09 Financial and Non-Financial Assets / Receivables

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€ million

 

2018

 

2017

 

 

Total

 

Of which
noncurrent

 

Of which
current

 

Total

 

Of which
noncurrent

 

Of which
current

 

 

 

 

 

 

 

 

 

 

 

 

 

Trade receivables

 

681.9

 

 

681.9

 

655.7

 

 

655.7

 

 

 

 

 

 

 

 

 

 

 

 

 

Investments

 

11.3

 

11.3

 

 

11.1

 

11.1

 

Loans granted

 

89.6

 

89.6

 

 

90.5

 

90.5

 

Receivables from associates

 

1.3

 

 

1.3

 

1.3

 

 

1.3

Loan and interest receivables

 

 

 

 

1.6

 

 

1.6

Derivative financial instruments

 

10.7

 

4.7

 

6.0

 

13.4

 

1.5

 

11.9

Insurance compensation

 

 

 

 

10.2

 

 

10.2

Receivables from suppliers

 

21.0

 

 

21.0

 

4.6

 

 

4.6

Deposits

 

3.3

 

2.7

 

0.6

 

3.1

 

2.5

 

0.6

Restricted cash and cash equivalents

 

0.8

 

 

0.8

 

0.2

 

 

0.2

Sundry assets

 

1.4

 

1.0

 

0.4

 

49.1

 

1.2

 

47.9

Other financial assets

 

139.4

 

109.3

 

30.1

 

185.1

 

106.8

 

78.3

 

 

 

 

 

 

 

 

 

 

 

 

 

Prepaid expenses

 

8.2

 

0.9

 

7.3

 

10.2

 

1.2

 

9.0

Plan assets for phased early retirement

 

0.2

 

 

0.2

 

0.3

 

 

0.3

Advance payments made

 

16.9

 

3.6

 

13.3

 

9.1

 

2.3

 

6.8

Other tax receivables

 

60.3

 

0.8

 

59.5

 

63.7

 

0.3

 

63.4

Sundry assets

 

5.1

 

 

5.1

 

6.5

 

 

6.5

Other non-financial assets

 

90.7

 

5.3

 

85.4

 

89.8

 

3.8

 

86.0

 

 

 

 

 

 

 

 

 

 

 

 

 

Income tax receivables

 

64.0

 

 

64.0

 

13.9

 

 

13.9

Trade receivables consist entirely of receivables from contracts with customers.

Insurance compensation of €10.2 million in the previous year concerns insurance claims from the loss event at the Charleston production site.

Receivables are shown at amortized cost, which corresponds to their market value. Adequate loss allowances are set up to cover default risks, to the extent that these are not covered by insurance, bank guarantees or advance payments received.

WACKER takes the simplified approach when calculating impairments of trade receivables in accordance with 9. Under this approach, the loss allowance is determined immediately upon origination on the basis of the lifetime expected credit losses. Further changes in the credit risk (expected credit loss or ECL) do not need to be tracked. The expected credit losses are determined using a provision matrix, which defines fixed default rates per past-due category on the basis of the risk classes of the past-due receivables.

The following table shows a breakdown of expected impairments of trade receivables:

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Development of Past-Due Trade Receivables as of Dec. 31, 2018

 

 

 

 

 

 

 

€ million

 

Carrying amount

 

Loss allowance

 

Expected loss rate (%)

 

 

 

 

 

 

 

Not past due

 

609.3

 

-0.7

 

-0.11

up to 30 days past due

 

60.8

 

-0.7

 

-1.14

31 to 60 days past due

 

8.4

 

-0.2

 

-2.33

61 to 90 days past due

 

2.2

 

-0.2

 

-8.33

Receivables impaired as uncollectible

 

1.2

 

-1.5

 

-55.56

Total

 

681.9

 

-3.3

 

-0.48

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Development of Past-Due Trade Receivables as of Jan. 1, 2018

 

 

 

 

 

 

 

€ million

 

Carrying amount

 

Loss allowance

 

Expected loss rate (%)

 

 

 

 

 

 

 

Not past due

 

513.3

 

-0.4

 

-0.08

up to 30 days past due

 

120.6

 

-0.2

 

-0.17

31 to 60 days past due

 

10.2

 

-0.1

 

-0.97

61 to 90 days past due

 

11.4

 

-0.1

 

-0.87

Receivables impaired as uncollectible

 

0.2

 

-2.6

 

-92.86

Total

 

655.7

 

-3.4

 

-0.52

The lifetime expected credit losses reflect all possible loss events that could occur until the expected maturity of the financial asset. WACKER determines the expected credit loss by taking into account the entire contractual period during which the Group is exposed to the credit risk.

WACKER applies three key parameters to assess the expected credit loss for noncurrent and current interest-bearing receivables (loans and fixed-interest securities): the probability of default (PD), the loss given default (LGD) and the estimated exposure at default (EAD). In the case of loans and fixed-interest securities, WACKER determines a loss allowance equivalent to the 12-month expected credit losses, as the former are financial instruments with a low credit risk.

Valuation allowances and past-due debts developed as follows:

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Development of Loss Allowances for Trade Receivables

 

 

 

 

 

€ million

 

2018

 

2017

 

 

 

 

 

As of Jan. 1 (as per IAS 39)

 

3.4

 

3.7

Effects of first-time application of new accounting standards

 

-0.1

 

Opening balance of loss allowance as of Jan. 1 (as per IFRS 9)

 

3.3

 

3.7

Increase /decrease in loss allowances recognized in profit or loss

 

0.1

 

Receivables impaired as uncollectible

 

 

-0.1

Change in scope of consolidation

 

 

Exchange-rate differences

 

-0.1

 

-0.2

As of Dec. 31

 

3.3

 

3.4

The loss allowances exclusively concern revenue from contracts with customers.

Under IAS 39, valuation allowances were established in the prior year for identifiable credit risks and exchange-rate fluctuations. No valuation allowances were recognized for other financial assets in the prior year. There was no significant credit risk as of December 31, 2018.

We continuously monitor the creditworthiness of our debtors to assess the intrinsic value of the corresponding receivables; where appropriate, we take out credit default insurance. In addition, customers make advance payments and provide bank guarantees. The maximum default risk is equal to the carrying amount of the uninsured receivables. No loans or receivables were renegotiated to prevent an overdue debt or possible loss allowances. Based on past experience and on the conditions prevailing as of the reporting date, there are no restrictions with regard to credit quality.

IFRS
The International Financial Reporting Standards (until 2001 International Accounting Standards, IAS) are compiled and published by the London-based International Accounting Standards Board (IASB). Since 2005, publicly listed EU-based companies have been required to use IFRS in accordance with IAS regulations.

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