Econocom - 2020 annual report

06 consolidated financial statements

notes to the consolidated financial statements

Residual interest in leased 11. assets and gross liability commitments for purchases of leased assets Residual interest in leased assets 11.1.

The Group’s residual interest in leased assets sold to refinancing institutions corresponds to an estimated market value. Management issues an estimate that requires critical judgement. This residual interest is calculated as follows: for all fixed-term contracts, the estimated • market value is calculated using an accelerated diminishing balance method, based on the amortisation of the original purchase cost of each item of equipment.

The residual interest therefore represents a long-term asset which is discounted using the same method as for the related lease. This method does not apply to nonstandard cases, which arerare; • contracts, the accelerated diminishing balance method of depreciation is not applicable. The estimated market value for these contracts is calculated by using a fixed percentage of the original purchase cost of the equipment. for renewable asset management

31 Dec. 2020 31 Dec. 2019

in € millions

Residual interest in leased assets non-current portion (between 1 and 5 years) Residual interest in leased assets current portion (less than 1 year)

134.3

131.9

40.9

33.0

Total

175.2

165.0

The Group regularly revises estimates of its residual interest in leased assets using a statistical method based on its experience of second-handmarkets. For more recent assets, for which there is inadequate market data to establish an accurate valuation, the Group uses a prudent approach which may be adjusted when it has access to adequate historical information. The residual interest recognised at 31 December 2020 was €175.2 million for a portfolio of leased assets representing

€5.9 billion (purchase price of the assets on inception of the lease). The Group’s residual interest in leased assets therefore stood at 3.0% of the purchaseprice of the assets in its portfolio ( versus 2.7% at 31 December 2019). The impact of discounting on the total amount of the residual interest was €10.5 million at 31 December 2020, the pre-discountedvalues were €185.7 million at 31 December 2020. Residual interest in leased assets concerns IT assets and industrial assets amounting to €150.7 million and€24.5million, respectively.

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2020 annual report