Vetoquinol - Universal Registration Document - 2021

CONSOLIDATED FINANCIAL STATEMENTS Notes to the consolidated financial statements Vetoquinol Universal Registration Document 2020 Financial report 95 6 6.5.27.2 Analysis of inventory impairment €000 Dec 31, 2018 Additions Reclassifications Write-backs Currency differences Dec 31, 2019 Raw materials & consumables 276 788 - (243) 1 822 Work in progress 646 689 - (672) 1 664 Semi-finished and finished goods 1,121 1,880 - (1,656) 60 1,406 Goods purchased for resale 31 110 - (19) 0 122 TOTAL 2,074 3,468 - (2,589) 61 3,013 €000 Dec 31, 2019 Additions Reclassifications Write-backs Currency differences Dec 31, 2020 Raw materials & consumables 822 707 (11) (811) (10) 697 Work in progress 664 1,026 - (688) (3) 998 Semi-finished and finished goods 1,406 1,454 567 (1,901) (99) 1,427 Goods purchased for resale 122 256 - (141) (4) 234 TOTAL 3,013 3,443 556 (3,541) (116) 3,356 The Group monitors inventory on an individual basis (pharmaceutical batches). A 100% provision is recorded if a lot is not sellable, i.e., if it is defective and/or if it does not comply with good manufacturing practices. Similarly, batches that cannot be sold due to a short expiration date are written down (100% write-downs for expiration dates of less than 6 months). In the event of a shortfall in the sales budget for an item, a provision for depreciation is recorded on the basis of the new sales forecasts. The sales outlooks for the items are reviewed monthly with regard to the volume in stock. 6.5.28 Trade and other receivables €000 Dec 31, 2020 Dec 31, 2019 Trade receivables 76,224 78,796 Impairment of trade receivables (3,477) (2,691) Net trade receivables 72,747 76,104 Prepayments 1,326 1,540 Receivables from government agencies 11,817 10,250 Other operating receivables 1,815 941 Miscellaneous receivables 898 1,217 Provisions - - Other receivables 15,856 13,948 Total trade and other receivables 88,602 90,052 Prepaid expenses 2,222 2,565 Loans and guarantees 399 327 Other (0) (0) Total other current assets 2,621 2,892 All net trade receivables were due in less than one year. Receivables are written down according to the risk of non-recovery, and an analysis is made individually for each customer (on a receivable-by-receivable basis). The Group also applies the following automatic impairment method: receivables aged over 180 days and less than 360 days are 50% covered by provisions; over 360 days they are 100% covered. The Group has applied IFRS 9 “Financial Instruments” since January 1, 2019. The only impact of its application was the recognition of an additional provision, relating to expected losses on the Group’s trade receivables. As of December 31, 2020, this provision stood at €1.2 million (€0.3 million as of December 2019). Trade receivables are recognized at the fair value of the cash to be received. Given the Group’s business prac- tices, fair value is usually equal to the nominal value of the receivables. Trade receivables are subsequently stated less impairment recorded after an itemized analy- sis of the risk of bad debts.