(25) Credit risk

The carrying amounts of the following financial instruments reflect the Group's maximum exposure to credit risk. At the end of the reporting period, the maximum exposure was as follows:

Carrying amounts of financial instruments

EUR '000

 

2019/2020

 

2018/2019

 

 

 

 

 

Financial assets, receivables and other financial receivables

 

49,607

 

41,657

Cash and cash equivalents

 

3,317

 

55,865

When reporting trade receivables, Borussia Dortmund uses the simplified approach whereby expected credit losses are recognised over the entire remaining term upon recognition. Under the simplified approach, Borussia Dortmund calculates expected credit losses broken down by risk groups and taking into account historical loss rates. The allocation to the respective risk groups is based on the shared credit risk characteristics. At Borussia Dortmund, these are receivables from transfer deals on the one hand, and other trade receivables related primarily to ticketing, merchandising and sponsorships on the other. Credit loss rates specific to the risk clusters are calculated on the basis of the historical credit loss rates for the past three financial years and taking into account forward-looking macroeconomic indicators (gross domestic product) as well as an assessment of the economic impact of the COVID-19 pandemic. This method of calculation resulted in a loss rate that was insignificantly higher than in the previous year.

Under the simplified approach, loss allowances are recognised on an individual basis if one or more events occur that have a detrimental impact on the creditworthiness of the debtor. These events include default in payment, impending insolvency or concessions by the debtor due to payment difficulties. Trade receivables are written off immediately if their recoverability is no longer expected with sufficient probability. This is the case, for example, when the debtor is in default.

Receivables from transfer deals represent a concentration of risk. These are hedged via transfer rights.

The change in loss allowances on the basis of the expected credit losses for trade receivables as at 30 June 2020 is presented in the table below:

EUR '000

 

2019/2020

 

2018/2019

 

 

 

 

 

Loss allowances as at 1 July in accordance with IAS 39

 

0

 

1,500

Adjustment in connection with the initial application of IFRS 9

 

0

 

11

Loss allowances as at 1 July in accordance with IFRS 9

 

1,852

 

1,511

 

 

 

 

 

Transfers recognised in profit or loss

 

2,552

 

860

Reversals recognised in profit or loss

 

-427

 

-94

Items recognised outside profit or loss

 

0

 

-431

Loss allowances in accordance with IFRS 9

 

5

 

6

Loss allowances as at 30 June

 

3,982

 

1,852

The maturities of trade receivables as at the end of the reporting period were as follows:

Maturity analysis of receivables

EUR '000

 

2019/2020

 

2018/2019

 

 

 

 

 

Not yet due

 

48,767

 

38,437

 

 

 

 

 

Less than 30 days past due

 

358

 

1,301

Between 30 and 89 days past due

 

74

 

66

More than 90 days past due

 

1

 

0

 

 

49,200

 

39,804

Cash and cash equivalents relate to bank balances and short-term investments in the form of overnight and time deposits. Borussia Dortmund only deposits money at banks with investment grade ratings. Furthermore, the creditworthiness of the banks is regularly monitored on the basis of credit default swaps (CDS).

Due to the short investment term and the creditworthiness of the banks, cash and cash equivalents are subject to a low level of credit risk. Thus, as in the previous year, no material loss allowances had been recognised.

The table below contains information on the credit risk and the expected credit losses according to the classes of receivables defined by Borussia Dortmund as at 30 June 2020:

EUR '000

 

Gross carrying

 

Default rate (%)

 

Expected credit losses

 

 

 

 

 

 

 

Receivables from transfer deals

 

24,103

 

0.06

 

14

Other trade receivables

 

14,008

 

0.06

 

9

Total

 

38,111

 

 

 

23

30 June 2019

EUR '000

 

Gross carrying

 

Default rate (%)

 

Expected credit losses

 

 

 

 

 

 

 

Receivables from transfer deals

 

28,175

 

0.05

 

14

Other trade receivables

 

6,146

 

0.05

 

3

Total

 

34,321

 

 

 

17

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