Note 1 –  Basis of preparation, new and changed accounting policies, consolidation and significant accounting policies			10
Note 2 –  Significant accounting judgements, estimates and assumptions			14
Note 3 –  Changes in accounting policies and disclosures			14
Note 4 – Revenue			15
Note 5 – Expense by nature			15
Note 6 – Cost of sales			15
Note 7 – Selling expense			15
Note 8 – Administrative expenses			15
Note 9 – Research and development expenses			15
Note 10 – Other operating income			15
Note 11 – Other operating expense			16
Note 12 – Leases			16
Note 13 – Net finance cost			16
Note 14 – Income tax			17
Note 15 – Intangible assets			17
Note 16 – Property plant and equipment			18
Note 17 – Non current financial assets			19

Note 18 – Financial investment			19
Note 19 – Inventories			19
Note 20 – Trade receivables			19
Note 21 – Other receivables			20
Note 22 – Prepaid expenses and accrued income			20
Note 23 – Cash and cash equivalents			20
Note 24 – Equity			20
Note 25 – Interest bearing borrowings			20
Note 26 – Provision for defined benefit pensions			20
Note 27 – Other payables			21
Note 28 – Accrued expenses and deferred income			21
Note 29 – Provisions			22
Note 3o – Specification of cash flow			22
Note 31 – Financial risk management			22
Note 32 – Pledged assets and contingent liabilities			23
Note 33 – Transaction with related parties			23
Note 34 – Investment commitments			23
Note 35 – Acquisitions			23
Note 36 – Significant events after the balance sheet date			25

 

CORPORATE INFORMATION

AR Packaging Group AB (publ), company registration number 559062-9373 (the Company) is a limited liability company incorporated and domiciled in Sweden. The address of the Company’s registered office is Maskinvägen 1, SE-227 30 Lund.

NOTE 1 – BASIS OF PREPARATION, NEW AND CHANGED ACCOUNTING POLICIES, CONSOLIDATION AND SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PREPARATION

The Consolidated Accounts have been prepared in accordance with International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB) and interpretations from the IFRS Interpretations Committee.

The consolidated financial statements are not presented in accordance with International Accounting Standard 1, Presentation of Financial Statements, as they do not include comparative figures, which constitute a departure from International Financial Reporting Standards as issued by the International Accounting Standards Board

The consolidated financial statements have been prepared on a historical cost basis, except for derivative financial instruments, equity instruments and Contingent consideration provision that have been measured at fair value. The Group’s consolidated financial statements are presented in TEUR, which is also the parent company’s functional currency. All values are rounded to the nearest thousand (TEUR), except when otherwise stated.

NEW AND CHANGED ACCOUNTING POLICIES APPLIED BY THE GROUP

AR Packaging Group has since 1 January 2020 applied the following amendments:

Amendments to IFRS 3: Definition of a Business

The amendments to IFRS 3 clarifies the definition of a business in order to assist Companies in determining if a transaction is to be recognised as a business or acquisition of a group of assets.

Amendments to IFRS 19, IAS 39 and IFRS 7: Interest Rate Benchmark Reform

The amendments to IFRS 9, IAS 39 and IFRS 7 are effects due to reforms of upcoming exchange of common interest rates (as STIBOR, TEUR IBOR, LIBOR) to alternative, risk free rates. The amendments provide certain reliefs in the criteria for hedge accounting. The reliefs have the effect that Companies applying hedge accounting may assume that interest rates used as base for hedged cash flows and cash flows from hedging instruments will not change as a consequence of uncertainties in the interest rate benchmark reforms.

IAS 1 and IAS 8: Definition of Materiality

The amendments to IAS 1 and IAS 8 clarify the definition of materiality.

The application of above amendments has not had any impact on the Group’s financial reports.

BASIS OF CONSOLIDATION

The consolidated financial statements comprise the financial statements of the Group and its subsidiaries as at 31 December 2020. Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Specifically, the Group controls an investee if and only if the Group has:

 

•

Power over the investee (i.e. existing rights that give it the current ability to direct the relevant activities of the investee)

 

•

Exposure, or rights, to variable returns from its involvement with the investee, and

 

•

The ability to use its power over the investee to affect its returns

When the Group has less than a majority of the voting or similar rights of an investee, the Group considers all relevant facts and circumstances in assessing whether it has power over an investee, including:

 

•

The contractual arrangement with the other vote holders of the investee

 

•

Rights arising from other contractual arrangements

 

•

The Group’s voting rights and potential voting rights

The Group re-assesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control. Consolidation of a subsidiary begins when the Group obtains control over the subsidiary and ceases when the Group loses control of the subsidiary. Assets, liabilities, income and expenses of a subsidiary acquired or disposed of during the

year are included in the consolidated financial statements from the date the Group gains control until the date the Group ceases to control the subsidiary. Profit or loss and each component of other comprehensive income (OCI) are attributed to the shareholders of the parent company of the Group and to the non-controlling interests, even if this results in the non-controlling interests having a deficit balance. When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with the Group’s accounting policies. All intra-group assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the Group are eliminated in full on consolidation.

A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction. If the Group loses control over a subsidiary, it:

 

•

Derecognizes the assets (including goodwill) and liabilities of the subsidiary

 

•

Derecognizes the carrying amount of any non-controlling interests

 

•

Derecognizes the cumulative translation differences recorded in equity

 

•

Recognises the fair value of the consideration received

 

•

Recognises the fair value of any investment retained

 

•

Recognises any surplus or deficit in profit or loss

 

•

Reclassifies the parent’s share of components previously recognised in OCI to profit or loss or retained earnings, as appropriate, as would be required if the Group had directly disposed of the related assets or liabilities

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES BUSINESS COMBINATIONS AND GOODWILL

Business combinations are accounted for using the acquisition method. The cost of an acquisition is measured as the aggregate of the consideration transferred measured at acquisition date fair value and the amount of any non-controlling interests in the acquiree. For each business combination, the Group elects whether to measure the non-controlling interests in the acquiree at fair value or at the proportionate share of the acquiree’s identifiable net assets. Acquisition-related costs are expensed as incurred and included in administrative expenses.

When the Group acquires a business, it assesses the financial assets and liabilities assumed for appropriate classification and designation in accordance with the contractual terms, economic circumstances and pertinent conditions as at the acquisition date. If the business combination is achieved in stages, any previously held equity interest is re-measured at its acquisition date fair value and any resulting gain or loss is recognised in profit or loss. It is then considered in the determination of goodwill. Any contingent consideration to be transferred by the acquirer will be recognised at fair value at the acquisition date.

Goodwill is initially measured at cost, being the excess of the aggregate of the consideration transferred and the amount recognised for non-controlling interests, and any previous interest held, over the net identifiable assets acquired and liabilities assumed. If the fair value of the net assets acquired is in excess of the aggregate consideration transferred, the Group re-assesses whether it has correctly identified all of the assets acquired and all of the liabilities assumed and reviews the procedures used to measure the amounts to be recognised at the acquisition date. If the re-assessment still results in an excess of the fair value of net assets acquired over the aggregate consideration transferred, then the gain is recognized in profit or loss. After initial recognition, goodwill is measured at cost less any accumulated impairment losses. For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to each of the Group’s cash generating units, which have been identified as the Group’s operating segments, which are expected to benefit from the combination, irrespective of whether other assets or liabilities of the acquiree are assigned to those units.

Where goodwill has been allocated to a cash-generating unit and part of the operation within that unit is disposed of, the goodwill associated with the disposed operation is included in the carrying amount of the operation when determining the gain or loss on disposal. Goodwill disposed in these circumstances is measured based on the relative values of the disposed operation and the portion of the cash-generating unit retained.

FOREIGN CURRENCIES

Transactions in foreign currencies are initially recorded by the Group’s entities at their respective functional currency spot rates at the date the transaction first qualifies for recognition. Monetary assets and liabilities denominated in foreign currencies are translated at the functional currency spot rates of exchange at the reporting date. Differences arising on settlement or translation of monetary items are recognized in profit or loss.

Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates at the dates of the initial transactions.

Any goodwill arising on the acquisition of a foreign operation and any fair value adjustments to the carrying amounts of assets and liabilities arising on the acquisition are treated as assets and liabilities of the foreign operation and translated at the spot rate of exchange at the reporting date.

 

On consolidation, the assets and liabilities of foreign operations are translated into TEUR os at the rate of exchange prevailing at the reporting date and their income statements are translated at average exchange rates for the period. The exchange differences arising on translation for consolidation are recognized in other comprehensive income and accumulated in the currency translation reserve in equity and to non-controlling interests if applicable. On disposal of a foreign operation, the component of the currency translation reserve relating to that particular foreign operation is recognized in profit or loss.

CURRENT VERSUS NON CLASSIFICATION

The Group presents assets and liabilities in the statement of financial position based on current/non-current classification. An asset is presented as current when it is:

 

•

Expected to be realised or intended to sold or consumed in normal operating cycle

 

•

Held primarily for the purpose of trading

 

•

Expected to be realised within twelve months after the reporting period, or exchanged or used to settle a liability for at least twelve months after the reporting period

All other assets are classified as non-current.

A liability is presented as current when:

 

•

It is expected to be settled in normal operating cycle

 

•

It is held primarily for the purpose of trading

 

•

It is due to be settled within twelve months after the reporting period, or

 

•

There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period

The Group classifies all other liabilities as non-current.

The fair values of derivative financial instruments not included in hedge accounting relationships are presented as current. Deferred tax assets and liabilities are classified as non-current assets and liabilities.

REVENUE RECOGNITION

All revenue from contracts with customers is reported when control of goods or services has been transferred to the purchaser. When a contract with a customer has been entered into, the contract’s distinct performance obligations are identified If an obligation is not distinct, it must be combined with other performance obligations until a distinct performance obligation has been identified. If agreed consideration includes some form of variable consideration, this should be taken into consideration when reporting the revenue.

Revenue is reported at a point in time or over time, depending on when control is transferred to the customer. Control relates to the customer’s ability to determine how the asset is used and thereby receive essentially all of the benefits relating to the asset. Control relates to the customer’s ability to determine how the asset is used and thereby receive essentially all of the benefits relating to the asset. Control is transferred over time if one of the following criteria is met:

 

•

The customer simultaneously receives and consumes the benefits provided by the entity’s performance as the entity performs.

 

•

The entity’s performance creates or enhances an asset (for example, work in progress) that the customer controls as the asset is created or enhanced.

 

•

The entity’s performance does not create an asset with an alternative use to the entity and the entity has an enforceable right to payment for performance completed to date.

In order to determine the point in time at which the customer obtains control of goods or services that are delivered, the following matters are taken into account:

 

•

The entity is entitled to payment

 

•

The customer has legal title to the asset

 

•

The asset has been delivered

 

•

The customer has assumed the risks and rewards associated with the asset

 

•

The customer has accepted the asset

The main revenue flows arise from the sales of packaging in different market segments and the sales of technical solutions. With regards to sales of packages, control is transferred at a point in time and coincides with the actual delivery of the goods. As far as concerns the transfer of control of technical solutions, it transfers over time to the customer as the delivered solution is unique to the customer.

INCOME TAX

Current income tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date in the countries where the Group operates and generates taxable income.

Deferred taxes on temporary differences are identified using the asset liability approach. Temporary differences exist when an assets and or a liabilites tax value differs from its carrying value.

Deferred tax liabilities are recognized for all taxable temporary differences, except when the deferred tax liability arises from the initial recognition of goodwill or an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss.

Deferred tax assets are recognized for all deductible temporary differences and tax losses carried forward. Deferred tax assets are recognized to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the tax losses carried forward can be utilized, except when the deferred tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss.

The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilized.

Unrecognized deferred tax assets are re-assessed at each reporting date and are recognized to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date.

Deferred tax relating to items recognized outside profit or loss is recognized outside profit or loss. Deferred tax items are recognized in correlation to the underlying transaction either in OCI or directly in equity.

Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to set off current tax assets against current income tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.

FINANCIAL INSTRUMENTS

A financial asset or liability is recognized in the balance sheet when the Group becomes a party in a contractual relationship. A financial asset is derecognized when:

 

•

The Group’s right to receive cash flows from the asset have expired, or

 

•

The Group has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a “pass-through” arrangement; and either

 

•

the Group has transferred substantially all the risks and rewards of the asset, or the Group has neither transferred nor retained substantially all the risks and

 

•

rewards of the asset, but has transferred control of the asset.

Financial liabilities are derecognized when the obligation in the contract has been settled.

Financial assets and liabilities are set off and reported net in the balance sheet, only where there is a legal right to set off the reported amounts and there is an intention to settle them as a net amount or simultaneously realize the asset and settle the debt.

CLASSIFICATION OF FINANCIAL INSTRUMENTS

Financial assets are classified, at initial recognition, as interest bearing assets, equity instruments or financial derivatives. All financial assets, with the exception of financial assets not recorded at fair value through profit or loss, are recognized initially at fair value plus transaction costs that are attributable to the acquisition of the financial asset.

For purposes of subsequent measurement financial assets are classified in the following categories:

 

•

Interest bearing financial instruments

 

•

Equity instruments

 

•

Derivative financial instruments

 

The way in which interest bearing financial instruments are classified and valued depends on the type of business model applied by AR Packaging Group with respect to the way in which the financial assets are administered and managed. Interest bearing financial assets are measured either at their:

 

•

Amortized cost

 

•

Fair value through other comprehensive income

 

•

Fair value through income statement

All interest bearing assets are held (business model) for the purpose of receiving regular payments in the form of principal and interest. For this reason, all interest bearing assets are reported and measured at their amortized cost using the effective interest method. Interest revenue is reported as a net financial income/ expense in the income statement. Any capital gains and losses that arise when these assets are derecognized are reported as other income and expenses. AR Packaging Group reports the following interest bearing assets in the balance sheet:

 

•

Accounts receivable and leasing receivables (current and long term)

 

•

Long term receivables

All equity instruments are reported at their fair value in the income statement.

Financial derivative instruments are held solely to manage the financial risks to which AR Packaging Group is exposed (these financial risks being presented in more detail in Note 31). AR Packaging Group holds financial derivative instruments, primarily hedging instruments, that are used to hedge future cash flows. All derivatives are measured at their fair value on the basis of the income statement and are reported as either an asset (current or non-current) or a liability (current or non-current). When hedge accounting is used, the effective portion of the change in value will be reported in the hedge reserve via other comprehensive income (see description of hedging accounting below).

Impairment of financial assets

In respect of all interest bearing financial instruments for which accounts receivable and leasing receivables are reported, a credit risk reserve is calculated and recognized and the value of this reserve is based on the future expected losses with respect to the individual assets. In respect of accounts receivable, the credit risk reserve is calculated based on the expected loss for the asset during the total lifetime of the asset.

FINANCIAL LIABILITIES

Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, or other financial liabilities, as appropriate. All financial liabilities are recognized initially at fair value and, in the case of other financial liabilities, net of directly attributable transaction costs. The Group’s financial liabilities include trade and other payables, loans and borrowings, provision for contingent consideration and derivative financial instruments.

The measurement of financial liabilities depends on their classification. Financial liabilities at fair value through profit or loss are financial liabilities held for trading and provision for contingent consideration. Financial liabilities held for trading include derivative financial instruments. The Group uses derivative financial instruments, such as forward currency contracts and interest rate swaps to hedge its foreign currency risks and interest rate risks respectively. Such derivative financial instruments are initially recognized at fair value on the date on which a derivative contract is entered into and are subsequently re-measured at fair value. Derivatives are carried as financial liabilities when the fair value is negative.

Financial liabilities at fair value through profit or loss are carried in the balance sheet at fair value with net changes in fair value presented as:

 

•

Other operating income (positive net changes in fair value of foreign currency forward contracts and provision for contingent consideration)

 

•

Other operating expense (negative net changes in fair value of foreign currency forward contracts and provision for contingent consideration)

 

•

Finance income (positive net changes in fair value of interest swaps)

 

•

Finance expense (negative net changes in fair value of interest swaps)

After initial recognition, interest bearing borrowings are subsequently measured at amortized cost using the EIR method (effect interest rate). Gains and losses are recognized in profit or loss when the liabilities are derecognized as well as through the EIR amortization process. Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortization is included as finance costs in the income statement. This category generally applies to trade payables and interest bearing borrowings. For more information refer to Note 25.

A financial liability is derecognized when the obligation under the liability is discharged or cancelled, or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognized in the income statement.

OFFSETTING FINANCIAL ASSETS AND FINANCIAL LIABILITIES

Financial assets and financial liabilities are offset and the net amount is reported in the consolidated balance sheet if there is a currently enforceable legal right to offset the recognized amounts and there is an intention to settle on a net basis, to realize the assets and settle the liabilities simultaneously.

HEDGE ACCOUNTING

In order to fulfil the requirements of hedge accounting, there needs to be a clear connection to the secured transaction, that the hedge is designed to be effective and that the hedge transaction can be measured. Moreover, a hedging documentation shall be in place and the hedged transaction has to be identified.

Hedge of future commercial cash flow in foreign currency is made via a foreign exchange forward contract based on a forecasted transaction. The effective portion of the changes in the fair value of hedging instruments is recognized in other comprehensive income and cumulated changes as a separate line in equity. The gain or loss attributable to any ineffective portion is recognized directly in profit and loss. When the hedging instrument expires or is sold, or when the hedge no longer meets the requirements for hedge accounting, cumulated gains or losses remain in equity and are recognized as gain/loss at the same time as the forecast transaction is finally recognized in the profit and loss. Information about fair value of derivatives used for hedge accounting can be found in Note 31. Changes in the hedging reserve in equity is shown under other comprehensive income for the Group.

PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment is stated at cost, net of accumulated depreciation and accumulated impairment losses, if any. Such cost includes the cost of replacing part of the property, plant and equipment and borrowing costs for long-term construction projects if the recognition criteria are met. Property, plant and equipment are systematically depreciated over the expected useful life of the respective asset. Each part of an item of property, plant and equipment, with a cost that is significant in relation to the total cost of the item, is depreciated separately when the useful life for the part differs from the useful life of the other parts of the item. Land is assumed to have an indefinite useful life and is not depreciated. Subsequent expenditure on property, plant and equipment increases the acquisition value only if it is probable that AR Packaging will have future economic benefit from the subsequent expenditure. If the subsequent expenditure represents a significant part of the property, plant and equipment the carrying amount of the replaced part is derecognised. All other repair and maintenance costs are recognized in profit or loss as incurred.

Depreciation is calculated on a straight-line basis over the estimated useful lives of the assets as follows:

 

•

Office buildings 25–50 years

 

•

Industrial buildings 25–50 years

 

•

Plant and machinery 3–15 years

 

•

Equipment, tools, fixtures and fittings 3–15 years

An item of property, plant and equipment and any significant part initially recognized is derecognized upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the income statement when the asset is derecognized.

The residual values, useful lives and methods of depreciation of property, plant and equipment are reviewed at each financial year end and adjusted prospectively, if appropriate.

LEASES

At inception of a contract, the Group assesses whether a contract is, or contains a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.

As a lessee

The Group recognizes a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located, less any lease incentives received. The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the end of the lease term, unless the lease transfers ownership of the underlying asset to the Group by the end of the lease term or the cost of the right-of-use asset reflects that the Group will exercise a purchase option. In that case the right-of-use asset will be depreciated over the useful life of the underlying asset, which is determined on the same basis as those of property and equipment. In addition, the right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability. The lease liability,

 

current and non-current, is initially measured at the present value of the lease payments of the estimated lease term that are not paid at the commencement date. The lease term is the non-cancellable period and additional periods according to the agreement, if these are considered reasonably certain at inception date. The payments generally are discounted using the group’s incremental borrowing rate, which in addition to the groups credit risk reflects the agreements lease term, currency and quality of the underlying asset considered as collateral. If the interest rate implicit in the lease is readily determined it is used, which is the case for parts of the groups car and forklift leases.

The lease liability comprise the net present value of the following payments during estimated lease term:

 

•

fixed payments, including in-substance fixed payments

 

•

variable lease payments that depend on an index, initially measured using the index at the commencement date

 

•

the exercise price under a purchase option that the group is reasonably certain to exercise and

 

•

penalties for early termination of a lease if estimated lease term reflects that the group will terminate early.

Lease liabilities for buildings where payments depend on an index, are based on actual payments at reporting date. Lease liabilities are remeasured at reporting date with a corresponding adjustment to the carrying amount of the right of use asset. Adjustments of lease liabilities and right of use assets arising from changes in estimated lease term are performed in the same way. This occurs when the last termination date within the previously estimated lease term has been passed or when important events occur or the circumstances significantly changes and affects the prevailing estimation of the lease term.

The Group recognizes right of use assets as part of PPE and lease liability as part of interest-bearing liabilities in the balance sheet.

The Group has elected not to recognize right of use assets and lease liabilities for short term leases (less than 12 months) and leases of low value assets (less than 5 TEUR ). The Group recognizes the lease payments associated with these leases as an expense on a straight line basis over the lease term.

As a lessor

At inception of a contract that contains a lease component, the Group determines whether it is a finance lease or an operating lease. To classify each lease, the Group makes an overall assessment of whether the lease transfers substantially all of the risks and rewards incidental to ownership of the underlying assets. The Group recognizes lease payments received under operating leases as income on a straight line basis over the lease term as part of Other revenue.

INTANGIBLE ASSETS

Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible assets acquired in a business combination is their fair value at the date of acquisition. Following initial recognition, intangible assets are carried at cost less any accumulated amortization and accumulated impairment losses. Internally generated intangibles, excluding capitalized development costs, are not recognized and the related expenditure is reflected in profit or loss in the period in which the expenditure is incurred.

The useful lives of intangible assets are assessed to be finite and are amortized over the useful economic life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortization periods and the amortization methods are reviewed at least at the end of each reporting period. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset are considered to modify the amortization period or method, as appropriate, and are treated as changes in accounting estimates. The amortization expense on intangible assets is recognized in the statement of profit or loss as the expense category that is consistent with the function of the intangible assets.

Gains or losses arising from de-recognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in the statement of profit or loss when the asset is derecognized.

Research costs are expensed as incurred. Development expenditures on an individual project are recognized as an intangible asset when the Group can demonstrate:

 

•

The technical feasibility of completing the intangible asset so that the asset will be available for use or sale

 

•

Its intention to complete and its ability to use or sell the asset

 

•

How the asset will generate future economic benefits

 

•

The availability of resources to complete the asset

 

•

The ability to measure reliably the expenditure during development

 

•

The ability to use the intangible asset generated

Following initial recognition of the development expenditure as an asset, the asset is carried at cost less any accumulated amortization and accumulated impairment losses. Amortization of the asset begins when development is complete and the asset is available for use. It is amortized over the period of expected future benefit. Amortization is recorded in cost of goods sold. During the period of development, the asset is tested for impairment annually. Amortization is calculated on a straight-line basis over the estimated useful lives as follows:

 

•

Customer relations 6–13 years

 

•

Development expenditures 5 years

 

•

Patents 5 years

 

•

Brands 0–3 years

IMPAIRMENT OF NON-FINANCIAL ASSETS

The Group assesses, at each reporting date, whether there is an indication that an asset may be impaired. If any indication exists, or when annual impairment testing for an asset is required, the Group estimates the asset’s recoverable amount. An asset’s recoverable amount is the higher of an asset’s or cash-generating unit’s (CGU) fair value less costs of disposal and its value in use. Recoverable amount is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. When the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount.

In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less costs of disposal, recent market transactions are taken into account. If no such transactions can be identified, an appropriate valuation model is used. These calculations are corroborated by valuation multiples, quoted share prices for publicly traded companies or other available fair value indicators.

The Group bases its impairment calculation on detailed budgets and forecast calculations, which are prepared separately for each of the Group’s CGUs to which the individual assets are allocated. These budgets and forecast calculations generally cover a period of five years. For longer periods, a long-term growth rate is calculated and applied to project future cash flows after the fifth year.

For assets excluding goodwill, an assessment is made at each reporting date to determine whether there is an indication that previously recognised impairment losses no longer exist or have decreased. If such indication exists, the Group estimates the asset’s or CGU’s recoverable amount. A previously recognised impairment loss is reversed only if there has been a change in the assumptions used to determine the asset’s recoverable amount since the last impairment loss was recognised. The reversal is limited so that the carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised for the asset in prior years. Such reversal is recognised in the statement of profit or loss.

Goodwill has specific characteristics for impairment testing and is tested annually as at 31 December and when circumstances indicate that the carrying value may be impaired. Impairment is determined for goodwill by assessing the recoverable amount of each CGU to which the goodwill relates. When the recoverable amount of the CGU is less than its carrying amount, an impairment loss is recognised.

Impairment losses relating to goodwill cannot be reversed in future periods.

INVENTORIES

Inventories are valued at the lower of cost and net realisable value. Costs incurred in bringing each product to its present location and condition, are accounted for as follows:

 

•

Raw materials: purchase cost on a first in, first out basis

 

•

Finished goods and work in progress: cost of direct materials and labour and a proportion of manufacturing overheads based on the normal operating capacity, but excluding borrowing costs

Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale.

CASH AND CASH EQUIVALENTS

Cash and cash equivalents in the statement of financial position comprise cash at banks and on hand and short-term deposits with a maturity of three months or less.

 

PROVISIONS

Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. When the Group expects some or all of a provision to be reimbursed, for example, under an insurance contract, the reimbursement is recognised as a separate asset, but only when the reimbursement is virtually certain. The expense relating to a provision is presented in the statement of profit or loss net of any reimbursement.

Provisions for warranty-related costs are recognised when the product is sold or service provided to the customer. Initial recognition is based on historical experience. The initial estimate of warranty-related costs is revised annually.

Restructuring provisions are recognised only when the recognition criteria for provisions are fulfilled. The Group has a constructive obligation when a detailed formal plan identifies the business or part of the business concerned, the location and number of employees affected, a detailed estimate of the associated costs, and an appropriate time line. Furthermore, the employees affected have been notified of the plan’s main features.

If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, when appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognised as a financial costs.

PENSIONS

The Group operates unfunded defined benefit pension plans in a few countries. The cost of providing benefits under the defined benefit plan is determined using the projected unit credit method. Re-measurements, comprising of actuarial gains and losses, are recognised immediately in the statement of financial position with a corresponding debit or credit to retained earnings through OCI in the period in which they occur. Re-measurements are not reclassified to profit or loss in subsequent periods.

Past service costs are recognised in profit or loss on the earlier of:

 

•

The date of the plan amendment or curtailment, and

 

•

The date that the Group recognises restructuring-related costs

Net interest is calculated by applying the discount rate to the net defined benefit liability. The Group recognises changes in the net defined benefit obligation relating to service costs (comprising current service costs, past-service costs, gains and losses on curtailments and non-routine settlements) under “Selling expenses” and “Administrative expenses” in the consolidated statement of profit or loss, while changes in the defined benefit obligation relating to interest expense are recognised under “Financial expenses” in the consolidated statement of profit or loss. The Group also provides a defined benefit plan for white collar employees in Sweden which is secured by a plan provided by Alecta. According to a statement (UFR 3) from the Swedish Financial Reporting Board, this is a multi-employer defined benefit plan. The Group has not had access to information that would permit recognition of the plan as a defined benefit plan, which is why the pension plan is accounted as a defined contribution plan. Under a defined contribution plan, the Group pays predetermined contributions into a fund (a separate legal entity) and has no further legal or constructive obligation to make further payments. The pension cost to be recognized in the period is the contribution payable in exchange for service rendered by employees during the period.

SHARE-BASED PAYMENTS

AR Packaging Group has a warrant program where warrants are sold to senior executives. The options have been sold at a price that corresponds to the assessed fair value at the time of acquisition, which means that there is no amount to report as share-based payment in the balance sheet and income statement under IFRS 2.

CONTINGENT LIABILITIES

Contingent liabilities are present obligations that have arisen from past events, such as rental agreements, possible defaults of deliveries in the ordinary course of business for which the Group has guarantee commitments and sales of accounts receivable under factoring agreements. Contingent liabilities are not recognized in the statement of financial position because it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligations. However, since it cannot be precluded that an outflow of resources embodying economic benefits can be required to settle the obligations, the Group discloses the possible contingencies separately.

NOTE 2 – SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS

The preparation of the Group’s consolidated financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures, and the disclosure of contingent liabilities. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods. The areas where judgements, assumptions and estimates are most significant to the Group and which may affect the financial statements if changed are described below:

IMPAIRMENT TESTING OF GOODWILL

In calculating the recoverable amount of cash-generating units for assessing any goodwill impairment, a number of assumptions about future conditions and estimates of parameters have been made. A presentation of these can be found in Note 14. As is apparent in the description in Note 14 changes that beyond what can reasonably be expected for these estimations and assessments could have a significant effect on goodwill.

The risk is however very low since the recoverable values are for the most part higher than the reported values in those cases where goodwill values are substantial.

PROVISIONS FOR DEFINED BENEFIT PENSIONS

The provision for defined benefit pension plans is dependent on the actuarial assumptions, which include discount rates, changes in health care costs, inflation, salary increases, retirement rates, mortality rates and other factors. The discount rate assumptions are based on the long-term return on high quality corporate bonds and if they are not available government bonds at year-end. Assumptions about changes in health care costs are based on historical data, future prospects and assessed long-term trends. The assumptions of inflation are based on external market indicators. The assumptions about wage growth reflect the long-term actual experience, outlook and assumed inflation. Pension levels and mortality is mainly based on official statistics. Please refer to Note 26 for details of the assumptions used in the actuarial calculations of the defined benefit pension plans.

VALUATION OF LOSS CARRY-FORWARDS

Every year, the Group assesses whether there is any impairment of deferred tax assets regarding loss carry-forwards for tax purposes. In making the assessment, consideration is also given to applicable tax legislation, for example regarding transfer pricing rules, as well as known future changes to legislation. In addition, the Group assesses the possibility to capitalize new deferred tax assets with respect to the year’s loss carry-forwards for tax purposes, where appropriate. Deferred tax assets are reported only in those cases where it is likely that, in the future, from a tax perspective there will be surpluses against which the temporary difference may be utilized.

Recognized deferred tax assets of losses carry forward are set forth in note 14 “Income Taxes”. Unrecognized tax losses carry forward amount to approximately MEUR 60.

NOTE 3 – CHANGES IN ACCOUNTING POLICIES AND DISCLOSURES

Significant accounting policies, judgements, estimates and assumptions under IFRS are summarized in Note 1 and Note 2. Applied accounting policies include new and amended standards and interpretations issued by IASB and endorsed by EU, which are effective as at 31 December 2020. The following new and amended standards and interpretations are not yet effective or have not been endorsed by EU, but will be effective for financial years starting after 1 January 2021. None of these have been applied when preparing the Group’s financial report for the year 2020.

AMENDMENTS TO IFRS 16 LEASES: COVID-19-RELATED RENT CONCESSIONS

The amendments provide lessees with an option to treat qualifying rent concessions in the same way as they would if they were not lease modifications. In many cases, this will result in accounting for the concessions as variable lease payments in the period in which they are granted. Amendments to IFRS 16 are effective for financial years starting after 1 June 2020 and was endorsed by EU 9 October 2020. The Company is assessing the impact the amendments may have on the Group’s financial statements.

AMENDMENTS TO IAS 16 PROPERTY, PLANT AND EQUIPMENT: PROCEEDS BEFORE INTENDED USE

The amendment prohibits an entity from deducting from the cost of an item of Property, Plant and Equipment any proceeds received from selling items produced while the entity is preparing the asset for its intended use. Amendments to IAS 16 are effective for financial years starting after 1 January 2022 and are expected to be endorsed by EU during the second half of 2021. The amendments are not expected to have any impact on the Group’s financial statements.

 

AMENDMENTS TO IAS 37 PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS: ONEROUS CONTRACTS – COSTS OF FULFILLING A CONTRACT

The amendments to IAS 37 clarifies that the direct costs to fulfilling a contract include both the incremental costs of fulfilling the contract and an allocation of other costs directly related to fulfilling contracts. Before recognising a separate provision for an onerous contract, the entity recognizes any impairment loss that has occurred on assets used in fulfilling the contract. Amendments to IAS 37 are effective for financial years starting after 1 January 2022 and are expected to be endorsed by EU during the second half of 2021. The amendments are not expected to have any impact on the Group’s financial statements.

AMENDMENTS TO IAS 1 PRESENTATION OF FINANCIAL STATEMENTS: CLASSIFICATION OF LIABILITIES AS CURRENT OR NON-CURRENT

The amendments clarify that liabilities are classified as either current or non-current, depending on the rights that exist at the end of the reporting period. Classification is unaffected by the expectations of the entity or events after the reporting date. The amendments also clarify what IAS 1 means when it refers to the ”settlement” of a liability. Amendments to IAS 1 are effective for financial years starting after 1 January 2023 but are not yet endorsed by EU. The Company is assessing the impact the amendments may have on the Group’s financial statements.

AMENDMENTS TO IFRS 9 FINANCIAL INSTRUMENTS AND IFRS 7 FINANCIAL INSTRUMENTS: INFORMATION DUE TO REFERENCE INTEREST RATE REFORMS (SUCH AS STIBOR AND LIBOR)

From 2021, changes will be introduced in a number of standards as a result of the ongoing reference interest rate reform. The Group has a financial debt that may to a limited extent be affected by the reform. The Group follows developments and has the ambition to apply the reliefs introduced in IFRS statements.

NOTE 4 – REVENUE

 

Net sales per nature of income		2020
Sales of goods
Sale of packaging			860 108
Sales of technical solutions			8 551
Sale of services			5 915
Other			4 630
Total			879 204

Of total sales of goods TEUR 860 108 is accounted for at point in time and TEUR 8 551 is accounted for over time. All revenue from sale of services and other sales is accounted for at point in time. Normal payment terms are 30 - 90 days.

The aggregate amount of unsatisfied performance obligations (that is delivery over time of machinery projects) amounts to TEUR 6 397 and it will be recognized mainly in the following year.

The consolidated net sales per geographical market are distributed based on locations of the customers:

 

Net sales per geographical market		2020
Western Europe			559 280
Eastern Europe			241 396
Rest of the world			78 528
Total			879 204

The largest individual countries 2020 were Germany with sales of TEUR 151,323 and Poland with sales of TEUR 105,335. The increased sales in Germany and Poland during 2020 are mainly due to the aqusitions of rlc and BSC Drukarnia Opakowan.

Net sales to our two biggest customers, which both individually stands for more than 9 per cent of the total net sales, amounted to total TEUR 245,155, with individual sales to the two customers amounting to TEUR 161,649 and TEUR 83,506 respectively. Net sales to the biggest customers are included in operating segment Branded Products.

CONTRACT BALANCES

Information on receivables, contract assets and contract liabilities from contracts with customers is summarized below:

 

		2020
Receivables included in trade receivables and other receivables			122 162
Contract assets			—
Contract liabilities			1 463

Contract liabilities mainly relate to advances from customers for the development of machines.

NOTE 5 – EXPENSE BY NATURE

 

		2020
Manufacturing expenses			510 989
Direct selling cost			28 929
Personnel expenses			178 603
Marketing expenses			8 816
Depreciation and amortisation			62 560
Other expenses			16 649
Total			806 546

NOTE 6 – COST OF SALES

 

		2020
Change in WIP/finished goods			1 946
Raw materials and consumables			447 998
Direct selling cost			28 929
Variable manufacturing expenses			49 874
Personnel expenses			130 564
Depreciation and amortisation			47 022
Other cost of sales			11 171
Total			717 504

NOTE 7 – SELLING EXPENSE

 

		2020
Personnel expenses			15 183
Marketing expense			7 859
Amortisation of customer relations			15 538
Total			38 580

NOTE 8 – ADMINISTRATIVE EXPENSES

 

		2020
Personnel expenses			31 983
External services			2 916
Travelling expenses			755
Marketing cost			957
IT expenses			5 589
Other administrative expenses			7 166
Total			49 366

NOTE 9 – RESEARCH AND DEVELOPMENT EXPENSES

 

		2020
Personnel expenses			871
Other research and development expenses			225
Total			1 096

NOTE 10 – OTHER OPERATING INCOME

 

		2020
Gain on sale of property, plant and equipment			2 515
Exchange rate gains on current assets and current liabilities			203
Rental income			758
Reversal of provision and accruals			1 163
Negative Goodwill			4 886
Other 1)			718
Total			10 243

 

1)	Includes government grant of TEUR 536 related to Covid-19

 

NOTE 11 – OTHER OPERATING EXPENSE

 

		2020
Loss on sale of property, plant and equipment			1 846
Exchange rate losses on current assets and current liabilities			1 398
Net losses on foreign currency forward contracts			1 664
Restructuring expenses			19 763
Customer claim			0
Other			0
Total			24 671

NOTE 12 – LEASES

AS LESSEE

The Group leases several kinds of assets; properties, machinery, forklifts, cars and other. No lease contracts contain covenants or limitations other than leased asset pledges.

 

2020 Right-of-use asset

Properties

Machinery

Forklifts

Cars

Other

Total

Depreciations

–6 109

–2 262

–434

–587

–375

–9 767

Net book value at end of the year

31 397

12 716

1 861

2 013

1 617

49 604

Additional right-of-use assets 2020 amounts to 16 543 TEUR. The amount includes acquisition value of new rights-of-use of 7 945 TEUR and 8 598 TEUR through business combinations.

AS LESSEE

 

Lease liabilities		2020
Current			8 832
Non-current			42 628
Leasing liabilities in the balance sheet			51 460

A maturity analysis of the leasing liabilities is presented in note 31 Financial risk management, section liquidity risk.

 

Amounts recognized in the income statement – IFRS 16		2020
Depreciation on right-of-use assets			–8 076
Interest on lease liabilities			–1 656
Expenses relating to short-term leases			–201
Expenses relating to leases of low-value assets, excluding short term leases			–185
Profit/loss for the period			–10 118

 

Amounts recognized in consolidated statement of cash flows – IFRS 16		2020
Total cash outflow for leases			–9 797

Above cash outflow include payments of lease liabilities variable lease fees, short-term leases and leases of low-value assets.

PROPERTY LEASES

The Group leases properties for production facilities and offices:

 

•

A&R Packaging facilities in Kriftel and Hattersheim, Germany – lease term until 2027 and 2022

 

•

A&R Packaging facilities in Lund, Sweden – lease term until 2027

 

•

A&R Packaging facilities in France – lease term until 2024

 

•

A&R Packaging facilities in St Petersburg and Timashevsk, Russia – lease terms until 2021 and 2023

 

•

Flexibles facilities in Lund and Halmstad, Sweden – lease terms until 2027 and 2026

 

•

Flexibles facilities in Highbridge, Great Britain – lease term until 2022

 

•

SP Containers facilities in Sheffield, Great Britain – lease term until 2022 and 2023

Some lease contracts contain extension options and exit options possible to exercise by the Group. At inception of a contract it is decided if it is reasonably certain that an extension option will be exercised. If an important event, or changes in circumstances within the Group’s control occurs, the Group reconsiders if it is reasonably certain that an extension option will be exercised. Some lease contracts contain fees based on changes in local price indexes. Some lease contracts states that fees relating to property taxes are paid by the lessee. These amounts are fixed on a yearly basis. Property taxes are not included in the valuation of the lease liabilities.

OTHER LEASE CONTRACTS

The Group leases machinery, forklifts, cars and other. In some cases there are possibilities for the Group to purchase the assets at end of the lease term.

Estimated residual value guarantees are re-assessed yearly to re-measure the lease liabilities and right-of-use assets.

The Group leases some equipment with lease terms of 1 to 3 years. These contracts are short-term leases and/or leases of low-value assets. The Group has elected not to recognize right-of-use assets and lease liabilities on these contracts.

AS LESSOR

The Group lets a property in Germany and classifies this contract as an operational lease since it does not transfer the major risks and rewards connected to the ownership of the underlying asset. The yearly fee is 597 TEUR and the term ends 2021.

NOTE 13 – NET FINANCE COST

 

Finance income		2020
Interest income 1)			204
Total finance income			204

 

Finance costs		2020
Interest on loan and borrowings 1)			–39 608
Exchange rate losses on non-current financial assets and liabilities in foreign currencies			–3 153
Other 2)			–5 873
Total finance cost			–48 634
Net finance cost			–48 430

 

1)	Refers to items that are valued at amortised cost.

2)	Refers mainly to financing costs.

 

NOTE 14 – INCOME TAX

RECOGNIZED IN THE INCOME STATEMENT

 

		2020
Current tax
Current tax expense			–17 630
Adjustment of previous year			832
Total current tax			–16 798
Deferred tax
Recognition and reversal of temporary differences			10 884
Capitalised tax loss carry forward			856
Utilised tax loss carry forward			–4 385
Revaluation of tax loss carry forward			31
Total deferred tax			7 386
Total income tax			–9 412

Reconciliation of effective tax rate:

 

		2020
Accounting profit before income tax			9 800
Tax calculated using Swedish tax rate 21.4%			–2 097
Difference between Swedish and foreign tax rates			595
Non-taxable income			2 870
Non-deductible expense			–7 671
Utilisation of previously not recognised tax losses			1 932
Tax losses not recognised			–739
Revaluation of tax losses			1 773
Other permanent effects			–6 979
Effects from changes in tax rates			72
Adjustment of previous years current income tax			832
Total income tax for the period			–9 412

RECOGNIZED IN THE BALANCE SHEET

Deferred tax assets and deferred tax liabilities relates to the following:

 

2020		Assets				Liabilities
Tax losses carry forward			6 419				0
Provisions for defined benefit pensions			8 006				119
Property, plant and equipment			330				51 569
Untaxed reserves			0				107
Other			6 983				2 463
Total			21 738				54 258

Deferred tax assets are recognized for tax losses carry forwards to the extent that it is probable that they can be utilized to reduce future taxable profits.

Recognised tax losses carry forward are relating to the following countries:

 

2020		MEUR				Tax rate
Sweden			16				21	%
France			10				28	%

Tax losses carry forward in Sweden and France may be utilized against future tax income and are not limited in time. In France there is a maximum amount to be used each year.

In addition to the above recognized tax losses carry forwards, the Group has unrecognised tax losses carry forward in France MEUR 43 and Norway MEUR 17, that might be utilized to reduce future taxable profits but are not recognized due to uncertainty of the possibility to generate enough taxable profits in the near future.

No tax losses carry forward are limited in time.

Reconciliation of net deferred tax:

 

		2020
Opening balance at 1 January			–21 798
Recognized in the income statement			7 386
Recognized in other comprehensive income			–270
Business combinations			–18 429
IFRS 16			21
Translation differences			571
Closing balance at 31 December			–32 519

NOTE 15 – INTANGIBLE ASSETS

 

		2020
Capitalized development expenses			6 783
Patents			676
Goodwill			153 298
Brands			60 900
Customer relations			110 386
Total intangible assets			332 043

 

Capitalized development expenses		2020
Opening acquisition value			16 449
Business combinations			16 297
Additions			2 100
Sale/disposals			–1 355
Reclassifications			–144
Translation differences			270
Closing accumulated acquisition value			33 617
Opening accumulated amortisations			–11 665
Business combinations			–14 452
Sale/disposals			1 321
Amortisations			–1 776
Translation differences			–227
Closing accumulated amortisations			–26 799
Opening accumulated write-downs			–16
Write-down			–19
Reclassifications			0
Closing accumulated write-downs			–35
Net book value at the end of the year			6 783

 

Patents		2020
Opening acquisition value			1 343
Business combinations			1 126
Additions			22
Sale/disposals			–452
Reclassifications			218
Translation differences			14
Closing accumulated acquisition value			2 271
Opening accumulated amortisations			–800
Business combinations			–897
Sale/disposals			238
Amortisations			–141
Write-down			0
Reclassifications			0
Translation differences			5
Closing accumulated amortisations			–1 595
Net book value at the end of the year			676

 

Goodwill		2020
Opening acquisition value			148 178
Additions through acquisitions			0
Business combinations			5 959
Additions through merger			0
Translation differences			–839
Closing accumulated acquisition value			153 298
Net book value at the end of the year			153 298

 

Brands		2020
Opening acquisition value			58 500
Business combinations			3 600
Closing accumulated acquisition value			62 100
Opening accumulated amortisations			0
Amortisations			–1 200
Closing accumulated amortisations			–1 200
Net book value at the end of the year			60 900

 

Customer relations		2020
Opening acquisition value			149 522
Business combinations			22 253
Additions			0
Sale/disposals			0
Reclassifications			0
Translation differences			–998
Closing accumulated acquisition value			170 777
Opening accumulated amortisations			–44 839
Business combinations			0
Sale/disposals			0
Amortisations			–15 538
Other changes			–127
Reclassifications			0
Translation differences			113
Closing accumulated amortisations			–60 391
Net book value at the end of the year			110 386

The cost of amortisation of intangible assets has affected the following functions in the Group statement of profit or loss:

 

		2020
Cost of goods sold			1 917
Selling expenses			16 738
Total amortisation			18 655

IMPAIRMENT TEST OF GOODWILL AND BRANDS IN CASH GENERATING UNITS

The Group’s goodwill and brands is allocated to the following cash generating units:

 

•

Branded Products

 

•

Systems

 

•

Flexibles

 

•

Food Packaging

 

The allocation of the carrying amount of the goodwill and the brands is specified below:

 

		Branded Products				Systems				Flexibles				Food Packaging				Total
Carrying amount of goodwill 2020			56 644				42 374				42 374				11 907				153 298

 

		Branded Products				Systems				Flexibles				Food Packaging				Total
Carrying amount of brands 2020			32 600				7 050				9 350				11 900				60 900

METHOD FOR ASSESSING THE RECOVERABLE AMOUNT

Impairment is determined by assessing the recoverable amount of each cash generating unit to which the goodwill and brands relates. The recoverable amount of a cash generating unit is determined based on estimates of value in use. These calculations are based on estimated future cash flows before tax, based on financial budget and forecast approved by management covering a five-year period. Cash flows beyond the five-year period are extrapolated using the estimated growth rates stated below. The growth rate does not exceed the long-term growth rate of the packaging market in which the relevant cash generating units operates.

KEY ASSUMPTIONS USED FOR THE CALCULATIONS OF VALUE IN USE

 

2020		Branded Products				Systems				Flexibles				Food Packaging
Gross margin 1)			28.1	%			27.3	%			23.1	%			24.0	%
Growth rate 2)			2.0	%			2.0	%			2.0	%			2.0	%
Discount rate 3)			8.9	%			7.1	%			7.1	%			8.3	%

 

1)	Estimated gross margin.

2)	Weighted average growth rate used to extrapolate cash flows beyond the budget period.

3)	Discount rate used in calculating the present value of estimated future cash flows.

IMPAIRMENT OF GOODWILL AND BRANDS

Management has determined the budgeted gross margins based on past performance and its expectations for the market development. The weighted average growth rates used are consistent with the forecasts included in industry reports. The discount rates used are based on weighted average cost of capital and reflect specific risks relating to the various reported cash generating units. According to management’s best judgement, any reasonable change in the key variables will not cause calculated the value-in-use for any of the CGUs to fall below the carrying amount.

NOTE 16 – PROPERTY PLANT AND EQUIPMENT

Property, plant and equipment comprises owned and leased assets.

 

		2020
Property, plant and equipment – owned			245 874
Right-of-use assets – leased			47 837
Total tangible assets			293 711

Right-of-use assets includes assets according to note 12.

 

Property, plant and equipment – owned		2020
Buildings and land			88 712
Plant and machinery			136 830
Equipment, tools, fixtures and fittings			10 533
Construction in progress			9 799
Total Property, plant and equipment – owned			245 874

 

Buildings and land		2020
Opening acquisition value			103 516
Business combinations			92 612
Additions			98
Sale/disposals			–26 933
Reclassifications			533
Translation differences			–2 459
Closing accumulated acquisition value			167 367
Opening accumulated amortisations			–56 547
Business combinations			–24 404
Sale/disposals			4 942
Depreciations			–3 118
Write-down			–5
Translation differences			477
Closing accumulated amortisations			–78 655
Net book value at the end of the year			88 712

 

Plant and machinery		2020
Opening acquisition value			332 800
Business combinations			177 641
Additions			9 126
Sale/disposals			–26 435
Reclassifications			17 145
Translation differences			–2 414
Closing accumulated acquisition value			507 863
Opening accumulated amortisations			–248 366
Business combinations			–116 749
Sale/disposals			22 900
Depreciations			–27 337
Write-down			–552
Reclassifications			–955
Translation differences			26
Closing accumulated amortisations			–371 033
Net book value at the end of the year			136 830

 

Equipment, tools, fixtures and fittings		2020
Opening acquisition value			43 517
Business combinations			14 741
Additions			1 597
Sale/disposals			–706
Reclassifications			685
Translation differences			195
Closing accumulated acquisition value			60 029
Opening accumulated amortisations			–35 497
Business combinations			–10 919
Sale/disposals			621
Depreciations			–3 455
Write-down			–47
Reclassifications			0
Translation differences			–199
Closing accumulated amortisations			–49 496
Net book value at the end of the year			10 533

Construction in progress		2020
Opening acquisition value			4 586
Business combinations			1 327
Additions			21 718
Sale/disposals			–245
Reclassifications			–17 484
Translation differences			–103
Closing accumulated acquisition value			9 799

The cost of depreciation and impairment of property, plant and equipment has affected the following functions in the statement of profit or loss:

 

		2020
Cost of goods sold			33 910
Total depreciation			33 910

NOTE 17 – NON CURRENT FINANCIAL ASSETS

 

		2020
Deposits			223
Loan			701
Other			154
Total			1 078

NOTE 18 – FINANCIAL INVESTMENT

 

		2020
Financial investments at fair value through profit or loss
Equity instruments			838
Total			838

NOTE 19 – INVENTORIES

 

		2020
Raw material			41 418
Work in progress			15 998
Finished goods			56 902
Total			114 318

The Group’s provision for write-down in inventory to the net realizable value amounts to TEUR 2 521.

NOTE 20 – TRADE RECEIVABLES

 

		2020
Trade receivables			123 028
Provision for doubtful receivables			-866
Trade receivables, net			122 162

The provision for doubtful trade receivables corresponds to 1% of total trade receivables and has changed as follows:

 

		2020
Provision at 1 January			1 280
Addition of provision for expected losses			149
Realized losses			–408
Reversal of unused provisions			–217
Translation differences			62
Provision at 31 December			866

As at 31 December, trade receivables amounting to TEUR 7 228 were due but without any impairment deemed necessary. The overdue receivables relate to a number of customers who have not had any payment difficulties and from which the Group did not in previous periods have any impairment losses and does not expect any impairment losses related to the unpaid trade receivables.