Skonsolidowane Sprawozdanie Finansowe 2023 GK Arctic Paper S.A.2
Translatorʼs Explanatory Note: the following document is a free translation of the report of the above-mentioned Company. In the event of any discrepancy in interpreting the terminology in Polish version is binding.
Information on consolidated financial statements5
Information about amendment of the Management Board Report5
Definitions and abbreviations6
Abbreviations applied to business entities, institutions and authorities of the Company6
Definitions of selected terms abbreviations of currencies8
Consolidated profit and loss account11
Consolidated statement of total comprehensive income12
Consolidated statement of financial position13
Consolidated cash flow statement15
Consolidated statement of changes in equity17
3.Composition of the management and supervisory bodies22
4.Approval of the financial statements23
5.Relevant values based on professional judgement and estimates24
6.Basis for the preparation of the consolidated financial statements25
7.Changes in previously applied accounting policies and comparability of data26
8.New standards and interpretations that have been published and are not yet effective27
12.Items of other comprehensive income50
15.Dividend paid and proposed54
19.Intangible assets and goodwill60
21.Test utraty wartości rzeczowych aktywów trwałych oraz aktywów niematerialnych62
23.Trade and other receivables66
24.Cash and cash equivalents67
25.Share capital and other capital68
26.Liabilities under bank loans and other financial liabilities74
29.Trade and other payables, grants and deferred income81
32.Information on related entities82
33.Information on the agreement and remuneration of the statutory auditor or entity authorised to audit financial statements84
Skonsolidowane Sprawozdanie Finansowe 2023 GK Arctic Paper S.A.3
38.Certificates in cogeneration97
41.Impact of the war in Ukraine on the Group’s operations98
42.Material events after the balance sheet date98
Statement of the Management Board99
Accuracy and reliability of the presented reports99
Consolidated Financial Statements 2023 of the Arctic Paper S.A. Capital Group 5
Introduction
These Consolidated Financial Statements, which are a component of the Consolidated Annual Report for 2023 were prepared in accordance with the Regulation of the Minister of Finance of 29 March 2018 on the current and periodic information provided by securities issuers and on the conditions for recognizing information required by the law of a non‐member state as equivalent information (Journal of Laws of 20018, item 757, as amended) and in accordance with International Financial Reporting Standards (IFRS), approved by the EU (IFRS, EU).
As at the approval date of these Consolidated Financial Statements for publication, in light of the current process of IFRS endorsement in the European Union and the nature of the Group’s activities, there is no difference between the effective IFRS standards and the IFRS standards endorsed by the European Union. IFRS cover standards and interpretations approved by the International Accounting Standards Board (IASB).
These Consolidated Financial Statements present data in PLN, and all figures, unless otherwise specified, are disclosed in PLN ‘000.
Management Board of Arctic Paper S.A. (the "Company") informs that in the Management Report of the Arctic Paper Capital Group for 2023 published on April 4, 2024, due to technical reasons arising at the time of converting the document "Arctic Paper Capital Group Management Report 2023" ("Management Report") into a file xhtml, an incomplete document of the above Report was created, in which the last pages were missing, i.e. pages 46 to 64.
The Management Board's report has been supplemented with missing missing pages, i.e. pages 46 to 64, and replaces and invalidates the Management Board's Report of the Arctic Paper Capital Group for 2023 issued on April 4, 2024.
The Management Board informs that no financial data included in the consolidated financial statements for 2023 have been changed in relation to the original version of the report.
Consolidated Financial Statements 2023 of the Arctic Paper S.A. Capital Group 6
Introduction
Unless the context requires otherwise, the following definitions and abbreviations are used in the whole document:
Arctic Paper, Company, Issuer, Parent Entity, AP | Arctic Paper Spółka Akcyjna with its registered office in Kostrzyn nad Odrą, Poland |
Capital Group, Group, Arctic Paper Group, AP Group | Capital Group comprised of Arctic Paper Spółka Akcyjna and its subsidiaries as well as joint ventures |
Arctic Paper Kostrzyn, AP Kostrzyn, APK | Arctic Paper Kostrzyn Spółka Akcyjna with its registered office in Kostrzyn nad Odrą, Poland |
Arctic Paper Munkedals, AP Munkedals, APM | Arctic Paper Munkedals AB with its registered office in Munkedal Municipality, Västra Götaland County, Sweden |
Arctic Paper Mochenwangen, AP Mochenwangen, APMW | Arctic Paper Mochenwangen GmbH with its registered office in Mochenwangen, Germany |
Arctic Paper Grycksbo, AP Grycksbo, APG | Arctic Paper Grycksbo AB with its registered office in Kungsvagen, Grycksbo, Sweden |
Paper Mills | Arctic Paper Kostrzyn, Arctic Paper Munkedals, Arctic Paper Grycksbo |
Arctic Paper Investment AB, API AB | Arctic Paper Investment AB with its registered office in Göteborg, Sweden |
Arctic Paper Investment GmbH, API GmbH | Arctic Paper Investment GmbH with its registered office in Wolpertswende, Germany |
Arctic Paper Verwaltungs | Arctic Paper Verwaltungs GmbH with its registered office in Wolpertswende, Germany |
Arctic Paper Immobilienverwaltungs | Arctic Paper Immobilienverwaltungs GmbH & Co. KG with its registered office in Wolpertswende, Germany |
Kostrzyn Group | Arctic Paper Kostrzyn Spółka Akcyjna with its registered office in Kostrzyn nad Odrą and EC Kostrzyn Sp. z o.o. with its registered office in Kostrzyn nad Odrą |
Mochenwangen Group | Arctic Paper Investment GmbH, Arctic Paper Mochenwangen GmbH, Arctic Paper Verwaltungs GmbH, Arctic Paper Immobilienverwaltungs GmbH & Co.KG |
Grycksbo Group | Arctic Paper Grycksbo AB, Arctic Paper Investment AB, Arctic Paper Finance AB; |
Sales Offices | Arctic Paper Papierhandels GmbH with its registered office in Vienna (Austria); |
Consolidated Financial Statements 2023 of the Arctic Paper S.A. Capital Group 7
Introduction
| Arctic Paper Benelux SA with its registered office in Oud-Haverlee (Belgium); |
Arctic Paper Danmark A/S with its registered office in Greve (Denmark); | |
Arctic Paper France SA with its registered office in Paris (France); | |
Arctic Paper Deutschland GmbH with its registered office in Hamburg, Germany; | |
Arctic Paper Italia Srl with its registered office in Milan (Italy); | |
Arctic Paper Baltic States SIA with its registered office in Riga (Latvia); | |
Arctic Paper Norge AS with its registered office in Oslo (Norway); | |
Arctic Paper Polska Sp. z o.o. with its registered office in Warsaw (Poland); | |
Arctic Paper España SL with its registered office in Barcelona (Spain); | |
Arctic Paper Finance AB with its registered office in Munkedal (Sweden); | |
Arctic Paper Schweiz AG with its registered office in Derendingen (Switzerland) | |
Arctic Paper UK Ltd with its registered office in London (UK) | |
Arctic Power Sp. z o.o. | Arctic Power Sp. z o.o. with its registered office in Kostrzyn nad Odrą (Poland) |
Kostrzyn Packaging Spółka z o.o. | Arctic Paper East Sp. z o.o. with its registered office in Kostrzyn nad Odrą (Poland) |
Rottneros, Rottneros AB | Rottneros AB with its registered office in Sunne (Sweden) |
Rottneros Group, Rottneros AB Group | Rottneros AB with its registered office in Söderhamn, Sweden; Rottneros Bruk AB with its registered office in Rottneros, Sweden; Utansjo Bruk AB with its registered office in Söderhamn, Sweden, Vallviks Bruk AB with its registered office in Vallvik, Sweden; Rottneros Packaging AB with its registered office in Sunne, Sweden; SIA Rottneros Baltic with its registered office in Kuldiga, Latvia; since 1 January 2020 – Nykvist Skogs AB with its registered office in Gräsmark, Sweden |
Pulp Mills | Rottneros Bruk AB with its registered office in Rottneros, Sweden; Vallviks Bruk AB with its registered office in Vallvik, Sweden |
Rottneros Purchasing Office | SIA Rottneros Baltic with its registered office in Kuldiga, Latvia |
Office Kalltorp | Kalltorp Kraft Handelsbolaget with its registered office in Trollhattan, Sweden |
Consolidated Financial Statements 2023 of the Arctic Paper S.A. Capital Group 8
Introduction
Nemus Holding AB | Nemus Holding AB with its registered office in Göteborg, Sweden |
Thomas Onstad | The Issuer’s core shareholder, holding directly and indirectly over 50% of shares in Arctic Paper S.A.; a member of the Issuer’s Supervisory Board |
Management Board, Issuer’s Management Board, Company’s Management Board, Group’s Management Board | Management Board of Arctic Paper S.A. |
Supervisory Board, Issuer’s Supervisory Board, Company’s Supervisory Board, Group’s Supervisory Board, SB | Supervisory Board of Arctic Paper S.A. |
AGM, GM, Issuer’s General Meeting, Company’s General Meeting | Annual General Meeting of Arctic Paper S.A. |
EGM, Extraordinary General Meeting, Issuer’s Extraordinary General Meeting, Company’s Extraordinary General Meeting | Extraordinary General Meeting of Arctic Paper S.A. |
Articles of Association, Issuer’s Articles of Association, Company’s Articles of Association | Articles of Association of Arctic Paper S.A. |
SEZ | Kostrzyńsko-Słubicka Special Economic Zone |
Registration Court | District Court in Zielona Góra |
Warsaw Stock Exchange, WSE | Giełda Papierów Wartościowych w Warszawie Spółka Akcyjna |
KDPW, Depository | Krajowy Depozyt Papierów Wartościowych Spółka Akcyjna with its registered office in Warsaw |
PFSA | Polish Financial Supervision Authority |
SFSA | Swedish Financial Supervisory Authority, equivalent to PFSA |
NASDAQ in Stockholm, Nasdaq | Stock Exchange in Stockholm, Sweden |
CEPI | Confederation of European Paper Industries |
EURO-GRAPH | The European Association of Graphic Paper Producers |
Eurostat | European Statistical Office |
GUS | Central Statistical Office of Poland |
NBSK | Northern Bleached Softwood Kraft |
BHKP | Bleached Hardwood Kraft Pulp |
FY | Financial year |
Q1 | 1st quarter of the financial year |
Consolidated Financial Statements 2023 of the Arctic Paper S.A. Capital Group 9
Introduction
Q2 | 2nd quarter of the financial year |
Q3 | 3rd quarter of the financial year |
Q4 | 4th quarter of the financial year |
H1 | First half of the financial year |
H2 | Second half of the financial year |
YTD | Year-to-date |
Like-for-like, LFL | Analogous, with respect to operating result. |
p.p. | Percentage point, difference between two amounts of one item given in percentage |
PLN, zł, złoty | Monetary unit of the Republic of Poland |
gr | grosz – 1/100 of one zloty (the monetary unit of the Republic of Poland) |
Euro, EUR | Monetary unit of the European Union |
GBP | Pound sterling, monetary unit of the United Kingdom |
SEK | Swedish krona – the monetary unit of Sweden; |
DKK | Danish krona – the monetary unit of Denmark; |
NOK | Norwegian krona – the monetary unit of Norway; |
CHF | Swiss franc – the monetary unit of Switzerland; |
USD | United States dollar, the legal tender in the United States of America |
IAS | International Accounting Standards |
IFRS | International Financial Reporting Standards |
IFRS EU | International Financial Reporting Standards endorsed by the European Union |
GDP | Gross Domestic Product. |
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Consolidated Financial Statements 2023 of the Arctic Paper S.A. Capital Group 11
(unless specified otherwise, all amounts are in PLN ‘000)
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Continuing operations |
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Revenues from sales of paper and pulp |
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Sales revenues |
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Costs of sales |
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Profit/(loss) on sales |
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Selling and distribution costs |
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Administrative expenses |
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Other operating income |
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Other operating expenses |
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Operating profit/(loss) |
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Financial income |
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Financial expenses |
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Gross profit/(loss) |
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Income tax |
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Net profit/(loss) from continuing operations |
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Net profit/(loss) for the financial year |
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Attributable to: |
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The shareholders of the Parent Entity |
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To the non-controlling shareholder |
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Earnings/(loss) per share:
– basic earnings from the profit/(loss) attributable to the shareholders of the Parent Entity |
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– diluted earnings from the profit attributable to the shareholders of the Parent Entity |
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Consolidated Financial Statements 2023 of the Arctic Paper S.A. Capital Group 12
(unless specified otherwise, all amounts are in PLN ‘000)
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Net profit/(loss) for the reporting period |
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Items of other comprehensive income to be reclassified to profit or loss, before taxation |
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FX differences on translation of foreign operations |
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Measurement of financial instruments, including: |
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Measurement of financial instruments (items to be reclassified in future periods) |
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Measurement of financial instruments (items reclassified in the period) |
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Items of other comprehensive income not to be reclassified to profit or loss, before taxation |
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Actuarial profit/(loss) for defined benefit plans |
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Other comprehensive income before tax |
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Income tax relating to items of other comprehensive income that will be reclassified to profit or loss |
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Deferred income tax on the measurement of financial instruments, of which: |
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Deferred income tax on the measurement of financial instruments |
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Deferred income tax on the measurement of financial instruments (reclassified in the period) |
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Deferred income tax on actuarial profit/(loss) relating to defined benefit plans |
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Total comprehensive income for the period |
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Total comprehensive income attributable to: |
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Consolidated Financial Statements 2023 of the Arctic Paper S.A. Capital Group 13
(unless specified otherwise, all amounts are in PLN ‘000)
| Note | As at 31 December 2023 | As at 31 December 2022 |
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ASSETS |
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Fixed assets |
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Tangible fixed assets | 16 | ||
Investment properties | 18 | ||
Intangible assets | 19 | ||
Goodwill | 19 | ||
Interest in joint ventures | 20.3 | ||
Other financial assets | 20.1 | ||
Other non-financial assets | 20.2 | ||
Deferred income tax asset | 13.3 | ||
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TOTAL FIXED ASSETS |
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Current assets |
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Inventories | 22 | ||
Trade and other receivables | 23 | ||
Corporate income tax receivables |
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Other non-financial assets | 20.2 | ||
Other financial assets | 20.1 | ||
Cash and cash equivalents | 24 | ||
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TOTAL CURRENT ASSETS |
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TOTAL ASSETS |
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Consolidated Financial Statements 2023 of the Arctic Paper S.A. Capital Group 14
(unless specified otherwise, all amounts are in PLN ‘000)
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EQUITY AND LIABILITIES |
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Equity |
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Equity (attributable to the shareholders of the Parent Entity) |
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Share capital | 25.1 | ||
Supplementary capital | 25.3 | ||
Other capital | 25.4 | ||
FX differences on translation | 25.2 | ( | ( |
Retained earnings/Accumulated losses | 25.5 | ||
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Non-controlling interests | 25.6 | ||
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TOTAL EQUITY |
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Long-term liabilities |
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Loans payables | 26 | ||
Provisions | 28 | ||
Employee liabilities | 27 | ||
Other financial liabilities | 26 | ||
Deferred income tax provision | 13.3 | ||
Grants and deferred income | 29.2 | ||
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Short-term liabilities |
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Loans payables | 26 | ||
Provisions | 28 | ||
Other financial liabilities | 26 | ||
Trade and other payables | 29.1 | ||
Employee liabilities | 27 | ||
Income tax liability |
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Grants and deferred income | 29.2 | ||
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TOTAL LIABILITIES |
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TOTAL EQUITY AND LIABILITIES |
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Consolidated Financial Statements 2023 of the Arctic Paper S.A. Capital Group 15
(unless specified otherwise, all amounts are in PLN ‘000)
| Note | 12-month period ended on 31 December 2023 | 12-month period ended on 31 December 2022 |
Cash flows from operating activities |
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Gross profit/(loss) |
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Adjustments for: |
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Depreciation/amortisation | 11.6 | ||
Impairment of non-financial assets |
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FX gains/(loss) |
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Interest, net |
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Profit/(loss) on investing activities |
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(Increase)/decrease in trade and other receivables |
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(Increase)/decrease in inventories |
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Increase/(decrease) of liabilities except loans, borrowings, bonds and other financial liabilities |
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Change in non-financial assets |
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Change in provisions |
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Change in pension provisions and employee liabilities |
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Change in grants and deferred income |
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Co-generation certificates and CO2 emission rights (increase) |
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Change in settlement of realised forward contracts that meet hedge accounting rules (reduction) |
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Change in accounting for unrealized forward contracts not meeting hedge accounting rules |
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Other |
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Total flows from operations |
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Income tax paid |
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Net cash flows from operating activities |
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Cash flows from investing activities |
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Purchase of tangible fixed assets and intangible assets |
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Outflows from bank deposit set up for more than 3 months |
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Proceeds from bank deposit set up for more than 3 months |
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Interest received |
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Proceeds from forward contracts that do not comply with hedge accounting rules |
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Acquisition of long-term financial assets |
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Other capital outflows / inflows |
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Net cash flows from investing activities |
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Cash flows from financing activities |
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Change to overdraft facilities |
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Repayment of leasing liabilities |
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Repayment of other financial liabilities |
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Proceeds from borrowing |
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Repayment of loans |
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Dividend paid to shareholders of AP SA | 15 | ( | ( |
Consolidated Financial Statements 2023 of the Arctic Paper S.A. Capital Group 16
(unless specified otherwise, all amounts are in PLN ‘000)
Dividend paid to non-controlling shareholders | 25.6 | ( | ( |
Interest paid |
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Net FX differences |
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Increase (decrease) in cash and cash equivalents after effects of exchange rate changes |
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Cash and cash equivalents at the beginning of the period |
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Cash and cash equivalents at the end of the period | 24 |
Consolidated Financial Statements 2023 of the Arctic Paper S.A. Capital Group 17
(unless specified otherwise, all amounts are in PLN ‘000)
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| Attributable to the shareholders of the Parent Entit |
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| Note | Share capital | Supplementary capital | FX differences on translation of foreign operations | Other | Retained earnings (Accumulated losses) | Total | Equity attributable to non-controlling shareholders | Total equity |
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As at 1 January 2023 |
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Net profit/(loss) for the period |
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Other net comprehensive income for the period |
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Total comprehensive income for the period |
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Profit distribution |
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Payment of dividend to shareholders of AP SA | 15, 26.6 | ( | ( | ( | ( | ||||
The sum of the changes in the capital |
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As at 31 December 2023 |
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Consolidated Financial Statements 2023 of the Arctic Paper S.A. Capital Group 18
(unless specified otherwise, all amounts are in PLN ‘000)
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| Note | Share capital | Supplementary capital | FX differences on translation of foreign operations | Other capital | Retained earnings (Accumulated losses) | Total | Equity attributable to non-controlling shareholders | Total equity |
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As at 1 January 2022 |
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Net profit/(loss) for the period |
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Other net comprehensive income for the period |
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Total comprehensive income for the period |
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Payment of dividend to shareholders of AP SA | 15, 26.6 | ( | ( | ( | ( | ( | |||
Total changes in capital |
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As at 31 December 2022 |
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Consolidated Financial Statements 2023 of the Arctic Paper S.A. Capital Group 19
(unless specified otherwise, all amounts are in PLN ‘000)
Accounting principles (policies) and additional explanatory notes
The
Arctic Paper
The Parent Entity is entered in the register of entrepreneurs of the National Court Register maintained by the District Court in Zielona Góra (Poland) – 8th Commercial Division of the National Court Register, under KRS number 0000306944. The Parent Entity holds statistical number REGON 080262255.
The company’s registered office is located in
The Group’s additional business, subordinate to paper and pulp production, covers:
—Production of packaging,
—Generation of electricity,
—Transmission of electricity,
—Electricity distribution,
—Heat production,
—Heat distribution,
—Logistics services,
Consolidated Financial Statements 2023 of the Arctic Paper S.A. Capital Group 20
(unless specified otherwise, all amounts are in PLN ‘000)
As at 31.12.2023 |
| As at 31.12.2022 | |||||||||||||||
Shareholder | Number of shares | Share in the share capital | Number of votes | Share in the total number of votes | Shareholder |
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Thomas Onstad | 47 205 107 | 68,13% | 47 205 107 | 68,13% | Thomas Onstad |
| 47 205 107 | 68,13% | 47 205 107 | 68,13% | |||||||
- indirectly via | 41 581 449 | 60,01% | 41 581 449 | 60,01% | - indirectly via |
| 40 981 449 | 59,15% | 40 981 449 | 59,15% | |||||||
Nemus Holding AB |
| 40 981 449 | 59,15% | 40 981 449 | 59,15% | Nemus Holding AB |
| 40 381 449 | 58,28% | 40 381 449 | 58,28% | ||||||
other entity |
| 600 000 | 0,87% | 600 000 | 0,87% | other entity |
| 600 000 | 0,87% | 600 000 | 0,87% | ||||||
- directly | 5 623 658 | 8,12% | 5 623 658 | 8,12% | - directly |
| 6 223 658 | 8,98% | 6 223 658 | 8,98% | |||||||
Other | 22 082 676 | 31,87% | 22 082 676 | 31,87% | Other |
| 22 082 676 | 31,87% | 22 082 676 | 31,87% | |||||||
Total | 69 287 783 | 100,00% | 69 287 783 | 100,00% | Total |
| 69 287 783 | 100,00% | 69 287 783 | 100,00% | |||||||
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Treasury shares | - | 0,00% | - | 0,00% | Treasury shares |
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Total | 69 287 783 | 100,00% | 69 287 783 | 100,00% | Total |
| 69 287 783 | 100,00% | 69 287 783 | 100,00% | |||||||
Additionally, Mr Thomas Onstad, an indirect shareholder of Nemus Holding AB, holds directly 5,623,658 shares representing 8.12% of the total number of shares in the Company, and via another entity – 600,000 shares accounting for 0.87% of the total number of shares of the Issuer. Mr Thomas Onstad’s total direct and indirect holding in the capital of Arctic Paper S.A. as at 31 December 2023 was 68.13% (31 December 2022: 68.13%) and has not changed until the date hereof.
The ultimate Parent Entity of the Group that prepares the consolidated financial statements is
Consolidated Financial Statements 2023 of the Arctic Paper S.A. Capital Group 21
(unless specified otherwise, all amounts are in PLN ‘000)
The Group is composed of Arctic Paper S.A. and the following subsidiaries:
Unit | Registered office | Business activity | Group’s interest in the equity of the | ||
31 December 2023 | 31 December 2022 | ||||
Arctic Paper Kostrzyn S.A. | Poland, Fabryczna 1, 66-470 Kostrzyn nad Odrą | Paper production | 100% | 100% | |
Arctic Paper Munkedals AB | Sweden, SE 455 81 Munkedal | Paper production | 100% | 100% | |
Arctic Paper Mochenwangen GmbH | Germany, Fabrikstrasse 62, DE-882, 84 Wolpertswende | Non-operating company, formerly paper production | 99,74% | 99,74% | |
Arctic Paper Grycksbo AB | Sweden, Box 1, SE 790 20 Grycksbo | Paper production | 100% | 100% | |
Arctic Paper UK Limited | United Kingdom, 8 St Thomas Street SE1 9RR London | Trading company | 100% | 100% | |
Arctic Paper Baltic States SIA | Latvia, K. Valdemara iela 33-20, Riga LV-1010 | Trading company | 100% | 100% | |
Arctic Paper Deutschland GmbH | Germany, Am Sandtorkai 71, D-20457 Hamburg | Trading company | 100% | 100% | |
Arctic Paper Benelux S.A. | Belgium, Ophemstraat 24, B-3050 Oud-Heverlee | Trading company | 100% | 100% | |
Arctic Paper Schweiz AG | Switzerland, Gutenbergstrasse 1, CH-4552 Derendingen | Trading company | 100% | 100% | |
Arctic Paper Italia srl | Piazzale Biancamano 8 20121 Milano, Italia | Trading company | 100% | 100% | |
Arctic Paper Danmark A/S | Denmark, Korskildelund 6 DK-2670 Greve | Trading company | 100% | 100% | |
Arctic Paper France SAS | France, 43 rue de la Breche aux Loups, 75012 Paris | Trading company | 100% | 100% | |
Arctic Paper Espana SL | Spain, Avenida Diagonal 472-474, 9-1 Barcelona | Trading company | 100% | 100% | |
Arctic Paper Papierhandels GmbH | Austria, Hainborgerstrasse 34A, A-1030 Wien | Trading company | 100% | 100% | |
Arctic Paper Polska Sp. z o.o. | Poland, Okrężna 9, 02-916 Warszawa | Trading company | 100% | 100% | |
Arctic Paper Norge AS | Norway, Eikenga 11-15, NO-0579 Oslo | Trading company | 100% | 100% | |
Arctic Paper Sverige AB | Sweden, SE 455 81 Munkedal | Trading company | 100% | 100% | |
Arctic Power Sp.z o.o. (formerly Arctic Paper East Sp. z o.o.) | Poland, Fabryczna 1, 66-470 Kostrzyn nad Odrą | Production of energy | 100% | 100% | |
Arctic Paper Investment GmbH * | Germany, Fabrikstrasse 62, DE-882, 84 Wolpertswende | Activities of holding companies | 100% | 100% | |
Arctic Paper Finance AB | Sweden, Box 383, 401 26 Göteborg | Activities of holding companies | 100% | 100% | |
Arctic Paper Verwaltungs GmbH * | Germany, Fabrikstrasse 62, DE-882, 84 Wolpertswende | Activities of holding companies | 100% | 100% | |
Arctic Paper Immobilienverwaltung GmbH&Co. KG* | Germany, Fabrikstrasse 62, DE-882, 84 Wolpertswende | Activities of holding companies | 94,90% | 94,90% | |
Arctic Paper Investment AB ** | Sweden, Box 383, 401 26 Göteborg | Activities of holding companies | 100% | 100% | |
Consolidated Financial Statements 2023 of the Arctic Paper S.A. Capital Group 22
(unless specified otherwise, all amounts are in PLN ‘000)
Unit | Registered office | Business activity | Group’s interest in the equity of the | ||
31 | 31 | ||||
EC Kostrzyn Sp. z o.o. | Poland, ul. Fabryczna 1, 66-470 Kostrzyn nad Odrą | Rental of properties and machines and equipment | 100% | 100% | |
Munkedals Kraft AB | Sweden, 455 81 Munkedal | Production of hydropower | 100% | 100% | |
Kostrzyn Packaging Spółka z o.o. | Poland, ul. Fabryczna 1, | Production of packaging | 76% | 100% | |
Kalltorp Kraft Hb | Sweden, Trollhatan | Production of hydropower | 50% | 50% | |
Rottneros AB | Sweden, Söderhamn | Activities of holding companies | 51,27% | 51,27% | |
Rottneros Bruk AB | Sweden, Rottneros | Pulp production | 51,27% | 51,27% | |
Utansjo Bruk AB | Sweden, Söderhamn | Non-operating company | 51,27% | 51,27% | |
Vallviks Bruk AB | Sweden, Vallvik | Pulp production | 51,27% | 51,27% | |
Nykvist Skogs AB | Sweden, Gräsmark | Company grouping forest owners | 51,27% | 51,27% | |
Rottneros Packaging AB | Sweden, Sunne | Production of food packaging | 51,27% | 51,27% | |
SIA Rottneros Baltic | Latvia, Kuldiga | Procurement bureau | 51,27% | 51,27% | |
* – companies established for the purpose of the acquisition of Arctic Paper Mochenwangen GmbH
** – company established to acquire Grycksbo Paper Holding AB (closed in 2015) and indirectly Arctic Paper Grycksbo AB
As at the date of this report, there were no changes from 31 December 2023.
As at 31 December 2023 and as well as on the day hereof, the percentage of voting rights held by the Group in its subsidiaries corresponded to the percentage held in the share capital of those entities. All subsidiaries in the Group are consolidated using the full method from the date on which the Group obtains control over them and cease to be consolidated from the date on whichcontrol ceases.
3.Composition of the management and supervisory bodies
3.1.Management Board of the Parent Entity
As at 31 December 2023, the Parent Entity’s Management Board was composed of:
—Michał Jarczyński – President of the Management Board appointed on 10 December 2018, with effect from 1 February 2019;
—Katarzyna Wojtkowiak – Member of the Management Board appointed on 29 May 2023;
—Fabian Langenskiöld – Member of the Management Board appointed on 14 August 2023.
On 9 May 2023, Mr Göran Eklund resigned as Member of the Management Board and CFO of the Parent Entity with effect from 29 May 2023.
Consolidated Financial Statements 2023 of the Arctic Paper S.A. Capital Group 23
(unless specified otherwise, all amounts are in PLN ‘000)
The Supervisory Board, by resolution of 9 May 2023, appointed Ms Katarzyna Wojtkowiak as a Member of the Parent Entity’s Management Board with effect from 29 May 2023. Ms Katarzyna Wojtkowiak also holds the position of CFO.
The Supervisory Board, by resolution of 9 August 2023, appointed Mr Fabian Langenskiöld as a Member of the Parent Entity’s Management Board with effect from 14 August 2023. Mr Fabian Langenskiöld also holds the position of Executive Vice-President for Sales and Marketing.
Members of the Executive Board shall hold office continuously from the date of their appointment.
From 31 December 2023 until the publication date of the financial statements no other changes in the composition of the Management Board of the Company occurred.
3.2.Supervisory Board of the Parent Entity
As at 31 December 2023, the Parent Entity’s Supervisory Board was composed of:
Per Lundeen – Chairman of the Supervisory Board appointed on 22 September 2016 (appointed to the Supervisory Board on 14 September 2016);
Roger Mattsson – Deputy Chairman of the Supervisory Board appointed on 22 September 2016 (appointed as a Member of the Supervisory Board on 14 September 2014);
Thomas Onstad – Member of the Supervisory Board appointed on 22 October 2008;
Zofia Dzik – Member of the Supervisory Board appointed on 22 June 2021;
Anna Jakubowski – Member of the Supervisory Board appointed on 22 June 2021.
Members of the Supervisory Board shall hold office continuously from the date of their appointment.
Up to the date of publication of these consolidated financial statements, there were no changes in the composition of the Parent Entity’s Supervisory Board.
3.3.Audit Committee of the Parent Entity
As at 31 December 2023, the Parent Entity’s Audit Committee was composed of:
Anna Jakubowski – Chairperson of the Audit Committee appointed on 22 June 2021 (appointed as Member of the Audit Committee on 5 August 2021);
Zofia Dzik – Member of the Audit Committee appointed on 22 June 2021 (appointed as Member of the Audit Committee on 5 August 2021);
Roger Mattsson – Audit Committee Member appointed on 14 September 2014 (appointed as Audit Committee Member on 23 June 2016).
The members of the Audit Committee shall hold office continuously from the date of their appointment
Up to the date of publication of these consolidated financial statements, there were no changes in the composition of the Parent Entity’s Audit Committee.
4.Approval of the financial statements
These consolidated financial statements were approved for publication by the Parent Entity’s Management Board on 21 May 2024.
Consolidated Financial Statements 2023 of the Arctic Paper S.A. Capital Group 24
(unless specified otherwise, all amounts are in PLN ‘000)
5.Relevant values based on professional judgement and estimates
5.1.Professional judgement
In the process of applying accounting policies to the areas presented below, professional judgement of the management has the most significant effect, apart from accounting estimates.
The Group has lease contracts which it recognizes in accordance with IFRS 16. IFRS 16 introduced a uniform lessee accounting model and requires the lessee to recognize the assets and liabilities arising from each lease. On the lease commencement date, the lessee recognizes an asset with respect to the right to use the underlying asset and a lease liability that reflects the lessee’s obligation to make lease payments. The Parent Entity’s management exercises its professional judgement, inter alia, in determining whether a contract constitutes a lease and in determining the lease term when there is an option to extend the contract term, and makes an estimate in determining the marginal interest rate for leases based on the requirements in IFRS 16. For more information, see Note 17.
The basic assumptions for the future and other key sources of uncertainties as at the balance sheet date that affect the risk of major adjustments in the carrying amount of assets and liabilities in the next financial year are presented below.
Due to the high demand for paper and the strong financial performance of Arctic Paper Grycksbo, following the annual assessment of the impairment rationale for tangible fixed assets and intangible assets, the Management Board identified the need to test the non-financial fixed assets for impairment for the Paper Mill in order to update impairment allowances recognised in previous years.
In connection with the test, the Company makes a number of estimates, of which the forecast sales volumes, selling prices, raw material purchase prices, energy prices, discount rate and the growth rate over the residual period have the greatest impact on the value in use of the assets. Some of the assumptions used to determine the value in use of assets are based on unobservable inputs and are therefore subject to estimation uncertainty.
The results of the test as at 31 December 2023 were presented in note 21.2. The test performed as at 31 December 2023 resulted in the reversal of part of the impairment allowance.
As at 31 December 2023, in accordance with the requirements of EU IFRS, Rottneros performed an impairment test for trademarks and goodwill arising from the acquisition of a subsidiary in January 2020. The test did not show the need to make an impairment allowance for this asset. The results of the test as at 31 December 2023 were presented in note 21.1.
The costs of retirement post-employment benefits is determined with actuarial techniques. The estimates were presented in note 27.2. Actuarial measurements require certain assumptions as to the applicable discount rates, anticipated salary increases, mortality ratio and projected growth of retirement benefits. Due to the long-term nature of the programmes, the estimates are subject to certain uncertainties. For more information, see Note 27.2.
The Group recognises a deferred income tax asset assuming that taxable profit will be generated in the future to utilise the asset. Material deterioration of the generated taxable profit in the future could render this assumption unjustified. The calculation of the deferred income tax asset is presented in note 13.3.
Consolidated Financial Statements 2023 of the Arctic Paper S.A. Capital Group 25
(unless specified otherwise, all amounts are in PLN ‘000)
Fair value of financial instruments for which there is no active market is measured using the appropriate valuation techniques. The Group uses professional judgement to select adequate methods and to make assumptions. The fair value of financial instruments is presented in note 35.1.
Depreciation/amortisation rates are determined on the basis of the anticipated useful lives of tangible fixed assets and intangible assets. Every year, the Group reviews the approved economic useful lives on the basis of current estimates. The approved economic useful lives for each tangible fixed asset are presented in note 9.5 and for intangible assets in note 9.7.
Regulations related to VAT, corporate income tax and charges related to social insurance are subject to frequent changes. Those frequent changes result in unavailability of appropriate points of reference, inconsistent interpretations and few precedents that could apply. Additionally, the applicable regulations contain also certain ambiguities that result in differences of opinion as to legal interpretations of tax regulations – among public authorities and between public authorities and enterprises.
Therefore, the amounts presented and disclosed in the financial statements may change in the future as a result of final decisions by tax inspection authorities.
The Group recognises and measures current and deferred tax assets or liabilities using the requirements of IAS 12 Income Taxes on the basis of tax profit/(loss), tax base and tax rates, taking into account an assessment of the uncertainties associated with tax settlements. When an uncertainty exists if and to what extent the tax authority accepts tax settlements to specific transactions, the Group recognises those settlements subject to uncertainty assessment.
The Group estimates its impairment allowance to receivables in the amount of anticipated credit losses over the whole life of the receivables since the initial recognition. The amount of impairment for receivables is the difference between the carrying amount of the receivables and the estimated probable collectible amount.
Impairment allowances for inventories are made when the carrying amount of a specific assortment is lower than its net realisable price. The net sales price is estimated as the realisable price of the assortment net of selling and distribution costs.Several factors are taken into account when creating inventory impairment allowances. The most important of these are the duration of the backlog and the assessment of the possibility of finding its use. When calculating such an allowance, the possibility of reusing the product in the production process is also taken into account, in which case the allowance is reduced by this value.
More information on impairment allowances on inventories is included in note 22, and impairment allowances on receivables in note 23.
6.Basis for the preparation of the consolidated financial statements
These Consolidated Financial Statements have been made in accordance with the historical cost convention, with the exception of investment properties and derivative financial instruments that are measured at fair value.
These Consolidated Financial Statements are presented in the Polish Zloty (“PLN”), and all values, unless indicated otherwise, are stated in PLN ‘000.
Consolidated Financial Statements 2023 of the Arctic Paper S.A. Capital Group 26
(unless specified otherwise, all amounts are in PLN ‘000)
These consolidated financial statements have been prepared in accordance with the Regulation of the Minister of Finance of 29 March 2018 on current and periodic information provided by issuers of securities and the conditions for recognising as equivalent the information required by the laws of a non-member state (Journal of Laws 20018, item 757, as amended), and the International Financial Reporting Standards (“IFRS”) as endorsed by the European Union (“EU IFRS”).
IFRS cover standards and interpretations approved by the International Accounting Standards Board (IASB).
Certain subsidiaries of the Group maintain their books of account in compliance with the accounting policies (principles) as set forth in the Accounting Act of 29 September 1994 (“Act”) as amended, and the regulations issued pursuant thereto (“Polish accounting standards”) or in compliance with other local accounting standards applicable to foreign operations. The consolidated financial statements contain adjustments that are not incorporated in the books of account of the Group entities, implemented to make the financial data of those entities compliant with EU IFRS.
6.1.Currency of the financial statements and functional currencies
The Group’s consolidated financial statements are presented in PLN which is also the functional currency of the Parent Entity. A functional currency is determined for each subsidiary and the assets and liabilities of each entity are measured in its relevant functional currency. The functional currencies of the Group companies included in these consolidated financial statements are as follows: Polish zloty (PLN), Swedish krona (SEK), euro (EUR), Norwegian krone (NOK), Danish krona (DKK), pound sterling (GBP) and Swiss franc (CHF).
7.Changes in previously applied accounting policies and comparability of data
7.1.Modifications to the existing accounting principles
The accounting policies applied in the preparation of the interim abbreviated consolidated financial statements are consistent with those used in the preparation of the Group’s annual consolidated financial statements for the year ended 31 December 2022, except as set out below.
a)IFRS 17 “Insurance contracts” and amendments to IFRS 17
IFRS 17 “Insurance Contracts” was issued by the International Accounting Standards Board on 18 May 2017, while the amendments to IFRS 17 were published on 25 June 2020. The new standard is effective for annual periods beginning on or after 1 January 2023.
IFRS 17 Insurance Contracts will replace the current IFRS 4, which allows for a variety of practices in accounting for insurance contracts. The new standard will fundamentally change the accounting for all entities that deal with insurance contracts and investment contracts; however, the scope of the standard is not limited to insurance companies only, and contracts entered into by entities other than insurance companies may also contain an element that meets the definition of an insurance contract (as defined in IFRS 17).
b)Amendment to IFRS 17 “Insurance Contracts”
The amendment relates to the transitional requirements in connection with the first-time application of IFRS 17 “Insurance Contracts” and IFRS 9 “Financial Instruments”. The purpose of the amendment is to ensure the usefulness of financial information
Consolidated Financial Statements 2023 of the Arctic Paper S.A. Capital Group 27
(unless specified otherwise, all amounts are in PLN ‘000)
for investors in the period of initial application of the new standard by introducing certain simplifications with regard to the presentation of comparative information.
The amendment relates only to the application of the new IFRS 17 standard and does not affect any other requirements in IFRS 17.
c)Amendments to IAS 1 “Presentation of Financial Statements” and the IFRS Board’s guidance on disclosure of accounting policies in practice
The amendment to IAS 1 introduces the requirement to disclose material information about accounting policies as defined in the standard. The amendment clarifies that information on accounting policies is material if, in its absence, users of the financial statements would not be able to understand other relevant information contained in the financial statements. In addition, the Board’s guidance on the application of the concept of materiality in practice has also been revised to provide guidance on the application of the concept of materiality to accounting policy disclosures. The change is effective from 1 January 2023.
d)Amendments to IAS 8 “Accounting Policies, Changes in Accounting Estimates and Errors”:
In 2021 the Board published an amendment to IAS 8 “Accounting Policies, Changes in Accounting Estimates and Errors” regarding the definition of estimates. The amendment to IAS 8 clarifies how entities should distinguish between changes in accounting policies and changes in accounting estimates. The change is effective from 1 January 2023.
e)Amendments to IAS 12 “Income Taxes”
The amendments to IAS 12 clarify how to account for deferred tax on transactions such as leases and retirement obligations. Prior to the amendment to the standard, there was ambiguity as to whether the recognition of equal amounts of an asset and a liability for accounting purposes (e.g. the initial recognition of a lease) with no impact on current tax settlements necessitates the recognition of deferred tax balances or whether the so-called initial recognition exemption applies, which states that deferred tax balances are not recognised if the recognition of an asset or liability has no impact on the accounting or tax outcome at the time of that recognition. Revised IAS 12 addresses this issue by requiring deferred tax to be recognised in the above situation by additionally stating that the exemption from initial recognition does not apply if an entity simultaneously recognises an asset and an equivalent liability and each creates temporary differences.
The amendment is effective for financial statements for periods beginning on or after 1 January 2023.
f)Amendments to IAS 12 Income Tax: Global Minimum Tax (Pillar Two)
In May 2023 the Management Board published amendments to IAS 12 “Income Tax” in response to the Pillar Two global minimum income tax regulations issued by the Organisation for Economic Co-operation and Development (OECD) in connection with international tax reform. The amendment to IAS 12 provides a temporary exemption from the requirement to recognise deferred tax arising from enacted tax law that implements the Pillar Two model rules. Companies can apply the guidance of the revised IAS 12 standard immediately, while specific disclosures are required for annual periods beginning on or after 1 January 2023. At the date of these consolidated financial statements, this amendment has not yet been approved by the European Union.
The Group did not decide to adopt earlier any other standards, interpretations or amendments that were issued but are not yet effective for periods commencing on 1 January 2023.
8.New standards and interpretations that have been published and are not yet effective
In these consolidated financial statements, the Group has not decided to early apply the following published standards, interpretations or amendments to existing standards before their effective date:
a)Amendment to IFRS 16 “Leases”
In September 2022 the Supervisory Board amended IFRS 16 “Leases” by supplementing the requirements for the subsequent measurement of the lease liabilities for sale and leaseback transactions, where the criteria of IFRS 15 are met and the transaction should be accounted for as a sale.
Consolidated Financial Statements 2023 of the Arctic Paper S.A. Capital Group 28
(unless specified otherwise, all amounts are in PLN ‘000)
The change requires the seller-lessee to subsequently measure the lease liabilities resulting from the leaseback in such a way as not to recognize a gain or loss related to the retained right of use. The new requirement is particularly relevant where sale-leasebacks include variable lease payments that do not depend on an index or rate, as these payments are excluded from “lease payments” under IFRS 16. The revised standard includes a new example that illustrates the application of the new requirement in this respect. The amendment is effective from 1 January 2024. At the date of these consolidated financial statements, the amendment has not yet been approved by the European Union.
b)Amendments to IAS 1 “Presentation of Financial Statements”
In 2020, the Supervisory Board published amendments to IAS 1, which clarify the presentation of liabilities as long-term and short-term. In October 2022, the Supervisory Board issued further amendments to the IAS 1 standard, which address the issue of classifying liabilities as long-term and short-term, in relation to which the entity is obliged to meet certain contractual requirements, the so-called covenants. The amended IAS 1 provides that liabilities are classified as short-term or long-term depending on the rights existing at the end of the reporting period. Neither the entity’s expectations nor events after the reporting date (for example, waiver or breach of covenant) affect the classification.
The published amendments are effective for financial statements for periods beginning on or after 1 January 2024.
At the date of these consolidated financial statements, these amendments have not yet been approved by the European Union.
c)Amendments to IAS 7 “Statement of cash flows” and IFRS 7 “Financial instruments: disclosures” – disclosure of supplier finance arrangements
In May 2023, the Supervisory Board published amendments to IAS 7 “Statement of cash flows” and IFRS 7 “Financial instruments: disclosures. The amendments to the standards introduce disclosure requirements for supplier financing arrangements. The amendments require specific disclosures about the entity’s financial contracts with suppliers to enable readers of the financial statements to assess the impact of those contracts on the entity’s liabilities and cash flows and the entity’s exposure to liquidity risk. These amendments are intended to increase the transparency of disclosures about arrangements made with suppliers. The changes do not affect recognition and measurement principles, only disclosure requirements. The new disclosure obligations will be effective for annual reporting periods beginning on or after 1 January 2024.
At the date of these consolidated financial statements, these amendments have not yet been approved by the European Union.
d)IAS 21 “The Effects of Changes in FX Rates”
In August 2023 the Supervisory Board published amendments to IAS 21 “The Effects of Changes in FX Rates”. The changes introduced are intended to make it easier for entities to determine whether a currency is convertible into another currency and to estimate the immediate FX rate when a currency is not convertible. In addition, the amendments to the standard introduce additional disclosures when currencies are not convertible on how the alternative FX rate is determined.
The published amendments are effective for financial statements for periods beginning on or after 1 January 2025.
At the date of these consolidated financial statements, these amendments have not yet been approved by the European Union.
e)IFRS 14 “Regulatory accruals”
This standard allows entities that prepare their financial statements in accordance with IFRS for the first time (on or after 1 January 2016) to recognise amounts arising from price-regulated activities in accordance with existing accounting policies. To improve comparability, with entities that already apply IFRS and do not report such amounts, under published IFRS 14, amounts arising from regulated price activities should be presented as a separate line item in both the statement of financial position and the statement of profit and loss and statement of other comprehensive income.
By a decision of the European Union, IFRS 14 will not be endorsed.
f)Amendments to IFRS 10 and IAS 28 on the sale or contribution of assets between an investor and its associates or joint ventures
Consolidated Financial Statements 2023 of the Arctic Paper S.A. Capital Group 29
(unless specified otherwise, all amounts are in PLN ‘000)
The amendments resolve the current inconsistency between IFRS 10 and IAS 28. The accounting treatment depends on whether the non-monetary assets sold or contributed to the associate or joint venture constitute a “business”.
Where non-monetary assets constitute a “business”, the investor shows a full profit or loss on the transaction. If, on the other hand, the assets do not meet the definition of a business, the investor only recognises a gain or loss to the extent of the portion representing the interests of other investors.
The amendments were published on 11 September 2014. At the date of these consolidated financial statements, approval of this amendment is deferred by the European Union.
g)Reform of the interest rate reference index (IBOR reform)
On 1 January 2018, Regulation (EU) 2016/1011 of the European Parliament and of the Council of 8 June 2016 on indices to be used as benchmarks in financial instruments and contracts (“IBOR Reform”) entered into force. An amendment to the regulation was issued in February 2021. The regulation introduced a new standard for the determination and application of reference rates used in the financial market. Consequently, the approach to setting WIBOR and EURIBOR rates has been reformed. The LIBOR rates for the British pound, Swiss franc, yen and euro ceased to be quoted from 1 January 2022 and were replaced by alternative rates. At the same time, the 1W and 2M LIBOR rates for the US dollar ceased to be quoted. In line with the current decisions of the reform appointees, the remaining USD LIBOR rates are likely to exist until 30 June 2023.
It is not expected that the above Amendments, other than the application of the changes arising from IAS 1, will have a significant impact on the Group’s financial statements.
8.1.Implementation of new standards
As at the date of approval of these Consolidated Financial Statements for publication, the Management Board of the Parent Entity does not expect material impact of the introduction of other standards and interpretations on the accounting principles (policy) applied by the Group with respect to the Group’s operations or its financial results.
9.1.Principles of consolidation
These Consolidated Financial Statements cover financial statements of Arctic Paper S.A. and its subsidiaries for the year ended on 31 December 2023. The financial statements of subsidiary entities, subject to adjustments to achieve compliance with EU IFRS, are made for the same reporting period as the financial statements of the patent entity relying on consistent accounting principles, applied to similar transactions and economic events. In order to eliminate any discrepancies in the applied accounting standards, adjustments are made. All material balances and transactions among Group entities, including unrealised profit on transactions within the Group, have been fully eliminated. Unrealised losses are eliminated unless they evidence impairment.
Subsidiaries are consolidated using the full method from the date on which the Group obtains control over them and cease to be consolidated from the date on which control ceases. Control by the Parent Entity occurs when:
—it exercises power over the entity,
—it is exposed to variable return or is entitled to variable return as a result of its involvement in the entity,
—it is able to exercise its power to affect the level of generated return.
The Company verifies its effective control over other entities if a situation occurs that may indicate a change to one or more of the above requirements for control to be effective.
When the Company holds less than a majority of votes in an entity but the held voting rights are sufficient to unilaterally direct the essential matters of the entity, this means that control is exercised. When assessing if the voting rights in an entity are sufficient to ensure power, the Company analyses all material circumstances, such as:
Consolidated Financial Statements 2023 of the Arctic Paper S.A. Capital Group 30
(unless specified otherwise, all amounts are in PLN ‘000)
—the volume of the package of voting rights versus the volumes of other packages and distribution of voting rights held by other shareholders;
—potential voting rights held by the Company, other shareholders or other parties;
—rights resulting from contractual arrangements; and
—additional circumstances that may prove if the Company is or is not able to direct material operations when decisions are taken, including voting schemes observed at previous shareholder meetings.
Change to the holdings by the Parent Entity that do not result in loss of control over subsidiary entities, are recognised as capital transactions. In such instances, in order to reflect the changes in relative interests in subsidiary entities, the Group adjusts the carrying amount of controlling interests and non-controlling interests. All differences between the adjustment amounts to non-controlling interests and the fair value of the amount paid or received, are recognised to equity and attributed to the owners of the Parent Entity.
9.2.Involvement in joint ventures
Joint ventures are contractual arrangements pursuant to which two or more parties take up economic operations that is subject to joint control. W przypadku Grupy, wspólne przedsięwzięcie dotyczy spółki Kalltorp Kraft Hb.
The Group’s investments in joint ventures are recognised in the consolidated financial statements with the equity method. In accordance with the equity method, investments in joint ventures are initially recognised at cost and afterwards adjusted to reflect the Group’s share in the financial result and other comprehensive income of the joint venture. If the Group’s share in losses of a joint venture exceeds the value of its interest in the entity, the Group discontinues to disclose its share in further losses. Additional losses are recognised solely to the extent corresponding to legal or customary obligations assumed by the Group or payments made on behalf of the joint venture.
Investments in joint ventures are disclosed with the equity method since the day the entity has obtained the status of a joint venture. On the day the investment is made in a joint venture, the amount by which the investment costs exceed the Group’s interest in the net fair value of identifiable assets and liabilities of the entity, is recognised as goodwill and included in the carrying amount of the investment. The amount by which the Group’s interest in the net fair value of identifiable assets and liabilities exceeds the costs of the investment, is recognised directly in profit and loss of the period in which the investment was made.
If necessary, the entire carrying amount of the investment is tested for impairment in compliance with IAS 36 Impairment of Assets as a single asset and its realisable value is compared to the carrying amount. Such recognised impaired value constitutes a part of the carrying amount of the investment. Such impairment is reversed in compliance with IAS 36 to the extent corresponding to a subsequent increase in the realisable value of the investment.
The Group discontinues to apply the equity method on the day the investment stops being a joint venture and when it is reclassified to assets available for sale. The difference between the carrying amount of a joint venture as at the day the equity method is no longer applied and the fair value of retained interests and proceeds from the sale of certain interests in the entity, is taken into account when calculating the profit or loss on disposal of such joint venture.
If the Group decreases its interests in a joint venture and continues to account for it with the equity method, in its financial result it recognises the part of profit or loss previously recognised in other comprehensive income corresponding to the reduced interest if such profit or loss is subject to re-classification to financial result at disposal of the related assets or liabilities.
Gains/losses on measurement of interests in joint ventures are recognised as other financial income/expenses.
Consolidated Financial Statements 2023 of the Arctic Paper S.A. Capital Group 31
(unless specified otherwise, all amounts are in PLN ‘000)
The Group measures financial instruments such as derivative instruments and non-financial assets such as investment properties at fair value as at each balance sheet date. Additionally, the fair value of financial instruments measured at amortised cost is disclosed in note 35.1.
The fair value is understood as the price that could be received for the sale of an asset or paid as a result of transfer of a liability subject to ordinary sale of such asset between market players as at the measurement date at the prevailing market conditions. Fair value measurement is based on an assumption that the sale transaction of an asset or transfer of a liability is executed:
in the main market for such asset or liability;
if no main market exists, in the most advantageous market for such asset or liability.
Both the main and most advantageous market must be accessible to the Group.
The fair value of an asset or liability is measured subject to an assumption that market players act in their best economic interests when setting the price of such asset or liability.
The measurement of the fair value of a non-financial asset provides for the possibility of a market player to generate economic benefits as a result of most intensive and best use of the asset or sale thereof to another market player that would ensure the most intensive and best use of such asset.
The Group applies measurement techniques that are adequate to the circumstances at hand and when adequate data is available to measure the fair value with maximum use of adequate observable input data and minimum use of non-observable input data.
All assets and liabilities that are measured at fair value or their fair value is disclosed in the financial statements, are classified in the hierarchy of fair value in the way described below to the lowest level of input data which is material for the measurement at fair value treated as a whole:
—Level 1 – Listed (unadjusted) market prices in an active market for identical assets or liabilities,
—Level 2 – Measurement techniques for which the lowest level of input data that is material for the measurement at fair value as a whole is observable or indirectly observable,
—Level 3 – Measurement techniques for which the lowest level of input data that is material for the measurement at fair value as a whole is not observable.
As at each balance sheet date, for assets and liabilities occurring as at each balance sheet date in the financial statements, the Group assesses if there have been transfers between the hierarchy levels by re-assessment of the classification to each level, following the materiality of the input data from the lowest level which is material for measurement at fair value treated as a whole.
Summary of material accounting principles relating to measurement at fair value.
The Management Board of Arctic Paper S.A. define policies and procedures for both systematic fair value measurement of investment properties, hedging instruments (SWAPs, forwards) and other derivatives to be used by the boards of directors of subsidiaries.
Independent appraisers are retained to measure material assets such as properties as at the end of each financial year.
Measurement at fair value of financial instruments is performed by independent financial institutions specialised in the measurement of such instruments.
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For the disclosure of results of such measurement at fair value, the Group has defined classes of assets and liabilities on the basis of the type, features and risks related to individual assets and liabilities and the level in the hierarchy of fair value, as described above.
9.4.Foreign currency translation
Transactions denominated in currencies other than the functional currency of the entity are translated into the presentation currency at the FX rate prevailing on the transaction date.
On the balance sheet date, monetary assets and liabilities expressed in currencies other than the functional currency of the entity are translated into the functional currency using the mean foreign exchange rate prevailing for the presentation currency as at the end of the reporting period. FX differences from translation are recognised under financial income or financial expenses or are capitalised as cost of assets, as defined in the accounting policies. Non-monetary foreign currency assets and liabilities recognised at historical cost are translated at the historical foreign exchange rates prevailing on the transaction date. Non-monetary assets and liabilities denominated in a currency other than the functional currency, recognised at fair value are translated into the functional currency using the rate of exchange prevailing on the date of revaluation to fair value.
The functional currencies of the foreign subsidiaries are EUR, SEK, DKK, NOK, GBP and CHF. As on the balance sheet date, the assets and liabilities of those subsidiaries are translated into the presentation currency of the Group (PLN) at the rate of exchange prevailing on the balance sheet date and their statement of profit and loss is translated using the average weighted exchange rates for the relevant reporting period. The FX differences on translation are recognised in other total comprehensive income and cumulated in a separate equity item. On disposal of a foreign operation, the cumulative amount of the deferred FX differences recognised in equity and relating to that particular foreign operation shall be recognised in the statement of profit and loss.
The following exchange rates were used for book valuation purposes:
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USD | 3,9350 | 4,4018 | |
EUR | 4,3480 | 4,6899 | |
SEK | 0,3919 | 0,4213 | |
DKK | 0,5833 | 0,6307 | |
NOK | 0,3867 | 0,4461 | |
GBP | 4,9997 | 5,2957 | |
CHF | 4,6828 | 4,7679 | |
Mean currency exchange rate for the reporting periods are as follows:
Średnie kursy wymiany za poszczególne okresy obrotowe kształtowały się następująco:
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Tangible fixed assets are measured at purchase price or construction cost reduced by accumulated depreciation and all impairment allowances. The initial value of fixed assets comprises their purchase price and any directly attributable costs of bringing the asset to working condition for its intended use. The cost also comprises the expenses for replacement of fixed asset components when incurred, if the recognition criteria are met.
Upon purchase, fixed assets are divided into components which represent items with a significant value that can be allocated a separate economic useful life. Overhauls also represent asset components. These expenditures are only capitalised if it is likely that they will result in an economic benefit to the Group associated with the expenditure.
Tangible fixed assets are depreciated using the straight-line method over their estimated useful lives as follows:
Type | Period |
Buildings and structures | 25-50 years |
Plant and machinery | 5-20 years |
Office equipment | 3-10 years |
Motor vehicles | 5-10 years |
Computers | 1-10 years |
Residual values, useful lives and depreciation methods of asset components are reviewed annually and, if necessary, adjusted retrospectively i.e. with effect from the beginning of the financial year that has just ended.
An item of tangible fixed assets may be removed from the statement of financial position upon disposal or when no economic benefits are expected from the continued use of such an asset. Any profit or loss arising from the derecognition of an asset from the statement of financial position (calculated as the difference between the net disposal proceeds, if any, and the carrying amount of the item) is recognised in the statement of profit and loss in the period in which the derecognition occurs.
9.5.1.Right-of-use assets and leasing
In accordance with IFRS 16, the Group applies a uniform lessee accounting model, which requires the lessee to recognize assets and liabilities resulting from each lease. On the lease commencement date, the lessee recognizes an asset with respect to the right to use the underlying asset and a lease liability that reflects the lessee’s obligation to make lease payments.
The lessee separately recognizes depreciation of an asset with respect to the right of use and interest on the lease liability.
The lessee updates the measurement of the lease liability after the occurrence of certain events (e.g. changes in the lease period, changes in future lease payments resulting from a change in the index or the rate used to determine such payments). In such instances, the lessee recognises the revaluation of the lease liability as an adjustment to the value of the asset with respect to the right of use.
As at 1 January 2019, the Group applied IFRS 16 for the first time and introduced a prospectively uniform lessee accounting model, accounting for a lease agreement with a period exceeding 12 months, in accordance with the standard, unless the underlying asset had a value not greater than EUR 5,000
The Group is a lessee primarily in case of perpetual usufruct right of land, rental contracts for office space, lease of motor vehicles and machines and equipment.
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(unless specified otherwise, all amounts are in PLN ‘000)
The initial recognition of investment properties is at the purchase price, including transactional costs. The carrying amount of an asset covers the replacement cost of the component of the investment property when incurred as long as the recognition criteria are satisfied, and it does not include the current maintenance costs of such properties.
After initial recognition, investment properties are disclosed at fair value. Gains or losses resulting from changes to the fair value are recognised in the profit or loss in the period they arose, subject to the related impact on deferred income tax.
Investment properties are removed from the statement of financial position when they are disposed of or when an investment property is permanently withdrawn from use when no future benefits are expected from its sale. Any profit or loss arising on derecognition of an investment property from the statement of financial position are recognised as profit or loss in the period when such derecognition occurred.
Assets are transferred to investment properties only when a change of their use takes place, confirmed with the end of use of such asset by the owner or conclusion of an operational lease contract. If an asset is used by the owner – the Group, it becomes an investment property when the Group applies the principles described in the section Tangible fixed assets (note 9.5) until the date the use of the property is changed.
When an investment property is transferred to assets used by the owner or to inventories, the alleged cost of such asset to be applied to recognise it in another category, shall be equal to the fair value of the property determined as at the date its mode of use was changed.
9.7.
The Group owns the following intangible assets: customer relationships, trademarks, goodwill and software.
Acquired intangible assets (if they meet the recognition criterion for development costs) are measured on initial recognition at cost or production cost, respectively. The cost of intangible assets acquired in a business combination is equal to their fair value as at the date of combination. After initial recognition, intangible assets (except goodwill and trademarks) are carried at cost less accumulated amortisation and impairment allowances.
The useful lives of intangible assets are assessed by the Group to be either finite or indefinite. Intangible assets with finite lives are amortised over the useful life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortisation period and the amortisation method for an intangible asset with a finite useful life are reviewed at least at each financial year end. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset are accounted for by changing the amortisation period or method, as appropriate, and treated as changes in accounting estimates. The amortisation expense on intangible assets with limited useful live is recognised in profit or loss in the expense category consistent with the function of the intangible asset.
Intangible assets with indefinite useful lives include goodwill and trademarks. Intangible assets with indefinite useful lives are reviewed annually for possible impairment, either on an asset-by-asset basis or at the cash-generating unit level.
Useful lives are reviewed on an annual basis and, if necessary, are adjusted with effect from the beginning of the financial year that has just ended.
The policies applied to the Group’s intangible assets are summarised as follows:
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| Goodwill | Relations with customers | Trademarks | Software |
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Useful life | Unspecified | 10 years | Unspecified | 2-5 years | |
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Depreciation method | Is not depreciated | 10 years with the straight-line method | Is not depreciated | 2-5 years with the straight-line method | |
Internally generated or acquired | Acquired | Acquired | Acquired | Acquired | |
Impairment test | Annual verification and in case of any impairment indications | Annual assessment of any impairment indications | Annual verification and in case of any impairment indications | Annual assessment of any impairment indications | |
After analysing the relevant factors, for trademarks the Group does not define any time limit of their useful life. The intention of the Group is to operate for an indefinite period under the same trademark and it is believed that it will not become impaired. Consequently, and in accordance with IAS 38, the Group does not amortise intangible assets with indefinite useful lives. Useful life of such resources should be reviewed in each reporting period, in order to determine whether events and circumstances continue to confirm the assumption of the indefinite useful life of such asset.
Profit or loss arising from the removal of intangible assets from the statement of financial position is measured at the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in profit or loss when the asset is removed from the statement of financial position.
The Group has goodwill arising from the acquisition of the Rottneros Group. Goodwill resulting from acquisition of an entity is initially recognised at the purchase prices being the amount of surplus:
—of the sum of:
›payment transferred,
›amount of all non-controlling interests in the acquired entity, and
—over the fair value determined as at the acquisition date of the acquired identifiable acquired assets and liabilities.
After initial recognition, the goodwill is recognised at the purchase cost reduced by all accumulated impairment allowances. An impairment test is held annually or more often if required. Goodwill is not amortised.
As at the acquisition date, goodwill is allocated to all cash generating centres that may benefit from combination synergies. Each centre or group of centres to which goodwill has been attributed:
—corresponds to the lowest level in the Group at which goodwill is monitored for internal management purposes, and
—is not larger than one operational segment determined in compliance with IFRS 8 Operating Segments.
Impairment allowances are determined on the basis of an estimated value of each cash generating centre to which the goodwill was allocated. When the recoverable value of a cash generating centre is lower than its carrying amount, an impairment allowance is recognised.
The Group owns a heat and power plant and as a result holds rights to emissions generated in its operations. The Group discloses its rights to emit greenhouse gases in a net amount. This means that rights acquired free of charge are recognised in the statement of financial position at their purchase price of “zero”, and a provision relating to the obligation to redeem an appropriate number of rights is created at the time of the occurrence of a deficit in the rights held and is charged to the costs of heat generation and electricity generation, in proportion to the consumption of gas for each activity. When emission rights to greenhouse gases are acquired to cover a future deficit, at acquisition the rights are recognised as intangible assets. When a surplus of greenhouse gas emission rights is generated in excess of their expected consumption, the Company recognises the result from the sale of these rights within other operating activities when the sale transaction physically takes place. The
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provision for a deficit of emission rights is measured at the value of the acquired intangible assets. The provision is recognised in the amount relying on the annual limit of emission rights.
9.7.4.Certyfikaty w kogeneracji
Grupa, jako jednostka produkująca energię elektryczną w kogeneracji otrzymuje świadectwa pochodzenia, („certyfikaty”). Przychody z tytułu certyfikatów rozpoznawane są, jako pomniejszenie kosztów w momencie produkcji i wyceniane po aktualnie obowiązującej na rynku cenie, pod warunkiem, że rynek ww. certyfikatów jest aktywny. W przeciwnym wypadku przychody rozpoznawane są w momencie sprzedaży certyfikatów. Prawa materialne wynikające z wyceny ujmowane są w aktywach niematerialnych. Dane szczegółowe dotyczące otrzymanych w bieżącym roku certyfikatów zostały przedstawione zostały w nocie nr 38.
9.8.Impairment of non-financial fixed assets
An assessment is made by the Group as at each balance sheet date to determine whether there is any indication that a component of non-financial fixed assets may be impaired. If such indications are identified, or if an annual impairment test is required, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs.
The recoverable amount of a cash-generating unit is the higher of the cash-generating unit’s fair value or its value in use. The 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. If the carrying amount of a cash-generating unit is greater than its recoverable amount, an impairment allowance has occurred and an allowance to the determined recoverable amount is then made. In assessing the 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. Impairment allowances of continuing operations are recognised in the expense categories consistent with the function of the impaired asset.
At each balance sheet date, the Group assesses whether there are indications that an impairment allowance recognised in prior periods in respect of a cash-generating unit is unnecessary or should be reduced. If such indications exist, the Group estimates its recoverable amount. A previously recognised impairment allowance is reversed if, and only if, there has been a change in the estimates used to determine the recoverable amount of the cash-generating unit since the last impairment allowance was recognised. In this case, its carrying amount is increased to its recoverable amount. The increased amount must not exceed the carrying amount that would have been determined (net of amortisation and depreciation) had no impairment allowance been recognised for that cash-generating unit in prior years. A reversal of an impairment allowance for a cash-generating unit is recognised immediately as income. Once an impairment allowance has been reversed, the depreciation charge relating to an asset is adjusted in subsequent periods so that its revised carrying amount less residual value is systematically written off over the remaining useful life of that cash-generating unit.
Borrowing costs are capitalised as part of the cost of tangible fixed assets. External borrowing costs include interest calculated using the effective interest rate method, finance charges in respect of leases and FX differences incurred in connection with the external financing to the extent that they are regarded as an adjustment to interest expense.
In compliance with IFRS 9, the Group classifies financial assets to one of the following categories:
—measured at amortised cost: To measure its financial assets measured at amortised cost, the Group applies the effective interest rate method; those are trade receivables, loans granted, other financial receivables and cash and cash equivalents. After initial recognition, trade receivables are measured at amortised cost with the effective interest rate method subject to impairment allowances’ trade receivables due within 12 months of the day of their origin (without financing elements) and not forwarded to factoring, are not discounted and are measured at nominal value; interest
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income, exchange differences and impairment allowances are recognised in profit or loss; profits or losses on derecognition of a financial instrument are recognised in profit or loss for the period;
—
—hedging financial instruments: Hedging financial instruments (SWAP contracts and energy forwards) are valued in accordance with the hedge accounting principles included in IFRS 9.
The Company classifies financial assets to an appropriate category subject to the business model of managing financial assets and to the characteristics of contractual cash flows for each financial asset.
9.11.Impairment of financial assets
As at each balance sheet date, the Group assesses whether there is any objective evidence that a financial asset or a group of financial assets is impaired.
In accordance with IFRS 9, the Company measures allowances for expected credit losses in the amount equal to the 12-month expected credit losses or expected credit losses in the life of the financial instrument. In case of trade receivables, the Company applies a simplified approach and estimates allowances for anticipated credit loss equal to anticipated credit loss over the life of the receivables which does not exceed 12 months.
Trade receivables are the most important financial asset in the Group’s financial statements that are subject to the principles of calculating anticipated credit losses.
The Group applies a simplified model to recognise impairment allowances to trade receivables.
In the simplified model, the Group does not monitor changes to credit risk level over the life of the instrument and estimates anticipated credit losses over the horizon until the maturity of the instrument. In order to estimate the anticipated credit loss, the Group applies a provision matrix estimated on the basis of historic collectibility levels and recoveries from counterparties. The anticipated credit loss is calculated at the time the receivables are recognised in the statement of financial position and it is updated as at each closing of reporting periods, subject to the number of overdue dates.
In determining whether the credit risk of a financial asset has increased significantly since initial recognition and in estimating expected credit losses, the Group considers reasonable and documentable information that is relevant and available without undue cost or effort.this includes both quantitative and qualitative analysis, based on the group’s historical experience and credit rating. The Group assumes that the credit risk of a financial asset has increased significantly if it is more than 60 days past due.
Signs of increased credit risk can be (among other things):
Delayed instalment or interest payment of 60 days or more
Significant deterioration in the borrower’s financial situation (profitability, indebtedness, liquidity ratios)
Commencement of formal restructuring, bankruptcy or liquidation process
Lack of ability to obtain financial information for the entity, etc.
The Group considers a financial asset to be past due when it is more than 90 days past due.
The Group considers financial instruments to have low credit risk if the instrument’s rating is within an investment grade – depending on the rating agency.
The Group divides trade receivables into insured receivables and uninsured receivables, and on the basis of historical data and taking into account expected future factors, it calculates the percentage of expected loss for each aging range of trade
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receivables. The receivables aging ranges are as follows: maturity range, up to 30 days, up to 60 days, up to 90 days, up to 120 days, up to 360 days and over 360 days.
9.12.Financial derivatives and hedges
The derivatives used by the Group to hedge the risks associated with changes in interest rates and electricity prices are mainly interest rate swaps and forward energy contracts. Such financial derivatives are measured at fair value through other comprehensive income. Such derivatives are stated as assets when the value is positive and as liabilities when the value is negative.
Any gains or losses arising from changes in the fair value of the derivatives that do not qualify for hedge accounting are recognised directly in the net profit or loss for the financial year.
For the purpose of hedge accounting, hedges are classified as:
—fair value hedges when hedging the exposure to changes in the fair value of a recognised asset or liability, or
—cash flow hedges when hedging exposure to variability in cash flows that is attributable to a particular risk inherent in the recognised asset or liability or a forecast transaction, or
When a hedge is established, the Group formally identifies and documents the hedging relationship, as well as the objective of risk management and the hedging strategy. The documentation includes identification of the hedging instrument, the hedged item or transaction, the nature of the risk being hedged and the assessment method of the hedging instrument’s effectiveness in offsetting the exposure to changes in the hedged item’s fair value or cash flows attributable to the hedged risk. Hedges are expected to be highly effective in offsetting the exposure to changes in the fair value or cash flows attributable to the hedged risk. Hedge effectiveness is assessed on a regular basis to check if the hedge is highly effective throughout all reporting periods for which it was designated.
A cash flow hedge is a hedge against the risk of variability in cash flows (interest on loans and electricity prices) that is attributable to a specific risk associated with a recognised asset or liability or a highly probable forecast transaction, and which could affect profit or loss. The part of profit or loss related to the hedging instrument which constitutes an effective hedge is recognised directly in other comprehensive income and the non-effective part is recognised in profit or loss.
If a hedged intended transaction subsequently results in the recognition of a financial asset or financial liability, the associated gains or losses that were recognised in other comprehensive income and accumulated in equity shall be reclassified to the statement of profit and loss in the same period or periods in which the asset acquired or liability assumed affects profit or loss.
For derivatives that do not qualify for hedge accounting, any gains or losses arising from changes in fair value are recognised directly to net financial result for the period.
Inventories are valued at the lower of purchase price/construction cost and realisable net selling price. Purchase price or construction cost of every item of inventories includes all purchase expenses, transformation expenses and other costs incurred in bringing each inventory item to its present location and conditions are accounted for as follows for both the current and previous year:
Materials | at purchase cost, disposal at average weighted cost | ||
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Finished products and work in progress | cost of direct materials and labour and an appropriate surcharge of indirect production costs determined with an assumption of normal use of production capacities with the exclusion of external financing costs | ||
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Goods | at purchase cost, disposal at average weighted cost | ||
Net realisable value is the estimated selling price in the ordinary course of economic activity, reduced by estimated costs of necessary to finish the items and to finalise the sale.
Several factors are taken into account when creating impairment allowances on inventories. The most important of these are the duration of the backlog and the assessment of the possibility of finding its use. The calculation of such an allowance also takes into account the possibility of the product being reused in the production process, in which case the allowance is reduced by this value.
Budget receivables are presented within other receivables, with the exception of corporate income tax receivables (from tax offices e.g. in Sweden), which are a separate item in the statement of financial position.
9.15.Cash and cash equivalents
Cash and short-term deposits reported in the statement of financial position include cash at bank and in hand and short-term deposits with an original maturity of three months or less, as well as deposits with a longer maturity if they are repayable on demand.
For the purpose of the cash flow statement, cash and cash equivalents consist of cash and cash equivalents as defined above.
At initial recognition, all bank loans are recognised at fair value, less the costs associated with obtaining the loan.
After initial recognition, interest-bearing loans are measured at amortised cost using the effective interest rate method.
In determining amortised cost, account is taken of the costs associated with obtaining the loan and the discounts or premiums received in respect of the liability.
Revenues and expenses are recognised in profit or loss when the liabilities are derecognised from the statement of financial position or accounted for with the effective interest method.
Financial liabilities are classified as measured, at amortized cost (trade and other payables for the purchase of tangible fixed assets and intangible assets, other payables, credit and lease liabilities or as hedging instruments.
The Company excludes a financial liability from its statement of financial position when the liability has expired – that is, when the obligation specified in the contract has been fulfilled, canceled or expired. Replacement of an existing debt instrument with an instrument with basically different conditions, made between the same entities, is recognised by the Company as expiry of the original financial liability and recognition of a new financial liability. When a financial liability is derecognised from the statement of financial position, the difference between the carrying amount of the extinguished liability and the consideration paid (including any non-cash assets transferred or liabilities assumed) is recognised in the income statement.
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Provisions are created when the Group is charged with a (legal or customary) obligation relating to past events, and when it is likely that satisfaction of such obligation shall result in a necessity of an outflow of economic benefits and an amount of such obligation may be reliably estimated. Where the Group expects some or all of the provisioned costs 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 any provision is presented in the profit and loss account after the deduction of any reimbursement.
Provisions for wages and salaries and unused leave are calculated based on the best knowledge of its future realisation.
9.19. Offsetting financial assets and liabilities
Financial assets and liabilities are offset, and the net amount is shown in the statement of financial position only if the Group has a valid legal title to set off and intends to settle these amounts net or to realize the asset and settle the liability at the same time.
In accordance with the Group’s remuneration principles, the employees of the Group are entitled to a retirement allowance. It is a one-off payment due to employees upon their retirement. The amount of retirement allowance depends on the seniority and the average salary of the employee. The Group sets up a provision for future retirement allowance liabilities in order to allocate the costs to the relevant periods. In accordance with IAS 19, retirement allowances are defined post-employment benefit plans. The present value of the liabilities is calculated by an independent actuary as at each balance sheet date. The accrued liability is equal to discounted payments to be made in the future subject to staff rotation and applies to the period until the balance sheet date. Demographic information and information on staff rotation is based on historical data.
On the basis of measurements performed by professional actuarial companies, the Group recognises a provision for future employee benefits.
Re-measurement of employee benefits related to defined benefit plans, covering actuarial gains and losses, is recognised in other comprehensive income and is not later re-classified to profit or loss.
The Group recognises the following changes to its net liabilities relating to defined benefit plans within costs of sales, administrative expenses, selling and distribution costs and financial expenses, composed of:
—service costs (including, inter alia, the current service costs, future service costs)
—net interest on the net liability under the defined benefit plans.
9.21.Revenue from contracts with customers and other income
9.21.1.Revenues from contracts with customers
Revenue from the sale of products (paper and pulp) is recognised if control of the commodity or product has been transferred to another entity.
Pursuant to IFRS 15, the Group applies a five-step model to recognise revenues from contracts with customers.
—Requirements applicable to identifying contracts with customers: contracts with customers meet the definition when all of the following criteria have been satisfied: the parties to the contract have concluded the contract and are obliged to perform their obligations; the Group is able to identify the rights of each party concerning the goods and services to be
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provided; the Group is able to identify the payment terms for the goods and services to be provided; the contract has economic content and it is likely that the Group will receive its remuneration due to it in exchange for the goods and services to be provided to the customer.
—Identification of obligations to perform the service: at contract conclusion the Group assesses the goods and services promised in the contract and identifies each promise as a liability for delivery to the customer: the goods or services (or a package of goods or services) that may be identified or a group of separate goods or services that are basically the same and when the delivery has the same nature.
—Identification of the transactional price: in order to determine the transactional price, the Group takes the contractual conditions into account as well as its customary commercial practices. The transactional price is the amount that – as the Group expects – will be due to it in exchange for the delivery of the promised goods or services to the customer, net of any amounts collected on behalf of third parties. The contractual remuneration may cover fixed amounts, variable amounts or both types; in order to estimate the variable remuneration, the Group has decided to apply the most probable value method.
—The allocation of the transactional price of each liability to perform: The Group allocates the transactional price to each obligation to perform (or for separate goods or separate services) in an amount that reflects the remuneration amount, in line with the Group’s expectations – it is due to the Group in exchange for the delivery of the promised goods or services to the customer.
—Revenue recognition when the obligation to perform is being executed: The Group recognises revenues at completion (or during completion) of its obligation to perform by delivery of the promised goods or services (an asset) to the customer (the customer acquires control over the asset). Revenues are recognised in the remuneration amount which – as expected by the entity – is due to it in exchange for the goods or services promised to customers.
Interest income is recognised as interest accrues (using the effective interest rate method that is the rate that discounts the estimated future cash receipts over the anticipated life of the financial instrument) to the net carrying amount of the financial asset.
If it is certain that a grant will be obtained and all the related conditions will be satisfied, then public grants are recognised at fair value.
If the grant applies solely to a specific cost item, then it is recognised as revenues commensurate to the costs that the grant is to compensate. If the grant applies to an asset, then its fair value is recognised in the account of deferred income and then gradually – in equal annual charges – it is recognised in profit or loss over the estimated useful life of the asset.
Current income tax liabilities and receivables for the current period and previous periods are measured at amounts projected to be paid to tax authorities (to be recovered from tax authorities) with tax rates and based on tax regulations legally or actually applicable as at the balance sheet date.
For financial reporting purposes, deferred income tax is recognised, using the liability method, regarding temporary differences as at the balance sheet date between the tax value of assets and liabilities and their carrying amount disclosed in the financial statements.
A deferred tax liability is recognised for all taxable temporary differences, except where the deferred tax liability arises from the initial recognition of an amount and, at the time of recognition, has no effect on either pre-tax profit or loss, taxable profit or tax loss, and
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Deferred income asset is recognised for all negative temporary differences, carry-forward of unused tax credits and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry-forward of unused tax credits and unused tax losses can be utilised:
The carrying amount of the deferred tax asset is reviewed as at each balance sheet 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 income tax asset to be utilised. Unrecognised deferred income tax asset is reassessed as at each balance sheet date and is recognised to the extent that it has become probable that future taxable profit will be available that will allow the deferred tax asset to be recovered.
Deferred tax asset and provisions are measured at the tax rates that are expected to apply in the period in which the asset is realised or the provision applied, based on tax rates (and tax laws) that have been enacted or substantively enacted as at the balance sheet date.
Income tax relating to items recognised outside profit or loss is recognised outside profit or loss: in other comprehensive income in correlation items recognised in other comprehensive income or directly in equity with reference to items recognised directly in equity.
Deferred income tax asset and deferred income tax liability are offset, if a legally enforceable right exists to set off current income tax asset against current income tax liability and the deferred income tax relates to the same taxable entity and the same tax authority.
Revenues, expenses, assets and liabilities are recognised after the deduction of the amount of VAT, except:
—where VAT incurred on a purchase of assets or services is not recoverable from the tax authority, in which case VAT is recognised as part of the cost of purchase of the asset or as part of the expense item as applicable and
—receivables and payables which are disclosed with the VAT amount inclusive.
The net amount of VAT recoverable from or payable to the tax authority is included in the statement of financial position as part of receivables or payables.
The amount of excise tax payable in respect of the electricity produced is recognised in the statement of profit and loss in the same period as revenue from energy sales and in the statement of financial position under liabilities.
Excise tax on energy used for own consumption is recognised as costs of sales in the statement of profit and loss.
Net earnings per share are calculated by dividing the net profit and the net profit on continuing operations for the period, attributable to the shareholders of the Parent Entity, by the weighted average number of shares outstanding in the reporting period. Diluted earnings per share are calculated by dividing the net profit and the net profit on continuing operations for the period, attributable to the shareholders of the Parent Entity, by the diluted weighted average number of shares outstanding in the reporting period.
Consolidated Financial Statements 2023 of the Arctic Paper S.A. Capital Group 43
(unless specified otherwise, all amounts are in PLN ‘000)
Operating segments include continuing operations. The Group’s principal activity is the production of paper and pulp.
The paper production business is presented as the “Paper” segment and includes the financial results of, among others, three paper mills:
—Arctic Paper Kostrzyn S.A. (Poland) – produces high-quality uncoated graph paper under the Amber brand;
—Arctic Paper Munkedals AB (Sweden) – produces high quality uncoated graphic paper under the Munken brand;
—Arctic Paper Grycksbo (Sweden) – production of coated wood-free paper under the brands of G-Print and Arctic.
The cellulose business is presented as the “Cellulose" segment and includes, among others, two cellulose plants:
—the Pulp Mill in Rottneros (Sweden) produces mainly two types of mechanical pulp: groundwood and chemo-thermo mechanical pulp (CTMP);
—the Pulp Mill in Vallvik (Sweden) produces two types of long-fibre sulphate pulp: fully bleached sulphate pulp and unbleached sulphate pulp. The most of Vallvik Pulp Mill production is known as NBSK pulp.
The Group identifies the following business segments:
—Paper – this segment includes uncoated and coated papers. Uncoated paper – paper for printing or other graphic purposes, including wood-free and wood paper. Uncoated wood-free paper can be produced from various types of pulp, with different filler content, and can undergo various finishing processes, such as surface sizing and calendering. Two main categories of this type of paper are graphic paper (used for example for printing books and catalogues) and office papers (for instance, photocopy paper); however, the Group currently does not produce office paper. Uncoated wood paper from mechanical pulp intended for printing or other graphic purposes. That type of paper is used to print magazines with rotogravure and offset techniques. The Group’s products in this segment are usually used for printing paperbacks, Coated paper – wood-free paper for printing or other graphic purposes, one-side or two-side coated with mixtures containing mineral pigments, such as china clay, calcium carbonate, etc. The coating process can involve different methods, both on-line and off-line, and can be supplemented by super-calendering to ensure a smooth surface. Coating improves the quality of printed photos and illustrations.
—Pulp – fully bleached sulphate pulp and unbleached sulphate pulp which is used mainly for the production of printing and writing papers, cardboard, toilet paper and white packaging paper as well as chemi thermo mechanical pulp (CTMP) and groundwood which are used mainly for production of printing and writing papers.
Exclusions include the exclusion of turnover and inter-segment settlements (transactions relating to Kostrzyn Packaging including fixed assets under construction and sales with the Rottneros Group) and the results of operations of Arctic Paper S.A. (primarily the provision of services between companies)
The division of the business segments into paper and pulp is dictated by the following considerations:
—Demand for products and their supply as well as the prices of products sold in the market are affected by operational factors characteristic for each segment, such as e.g. the production capacity level in the specific paper and pulp segment,
—The key operating parameters such as inflow of orders or the level of production costs are determined by the factors that are similar for each paper and pulp segment,
—The results of the Arctic Paper Group are under the pressure of global market trends with respect to the prices of paper and pulp, and to a lesser extent are subject to the specific conditions of the production entities.
Every month, on the basis of internal reports received from companies (apart from companies of the Rottneros Group), the results in each operating segment are analysed by the management of the Group. The financial results of companies in the Rottneros Groups are analysed on the basis of quarterly financial results published on the websites of Rottneros AB.
The operating results are measured primarily on the basis of EBITDA calculated by adding depreciation/amortisation and impairment allowances to tangible fixed assets and intangible assets to operating profit/(loss), in each case in compliance with
Consolidated Financial Statements 2023 of the Arctic Paper S.A. Capital Group 44
(unless specified otherwise, all amounts are in PLN ‘000)
EU IFRS. In accordance with EU IFRS, EBITDA is not a metric of operating profit/(loss), operational results or liquidity. EBITDA is the measure that the Parent Entity’s Management Board uses to manage the business.
Transactions between segments are concluded at arms’ length like between unrelated entities.
|
| Paper | Pulp | Total | Exclusions | Total continuing operations |
|
|
|
|
|
|
|
Revenues |
|
|
|
|
| |
Sales to external customers | 2 460 441 | 1 088 712 | 3 549 153 | - | 3 549 153 | |
Sales between segments | - | 2 794 | 2 794 | (2 794) | - | |
|
|
|
|
|
|
|
Total segment revenues | 2 460 441 | 1 091 506 | 3 551 947 | (2 794) | 3 549 153 | |
|
|
|
|
|
|
|
Result of the segment |
|
|
|
|
| |
Adjusted EBITDA | 380 946 | 104 198 | 485 144 | (9 839) | 475 304 | |
|
|
|
|
|
|
|
Depreciation/amortisation | (83 255) | (34 665) | (117 920) | (317) | (118 237) | |
Operating profit/(loss) |
| 297 691 | 69 533 | 367 224 | (10 156) | 357 068 |
|
|
|
|
|
|
|
Interest income | 7 366 | 5 547 | 12 912 | (2 581) | 10 331 | |
Interest expense | (4 342) | (3 566) | (7 908) | 1 624 | (6 284) | |
FX gains and other financial income | 3 446 | 3 962 | 7 408 | (2 670) | 4 738 | |
FX losses and other financial expenses | (19 951) | (4 754) | (24 705) | (231) | (24 936) | |
Gross profit | 284 209 | 70 722 | 354 931 | (14 014) | 340 917 | |
|
|
|
|
|
| |
Assets of the segment |
| 1 762 824 | 1 057 151 | 2 819 975 | (105 172) | 2 714 803 |
|
|
|
|
|
|
|
Liabilities of the segment |
| 670 887 | 279 817 | 950 704 | (150 542) | 800 162 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures | (123 971) | (80 166) | (204 136) | 3 964 | (200 172) | |
|
|
|
|
|
|
|
Interest in joint ventures |
| 4 891 | - | 4 891 | - | 4 891 |
—Revenues from inter-segment transactions are eliminated on consolidation.
—The segment result does not include financial income (PLN 15,069 thousand, of which PLN 10,331 thousand is interest income and PLN 4,738 thousand is FX differences) and financial expenses (PLN 31,220 thousand, of which PLN 6,284 thousand is interest expense and PLN 24,936 thousand is FX differences), depreciation/amortisation (PLN 118,237 thousand), as well as income tax liabilities (PLN 68,528 thousand).
—Segment assets do not include deferred tax (PLN 3,183 thousand), as this item is managed at Group level and interests in joint ventures (PLN 4,891 thousand). Segment liabilities do not include deferred tax (PLN 121,208 thousand), as this item is managed at Group level.
The following table sets out revenue and profit figures and certain assets and liabilities from continuing operations by Group segment for the 12 months ended 31 December 2022 and as at 31 December 2022 [the note has been modified from the 2022 version due to a change in segment presentation].
Consolidated Financial Statements 2023 of the Arctic Paper S.A. Capital Group 45
(unless specified otherwise, all amounts are in PLN ‘000)
Twelve-month period ended on 31 December 2022 and as at 31 December 2022
|
| Paper | Pulp | Total | Exclusions | Total continuing operations |
|
|
|
|
|
|
|
Revenues |
|
|
|
|
| |
Sales to external customers | 3 582 179 | 1 314 473 | 4 894 276 | - | 4 894 276 | |
Sales between segments | - | - | - | - | - | |
|
|
|
|
|
|
|
Total segment revenues |
| 3 582 179 | 1 314 473 | 4 896 653 | (2 377) | 4 894 276 |
|
|
|
|
|
|
|
Result of the segment |
|
|
|
|
| |
Adjusted EBITDA | 697 052 | 288 478 | 985 530 | (11 557) | 973 973 | |
|
|
|
|
|
|
|
Depreciation/amortisation | (79 821) | (50 945) | (130 766) | (228) | (130 994) | |
Operating profit/(loss) |
| 617 231 | 237 534 | 854 764 | (11 785) | 842 979 |
|
|
|
|
|
|
|
Interest income | 1691 | 1 764 | 3 455 | (588) | 2 867 | |
Interest expense | (4 709) | (2 205) | (6 914) | 269 | (6 646) | |
FX gains and other financial income | 3 117 | 89 102 | 92 218 | (2 318) | 89 900 | |
FX losses and other financial expenses | (210) | - | (210) | (1 313) | (1 523) | |
Gross profit/(loss) | 617 119 | 326 194 | 943 314 | (15 736) | 927 578 | |
Assets of the segment | 1 859 228 | 1 414 303 | 3 273 531 | (28 505) | 3 245 026 | |
Liabilities of the segment | 804 515 | 348 415 | 1 152 930 | (128 378) | 1 024 552 | |
Capital expenditures | (99 930) | (54 815) | (154 745) | (134) | (154 879) | |
Interest in joint ventures |
| 4 264 | - | 4 264 | - | 4 264 |
—Revenues from inter-segment transactions are eliminated on consolidation.
—Segment results do not include financial income (PLN 92,k767 thousand of which PLN 2,867 thousand is interest income) and financial expenses (PLN 8,169 thousand of which PLN 6,646 thousand is interest expense), depreciation/amortisation (PLN 130,994 thousand) as well as income tax cost (PLN 170,756 thousand).
—Segment assets do not include deferred tax (PLN 5,196 thousand), as this item is managed at Group level and interests in joint ventures (PLN 4,264 thousand). Segment liabilities do not include deferred tax (PLN 177,750 thousand), as this item is managed at Group level.
10.1.Revenue from contracts with customers
The table below presents the Group’s revenues from sales of paper and pulp to external customers in each segment, split by countries and regions, in 2023 and 2022:
Geographical information |
|
|
|
Year ended on 31 December 2023 |
|
|
|
Revenues from sales of paper and pulp from external customers by segment: | Paper | Pulp | Total |
|
|
| |
Germany | 540 316 | 146 591 | 686 907 |
France | 217 531 | 7 924 | 225 455 |
UK | 287 745 | 23 771 | 311 517 |
Scandinavia | 242 716 | 297 519 | 540 235 |
Western Europe (other countries) | 319 787 | 176 701 | 496 488 |
Poland | 414 438 | 792 | 415 230 |
Central and Eastern Europe (other than Poland) | 404 880 | 57 844 | 462 723 |
Outside Europe | 33 027 | 377 570 | 410 597 |
Total segment revenues | 2 460 441 | 1 088 712 | 3 549 153 |
Consolidated Financial Statements 2023 of the Arctic Paper S.A. Capital Group 46
(unless specified otherwise, all amounts are in PLN ‘000)
Geographical information |
|
|
|
Year ended on 31 December 2022 |
|
|
|
Revenues from sales of paper and pulp from external customers by segment: | Paper | Pulp | Total |
|
|
| |
Germany | 722 082 | 199 682 | 921 764 |
France | 333 612 | 15 303 | 348 915 |
UK | 381 950 | 24 814 | 406 764 |
Scandinavia | 293 545 | 370 515 | 664 060 |
Western Europe (other countries) | 526 400 | 277 687 | 804 087 |
Poland | 595 087 | 2 717 | 597 804 |
Central and Eastern Europe (other than Poland) | 657 937 | 37 495 | 695 432 |
Outside Europe | 69 190 | 386 261 | 455 451 |
Total segment revenues | 3 579 803 | 1 314 473 | 4 894 276 |
Sales revenues related to the item “Western Europe” cover mainly sales in Belgium, the Netherlands, Austria, Switzerland, Italy and Spain. Sales revenues related to the item “Central and Eastern Europe” cover mainly sales in Ukraine, the Czech Republic, Slovakia, Hungary and Bulgaria. Sales revenues related to the item “Outside Europe” cover mainly sales in China and the USA. Sales to no buyer exceed 10% of total revenues.
10.2. Fixed assets by country and region
The table below presents the Group’s fixed assets reduced by deferred income tax asset split by country and region, as at 31 December 2023 and 31 December 2022:
Geographical information Fixed assets: | As at 31 December 2023 | As at 31 December 2022 |
Germany | 2 521 | 3 295 |
France | 223 | 405 |
Scandinavia | 818 430 | 930 972 |
Western Europe (other countries) | 419 | 344 |
Poland | 467 398 | 431 512 |
Central and Eastern Europe (other than Poland) | 86 | 144 |
Total fixed assets | 1 289 078 | 1 366 671 |
Consolidated Financial Statements 2023 of the Arctic Paper S.A. Capital Group 47
(unless specified otherwise, all amounts are in PLN ‘000)
The decrease in the Group’s fixed assets is primarily due to lower capital expenditure on tangible fixed assets made at the Swedish Paper and Pulp Mills during 2023 and a decrease in other financial assets comprising a positive valuation of derivatives, mainly power forwards.
|
| Year ended on 31 December 2023 | Year ended on 31 December 2022 |
Reversal of provisions | - | 3 | |
Damages received | 1 819 | 33 | |
Rental income | 3 509 | 2 613 | |
Sales of services |
| 6 031 | 1 342 |
Grants |
| 6 376 | 163 |
Sale of utilities |
| 66 630 | 37 502 |
Sale of materials | 1 482 | 10 703 | |
Profit on disposal of tangible fixed assets | 1 206 | 173 | |
Profit on sale of CO2 emission rights | 8 777 | 17 629 | |
Compensation of R&D projects from the National Centre for Research and Development | 24 | 8 590 | |
CO2 compensation | 31 263 | - | |
Other |
| 6 700 | 7 027 |
Total |
| 129 397 | 85 778 |
|
|
|
|
| Year ended on 31 December 2023 | Year ended on 31 December 2022 |
Real estate tax | (887) | (803) | |
Costs of sales of utilities | (45 692) | (31 162) | |
Costs of sales of materials | (80) | (10 093) | |
Reorganisation costs in subsidiary entity | 39 | (288) | |
Loss on disposal/liquidation of tangible fixed assets | (517) | (3 868) | |
Decreasing the value of property investments | - | (1 215) | |
Costs of research projects from the National Centre for Research and Development | - | (16 708) | |
Humanitarian aid for Ukraine | - | (581) | |
Other |
| (5 826) | (4 875) |
Total |
| (52 963) | (69 593) |
Consolidated Financial Statements 2023 of the Arctic Paper S.A. Capital Group 48
(unless specified otherwise, all amounts are in PLN ‘000)
|
| Year ended on 31 December 2023 | Year ended on 31 December 2022 |
Interest income on funds in bank accounts |
| 8 518 | 2 781 |
Interest income on loans granted |
| - | - |
Interest income on receivables |
| 206 | 44 |
Other interest income |
| 1 607 | 42 |
FX gains |
| - | 16 650 |
Profit on interests in joint ventures |
| 776 | 459 |
Other financial income |
| 396 | 9 |
Gain on forward contracts not meeting hedge accounting rules measured at fair value through profit or loss | 3 566 | 45 433 | |
Profit on other forward contracts |
| - | 27 348 |
Total |
| 15 069 | 92 767 |
|
| Year ended on 31 December 2023 | Year ended on 31 December 2022 |
|
|
|
|
Interest on bank loans measured at amortised cost | (979) | (3 735) | |
Interest on other financial liabilities | (4 423) | (2 243) | |
Interest on actuarial provisions | (1 172) | (508) | |
Finance expenses from leasing contracts | (529) | (634) | |
Bank charges |
| (859) | (401) |
FX losses |
| (21 844) | - |
Measurement effect of the adjusted purchase price | (816) | (601) | |
Ineffective remeasurement to fair value of derivatives | (396) | - | |
Other financial expenses | (203) | (46) | |
|
|
|
|
Total |
| (31 220) | (8 169) |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Consolidated Financial Statements 2023 of the Arctic Paper S.A. Capital Group 49
(unless specified otherwise, all amounts are in PLN ‘000)
11.6. Depreciation/amortisation expense and impairment allowances recognised in profit or loss
|
| Year ended on 31 December 2023 | Year ended on 31 December 2022 |
|
|
|
|
Items recognised as costs of sales: |
|
| |
Depreciation of fixed assets and intangible assets | (113 009) | (125 687) | |
Impairment of tangible fixed assets (reversal) | - | - | |
Impairment of intangible assets (reversal) | - | - | |
|
|
|
|
Items recognised as costs of sales: |
|
| |
Depreciation of fixed assets and intangible assets | (2 399) | (3 094) | |
Impairment of tangible fixed assets | - | - | |
Impairment of intangible assets | - | - | |
|
|
|
|
Items recognised as administrative expenses: |
|
| |
Depreciation of fixed assets and intangible assets | (2 829) | (2 212) | |
Impairment of tangible fixed assets | - | - | |
Impairment of intangible assets | - | - | |
|
| Note | Year ended on 31 December 2023 | Year ended on 31 December 2022 |
|
|
|
|
|
|
|
|
|
|
Salary costs |
| (353 016) | (414 079) | |
Social insurance premiums |
| (92 323) | (86 494) | |
Costs of retirement benefits | 27.2 | (640) | (351) | |
|
|
|
|
|
Total costs of employee benefits, |
| (445 979) | (500 925) | |
Items recognised as costs of sales: |
| (334 920) | (363 740) | |
Items recognised as selling and distribution costs: |
| (46 619) | (57 532) | |
Items recognised as administrative expenses |
| (64 721) | (81 588) | |
Items recognised as other comprehensive income |
| 281 | 1 935 | |
Consolidated Financial Statements 2023 of the Arctic Paper S.A. Capital Group 50
(unless specified otherwise, all amounts are in PLN ‘000)
12.Items of other comprehensive income
The components of other total comprehensive income for the year ended on 31 December 2023 and 31 December 2022 that are re-classified to profit or loss, are as follows:
|
| Year ended on 31 December 2023 | Year ended on 31 December 2022 |
|
|
|
|
|
|
| |
Cash flow hedges |
|
| |
Profit/(loss) for the period resulting from contracts settled during the reporting period | (20 990) | (326 740) | |
Profit/(loss) for the period resulting from contracts not settled as the reporting date | (224 619) | 466 958 | |
Adjustments resulting from re-classification to profit/(loss) | - | 72 782 | |
|
|
|
|
Total other comprehensive income | (245 609) | 212 999 | |
The adjustments resulting from the reclassification to profit/(loss) relate to the valuation of power purchase forwards due to the cessation of production of one of the mechanical pulp grades, wood pulp, at the Rottneros mill. For this reason, some of the contracts concluded in previous years no longer met the criteria for hedge accounting
Cash flow hedges are described in detail in note 35 to this report.
The major components of income tax liabilities for the year ended on 31 December 2023 and on 31 December 2022 are as follows:
|
| Rok zakończony | Rok zakończony |
|
|
|
|
Skonsolidowany rachunek zysków i strat |
|
| |
Consolidated profit and loss account |
|
| |
Current income tax | (62 563) | (126 695) | |
Current income tax liability | 1 318 | (515) | |
|
|
|
|
Deferred income tax |
|
| |
Resulting from the establishment and reversal of temporary differences | (7 285) | (43 545) | |
Tax credit/(liability) disclosed in the consolidated income statement | (68 529) | (170 756) | |
|
|
|
|
Consolidated statement of changes in equity |
|
| |
Current income tax | - | - | |
Tax effects of the costs of increase of share capital | - | - | |
|
|
|
|
Tax benefit (tax liability) recognised in equity | - | - | |
|
|
|
|
Consolidated statement of total comprehensive incoe |
|
| |
Deferred income tax |
|
| |
Consolidated Financial Statements 2023 of the Arctic Paper S.A. Capital Group 51
(unless specified otherwise, all amounts are in PLN ‘000)
Deferred income tax on the measurement of hedging instruments | 50 399 | (43 941) | |
Deferred income tax on actuarial profit/loss | (174) | 438 | |
|
|
|
|
Tax benefit (tax liability) recognised in other comprehensive income | 50 225 | (43 504) | |
13.2. Recognition of effective tax rate
A reconciliation of income tax expense applicable to gross profit/(loss) before income tax at the statutory income tax rate, to income tax expense at the Group’s effective income tax rate for the year ended on 31 December 2023 and 31 December 2022 is as follows:
|
| Year ended on 31 December 2023 | Year ended on 31 December 2022 |
|
|
|
|
Gross profit/(loss) before tax | 340 917 | 927 578 | |
|
|
|
|
Tax at the statutory rate prevailing in Poland in | (64 774) | (176 240) | |
|
|
|
|
Tax adjustments from previous years, recognised in the current income tax | 1 318 | (515) | |
Difference resulting from income tax rates in force in other countries | (4 360) | (10 008) | |
Tax loss not incorporated in deferred income tax assets calculation | (45) | - | |
Use of tax expenses on which no deferred tax has been recognised | - | 9 251 | |
Non-taxable revenues | 606 | 3 164 | |
Costs that are not tax deductible | (3 378) | (3 599) | |
Effects of the tax group in Sweden | - | 4 335 | |
Effects of the tax group in Poland | 2 058 | 2 856 | |
|
|
|
|
Tax at the effective tax rate of 20% (2022: 18%) | (68 528) | (170 755) | |
Income tax (charge) stated in the consolidated income statement | (68 528) | (170 755) | |
The amount of unrecognised deferred income tax asset relates mainly to tax losses that are expected to be time barred before realised, as well as those temporary differences that in the Group’s opinion may not be used for tax purposes.
Deferred income tax asset is recognised for tax losses carried forward to the extent that realisation of the related tax benefit through future taxable profit is probable.
The Polish tax system provides for restrictions in cumulating tax losses by legal persons that remain under joint control which is the case for Group member companies. Therefore, each subsidiary of the Group in Poland may utilise solely their own tax losses in order to reduce taxable income in subsequent years.
The amounts and expiry dates of tax losses for which deferred tax assets were not recognised are as follows:
|
| 2023 | Expiry date | 2023 | Expiry date |
Expiring tax losses | 20 829 | 2024-2028 | 34 076 | 2023-2027 | |
Tax losses and temporary differences without time limit | - |
| - |
| |
TOTAL | 20 829 |
| 34 076 |
| |
Consolidated Financial Statements 2023 of the Arctic Paper S.A. Capital Group 52
(unless specified otherwise, all amounts are in PLN ‘000)
The potential tax effect of non-activated tax losses and temporary differences amounts to PLN 3,958 thousand and relates to tax losses at Arctic Paper S.A. incurred prior to the establishment of the tax group in Poland.
Deferred income tax relates to the following items:
Net deferred income tax asset/provision | 31 December 2023 | 31 December 2022 |
– Adjustment to presentation | (11 766) | (15 884) |
– Deferred income tax asset | 3 183 | 5 196 |
Deferred income tax liability | 121 208 | 177 750 |
|
| Consolidated balance sheet as at | Consolidated profit and loss account for the year ended | |||
|
| |||||
|
| 31 December 2023 | 31 December 2022 | 31 December 2023 | 31 December 2022 | |
|
|
|
|
|
| |
Deferred income tax liability |
|
|
|
| ||
Fixed assets |
| 122 996 | 115 360 | (7 635) | (15 151) | |
Hedging instruments | 9 979 | 78 273 | 68 295 | (56 526) | ||
|
|
|
| - | - | |
|
|
|
|
|
| |
Gross deferred income tax provision | 132 975 | 193 634 | 60 659 | (71 677) | ||
|
|
|
|
|
| |
|
|
|
|
|
| |
|
| Consolidated balance sheet as at | Consolidated profit and loss account for the year ended | |||
|
| |||||
|
| 31 December 2023 | 31 December 2022 | 31 December 2023 | 31 December 2022 | |
|
|
|
|
|
| |
|
|
|
|
|
| |
Deferred income tax asset |
|
|
|
| ||
Post-employment payments | 8 539 | 2 516 | 6 023 | (2 927) | ||
Uninvoiced liabilities | 3 566 | 10 637 | (7 071) | 2 673 | ||
Inventories |
| 1 322 | 899 | 423 | (588) | |
Trade receivables |
| 1 523 | 7 028 | (5 505) | 2 763 | |
Losses deductible from future taxable income | - | - | - | (10 469) | ||
|
|
|
|
|
| |
Gross deferred income tax asset | 14 949 | 21 079 | (6 130) | (8 548) | ||
|
|
|
|
|
| |
FX differences |
|
|
| (11 589) | (6 824) | |
Total, of which |
|
|
| 42 941 | (87 049) | |
Changes to deferred income tax recognised in other comprehensive income |
|
| 50 225 | (43 504) | ||
Changes to deferred income tax recognised in profit and loss account |
|
| (7 285) | (43 545) | ||
Consolidated Financial Statements 2023 of the Arctic Paper S.A. Capital Group 53
(unless specified otherwise, all amounts are in PLN ‘000)
The table shows the sum of the positive and negative temporary differences for each Group company, without offsetting at entity level. The presentation adjustment offsets assets and provision at the individual company level.
The Management Board made an assessment of recoverability of the deferred income tax asset related to tax losses and determined the asset was recoverable, inter alia, due to the fact that AP Grycksbo and AP Munkedals are part of a tax group in Sweden, and tax regulations in Sweden do not temporarily limit the use of tax losses incurred in previous years.
The Group did not recognise any deferred income tax asset on the tax losses suffered by Arctic Paper SA due to the limited period of applying the losses in the coming years when the Company does not expect to generate taxable income to be offset against the losses.
The decision to create or not create an asset is dictated by the recoverability of the asset at the entity level.
Earnings per share are established by dividing the net profit/(loss) for the reporting period attributable to the Company’s ordinary shareholders by the weighted average number of ordinary shares outstanding in the reporting period.
The information regarding profit/(loss) and the number of shares which constituted the base to calculate earnings per share and diluted earnings (loss) per share is presented below (all shares are ordinary shares and belong to the same class):
|
| Year ended on 31 December 2023 | Year ended on 31 December 2022 |
|
|
|
|
|
|
|
|
Net profit/(loss) attributable to the shareholders of the Parent Entity | 247 132 | 631 001 | |
|
|
|
|
Number of ordinary shares – A series | 50 000 | 50 000 | |
Number of ordinary shares – B series | 44 253 500 | 44 253 500 | |
Number of ordinary shares – C series | 8 100 000 | 8 100 000 | |
Number of ordinary shares – E series | 3 000 000 | 3 000 000 | |
Number of ordinary shares – F series | 13 884 283 | 13 884 283 | |
|
|
|
|
Total number of shares | 69 287 783 | 69 287 783 | |
Weighted average number of shares | 69 287 783 | 69 287 783 | |
Diluted weighted average number of ordinary shares | 69 287 783 | 69 287 783 | |
|
|
|
|
Profit/(loss) per share (in PLN) |
|
| |
– basic earnings from the profit/(loss) for the period attributable to the shareholders of the Parent Entity | 3,57 | 9,11 | |
|
|
|
|
Diluted profit/(loss) per share (in PLN) |
|
| |
– from the profit/(loss) for the period attributable to the shareholders of the Parent Entity | 3,57 | 9,11 | |
There were no transactions in ordinary shares between the balance sheet date and the date of these consolidated financial statement.
Consolidated Financial Statements 2023 of the Arctic Paper S.A. Capital Group 54
(unless specified otherwise, all amounts are in PLN ‘000)
Dividend is paid based on the net profit disclosed in the standalone annual financial statements of Arctic Paper S.A. after covering losses carried forward from the previous years.
At the date of this report, the Parent Entity did not hold any preference shares.
The Parent Entity’s ability to pay potential dividends to shareholders is dependent on the level of distributions received from its subsidiaries. The risk associated with the Company’s ability to disburse dividend was described in the part “Risk factors” of the annual report for 2023.
In connection with the term and revolving loan agreements signed on 2 April 2021, the Parent Entity’s ability to pay dividends is subject to the Group meeting certain financial ratios in the period prior to payment (as that term is defined in the term and revolving credit facility agreement) and there being no event of default (as that term is defined in the term and revolving loan agreement).
On 15 February 2024, the Management Board of the Company, taking into account the preliminary financial results of the Company and the Arctic Paper S.A. Capital Group for 2023, decided to recommend to the Annual General Meeting of the Company the payment of a dividend from the Company’s net profit for the financial year 2023, in the total amount of PLN 69,287,783, i.e. PLN 1.00 gross per share. The Management Board’s recommendation will be reviewed by the Supervisory Board and will be submitted to the Annual General Meeting for resolution. The final decision on the distribution of the Company’s 2023 profit and the payment of the dividend will be taken by the Annual General Meeting.
Dividend payment restrictions are described in note 25.5.
On 15 February 2024, the Management Board of the Parent Entity, taking into account the preliminary financial results of the Parent Entity and the Arctic Paper S.A. Capital Group for 2023, decided to recommend to the Annual General Meeting of the Company the payment of a dividend from the Company’s net profit for the financial year 2023, in the total amount of PLN 69,287,783, i.e. PLN 1.00 gross per share. The Management Board’s recommendation will be reviewed by the Supervisory Board and will be submitted to the Annual General Meeting for resolution. The final decision on the distribution of the Company’s 2023 profit and the payment of the dividend will be taken by the Annual General Meeting.
The table below provides a summary of dividend amounts in 2024:
Type of dividend | amount |
Dividends recognised as distributions to owners per share (PLN) | |
Dividends proposed or enacted up to the date the financial statements were authorised for issue but not recognised as distributed to share holders (in PLN ‘000). PLN) | |
Dividends proposed or enacted by the date the financial statements were authorised for issue but not recognised as distributed to holders of shares, per share (PLN) |
Consolidated Financial Statements 2023 of the Arctic Paper S.A. Capital Group 55
(unless specified otherwise, all amounts are in PLN ‘000)
Tangible fixed assets include tangible fixed assets excluding right-of-use assets and right-of-use assets.
|
| Table | As at 31 December 2023 | As at 31 December 2022 |
|
|
|
|
|
Tangible fixed assets | 16.1 | 1 137 780 | 1 095 320 | |
Right-of-use assets | 16.2 | 28 391 | 29 684 | |
|
|
|
|
|
TOTAL |
| 1 166 171 | 1 125 004 | |
Consolidated Financial Statements 2023 of the Arctic Paper S.A. Capital Group 56
(unless specified otherwise, all amounts are in PLN ‘000)
16.1.Tangible fixed assets without assets with the right of use
|
| Land and buildings | Plant | Fixed assets under construction | Total |
|
|
|
|
|
|
Net carrying amount as at 1 January 2022 | 267 632 | 757 262 | 90 532 | 1 115 425 | |
Increase due to purchase | 12 729 | 52 944 | 79 100 | 144 773 | |
Increase due to transfer of tangible fixed assets under construction | 7 940 | 70 309 | (78 248) | - | |
Decreases due to disposal | - | (165) | - | (165) | |
Decreases due to liquidation | - | (432) | - | (432) | |
Depreciation allowance for the period | (17 493) | (96 689) | - | (114 183) | |
Impairment |
| - | (4 411) | - | (4 411) |
Change to presentation within groups | - | (241) | - | (241) | |
FX differences on translation | (10 989) | (29 866) | (4 591) | (45 446) | |
Transfer to right-of-use assets | - | - | - | - | |
Net carrying amount as at 31 December 2022 | 259 818 | 748 709 | 86 793 | 1 095 320 | |
|
|
|
|
|
|
|
|
|
|
|
|
Net carrying amount as at 1 January 2023 | 259 818 | 748 709 | 86 793 | 1 095 320 | |
Increase due to purchase | 18 037 | 60 773 | 124 362 | 203 172 | |
Increase due to transfer of tangible fixed assets under construction | 396 | 53 020 | (53 416) | - | |
Decreases due to disposal | - | (2 101) | - | (2 101) | |
Decreases due to liquidation | - | (10) | - | (10) | |
Depreciation allowance for the period | (18 697) | (89 838) | - | (108 535) | |
FX differences on translation | (11 428) | (33 441) | (5 198) | (50 067) | |
|
|
|
|
| - |
Net carrying amount as at 31 December 2023 | 248 126 | 737 113 | 152 541 | 1 137 780 | |
|
|
|
|
|
|
Balance as at 1 January 2022 |
|
|
|
| |
Gross carrying amount | 583 677 | 2 181 612 | 90 532 | 2 855 821 | |
Depreciation/amortisation and impairment allowances | (316 045) | (1 424 351) | - | (1 740 396) | |
|
|
|
|
|
|
Net carrying amount | 267 632 | 757 262 | 90 532 | 1 115 425 | |
|
|
|
|
|
|
Balance as at 31 December 2022 |
|
|
|
| |
Gross carrying amount | 580 482 | 2 146 173 | 86 793 | 2 813 448 | |
Depreciation/amortisation and impairment allowances | (320 664) | (1 397 463) | - | (1 718 128) | |
|
|
|
|
|
|
Net carrying amount | 259 818 | 748 709 | 86 793 | 1 095 320 | |
Balance as at 1 January 2023 |
|
|
|
| |
Gross carrying amount | 580 482 | 2 146 173 | 86 793 | 2 813 448 | |
Depreciation/amortisation and impairment allowances | (320 664) | (1 397 463) | - | (1 718 128) | |
|
|
|
|
|
|
Net carrying amount | 259 818 | 748 709 | 86 793 | 1 095 320 | |
|
|
|
|
|
|
Balance as at 31 December 2023 |
|
|
|
| |
Gross carrying amount | 570 812 | 2 160 025 | 152 541 | 2 883 378 | |
Depreciation/amortisation and impairment allowances | (322 687) | (1 422 911) | - | (1 745 598) | |
|
|
|
|
|
|
Net carrying amount | 248 126 | 737 113 | 152 541 | 1 137 780 | |
Consolidated Financial Statements 2023 of the Arctic Paper S.A. Capital Group 57
(unless specified otherwise, all amounts are in PLN ‘000)
As at 31 December 2023, an impairment test of the assets of Arctic Paper Grucksbo and the Rottneros Group was carried out, the results of the test are described in note 21 of the later report. Impairment of tangible fixed assets for the year ended on 31 December 2023 was PLN 0 thousand (in the year ended on 31 December 2022: PLN -4.411 thousand).
Tangible fixed assets excluding rights-of-use assets with a carrying amount of PLN 731,515 thousand (as at 31 December 2022: PLN 718,891 thousand are subject to mortgage to secure the bank loans (note 26.2).
The amount of capitalised external funding costs and FX gains/losses in the year ended on 31 December 2023 was PLN 72 thousand (in the year ended on 31 December 2022: PLN 0 thousand).
The value of depreciation for 2023 for additions to tangible fixed assets made during 2023 amounted to PLN 1,651 thousand and related mainly to machinery and equipment (2022: PLN 5.936 thousand).
Right-of-use assets with a carrying amount of PLN 4,255 thousand as at 31 December 2023 (PLN 7,399 thousand as at 31 December 2022) are covered by mortgages/pledges established to secure lease liabilities.
|
| Land and buildings | Plant | Total |
|
|
|
|
|
Net carrying amount as at 1 January 2022 | 27 532 | 9 618 | 37 150 | |
Increases due to the extension or conclusion of new contracts | 12 274 | 1 702 | 13 976 | |
Reductions due to termination of contracts | (437) | - | (437) | |
Decreases due to liquidation | - | - | - | |
Depreciation allowance for the period | (6 685) | (3 714) | (10 399) | |
FX differences on translation | (228) | (208) | (436) | |
Net carrying amount as at 31 December 2022 | 32 455 | 7 399 | 39 854 | |
|
|
|
|
|
Net carrying amount as at 1 January 2023 | 32 455 | 7 399 | 39 854 | |
Increases due to the extension or conclusion of new contracts | 4 654 | 4 174 | 8 829 | |
Reductions due to termination of contracts | - | (3 797) | (3 797) | |
Decreases due to liquidation | (3 823) | (79) | (3 902) | |
Depreciation allowance for the period | (7 213) | (3 094) | (10 307) | |
FX differences on translation | (646) | (348) | (994) | |
|
|
|
|
|
Net carrying amount as at 31 December 2023 | 25 429 | 4 255 | 29 684 | |
Balance as at 1 January 2022 |
|
|
|
| |
Gross carrying amount |
| 40 584 | 16 887 |
| 57 471 |
Depreciation/amortisation and impairment allowances | (13 052) | (7 269) |
| (20 321) | |
|
|
|
|
|
|
Net carrying amount |
| 27 532 | 9 618 |
| 37 150 |
|
|
|
|
|
|
Balance as at 1 January 2022 |
|
|
|
| |
Gross carrying amount |
| 52 436 | 16 360 |
| 68 795 |
Depreciation/amortisation and impairment allowances | (19 980) | (8 961) |
| (28 941) | |
|
|
|
|
|
|
Net carrying amount |
| 32 455 | 7 399 |
| 39 854 |
|
|
|
|
|
|
Balance as at 1 January 2022 |
|
|
|
| |
Gross carrying amount |
| 52 436 | 16 360 |
| 68 795 |
Depreciation/amortisation and impairment allowances | (19 980) | (8 961) |
| (28 941) | |
|
|
|
|
|
|
Net carrying amount |
| 32 455 | 7 399 |
| 39 854 |
Consolidated Financial Statements 2023 of the Arctic Paper S.A. Capital Group 58
(unless specified otherwise, all amounts are in PLN ‘000)
The Group entered into lease contracts covering selected motor vehicles, technical equipment, offices and warehouses and perpetual usufruct right of land.
As at 31 December 2023 and 31 December 2022 the future minimum lease fees and the present value of minimum net lease fees were as follows:
|
|
| As at 31 December 2023 | As at 31 December 2022 | ||
|
|
| Minimum fees | Present value of the fees | Minimum fees | Present value of the fees |
|
|
|
|
|
|
|
In 1 year |
| 5 103 | 4 720 | 8 537 | 7 881 | |
In 1 to 5 years |
| 14 536 | 13 032 | 14 316 | 11 254 | |
Over 5 years |
| 49 626 | 10 990 | 46 137 | 11 061 | |
|
|
|
|
|
|
|
Total minimum lease fees |
| 69 265 | 28 743 | 68 989 | 30 197 | |
Minus financial expenses |
| (40 511) |
| (38 792) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value of present minimum |
| 28 754 | 28 743 | 30 197 | 30 197 | |
- short-term |
|
| 4 720 |
| 7 881 | |
- long-term |
|
| 24 022 |
| 22 315 | |
The Group applies leasing simplifications for leases of low value and a term of 12 months or less. In 2023, the value of the costs incurred for low-value assets amounted to PLN 42 thousand (2022: PLN 26 thousand). In 2023 and 2022, the Group did not enter into leases of 12 months or less.
|
|
| Year ended on 31 December 2023 | Year ended on 31 December 2022 |
|
|
|
|
|
Opening balance as at 1 January |
| 1 763 | 2 978 | |
Increases (subsequent expenditures) |
| - | - | |
Sale of properties |
| - | - | |
Profit/(loss) on fair value measurement |
| (12) | (1 215) | |
|
|
| - | - |
Closing balance as at 31 December |
| 1 751 | 1 763 | |
Investment properties include undeveloped plots of land in Warsaw.
Investment properties were disclosed at fair value as a result of an appraisal by an accredited appraiser. The appraisal was made with a comparative approach, the adjusted average price method.
Consolidated Financial Statements 2023 of the Arctic Paper S.A. Capital Group 59
(unless specified otherwise, all amounts are in PLN ‘000)
The property appraiser holds a license in property appraising granted by the President of the Housing and City Development Office. The market value of a property is the most likely price that may be realised in the market, determined with reference to transactional prices and subject to the following assumptions:
—the parties to the transaction were independent of each other, were not forced to act and were willing to enter into the transaction,
—sufficient time has expired to expose the property to the market and to negotiate contractual terms and conditions.
The market value for the current method of use (WRU) was appraised subject to:
—purpose of the appraisal,
—type and location of the property,
—function in the local development plan,
—existence of technical infrastructure,
—condition of the property,
The current costs incurred in 2023 included real estate tax of PLN 11 thousand (2022: PLN 11 thousand).
Consolidated Financial Statements 2023 of the Arctic Paper S.A. Capital Group 60
(unless specified otherwise, all amounts are in PLN ‘000)
19.Intangible assets and goodwill
|
| Goodwill | Relations with customers | Trademarks | Co-generation certificates and CO2 emission rights | Other* | Total |
Net value as at 1 January 2023 | 8 847 | - | 39 808 | 23 563 | 527 | 72 746 | |
Increases |
| - | - | - | 15 984 | 116 | 16 100 |
Decreases |
| - | - | - | (18 617) | - | (18 617) |
Depreciation for the period | - | - | - | - | (204) | (204) | |
Impairment (reversal) | - | - | - | - | - | - | |
FX differences on translation | (617) | - | (2 686) | (28) | (0) | (3 332) | |
|
|
|
|
|
|
|
|
Net value as at 31 December 2023 | 8 230 | - | 37 122 | 20 902 | 439 | 66 694 | |
|
|
|
|
|
|
|
|
As at 1 January 2023 |
|
|
|
|
|
| |
Gross value |
| 8 847 | 35 115 | 84 136 | 23 563 | 40 576 | 192 237 |
Depreciation/amortisation and impairment allowances | - | (35 115) | (44 327) | - | (40 049) | (119 491) | |
|
|
|
|
|
|
|
|
Net value |
| 8 847 | - | 39 808 | 23 563 | 527 | 72 746 |
|
|
|
|
|
|
|
|
As at 31 December 2023 |
|
|
|
|
|
| |
Gross value |
| 8 230 | 35 115 | 78 356 | 20 902 | 39 611 | 182 214 |
Depreciation/amortisation and impairment allowances | - | (35 115) | (41 234) | - | (39 172) | (115 521) | |
|
|
|
|
|
|
|
|
Net value |
| 8 230 | - | 37 122 | 20 902 | 439 | 66 694 |
|
|
|
|
|
|
|
|
* the item other contains computer software |
|
|
|
|
|
| |
|
| Goodwill | Relations with customers | Trademarks | Co-generation certificates and CO2 emission rights | Other* | Total |
|
|
|
|
|
|
|
|
Net value as at 1 January 2022 | 9 421 | - | 42 302 | 11 752 | 2 613 | 66 088 | |
Increases |
| - | - | - | 21 782 | 127 | 21 910 |
Decreases |
| - | - | - | (10 038) | - | (10 038) |
Depreciation for the period | - | - | - | - | (2 093) | (2 093) | |
Impairment (reversal) | - | - | - | - | - | - | |
FX differences on translation | (573) | - | (2 494) | 67 | (120) | (3 120) | |
|
|
|
|
|
|
|
|
Net value as at 31 December 2022 | 8 847 | - | 39 808 | 23 563 | 527 | 72 746 | |
|
|
|
|
|
|
|
|
As at 1 January 2022 |
|
|
|
|
|
| |
Gross value |
| 9 421 | 35 115 | 89 502 | 11 752 | 41 739 | 187 528 |
Depreciation/amortisation and impairment allowances | - | (35 115) | (47 200) | - | (39 126) | (121 440) | |
|
|
|
|
|
|
|
|
Net value |
| 9 421 | - | 42 302 | 11 752 | 2 613 | 66 088 |
|
|
|
|
|
|
|
|
As at 31 December 2022 |
|
|
|
|
|
| |
Gross value |
| 8 847 | 35 115 | 84 136 | 23 563 | 40 576 | 192 237 |
Depreciation/amortisation and impairment allowances | - | (35 115) | (44 327) | - | (40 049) | (119 491) | |
|
|
|
|
|
|
|
|
Net value |
| 8 847 | - | 39 808 | 23 563 | 527 | 72 746 |
Consolidated Financial Statements 2023 of the Arctic Paper S.A. Capital Group 61
(unless specified otherwise, all amounts are in PLN ‘000)
* – The item Other contains mainly computer software.
As at 31 December 2023, an impairment test of the assets of Arctic Paper Grucksbo and the Rottneros Group was carried out, the results of the test are described in note 21 of the later report.
At 31 December 2023 and 31 December 2022, trademarks include Arctic Paper’s trademarks (net value at 31 December 2023 and 31 December 2022: PLN 1,319 thousand), AP Grycksbo (net value at 31 December 2023: PLN 7,294 thousand, net value at 31 December 2022: PLN 7,841 thousand) and Rottneros (net worth at 31 December 2023: PLN 28,509 thousand and 31 December 2022: PLN 30,648 thousand). The Arctic Paper and Rottneros trademarks are not impaired. The trademark in AP Grycksbo as at 31 December 2023 is subject to an impairment allowance of PL 41,230 thousand (as at 31 December 2022: PLN 44,327 thousand).
Impairment of intangible assets recognised in the year ended 31 December 2023 amounted to PLN 0 thousand (recognised in the year ended 31 December 2022: PLN 0 thousand).
Intangible assets with a carrying amount of PLN 29,942 thousand (as at 31 December 2022: PLN 33,250 thousand) are used as collateral for bank loans (Note 26.2).
20.Other assets
|
| Note | As at 31 December 2023 | As at 31 December 2022 |
Hedging instruments | 35.3.1 | 46 629 | 309 406 | |
Derivative instruments measured at fair value through profit and loss |
| 7 838 | 72 781 | |
Investments in equity instruments |
| 14 500 | 3 370 | |
Receivable from realised forward contracts |
| 11 008 | 37 641 | |
Receivables from pension fund |
| 21 236 | 22 829 | |
|
|
|
|
|
Total |
|
| 101 211 | 446 027 |
|
|
|
|
|
– short-term |
| 51 798 | 283 411 | |
– long-term |
| 49 414 | 162 617 | |
20.2. Other non-financial assets
|
|
| As at 31 December 2023 | As at 31 December 2022 |
|
|
|
|
|
Insurance costs |
| 531 | 573 | |
Lease fees |
| 476 | 131 | |
Advance payments for services |
| 13 177 | 8 488 | |
Rent |
| 479 | 1 521 | |
Other |
| 2 665 | 1 612 | |
|
|
|
|
|
Total |
| 17 328 | 12 325 | |
|
|
|
|
|
– short-term |
| 17 170 | 12 048 | |
Consolidated Financial Statements 2023 of the Arctic Paper S.A. Capital Group 62
(unless specified otherwise, all amounts are in PLN ‘000)
20.3. Interests in joint ventures
Interests in joint ventures include shares in the Kalltorp Kraft Hb hydroelectric power plant. The purpose of acquiring the shares was to implement the strategy of increasing its own energy capacity.
21.Test utraty wartości rzeczowych aktywów trwałych oraz aktywów niematerialnych
21.1.Rottneros Group
As at 31 December 2023 and 31 December 2022, the Rottneros Group performed impairment tests for goodwill using the discounted cash flow method. Tests showed no need to write down goodwill at this date.
The carrying amount of the Rottneros Group’s fixed assets and intangible assets adopted for consolidation of the Arctic Paper Group in these consolidated financial statements is measured at comparable amounts to those presented in the Rottneros Group’s consolidated financial statements. For this reason, the impairment analysis of the assets allocated to the Rottneros Group cash generating unit was based on the impairment analysis prepared by the Rottneros Group. The unit is allocated goodwill and a trademark with an indefinite useful life.
An impairment test of the Rottneros Group’s cash flow generating unit was carried out as at 31 December 2023.
The cash-generating unit is classified in the pulp segment. The recoverable amount of the facility has been determined based on value in use using the discounted cash flow method. A discount rate (WACC) of 10% and a forecast period from 2023 to a maximum of 2028 were used to calculate the value in use of the net assets attributable to the cash-generating unit. The projected flows included a residual period of more than 5 years due to the Group’s strategy of operating the centre indefinitely. As at 31 December 2023, the total net assets tested for impairment amounted to PLN 678,450 thousand (including goodwill of PLN 8,229 thousand and trademark of PLN 28,509 thousand). As at 31 December 2022, the total net assets tested for impairment amounted to PLN 629,843 thousand (including goodwill of PLN 8,847 thousand and trademark of PLN 30,648 thousand). The residual value of the cash-generating unit as at 31 December 2023 was defined as its value in use amounting for PLN 830,853 thousand.
The recoverable amount of the net assets allocated to the cash-generating units was higher than the carrying amount of these assets and therefore the test did not indicate an impairment of the Rottneros Group’s tangible fixed assets and intangible assets (including trademark and goodwill) recognised in these consolidated financial statements as at 31 December 2023 and 31 December 2022.
Consolidated Financial Statements 2023 of the Arctic Paper S.A. Capital Group 63
(unless specified otherwise, all amounts are in PLN ‘000)
Key assumptions
Main assumptions | 2023 |
2022 | |||||||||
|
|
| |||||||||
Approved projections based on | 2024-2028 | 2023-2027 | |||||||||
|
|
| |||||||||
Weighted average cost of capital (WACC) | 10,0% | 11,5% | |||||||||
Growth rate in the residual period | 0,0% | 0,0% | |||||||||
|
|
| |||||||||
|
|
| |||||||||
|
|
| Impact on the value of assets in use | ||||||||
Parameter |
| Change of the | 2023 | 2022 | |||||||
|
|
|
|
| |||||||
| Weighted average cost of capital (WACC) | +0,1 p.p. | No data | No data | |||||||
| Growth rate in the residual period | +0,1 p.p. | No data | No data | |||||||
| Weighted average cost of capital (WACC) | -0,1 p.p. | No data | No data | |||||||
| Growth rate in the residual period | -0,1 p.p. | No data | No data | |||||||
|
|
|
| ||||||||
As at 31 December 2023 and 31 December 2022 earlier impairment tests were conducted at Arctic Paper Grycksbo with reference to tangible fixed assets and intangible assets.
The carrying amount of the cash-generating unit as at 31 December 2023 was determined to be PLN 147,872 thousand. It comprised the following components: tangible fixed assets, intangible assets, net working capital, cash and cash equivalents decreased by previously recognized cumulative impairment for Arctic Paper Grycksbo.
The total cumulative impairment allowance for Arctic Paper Grycksbo as at 31 December 2023 amounted to PLN 248,521 thousand (31 December 2022: PLN 267,164 thousand). The difference in the impairment allowance was due to the measurement of the impairment allowance from previous years denominated in SEK to the presentation currency – PLN.
The recoverable amount of the cash-generating unit as at 31 December 2023 was determined as its value in use and amounted to PLN 146,371 thousand. The test did not result in a change in the impairment allowance as at 31 December 2023. The difference between the use value and the carrying value was calculated and amounted for PLN 1,501 thousand, which was not reflected in the statement of financial position and profit and loss account.
Due to the recognition of the impairment in previous periods, the management board will monitor the issue of potential reversal of the impairment, however, only up to the carrying amount of the assets that would be determined in a normal life cycle (after depreciation).
The impairment test as at 31 December 2023 at Arctic Paper Grycksbo was related to higher-than-expected results of the company realised as a result of market conditions such as macroeconomic factors, competitive environment and higher demand in the paper segment produced by Grycksbo. The cash-generating unit is classified as a paper segment.
The value of the weighted average cost of capital (WACC) at 31 December 2023 was 9.7% (at 31 December 2022 9.4%).
The key assumptions of the impairment test carried out as at 31 December 2023 are described below.
Calculations of the value in use of the paper sale centre at the Grycksbo Paper Mill is most sensitive to the following variables:
Consolidated Financial Statements 2023 of the Arctic Paper S.A. Capital Group 64
(unless specified otherwise, all amounts are in PLN ‘000)
—Level of sales;
—Selling prices;
—Discount rate;
—Changes in commodity prices;
—Energy price developments.
Level of sales – estimates of the level of sales are made based on budget data on the basis of the expected demand for a given type of paper manufactured at AP Grycskbo and taking into account the paper mill’s production capacity.
Selling prices – estimates of selling prices are made based on budget data on the basis of the expected demand for a given type of paper manufactured at AP Grycksbo and in correlation with the prices of raw materials, mainly pulp.
Sales prices include discounts and rebates granted.
Discount rate – reflects the assessment of risks inherent to the centre estimated by the management. This is the rate applied by the management to estimate the operational effectiveness (results) and future investment proposals. In the budgeted period the applied discount rate is 9.7% (the rate applied as at 31December 2022: 9.4%). The discount rate was determined on the basis of the following: Weighted average cost of capital (WACC)
Changing raw material prices (mainly pulp) – estimates concerning changes to raw materials are made on the basis of the external data related to pulp prices. The main source of data underpinning the assumptions made are forecasts from a reputable external pulp market research company. It should be noted that the costs of pulp is characterised by high volatility.
Changing energy prices – a growth of energy prices, mainly electricity, listed at Nordpool, the commodity exchange in Sweden, and of the energy generated from biomass as the core source of energy, results from the assumptions applied to the projections approved by the local management of the Grycksbo Paper Mill. The assumed power purchase prices also take into account price levels that have been hedged by the company by forward contracts.
The tables below will present the assumptions and sensitivity analysis for the impairment test carried out as at 31 December 2023 and 31 December 2022:
Consolidated Financial Statements 2023 of the Arctic Paper S.A. Capital Group 65
(unless specified otherwise, all amounts are in PLN ‘000)
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Key assumptions
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| As at 31 December 2023 | As at 31 December 2022 |
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Materials (at purchase prices) | 187 943 | 258 076 | |
Production in progress (at manufacturing costs) | 8 428 | 9 170 | |
Finished products, of which: |
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At purchase price / manufacturing costs | 247 760 | 333 922 | |
At net realisable price | - | - | |
Advance payments for deliveries | 800 | 37 | |
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Total inventories, at the lower of cost and net realisable value | 444 930 | 601 205 | |
Impairment allowance to inventories | 16 556 | 9 703 | |
Total inventories before impairment allowance | 461 487 | 610 909 | |
Goods amounted to PLN 23 thousand at 31 December 2023 (31 December 2022: PLN 327 thousand).
Consolidated Financial Statements 2023 of the Arctic Paper S.A. Capital Group 66
(unless specified otherwise, all amounts are in PLN ‘000)
The value of inventories recognised in 2023 costs is PLN 1,887 million (2022: PLN 2,694 million). In the year ended 31 December 2023, the Group increased inventory allowances by a net amount of PLN 6,853 thousand (2022: net reduction of PLN 748 thousand). The reduction in the allowance was mainly due to the sale or scrapping of spare parts.
The difference in the impairment allowances is referred to costs of sales in the profit and loss account. The impairment allowance is related to finished products and slowly (including spare parts) rotating materials and exposed to the risk of damage, obsolescence or non use for internal needs.
In the financial year ended on 31 December 2023 the Group had a pledge agreement on its entire movable assets understood as inventories, trade receivables and cash for PLN 823,436 thousand, SEK 135 thousand.
In the financial year ended on 31 December 2022 the Group had a pledge agreement on its entire movable assets understood as inventories, trade receivables and cash for PLN 952,687 thousand, NOK 58 thousand.
23.Trade and other receivables
| As at 31 December 2023 | As at 31 December 2022 | |
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Trade receivables | 365 415 | 457 032 | |
VAT receivables | 40 146 | 38 442 | |
Other third party receivables | 9 860 | 5 201 | |
Other receivables from related entities | - | 2 716 | |
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Total (net) receivables | 415 421 | 503 391 | |
Impairment allowances to receivables | 4 150 | 5 482 | |
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Gross receivables | 419 572 | 508 873 | |
All the trade receivables specified above are receivables under contracts with customers and they do not contain any material financing element.
The terms and conditions of transactions with related entities are presented in note 32.
Trade receivables do not earn interest and have customary payment terms of 30 to 90 days.
The Group has an appropriate policy of selling solely to verified customers. Therefore, in the opinion of the management, there is no additional credit risk in excess of the level identified with the impairment allowance to uncollectible receivables characteristic for the Group’s trade receivables.
As at 31 December 2023, trade receivables of PLN 4,150 thousand (as at 31 December 2022: PLN 5,482 thousand) were deemed uncollectible and therefore written off.
Consolidated Financial Statements 2023 of the Arctic Paper S.A. Capital Group 67
(unless specified otherwise, all amounts are in PLN ‘000)
The changes to impairment allowances to receivables were as follows:
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| Year ended on 31 December 2023 | Year ended on 31 December 2022 |
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|
|
Impairment allowance as at 1 January | 5 482 | 15 954 | |
Increase |
| (724) | (209) |
Utilisation |
| (335) | (10 484) |
Release of unused allowance | (177) | (7) | |
FX differences on translation of foreign operations | (96) | 227 | |
Impairment allowance as at 31 December | 4 150 | 5 482 | |
The impairment allowance fully refers to receivables under contracts with customers.
Below is an analysis of trade receivables that as at 31 December 2023 and 31 December 2022 were overdue but not treated as uncollectible:
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| Total | Not overdue |
| Overdue but collectible |
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| < 30 days | 30-60 days | 60-90 days | 90-120 days | >120 days |
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As at 31 December 2023 | 365 415 | 322 217 | 39 940 | 1 047 | 48 | 122 | 2 042 | |
As at 31 December 2022 | 457 032 | 399 413 | 52 226 | 2 401 | 172 | 248 | 2 573 | |
Receivables over 120 days in the prospective assessment of the Company’s management qualify as collectible and therefore no impairment was recognised.
The maturities of other receivables from third parties do not exceed 360 days. The policy regarding the recognition of impairment allowances on receivables is described in Notes 9.11 and 35.
Cash at bank earns interest at variable interest rates based on overnight bank deposit rates.
The fair value of cash and cash equivalents at 31 December 2023 is PLN 500,449 thousand (31 December 2022: PLN 481,930 thousand).
As at 31 December 2023, the Group had unused cash under current facilities of PLN 215,329 thousand (31 December 2022: PLN 227,286 thousand).
As at 31 December 2023, the Group had a used overdraft facility of PLN 0 thousand (31 December 2022: PLN 0 thousand).
Consolidated Financial Statements 2023 of the Arctic Paper S.A. Capital Group 68
(unless specified otherwise, all amounts are in PLN ‘000)
The balance of cash and cash equivalents disclosed in the cash flow statement consisted of the following items:
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| As at 31 December 2023 | As at 31 December 2022 |
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Cash in bank and on hand | 500 316 | 481 930 | |
Short-term deposits | 133 | - | |
Cash in transit | - | - | |
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Cash and cash equivalents in the consolidated statement of financial position | 500 449 | 481 930 | |
Cash in bank and on hand attributable to discontinued operations | - | - | |
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Cash and cash equivalents in the consolidated cash flow statement | 500 449 | 481 930 | |
Since 2017, cash pooling in EUR and in PLN has been operating within the Arctic Paper Group companies. The operation consists in pooling cash balances held by the individual system participants and setting them off with temporary shortages of funds with the other cash-pool participants. The solution is aimed at supporting effective cash management in the Group and minimising the costs of external funding sources by using the Group’s own cash.
25.Share capital and other capital
Share capital (in PLN) |
| As at 31 December 2023 | As at 31 December 2022 | |
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|
series A ordinary shares of the nominal value of PLN 1 each |
| 50 000 | 50 000 | |
series B ordinary shares of the nominal value of PLN 1 each |
| 44 253 500 | 44 253 500 | |
series C ordinary shares of the nominal value of PLN 1 each |
| 8 100 000 | 8 100 000 | |
series E ordinary shares of the nominal value of PLN 1 each |
| 3 000 000 | 3 000 000 | |
series F ordinary shares of the nominal value of PLN 1 each |
| 13 884 283 | 13 884 283 | |
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Number of shares |
| 69 287 783 | 69 287 783 | |
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|
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Value of share capital |
| 69 287 783 | 69 287 783 | |
25.1.1.Changes to the share capital of Arctic Paper S.A.
In 2022 and 2021 there were no changes to the share capital of Arctic Paper S.A.
25.1.2.Nominal value of shares
The shares have a nominal value of PLN 1 and have been fully paid.
25.1.3.Shareholders’ rights
Shares in all series are entitled to one vote and they have equal privileges as to dividend and capital refund.
25.2. FX differences on translation of foreign operations
This item includes exchange rate differences resulting from the translation of the financial statements of foreign subsidiaries, for which the functional currency is different from PLN, into the presentation currency of these financial statements, i.e. PLN. The rules of translation along with the applied FX rates are described in note 9.4.
Consolidated Financial Statements 2023 of the Arctic Paper S.A. Capital Group 69
(unless specified otherwise, all amounts are in PLN ‘000)
Supplementary capital is made up of the issue price of shares of Arctic Paper S.A. in excess of their nominal value reduced by the costs of the issues that took place in 2009, 2010 and 2013, equal to PLN 134,257 thousand, reduction of the nominal price of the shares from PLN 10 to PLN 1 in 2012 of PLN 498,632 thousand and a portion of retained profit and accumulated loss resulting from profit distribution by Arctic Paper S.A. of PLN -224,913 thousand.
| 2023-12-31 | 2022-12-31 |
Excess of issue price over nominal value (agio) | 117 486 | 134 257 |
Capitals under Article 396 of the Code of Commercial Partnerships and Companies | 19 771 | 19 771 |
Decrease of share capital | 498 632 | 498 632 |
Capital created from company profits | 35 829 | - |
Coverage of losses with supplementary capital | (244 683) | (244 683) |
TOTAL | 443 805 | 407 977 |
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The table below presents changes to the supplementary capital in the year ended on 31 December 2023 and 31 December 2022:
In accordance with provisions of the Code of Commercial Partnerships and Companies, the parent entity is obliged to establish supplementary capital to cover potential losses. At least 8% of the profit for the financial year disclosed in the standalone financial statements of the Parent Entity should be transferred to the category of capital until the capital has reached the amount of at least one third of the share capital of the Parent Entity. The use of supplementary capital and reserve funds is determined by the General Meeting; however, a part of supplementary capital equal to one third of the share capital can be used solely to cover the losses disclosed in the standalone financial statements of the Parent Entity and cannot be distributed to other purposes.
Consolidated Financial Statements 2023 of the Arctic Paper S.A. Capital Group 70
(unless specified otherwise, all amounts are in PLN ‘000)
The capital reserve comprises part of the retained earnings and losses arising from the distribution of the result of Arctic Paper S.A., the reclassification between capitals in APSA and the capital from the valuation of hedging transactions. Information on the Other capital is presented in the table below:
| 2023-12-31 | 2022-12-31 |
Other reserves created from profits | 135 511 | 135 511 |
Capital from revaluation of a hedging instrument | 27 240 | 176 936 |
TOTAL | 162 751 | 312 447 |
The table below presents changes to the reserve capitals in the year ended on 31 December 2023 and 31 December 2022:
|
| Year ended on 31 December 2023 | Year ended on 31 December 2022 |
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Other reserves at the beginning of period | 312 447 | 201 226 | |
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|
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Changes to cash flow hedges |
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| |
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|
Change of measurement of financial instruments, of which: | (172 130) | 147 549 | |
– Forward for electricity | (167 829) | 139 895 | |
– interest rate SWAP | (4 703) | 4 845 | |
– Forward for pulp | 402 | 2 810 | |
Deferred income tax on the change of measurement of financial instruments, including: | 35 322 | (30 400) | |
– Forward for electricity | - | (28 811) | |
– interest rate SWAP | 34 510 | (941) | |
– Forward for pulp | 894 | (648) | |
Other changes | (83) | - | |
Dividend disbursed to shareholders of AP SA | - | (5 928) | |
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Other reserves at the end of period | 175 639 | 312 447 | |
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25.5.Retained profit/accumulated loss and restrictions to dividend distribution
The item of retained profit/accumulated loss covers retained profit/accumulated loss of the financial year and actuarial gains/losses on actuarial measurement of provisions for retirement benefits.
Retained profit/accumulated loss in the consolidated financial statements may contain amounts that are not distributable – such that may not be distributed as dividend. All financial statements of consolidated entities are prepared in accordance with the companies’ articles of association. Arctic Paper Kostrzyn S.A. and Arctic Paper S.A. prepare their financial statements in accordance with International Financial Reporting Standards. The statutory financial statements of the other entities are prepared in accordance with local accounting standards. Dividendsto the Parent Entity may be paid on the basis of the financial result established in the separate annual accounts prepared for statutory purposes. Such local definition of undistributed profit often differs from the definition of undistributed profit resulting from EU IFRS which may restrict profit distribution. For instance, local legal regulations often require allocations to certain reserves on account of potential future losses. Application of different accounting principles may generate differences between statutory financial statements and reporting packages for consolidation purposes.
Consolidated Financial Statements 2023 of the Arctic Paper S.A. Capital Group 71
(unless specified otherwise, all amounts are in PLN ‘000)
Dividend for shareholders of the parent entity may be distributed out of net profit disclosed in the standalone annual financial statements of Arctic Paper S.A. made for statutory purposes.
In connection with the term and revolving loan agreements signed on 2 April 2021, the Company’s ability to pay dividends is subject to the Group meeting certain financial ratios in the period prior to payment (as that term is defined in the term and revolving credit facility agreement) and there being no event of default (as that term is defined in the term and revolving loan agreement). In 2022, there were no restrictions on the payment of dividends on this account.
Due to the signed loan agreement, RROS AB has a dividend restriction of 50% of net profit.
As at 31 December 2023, there were no other restrictions concerning dividend distribution.
Retained earnings/losses presented in the statement of financial position as at 31 December 2023 and 31 December 2022 consist of the following items:
|
| As at 31 December 2023 | As at 31 December 2022 | |
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|
|
| |
Consolidated gains / losses attributable to the parent company | 1 032 560 | 785 429 | ||
Consolidated profit / loss from the distribution of profit / loss of the parent company, incl | (166 189) | 56 717 | ||
– from last year’s profit/loss distribution/dividend payment | (222 906) | (21 787) | ||
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|
| |
Profit / loss on the acquisition/sale of Rottneros AB shares from non-controlling shareholders, incl. | 23 193 | 23 193 | ||
– profit | 29 353 | 29 353 | ||
– loss | (6 160) | (6 160) | ||
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|
| |
Actuarial profit/loss | (27 530) | (27 637) | ||
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| |
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|
| |
Gains / losses retained at the end of the period | 862 036 | 837 702 | ||
25.6. Non-controlling interests
|
| Year ended on 31 December 2023 | Year ended on 31 December 2022 |
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|
|
As at beginning of the period | 464 564 | 330 859 | |
Dividend disbursed by subsidiary entities | (41 849) | (20 088) | |
Share in other comprehensive income of subsidiary entities | (64 633) | 153 792 | |
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|
|
At the end of period | 358 081 | 464 564 | |
Non-controlling interests cover a portion of the Group’s equity attributable primarily to the non-controlling shareholders in Rottneros AB. The table below presents the main financial data for the Rottneros Group disclosed in the consolidation of the Arctic Paper Group, taking into account the settlement of the fair value of the assets acquired as at the date of taking control of the Rottneros Group:
Consolidated Financial Statements 2023 of the Arctic Paper S.A. Capital Group 72
(unless specified otherwise, all amounts are in PLN ‘000)
Consolidated profit and loss account | Year ended on 31 December 2023 | Year ended on 31 December 2022 | |
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|
|
|
Revenues from sales of products | 1 091 506 | 1 314 473 | |
Operating expenses | (1 032 077) | (1 076 712) | |
Operating profit/(loss) | 59 429 | 237 761 | |
Financial income/expenses | 1 189 | 88 661 | |
Gross profit/(loss) | 60 617 | 326 422 | |
Income tax | (12 678) | (68 088) | |
Net profit/(loss) | 47 939 | 258 334 | |
Consolidated balance sheet | As at 31 December 2023 | As at 31 December 2022 | |
Fixed assets | 576 093 | 548 430 | |
Current assets, of which: | 492 618 | 777 298 | |
Inventories | 193 599 | 183 687 | |
Receivables and other assets | 222 207 | 397 707 | |
Cash and cash equivalents | 76 812 | 195 905 | |
TOTAL ASSETS | 1 068 711 | 1 325 728 | |
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|
|
|
Equity | 728 150 | 865 248 | |
Long-term liabilities | 110 516 | 184 108 | |
Short-term liabilities | 230 045 | 276 373 | |
TOTAL EQUITY AND LIABILITIES | 1 068 711 | 1 325 728 | |
Consolidated cash flow statement | Year ended on 31 December 2023 | Year ended on 31 December 2022 | |
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|
|
Cash flows from operating activities | 38 169 | 244 488 | |
Cash flows from investing activities | (54 017) | (54 815) | |
Cash flows from financing activities | (90 728) | (55 578) | |
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|
|
Change in cash and cash equivalents | (106 575) | 134 094 | |
Cash and cash equivalents at the beginning of the period | 195 905 | 72 225 | |
Net FX differences | (12 517) | (10 414) | |
Cash and cash equivalents at the end of the period | 76 812 | 195 905 | |
During 2023, Rottneros AB paid dividends, totalling PLN 85,932 thousand (SEK 213 million) of which PLN 41,849 thousand related to non-controlling shareholders.
During 2022, Rottneros AB paid dividends, totalling PLN 41,248 thousand (SEK 91 million) of which PLN 20,088 thousand related to non-controlling shareholders.
There are no other restrictions on the management of assets and capital for the Arctic Paper Group due to the non-controlling shareholders of the Rottneros Group.
Consolidated Financial Statements 2023 of the Arctic Paper S.A. Capital Group 73
(unless specified otherwise, all amounts are in PLN ‘000)
25.7. Analysis of other comprehensive income by capital item
| Na dzień | Na dzień |
FX differences on translation of foreign operations |
|
|
included in “FX differences on translation of foreign operations” attributable to equity holders of the parent company | (67 547) | (47 328) |
included under “Non-controlling shareholders’ equity” | (31 486) | (23 938) |
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|
|
Measurement of financial instruments |
|
|
Items to be reclassified to profit/(loss) in future reporting periods: |
|
|
included under “Other reserves” | (128 013) | 252 488 |
included under “Non-controlling shareholders’ equity” | (50 514) | 118 137 |
reclassified to profit/(loss) during the reporting |
|
|
included under “Other reserves” | (8 795) | (135 339) |
included under “Non-controlling shareholders’ equity” | (7 888) | (66 228) |
|
|
|
Actuarial profit/(loss) for defined benefit plans |
|
|
recognised under “Retained earnings” | 108 | 2 374 |
included under “Non-controlling shareholders’ equity” | - | - |
|
|
|
TOTAL | (294 136) | 100 166 |
Consolidated Financial Statements 2023 of the Arctic Paper S.A. Capital Group 74
(unless specified otherwise, all amounts are in PLN ‘000)
26.Liabilities under bank loans and other financial liabilities
Short-term liabilities | Note | Repayment date | Interest rate | As at 31 December 2023 | As at 31 December 2022 | ||||
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| |||
Other financial liabilities: |
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|
| ||||
Lease liabilities | 17 | do 31-12-2024 |
| 4 720 | 7 881 | ||||
Hedging instruments | 35 |
|
| (2) | - | ||||
Other liabilities |
| do 31-12-2024 |
| 162 | 174 | ||||
Total other short-term financial liabilities |
|
|
| 4 880 | 8 055 | ||||
Bank loan commitments: |
|
|
|
|
| ||||
Long-term loan from a consortium of banks: Santander, Pekao, BNP (short-term part) in PLN |
| 31-03-2026 | 7,68% | 13 383 | 14 828 | ||||
Long-term loan from a consortium of banks: Santander, Pekao, BNP (short-term part) in EUR | 35.3 | 31-03-2026 | 5,71% | 13 225 | 15 497 | ||||
Loan from Danske Bank in SEK | 35.3 | 14-07-2024 | STIBOR 3M+1,75% | 12 541 | - | ||||
Loan from Nordea Bank Abp in SEK (short-term part) | 35.3 | do 31-12-2024 | NSSu+1,75% | 4 714 | 5 062 | ||||
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|
|
|
|
| ||||
Total short-term bank loans |
|
|
| 43 862 | 35 387 | ||||
Total short-term financial liabilities |
|
|
|
| 48 742 | 43 443 | |||
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|
|
|
|
| ||||
Long-term liabilities | Note | Repayment date | Interest rate | As at 31 December 2023 | As at 31 December 2022 | ||||
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|
|
|
|
|
| |||
Other financial liabilities: |
|
|
|
|
| ||||
Lease liabilities | 17 | to 31-12-2029 |
|
| 24 022 | 22 315 | |||
Other liabilities |
|
|
| 865 | 843 | ||||
Total other long-term financial liabilities |
|
|
| 24 887 | 23 158 | ||||
Bank loan commitments: |
|
|
|
|
| ||||
Long-term loan from a consortium of banks: Santander, Pekao, BNP (long-term part) in PLN | 35.3 | 31-03-2026 | 7,68% | 21 417 | 36 043 | ||||
Long-term loan from a consortium of banks: Santander, Pekao, BNP (long-term part) in EUR | 35.3 | 31-03-2026 | 5,71% | 20 663 | 36 979 | ||||
Loan from Nordea Bank Abp in SEK (long-term part) | 35.3 | to 31-12-2024 | NSSu+1,75% | 17 244 | 23 593 | ||||
Loan from Danske Bank in SEK | 35.3 | 14-07-2024 | STIBOR 3M+1,75% | 19 987 | 42 551 | ||||
|
|
|
|
|
| ||||
Total long-term bank loans |
|
|
| 79 311 | 139 166 | ||||
Total long-term financial liabilities |
|
|
|
| 104 198 | 162 324 | |||
|
|
|
|
|
| ||||
|
|
|
|
|
| ||||
Consolidated Financial Statements 2023 of the Arctic Paper S.A. Capital Group 75
(unless specified otherwise, all amounts are in PLN ‘000)
In the period covered by this report, the Group made a partial repayment of the term loan under the loan agreement concluded on 2 April 2021 with a syndicate of banks in the amount of PLN 29,256 thousand and made a partial repayment of the loan with Nordea Bank in the amount of PLN 4,754 thousand and with Danske Bank in the amount of PLN 46,751 thousand.
The other changes in the value of loansat 31 December 2023 compared to 31 December 2022 are mainly due to changes in the balance sheet valuation and payment of interest accrued at 31 December 2022 and paid during 2023
The collateral established in connection with the term and revolving loan agreements signed on 2 April 2021 and signed on 11 May 2021 remained unchanged as at 31 December 2023.
In connection with the term and revolving loan agreements signed on 2 April 2021, on 11 May 2021 the Company signed agreements and declarations pursuant to which collateral for the above receivables and other claims was established in favour of Bank Santander Bank Polska S.A. acting as Security Agent, i.e.
1. under Polish law – Collateral Documents establishing the following Collateral:
›financial and registered pledges on all shares or interests held by the Company and Arctic Paper Kostrzyn SA registered in Poland, with the exception of the Company’s shares;
›mortgages on all real properties located in Poland and owned by the Guarantors;
›registered pledges on all material rights and movable assets owned by the Company and the Guarantors, constituting an organised part of enterprise, located in Poland (with the exception of the assets listed in the Loan Agreement);
›assignment of (existing and future) insurance policies relating to the assets of the Company Arctic Paper Kostrzyn S.A. (with the exception of the insurance policies listed in the Loan Agreement);
›declarations by the Company and Arctic Paper Kostrzyn S.A. on voluntary submission to enforcement, in the form of a notary deed;
›financial pledges and registered pledges on the bank accounts of the Company and Arctic Paper Kostrzyn S.A. registered in Poland (the pledges relate to current and future bank accounts; in the event of an event of default, in the event that the pledged receivable or part thereof becomes due, the Company may not draw funds from the pledged receivable, nor may it instruct the bank maintaining the account to disburse the funds);
›powers of attorney to the Polish bank accounts of the Company and Arctic Paper Kostrzyn S.A.;
›civil surety for liabilities granted by Arctic Paper S.A., Arctic Paper Kostrzyn S.A., Arctic Paper Munkedals AB, Arctic Paper Grycksbo AB
2. under Swedish law – Collateral Documents establishing the following Collateral:
›pledges over all the Company’s and Arctic Paper Munkedals AB, Arctic Paper Grycksbo AB shares or interests registered in Sweden
›mortgages on all real properties located in Sweden and owned by Arctic Paper Munkedals AB, Arctic Paper Grycksbo AB, provided that only existing mortgage deeds are subject to such security;
›corporate mortgage loans granted by the Guarantors registered in Sweden as long as such collateral covers solely the existing mortgage deeds;
›assignment of (existing and future) insurance policies covering the assets of Arctic Paper Munkedals AB and Arctic Paper Grycksbo AB (with the exception of insurance policies listed in the Loan Agreement);
›pledges on Swedish bank accounts of Arctic Paper Munkedals AB and Arctic Paper Grycksbo AB, as long as such collateral is without prejudice to free management of funds deposited on bank accounts until an event of default specified in the Loan Agreement.
Apart from the above, as at 31 December 2023 the Group disclosed:
1) collateral on assets related to the obligations contracted by Rottneros AB with Danske Bank – this is:
›pledge on assets for SEK 284,730 thousand (PLN 111,586);
Consolidated Financial Statements 2023 of the Arctic Paper S.A. Capital Group 76
(unless specified otherwise, all amounts are in PLN ‘000)
2. collaterals on assets on account of AP Kraft’s liabilities with Nordea Bank – these are:
›mortgage on assets for SEK 68,000 thousand (PLN 26,649 thousand).
The collateral established in connection with the term and revolving loan agreements signed on 2 April 2021 and signed on 11 May 2021 remained unchanged as at 31 December 2022.
Apart from the above, as at 31 December 2022 the Group disclosed:
1) collateral on assets related to the obligations contracted by Rottneros AB with Danske Bank – this is:
›pledge on assets for SEK 284,730 thousand (PLN 119,957);
2. collaterals on assets on account of AP Kraft’s liabilities with Nordea Bank – these are:
›mortgage on assets for SEK 80,000 thousand (PLN 33,704 thousand).
27.Employee benefits
27.1.Employee liabilities
The table below summarises the employee liabilities as at 31 December 2023 and 31 December 2022.
|
| Nota | Na dzień | Na dzień |
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|
|
|
|
Provision for pensions and similar benefits | 27.2 | 42 694 | 47 286 | |
Payable to employees as salaries |
| 18 202 | 13 701 | |
Personal Income Tax |
| 5 045 | 6 147 | |
Tax on repaid provision for pensions and similar benefits |
| 5 523 | 13 908 | |
Social benefit liabilities |
| 24 064 | 17 010 | |
Unused leave |
| 38 592 | 42 690 | |
Bonuses |
|
| 10 433 | 34 050 |
Other employee liabilities |
| 2 111 | 1 921 | |
|
|
|
|
|
TOTAL |
|
| 146 664 | 176 712 |
|
|
|
|
|
– short-term |
|
| 105 525 | 133 165 |
– long-term |
|
| 41 139 | 43 547 |
27.2.Retirement benefits and other post-employment benefits
Group entities pay post-employment benefits to its retiring employees in amounts set forth in Poland’s Labour Code in case of Arctic Paper Kostrzyn S.A. and on the basis of existing agreements with trade unions in case of Arctic Paper Munkedals AB, Arctic Paper Kostrzyn S.A and Arctic Paper Grycksbo AB which additionally has set up a Social Fund for future retirees. In Q4 2022, AP Munkedals and AP Grycksbo, under a signed agreement with the pension fund in Sweden, the PRI made a full repayment of the liability for this. Moreover, due to legal regulations, Arctic Paper Mochenwangen GmbH is still obliged to recognize the provision for retirement benefits.
Consolidated Financial Statements 2023 of the Arctic Paper S.A. Capital Group 77
(unless specified otherwise, all amounts are in PLN ‘000)
In this connection, on the basis of measurement performed in each country by professional actuarial companies, the Group establishes a provision for future benefits.
Measurement of employee benefits related to defined benefit plans, covering actuarial gains and losses, is recognised in other comprehensive income and is not later re-classified to profit or loss.
The Group recognises the following changes to its net liabilities relating to defined benefit plans within costs of sales, administrative expenses or selling and distribution costs, composed of:
service costs (including inter alia the current service costs, future service costs)
net interest on the net liability under the defined benefit plans.
The net cost of employee benefits is presented in the table below:
|
|
| Year ended on 31 December 2023 | Year ended on 31 December 2022 |
|
|
|
|
|
Current headcount costs |
|
| 921 | 1 778 |
Interest expense on employee benefit liabilities |
| 1 172 | 1 172 | |
Actuarial (profit)/loss |
|
| (281) | (1 935) |
|
|
|
| - |
Total costs of benefit in the plan |
| 1 812 | 351 | |
of which: |
|
|
|
|
recognised in the income statement |
| 2 092 | 2 286 | |
recognised in other comprehensive income |
| (281) | (1 935) | |
Consolidated Financial Statements 2023 of the Arctic Paper S.A. Capital Group 78
(unless specified otherwise, all amounts are in PLN ‘000)
The justification presenting changes in the provisions for the years ended on 31 December 2023 and 31 December 2022 is presented in the table below.
|
|
| Defined benefit plan in Sweden (AP SA branch) | Defined benefit plan in Sweden (Munkedals) | Defined benefit plan in Sweden (Grycksbo) | Defined benefit plan in Sweden (Rottneros Group) | Defined benefit plan in Poland (Kostrzyn) | Defined benefit plan in Germany | Total |
|
|
|
|
|
|
|
|
|
|
Provisions for pensions and similar benefits as at 1 January 2023 |
| 3 083 | - | - | 23 172 | 13 912 | 7 120 | 47 286 | |
Current headcount costs |
| - | - | - | - | 848 | 73 | 921 | |
Interest expense |
| - | - | - | - | 831 | 341 | 1 172 | |
Actuarial Loss (Profit) |
| - | - | - | - | (917) | 636 | (281) | |
Benefits paid |
| (3 083) | - | - | - | (448) | (722) | (4 254) | |
FX differences on translation of foreign plans |
| - | - | - | (1 617) | - | (533) | (2 150) | |
Liabilities for pensions and similar benefits at 31 December 2023 |
| - | - | - | 21 555 | 14 226 | 6 914 | 42 694 | |
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Defined benefit plan in Sweden (AP SA branch) | Defined benefit plan in Sweden (Munkedals) | Defined benefit plan in Sweden (Grycksbo) | Defined benefit plan in Sweden (Rottneros Group) | Defined benefit plan in Poland (Kostrzyn) | Defined benefit plan in Germany | Total |
|
|
|
|
|
|
|
|
|
|
Provisions for pensions and similar benefits as at 1 January 2022 |
| 3 117 | 33 553 | 37 289 | 23 327 | 11 166 | 11 392 | 119 844 | |
Current headcount costs |
| (34) | - | - | 1 264 | 548 | - | 1 778 | |
Interest expense |
| - | (358) | 358 | - | 335 | 174 | 508 | |
Actuarial Loss (Profit) |
| - | - | (58) | - | 2 377 | (4 254) | (1 935) | |
Benefits paid |
| - | - | (381) | - | (514) | (417) | (1 313) | |
Repayment of liability to the pension fund |
| - | (31 153) | (34 435) | - | - | - | (65 588) | |
FX differences on translation of foreign plans |
| - | (2 042) | (2 773) | (1 420) | - | 225 | (6 009) | |
Liabilities for pensions and similar benefits at 31 December 2022 |
| 3 083 | - | - | 23 172 | 13 912 | 7 120 | 47 286 | |
Consolidated Financial Statements 2023 of the Arctic Paper S.A. Capital Group 79
(unless specified otherwise, all amounts are in PLN ‘000)
The core assumptions made by actuary as at each balance sheet date to calculate the amounts of the obligations are as follows:
|
|
|
|
| As at 31 December 2023 | As at 31 December 2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Discount rate (%) |
|
|
|
|
| |
Programme in Sweden** |
|
|
| n.a. | n.a. | |
Programme in Poland |
|
|
| 5,0% | 6,0% | |
Programme in Germany |
|
|
| 3,6% | 4,2% | |
|
|
|
|
|
|
|
Anticipated salary growth rate (%) |
|
|
| |||
Programme in Sweden** |
|
|
| n.a. | n.a. | |
Programme in Poland |
|
|
| 5,0% | 7,0% | |
Programme in Germany* |
|
|
| n.a. | n.a. | |
|
|
|
|
|
|
|
Remaining employment period (in years) |
|
|
|
|
| |
Programme in Sweden** |
|
|
| n.a. | n.a. | |
Programme in Poland |
|
|
| 11,0 | 12,3 | |
Programme in Germany* |
|
|
| 13,2 | 12,9 | |
* AP Mochenwangen is not a business operator and therefore changes in interest rates and the duration of employment do not affect the value of the provision for retirement benefits in Germany.
The table below presents a sensitivity analysis of the provision for retirement benefits:
Change in the adopted discount rate by 1 percentage point |
|
|
| |||
|
|
|
|
| Increase by 1 p.p. | Decrease by 1 p.p. |
31 December 2023 |
|
|
| w tys. PLN | PLN thousand | |
Impact on the defined benefit obligation (not including Swedish tax) | (2 348) | 2 858 | ||||
31 December 2022 |
|
|
|
|
| |
Impact on the defined benefit obligation (not including Swedish tax) | (2 509) | 3 096 | ||||
|
|
|
|
|
|
|
Change to the anticipated salary growth rate by 1 percentage point |
|
|
| |||
|
|
|
|
| Increase by 1 p.p. | Decrease by 1 p.p. |
31 December 2023 |
|
|
| w tys. PLN | PLN thousand | |
Impact on the liabilities under defined benefit plans |
| 1 684 | (1 417) | |||
31 December 2022 |
|
|
|
|
| |
Impact on the liabilities under defined benefit plans |
| 1 798 | (1 501) | |||
Consolidated Financial Statements 2023 of the Arctic Paper S.A. Capital Group 80
(unless specified otherwise, all amounts are in PLN ‘000)
28.1.Change in provisions
The table below presents changes to provisions in for 2023-2022:
|
| Provisions |
|
|
|
As at 1 January 2023 | 10 467 | |
Established during the financial year | 4 801 | |
Applied |
| (8 277) |
Reversed |
|
|
Adjustment due to FX differences | (656) | |
As at 31 December 2023, of which: | 6 335 | |
- short-term |
| 1 240 |
- long-term |
| 5 095 |
|
|
|
As at 1 January 2022 | 1 840 | |
Established during the financial year | 8 797 | |
Applied |
| (63) |
Reversed |
|
|
Adjustment due to FX differences | (107) | |
As at 31 December 2022, of which: | 10 467 | |
- short-term |
| 9 202 |
- long-term |
| 1 265 |
Other provisions as at 31 December 2023 and 31 December 2022 cover mainly a provision for rights to emit CO2.
28.2.Provisions for complaints and returns
Provisions for complaints and returns are established on the basis of complaints and returns made in the previous years. Due to regular outlays on improvement of the quality of production processes and products, the Group did not recognise a provision for complaints and returns as at the end of 2023 and 2022.
Consolidated Financial Statements 2023 of the Arctic Paper S.A. Capital Group 81
(unless specified otherwise, all amounts are in PLN ‘000)
29.Trade and other payables, grants and deferred income
29.1.Trade and other payables (short-term)
|
| Na dzień | Na dzień |
|
|
|
|
Trade payables, of which: |
|
| |
Due to related entities | 6 | 56 | |
Due to other entities | 412 918 | 519 847 | |
|
|
|
|
|
| 412 924 | 519 903 |
Taxes, duties and other liabilities |
|
| |
VAT |
| 5 009 | 12 118 |
Excise tax |
| 575 | 586 |
Real estate tax | 2 634 | 4 171 | |
Other taxes |
| 1 876 | 1 870 |
|
| 10 094 | 18 744 |
Other liabilities |
|
| |
Investment commitments | 16 295 | 9 303 | |
Liabilities related to environmental protection | 198 | 1 486 | |
Prepayments |
| 8 406 | 1 774 |
|
|
|
|
|
| 24 899 | 12 563 |
|
|
|
|
TOTAL |
| 447 917 | 551 211 |
Principles and payment terms of the liabilities presented above:
—the terms and conditions of transactions with related entities are presented in note 32.3;
—trade payables are interest free and are usually payable within 60 days;
—other liabilities are interest free and the usual payment term is 1 month;
—the amount of the difference between VAT payable and receivable is paid to the relevant tax authorities on a monthly basis.
Consolidated Financial Statements 2023 of the Arctic Paper S.A. Capital Group 82
(unless specified otherwise, all amounts are in PLN ‘000)
As at 31 December 2023, the Group plans to make expenditures on tangible fixed assets in 2024 of minimum PLN 150 million. These amounts will be allocated to the purchase of new machinery and equipment.
As at 31 December 2022, the Group planned expenditures on tangible fixed assets of no less than PLN 180 million in 2023.
31.1.Bank guarantee
—a bank guarantee in favour of Skatteverket Ludvika for SEK 135 thousand (PLN 53 thousand) .
Arctic Paper S.A. and its subsidiaries are not a party to any legal cases filed in court against them.
32.Information on related entities
The related entities to the Arctic Paper S.A. Capital Group are as follows:
—Thomas Onstad – majority shareholder,
—Nemus Holding AB – parent company for Arctic Paper SA,
—Munkedal Skog – a subsidiary of Nemus Holding AB,
—Key management personnel – company related to the CEO.
Consolidated Financial Statements 2023 of the Arctic Paper S.A. Capital Group 83
(unless specified otherwise, all amounts are in PLN ‘000)
The table below presents the total values of transactions with related entities in 2022-2023:
|
| Data for the period from 1 January 2023 to 31 December 2023 and as at 31 December 2023 | |||||||||||||||
|
|
|
|
|
|
|
|
| |||||||||
Related Entity | Sales of services to related entities | Purchases of services from related entities/remuneration | Interest – financial income | Interest – | Receivables from related entities | Loan receivables | Liabilities to related entities | ||||||||||
|
|
|
|
|
|
|
|
| |||||||||
Nemus Holding AB | 409 | 60 | - | - | - | - | 6 | ||||||||||
Thomas Onstad | - | - | - | - | - | - | - | ||||||||||
Munkedals Skog | - | 349 | - | - | - | - | - | ||||||||||
Key management personnel |
| - | 1 272 | - | - | - | - | - | |||||||||
Total |
| 409 | 1 681 | - | - | - | - | 6 | |||||||||
|
| Data for the period from 1 January 2022 to 31 December 2022 and as at 31 December 2022 | |||||||||||||||
|
|
|
|
|
|
|
|
| |||||||||
Related Entity | Sales of services to related entities | Purchases of services from related entities/remuneration | Interest – financial income | Interest – | Receivables from related entities | Loan receivables | Liabilities to related entities | ||||||||||
|
|
|
|
|
|
|
|
| |||||||||
Nemus Holding AB | 444 | 64 | - | - | 2 716 | - | 7 | ||||||||||
Thomas Onstad | - | - | - | - | - | - | - | ||||||||||
Munkedals Skog | - | 244 | - | - | - | - | - | ||||||||||
Key management personnel | - | 1 191 | - | - | - | - | 49 | ||||||||||
Total | 444 | 1 499 | - | - | 2 716 | - | 56 | ||||||||||
32.1.Ultimate Parent Entity of the Group
The ultimate parent entity of the Group that prepares the consolidated financial statements is Nemus Holding AB. During the financial year ended 31 December 2023 and 31 December 2022, there were transactions between the Group and Nemus Holding AB listed in note 32.
32.2.Parent Entity
Nemus Holding AB is the Parent Entity for the Arctic Paper S.A. Capital Group which as at 31 December 2023 held 59.15% ordinary shares in Arctic Paper S.A.
32.3.Terms and conditions of transactions with related entities
Trade receivables and payables usually have a payment term of between 14 and 30 days for related entities. Transactions with related entities are carried out at arm’s length.
32.4.Remuneration of senior management and the Supervisory Board of the Parent Entity
The Parent Entity’s management team as at 31 December 2023 comprises three persons: President of the Management Board and two Members of the Management Board.
The remuneration of the management staff in the year ended on 31 December 2023 amounted to PLN 3,857 thousand (PLN 3,713 thousand in the year ended on 31 December 2022).
Consolidated Financial Statements 2023 of the Arctic Paper S.A. Capital Group 84
(unless specified otherwise, all amounts are in PLN ‘000)
The table below shows the remuneration of the Parent Entity’s senior management and Supervisory Board:
| Year ended on 31 December 2023 |
| Year ended on 31 December 2022 |
Management Board |
|
|
|
Short-term employee benefits | 2 418 |
| 2 280 |
Post-employment payments | 265 |
| 335 |
| 2 683 |
| 2 615 |
Supervisory Board |
|
|
|
Short-term employee benefits | 1 174 |
| 1 098 |
|
|
|
|
Total | 3 857 |
| 3 713 |
Short-term employee benefits include costs incurred by the Company for senior management services provided to a subsidiary of PLN 1,427 thousand.
32.5.Loan to a member of the Management Board
In 2022-2023 neither the Parent Entity, nor its subsidiary companies granted any loans to Members of the Management Board.
32.6. Other transactions with the involvement of Members of the Management Board
In the period covered with these Consolidated Financial Statements there were no other transactions between the subsidiary companies and Members of the Management Board .
33.Information on the agreement and remuneration of the statutory auditor or entity authorised to audit financial statements
On 22 February 2023, the Company’s Supervisory Board decided to appoint PricewaterhouseCoopers Polska Spółka z ograniczoną odpowiedzialnością Audyt Sp.k. as the auditor of the Company and the Arctic Paper S.A. Capital Group to audit the financial statements for 2023 and 2024.
On 22 February 2023, the Company’s Supervisory Board, based on the Audit Committee’s recommendation on the selection of an auditor, decided to select PricewaterhouseCoopers Polska Spółka z ograniczoną odpowiedzialnością Audyt Sp.k. as the auditor of the Company and the Arctic Paper S.A. Capital Group to audit the financial statements for 2023 and 2024. The recommendation of the Audit Committee was issued as a result of the selection procedure in compliance with the “Policy and procedure for the selection of the audit firm for the statutory and voluntary audit of the consolidated and standalone financial statements of Arctic Paper S.A. with its registered office in Kostrzyn nad Odrą”.
The table below presents the remuneration of the statutory auditor, paid or payable for the year ended on 31 December 2023 and 31 December 2022 by category of services:
Service type | Year ended on 31 December 2023 |
| Year ended on 31 December 2022 |
Statutory audit of the annual financial statements | 335 |
| 307 |
Review of interim financial statements | 115 |
| 98 |
Other services (examination of the proforma report and correct calculation of covenants in accordance with the loan agreements) | - |
| 50 |
Consolidated Financial Statements 2023 of the Arctic Paper S.A. Capital Group 85
(unless specified otherwise, all amounts are in PLN ‘000)
|
|
|
|
Total | 450 |
| 455 |
The above remuneration does not include services provided to other Group companies.
34.Financial risk management objectives and principles
The main financial instruments used by the Group include bank loans. The main purpose of those financial instruments is to raise finance for the Group’s operations. The Group companies also conclude lease agreements.
The Group also uses factoring without recourse for trade receivables. The main purpose for using the financial instrument is to quickly raise funds. Receivables that are subject to factoring have been removed from the consolidated statement of financial position, as the conditions for removing the asset in accordance with IFRS 9 have been met.
The Group has various other financial instruments such as trade receivables and payables which arise directly from its operations. The core risks arising from the Group’s financial instruments include: interest rate risk, liquidity risk, FX risk and credit risk. The Management Board reviews and approves policies for managing each of those risks.
In 2023, in the opinion of the Parent Entity’s Management Board – compared to the annual consolidated financial statements prepared as at 31 December 2023, there were no significant changes in financial risk. There have been no changes to the objectives and policies of the management of the risk.
The Group is exposed to interest rate changes primarily with respect to its long-term financial liabilities. The Group held bank deposits as at 31 December 2023.
The table below presents the sensitivity of gross profit to rationally feasible interest rate changes assuming no change to other factors (related to liabilities based on variable interest rates). Variable rate loans and leases as at 31 December 2023 and 31 December 2022 are included in the calculation. For each currency the same growth of interest rate was assumed by 1 percentage point. At the end of each reporting period, the values of loans and leases in a specific currency were grouped together and an increase of 1 percentage point was calculated on the calculated amounts.
Consolidated Financial Statements 2023 of the Arctic Paper S.A. Capital Group 86
(unless specified otherwise, all amounts are in PLN ‘000)
|
|
|
|
| |||||
As at 31 December 2023 | PLN | SEK | EUR | ||||||
|
|
|
|
| |||||
Long-term portion of loans | 21 417 | 37 231 | 20 663 | ||||||
Long-term portion of lease liabilities | 14 504 | 5 992 | 3 414 | ||||||
Less loans covered by SWAP | (21 417) | - | (20 663) | ||||||
The basis for calculating the impact of a change in the interest rate | 14 504 | 43 222 | 3 414 | ||||||
Effect on profit before tax of a 1 percentage point increase in interest rates | (145) | (432) | (34) | ||||||
|
|
|
|
| |||||
As at 31 December 2022 | PLN | SEK | EUR | ||||||
|
|
|
|
| |||||
Long-term portion of loans and bonds | 36 043 | 66 144 | 36 979 | ||||||
Long-term portion of lease liabilities | 12 035 | 6 824 | 2 978 | ||||||
Less loans covered by SWAP | (36 043) | - | (36 979) | ||||||
The basis for calculating the impact of a change in the interest rate | 12 035 | 72 968 | 2 978 | ||||||
Effect on profit before tax of a 1 percentage point increase in interest rates | (120) | (730) | (30) | ||||||
The basis for calculating the impact of interest rate changes at 31 December 2023 for the long-term part of the SEK loans takes into account the extended maturity for the loan with Nordea Bank Abp.
The following table shows the carrying amount of the Group’s financial instruments exposed and not exposed to interest rate risk.
|
| As at 31 December 2023 | As at 31 December 2022 | |||||||||
| The value of the financial liability, including: | The value of liability subject to fixed interest rate | The value of liability subject to variable interest rate | The value of the financial liability, including: | The value of liability subject to fixed interest rate | The value of liability subject to variable interest rate | ||||||
|
|
|
|
|
|
|
| |||||
Other financial liabilities: |
|
|
|
|
|
| ||||||
Lease liabilities | 28 742 | - | 28 742 | 30 196 | - | 30 196 | ||||||
|
|
|
|
|
|
|
| |||||
Bank loans: |
|
|
|
|
|
| ||||||
Long-term loan from a consortium of banks: Santander, Pekao, BNP in PLN | 34 800 | 34 800 | - | 50 872 | 50 872 | - | ||||||
Long-term loan from a consortium of banks: Santander, Pekao, BNP in EUR | 33 888 | 33 888 | - | 52 476 | 52 476 | - | ||||||
Revolving loan syndicate of banks (Santander, Pekao, BNP) PLN | - | - | - | - | - | - | ||||||
Revolving loan syndicate of banks (Santander, Pekao, BNP) EUR | - | - | - | - | - | - | ||||||
Loan from Nordea Bank Abp in SEK | 21 957 | - | 21 957 | 28 655 | - | 28 655 | ||||||
Loan from Danske Bank in SEK | 32 528 | - | 32 528 | 42 551 | - | 42 551 | ||||||
Total fixed and variable rate bank loans | 123 173 | 68 687 | 54 485 | 174 554 | 103 347 | 71 206 | ||||||
TOTAL FIXED AND VARIABLE INTEREST RATE LIABILITIES | 151 915 | 68 687 | 83 228 | 204 750 | 103 347 | 101 403 | ||||||
|
|
|
| |||||||||
The fixed interest rates for bank loans result from the concluded SWAP instruments.
Consolidated Financial Statements 2023 of the Arctic Paper S.A. Capital Group 87
(unless specified otherwise, all amounts are in PLN ‘000)
The Group is exposed to transactional FX risk. This risk also takes place in the case of transactions in other currencies than the entity’s measurement currency.
The table below presents the sensitivity of the financial result and comprehensive income to rationally feasible fluctuations of USD, EUR, GBP and SEK rates assuming no changes to any other factors. The calculations cover only the impact of FX rate fluctuations on FX balance sheet items and a rate increase or decrease for each currency of 5% was applied. At the end of each reporting period, assets and liabilities were grouped by currency and a rate increase or decrease by 5% was calculated on the net position in each currency – assets minus liabilities. During the year, FX assets and liabilities remained stable.
|
|
|
|
|
| ||
As at 31 December 2023 | Basis for the calculation |
|
|
|
| ||
Impact of FX rate changes on gross profit | the effect of FX rate change | FX rate growth | Total impact | FX rate drop | Total impact | ||
|
|
|
|
|
|
| |
PLN – EUR | 181 509 | +5% | 9 075 | -5% | (9 075) | ||
PLN – USD | (22 384) | +5% | (1 119) | -5% | 1 119 | ||
PLN – GBP | 13 850 | +5% | 693 | -5% | (693) | ||
PLN – SEK | (17 870) | +5% | (893) | -5% | 893 | ||
SEK – EUR | 147 131 | +5% | 7 357 | -5% | (7 357) | ||
SEK – USD | 99 327 | +5% | 4 966 | -5% | (4 966) | ||
SEK – GBP | 18 547 | +5% | 927 | -5% | (927) | ||
|
|
|
|
|
|
| |
Impact of financial instruments on other comprehensive income (due to differences on translation of foreign operations) |
| FX rate growth | Total impact | FX rate drop | Total impact | ||
|
|
|
|
|
|
| |
PLN – SEK |
| +5% | 36 965 | -5% | (36 965) | ||
PLN – EUR |
| +5% | 61 | -5% | (61) | ||
|
|
|
|
|
|
| |
|
|
|
|
|
|
| |
As at 31 December 2022 | Basis for the calculation |
|
|
|
| ||
Impact of FX rate changes on gross profit | growth/drop of FX rates | FX rate growth | Total impact | FX rate drop | Total impact | ||
|
|
|
|
|
|
| |
PLN – EUR | 89 332 | +5% | 4 467 | -5% | (4 467) | ||
PLN – USD | (68 453) | +5% | (3 423) | -5% | 3 423 | ||
PLN – GBP | 17 865 | +5% | 893 | -5% | (893) | ||
PLN – SEK | (18 495) | +5% | (925) | -5% | 925 | ||
SEK – EUR | 379 187 | +5% | 18 959 | -5% | (18 959) | ||
SEK – USD | 91 148 | +5% | 4 557 | -5% | (4 557) | ||
SEK – GBP | 23 273 | +5% | 1 164 | -5% | (1 164) | ||
|
|
|
|
|
|
| |
Impact of financial instruments on other comprehensive income (due to differences on translation of foreign operations) |
| FX rate growth | Total impact | FX rate drop | Total impact | ||
|
|
|
|
|
|
| |
PLN – SEK |
| +5% | 34 412 | -5% | (34 412) | ||
PLN – EUR |
| +5% | 87 | -5% | (87) | ||
34.3. Product and raw material price risk
The Group is exposed to the risk of decreasing sales prices as a result of intensifying competition in the market and the risk of growing prices of raw materials due to restricted supply of raw materials in the market.
The Group uses derivative instruments to manage market risk. The Rottneros Group is hedging against changes in the price of its product, cellulose. The Group hedges the risk of changes in energy prices to limit their impact on the volatility of the result. Details of all hedges used in the Group are set out in note 35.
Consolidated Financial Statements 2023 of the Arctic Paper S.A. Capital Group 88
(unless specified otherwise, all amounts are in PLN ‘000)
Credit risk is the risk of financial loss by the Group when a customer or a counterparty to a financial instrument contract defaults under the contract. Credit risk is primarily related to receivables. The Group’s trade receivables are mostly covered by insurance.
The Group enters into transactions solely with companies of a good financial standing. All customers who wish to use merchant credit are subject to preliminary verification procedures. Additionally, due to monitoring of the status of receivables on an ongoing basis, the Group’s exposure to the risk of uncollectible receivables is limited.
The Group recognises an impairment allowance on financial assets (allowance for expected credit losses) classified as financial assets measured at amortised cost or financial assets measured at fair value through profit or loss. If credit risk related to a specific financial instrument has increased materially since initial recognition, the Group estimates the allowance for anticipated credit losses related to the financial instrument equal to anticipated credit losses throughout the lifetime of the instrument. If as at the reporting date, credit risk related to a financial instrument has not increased materially since its initial recognition, the Group assesses the allowance for anticipated losses related to that financial instrument in an amount equal to 12-month anticipated credit losses. Due to the fact that the Group’s trade receivables do not contain a material funding component, the impairment allowance for trade receivables is calculated on the basis of the anticipated credit losses throughout the lifetime of the financial instrument.
The table below presents the calculation of the allowance for trade receivables in terms of expected credit losses and specific risk (allowance) :
As at 31 December 2023 | Weighted average percentage of the expected loss for uninsured receivables | Gross value of uninsured receivables | Weighted average percentage of expected credit losses insured receivables | Gross value of insured receivables | Allowance for expected loss on uninsured receivables | Allowance for expected loss on insured receivables | Specific allowance | Total allowance for receivables | |||||||
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| ||||||
Not overdue | 0,00% | 83 212 | 0,00% | 239 006 | 1 | - | - | 1 | |||||||
< 30 days | 0,00% | 4 583 | 0,00% | 35 357 | - | - | - | - | |||||||
30-60 days | 0,17% | 445 | 0,32% | 605 | 1 | 2 | - | 3 | |||||||
60-90 days | 0,47% | 48 | nd | - | - | - | - | - | |||||||
90-120 days | 1,64% | 37 | 0,99% | 86 | 1 | 1 | - | 1 | |||||||
120-360 days | 1,88% | 1 998 | 1,22% | 82 | 38 | 1 | - | 39 | |||||||
>360 days |
| 4 106 |
| - | - | - | 4 106 | 4 106 | |||||||
|
| 94 430 |
| 275 135 | 40 | 4 | 4 106 | 4 150 | |||||||
As at 31 December 2022 | Weighted average percentage of the expected loss for uninsured receivables | Gross value of uninsured receivables | Weighted average percentage of expected credit losses insured receivables | Gross value of insured receivables | Allowance for expected loss on uninsured receivables | Allowance for expected loss on insured receivables | Specific allowance | Total allowance for receivables | |||||||
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Not overdue | 0,00% | 97 742 | 0,01% | 301 696 | 4 | 21 | - | 25 | |||||||
< 30 days | 0,01% | 7 179 | 0,01% | 45 053 | 1 | 6 | - | 6 | |||||||
30-60 days | 0,28% | 237 | 0,11% | 2 168 | 1 | 2 | - | 3 | |||||||
60-90 days | 3,70% | 114 | 1,29% | 64 | 4 | 1 | - | 5 | |||||||
90-120 days | 36,59% | 21 | 7,86% | 254 | 8 | 20 | - | 28 | |||||||
120-360 days | 84,08% | 259 | 14,25% | 2 952 | 218 | 421 | - | 639 | |||||||
>360 days |
| 4 776 |
| - | - | - | 4 776 | 4 776 | |||||||
|
| 110 328 |
| 352 187 | 235 | 471 | 4 776 | 5 482 | |||||||
The weighted average percentage of expected loss was determined on the basis of historical data for 2019-2021 and took into account an analysis of macro-ecomonic factors possible in the future.
The Group treats all receivables that are not overdue and are not subject to any impairment allowance, as collectible.
Consolidated Financial Statements 2023 of the Arctic Paper S.A. Capital Group 89
(unless specified otherwise, all amounts are in PLN ‘000)
With respect to other financial assets of the Group such as cash and cash equivalents, the Group’s exposure to credit risk arises from default of the counterparty.
The Group has no major concentration of credit risk. Concentration of risk is assessed separately for insured and uninsured receivables. In addition, when determining the credit risk for a given group of receivables, the Group takes into account the grade of paper/cellulose being sold and the currency of the transaction, as well as the geographical location of the counterparties and their rating.
The maximum amount exposed to credit risk is equal to the carrying value of the financial instruments held.
The Group monitors its risk of a shortage of funds using a recurring liquidity planning tool. This tool considers the maturity of both its financial investments and financial assets (e.g. accounts receivables, other financial assets) and projected cash flows from operating activities.
The Group aims to maintain a balance between continuity and flexibility of financing through the use of various sources of funding, such as overdrafts, bank loans and leasing agreements.
The table below summarises the Group’s financial liabilities at 31 December 2023 and as at 31 December 2022 by maturity based on contractual undiscounted payments.
As at 31 December 2023 | Carrying amount | Upon request | Less than 3 months | 3 to 12 months | 1 to 5 years | Over 5 years | Total | |
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Bank loans | 123 173 | - | 6 307 | 40 923 | 83 883 | - | 131 113 | |
Leases | 28 742 | 538 | 1 427 | 3 916 | 14 536 | 49 626 | 70 043 | |
Trade payables and for the purchase of tangible and intangible assets | 429 219 | 479 | 424 056 | 4 685 | - | - | 429 219 | |
Other financial liabilities | 1 025 | 160 | - | - | 865 | - | 1 025 | |
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|
|
|
|
|
| 582 159 | 1 177 | 431 789 | 49 524 | 99 285 | 49 626 | 631 401 |
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|
|
As at 31 December 2022 |
| Upon request | Less than 3 months | 3 to 12 months | 1 to 5 years | Over 5 years | Total | |
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|
|
Bank loans | 174 554 | - | 3 567 | 40 684 | 155 503 | - | 199 755 | |
Leases | 30 196 | - | 3 084 | 5 453 | 14 316 | 46 137 | 68 989 | |
Trade payables and for the purchase of tangible and intangible assets | 529 206 | 452 | 525 299 | 3 456 | - | - | 529 206 | |
Other financial liabilities | 1 017 | 174 | - | - | 843 | - | 1 017 | |
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|
|
|
|
|
|
|
|
|
| 734 973 | 626 | 531 950 | 49 593 | 170 661 | 46 137 | 798 967 |
As at 31 December 2023 | Carrying amount | Upon request | Less than 3 months | 3 to 12 months | 1 to 5 years | Over 5 years | Total | |
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|
|
|
|
|
|
|
|
Bank loans | 123 173 | - | 6 058 | 38 396 | 78 919 | - | 123 373 | |
Leases | 28 742 | 538 | 1 427 | 3 715 | 14 536 | 49 626 | 69 842 | |
Trade payables and for the purchase of tangible and intangible assets | 429 219 | 479 | 424 056 | 4 685 | - | - | 429 219 | |
Other financial liabilities | 1 025 | 160 | - | - | 865 | - | 1 025 | |
|
| 582 159 | 1 177 | 431 541 | 46 796 | 94 320 | 49 626 | 623 460 |
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|
|
As at 31 December 2022 |
| Upon request | Less than 3 months | 3 to 12 months | 1 to 5 years | Over 5 years | Total | |
|
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|
|
|
|
|
Consolidated Financial Statements 2023 of the Arctic Paper S.A. Capital Group 90
(unless specified otherwise, all amounts are in PLN ‘000)
Bank loans | 174 554 | - | 3 567 | 40 684 | 155 503 | - | 199 755 | |
Leases | 30 196 | - | 3 084 | 5 453 | 14 316 | 46 137 | 68 989 | |
Trade payables and for the purchase of tangible and intangible assets | 529 206 | 452 | 525 299 | 3 456 | - | - | 529 206 | |
Other financial liabilities | 1 017 | 174 | - | - | 843 | - | 1 017 | |
|
| 734 973 | 626 | 531 950 | 49 593 | 170 661 | 46 137 | 798 967 |
The table above as at 31 December 2023 takes into account the extension of the term of the loan with Nordea Bank Abp.
The Group has contractual commitments to acquire tangible fixed assets amounting to PLN 150,938 thousand as at 31 December 2023 (PLN 36,522 thousand as at 31 December 2022).
The table below provides a reconciliation of the items in the table above to the data in the statement of financial position (SHSF) or a note.
As at 31 December 2023 | Note / balance sheet | Value according to the note or balance sheet | Interest payable until repayment | Value according to the table | |
Bank loans | 26 | 123 173 | 7 940 | 131 113 | |
Leases | 17 | 28 742 | 41 062 | 69 804 | |
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|
|
Trade payables and for the purchase of tangible and intangible assets | 29.1 | 429 219 | nd | 429 219 | |
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|
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Other financial liabilities | 26 | 1 025 | nd | 1 025 | |
As at 31 December 2022 | Note / balance sheet | Value according to the note or balance sheet | Interest payable until repayment | Value according to the table | |
Bank loans | 26 | 174 553 | 25 201 | 199 755 | |
Leases | 17 | 30 197 | 38 792 | 68 989 | |
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|
|
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|
|
Trade payables and for the purchase of tangible and intangible assets | 29.1 | 529 206 | nd | 529 206 | |
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Other financial liabilities | 26 | 1 017 | nd | 1 017 | |
There is no significant concentration of liquidity risk in the Group. Concentrations of risk are assessed separately for loan agreements, leases, trade and other payables by maturity of the liability. In addition, the Group takes into account the type and currency of the transaction and the geographical location of the counterparty when determining liquidity risk.
The table below shows the breakdown of cash by rating of the bank where it is deposited:
rating | cash and cash equivalents at 31.12.2023 |
A+ | 233 111 |
AA- | 41 483 |
BBB+ | 50 339 |
BBB | 56 498 |
BB | 97 830 |
Pozostałe* | 21 189 |
Suma | 500 449 |
*The remaining cash is kept in bank accounts of sales branches; due to significant fragmentation, no data was collected on the ratings of the banks where the cash is deposited.
Consolidated Financial Statements 2023 of the Arctic Paper S.A. Capital Group 91
(unless specified otherwise, all amounts are in PLN ‘000)
Three main banks that the Group deposits cash and cash equivalents are 31%, 20% and 15% of the balance as at 31 December 2023.
The Company uses the following financial instruments: cash on hand and in bank accounts, loans, receivables, payables, lease agreements and interest SWAP contracts, forward contracts for the sale of pulp and forward contracts for the purchase of electricity.
35.1.Fair values of different categories of financial instruments
Due to the fact that the carrying amounts of the financial instruments held by the Group do not materially differ from their fair value (except those listed in the table below), the table below presents all financial instruments by their carrying amounts, split into classes and categories of assets and liabilities.
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|
| Carrying amount | Fair value | ||
|
| Category in compliance with IFRS 9 | As at 31 December 2023 | As at 31 December 2022 | As at 31 December 2023 | As at 31 December 2022 |
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Financial assets |
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| |
Trade and other receivables | WwZK | 375 276 | 464 949 | *** | *** | |
Hedging instruments* | IRZ | 46 629 | 309 406 | *** | *** | |
Derivative instruments measured at fair value through profit and loss | WwWGpWF | 7 838 | 72 781 | *** | *** | |
Receivables from pension fund | WwZK | 21 236 | 22 829 | *** | *** | |
Settlement of realised forward contracts | WwZK | 11 008 | 37 641 | *** | *** | |
Other financial assets ** | WwWGpWF | 14 501 | 3 370 | *** | *** | |
Cash and cash equivalents | WwZK | 500 449 | 481 930 | *** | *** | |
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Financial liabilities |
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| |
Loans | WwZK | 123 173 | 174 553 | 126 986 | 181 237 | |
Lease liabilities , of which: | WwZK | 28 742 | 30 196 | *** | *** | |
– long-term |
| 24 022 | 22 315 | *** | *** | |
– short-term |
| 4 720 | 7 881 | *** | *** | |
Trade payables, for the purchase of tangible and intangible assets. | WwZK | 430 244 | 530 222 | *** | *** | |
Hedging instruments* | IRZ | 865 | - | *** | *** | |
* derivative hedging instruments meeting the requirements of hedge accounting
** primarily investments in equity instruments
*** financial assets and liabilities at fair value close to carrying amount
Abbreviations used:
WwZK – Financial assets/liabilities measured at amortised cost
Consolidated Financial Statements 2023 of the Arctic Paper S.A. Capital Group 92
(unless specified otherwise, all amounts are in PLN ‘000)
IRZ – Hedge Accounting Instruments at fair value through other comprehensive income (where the instrument is determined to be effective)
WwWGpWF – financial assets/liabilities measured at fair value through profit and loss
The fair value of hedging instruments was determined on the basis of observable data from active markets that are not market quotations.
The fair value of loans is estimated using an internal model based on discounting financial flows.
As at 31 December 2023 and 31 December 2022, financial instruments according to the valuation hierarchy qualify as Level 3 except for derivatives (Level 2).
35.2. Changes in assets and liabilities arising from financing activities
Year ended on 31 December 2023 | Note | 1 January 2023 | Changes resulting from cash flows from financing activity | Effects of currency exchange rate fluctuations | Changes in fair value or amortised cost | Changes due to acquisition/disposal | 31 December 2023 | |
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Liabilities arising from financing activities |
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| |
Loans (short-term and long-term) | 27 | 174 554 | (41 142) | (10 239) | - | - | 123 173 | |
Lease liabilities (short-term and long-term) | 27 | 30 196 | (9 795) | (1 105) | - | 9 446 | 28 742 | |
Other (short-term and long-term) | 27 | 1 017 | (795) | (71) | 875 | - | 1 025 | |
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| |
Total liabilities resulting from financing activity |
| 205 767 | (51 731) | (11 415) | 875 | 9 446 | 152 940 | |
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Assets arising from financing activities |
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| |
Derivative financial instruments (assets) | 20.1 | 8 144 | 4 147 | - | (8 849) | - | 3 442 | |
Total assets arising from financing activities |
| 8 144 | 4 147 | - | (8 849) | - | 3 442 | |
As at 31 December 2023 the Group’s cash flows were hedged with a forward contract for purchase of electricity, a forward contract for sale of pulp, an interest rate SWAP.
Consolidated Financial Statements 2023 of the Arctic Paper S.A. Capital Group 93
(unless specified otherwise, all amounts are in PLN ‘000)
The table below presents detailed information concerning the hedging relationship in cash flow hedge accounting regarding sales of pulp:
Type of hedge | Cash flow hedge related to sales of pulp | |
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|
|
Hedged item | The hedged item is a part of highly likely future cash inflows for pulp sales | |
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|
|
Hedging instruments | Forward contracts are used as the hedging item wherein the Company agrees to sell pulp for SEK | |
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|
Contract parameters: |
| |
Contract conclusion date | 2023 | |
Maturity date: | depending on the contract; until 31.12.2024 | |
Hedged quantity of pulp | 12,000 tonnes | |
Term price | SEK 13 284 /tonne | |
The table below presents detailed information concerning the hedging relationship in the cash flow hedge accounting related to electricity purchases:
` |
| Cash flow hedge related to planned purchases of electricity | |
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|
| |
Hedged item | The hedged item is a part of highly likely future cash flows for electricity purchases | ||
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|
| |
Hedging instruments | Forward contract for the purchase of electricity at Nord Pool Exchange | ||
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|
| |
Contract parameters: |
| ||
Contract conclusion date | depending on the contract; from 2019 | ||
Maturity date | depending on the contract; until 31.12.2028 | ||
Hedged quantity of electricity | 879 189 MWh | ||
Term price | from 26,95 to 65,10 EUR/MWh | ||
Consolidated Financial Statements 2023 of the Arctic Paper S.A. Capital Group 94
(unless specified otherwise, all amounts are in PLN ‘000)
The table below presents detailed information concerning the hedging relationship in the cash flow hedge accounting related to payment of interest in EUR and PLN on the loan in EUR and PLN:
SWAP on the interest rate | EUR | PLN |
|
Type of hedge | Hedge of cash flows related to variable interest rate on the EUR long-term loan | Hedge of cash flows related to variable interest rate on the PLN long-term loan | |
Hedged item | The hedged item are future EUR interest flows in EUR related to a loan in EUR calculated on the basis of 3M EURIBOR | Future PLN interest flows on PLN loan calculated on the basis of 3M WIBOR | |
Hedging instruments | SWAP transaction under which the Company agreed to pay interest in EUR on the EUR loan on the basis of a fixed interest rate | SWAP transaction under which the Company agreed to pay interest in PLN on the PLN loan on the basis of a fixed interest rate | |
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|
|
|
Currency | Date | Fair loan amount in PLN as at 31.12.2023 | |
EUR | 2021-04-02 – 2026-04-02 |
| 14 000 560 |
EUR | 2021-04-02 – 2026-04-02 |
| 10 500 420 |
EUR | 2021-04-02 – 2026-04-02 |
| 10 500 420 |
|
|
| 35 001 400 |
|
|
|
|
PLN | 2021-04-02 – 2026-04-02 |
| 15 000 000 |
PLN | 2021-04-02 – 2026-04-02 |
| 11 250 000 |
PLN | 2021-04-02 – 2026-04-02 |
| 11 250 000 |
|
|
| 37 500 000 |
The value secured is the interest calculated on the value of the loan in the amount of |
| 72 501 400 | |
Interest secured by an interest rate swap |
|
| 4 607 267 |
The fixed interest rate on the EUR flow hedge is: 0.11%, and for flows in PLN it is: 1.21%.
The effectiveness of the hedging instruments is very high due to the fact that the parameters of the hedging instruments are matched to the hedged items, particularly with regard to the denominations and dates of the cash flows, the interest rate underlying the calculation of these flows, and the interest accrual conventions. The effectiveness of hedging instruments such as electricity forwards is very high due to the fact that the parameters of the hedging instruments are matched to the hedged items, particularly in terms of the type and quantity of energy purchased and the dates of cash flows associated with energy payments. The effectiveness of hedging instruments such as forwards for the sale of pulp is very high due to the fact that the parameters of the hedging instruments are matched to the hedged items, in particular with regard to the grade and quantity of the pulp sold and the dates of the cash flows associated with receiving payment for the pulp.
The Group assesses whether the derivative designated in each hedging relationship will effectively offset changes in the cash flows of the hedged item using the notional derivative method. The hedge ratios are 100% and the only source of potential ineffectiveness we identify is the two-day difference in maturity of the hedged item and the hedging instrument. The ratios and sources of ineffectiveness are presented in the hedge accounting documentation.
Consolidated Financial Statements 2023 of the Arctic Paper S.A. Capital Group 95
(unless specified otherwise, all amounts are in PLN ‘000)
35.3.1.Other information on derivative instruments
The table below shows the fair value of derivative hedging instruments in cash flow hedge accounting and fair value as at 31 December 2023 and comparatives:
|
| Status as at 31 December 2023 | Status as at 31 December 2022 | ||
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|
|
| Assets | Equity and liabilities | Assets | Equity and liabilities |
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|
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|
|
Forward on pulp sales | 3 135 | - | 2 528 | - | |
SWAP |
| 3 441 | - | 8 144 | - |
Forward for electricity | 40 053 | 865 | 302 033 | - | |
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|
|
|
|
|
Total hedging derivative instruments | 46 629 | 865 | 312 705 | - | |
The table below shows the nominal value of the amounts associated with the positions designated as hedging instruments at 31 December 2023:
|
|
|
| Up to 1 year | 1 to 5 years | Over 5 years | Total |
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|
|
|
|
|
Forward for electricity: |
|
|
|
|
|
| |
Purchased energy (in PLN ‘000) |
|
| 47 151 | 39 081 | - | 86 232 | |
Forward on pulp sales |
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|
|
|
|
| |
| Pulp sold (in PLN ‘000) |
| 62 472 | - | - | 62 472 | |
interest rate SWAP |
|
|
|
|
|
| |
| principal repayment (in PLN ‘000) |
| 26 607 | 42 080 | - | 68 687 | |
The table below presents the amounts related to hedge accounting that were recognised in 2023 by the Group in profit and loss and in the total comprehensive income statement:
|
|
| Year ended on 31 December 2023 |
|
|
|
|
Other reserves in the part related to revaluation as at 31 December 2023 – fair value measurement of hedging derivative instruments due to the hedged risk, corresponding to effective hedging, net of tax effect |
| 40 127 | |
including those concerning |
|
| |
| forward contracts |
| 37 448 |
| SWAP contracts |
| 2 679 |
|
|
|
|
The period of the anticipated hedged flows |
| 01 January 2024 – 31 December 2028 | |
|
|
|
|
The table below presents changes to other reserves in the part related to measurement under hedge accounting in 2023:
Consolidated Financial Statements 2023 of the Arctic Paper S.A. Capital Group 96
(unless specified otherwise, all amounts are in PLN ‘000)
|
|
| Year ended on 31 December 2023 |
|
|
|
|
Other reserves in the part related to revaluation as at 1 January 2023 |
| 176 935 | |
Deferral to changes of fair value measurement of the hedging derivative instruments due to the hedged risk, corresponding to the effective hedge, net of tax effect |
| (136 808) | |
Amount of deferred remeasurement to fair value of hedging derivatives for hedged risk, removed from other reserves and transferred to financial income, net of tax effect |
| - | |
|
|
|
|
Other reserves in the part related to revaluation as at 31 December 2023 |
| 40 127 | |
The amounts in the table disclose the effect of deferred income tax.
The primary objective of the Group’s capital management is to maintain a strong credit rating and healthy capital ratios in order to support the Group’s business operations and maximise the shareholder value.
The Group manages its capital structure and makes adjustments to it, in light of changes in the economic conditions. To maintain or adjust the capital structure, the Group may adjust the dividend payment to its shareholders, return capital to the shareholders or issue new shares. No changes were made in the objectives, policies or processes during the year ended on 31 December 2023 and 31 December 2022.
The Group monitors its equity using a leverage ratio, which is net debt divided by total equity plus net debt. The Group’s rules stipulate that this ratio should be within a range of up to 0.55. The Group includes interest bearing loans, trade and other payables, net of cash and cash equivalents within its net debt.
Arctic Paper Group | As at 31 December 2023 | As at 31 December 2022 | |
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|
|
Bank loans and other financial liabilities | 152 940 | 205 766 | |
Trade and other payables | 447 917 | 551 211 | |
Minus cash and cash equivalents | (500 449) | (481 930) | |
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|
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Net debt | 100 408 | 275 048 | |
Equity | 1 801 508 | 2 727 665 | |
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|
|
Equity and net debt | 1 901 915 | 3 002 713 | |
|
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|
|
Leverage ratio | 0,05 | 0,09 | |
Compared to the 2022 annual report, the leverage ratio decreased as a result of an increase in cash and cash equivalents and equity as at 31 December 2023.
The average headcount in the Group in the years ended on 31 December 2023 and 31 December 2022 was as follows:
Consolidated Financial Statements 2023 of the Arctic Paper S.A. Capital Group 97
(unless specified otherwise, all amounts are in PLN ‘000)
38.Certificates in cogeneration
The property rights to the certificates of origin, which are evidence of the production of electricity in CHP, are held by AP Grycksbo.
For the cogeneration of electricity, in 2023 the AP Grycksbo acquired the following rights: green certificates 1,586 MWh (2022: 10,497 MWh In 2023, revenue generated from the sale of certificates amounted to PLN 0 thousand (2022: PLN 3 thousand).
Revenues related to the certificates in cogeneration are recognised as a reduction of internal costs of sales in the profit and loss account.
In the current year, the Group companies have not received any material grants.
40.Information on the impact of climate issues on the Group’s operations
The Arctic Paper Group regularly assesses climate-related risks and opportunities that may affect the Group’s operations. The impact of climate issues has been determined to the best of management’s knowledge, current, obtainable estimates of the economic and social conditions likely to occur in the foreseeable future. The environment and climate change, is one of the identified significant areas from the point of view of assessing their importance and impact on the Arctic Paper Group’s operations.
The detailed risk areas, their implications and the mitigating actions taken by the Arctic Paper Group are presented in the Arctic Paper Group Sustainability Report in section 2.4 Principal risks and their management.Mitigating risks associated with the effects of climate change include, among others, careful monitoring of environmental standards and indicators, reduction of individual energy consumption and investment in renewable, carbon-neutral energy sources.
The Arctic Paper Group is actively investing in the energy transition, both in terms of improving the efficiency of the technologies currently used and diversifying energy sources towards low and zero carbon solutions, including the construction of a multi-fuel boiler at Arctic Paper Munkedals and the start of an investment to build a biomass drying and pellet plant at Arctic Paper Grycksbo, which will provide more sustainable fuel sourcing and reduce energy costs.
Arctic Paper’s ambition and the target set by the 4P Strategy adopted in 2021 is to achieve CO2 neutrality in the paper and packaging pillars by 2030, and in all pillars (including the energy and pulp pillars) by 2035.
Consolidated Financial Statements 2023 of the Arctic Paper S.A. Capital Group 98
(unless specified otherwise, all amounts are in PLN ‘000)
There were no significant impairment allowances of fixed or current assets in 2023. There was also no indication of any additional provisions other than the allowances and provisions that are recognised in the course of the Group’s regular business.
41.Impact of the war in Ukraine on the Group’s operations
The Arctic Paper Group sells graphic paper to, inter alia, Ukraine (sales to Russia and Belarus have been discontinued); sales to this market are made mainly on the basis of prepayments (some customers are insured) and own collection from the premises of Arctic Paper factories or on the basis of FCA Poland. In 2023, sales to this market amounted to 0.99% of the Group’s turnover. We assess that the war in Ukraine has no direct impact on the Group’s operation.
42.Material events after the balance sheet date
From the balance sheet date until the day of publishing of these condolidated financial statements, there were no other events which might have a material impact on the Group’s financial and capital position.
Signatures of the Members of the Management Board
Position | First and last name | Date | Signature |
President of the Management Board | Michał Jarczyński | 21 May 2024 | signed with a qualified electronic signature |
Member of the Management Board | Katarzyna Wojtkowiak | 21 May 2024 | signed with a qualified electronic signature |
Member of the Management Board | Fabian Langenskiöld
| 21 May 2024 | signed with a qualified electronic signature |
Consolidated Financial Statements 2023 of the Arctic Paper S.A. Capital Group 99
(unless specified otherwise, all amounts are in PLN ‘000)
Members of the Management Board of Arctic Paper S.A. represent that to the best of their knowledge:
The consolidated financial statements of the Arctic Paper Capital Group for the year ended on 31 December 2023 and the comparable data were prepared in compliance with the applicable accounting principles and they reflect the economic and financial condition of the Capital Group and its financial result for 2023 in a true, reliable and clear manner.
Signatures of the Members of the Management Board
Position | First and last name | Date | Signature |
President of the Management Board | Michał Jarczyński | 21 May 2024 | signed with a qualified electronic signature |
Member of the Management Board | Katarzyna Wojtkowiak | 21 May 2024 | signed with a qualified electronic signature |
Member of the Management Board | Fabian Langenskiöld | 21 May 2024 | signed with a qualified electronic signature |