NOTE 1 – BASIS OF PREPARATION

These unaudited interim condensed consolidated financial statements as of September 30, 2021 and for the nine month period then ended, have been prepared to meet the reporting requirements of Rule 3-05 of Regulation S-X and in accordance with International Accounting Standard 34, Interim Financial Reporting (IAS 34).

These interim consolidated financial statements do not include all of the information and disclosures required in the annual financial statements. These financial statement should be read in conjunction with the financial statements for the year ended December 31, 2020. In the opinion of management, the unaudited interim consolidated financial statements reflect all adjustments which management considers necessary for a fair presentation of such financial statements for the periods presented. The results for the interim periods presented are not necessarily indicative of the results that may be expected for the entire fiscal year. The group has applied the same accounting principles and conditions as in the financial statement for the year ended December 31, 2020. The consolidated interim 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.

NOTE 2 – REVENUE

 

Net sales per nature of income		Nine months ended September 30, 2021
Sales of goods
Sale of packaging			691 065
Sales of technical solutions			10 978
Sale of services			2 808
Other			3 287
Total			708 138

Of total sales of goods TEUR 697 160 is accounted for at point in time and TEUR 10 978 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 consolidated net sales per geographical market are distributed based on locations of the customers:

 

Net sales per geographical market		Nine months ended September 30, 2021
Western Europe			453 570
Eastern Europe			187 516
Rest of the world			67 052
Total			708 138

The largest individual countries is Germany with sales of TEUR 126 142, United Kingdom with sales of TEUR 87 972 and Poland with sales of TEUR 82 691.

Net sales to our two biggest customers amounted to total TEUR 177 481, individual sales to the two customers amounting to TEUR 118 477 and TEUR 59 004 respectively.

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

CONTRACT BALANCES

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

 

		September 30, 2021
Receivables included in trade receivables and other receivables			156 131
Contract assets			—
Contract liabilities			754

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

NOTE 3 – FINANCIAL INSTRUMENTS

Valuation principles for financial instruments as described in the financial statement for the year ended December 31, 2020 have been consistently applied throughout the reporting period. The below table provides the fair value measurement hierarchy of the Group’s financial assets and liabilities.

Valuation at fair value for currency futures is based on published forward rates in an active market.

AR Packaging agreed to pay additional consideration when they acquired BSC in 2020. The additional consideration of TEUR 904 is calculated as 50% of any positive difference to EBITDA in 2021 as compared to EBITDA in 2018. The earn-out is based on forecasted EBITDA and discounted to the valuation date. At 30 September 2021 the contingent consideration was TEUR 904.

 

September 30, 2021		Carrying amount				Fair value				Hierarchy level
Assets measured at fair value
Hedge accounting
Currency forward contract			3 706				3 706				2
Fair value through income statement
Fair value option shares			554				554				1
Assets for which fair value is disclosed
Non-current financial assets			1 311				1 311
Trade receivables			156 131				156 131
Other receivables			18 185				18 185
Accrued income			10 039				10 039
Cash and cash equivalents			82 094				82 094
Liabilities measured at fair value
Provision contingent consideration			904				904				3
Hedge accounting
Currency forward contract			3 862				3 862				2
Liabilities for which fair value is disclosed
Interest bearing borrowings
Loan from shareholder			50 000				50 000
Loans from credit institutions			648 442				648 442
Lease contract			52 858				52 858
Other loans			3 011				3 011
Trade payables			87 661				87 661
Other payables			20 679				20 679
Provision contingent consideration
Opening Balance											1 600
Payments during the period											-696
Closing Balance											904

 

NOTE 4 – ACQUSITION OF FIRSTAN HOLDINGS LTD

ACQUSITION OF FIRSTAN HOLDINGS LTD

Effective as per January 15th 2021 the Group acquired 100% of the share capital of the UK company Firstan Holdings Ltd. The UK based Firstan Holdings Ltd is a leading independent folding carton manufacturer within the food and healthcare segment with focus on quality, customer service and operational efficiency. Its factory, located in Godmanchester, Cambridgeshire, is a streamlined production facility with best in class machinery and operating systems. The company is an attractive addition to the Group’s product offering and is of significant strategic importance to strengthen the group’s position on the UK market. The Group has concluded that the acquired set is a business. The total consideration was paid in cash. If the acquisition had occurred on 1 January 2021 management estimates that the effect on consolidated net sales would have been TEUR 22 191 and profit for the period TEUR 2 156.

 

Identifiable assets acquired and liabilities assumed at acquisition date		TEUR
Intangible assets			4 000
Property, plant and equipment			8 908
Inventory			2 890
Trade and other receivables			6 152
Cash and cash equivalents			3 298
Deferred tax liability			-783
Other provisions			-484
Financial liabilities			-3 256
Trade and other payables			-6 396
Total identifiable net assets			14 329
Goodwill			22 175
Total consideration transferred			36 504

The fair value of trade receivables is TEUR 5 081. The full amount is expected to be collectible.

Goodwill

Goodwill arising from the transaction has been recognized as follows:

 

Consideration – outflow of cash, net of cash acquired		TEUR
Consideration transferred			36 504
Fair value of identifiable net assets			–14 329
Goodwill			22 175

The goodwill of TEUR 22 175 arising from the acquisition is attributable mainly to the synergies expected to be achieved from integrating the acquired operations into AR Packaging Group. None of the goodwill recognized is expected to be deductible for income tax purposes.

NOTE 5 – EFFECT OF COVID 19

As a company we are more resilient than many other businesses.

With regards to Covid-19, our estimate is that we have had a negative impact of the top line for the group of around 2%. Operationally, we have been able to handle the situation quite well, with no major disturbances in the supply chain to our customers. Our production facilities have been running without standstill and we have created good routines for our employees at our plants.

NOTE 6 – SIGNIFICANT EVENTS AFTER THE BALANCE SHEET DATE

The Company has evaluated subsequent events through January 7, 2022.

On the 1st of November 2021, Graphic Packaging Holding Company Announces Completion of AR Packaging Acquisition; Strengthening Global Market Position in Fiber-Based Packaging Solutions.