0) |
Change in scope | 16.4 |
At 31\u00a0December | 15.4 |
\u00a0
In May\u00a02023, LeasePlan transferred part of the shares in Constellation Automotive Holdings S.a.r.l. to Lincoln Financing Holdings Pte. Limited (former shareholder of LeasePlan), reducing the carrying amount of the equity instrument to EUR\u00a015.4\u00a0million. The Group does not consider that a significant change in the estimates for the inputs would materially impact the fair value for the Group.
", "dimensions": { "concept": "ifrs-full:DisclosureOfFinancialInstrumentsAtFairValueThroughProfitOrLossExplanatory", "language": "en", "entity": "scheme:969500E7V019H9NP7427", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "text_block_3aa1975d-fd8e-48a7-9be0-79ff3c9db494": { "value": "(in EUR million) | As at 31\u00a0December | |
|---|---|---|
2023 | 2022 | |
Cash and balances at central banks | 3,535.6 | \u2212 |
Cash at bank and on hand | 370.8 | 195.9 |
Short-term bank deposits | 90.6 | 57.3 |
Cash and cash equivalents excl. bank overdrafts | 3,997.0 | 253.1 |
Bank overdrafts | (315.3) | (129.5) |
Cash and cash equivalents, net of bank overdrafts | 3,681.6 | 123.6 |
Cash at bank and short-term bank deposits attributable to disposal group held for sale\u00a0(1) | \u2212 | 92.8 |
Balance as at 31\u00a0December 2023 for the purpose of the statement of cash flows | 3,681.6 | 216.4 |
|
\u00a0
All cash and balances at central banks are available at call except for the mandatory reserve deposits at the Dutch Central Bank. These reserve cash deposits are the so-called minimum reserves required to be held with respective national banks for successive periods of four to five weeks as part of the monetary policy of the European Central Bank. Thanks to cash reserve requirements, banks depend on the European Central Bank\u2019s liquidity-providing mechanism for their liquidity needs. The mandatory reserve deposits amounting to EUR\u00a0107.3\u00a0million (2022: EUR\u00a099\u00a0million) form part of \u201cCash and balances at central banks\u201d.
As the Group operates its own insurance and re-insurance programme, the cash balance includes funds required for this business.
The average interest rate on the outstanding cash and balances at central banks is 3.8% (2022: 2.0%).\u00a0
Cash and cash equivalent amounts are only held with financial institutions that have an investment grade credit rating, so the low-risk exemption has been applied and no expected credit loss has been applied to these balances.
The Group has pledged part of its short-term deposits to fulfil collateral requirements. Refer to note\u00a029 for further details.
", "dimensions": { "concept": "ifrs-full:DisclosureOfCashAndBankBalancesAtCentralBanksExplanatory", "language": "en", "entity": "scheme:969500E7V019H9NP7427", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "text_block_3c6f4c1b-f589-4153-9ff2-9e8605a8e962": { "value": "(in EUR million) | As at 31\u00a0December | |
|---|---|---|
2023 | 2022 | |
Cash and balances at central banks | 3,535.6 | \u2212 |
Cash at bank and on hand | 370.8 | 195.9 |
Short-term bank deposits | 90.6 | 57.3 |
Cash and cash equivalents excl. bank overdrafts | 3,997.0 | 253.1 |
Bank overdrafts | (315.3) | (129.5) |
Cash and cash equivalents, net of bank overdrafts | 3,681.6 | 123.6 |
Cash at bank and short-term bank deposits attributable to disposal group held for sale\u00a0(1) | \u2212 | 92.8 |
Balance as at 31\u00a0December 2023 for the purpose of the statement of cash flows | 3,681.6 | 216.4 |
|
\u00a0
All cash and balances at central banks are available at call except for the mandatory reserve deposits at the Dutch Central Bank. These reserve cash deposits are the so-called minimum reserves required to be held with respective national banks for successive periods of four to five weeks as part of the monetary policy of the European Central Bank. Thanks to cash reserve requirements, banks depend on the European Central Bank\u2019s liquidity-providing mechanism for their liquidity needs. The mandatory reserve deposits amounting to EUR\u00a0107.3\u00a0million (2022: EUR\u00a099\u00a0million) form part of \u201cCash and balances at central banks\u201d.
As the Group operates its own insurance and re-insurance programme, the cash balance includes funds required for this business.
The average interest rate on the outstanding cash and balances at central banks is 3.8% (2022: 2.0%).\u00a0
Cash and cash equivalent amounts are only held with financial institutions that have an investment grade credit rating, so the low-risk exemption has been applied and no expected credit loss has been applied to these balances.
The Group has pledged part of its short-term deposits to fulfil collateral requirements. Refer to note\u00a029 for further details.
", "dimensions": { "concept": "ifrs-full:DisclosureOfFairValueOfFinancialInstrumentsExplanatory", "language": "en", "entity": "scheme:969500E7V019H9NP7427", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "text_block_c8e9cfd6-ff73-49bb-9791-dc4d8e3dddb2": { "value": "In\u00a0December 2022 the Group successfully completed its capital increase (rights issue) in order to finance the cash component of the LeasePlan acquisition in 2023 (see note\u00a02).
At 31\u00a0December 2023, the authorised capital amounted to EUR\u00a01,225.4\u00a0million (2022: EUR\u00a0848.6\u00a0million), divided into 816,960,428\u00a0ordinary shares with a nominal value of EUR\u00a01.50 each.
At 31\u00a0December 2023, share premium amounted to EUR\u00a03,819.4\u00a0million (2022: EUR\u00a01,327.9\u00a0million).
On 22\u00a0May 2023, the Group completed a share issue for 251,215,332\u00a0ordinary shares with a nominal value of EUR\u00a01.50 each. This issue represented 30.75% of the total ordinary shares of the Group at the transaction date. The newly created Group shares were issued to finance the share component of the acquisition of LeasePlan. As required under IFRS\u00a03, the share component is measured based on the fair value of the Group\u2019s shares of EUR\u00a011.43 each at the Completion Date. Based on this, the share component of the acquisition amounts to EUR\u00a02,871.4\u00a0million. The share premium includes the amount paid in excess of the nominal value of the share capital. All shares issued by the Group have been fully paid.
The holders of the shares are entitled to receive dividend as declared at Annual General Meetings and are entitled to vote at meetings of the Company.
\u00a0
\u00a0\u00a0
Other Equity Instruments in the consolidated balance sheet and statement of changes in equity are split as follows:
(in EUR million) | AT1 Capital | Warrants | Treasury shares | Total |
|---|---|---|---|---|
Balance as at 1\u00a0January 2022 | \u2212 | \u2212 | (13.2) | (13.2) |
Acquisition of treasury shares | \u2212 | \u2212 | (5.4) | (5.4) |
Issue of treasury shares to employees | \u2212 | \u2212 | 2.4 | 2.4 |
Balance as at 31\u00a0December 2022 | \u2212 | \u2212 | (16.2) | (16.2) |
Issue of warrants | \u2212 | 128.1 | \u2212 | 128.1 |
Acquisition of treasury shares | \u2212 | \u2212 | (4.9) | (4.9) |
Issue of treasury shares to employees | \u2212 | \u2212 | 2.8 | 2.8 |
Proceeds from AT1 capital | 750.0 | \u2212 | \u2212 | 750.0 |
Balance as at 31\u00a0December 2023 | 750.0 | 128.1 | (18.2) | 859.9 |
\u00a0
At the closing date of the acquisition of LeasePlan, ALD issued EUR\u00a0750\u00a0million of Additional Tier\u00a01 (AT1) and EUR\u00a01,500\u00a0million of Tier\u00a02 debt (see note\u00a02) which were fully subscribed by Societe Generale for regulatory capital purposes.
AT1 capital qualifies as an equity instrument under IFRS. It is a perpetual deeply subordinated loan agreement with no maturity date fixed, for a maximum principal amount of EUR\u00a0750\u00a0million repayable only once and with an option of an early repayment five\u00a0years after the signing of the contract. The issuer has the ability to cancel interest payments at its sole discretion. The coupon on this loan is calculated on the basis of a fixed rate of 9.642% per annum.
Interest coupon in the year ending 31\u00a0December 2023 on these AT1 capital securities amounts to EUR\u00a045\u00a0million. In the year ending 31\u00a0December 2023 an amount of EUR\u00a07.8\u00a0million was paid out of the retained earnings. The remaining interest of EUR\u00a037.2\u00a0million is payable on 30\u00a0June 2024.
In the context of the acquisition of LeasePlan, the ordinary share issue on 22\u00a0May 2023 mentioned above included the issue of 26,310,039\u00a0ordinary shares with one for one warrants attached to them. The Group has undertaken to issue such warrants (ABSA) for the benefit of the LeasePlan shareholders.
These warrants are defined as equity instruments under IAS\u00a032 as there is a contract between the holder and the issuer which will be settled solely by the delivery of a fixed number of shares in exchange for a fixed amount of cash. These warrants are measured at fair value of EUR\u00a0128.1\u00a0million as at 22\u00a0May 2023 and would become exercisable based on the formula set out in the Framework Agreement (see note\u00a02 for further details).
At General Meeting held in prior years, the Group 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. Treasury shares held by the Group amount to 1,268,887\u00a0shares at 31\u00a0December 2023 (2022: 1,173,902\u00a0shares). Treasury shares do not have any voting rights attached to them.
\u00a0\u00a0
Translation reserves in 2023 have been positively impacted by:
Other reserves in the consolidated balance sheet and statement of changes in equity are split as follows:
(in EUR million) | Hedging reserve\u00a0(1) | Actuarial gain/ | Share-based\u00a0 | Total |
|---|---|---|---|---|
Balance as at 1\u00a0January 2022 | (8.9) | (1.2) | 13.4 | 3.4 |
Changes in cash flow hedges | 45.4 | \u2212 | \u2212 | 45.4 |
Changes in fair value of debt instruments | (15.2) | \u2212 | \u2212 | (15.2) |
Remeasurement of post-employment benefit obligations | \u2212 | 2.2 | \u2212 | 2.2 |
Share-Based payments | \u2212 | \u2212 | 2.9 | 2.9 |
Issue of treasury shares to employees | \u2212 | \u2212 | (2.4) | (2.4) |
Other\u00a0(2) | 9.0 | \u2212 | (8.9) | 0.1 |
Balance as at 31\u00a0December 2022 | 30.3 | 1.0 | 5.1 | 36.4 |
Changes in cash flow hedges | (64.9) | \u2212 | \u2212 | (64.9) |
Changes in fair value of debt instruments | 8.4 | \u2212 | \u2212 | 8.4 |
Remeasurement of post-employment benefit obligations | \u2212 | (3.1) | \u2212 | (3.1) |
Share-Based payments | \u2212 | \u2212 | 3.3 | 3.3 |
Issue of treasury shares to employees | \u2212 | \u2212 | (2.8) | (2.8) |
Balance as at 31\u00a0December 2023 | (26.2) | (2.1) | 5.5 | (22.8) |
|
\u00a0
The change in fair value of the debt instruments is designated as part of the cash flow hedge and as such the fair value movement has been included in equity rather than the income statement.
\u00a0
Non-controlling interests in the consolidated balance sheet and statement of changes in equity are as follows:
(in EUR million) | Total |
|---|---|
Balance as at 1\u00a0January 2022 | 33.8 |
Currency translation differences | (0.6) |
Net income | 4.7 |
Dividends | (9.9) |
Scope change | 8.9 |
Balance as at 31\u00a0December 2022 | 36.8 |
Currency translation differences | 0.1 |
Net income\u00a0(1) | 27.9 |
Dividends | (8.6) |
Scope change | 506.2 |
Dividend payment on AT1 capital | (36.9) |
Balance as at 31\u00a0December 2023 | 525.6 |
|
At the date of acquisition of LeasePlan, on 22\u00a0May 2023, the acquired net assets of LeasePlan include AT1 capital for EUR\u00a0513\u00a0million recorded in scope change line (including EUR\u00a018.4\u00a0million of accrued interest) which was previously issued by LeasePlan Corporation N.V. in 2019. These capital securities qualify as an equity instrument and are undated, deeply subordinated, resettable and callable. Redemption is discretionary to LeasePlan Corporation N.V. five years after the issue date, unless permitted by applicable banking regulations or on each interest payment date thereafter at their prevailing principal amount, together with unpaid interest. There is a fixed interest coupon of 7.375% per annum, payable semi-annually.
Interest on the AT1 capital issued by LeasePlan Corporation N.V. is non-cumulative and fully at the discretion of the Group so any failure by the issuer to pay interest or the prevailing principal amount when due in respect of the capital securities shall not constitute an event of default and does not give holders any right to demand repayment of the prevailing principal amount.
Interest coupon in the year ending 31\u00a0December 2023 on these AT1 capital securities amounts to EUR\u00a040.2\u00a0million of which an amount of EUR\u00a036.9\u00a0million was paid. The remaining part of EUR\u00a03.3\u00a0million is payable in May\u00a02024.
", "dimensions": { "concept": "ifrs-full:DisclosureOfShareCapitalReservesAndOtherEquityInterestExplanatory", "language": "en", "entity": "scheme:969500E7V019H9NP7427", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "text_block_b4c7f6cb-8b3d-43c2-915a-fee00a12ed60": { "value": "In\u00a0December 2022 the Group successfully completed its capital increase (rights issue) in order to finance the cash component of the LeasePlan acquisition in 2023 (see note\u00a02).
At 31\u00a0December 2023, the authorised capital amounted to EUR\u00a01,225.4\u00a0million (2022: EUR\u00a0848.6\u00a0million), divided into 816,960,428\u00a0ordinary shares with a nominal value of EUR\u00a01.50 each.
At 31\u00a0December 2023, share premium amounted to EUR\u00a03,819.4\u00a0million (2022: EUR\u00a01,327.9\u00a0million).
On 22\u00a0May 2023, the Group completed a share issue for 251,215,332\u00a0ordinary shares with a nominal value of EUR\u00a01.50 each. This issue represented 30.75% of the total ordinary shares of the Group at the transaction date. The newly created Group shares were issued to finance the share component of the acquisition of LeasePlan. As required under IFRS\u00a03, the share component is measured based on the fair value of the Group\u2019s shares of EUR\u00a011.43 each at the Completion Date. Based on this, the share component of the acquisition amounts to EUR\u00a02,871.4\u00a0million. The share premium includes the amount paid in excess of the nominal value of the share capital. All shares issued by the Group have been fully paid.
The holders of the shares are entitled to receive dividend as declared at Annual General Meetings and are entitled to vote at meetings of the Company.
\u00a0
", "dimensions": { "concept": "ifrs-full:DisclosureOfIssuedCapitalExplanatory", "language": "en", "entity": "scheme:969500E7V019H9NP7427", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "text_block_ad23a309-ef8d-4a0a-989d-3f54999af1e6": { "value": "In\u00a0December 2022 the Group successfully completed its capital increase (rights issue) in order to finance the cash component of the LeasePlan acquisition in 2023 (see note\u00a02).
At 31\u00a0December 2023, the authorised capital amounted to EUR\u00a01,225.4\u00a0million (2022: EUR\u00a0848.6\u00a0million), divided into 816,960,428\u00a0ordinary shares with a nominal value of EUR\u00a01.50 each.
At 31\u00a0December 2023, share premium amounted to EUR\u00a03,819.4\u00a0million (2022: EUR\u00a01,327.9\u00a0million).
On 22\u00a0May 2023, the Group completed a share issue for 251,215,332\u00a0ordinary shares with a nominal value of EUR\u00a01.50 each. This issue represented 30.75% of the total ordinary shares of the Group at the transaction date. The newly created Group shares were issued to finance the share component of the acquisition of LeasePlan. As required under IFRS\u00a03, the share component is measured based on the fair value of the Group\u2019s shares of EUR\u00a011.43 each at the Completion Date. Based on this, the share component of the acquisition amounts to EUR\u00a02,871.4\u00a0million. The share premium includes the amount paid in excess of the nominal value of the share capital. All shares issued by the Group have been fully paid.
The holders of the shares are entitled to receive dividend as declared at Annual General Meetings and are entitled to vote at meetings of the Company.
\u00a0
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForIssuedCapitalExplanatory", "language": "en", "entity": "scheme:969500E7V019H9NP7427", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "text_block_3648b39d-03b6-4d0d-9cb1-049f612fcae9": { "value": "At General Meeting held in prior years, the Group 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. Treasury shares held by the Group amount to 1,268,887\u00a0shares at 31\u00a0December 2023 (2022: 1,173,902\u00a0shares). Treasury shares do not have any voting rights attached to them.
", "dimensions": { "concept": "ifrs-full:DisclosureOfTreasurySharesExplanatory", "language": "en", "entity": "scheme:969500E7V019H9NP7427", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "text_block_eea09883-34ff-407e-9bc9-39854e5b5dde": { "value": "At General Meeting held in prior years, the Group 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. Treasury shares held by the Group amount to 1,268,887\u00a0shares at 31\u00a0December 2023 (2022: 1,173,902\u00a0shares). Treasury shares do not have any voting rights attached to them.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForTreasurySharesExplanatory", "language": "en", "entity": "scheme:969500E7V019H9NP7427", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "text_block_01e78123-f748-48b5-ba3a-38158713782b": { "value": "Translation reserves in 2023 have been positively impacted by:
Other reserves in the consolidated balance sheet and statement of changes in equity are split as follows:
(in EUR million) | Hedging reserve\u00a0(1) | Actuarial gain/ | Share-based\u00a0 | Total |
|---|---|---|---|---|
Balance as at 1\u00a0January 2022 | (8.9) | (1.2) | 13.4 | 3.4 |
Changes in cash flow hedges | 45.4 | \u2212 | \u2212 | 45.4 |
Changes in fair value of debt instruments | (15.2) | \u2212 | \u2212 | (15.2) |
Remeasurement of post-employment benefit obligations | \u2212 | 2.2 | \u2212 | 2.2 |
Share-Based payments | \u2212 | \u2212 | 2.9 | 2.9 |
Issue of treasury shares to employees | \u2212 | \u2212 | (2.4) | (2.4) |
Other\u00a0(2) | 9.0 | \u2212 | (8.9) | 0.1 |
Balance as at 31\u00a0December 2022 | 30.3 | 1.0 | 5.1 | 36.4 |
Changes in cash flow hedges | (64.9) | \u2212 | \u2212 | (64.9) |
Changes in fair value of debt instruments | 8.4 | \u2212 | \u2212 | 8.4 |
Remeasurement of post-employment benefit obligations | \u2212 | (3.1) | \u2212 | (3.1) |
Share-Based payments | \u2212 | \u2212 | 3.3 | 3.3 |
Issue of treasury shares to employees | \u2212 | \u2212 | (2.8) | (2.8) |
Balance as at 31\u00a0December 2023 | (26.2) | (2.1) | 5.5 | (22.8) |
|
\u00a0
The change in fair value of the debt instruments is designated as part of the cash flow hedge and as such the fair value movement has been included in equity rather than the income statement.
", "dimensions": { "concept": "ifrs-full:DisclosureOfReservesAndOtherEquityInterestExplanatory", "language": "en", "entity": "scheme:969500E7V019H9NP7427", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "text_block_8b73ad80-f8f7-44f9-8cf5-d806a67b9311": { "value": "Non-controlling interests in the consolidated balance sheet and statement of changes in equity are as follows:
(in EUR million) | Total |
|---|---|
Balance as at 1\u00a0January 2022 | 33.8 |
Currency translation differences | (0.6) |
Net income | 4.7 |
Dividends | (9.9) |
Scope change | 8.9 |
Balance as at 31\u00a0December 2022 | 36.8 |
Currency translation differences | 0.1 |
Net income\u00a0(1) | 27.9 |
Dividends | (8.6) |
Scope change | 506.2 |
Dividend payment on AT1 capital | (36.9) |
Balance as at 31\u00a0December 2023 | 525.6 |
|
At the date of acquisition of LeasePlan, on 22\u00a0May 2023, the acquired net assets of LeasePlan include AT1 capital for EUR\u00a0513\u00a0million recorded in scope change line (including EUR\u00a018.4\u00a0million of accrued interest) which was previously issued by LeasePlan Corporation N.V. in 2019. These capital securities qualify as an equity instrument and are undated, deeply subordinated, resettable and callable. Redemption is discretionary to LeasePlan Corporation N.V. five years after the issue date, unless permitted by applicable banking regulations or on each interest payment date thereafter at their prevailing principal amount, together with unpaid interest. There is a fixed interest coupon of 7.375% per annum, payable semi-annually.
Interest on the AT1 capital issued by LeasePlan Corporation N.V. is non-cumulative and fully at the discretion of the Group so any failure by the issuer to pay interest or the prevailing principal amount when due in respect of the capital securities shall not constitute an event of default and does not give holders any right to demand repayment of the prevailing principal amount.
Interest coupon in the year ending 31\u00a0December 2023 on these AT1 capital securities amounts to EUR\u00a040.2\u00a0million of which an amount of EUR\u00a036.9\u00a0million was paid. The remaining part of EUR\u00a03.3\u00a0million is payable in May\u00a02024.
", "dimensions": { "concept": "ifrs-full:DisclosureOfNoncontrollingInterestsExplanatory", "language": "en", "entity": "scheme:969500E7V019H9NP7427", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "text_block_d293b4bf-0322-494c-a072-ee4f7367e048": { "value": "\u00a0
The carrying amounts of the Group\u2019s bonds are denominated in the following currencies:
(in EUR million) | As at 31\u00a0December | |
|---|---|---|
2023 | 2022 | |
Euro | 10,766.9 | 3,576.3 |
Swedish Krona | 36.6 | \u2212 |
Norwegian Krona | 317.7 | \u2212 |
Other currencies | 760.9 | \u2212 |
Total bonds | 11,882.1 | 3,576.3 |
In LeasePlan, a number of fixed rate bonds were included in a fair value hedge whereby the bonds (hedged items) are measured at amortised cost and are constantly being adjusted for gains/losses attributable to the risk being hedged. As part of a periodic review of hedging strategy to comply with risk objectives, the Group decided to revoke these fair value hedge designations on 1\u00a0October 2023. Before de-designation any fair value changes were recognised in the income line item \u2018Unrealised gains/losses on financial instruments and other\u2019 and the amortisation of the impact on de-designation, that will be smoothed over the residual lifetime of these bonds and included in the same income statement line item, amounted to EUR\u00a038\u00a0million for the year ending 31\u00a0December 2023.
\u00a0
The following debt securities are currently issued:
Programme and special purpose company | Deal type | Country | Currency | Amount (in million)(1) | Set up/Renewal date |
|---|---|---|---|---|---|
ALD Funding Limited | Private | UK | GBP | 414 | February\u00a02023 |
Axus Finance NL B | Private | The Netherlands | EUR | 500 | June\u00a02023 |
Axus Finance SPRL | Private | Belgium | EUR | 400 | June\u00a02022 |
FCT Red & Black Auto Lease France 1 | Public | France | EUR | 123 | October\u00a02021 |
FCT Red & Black Auto Lease France 2 | Public | France | EUR | 500 | June\u00a02023 |
Bumper BE\u00a0NV/SA No.\u00a001 | Public | Belgium | EUR | 293 | October\u00a02021 |
Bumper FR 2022-1 FCT | Public | France | EUR | 380 | April\u00a02022 |
Bumper NL 2020-1 B.V. | Public | The Netherlands | EUR | 85 | June\u00a02020 |
Bumper NL 2022-1 B.V. | Private | The Netherlands | EUR | 450 | October\u00a02022 |
Bumper NL 2023-1 B.V. | Private | The Netherlands | EUR | 500 | September\u00a02023 |
Bumper UK 2021-1 Finance\u00a0PLC | Public | UK | GBP | 43 | March\u00a02021 |
Bumper DE\u00a0S.A.\u00a02023-1 | Public | Germany | GBP | 434 | February\u00a02023 |
|
\u00a0
The interest outstanding at the balance sheet date was EUR\u00a0135.8\u00a0million (2022: 27.1\u00a0million).
The maturity of the asset-backed securitisation programmes is as follows:
(in EUR million) | As at 31\u00a0December | |
|---|---|---|
2023 | 2022 | |
Less than 1\u00a0year | 1,385.4 | 603.7 |
1-5\u00a0years | 2,870.9 | 1,079.2 |
Over 5\u00a0years | \u2212 | 44.2 |
Total securitisation programme | 4,256.2 | 1,727.1 |
\u00a0
The carrying amounts of the Group\u2019s asset-backed securitisation programmes are denominated in the following currencies:
(in EUR million) | As at 31\u00a0December | |
|---|---|---|
2023 | 2022 | |
Euro | 3,730.0 | 1,260.4 |
UK Pound | 526.2 | 466.7 |
Total securitisation programme | 4,256.2 | 1,727.1 |
A guarantee at first demand has been granted to ING Luxembourg for an amount of EUR\u00a050\u00a0million on behalf of Axus Luxembourg\u00a0SA, under the condition negotiated in the frame of the distribution agreement concluded with this financial institution.
A guarantee at has been granted to Peugeot\u00a0SA for an amount of EUR\u00a020\u00a0million on behalf of Fleetpool, under the condition negotiated in the frame of the distribution agreement concluded with this financial institution.
The Group has issued guarantees to the total value of EUR\u00a0364.8\u00a0million of which EUR\u00a0363.0\u00a0million is related to residual value guarantees issued to clients.
", "dimensions": { "concept": "ifrs-full:DisclosureOfDebtSecuritiesExplanatory", "language": "en", "entity": "scheme:969500E7V019H9NP7427", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "text_block_75fc1fb2-41e0-46a3-b580-face88703c2e": { "value": "\u00a0
Saving deposits raised by LeasePlan Bank amount to EUR\u00a011.8\u00a0billion of which 31.7% are deposited for a fixed term. LeasePlan Bank is the brand name under which savings deposits are raised by LeasePlan Corporation N.V. which holds a banking licence in the Netherlands. LeasePlan Bank also operates on the German savings deposit market with a cross border offering from the Netherlands.
The maturity analysis of these deposits is as follows:
(in EUR million) | As at 31\u00a0December | |
|---|---|---|
2023 | 2022 | |
Deposits\u00a0(1) | 11,729.2 | \u2212 |
Payables related to deposits | 55.5 | \u2212 |
Total | 11,784.7 | \u2212 |
of which: | \u00a0 | \u00a0 |
Less than 1\u00a0year | 7,743.2 | \u2212 |
1-5\u00a0years | 3,925.0 | \u2212 |
Over 5\u00a0years | 116.6 | \u2212 |
|
The average interest rates on the outstanding balances of the fixed term savings deposits in original maturity terms are as follows:
\u00a0 | Year ended 31\u00a0December | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | |||
|---|---|---|---|---|---|---|---|---|---|
2023 | 2022 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | |
Three months or less\u00a0 | 1.60% | \u2212 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Longer than three months, less than a\u00a0year | 2.71% | \u2212 | |||||||
Longer than a year, less than 5\u00a0years | 1.53% | \u2212 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
\u00a0
The interest of the on-demand accounts is set monthly. The interest outstanding at the balance sheet date was EUR\u00a055.5\u00a0million.
", "dimensions": { "concept": "ifrs-full:DisclosureOfDepositsFromBanksExplanatory", "language": "en", "entity": "scheme:969500E7V019H9NP7427", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "text_block_9f2eae3f-49d2-47cc-b26d-5404ca92134f": { "value": "\u00a0
Changes in liabilities arising from financing activities are shown in the table below.
(in EUR million) | Balance as at 1\u00a0January 2023 | Financing | Interest accrued | Movement | Foreign exchange adjustment | Scope | Other | Balance as at 31\u00a0December 2023 |
|---|---|---|---|---|---|---|---|---|
Overdraft | 129.5 | 157.6 | \u2212 | \u2212 | 1.5 | 26.6 | \u2212 | 315.3 |
Borrowings from financial institutions excl. overdraft | 14,441.6 | 3,868.2 | 63.9 | \u2212 | 101.0 | 2,698.5 | \u2212 | 21,173.1 |
Bonds and notes issued | 5,303.4 | 1,366.3 | 68.8 | 68.2 | 12.2 | 9,319.3 | 0.0 | 16,138.3 |
Deposits | \u2212 | 451.9 | 31.2 | \u2212 | \u2212 | 11,301.7 | \u2212 | 11,784.7 |
Lease liabilities | 117.2 | (52.0) | 3.4 | \u2212 | 0.9 | 163.0 | 19.7 | 252.3 |
\u00a0
(in EUR million) | Balance as at 1\u00a0January 2022 | Financing | Interest accrued | Movement | Foreign exchange adjustment | Scope | Other | Balance as at 31\u00a0December 2022 |
|---|---|---|---|---|---|---|---|---|
Overdraft | 228.4 | (97.3) | \u2212 | \u2212 | (1.6) | \u2212 | \u2212 | 129.5 |
Borrowings from financial institutions excl. overdraft | 13,620.2 | 652.6 | 5.3 | \u2212 | (65.1) | 291.9 | (63.3) | 14,441.6 |
Bonds and notes issued | 4,668.7 | 639.4 | 21.2 | \u2212 | (25.9) | \u2212 | (0.0) | 5,303.4 |
Lease liabilities | 121.4 | (71.1) | \u2212 | \u2212 | (0.9) | 19.7 | 48.1 | 117.2 |
(in EUR million) | As at 31\u00a0December | |
|---|---|---|
2023 | 2022 | |
Trade payables | 2,560.4 | 1,045.8 |
Deferred leasing income\u00a0(1) | 732.1 | 363.7 |
Other accruals and other deferred income(2) | 1,060.2 | 611.5 |
Advance lease instalments received | 808.6 | 448.3 |
Accruals for contract settlements | 472.8 | 214.9 |
VAT and other taxes | 332.1 | 243.6 |
Other | 68.4 | 0.7 |
Trade and other payables | 6,034.7 | 2,928.6 |
|
\u00a0
\u00a0
The majority of the trade and other payables and deferred income, except for deferred leasing income, have a remaining maturity of less than one year. The increase in other is primarily attributable to cash collateral deposited for derivative financial instruments and originates from Credit Support Annexes (CSAs) to International Swaps and Derivatives Association (ISDA) master agreements.
Other accruals and other deferred amounts owed contain accruals for a number of different staff expenses, including for the variable remuneration. The accrual for variable remuneration also contains the liability for Phantom Share Units (\u201cPSUs\u201d) in LeasePlan.\u00a0The variable remuneration award for the Identified Staff consists of a direct payment in cash and a deferred payment in cash and Phantom Share Units (PSUs). The PSUs represent the underlying value of the Company shares which entitle the participant to a payment in cash after a specified period and are recognised as cash-settled share-based payment arrangement. The PSU part of the deferred award is revalued annually by estimating the Company\u2019s equity value for determining the fair value of the outstanding PSU awards. Liabilities recognised for PSUs are measured at the estimated fair value. The accrual for variable remuneration also contains the liability for Phantom Share Units (\u201cPSUs\u201d). The fair value of the accrual is EUR\u00a023.9\u00a0million as at 31\u00a0December 2023. As this obligation was purchased as part of the LeasePlan acquisition in the year there was no impact to the Group in 2022.
", "dimensions": { "concept": "ifrs-full:DisclosureOfOtherLiabilitiesExplanatory", "language": "en", "entity": "scheme:969500E7V019H9NP7427", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "text_block_ede079a5-c888-49a5-b993-5a06621ef5d5": { "value": "(in EUR million) | As at 31\u00a0December | |
|---|---|---|
2023 | 2022 | |
Trade payables | 2,560.4 | 1,045.8 |
Deferred leasing income\u00a0(1) | 732.1 | 363.7 |
Other accruals and other deferred income(2) | 1,060.2 | 611.5 |
Advance lease instalments received | 808.6 | 448.3 |
Accruals for contract settlements | 472.8 | 214.9 |
VAT and other taxes | 332.1 | 243.6 |
Other | 68.4 | 0.7 |
Trade and other payables | 6,034.7 | 2,928.6 |
|
Related party transactions relate mainly to transactions with companies of the Societe Generale (\u201cSG\u201d), the Group majority shareholder, and transactions with companies of TDR Capital as a result of the acquisition of LeasePlan (see note\u00a02 for further details). There was no material change in the nature of the transactions conducted by the Group with related parties from prior year. All business relations with Societe Generale are handled at normal market conditions.
Key management includes the following membxers of the Executive Committee: Chief Executive Officer, three 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 | |
|---|---|---|
2023 | 2022 | |
Salaries and other short-term employment benefits | 2.3 | 2.8 |
Post employment benefits | \u2212 | 0.4 |
Attendance fees for the Board members | 0.4 | 0.3 |
Other long-term benefits | 0.8 | 1.1 |
Total | 3.4 | 4.6 |
\u00a0
\u00a0
SG and its subsidiaries are customers of the Group. The Group leases to SG and its subsidiaries a fleet of 7,683\u00a0vehicles across 20\u00a0countries. Rentals have been priced at normal market conditions. More than 65% of the total fleet leased to Societe Generale is leased by ALD France. Rental paid by Societe Generale for the year ending 31\u00a0December 2023 amounted to EUR\u00a019.5\u00a0million (2022: EUR\u00a019.8\u00a0million). The amount outstanding as at 31\u00a0December 2023 amounted to EUR 1.4\u00a0million (2022: EUR 0.5\u00a0million).
TDR Capital has a controlling interest in Constellation Automotive Group, which had a controlling interest in British Car Auction (BCA) and CN Group B.V. The Group sells ex-lease vehicles on an arm\u2019s length basis under a long-term service agreement. The result of transactions with Constellation Automotive Holdings for the year ending 31\u00a0December 2023 is not material at the Group level. As at 31\u00a0December 2023 a balance is owed from Constellation Automotive Holdings of EUR\u00a00.7\u00a0million.
The Group has a contract with SG Global Services Centre (India), with which the Group subcontracts IT services including development, maintenance and support of international applications. The Group also subcontracts some technical infrastructure services to SG, mainly in France. The overall amount of IT services subcontracted to SG and its subsidiaries for the year ending 31\u00a0December 2023 amounts to EUR\u00a029.8\u00a0million (2022: EUR\u00a023.0\u00a0million). The amount outstanding as at 31\u00a0December 2023 amounted to EUR 0.5\u00a0million (2022: EUR 0.3\u00a0million).
Some Group entities share premises with SG or with SG business divisions in some countries (mainly France and Denmark which represent around 96% of the total rentals paid to SG). Rentals have been priced at arm\u2019s length and amounted to EUR\u00a00.8\u00a0million for the year ending 31\u00a0December 2023 (2022: EUR\u00a00.6\u00a0million).
SG retail and corporate banking network sells long term rental contracts to customers on behalf of the Group against a commission for each contract sourced. In the year ending 31\u00a0December 2023, around 20,000\u00a0contracts have been signed through the SG distribution network in three different countries. The rental contract brokerage\u2019s commission paid to SG by ALD France represented EUR\u00a03.0\u00a0million for the year ended 31\u00a0December 2023, (2022: EUR\u00a03.3\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 the Group. Insurance premiums have been fixed at arm\u2019s length. The overall amount of insurance premium paid by the Italy subsidiary to Sogessur for the year ending 31\u00a0December 2023 amounted to EUR\u00a047.0\u00a0million (2022: EUR\u00a054.4\u00a0million). There are no outstanding balances at the year end.
Societe Generale, as a shareholder, provides ALD Group with the following intercompany corporate services:
These Corporate services provided by SG have been subject to compensation of EUR\u00a08.2\u00a0million (estimated) in the year ending 31\u00a0December 2023 (2022: EUR\u00a08.5\u00a0million).
In addition, for the year ending 31\u00a0December 2023, there were 78\u00a0employees seconded from SG (2022: 57) to the Group. For certain employees, they remained on the payroll of SG and were re-billed to the Group, which amounted to re-billing for staff seconded of EUR\u00a017.0\u00a0million in the year ending 31\u00a0December 2023 (2022: EUR 14.9\u00a0million). The amount outstanding as at 31\u00a0December 2023 amounted to EUR 1.0\u00a0million (2022: EUR 1.0\u00a0million).
Societe Generale and its affiliates provide the Group with funding either through the Group Treasury centre or directly to Group subsidiaries at a market rate (see note\u00a030). 32.9% of the Group\u2019s funding was provided through SG representing EUR\u00a016,236.4\u00a0million as of 31\u00a0December 2023 (2022: 69% representing EUR\u00a013,710.8\u00a0million).
SG also provides bank guarantees on behalf of the Group and its subsidiaries in relation to external funding. Overall guarantees released by Societe Generale amounted up to EUR\u00a01,702.8\u00a0million as of 31\u00a0December 2023 (2022: EUR\u00a01,569.5\u00a0million).
SG also provides the Group with derivatives instruments which have a nominal amount of EUR\u00a05,259.28\u00a0million, and are represented on the balance sheet as at 31\u00a0December 2023 for a total amount of EUR\u00a065.8\u00a0million in assets and EUR\u00a092.0\u00a0million in liabilities (2022: nominal of EUR\u00a01,336.3\u00a0million, with EUR\u00a045.0\u00a0million in assets and EUR\u00a01.5\u00a0million in liabilities).
The Group has long-term cash deposits with SG for a total of EUR\u00a0180.9\u00a0million as at 31\u00a0December 2023 (2022: EUR\u00a0269.6\u00a0million). These deposits will roll-out in approximately 3\u00a0years\u2019 time and will not be renewed.
The Group has short-term deposits with SG for a total of EUR\u00a02,512.3\u00a0million as at December\u00a02023 (2022: EUR\u00a01,253.9\u00a0million).
All business relations with investments accounted for using the equity method are in the ordinary course of business and are handled on normal market terms. As at 31\u00a0December 2023, an amount of EUR\u00a041.5\u00a0million is provided as loans to investments accounted for using the equity method (see note\u00a018).
ALD Automotive Italia SRL had joined SG tax consolidation group in Italy in 2016. This regime allows the determination of a single IRES taxable base comprised of the taxable income and losses of each of the participating entities.
\u00a0
", "dimensions": { "concept": "ifrs-full:DisclosureOfRelatedPartyExplanatory", "language": "en", "entity": "scheme:969500E7V019H9NP7427", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "text_block_0aa98cd2-48be-4cc9-a8f9-cf533b179865": { "value": "Key management includes the following membxers of the Executive Committee: Chief Executive Officer, three 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 | |
|---|---|---|
2023 | 2022 | |
Salaries and other short-term employment benefits | 2.3 | 2.8 |
Post employment benefits | \u2212 | 0.4 |
Attendance fees for the Board members | 0.4 | 0.3 |
Other long-term benefits | 0.8 | 1.1 |
Total | 3.4 | 4.6 |
(in EUR million) | 2023 | 2022 | |||||||
|---|---|---|---|---|---|---|---|---|---|
Ernst & Young | Deloitte | KPMG | Other | Total | Ernst & Young | Deloitte | Other | Total | |
Audit services | 4.0 | 3.7 | 6.9 | 0.1 | 14.7 | 2.2 | 1.9 | 0.3 | 4.4 |
Audit related services | 0.1 | 0.0 | 0.3 | \u00a0 | 0.5 | 0.1 | 0.1 | \u2212 | 0.2 |
Other (non-audit) services | 0.1 | 0.0 | \u00a0 | 0.3 | 0.4 | \u2212 | \u2212 | \u2212 | \u2212 |
Total audit fees | 4.2 | 3.8 | 7.2 | 0.4 | 15.6 | 2.3 | 2.0 | 0.3 | 4.6 |
\u00a0
The Group has entered into commitments relating to the forward purchase of property and equipment under operating lease and rental fleet amounting to EUR\u00a09.5\u00a0billion (2022: EUR\u00a06.3\u00a0billion) as at the balance sheet date. These commitments are entered into in the ordinary course of business and the majority is back-to-back matched with lease contracts entered into with customers.
", "dimensions": { "concept": "ifrs-full:DisclosureOfCommitmentsExplanatory", "language": "en", "entity": "scheme:969500E7V019H9NP7427", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "text_block_98497a93-2e4d-41b3-9e94-8daa253e19d3": { "value": "\u00a0
The Group has completed the sale of its subsidiary LeasePlan Russia to Expo Capital Liz, a local company active in the automotive and leasing sector on 26 February, 2024. The sale of LeasePlan Russia, representing a funded fleet of 3,500 vehicles, has received clearance from the relevant Russian regulatory authorities. At the date of the acquisition of LeasePlan (22 May, 2023), \u00a0as part of the Purchase Price Allocation exercise, the Group recorded an impairment of EUR\u202f-28.5 million to the equity of LeasePlan Russia in line with the estimated future sales proceeds in the context of the Russian regulatory constraints. The sale resulted in a gain on disposal of EUR\u202f4.8 million in Ayvens\u2019 income statement in 2024 contributing to the total loss in the shareholders' equity of EUR\u202f-23.7 million. With this sale, the Group is no longer present in Russia.
In March 2024, Ayvens obtained the Declaration of No-Objection (DNO) from both the European Central Bank and the Dutch National Bank. The DNO allows the Group to merge ALD and LeasePlan's activities together and is an important step forward in the journey towards integration to become \"one\". Consequently, the shares of almost all LeasePlan entities will be transferred in a phased approach from LeasePlan Corporation N.V. to ALD SA. Once this is completed, ALD SA will, directly or indirectly, own all operating entities, ultimately allowing it to simplify and streamline the corporate governance, processes and business activities, particularly in the 20 overlapping countries where both entities are present.
\u00a0