10.4 Changes in working capital
in PLN millions, unless otherwise stated
Cash flows arising from interest on reverse factoring transactions are presented in cash flows from financing activities. The actually repaid principal amounts of receivables transferred to reverse factoring to a factor are presented in cash flows from operating activities, and partially also from investment activities. Moreover, the Parent Entity, as regards changes in working capital in the statement of cash flows, presented a separate line “Change in trade payables transferred to factoring” for the purposes of clear and transparent presentation.
The Parent Entity implemented reverse factoring in the period ended on 31 December 2019 (more information may be found in Note 10.3).
Since market practice with respect to the presentation of reverse factoring transactions in the statement of cash flows
is not uniform, the Management Board had to apply its own judgment in this regard. In the case of these transactions, the Parent Entity had to make an assessment as to whether expenses related to payments towards the factor should be classified to cash flows from operating activities or to cash flows from financing activities in the statement of cash flows. Pursuant to IAS 7.11, an entity should present cash flows from operating, investing and financing activities in a manner which is most appropriate to its business, because it provides information that allows users of financial statements to assess the impact of those activities on the financial position of the entity and the amount of its cash and cash equivalents.
Due to the above, in the Parent Entity’s view:
- presentation of the repayment of the principal amounts of receivables in the reverse factoring in cash flows from operating activities is compliant with the objective of individual transaction elements and consistent with the presentation of these transactions in the statement of financial position. When legal subrogation of receivables is made by the factor, from a legal standpoint he assumes the rights and responsibilities characteristic for trade receivables. Only cash flows from the repayment of principal amounts of receivables from liabilities due to the purchase and construction of fixed assets and intangible assets are presented under investing activities (more information may be found in Note 10.3).
- however, the financial aspect related to the factoring transaction is indicated in the presentation of interest in financing activities. This is consistent with recognising this interest in financing costs in the statement of profit or loss pursuant to the accounting policy adopted by the Parent Entity for the presentation of interest cost of reverse factoring in the financial activities.
| Inventories | Trade receivables | Trade payables | Similar payables | Working capital | |
|---|---|---|---|---|---|
| As at 1 January 2022 | (6 487) | (1 026) | 3 106 | 95 | (4 312) |
| As at 31 December 2022 | (8 902) | (1 178) | 3 262 | 18 | (6 800) |
| Change in the statement of financial position | (2 415) | (152) | 156 | (77) | (2 488) |
| Exchange differences from translation of statements of operations with a functional currency other than PLN | 43 | 16 | (17) | – | 42 |
| Depreciation/amortisation recognised in inventories | 117 | – | – | – | 117 |
| Change in liabilities due to purchase of property, plant and equipment and intangible assets | – | – | 41 | – | 41 |
| Reclassification to property, plant and equipment | (10) | – | – | – | (10) |
| Reclassification from property, plant and equipment | 16 | – | – | – | 16 |
| As at a date of loss of control | (94) | (20) | 79 | – | (35) |
| Adjustments | 72 | (4) | 103 | – | 171 |
| Change in the statement of cash flows | (2 343) | (156) | 259 | (77) | (2 317) |
| Inventories | Trade receivables | Trade payables | Similar payables | Working capital | |
|---|---|---|---|---|---|
| As at 1 January 2021 | (4 459) | (869) | 2 498 | 1 264 | (1 566) |
| As at 31 December 2021 | (6 487) | (1 026) | 3 106 | 95 | (4 312) |
| Change in the statement of financial position | (2 028) | (157) | 608 | (1 169) | (2 746) |
| Exchange differences from translation of statements of operations with a functional currency other than PLN | 41 | 20 | (15) | – | 46 |
| Depreciation/amortisation recognised in inventories | 91 | – | – | – | 91 |
| Change in liabilities due to purchase of property, plant and equipment and intangible assets | – | – | (176) | 54 | (122) |
| Change in liabilities due to interest on reverse factoring | – | – | – | 1 | 1 |
| Reclassification to property, plant and equipment | (37) | – | – | – | (37) |
| Adjustments | 95 | 20 | (191) | 55 | (21) |
| Change in the statement of cash flows, including: | (1 933) | (137) | 417 | (1 114) | (2 767) |
| assets held for sale (disposal group) and liabilities related to disposal group | 13 | (26) | (34) | – | (47) |