Notes to the consolidated financial statements
1. Basis of preparation
1.1. CORPORATE INFORMATION
Huhtamaki Group is a global specialist in packaging for food and drink with operations in 37 countries. The Group\u2019s focus and expertise are in paperboard based foodservice packaging, smooth and rough molded fiber packaging as well as flexible packaging. Huhtamaki offers standardized products, customized designs as well as total packaging systems and solutions. Main customers are food and beverage companies, quick service and fast casual restaurants, foodservice operators, fresh produce packers and retailers.
The parent company, Huhtam\u00e4ki Oyj, is a public limited liability company domiciled in Espoo, Finland and listed on NASDAQ OMX Helsinki\u00a0Ltd. The address of its registered office is Revontulenkuja 1, 02100 Espoo, Finland. A copy of consolidated financial statements is available at Group\u2019s website www.huhtamaki.com.
These Group consolidated financial statements were authorized for issue by the Board of Directors on February\u00a08, 2023. According to the Finnish Companies Act shareholders decide on the adoption of financial statements at the general meeting of shareholders held after the publication of the financial statements.
1.2. BASIS OF PREPARATION
The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) and the IAS and IFRS standards as well as SIC- and IFRIC- interpretations which were valid on December\u00a031, 2022. IFRS, referred to in the Finnish Accounting Act and in ordinances issued based on the provisions of said Act, refer to the standards and their interpretations adopted in accordance with the procedure laid down in regulations (EC) No 1606/2002 of the EU.
The consolidated financial statements have been prepared under the historical cost convention except for other investments at fair value through other comprehensive income, financial instruments at fair value through profit or loss, derivative instruments and cash-settled share-based payment arrangements that are measured at fair value. The preparation of financial statements in accordance with IFRS requires the use of certain critical accounting estimates. The use of estimates and assumptions is described in more detail in Note 1.8. Use of estimates and judgments. The consolidated financial statements are presented in millions of euros. Figures presented are exact figures and consequently the sum of individual figures may deviate from the sum presented.
1.3. DESCRIPTION OF THE IMPACT OF THE WAR IN UKRAINE AND THE DIVESTMENT OF OPERATIONS IN RUSSIA
Description of the impact of the war in Ukraine on the business can be found in the Directors\u2019 Report. This includes also information about the divestment of operations in Russia.
1.4 DESCRIPTION OF THE IMPACT OF COVID-19 ON THE BUSINESS
Description of the impact of COVID-19 on the business can be found in the Directors\u2019 Report.
1.5. ADOPTION OF NEW AND AMENDED STANDARDS AND INTERPRETATIONS
The following amended standards have been adopted as of January\u00a01, 2022 and they did not have material impact on the consolidated financial statements:
| \u25cf | Revised IFRS 3 Business Combinations. The amendments update the outdated reference to the Conceptual Framework. |
| \u25cf | Revised IAS 16 Property, Plant and Equipment. Under the amendments, proceeds from selling items before the related item of PPE is available for use should be recognized in profit or loss, together with the costs of producing those items. |
| \u25cf | Revised IAS 37 Provisions, Contingent Liabilities and Contingent Assets. When an onerous contract is accounted for based on the costs of fulfilling the contract, the amendments clarify that these costs comprise both the incremental costs and an allocation of other direct costs. |
| \u25cf | Annual Improvements to IFRS standards 2018-2020. Annual improvements include smaller amendments to four standards. |
The Group plans to adopt the following amendments in 2023 and they are not expected to have material impact on the consolidated financial statements:
| \u25cf | Revised IAS 1 Presentation of Financial Statements ad IFRS Practice Statement 2. The amendments clarify the application of materiality to disclosure of accounting policies. |
| \u25cf | Revised IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors. The amendments clarify how companies should distinguish changes in accounting policies from changes in accounting estimates, with a primary focus on the definition of and clarifications on accounting estimates. |
| \u25cf | Revised IFRS 12 Income Taxes. The amendments narrow the initial recognition exemption (IRE) and clarify that the exemption does not apply to transactions such as leases and decommissioning obligations which give rise to equal and offsetting temporary differences. |
The Group plans to adopt the following amendments later than 2023 and they are not expected to have material impact on the consolidated financial statements (amendments not yet endorsed by the European Union):
| \u25cf | Revised IAS 1 Presentation of Financial Statements. The amendments are to promote consistency in application and clarify the requirements on determining if a liability is current or non-current. |
| \u25cf | Revised IAS 1 Presentation of Financial Statements. The amendments specify that covenants to be complied with after the reporting date do not affect the classification of debt as current or non-current at the reporting date. The amendments require to disclose information about these covenants in the notes to the financial statements. |
| \u25cf | Revised IFRS 16 Leases. The amendments introduce a new accounting model for variable payments and will require seller-lessees to reassess and potentially restate sale-and-leaseback transactions entered into since 2019. |
1.6. PRINCIPLES OF CONSOLIDATION
Subsidiaries
The consolidated financial statements include the parent company Huhtam\u00e4ki Oyj and all its subsidiaries where over 50% of the subsidiary\u2019s voting rights are controlled directly or indirectly by the parent company, or the parent company is otherwise in control of the company for example based on Shareholder\u2019s Agreement.
Acquired subsidiaries are accounted for using the acquisition method. Subsidiaries are fully consolidated from the date on which the control is transferred to the Group. Divested subsidiaries are included up to the date the control ceases.
All intercompany transactions, receivables, liabilities and unrealized profits, as well as distribution of profits within the Group, are eliminated.
Profit and loss for the period attributable to equity holders of the parent company and to non-controlling interest is presented in the income statement. Comprehensive income attributable to equity holders of the parent company and to non-controlling interest is presented in the statement of comprehensive income. Comprehensive income is attributed to the owners of the parent company and to the non-controlling interest even if this results in the non-controlling interest having a deficit balance. Non-controlling interest is disclosed as a separate item within equity.
Associated companies and joint ventures
Associated companies, where the Group holds voting rights of between 20% and 50% and in which the Group has significant influence, but not control, over the financial and operating policies, are consolidated using the equity method. Joint arrangements are companies over whose activities the Group has joint control, established by contractual agreement. The joint arrangements classified as joint ventures are consolidated using the equity method. When the Group\u2019s share of losses exceeds the carrying amount of the equity accounted investment, the carrying amount is reduced to nil and recognition of further losses is discontinued except to the extent that the Group has incurred obligations in respect of the equity-accounted investments. The Group\u2019s share of result of equity-accounted investments is presented as a separate item above Earnings before interest and taxes. Correspondingly the Group\u2019s share of changes in other comprehensive income is recognized in the Group statement of comprehensive income.
1.7 FOREIGN CURRENCY TRANSLATION
Foreign currency transactions are translated into functional currency at the rates of exchange prevailing at the date of the transaction. The consolidated financial statements are presented in EUR, which is the Group\u2019s presentation currency and the parent company\u2019s functional currency. Monetary assets and liabilities are translated at the rates of exchange at the reporting period closing date. The exchange rate used at the reporting period closing date is the rate of the date prior to the last working day of the reporting period closing date. Foreign exchange differences arising from translation are recognized in the income statement. Foreign exchange gains and losses relating to operating activities are recognized in the same account as the underlying transaction above Earnings before interest and taxes. Foreign exchange differences relating to financial liability are recognized in financial income or expense except for those currency differences that relate to loans designated as a hedge of the net investment in foreign operations. Those currency differences are recognized as translation differences in other comprehensive income.
On consolidation the income statements of foreign entities are translated into euros at the average exchange rate for the accounting period. The statements of financial position of foreign entities are translated at the exchange rate of reporting period closing date. The exchange rate used at the reporting period closing date is the rate of the date prior to the last working day of the reporting period closing date. Differences resulting from the translation of income statement items at the average rate and items in the statement of financial position at the closing rate are recognized as part of translation differences in other comprehensive income.
On consolidation, exchange differences arising on the translation of the net investments in foreign subsidiaries, associated companies and joint ventures are recognized as translation differences in other comprehensive income. A similar treatment is applied to intragroup permanent loans, which in substance are equity. On disposal of a foreign entity, accumulated exchange differences are recognized in the income statement as part of the gain or loss on sale.
1.8. USE OF ESTIMATES AND JUDGMENTS
Preparation of the consolidated financial statements in accordance with IFRS requires management to make estimates and assumptions affecting the reported amounts of assets, liabilities, income and expenses, as well as the disclosure of contingent assets and liabilities. The estimates and assumptions are based on historical experience and other factors that are believed to be reasonable under the circumstances, which form the basis of making the judgments about carrying values. These estimates and assumptions are reviewed on an ongoing basis. Possible effect of the changes in estimates and assumptions are recognized during the period they are changed.
The following items and related notes include significant estimates and judgments that are subject to a risk of changes in the carrying values within next financial year: impairment testing (Note 3.2 Goodwill), measurement of pension liabilities (Note 2.2 Employee benefits), litigation and tax risks (Notes 2.7 Income taxes and 6.6. Litigations), restructuring plans (Note 2.4 Restructuring items), provision for inventory obsolescence (Note 4.1 Inventories), probability of deferred tax assets being recovered against future taxable profits (Note 2.7 Income taxes), business combinations related contingent considerations (Note 5.6 Interest-bearing liabilities) and purchase price allocations (Note 3.1 Business combinations).
\u200b
2. Financial performance
2.1. SEGMENT AND REVENUE
Information
The Group\u2019s operating segments are strategic business units which produce different products and which are managed as separate units. The Group\u2019s segment information is based on internal management reporting. The Group has three business areas which are organized into four reporting segments:
Foodservice Packaging:
| \u25cf | Foodservice Europe-Asia-Oceania: Foodservice paper and plastic disposable tableware is supplied to foodservice operators, fast food restaurants and coffee shops. The segment has production in Europe, Middle East, Asia, Africa and Oceania. |
| \u25cf | North America: The segment serves local markets in North America with Chinet\u00ae disposable tableware products, foodservice packaging products, as well as ice cream containers and other consumer goods packaging products. The segment has rigid paper, plastic and molded fiber manufacturing units in the United States and Mexico. |
Flexible Packaging:
Flexible packaging is used for a wide range of consumer products including food, pet food, hygiene and health care products. The segment serves global markets from production units in Europe, Middle East, Asia and South America.
Fiber Packaging:
Recycled fiber is used to make fresh product packaging, such as egg and fruit packaging. The segment has production in Europe, Oceania, Africa and South America.
ACCOUNTING PRINCIPLES
In the Group the performance assessment of segments and decisions on allocation of resources to segments are based on a segment\u2019s potential to generate earnings before interest and taxes (EBIT), operating cash flow and return on net assets. In management\u2019s opinion these are the most suitable key indicators for analyzing the segments\u2019 performance. The Chief Executive Officer is the highest decision maker regarding the above mentioned assessments and allocation of resources.
Segment\u2019s net assets include items directly attributable to a segment and items which can be allocated on a reasonable basis. Net assets comprise intangible assets (including goodwill), tangible assets, equity-accounted investments, inventories, trade and other receivables, accrued income and prepayments, trade payables, other payables and accrued expense. Capital expenditure includes acquisition of tangible and intangible assets which will be used during more than one reporting period. Intersegment pricing is based on fair market value.
Other activities include unallocated corporate costs and royalty income and related net assets. Unallocated assets and liabilities relate to post-employment benefits, taxes and financial items.
Group income statement and balance sheet items 2022
Segments 2022
Foodservice\u00a0Europe- | North | Flexible | Fiber | Segments | ||||||||
EUR million | Note | Asia-Oceania | \u00a0\u00a0\u00a0\u00a0 | America | \u00a0\u00a0\u00a0\u00a0 | Packaging | \u00a0\u00a0\u00a0\u00a0 | Packaging | \u00a0\u00a0\u00a0\u00a0 | total | ||
Net sales | 1,107.3 | 1,464.1 | 1,551.4 | 356.2 | 4,479.0 | |||||||
Intersegment net sales | 3.4 | 4.2 | 6.7 | 6.8 | -21.1 | |||||||
EBIT | 121.7 | 165.9 | 82.2 | 58.0 | 427.9 | |||||||
Net Assets | 3.1, 3.3, 3.4, 4 | 965.4 | 1,013.2 | 1,407.1 | 294.4 | 3,680.1 | ||||||
Capital Expenditure | 118.9 | 99.8 | 68.2 | 31.2 | 318.1 | |||||||
Depreciation and amortization | 2.3 | 60.6 | 58.4 | 64.6 | 23.3 | 206.8 |
Segments 2021
Foodservice\u00a0Europe- | North | Flexible | Fiber | Segments | ||||||||
EUR million | Note | Asia-Oceania | \u00a0\u00a0\u00a0\u00a0 | America | \u00a0\u00a0\u00a0\u00a0 | Packaging | \u00a0\u00a0\u00a0\u00a0 | Packaging | \u00a0\u00a0\u00a0\u00a0 | total | ||
Net sales | 937.8 | 1,156.1 | 1,165.6 | 315.4 | 3,574.9 | |||||||
Intersegment net sales | 4.0 | 4.2 | 0.9 | 18.3 | -27.4 | |||||||
EBIT | 78.5 | 137.3 | 63.6 | 35.2 | 314.7 | |||||||
Net Assets | 3.1, 3.3, 3.4, 4 | 930.9 | 838.1 | 1,272.7 | 272.8 | 3,314.6 | ||||||
Capital Expenditure | 85.0 | 70.6 | 46.0 | 56.2 | 257.7 | |||||||
Depreciation and amortization | 2.3 | 55.3 | 50.9 | 42.9 | 21.8 | 170.9 | ||||||
\u200b | \u200b | \u200b | \u200b | \u200b | \u200b | \u200b | \u200b | \u200b | \u200b | \u200b | \u200b | \u200b |
Intersegment net sales are eliminated on consolidation.
Net sales from transactions with a single customer do not amount 10\u00a0percent or more of the Group\u2019s net sales.
ACCOUNTING PRINCIPLES
Revenue recognition
The revenue is recognized at an amount of consideration to which the Group expects to be entitled in exchange for transferring promised goods or services to a customer. The transaction price is usually fixed but may also include variable considerations such as volume or cash discounts. The variable considerations are estimated using the most likely value method if not yet realized in the end of reporting period. The revenue further adjusted with indirect sales taxes and exchange rate differences relating to sales in foreign currency is presented as net sales.
Typical contracts with customers include a sale of goods to a customer with only one performance obligation. The revenue recognition occurs at a point in time, when the control of the goods is transferred to the customer according to the delivery terms. Payment terms are typical to the business and contracts do not include significant financing components.
Earnings before interest and taxes
Earnings before interest and taxes consists of net sales less costs of goods sold, sales and marketing expenses, research and development expenses, administration expenses, other operating expenses plus other operating income and share of result of equity-accounted investments. Foreign exchange gains and losses and changes of fair value of the derivative financial instruments relating to business are included in Earnings before interest and taxes.
Reconciliation calculations
Result
EUR million | \u00a0\u00a0\u00a0\u00a0 | 2022 | \u00a0\u00a0\u00a0\u00a0 | 2021 | ||
Total EBIT for reportable segments | 427.9 | 314.7 | ||||
EBIT for other activities | -22.7 | -18.7 | ||||
Net financial items | -53.2 | -33.0 | ||||
Profit before taxes | 352.1 | 263.0 |
Assets
EUR million | \u00a0\u00a0\u00a0\u00a0 | 2022 | \u00a0\u00a0\u00a0\u00a0 | 2021 | ||
Total assets for reportable segments | 4,323.4 | 4,099.3 | ||||
Assets in other activities | 35.3 | 106.7 | ||||
Unallocated assets | 462.5 | 336.3 | ||||
Group's total assets | 4,821.3 | 4,542.2 |
Liabilities
EUR million | \u00a0\u00a0\u00a0\u00a0 | 2022 | \u00a0\u00a0\u00a0\u00a0 | 2021 | ||
Total liabilities for reportable segments | 683.9 | 784.8 | ||||
Liabilities in other activities | 34.2 | 45.0 | ||||
Unallocated liabilities | 2,181.0 | 2,115.2 | ||||
Group's total liabilities | 2,899.1 | 2,945.0 |
Geographical information
In presenting information on geographical basis revenues are reported based on the selling entity\u2019s location. Assets are reported based on geographical location of the assets. Non-current assets are presented excluding financial instruments, deferred tax assets and post-employment benefit assets.
2022
Non-current | ||||||
EUR million | \u00a0\u00a0\u00a0\u00a0 | External net sales | \u00a0\u00a0\u00a0\u00a0 | assets | ||
United States | 1460.7 | 604.9 | ||||
Germany | 518.9 | 180.6 | ||||
India | 336.2 | 87.0 | ||||
The United Kingdom | 303.4 | 46.6 | ||||
Australia | 204.7 | 44.9 | ||||
Turkey | 203.7 | 393.7 | ||||
Thailand | 158.9 | -20.6 | ||||
South Africa | 133.0 | 8.8 | ||||
China | 121.2 | 54.9 | ||||
Poland | 108.9 | 54.1 | ||||
Finland | 76.2 | 79.5 | ||||
Other countries | 853.3 | 488.7 | ||||
Total | 4,479.0 | 2,023.1 |
2021
Non-current | ||||||
EUR million | \u00a0\u00a0\u00a0\u00a0 | External net sales | \u00a0\u00a0\u00a0\u00a0 | assets | ||
United States | 1154.0 | 606.2 | ||||
Germany | 455.4 | 147.2 | ||||
India | 276.2 | 91.1 | ||||
The United Kingdom | 255.1 | 58.9 | ||||
Australia | 172.1 | 49.6 | ||||
Thailand | 133.2 | -23.3 | ||||
China | 110.2 | 63.2 | ||||
South Africa | 104.2 | 2.9 | ||||
Russia | 99.5 | 65.4 | ||||
United Arab Emirates | 87.2 | 39.8 | ||||
Finland | 62.3 | 83.0 | ||||
Other countries | 665.6 | 732.0 | ||||
Total | 3,574.9 | 1,916.1 |
2.2. EMPLOYEE BENEFITS
Personnel expenses
EUR million | Note | 2022 | \u00a0\u00a0\u00a0\u00a0 | 2021 |
Wages and Salaries | 659.7 | 584.3 | ||
Compulsory social security contributions | 67.0 | 53.5 | ||
Pensions | ||||
Defined benefit plans | 7.1 | 7.1 | ||
Defined contribution plans | 19.2 | 17.2 | ||
Other post-employment benefits | 2.2 | -2.7 | ||
Share-based payments | 6.3. | 13.8 | 2.7 | |
Other personnel costs | 50.8 | 48.1 | ||
Total | 819.9 | 710.3 |
Remuneration paid by the parent company to the members of the Board of Directors as well as the Chief Executive Officer (CEO) of Huhtam\u00e4ki Oyj (10 people) amounted to EUR 3.1 million (EUR 3.5 million).
Average number of personnel | \u00a0\u00a0\u00a0\u00a0 | 2022 | \u00a0\u00a0\u00a0\u00a0 | 2021 |
Group | 19,550 | 18,385 | ||
Huhtam\u00e4ki Oyj | 138 | 134 |
See note 6.2 Related party transactions, 6.3 Share-based payments and Remuneration Statement.
Pension plans
The Group has established a number of de\ufb01ned benefit plans providing pensions and other post-employment benefits for its personnel worldwide. The US, the UK, Germany and the Netherlands are the countries having major de\ufb01ned bene\ufb01t plans comprising approximately 90% of the Group consolidated de\ufb01ned bene\ufb01t obligation.
The US and the UK de\ufb01ned bene\ufb01t plans are organized through a pension fund and the German and Dutch defined benefit plans through an insurance company. The major pension plans are funded and the assets of these plans are segregated from the assets of the Group. The subsidiaries\u2019 level of funding of the plans and asset allocation to asset categories meet local authority requirements.
In the de\ufb01ned bene\ufb01t pension plans the pensions payable are based on salary level before retirement and number of service\u00a0years. Some plans can include early retirement. The calculations for de\ufb01ned bene\ufb01t obligations at reporting period closing date have been made by quali\ufb01ed actuaries.
The Group has also unfunded post-employment medical benefit plans, principally in the US. The method of accounting, assumptions and the frequency of valuations are similar to those used for the defined benefit pension schemes.
These defined benefit plans expose the Group to actuarial risks, such as inflation risk, interest rate risk, life expectancy and market risk.
ACCOUNTING PRINCIPLES
Employee benefits
Employee benefits are all forms of consideration given in exchange for service rendered by employees or for the termination of employment.
The Group companies have various pension and other postemployment benefit plans in accordance with local conditions and practices worldwide. These plans are classified as either defined contribution plans or defined benefit plans.
In defined contribution plans, the Group pay fixed contributions into a separate entity such as an insurance company. The Group has no legal or constructive obligations to pay further contributions. The contributions are recognized in the income statement as personnel expenses in the period to which they relate.
In defined benefit plans, the Group is obligated for the current contributions, but also for sufficiency of the plan assets to provide agreed benefits for employees. The liability recognized in the statement of financial position is the present value of defined benefit obligation at the end of the reporting period less the fair value of plan assets. The present value of defined benefit plan obligation is calculated annually by independent actuaries using projected unit credit method. The present value is determined by discounting estimated future cash flows using interest rates of high-quality corporate bonds that are denominated in the currency in which the benefits will be paid and that have maturity terms approximating to the terms of the related obligation. The cost of providing defined benefit plans is recognized in the income statement as personnel expense, when the service is rendered by employees or when a plan amendment or curtailment takes place. The net interest expense is recognized in the income statement as financial expense. Remeasurements, including actuarial gains or losses, are recognized through other comprehensive income in shareholder\u2019s equity in the period which they rise and are not reclassified to profit or loss in subsequent periods.
Defined benefit | Fair value of | Effect from | Net defined | |||||||||||||
obligations | plan assets | asset ceiling | benefit liability | |||||||||||||
EUR million | \u00a0\u00a0\u00a0\u00a0 | 2022 | \u00a0\u00a0\u00a0\u00a0 | 2021 | \u00a0\u00a0\u00a0\u00a0 | 2022 | \u00a0\u00a0\u00a0\u00a0 | 2021 | \u00a0\u00a0\u00a0\u00a0 | 2022 | \u00a0\u00a0\u00a0\u00a0 | 2021 | \u00a0\u00a0\u00a0\u00a0 | 2022 | \u00a0\u00a0\u00a0\u00a0 | 2021 |
Balance at January 1 | 569.6 | 592.1 | -444.3 | -421.1 | 4.1 | - | 129.5 | 171.0 | ||||||||
Included in Income statement | ||||||||||||||||
Current service cost | 9.3 | 9.4 | 9.3 | 9.4 | ||||||||||||
Plan amendment and curtailment cost (+) / income (-) | 0.0 | -5.0 | 0.0 | -5.0 | ||||||||||||
Interest cost (+) / income (-) | 10.1 | 8.6 | -9.1 | -7.1 | 1.0 | 1.6 | ||||||||||
19.5 | 13.1 | -9.1 | -7.1 | 10.3 | 6.0 | |||||||||||
Included in Other comprehensive income | ||||||||||||||||
Remeasurements | ||||||||||||||||
Actuarial loss (+) / gain (-) arising from | ||||||||||||||||
Demographic assumptions | -1.5 | -1.3 | -1.5 | -1.3 | ||||||||||||
Financial assumptions | -144.7 | -23.1 | -144.7 | -23.1 | ||||||||||||
Experience adjustment | 14.5 | 2.6 | 14.5 | 2.6 | ||||||||||||
Actual return on plan assets less interest income | 90.6 | -18.1 | 90.6 | -18.1 | ||||||||||||
Changes in asset ceiling less interest | -3.0 | 4.1 | -3.0 | 4.1 | ||||||||||||
-131.7 | -21.8 | 90.6 | -18.1 | -3.0 | 4.1 | -44.1 | -35.7 | |||||||||
Other movements | ||||||||||||||||
Benefits paid | -35.5 | -40.8 | 29.0 | 34.5 | -6.5 | -6.3 | ||||||||||
Contribution by employer | -4.1 | -5.0 | -4.1 | -5.0 | ||||||||||||
Contribution by employee | -0.2 | -0.2 | -0.2 | -0.2 | ||||||||||||
Obligations and assets assumed in business combinations | - | 1.7 | - | 0.0 | - | 1.7 | ||||||||||
Assets extinguished on plan amendment | 0.0 | -0.7 | 0.0 | -0.7 | ||||||||||||
Effect of movements in exchange rates | 0.5 | 25.2 | -6.7 | -26.6 | 0.1 | -6.1 | -1.4 | |||||||||
Balance at December 31 | 422.4 | 569.6 | -344.7 | -444.3 | 1.2 | 4.1 | 78.9 | 129.5 |
Reflected to statement of financial position | \u00a0\u00a0\u00a0\u00a0 | 2022 | \u00a0\u00a0\u00a0\u00a0 | 2021 |
Employee benefit assets | 57.8 | 67.6 | ||
Employee benefit liabilities | 136.7 | 197.2 | ||
78.9 | 129.5 |
Amounts of funded and unfunded obligations | \u00a0\u00a0\u00a0\u00a0 | 2022 | \u00a0\u00a0\u00a0\u00a0 | 2021 |
Present value of funded obligations | 395.4 | 537.5 | ||
Present value of unfunded obligations | 27.0 | 32.0 | ||
422.4 | 569.6 |
Plan assets comprise: | \u00a0\u00a0\u00a0\u00a0 | 2022 | \u00a0\u00a0\u00a0\u00a0 | 2021 |
European equities | 8.9 | 14.8 | ||
North American equities | 26.4 | 61.0 | ||
European debt instruments | 2.7 | 20.5 | ||
North American debt instruments | 125.3 | 134.7 | ||
Property | 21.1 | 22.6 | ||
Insured plans | 87.6 | 92.5 | ||
Other | 72.8 | 98.2 | ||
344.7 | 444.3 |
All equity and debt instruments have quoted prices in active markets.
Expected contribution to defined benefit plans during 2023 is EUR 4.4 million.
The weighted average duration of defined benefit obligation was 12\u00a0years (15\u00a0years).
Significant actuarial assumptions | 2022 | 2021 | ||||||||||||||
Discount rate % | \u00a0\u00a0\u00a0\u00a0 | \u00a0\u00a0\u00a0\u00a0 | \u00a0\u00a0\u00a0\u00a0 | \u00a0\u00a0\u00a0\u00a0 | \u00a0\u00a0\u00a0\u00a0 | |||||||||||
Europe | 1.9 | \u2013 | 4.8 | 0.3 | \u2013 | 1.9 | ||||||||||
Americas | 5.2 | \u2013 | 9.7 | 2.6 | \u2013 | 6.8 | ||||||||||
Asia,Oceania,Africa | 5.2 | \u2013 | 10.9 | 2.2 | \u2013 | 9.8 | ||||||||||
Annual increase in healthcare costs % | ||||||||||||||||
Americas | 6.7 | 7.0 | ||||||||||||||
Asia,Oceania,Africa | 6.9 | 6.6 |
The effect of changes of significant actuarial assumptions on the defined benefit obligations
EUR million | \u00a0\u00a0\u00a0\u00a0 | 2022 | \u00a0\u00a0\u00a0\u00a0 | 2021 |
1% p. increase in discount rate | -40.3 | -74.2 | ||
1% p. decrease in discount rate | 43.9 | 84.4 | ||
1% p. increase of estimated healthcare cost | 0.6 | 0.5 | ||
1% p. decrease of estimated healthcare cost | -0.6 | -0.5 |
2.3. DEPRECIATION, AMORTIZATION AND IMPAIRMENT
EUR million | 2022 | 2021 | |
Depreciation and amortization by function: | |||
Cost of Goods Sold | 180.8 | 152.7 | |
Sales and marketing | 10.1 | 6.6 | |
Research and development | 4.4 | 0.2 | |
Administration | 14.3 | 14.2 | |
Total | 209.7 | 173.7 |
Depreciation and amortization by asset type: | \u00a0\u00a0\u00a0\u00a0 | \u00a0\u00a0\u00a0\u00a0 | |||
Land | 0.7 | 0.4 | |||
Buildings | 39.4 | 32.8 | |||
Machinery and equipment | 142.3 | 121.1 | |||
Other tangible assets | 8.0 | 7.4 | |||
Intangible assets | 19.3 | 12.1 | |||
Total | 209.7 | 173.7 | |||
\u200b | \u200b | ||||
Impairments reversed by asset type: | |||||
Buildings | - | -2.8 | |||
Machinery and equipment | - | - | |||
Goodwill | - | - | |||
Other Intangible assets | - | - | |||
Total | - | -2.8 |
ACCOUNTING PRINCIPLES
Depreciation and amortization
Depreciation and amortization is recorded on a straight-line basis over the estimated useful lives of the owned tangible and intangible assets or over the lease term of right-of-use assets. Land is not depreciated.
The estimated useful lives of the owned tangible and intangible assets are (years):
Buildings and other structures | \u00a0\u00a0\u00a0\u00a0 | 20\u201340 |
Machinery and equipment | 5\u201315 | |
Other tangible assets | 3\u201312 | |
Intangible assets | 3\u201320 |
See notes 2.1., 3.3. and 3.4.
2.4. RESTRUCTURING ITEMS
In 2022 restructuring cost of EUR 9.9 million (EUR 6.0 million) were booked to improve competitiveness and efficiency. Restructuring related items have been booked to Consolidated statement of income according to the table below:
EUR million | 2022 | 2021 |
Cost of goods sold | 4.9 | 8.3 |
Administration expenses | 3.9 | 2.8 |
Other operating income | -3.2 | -4.8 |
Other operating expenses | 4.3 | -0.2 |
Total | 9.8 | 6.0 |
2.5. OTHER OPERATING INCOME
EUR million | \u00a0\u00a0\u00a0\u00a0 | 2022 | 2021 | |
Grants | 1.2 | 3.1 | ||
Gain on disposal of tangible assets | 5.6 | 6.6 | ||
Insurance reimbursements for property damage incidents | 2.0 | 3.9 | ||
Sale of subsidiaries | 44.5 | \u2013 | ||
Royalty income | 0.1 | 0.2 | ||
Rental income | 1.3 | 0.9 | ||
Other | 20.0 | 9.7 | ||
Total | 74.8 | 24.4 |
See also note 3.1. Business combinations.
ACCOUNTING PRINCIPLES
Other operating income
Other operating income includes gains from disposal of assets and regular incomes, such as royalty income, rental income and gains relating to business combinations, which have not been derived from primary activities.
Other operating income includes also grants. Government or other grants are recognized in the income statement on a systematic basis in the same periods in which the expenses are incurred. Investment grants are presented in the statement of financial position as deferred income and recognized as income on a systematic basis over the useful life of the asset. \u00a0
2.6. OTHER OPERATING EXPENSES
EUR million | \u00a0\u00a0\u00a0\u00a0 | 2022 | \u00a0\u00a0\u00a0\u00a0 | 2021 |
Settlement of industrial dispute | 2.6 | - | ||
Environmental provision | 7.0 | - | ||
Strategic project expenses | - | 0.3 | ||
Loss on disposal of tangible assets | 4.0 | 0.7 | ||
Other | 3.2 | 3.7 | ||
Total | 16.8 | 4.8 |
Auditor\u2019s Fees
EUR million | \u00a0\u00a0\u00a0\u00a0 | 2022 | \u00a0\u00a0\u00a0\u00a0 | 2021 |
Audit fees | 2.9 | 2.5 | ||
Audit-related services | 0.0 | 0.0 | ||
Tax services | 0.0 | 0.0 | ||
Other services | 0.8 | 0.9 | ||
Total | 3.7 | 3.4 |
KPMG is acting as the principal auditor for Huhtamaki Group. KPMG network has also provided other consultancy not related to auditing worth of EUR 0.8 million (EUR 0.9 million) of which KPMG Oy Ab accounted for EUR 0.7 million (EUR 0.5 million). Non-audit services are subject to separate review and approval process concerning the provision of non-audit services by the Auditor and included e.g. advisory in connection with various tax, reporting and other local compliance matters.
ACCOUNTING PRINCIPLES
Other operating expenses
Other operating expenses include amortization of intangible assets, losses from disposal of assets and other costs not directly related to production or sale of products such as strategic project expenses.
2.7. INCOME TAXES
EUR million | \u00a0\u00a0\u00a0\u00a0 | 2022 | \u00a0\u00a0\u00a0\u00a0 | 2021 |
Current period taxes | 90.1 | 50.9 | ||
Previous period taxes | -0.5 | 11.6 | ||
Deferred tax expense | -23.0 | -2.2 | ||
Total tax expense | 66.7 | 60.3 | ||
Profit before taxes | 352.1 | 263.0 | ||
Tax calculated at domestic rate (20%) | 70.4 | 52.6 | ||
Effect of different tax rates in foreign subsidiaries | 4.9 | 2.9 | ||
Non-deductible expenses and tax-exempt income | -7.2 | 3.8 | ||
Tax effect of unrecognized tax losses | -5.3 | -0.0 | ||
Previous period taxes | -0.5 | 11.6 | ||
Adjustments to prior year's deferred taxes | 0.2 | -14.5 | ||
Deferred tax liability on undistributed earnings | -0.4 | -0.3 | ||
Other items\u00b9 | 4.4 | 4.2 | ||
Total tax expense | 66.7 | 60.3 |
1 Other items include changes in local tax rates.
Tax effects relating to components of other comprehensive income
2022 | 2021 | |||||||||||
Before\u00a0tax | Tax\u00a0expense/ | Net\u00a0of\u00a0tax | Before\u00a0tax | Tax\u00a0expense/ | Net\u00a0of\u00a0tax | |||||||
EUR million | \u00a0\u00a0\u00a0\u00a0 | amount | \u00a0\u00a0\u00a0\u00a0 | benefit | \u00a0\u00a0\u00a0\u00a0 | amount | \u00a0\u00a0\u00a0\u00a0 | amount | \u00a0\u00a0\u00a0\u00a0 | benefit | \u00a0\u00a0\u00a0\u00a0 | amount |
Cash flow hedges | 17.4 | -3.4 | 14.0 | 4.9 | -1.1 | 3.9 | ||||||
Remeasurements on defined benefit plans | 44.1 | -16.3 | 27.8 | 35.7 | -8.0 | 27.8 |
In 2022, income tax liabilities and assets include a net liability of EUR 41 million (EUR 34 million) relating to uncertain tax positions with inherently uncertain timing of cash outflows.
Certain Huhtamaki Group companies' prior period income tax returns are under examination by local tax authorities, and in 2022 Huhtamaki had ongoing tax investigations in various jurisdictions, including France, Germany, Finland, Hong Kong, India, Kenya, the Netherlands, New Zealand, Spain and the United States.
Huhtamaki\u2019s business and investments, especially in emerging markets, may be subject to uncertainties, including unpredictable tax treatment. Management judgment and a degree of estimation are required in determining the amount of tax expense. Liabilities for uncertain tax positions are recorded based on estimates and assumptions of the amount and likelihood of outflow of economic resources when it is more likely than not that certain filing positions may not be fully sustained upon review by local tax authorities. Even though management does not expect that any significant additional taxes in excess of those already provided for will arise as a result of these examinations, the outcome or actual cost of settlement may vary materially from estimates.
ACCOUNTING PRINCIPLES
Income taxes
The Group income statement includes current taxes of Group companies based on taxable profit for the financial period according to local tax regulations as well as adjustments to prior\u00a0year taxes and changes in deferred taxes. Tax effect relating to items recognized directly in equity or in other comprehensive income is recognized in equity or in other comprehensive income.
Deferred tax assets and liabilities are recognized using the liability method for all temporary differences arising from the difference between the tax basis of assets and liabilities and their carrying values for IFRS reporting purposes. Deferred tax is not recognized for non-deductible goodwill and for differences in investments in subsidiaries to the extent that they probably will not reverse in the foreseeable future.
Deferred tax is not recognized in the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit. In the determination of deferred income tax the enacted tax rate is used.
Principal temporary differences arise from tangible assets, untaxed reserves, tax losses carried forward, financial instruments and defined benefit plans. Deferred tax assets are recognized only to the extent that it is probable that future taxable profit will be available against which such assets can be utilized.
In accordance with IFRIC 23 the Group recognizes provisions for uncertain tax positions when the Group has a present obligation as a result of a past event and management judge that it is probable that there will be a future outflow of economic benefits from the Group to settle the obligation. Uncertain tax positions are assessed and measured on an issue by issue basis within the jurisdictions that we operate either using management\u2019s estimate of the most likely outcome where the issues are binary, or the expected value approach where the issues have a range of possible outcomes. The Group recognizes interest on late paid taxes as part of financing costs, and any penalties, if applicable, as part of the income tax expense.
Deferred taxes
EUR million | \u00a0\u00a0\u00a0\u00a0 | 2022 | \u00a0\u00a0\u00a0\u00a0 | 2021 |
Deferred tax assets | ||||
Tangible assets | 12.3 | 6.0 | ||
Employee benefit | 25.9 | 45.3 | ||
Provisions | 10.2 | 7.0 | ||
Unused tax losses | 20.7 | 13.8 | ||
Other temporary differences | 31.3 | 19.2 | ||
Total | 100.4 | 91.4 | ||
Deferred tax liabilities | ||||
Tangible assets | 96.7 | 92.1 | ||
Intangible assets | 29.8 | 5.1 | ||
Employee benefit | 19.2 | 20.2 | ||
Undistributed earnings | 25.9 | 21.7 | ||
Other temporary differences | 13.6 | 29.1 | ||
Total | 185.3 | 168.2 | ||
Net deferred tax liabilities | 84.9 | 76.8 | ||
Reflected in statement of financial position as follows: | ||||
Deferred tax assets | 48.4 | 55.1 | ||
Deferred tax liabilities | 133.3 | 131.9 | ||
Total | 84.9 | 76.8 |
December 31, 2022 the Group had EUR 91 million (EUR 111 million) worth of deductible temporary differences, for which no deferred tax asset was recognized. EUR 63 million of these temporary differences have unlimited expiry, EUR 6 million expire over five years and EUR 22 million in five years.
Movements in the net deferred tax balance during the year
EUR million | \u00a0\u00a0\u00a0\u00a0 | 2022 | \u00a0\u00a0\u00a0\u00a0 | 2021 |
Net deferred tax balance at January 1 | -76.8 | -37.8 | ||
Recognized in income statement | 23.0 | 2.2 | ||
Recognized in other comprehensive income | -19.7 | -9.0 | ||
Acquisitions and disposals | -5.9 | -30.8 | ||
Translation differences | -5.4 | -1.3 | ||
Net deferred tax balance at December 31 | -84.9 | -76.8 |
2.8. EARNINGS AND DIVIDEND PER SHARE
Earnings per share
EUR million | \u00a0\u00a0\u00a0\u00a0 | 2022 | 2021 |
Net income attributable to equity holders of the parent company (basic/diluted), EUR million | 276.2 | 198.8 | |
Weighted average number of shares outstanding, in thousands | 104,365 | 104,360 | |
Effect of share-based payments, in thousands | 308 | \u2014 | |
Diluted weighted average number of shares outstanding, in thousands | 104,673 | 104,360 | |
Earnings per share from the profit for the period attributable to equity holders of the parent company | |||
Basic earnings per share, EUR | 2.65 | 1.91 | |
Diluted earnings per share, EUR | 2.64 | 1.91 |
Dividend per share
The dividends paid in 2022 were EUR 0.94 per share, totaling EUR 98.1 million (EUR 0.92 per share, totaling EUR 96.0 million). A dividend of EUR 1.00 per share will be proposed at the Annual General Meeting on April 27, 2023. This corresponds total dividends of EUR 104.4 million for 2022, calculated based on outstanding shares at December 31, 2022. This dividend is not reflected in the financial statements.
ACCOUNTING PRINCIPLES
Earnings per share
The basic earnings per share figure is calculated by dividing the net income attributable to the shareholders of the parent company by the weighted average number of shares outstanding during the period. Diluted earnings per share is calculated by adjusting the weighted average number of shares by the effect of diluting shares due to Performance Share Arrangement in the Group.
Dividend per share
Dividends proposed by the Board of Directors are not recognized in the financial statements until they have been approved by the Company\u2019s shareholders at the Annual General Meeting.
3. Acquisitions and capital expenditure
3.1. BUSINESS COMBINATIONS
Elif Holding A.\u015e.
On September 23, 2021 Huhtamaki completed the acquisition of Elif Holding A.\u015e. (Elif), a major supplier of sustainable flexible packaging to global FMCG brand owners, with operations in Turkey and in Egypt. The acquired business is reported as part of Huhtamaki\u00b4s Flexible Packaging business segment as of September 23, 2021.
In the year 2022, Huhtamaki has completed the initial accounting for the acquisition. The acquired assets and liabilities were recognized with the following values as of the acquisition date. The values for interest bearing liabilities and deferred tax liabilities have changed from the draft values presented in the end of the year 2021, when the initial accounting for the acquisition was still incomplete.
EUR million | \u200b | \u200b |
Other intangible assets | \u200b | 78.5 |
Tangible assets | \u200b | 96.8 |
Inventory | \u200b | 58.7 |
Trade and other current receivables | \u200b | 53.4 |
Cash and cash equivalents | \u200b | 28.4 |
Total assets | \u200b | 315.8 |
\u200b | \u200b | \u200b |
Interest bearing liabilities | \u200b | 111.3 |
Deferred tax liabilities | \u200b | 33.0 |
Trade and other liabilities | \u200b | 35.3 |
Total liabilities | \u200b | 179.5 |
\u200b | \u200b | \u200b |
Net assets total | \u200b | 136.3 |
Goodwill | \u200b | 222.0 |
Consideration | \u200b | 358.3 |
Consideration, paid in cash | \u200b | 358.3 |
\u200b | \u200b | \u200b |
\u200b | \u200b | \u200b |
Analysis of cash flows of acquisition | \u200b | \u200b |
\u200b | \u200b | \u200b |
EUR million | \u200b | \u200b |
Purchase consideration, cash payment | \u200b | -358.3 |
Cash and cash equivalents in acquired companies | \u200b | 28.4 |
Transaction costs of the acquisitions | \u200b | -9.2 |
Net cash flow on acquisitions | \u200b | -339.0 |
Contingent considerations
In the beginning of the reporting period, Huhtamaki had EUR 18.4 million of financial liabilities for contingent considerations. The payments are contingent mainly on the financial performance on the acquired businesses after the acquisition. In the year 2022, Huhtamaki settled EUR 2.2 million of the liabilities. The net fair valuations through the profit or loss were EUR 4.8 million. The impact from the change in exchange rates was EUR -0.4 million. In the end of the period, the fair value of the liabilities is EUR 20.6 million.
Non-current assets held for sale
The Group has reclassified certain assets consisting of leasehold land, building, furniture and fixtures and plant and machinery from property, plant and equipment to Assets held for sale. The Group expects to dispose these assets over the course of next 12 months.
ACCOUNTING PRINCIPLES
Acquisitions
Business combinations are accounted for using the acquisition method. The identifiable assets and liabilities are measured at their fair value at the date of acquisition, any non-controlling interest is measured either at fair value or at the non-controlling interest\u2019s proportionate share of the acquiree\u2019s net assets. In a business combination achieved in stages, the previously held equity interest in the acquiree is remeasured at its acquisition-date fair value and any resulting gain or loss is recognized in profit or loss or other comprehensive income, as appropriate. The aggregate of consideration transferred, any non-controlling interest and any previously held equity interest, less acquired net assets is recognized as goodwill.
Any possible contingent consideration is recognized at fair value at the acquisition date and it is classified as a financial liability or equity. Contingent consideration classified as a financial liability is remeasured at reporting period closing date and the related profit or loss is recognized in the income statement. Contingent consideration classified as equity is not remeasured.
Acquisition related costs are expensed as incurred.
Assets held for sale
Assets are classified as held for sale, if their carrying amounts will be recovered mainly through a sale transaction rather than through continuing use. The assets must be available for immediate sale in their present condition subject only to terms that are usual and customary for sale of such assets. Also, the sale must be highly probable and expected to be completed within one year from the date of classification. These assets are presented separately in the consolidated statement of financial position and measured at the lower of the carrying amount and fair value less costs to sell. Comparative information is not restated. Assets classified as held for sale are not depreciated.
3.2. GOODWILL
Goodwill allocation by groups of cash-generating units
Goodwill acquired through business combinations has been allocated to the level of groups of cash-generating units (groups of CGUs) that are expected to benefit from the synergies of the acquisition, which represent the lowest level at which the goodwill is monitored for internal management purposes. The group of CGU in which goodwill can be allocated represents the operating segment or lower regional level within the operating segment. Goodwill allocation by segments, and the weighted average pre-tax discount interest rates used in discounting the projected cash flows to their present value, are presented in the table below:
2022 | \u00a0\u00a0\u00a0\u00a0 | 2021 | ||||||
EUR million | \u00a0\u00a0\u00a0\u00a0 | Goodwill | \u00a0\u00a0\u00a0\u00a0 | Discount\u00a0interest | \u00a0\u00a0\u00a0\u00a0 | Goodwill | \u00a0\u00a0\u00a0\u00a0 | Discount\u00a0interest |
Flexible Packaging | 555.6 | 12.9 | 527.0 | 9.7 | ||||
North America | 231.9 | 10.8 | 224.3 | 7.6 | ||||
Foodservice Europe-Asia-Oceania | 183.7 | 10.2 | 185.9 | 8.1 | ||||
Fiber Packaging | 63.7 | 10.8 | 63.7 | 9.0 | ||||
Total goodwill | 1,035.0 | 1,000.9 |
Impairment testing
Goodwill has been tested for impairment and since the recoverable value of the groups of the cash-generating units (CGUs) has been higher than the carrying value, no impairment charges has been recognized.
In assessing whether goodwill has been impaired, the carrying value of the group of CGUs units has been compared to the recoverable amount of the group of CGUs. The recoverable amount is based on value-in-use, which is estimated using a discounted cash flow model. The cash flows are determined using five-year cash flow forecasts, which are based on business plans. The plans are based on experience as well as future expected market trends.
The plans are approved by management and are valid when impairment test is performed. Cash flows for future periods are extrapolated by using 1.0\u00a0percent growth rate (1.5 percent) in developed countries, 1.3\u00a0percent growth rate (1.7 percent) in developing countries and 2.4\u00a0percent growth rate (2.7 percent) in high growth countries. The management views these growth rates as being appropriate for the business, given the long time horizon of the testing period.
Sensitivity analysis
As part of the impairment testing a sensitivity analysis around the key assumptions is performed. The assumptions used in the impairment testing, that are considered to be most sensitive for changes, are EBIT and discount rates. Sensitivity analysis around these key assumptions have been performed, and management believes that any reasonably possible change (decrease of 2 percentage points in EBIT margin, increase of 1.5 percentage points in discount rates or combined effect of these changes) in the key assumptions would not cause carrying amount of group of CGUs to exceed its recoverable amount in North America, Foodservice Europe-Asia-Oceania or Fiber Packaging. Based on the sensitivity analysis for Flexible Packaging, the before mentioned changes in the key assumptions would cause the carrying amount of the group of CGUs to exceed its recoverable amount.
ACCOUNTING PRINCIPLES
Goodwill
Goodwill arising from an acquisition represents the excess of the consideration transferred over the fair value of the net identifiable assets acquired. Goodwill is allocated to groups of cash-generating units that are expected to benefit from the synergies of the acquisition and is not amortized but tested annually for impairment. For associates and joint ventures, the carrying amount of goodwill is included in the carrying amount of the investment. Goodwill is valued at cost less impairment losses.
Impairment testing
Goodwill is tested annually or more frequently if there are indications of impairment. In assessing whether goodwill has been impaired, the carrying value of the group of cash generating units (group of CGUs) has been compared to the recoverable amount of the group of CGUs. The recoverable amount is based on value-in-use, which is estimated using a discounted cash flow model. The cash flows are determined using five-year cash flow forecasts, which are based on business plans. Business plans are based on past experience as well as future expected market trends. Management approves business plans for impairment testing purposes. Cash flows for future periods are extrapolated by using defined growth rates for developed countries, developing countries and emerging countries. The discount rate used in the calculation reflects the weighted average cost of capital (WACC) and risks to the asset under review.
A goodwill impairment loss is recognized immediately as an expense in the income statement and is not subsequently reversed.
\u00a0
3.3. INTANGIBLE ASSETS
EUR million | \u00a0\u00a0\u00a0\u00a0 | Goodwill | \u00a0\u00a0\u00a0\u00a0 | Customer | \u00a0\u00a0\u00a0\u00a0 | Software | \u00a0\u00a0\u00a0\u00a0 | Other | \u00a0\u00a0\u00a0\u00a0 | Total 2022 |
Acquisition cost on January 1, 2022 | 1,115.7 | 114.1 | 92.7 | 74.9 | 1,397.4 | |||||
Additions | - | - | 1.0 | 1.8 | 2.8 | |||||
Disposals | - | -0.4 | -0.7 | -1.3 | -2.4 | |||||
Intra-balance sheet transfer | - | - | 5.0 | 3.8 | 8.8 | |||||
Business combinations | 3.0 | - | - | - | 3.0 | |||||
Reclassification to assets held for sale | - | - | - | -0.8 | -0.8 | |||||
Changes in exchange rates | 32.6 | 5.3 | 0.5 | 1.0 | 39.4 | |||||
Acquisition cost on December 31, 2022 | 1,151.4 | 119.0 | 98.5 | 79.3 | 1,448.3 | |||||
Accumulated amortization and impairment on January 1, 2022 | -114.8 | -39.9 | -82.5 | -37.8 | -275.0 | |||||
Accumulated amortization on disposals and transfers | - | 0.4 | 0.5 | 0.1 | 1.0 | |||||
Amortization during the financial year | - | -9.5 | -4.6 | -5.2 | -19.3 | |||||
Reclassification to assets held for sale | - | - | - | 0.1 | 0.1 | |||||
Changes in exchange rates | -1.6 | -0.6 | -0.2 | 0.1 | -2.3 | |||||
Accumulated amortization and impairment on December 31, 2022 | -116.4 | -49.6 | -86.8 | -42.7 | -295.4 | |||||
Book value on December 31, 2022 | 1,035.0 | 69.4 | 11.8 | 36.7 | 1,152.9 |
EUR million | \u00a0\u00a0\u00a0\u00a0 | Goodwill | \u00a0\u00a0\u00a0\u00a0 | Customer | \u00a0\u00a0\u00a0\u00a0 | Software | \u00a0\u00a0\u00a0\u00a0 | Other | \u00a0\u00a0\u00a0\u00a0 | Total 2021 |
Acquisition cost on January 1, 2021 | 844.3 | 49.1 | 87.4 | 46.9 | 1,027.7 | |||||
Additions | - | - | 1.1 | 1.7 | 2.8 | |||||
Disposals | - | - | -1.5 | -0.3 | -1.8 | |||||
Intra-balance sheet transfer | - | - | 3.3 | 6.1 | 9.4 | |||||
Business combinations | 230.5 | 60.2 | 0.5 | 18.6 | 309.8 | |||||
Reclassification to assets held for sale | - | - | - | - | - | |||||
Changes in exchange rates | 40.9 | 4.8 | 1.9 | 1.9 | 49.6 | |||||
Acquisition cost on December 31, 2021 | 1,115.7 | 114.1 | 92.7 | 74.9 | 1,397.4 | |||||
Accumulated amortization and impairment on January 1, 2021 | -111.9 | -31.3 | -78.6 | -36.0 | -257.9 | |||||
Accumulated amortization on disposals and transfers | - | - | 1.5 | 0.0 | 1.5 | |||||
Amortization during the financial year | - | -6.8 | -3.8 | -1.5 | -12.1 | |||||
Reclassification to assets held for sale | - | - | - | - | - | |||||
Changes in exchange rates | -2.8 | -1.8 | -1.6 | -0.3 | -6.4 | |||||
Accumulated amortization and impairment on December 31, 2021 | -114.8 | -39.9 | -82.5 | -37.8 | -275.0 | |||||
Book value on December 31, 2021 | 1,000.9 | 74.2 | 10.3 | 37.1 | 1,122.4 |
ACCOUNTING PRINCIPLES
Goodwill
See note 3.2 Goodwill for the accounting principles relating to goodwill.
Other intangible asset
Other intangible assets include customer relations, patents, copyrights, trademarks, emission rights, renewable energy certificates and software licenses. These are measured at cost and typically amortized on a straight-line basis over the estimated useful lives, which may vary from 3 to 20\u00a0years. Other intangible assets with definite useful lives are tested for impairment when there are indications of impairment, see more information on impairment of assets in Note 3.4 Tangible assets.
Cloud computing arrangements that meet the definition of an intangible asset and comply with the recognition criteria are capitalized on the balance sheet. Implementation costs (customization and configuration) relating to cloud
computing arrangements that don't meet the definition of an intangible asset and are distinct from the access to the software are expensed when the services are received. If the customization and configuration services are not distinct from the access to the software, the costs are recognized as prepayments and expensed over the software contract term.
Research and development
Research costs are recognized in the income statement as incurred. Expenditure on development activities related to new products and processes are capitalized in the statement of financial position from the moment they are expected to bring future economic benefits and the Group has intention and resources to finalize the development. Previously expensed development expenditure is not capitalized later.
Emission rights and renewable energy certificates
Emission rights and renewable energy certificates are measured at cost. Rights and certificates received free of charge are recognized at their nominal value (nil). Emission rights are derecognized against actual emissions. A provision to cover the obligation to return emission rights is recognized at the fair value in the end of the reporting period if the emission allowances held by the Group do not cover actual emissions. Renewable energy certificates are derecognized against actual consumption of energy.
The estimated useful lives are (years):
Intangible assets up to | \u00a0\u00a0\u00a0\u00a0 | 20 |
Software | 3\u20135 | |
Customer relations | 7 |
Subsequent expenditure on capitalized other intangible assets is capitalized only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure is expensed as incurred.
3.4. TANGIBLE ASSETS
EUR million | \u00a0\u00a0\u00a0\u00a0 | 2022 | \u00a0\u00a0\u00a0\u00a0 | 2021 |
Owned property, plant and equipment | 1,588.4 | 1,510.4 | ||
Right-of-use assets | 147.4 | 163.7 | ||
Total tangible assets | 1,735.8 | 1,674.1 |
Owned assets | ||||||||||||
EUR million | \u00a0\u00a0\u00a0\u00a0 | Land and land improvements | \u00a0\u00a0\u00a0\u00a0 | Buildings | \u00a0\u00a0\u00a0\u00a0 | Machinery | \u00a0\u00a0\u00a0\u00a0 | Construction | \u00a0\u00a0\u00a0\u00a0 | Other | \u00a0\u00a0\u00a0\u00a0 | Total |
Acquisition cost on January 1, 2022 | 39.9 | 474.4 | 2,108.2 | 257.0 | 105.4 | 2,985.0 | ||||||
Additions | - | 3.8 | 14.0 | 302.2 | 5.2 | 325.2 | ||||||
Disposals | -0.3 | -20.1 | -103.9 | -29.0 | -3.8 | -157.1 | ||||||
Intra-balance sheet transfer | 0.1 | 31.1 | 106.2 | -168.4 | 4.7 | -26.3 | ||||||
Business combinations | - | - | - | - | - | - | ||||||
Reclassification to assets held for sale | -0.3 | -4.1 | -2.3 | - | -0.4 | -7.2 | ||||||
Changes in exchange rates | 0.2 | 10.1 | 43.3 | 4.4 | 0.2 | 58.1 | ||||||
Acquisition cost on December 31, 2022 | 39.6 | 495.2 | 2,165.5 | 366.1 | 111.2 | 3,177.7 | ||||||
Accumulated depreciation and impairment on January 1, 2022 | -1.5 | -203.3 | -1,196.8 | - | -73.0 | -1,474.6 | ||||||
Accumulated depreciation on disposals and transfers | - | 8.9 | 62.9 | - | 3.6 | 75.4 | ||||||
Depreciation during the financial year | -0.1 | -19.5 | -133.7 | - | -7.7 | -161.0 | ||||||
Impairments reversed during the financial year | - | - | - | - | - | - | ||||||
Reclassification to assets held for sale | - | 1.2 | 1.9 | - | 0.4 | 3.5 | ||||||
Changes in exchange rates | -0.1 | -4.3 | -28.4 | - | 0.2 | -32.6 | ||||||
Accumulated depreciation and impairment on December 31, 2022 | -1.7 | -217.0 | -1,294.0 | - | -76.4 | -1,589.2 | ||||||
Book value on December 31, 2022 | 37.9 | 278.2 | 871.4 | 366.1 | 34.8 | 1,588.4 |
Owned assets |
EUR\u00a0million | \u00a0\u00a0\u00a0\u00a0 | Land and land improvements | \u00a0\u00a0\u00a0\u00a0 | Buildings\u00a0and | \u00a0\u00a0\u00a0\u00a0 | Machinery\u00a0and | \u00a0\u00a0\u00a0\u00a0 | Construction | \u00a0\u00a0\u00a0\u00a0 | Other tangible | \u00a0\u00a0\u00a0\u00a0 | Total 2021 |
Acquisition cost on January 1, 2021 | 30.0 | 423.7 | 1,816.4 | 178.6 | 93.9 | 2,542.5 | ||||||
Additions | 0.1 | 2.1 | 15.8 | 258.6 | 2.5 | 279.1 | ||||||
Disposals | -0.6 | -2.2 | -80.1 | -1.8 | -1.5 | -86.2 | ||||||
Intra-balance sheet transfer | 4.4 | 12.7 | 155.7 | -188.0 | 5.9 | -9.4 | ||||||
Business combinations | 4.5 | 9.7 | 77.8 | 1.1 | 0.1 | 93.2 | ||||||
Reclassification to assets held for sale | - | - | - | - | - | - | ||||||
Changes in exchange rates | 1.7 | 28.4 | 122.6 | 8.5 | 4.5 | 165.7 | ||||||
Acquisition cost on December 31, 2021 | 39.9 | 474.4 | 2,108.2 | 257.0 | 105.4 | 2,985.0 | ||||||
Accumulated depreciation and impairment on January 1, 2021 | - | -176.2 | -1,081.7 | - | -64.9 | -1,322.7 | ||||||
Accumulated depreciation on disposals and transfers | -1.4 | 0.8 | 77.7 | - | 2.5 | 79.7 | ||||||
Depreciation during the financial year | -0.1 | -17.3 | -112.3 | - | -7.2 | -136.8 | ||||||
Impairments reversed during the financial year | - | 2.8 | - | - | - | 2.8 | ||||||
Reclassification to assets held for sale | - | - | - | - | - | - | ||||||
Changes in exchange rates | -0.1 | -13.5 | -80.6 | - | -3.4 | -97.5 | ||||||
Accumulated depreciation and impairment on December 31, 2021 | -1.5 | -203.3 | -1,196.8 | - | -73.0 | -1,474.6 | ||||||
Book value on December 31, 2021 | 38.4 | 271.1 | 911.4 | 257.0 | 32.5 | 1,510.4 |
\u200b | \u200b | Right-of-use assets | ||||||||
EUR\u00a0million | \u00a0\u00a0\u00a0\u00a0 | Land | \u00a0\u00a0\u00a0\u00a0 | Buildings | \u00a0\u00a0\u00a0\u00a0 | Machinery\u00a0and | \u00a0\u00a0\u00a0\u00a0 | Other | \u00a0\u00a0\u00a0\u00a0 | Total\u00a02022 |
Acquisition cost on January 1, 2022 | 14.9 | 201.2 | 39.3 | 0.7 | 256.1 | |||||
Additions | 0.2 | 9.4 | 7.2 | 1.0 | 17.9 | |||||
Disposals | -1.8 | -14.9 | -8.9 | -0.1 | -25.6 | |||||
Intra-balance sheet transfer | - | - | - | - | - | |||||
Business combinations | - | 1.7 | - | - | 1.7 | |||||
Changes in exchange rates | 0.2 | 0.2 | 0.4 | -0.0 | 0.7 | |||||
Acquisition cost on December 31, 2022 | 13.5 | 197.7 | 38.0 | 1.6 | 250.8 | |||||
Accumulated depreciation and impairment on January 1, 2022 | -5.4 | -68.0 | -18.7 | -0.4 | -92.5 | |||||
Accumulated depreciation on disposals and transfers | 0.2 | 10.0 | 8.0 | 0.1 | 18.4 | |||||
Depreciation during the financial year | -0.5 | -19.9 | -8.6 | -0.3 | -29.4 | |||||
Changes in exchange rates | -0.1 | 0.4 | -0.2 | 0.0 | 0.1 | |||||
Accumulated depreciation and impairment on December 31, 2022 | -5.8 | -77.5 | -19.4 | -0.6 | -103.4 | |||||
Book value on December 31, 2022 | 7.7 | 120.2 | 18.6 | 1.0 | 147.4 |
\u200b | \u200b | Right-of-use assets | ||||||||
EUR million | \u00a0\u00a0\u00a0\u00a0 | Land | \u00a0\u00a0\u00a0\u00a0 | Buildings | \u00a0\u00a0\u00a0\u00a0 | Machinery\u00a0and | \u00a0\u00a0\u00a0\u00a0 | Other | \u00a0\u00a0\u00a0\u00a0 | Total\u00a02021 |
Acquisition cost on January 1, 2021 | 14.5 | 177.1 | 35.9 | 0.6 | 228.1 | |||||
Additions | 0.3 | 18.1 | 8.4 | 0.1 | 26.9 | |||||
Disposals | -1.0 | -15.4 | -6.1 | -0.2 | -22.6 | |||||
Intra-balance sheet transfer | - | - | - | - | - | |||||
Business combinations | - | 14.7 | - | 0.2 | 14.9 | |||||
Changes in exchange rates | 1.1 | 6.7 | 1.1 | 0.0 | 8.9 | |||||
Acquisition cost on December 31, 2021 | 14.9 | 201.2 | 39.3 | 0.7 | 256.1 | |||||
Accumulated depreciation and impairment on January 1, 2021 | -4.6 | -62.3 | -15.2 | -0.4 | -82.5 | |||||
Accumulated depreciation on disposals and transfers | - | 14.8 | 5.8 | 0.2 | 20.8 | |||||
Depreciation during the financial year | -0.4 | -18.3 | -8.7 | -0.2 | -27.6 | |||||
Changes in exchange rates | -0.4 | -2.3 | -0.5 | -0.0 | -3.1 | |||||
Accumulated depreciation and impairment on December 31, 2021 | -5.4 | -68.0 | -18.7 | -0.4 | -92.5 | |||||
Book value on December 31, 2021 | 9.5 | 133.2 | 20.6 | 0.3 | 163.7 |
ACCOUNTING PRINCIPLES
Tangible asset
Tangible assets include both owned property, plant and equipment and right-of-use (ROU) assets.
Tangible assets comprising mainly of land, buildings, machinery, tooling and equipment are valued at cost less accumulated depreciation and impairment losses. The cost of self-constructed assets includes the cost of material, direct labor costs and an appropriated proportion of production overheads. When an asset includes major components that have different useful lives, they are accounted for as separate items. The costs of right-of-use assets include the amount of the initial measurement of the lease liability, any lease payments made at or before the commencement date less lease incentives received, any direct costs and an estimate of dismantling costs. The carrying amount is further adjusted for any remeasurement of the lease liability.
Expenditure incurred to replace a component in a tangible asset that is accounted for separately, including major inspection and overhaul costs, is capitalized. Other subsequent expenditure is capitalized only when it increases the future economic benefits embodied in the asset. All other expenditure such as ordinary maintenance and repairs is recognized in the income statement as an expense as incurred. The borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset are capitalized as part of the acquisition cost.
Depreciation is charged to the income statement on a straight-line basis over the estimated useful lives of the owned property, plant and equipment or over the lease term of right-of-use assets. Land is not depreciated.
The estimated useful lives of the owned property, plant and equipment are (years):
Buildings and other structures | \u00a0\u00a0\u00a0\u00a0 | 20\u201340 |
Machinery and equipment | 5\u201315 | |
Other tangible assets and land improvements | 3\u201312 |
Tangible assets which are classified as held for sale are valued at lower of its carrying amount or fair value less costs to sell. The depreciation of these assets will be ceased when assets are classified as held for sale. Gains or losses arising from the disposal of tangible assets are included in Earnings before interest and taxes.
Impairment of assets
The carrying amounts of assets are assessed at each reporting period closing date to determine whether there is any indication of impairment. If such indication exists, the recoverable amount is estimated. An impairment loss is recognized whenever the carrying amount of assets or cash-generating unit exceeds the recoverable amount. Impairment losses are recognized in the income statement. Impairment losses recognized in respect of cash-generating units are allocated first to reduce the carrying value of goodwill allocated to groups of cash-generating units and then to reduce the carrying amount of other assets in the group of units on pro rata bases.
For intangible and tangible assets the recoverable amount is the higher of the fair value less costs to sell and value-in-use. In assessing value-in-use, the estimated future cash flows are discounted to their present value based on the average cost of capital rate (pre-tax) of the cash-generating unit where the assets are located, adjusted for risks specific to the assets.
In respect of tangible assets, and other intangible assets excluding goodwill, impairment losses recognized in prior periods are assessed at each reporting date for any indication that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is only reversed to the extent that the asset\u2019s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortization, if no impairment loss had been recognized. An impairment loss in respect of goodwill is never reversed.
4. Working capital
4.1. INVENTORIES
EUR million | \u00a0\u00a0\u00a0\u00a0 | 2022 | \u00a0\u00a0\u00a0\u00a0 | 2021 |
Raw and packaging material | 320.9 | 261.1 | ||
Work-In-Process | 104.6 | 102.8 | ||
Finished goods | 307.6 | 280.2 | ||
Goods in transit | 22.3 | 21.6 | ||
Total | 755.4 | 665.7 |
The value at cost for finished goods amounts to EUR 343.3 million (EUR 310.6 million). An allowance of EUR 35.7 million (EUR \u00a030.4 million) has been established for obsolete items. Total inventories include EUR 2.5 million resulting from reversals of previously written down values (EUR 1.2 million). Reversals relate to sold finished goods inventories.
ACCOUNTING PRINCIPLES
Inventories
Inventories are measured at the lower of cost and net realizable value. Net realizable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses.
Cost of inventories is determined using the first-in first-out (FIFO) principle and include expenditure incurred in acquiring the inventories and bringing them to their existing location and condition. Costs for produced finished goods and work-in-process represent the purchase price of materials, direct labor costs, other direct costs and related production overheads excluding selling and financial costs.
4.2. TRADE AND OTHER CURRENT RECEIVABLES
EUR million | \u00a0\u00a0\u00a0\u00a0 | 2022 | \u00a0\u00a0\u00a0\u00a0 | 2021 |
Trade receivables | 563.2 | 568.5 | ||
Other receivables | 77.0 | 106.7 | ||
Accrued interest and other financial items | 28.0 | 27.7 | ||
Other accrued income and prepaid expenses | 41.1 | 42.0 | ||
Total | 709.4 | 744.9 |
Other accrued income and prepaid expenses include prepayments for goods, accrued royalty income, rebates and other miscellaneous accruals.
Aging and impairment losses of trade receivables at the closing date
Gross | Impairment | Net | Gross | Impairment | Net | ||||
EUR million | \u00a0\u00a0\u00a0\u00a0 | 2022 | 2022 | 2022 | 2021 | 2021 | 2021 | ||
Not past due | 495.7 | 0.7 | 495.0 | 502.9 | 1.3 | 501.6 | |||
Past due 0-30 days | 47.9 | -0.2 | 48.1 | 47.2 | -0.2 | 47.4 | |||
Past due 31-120 days | 15.9 | 0.2 | 15.7 | 15.1 | 0.6 | 14.5 | |||
Past due more than 120 days | 10.1 | 5.7 | 4.4 | 13.1 | 8.1 | 5.0 | |||
Total | 569.5 | 6.3 | 563.2 | 578.3 | 9.8 | 568.5 |
ACCOUNTING PRINCIPLES
Trade and other current receivables
Trade and other current receivables are financial assets initially measured at fair value and subsequently measured at amortized cost by using the effective interest method. The Group uses simplified approach to measure a loss
allowance for expected credit losses on trade receivables that do not contain a significant financing component, where the Group always measures the loss allowance at an amount equal to the lifetime expected credit losses. For this purpose, trade receivables are grouped based on geographical location, product type and customer rating. The Group uses its historical credit losses experience adjusted with supportable information about current and future conditions to define the expected credit losses. The amount of expected credit losses is updated at each reporting date.
In factoring arrangements for trade receivables, the sold trade receivables are derecognized once the contractual cash flows and substantially all risks and rewards of ownership are transferred.
4.3. PROVISIONS
Restructuring provisions
Restructuring provisions include mainly costs for various ongoing projects to streamline operations. Provisions relate to employee termination benefits.
Other provisions
Other provisions include mainly captive insurance provisions relating to workers, environmental and litigation provisions.
Restructuring | ||||
EUR million | reserve | Other | Total 2022 | Total 2021 |
Provision on January 1, 2022 | 3.6 | 14.2 | 17.8 | 34.2 |
Translation difference | -0.3 | 0.6 | 0.3 | 1.4 |
Provisions made during the year | 0.9 | 16.7 | 17.6 | 10.0 |
Provisions used during the year | -2.9 | -5.4 | -8.2 | -27.1 |
Unused provisions reversed during the year | -0.7 | -3.5 | -4.2 | -0.3 |
Unwind of discount | 0.0 | -0.1 | -0.1 | -0.3 |
Provision on December 31, 2022 | 0.7 | 22.5 | 23.1 | 17.8 |
Current | 0.7 | 9.2 | 9.8 | 4.7 |
Non-current | 0.0 | 13.3 | 13.3 | 13.1 |
ACCOUNTING PRINCIPLES
Provisions
Provisions are recognized in the statement of financial position when the Group has a present legal or constructive obligation as a result of a past event and it is probable that an outflow of economic benefits will be required to settle such obligation, and a reliable estimate of the amount of the obligation can be made. Provisions arise from restructuring plans, onerous contracts, legal proceedings and from environmental litigation risks. Obligations arising from restructuring plans are recognized when the detailed and formal plans have been established and when there is a valid expectation that such plan will be carried out (plan has been announced). Provision from emissions is recognized according to actual emissions.
4.4. TRADE AND OTHER CURRENT LIABILITIES
EUR million | \u00a0\u00a0\u00a0\u00a0 | 2022 | \u00a0\u00a0\u00a0\u00a0 | 2021 |
Trade payables | 491.0 | 550.0 | ||
Other payables | 82.0 | 97.7 | ||
Accrued interest expense and other financial items | 27.0 | 21.6 | ||
Personnel and social security accruals | 79.0 | 84.8 | ||
Other accrued expenses | 55.8 | 81.3 | ||
Total | 734.9 | 835.3 |
Other accrued expenses include accruals for purchases of material and other miscellaneous accruals.
ACCOUNTING PRINCIPLES
Trade and other current liabilities are measured at amortized cost.
5. Capital structure and financial items
5.1. NET FINANCIAL ITEMS
EUR million | \u00a0\u00a0\u00a0\u00a0 | 2022 | \u00a0\u00a0\u00a0\u00a0 | 2021 |
Interest income | ||||
Financial assets at amortized cost | ||||
Interest-bearing receivables and other receivables | 7.2 | 2.2 | ||
Financial assets at fair value through profit or loss | ||||
Derivatives | 1.8 | 0.4 | ||
Defined benefit plans | 1.9 | 1.2 | ||
Dividend income | ||||
Other investments | 0.2 | 0.2 | ||
Other financial income | ||||
FX revaluation gains | ||||
Interest-bearing assets and liabilities | 0.0 | 0.0 | ||
Derivatives | 0.1 | 0.0 | ||
Financial income | 11.1 | 4.0 | ||
Interest expense | ||||
Financial liabilities measured at amortized cost | ||||
Interest-bearing liabilities (excl. lease liabilities) | -32.2 | -19.9 | ||
Lease liabilities | -5.7 | -3.6 | ||
Financial liabilities at fair value through profit or loss | ||||
Derivatives | -11.2 | -3.8 | ||
Defined benefit plans | -2.8 | -2.8 | ||
Other financial expense | ||||
FX revaluation losses | ||||
Interest-bearing assets and liabilities | -4.4 | -2.1 | ||
Derivatives | 0.0 | -0.1 | ||
Change in fair value of contingent consideration | -4.8 | -0.7 | ||
Fees related to committed credit facilities | -2.5 | -4.3 | ||
Other fees | -0.7 | |||
Financial expense | -64.3 | -37.2 | ||
Net financial items | -53.2 | -33.2 |
ACCOUNTING PRINCIPLES
Net financial items
Gains and losses on fair value hedges are reported net of the gain or loss on the hedged item. Only foreign exchange revaluation gains and losses arising from purely financial exposures such as loans denominated in foreign currencies are reported in other financial items. Changes in fair value of contingent considerations related to business combinations are reported as other financial income or expense. \u00a0 \u00a0
5.2. INTEREST-BEARING RECEIVABLES
2022 | 2022 | 2021 | 2021 | |||
EUR million | Carrying amount | Fair value | \u00a0\u00a0\u00a0\u00a0 | Carrying amount | Fair value | |
Current | ||||||
Loan receivables | 13.4 | 13.4 | 0.8 | 0.8 | ||
Finance lease receivables | 1.6 | 1.6 | 1.0 | 1.0 | ||
Current interest-bearing receivables | 14.9 | 14.9 | 1.9 | 1.9 | ||
Non-current | ||||||
Loan receivables | 0.0 | 0.0 | 0.0 | 0.0 | ||
Finance lease receivables | 0.9 | 0.9 | 2.0 | 2.0 | ||
Non-current interest-bearing receivables | 0.9 | 0.9 | 2.0 | 2.0 |
Finance lease receivables
EUR million | 2022 | \u00a0\u00a0\u00a0\u00a0 | 2021 | ||
Finance lease receivable is payable as follows: | |||||
In less than one year | 1.6 | 1.0 | |||
Between one and five years | 0.9 | 2.0 | |||
Total minimum lease payments | 2.5 | 3.1 | |||
Present value of minimum lease payments | |||||
In less than one year | 1.1 | 0.9 | |||
Between one and five years | 1.3 | 1.9 | |||
Total present value of minimum lease payments | 2.5 | 2.8 | |||
Unearned future financial income | - | 0.3 |
Finance lease receivables relate to packaging machines leased to customers.
ACCOUNTING PRINCIPLES
Interest-bearing receivables
Interest-bearing receivables are measured at amortized cost. Fair values have been calculated by discounting future cash flows of each major receivable at the appropriate market interest rate prevailing at closing date. The fair value of current interest-bearing receivables is estimated to equal the carrying amount. \u00a0 \u00a0
5.3. CASH AND CASH EQUIVALENTS
EUR million | \u00a0\u00a0\u00a0\u00a0 | 2022 | 2021 |
Cash and bank | 305.0 | 176.7 | |
Liquid marketable securities | 4.4 | 1.9 | |
Total | 309.4 | 178.7 |
ACCOUNTING PRINCIPLES
Cash and cash equivalents
Cash and cash equivalents comprise of cash at bank and short-term highly liquid money market securities for the Group\u2019s cash management purposes that are subject to insignificant risk of changes in value.
5.4. SHAREHOLDERS\u2019 EQUITY
Share capital | \u00a0\u00a0\u00a0\u00a0 | Number\u00a0of\u00a0shares | Share\u00a0capital\u00a0EUR | Share\u00a0premium\u00a0EUR | Treasury\u00a0shares\u00a0EUR | Total\u00a0EUR |
January 1, 2021 | 107,760,385 | 366,385,309.00 | 115,023,103.38 | -31,343,038.88 | 450,065,373.50 | |
Own shares conveyance through performance share incentive plan | - | - | - | 137,850.00 | 137,850.00 | |
December 31, 2021 | 107,760,385 | 366,385,309.00 | 115,023,103.38 | -31,205,188.88 | 450,203,223.50 | |
Own shares conveyance through performance share incentive plan | - | - | - | |||
December 31, 2022 | 107,760,385 | 366,385,309.00 | 115,023,103.38 | -31,205,188.88 | 450,203,223.50 |
All shares issued are fully paid.
Share capital of the parent company
Huhtam\u00e4ki Oyj has one series of shares. Each share entitles its holder to equal voting rights and equal distribution of dividend and other assets. The Company\u2019s Articles of Association do not contain rules regarding the minimum or maximum number of shares or the minimum or maximum share capital. Shares do not have a nominal value. All shares issued are fully paid.
The amount of the subscription price exceeding the par value of shares (EUR 3.40) received by the Company in connection with share subscriptions based on option rights granted under the option rights plan established under the old Companies Act (734/1978) has been recorded in the share premium. The Company\u2019s last existing option rights plan ceased on April 30, 2014.
Based on the authorization given by the Annual General Meeting of Shareholders on March 25, 2002, the Company repurchased in total 5,061,089 own shares during 2002 and 2003. After 2003 no own shares have been repurchased. The Annual General Meeting of Shareholders on April 27, 2022 authorized the Board of Directors to decide on the repurchase of the Company\u2019s own shares. The authorization remains in force until the end of the next Annual General Meeting, however, no longer than until June 30, 2023. The authorization by Annual General Meeting on April 29, 2020 to the Board of Directors to resolve on the repurchase of own shares terminated at the end of the Annual General Meeting on April 27, 2022.
The Annual General Meeting of Shareholders on April 22, 2022 authorized the Board of Directors to decide on the issuance of shares as well as the issuance of special rights entitling to shares. The authorization remains in force until the end of the next Annual General Meeting, however, no longer than until June 30, 2023. This authorization cancelled the authorization given by the Annual General Meeting on April 22, 2021 to decide on the issuance of shares as well as the issuance of special rights entitling to shares. During 2022 no own shares were transferred (during 2021 a total of 15,000 own shares were transferred based on the authorization in force at that time).
On December 31, 2022 the Company owned a total of 3,395,709 own shares (3,395,709 own shares).
Members of the Board of Directors and the CEO of the Company owned on December 31, 2022 a total of 69,850 shares (56,600 shares). These shares represented 0.06% (0.05%) of the total number of shares and voting rights in the Company on December 31, 2022.
Proposal of the Board of Directors to distribute the earnings
On December\u00a031, 2022 Huhtam\u00e4ki Oyj\u2019s non-restricted equity was EUR 907,930,195.21 of which the result for the financial period was EUR 552,824,918.57. The Board of Directors proposes that dividend will be distributed at EUR 1.00 per share. No dividend for the own shares held by the Company on the record date shall be distributed.
The total amount of dividend on the date of this proposal would be EUR 104,364,676.
No significant changes have taken place in the Company\u2019s financial position since the end of the financial\u00a0year. The Company\u2019s liquidity position is good and the proposed distribution does not, in the view of the Board of Directors, risk the Company\u2019s ability to fulfill its obligations.
Treasury shares
Treasury shares include the purchase price of Huhtam\u00e4ki Oyj\u2019s shares held by Group companies. In 2022 no own shares were transferred \u00a0(in 2021 \u00a0own shares were transferred according to the terms and conditions of the CEO signing bonus). There are no additions in treasury shares in 2022.
Translation differences
Translation differences contain the differences resulting from the translation of foreign entities\u2019 financial statements into euros. Also gains and losses from net investments in foreign entities are reported in translation differences. Hedges of those investments are reported in translation differences, if hedge accounting criteria is met.
ACCOUNTING PRINCIPLES
Equity, dividends and own shares
The Group\u2019s equity includes instruments that evidences a residual interest in the assets of an entity after deducting all of its liabilities and contains no contractual obligation for the issuer to deliver cash or other financial asset to another entity or to exchange financial assets or financial liabilities with another entity under conditions which are unfavorable to the issuer. When Huhtam\u00e4ki Oyj\u2019s own shares are repurchased, the amount of the consideration paid, including directly attributable costs, is recognized as a deduction in equity. Dividends proposed by the Board of Directors are not recognized in the financial statements until the shareholders have approved them at the Annual General Meeting.
5.5. FAIR VALUE AND OTHER RESERVES
EUR million | \u00a0\u00a0\u00a0\u00a0 | |
December 31, 2020 | -103.8 | |
Cash flow hedges recognized in other comprehensive income | 5.5 | |
Cash flow hedges transferred to profit or loss | -0.5 | |
Cash flow hedges transferred to statement of financial position | -0.1 | |
Deferred taxes | -1.1 | |
Change of remeasurements on defined benefit plans | 35.7 | |
Deferred taxes | -8.0 | |
Change of non-controlling interest in other comprehensive income | -0.3 | |
December 31, 2021 | -72.4 | |
Cash flow hedges recognized in other comprehensive income | 7.5 | |
Cash flow hedges transferred to profit or loss | -0.4 | |
Cash flow hedges transferred to statement of financial position | 10.3 | |
Deferred taxes | -3.4 | |
Change of remeasurements on defined benefit plans | 44.1 | |
Deferred taxes | -16.3 | |
Change of non-controlling interest in other comprehensive income | 0.1 | |
December 31, 2022 | -30.4 |
Fair value and other reserves
Fair value and other reserves contain the effective portion of fair value changes of derivative instruments designated as cash flow hedges, the change in fair value of other investments, the change of remeasurements on defined benefit plans and the change of non-controlling interest. Also deferred taxes in equity are reported in fair value and other reserves.
ACCOUNTING PRINCIPLES
Fair value and other reserves
All derivative financial instruments are measured at fair value. The Group applies hedge accounting for certain interest rate swaps and foreign exchange forwards that meet hedge accounting criteria as defined in IFRS 9. The hedged item must be highly probable to occur and must ultimately affect the income statement. The hedges must be
highly effective prospectively. For qualifying cash flow hedges, the portion of any change in fair value that is effective is included in other comprehensive income, and any remaining ineffective portion is recognized in the income statement. The cumulative changes of fair value of the hedging instrument that have been recognized in equity are transferred from equity and included in the income statement when the forecasted transaction is recognized in the income statement. When the hedged forecast transaction subsequently results in the recognition of non-financial asset or non-financial liability, the cumulative change of fair value of the hedging instrument that has been recognized in equity is transferred from equity and included in the initial carrying amount of the asset or liability at the time it is recognized.
For qualifying fair value hedges, the valuation is recognized in the income statement relating to the hedged risk. Derivative instruments that are designated as hedging instruments but not accounted for according to the principles of hedge accounting or which do not fulfill IFRS 9 hedge accounting requirements are classified as financial instruments at fair value through profit or loss and valued at fair value. Changes in fair values of these derivative financial instruments are recognized in the income statement. A non-split presentation is applied to liabilities at fair value through profit or loss because the presentation in OCI would create or enlarge an accounting mismatch in profit or loss.
The Group uses foreign exchange forwards and foreign currency loans to hedge net investments in foreign entities. Hedges of net investment in foreign entities must meet the same hedge accounting criteria as cash flow hedges as detailed in IFRS 9. All changes in fair value arising from the hedges are recognized as a translation difference in other comprehensive income if hedge accounting criteria are met. If the hedged entity is disposed of, the cumulative changes in fair value of the hedging instrument that have been recognized in equity are included in the income statement at the time of disposal. \u00a0
5.6. INTEREST-BEARING LIABILITIES
\u200b | 2022 | 2021 | |||
EUR million | Carrying amount | Fair value | Carrying amount | Fair value | |
Current | |||||
Loans from financial institutions | |||||
fixed rate | 277.6 | 277.5 | 320.4 | 320.3 | |
floating rate | 63.5 | 63.5 | 74.4 | 74.4 | |
Bonds | |||||
fixed rate | - | - | - | - | |
Other current loans | |||||
floating rate | 5.1 | 5.1 | 0.2 | 0.2 | |
Contingent considerations | 20.6 | 20.6 | 3.3 | 3.3 | |
Lease liabilities | 25.3 | 25.3 | 28.8 | 28.8 | |
Total | 392.2 | 392.0 | 427.2 | 427.1 | |
Non-current | |||||
Loans from financial institutions | |||||
fixed rate | 79.3 | 74.3 | 98.0 | 92.0 | |
floating rate | 371.0 | 371.0 | 691.3 | 691.3 | |
Bonds | |||||
fixed rate | 815.8 | 777.6 | 323.7 | 305.8 | |
Other non-current loans | |||||
floating rate | 4.6 | 4.6 | 0.7 | 0.7 | |
Contingent considerations | - | - | 15.2 | 15.2 | |
Lease liabilities | 133.2 | 133.2 | 146.8 | 146.8 | |
Total | 1,403.9 | 1,360.7 | 1,275.6 | 1,251.7 |
Loan repayments
Repayment | Loans from | Bonds | Other loans | Contingent considerations | Lease liabilities | Total |
2023 | 341.1 | - | 5.1 | 20.6 | 25.3 | 392.1 |
2024 | 286.0 | 149.9 | - | - | 38.7 | 474.6 |
2025 | 86.0 | - | - | 13.9 | 99.9 | |
2026 | 47.5 | 168.3 | 4.6 | - | 11.4 | 231.7 |
2027 | 30.8 | 497.6 | - | - | 9.4 | 537.7 |
2028- | - | - | - | - | 59.9 | 59.9 |
ACCOUNTING PRINCIPLES
Interest-bearing liabilities
Interest-bearing loans and borrowings are classified as other liabilities. Interest-bearing loans and borrowings are originated loans and bank loans, and are carried at amortized cost by using the effective interest rate method. All interest-bearing liabilities are other liabilities than liabilities for trading purposes or derivative financial instruments defined in IFRS 9 and as such are carried at amortized cost. Fair values have been calculated by discounting future cash flows at the appropriate market interest rate prevailing at period end closing date. Interest rates for measuring fair values of interest-bearing liabilities were\u00a03.55%\u20136.17%. The fair value of current interest-bearing liabilities is estimated to equal the carrying amount.
Contingent considerations related to business combinations classified as financial liabilities are measured at fair value through profit or loss and reported in the interest-bearing liabilities.
Lease liabilities are recognized at the commencement date of the lease. Lease liabilities are measured at the present value of future lease payments using an effective interest rate method. The carrying amount is reduced to reflect the lease payments made and the interest expense is allocated over the lease term. A lease liability is remeasured, when there is a lease modification or reassessment.
Reconciliation of liabilities arising from financing activities
2022 | 2021 | |||||||
Non-cash changes | ||||||||
EUR million | Total | Cash flows | Business combinations | Contingent considerations | Foreign exchange movement | Reclassification from long-term to short-term | Other | Total |
Long-term loans | 1,270.6 | 293.7 | - | -15.2 | 31.3 | -155.8 | -12.2 | 1,128.8 |
Short-term loans | 346.2 | -186.1 | - | 20.0 | 0.8 | 155.8 | -42.6 | 398.4 |
Long-term lease liabilities | 133.2 | 0.0 | -1.8 | - | 1.0 | -17.3 | 4.5 | 146.8 |
Short-term lease liabilities | 25.3 | -28.8 | 1.9 | - | -0.1 | 17.3 | 6.2 | 28.8 |
Total liabilities from financing activities | 1,775.4 | 78.8 | 0.1 | 4.8 | 33.0 | 0.0 | -44.1 | 1,702.8 |
2021 | 2020 | |||||||
Non-cash changes | ||||||||
EUR million | Total | Cash flows | Business combinations | Contingent considerations | Foreign exchange movement | Reclassification from long-term to short-term | Other | Total |
Long-term loans | 1,128.8 | 364.0 | 31.6 | 15.2 | 21.4 | -86.8 | -26.6 | 810.0 |
Short-term loans | 398.4 | 13.0 | 67.0 | 3.3 | 7.0 | 86.8 | -7.3 | 228.6 |
Long-term lease liabilities | 146.8 | 0.0 | 14.6 | - | 5.2 | -21.9 | 17.4 | 131.4 |
Short-term lease liabilities | 28.8 | -28.8 | 1.8 | - | 1.0 | 21.9 | 9.9 | 23.0 |
Total liabilities from financing activities | 1,702.8 | 348.2 | 115.1 | 18.4 | 34.6 | 0.0 | -6.5 | 1,193.0 |
5.7. FINANCIAL ASSETS AND LIABILITIES BY CATEGORY
EUR million | \u00a0\u00a0\u00a0\u00a0 | 2022 | \u00a0\u00a0\u00a0\u00a0 | 2021 |
Financial assets at fair value through profit or loss | ||||
Derivatives | 10.9 | 20.4 | ||
Derivatives designated for hedge accounting | 20.0 | 1.8 | ||
Financial assets at amortized cost | ||||
Non-current interest-bearing receivables | 0.9 | 2.0 | ||
Other non-current assets | 28.7 | 4.7 | ||
Current interest-bearing receivables | 14.9 | 1.9 | ||
Trade and other current receivables | 611.8 | 675.2 | ||
Cash and cash equivalents | 309.4 | 178.7 | ||
Other investments | 2.4 | 2.2 | ||
Financial assets total | 999.0 | 886.9 | ||
Financial liabilities at fair value through profit or loss | ||||
Derivatives | 14.7 | 9.5 | ||
Contingent considerations | 20.6 | 18.4 | ||
Derivatives designated for hedge accounting | 2.3 | 8.5 | ||
Financial liabilities at amortized cost | ||||
Non-current interest-bearing liabilities | 1,403.9 | 1,260.5 | ||
Other non-current liabilities | 10.5 | 3.3 | ||
Current portion of long-term loans | 168.9 | 153.8 | ||
Short term loans | 202.6 | 270.1 | ||
Trade and other current liabilities | 541.4 | 640.5 | ||
Financial liabilities total | 2,364.9 | 2,364.5 |
In the statement of financial position derivatives are included in the following groups: non-current interest-bearing liabilities, other non-current assets, trade and other current receivables, other non-current liabilities and trade and other current liabilities.
ACCOUNTING PRINCIPLES
Financial assets and liabilities
Financial assets are classified according to IFRS 9 on the basis of the Group\u2019s business model for managing the financial assets and the contractual cash flow characteristics to the following categories: financial assets at fair value through profit or loss, financial assets at fair value through OCI and financial assets at amortized cost. Financial liabilities are classified to financial liabilities at fair value through profit and loss and financial liabilities at amortized cost.
Publicly traded and unlisted shares are classified as financial assets at fair value through OCI. Publicly traded shares are recognized at fair value, which is based on quoted market prices at the reporting period closing date. Gains or losses arising from changes in fair value are recognized in other comprehensive income and are presented in equity in fair value reserves. Unlisted shares are measured at cost, as their fair value cannot be measured reliably.
Non-derivative assets with fixed or determinable payments that are not quoted in an active market are classified as financial assets at amortized cost. Trade receivables and other receivables are included in this category. Trade and other receivables are measured at amortized cost by using the effective interest rate method.
The Group recognizes a loss allowance for expected credit losses on financial assets based on the general approach, where a loss allowance is measured at amount equal to 12-month expected credit losses if there has not been a significant increase in credit risk since the initial recognition. The Group measures expected credit losses based on historical credit losses experience, current and future conditions. Simplified approach is used for trade receivables that do not contain a significant financing component, where the Group always measures the loss allowance at an amount equal to the lifetime expected credit losses. The amount of expected credit losses is updated at each reporting date.
Fair values of foreign exchange forwards are calculated using market rates on the reporting period closing date. Fair values of foreign exchange options are calculated with the Garman-Kohlhagen model. Fair values of interest rate swaps, futures and forwards are based on net present values of estimated future cash flows. Cash, short-term loans
and overdrafts have fair values that approximate to their carrying amounts because of their short-term nature. The recoverable amount for financial investments is calculated as the present value of expected future cash flows, discounted at the original effective interest rate. Short-term receivables are not discounted. \u00a0
Contingent considerations related to business combinations classified as financial liabilities are measured at fair value through profit or loss and reported in the interest-bearing liabilities.
\u200b | \u200b | \u200b | \u200b | \u200b | \u200b | \u200b | \u200b | |
\u200b | \u200b | \u200b | \u200b | \u200b | \u200b | \u200b | \u200b | |
EUR million | \u200b | \u200b | \u200b | \u200b | \u200b | \u200b | ||
\u200b | \u200b | \u200b | \u200b | \u200b | \u200b | |||
Financial instruments measured at fair value | \u00a0\u00a0\u00a0\u00a0 | Level 1 | \u00a0\u00a0\u00a0\u00a0 | Level 2 | \u00a0\u00a0\u00a0\u00a0 | Level 3 | \u00a0\u00a0\u00a0\u00a0 | Total 2022 |
Assets | ||||||||
Derivatives | ||||||||
Currency derivatives | - | 23.9 | - | 23.9 | ||||
Interest rate derivatives | - | 7.0 | - | 7.0 | ||||
Other investments | - | - | 2.4 | 2.4 | ||||
Total | - | 30.9 | 2.4 | 33.3 | ||||
Liabilities | ||||||||
Derivatives | ||||||||
Currency derivatives | - | 10.8 | - | 10.8 | ||||
Interest rate derivatives | - | 6.2 | - | 6.2 | ||||
Contingent considerations | - | 20.6 | 20.6 | |||||
Total | - | 17.0 | 20.6 | 37.6 |
\u200b | \u200b | \u200b | \u200b | \u200b | \u200b | \u200b | \u200b | |
\u200b | \u200b | \u200b | \u200b | \u200b | \u200b | \u200b | \u200b | |
EUR million | \u200b | \u200b | \u200b | \u200b | \u200b | \u200b | ||
\u200b | \u200b | \u200b | \u200b | \u200b | \u200b | |||
Financial instruments measured at fair value | \u00a0\u00a0\u00a0\u00a0 | Level 1 | \u00a0\u00a0\u00a0\u00a0 | Level 2 | \u00a0\u00a0\u00a0\u00a0 | Level 3 | \u00a0\u00a0\u00a0\u00a0 | Total 2021 |
Assets | ||||||||
Derivatives | ||||||||
Currency derivatives | - | 21.3 | - | 21.3 | ||||
Interest rate derivatives | - | 0.9 | - | 0.9 | ||||
Other investments | - | - | 2.2 | 2.2 | ||||
Total | - | 22.2 | 2.2 | 24.4 | ||||
Liabilities | ||||||||
Derivatives | ||||||||
Currency derivatives | - | 16.2 | - | 16.2 | ||||
Interest rate derivatives | - | 1.8 | - | 1.8 | ||||
Contingent considerations | - | - | 18.4 | 18.4 | ||||
Total | - | 18.0 | 18.4 | 36.5 |
The Group uses income approach in determining the fair value. Inputs used are foreign exchange rates, interest rates and yield curves as well as implied volatilities.
Group\u2019s currency and interest rate derivatives are subject to International Swaps and Derivatives Association (ISDA) master netting agreements. The amounts are not offset in the statement of financial position.
Unquoted investments are carried at cost, as their fair value cannot be measured reliably.
The levels of the fair value hierarchy are defined as follows:
Level 1: Quoted prices in active markets.
Level 2: Valuation techniques based on observable market data.
Level 3: Valuation techniques incorporating information other than observable market data.\u00b6\u00b6
5.8. MANAGEMENT OF FINANCIAL RISKS
The objective of financial risk management is to ensure that the Group has access to sufficient funding in the most cost-efficient way and to minimize the impact on the Group from adverse movements in the financial markets. As defined in the Group Treasury Policy, management of financial risks is guided and controlled by a Finance Committee, led by the Chief Financial Officer (CFO). The Finance Committee reviews risk reports on the Group\u2019s interest-bearing balance sheet items, commercial flows, derivatives and foreign exchange exposures and approves required measures on a\u00a0monthly basis.
The Group Treasury department at the Espoo headquarters is responsible for the Group\u2019s funding and risk management and serves the business units in daily financing, foreign exchange transactions and cash management coordination.
Currency risk
The Group is exposed to exchange rate risk through cross-border trade within the Group, exports and imports, funding of foreign subsidiaries and currency denominated equities.
Transaction risk
The largest transaction exposures derive from capital flows, imports, exports and royalty receivables. The objective of currency transaction risk management is to protect the Group from negative exchange rate movements. Business units are responsible for actively managing their currency risks related to future commercial cash flows, in accordance with policies and limits defined by the business unit and approved by the Finance Committee. As a rule, commercial receivables and payables recorded on the balance sheet are always fully hedged, as well as 25% of probable flows over a minimum 12-month horizon. Eligible hedging instruments include currency forwards and in authorized subsidiaries also currency options. The business units\u2019 counterparty in hedging transactions is mainly Huhtam\u00e4ki Oyj.
EUR million | EUR exposure | CNY exposure | USD exposure | USD exposure | USD exposure | ||||||||||
2022 | 2021 | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | 2022 | \u00a0\u00a0\u00a0\u00a0 | 2021 | |||||
Trade receivables | 2.1 | 3.4 | 0.1 | 0.1 | 1.9 | 1.4 | 0.1 | 0.1 | 14.5 | \u00a0\u00a0\u00a0\u00a0 | 17.8 | ||||
Trade payables | -23.2 | -14.9 | -6.7 | -4.7 | -7.3 | -4.5 | -7.3 | -11.3 | -6.4 | -7.9 | |||||
Net balance sheet exposure | -21.1 | -11.5 | -6.6 | -4.7 | -5.5 | -3.2 | -7.2 | -11.2 | 8.1 | 9.9 | |||||
Forecasted sales (12 months) | 16.5 | 13.4 | 1.0 | 3.5 | 5.3 | 6.1 | 1.2 | 0.6 | 66.7 | 58.2 | |||||
Forecasted purchases (12 months) | -113.9 | -74.2 | -23.6 | -16.2 | -47.8 | -45.4 | -33.0 | -32.0 | -45.4 | -44.8 | |||||
Net forecasted exposure | -97.4 | -60.8 | -22.7 | -12.8 | -42.6 | -39.3 | -31.8 | -31.4 | 21.3 | 13.4 | |||||
Hedges | |||||||||||||||
Currency forwards (12 months) | 48.6 | 36.6 | 9.8 | 6.7 | 17.3 | 16.2 | 19.8 | 24.7 | -17.9 | -17.4 | |||||
Currency options (12 months) | - | - | - | - | |||||||||||
Total net exposure | -69.9 | -35.7 | -19.5 | -10.8 | -30.7 | -26.3 | -19.2 | -17.9 | 11.4 | 5.8 |
Translation risk
As a main rule\u00a0individual subsidiaries do not carry translation risk as they are financed in local currencies. As an exception, the Finance Committee can approve the use of foreign currency borrowing in countries with high local interest rates. In 2022 and 2021 on reporting period closing dates no such borrowings were outstanding.
The main translation exposures derive from equities and permanent loans, which in substance form a part of the net investment in the US, India and UK based subsidiaries. The Group hedges its translation risks selectively by using foreign currency loans and derivatives. Equity hedging decisions are made by the Finance Committee, who in its decision making considers the hedge\u2019s estimated impact on the Group\u2019s key indicators, long-term cash flows and hedging cost. On the reporting period closing date the Group had outstanding translation risk hedges of USD 223
million (of which USD 50 million in the form of currency loans and USD 173 million in the form of derivatives) and of GBP 20 million (of which GBP 20 million in the form of derivatives) (USD 223 million, of which USD 90 million in the form of currency loans and USD 133 million in the form of derivatives and GBP 20 million, of which GBP 20 million in the form of derivatives).
A 10% appreciation of the EUR versus the USD, INR and GBP would as of the reporting period closing date decrease the result before taxes by EUR 14.4 million (EUR 9.9 million) and the Group consolidated equity by EUR 117.3 million (EUR 107,4 million).
Interest rate risk
The interest-bearing debt exposes the Group to interest rate risk, namely re-pricing and price risk caused by interest rate movements. Management of interest rate risk is centralized to the Group Treasury. The Group\u2019s policy is to maintain in the main currency debt portfolios a duration that matches a benchmark duration range based on the Group\u2019s estimated cash flow, selected balance sheet ratios and also the shape of the yield curve. The objective of interest rate risk management is to reduce the fluctuation of the interest charge, enabling a more stable net income. The Group manages interest rate risk by selection of debt interest periods and by using derivatives such as futures, forward rate agreements, interest rate swaps and options.
At the reporting period closing date the average interest rate on Group interest-bearing net debt was 3.4% (1.6%) and average duration 2.2 years (1.6\u00a0years). A one\u00a0percentage point rise in market interest rates would increase Group net interest expense by EUR 5.1 million (EUR 6.6 million) over the following 12\u00a0months. A similar rise in interest rates would increase Group equity with EUR 1.9 million (EUR 7.5 million) due to mark-to-market revaluations of interest rate derivatives designated for cash flow hedges.
Currency split and repricing schedule of outstanding net debt including hedges (excl. lease liabilities)
2022 | 2021 | |||||||||
Debt repricing in period, incl. derivatives | ||||||||||
Amount | Amount | |||||||||
Currency | EUR million | 2023 | 2024 | 2025 | 2026 | 2027 | Later | EUR million | ||
EUR | 990.8 | 125.5 | 174.5 | 35.3 | 125.0 | 530.5 | 939.2 | |||
USD | 108.9 | 47.9 | 9.4 | 14.1 | 14.1 | 23.5 | 107.6 | |||
GBP | 92.5 | 92.5 | 121.7 | |||||||
HKD | 84.8 | 84.8 | 77.6 | |||||||
PLN | 21.4 | 21.4 | 23.4 | |||||||
Other | 13.8 | 13.8 | 75.2 | |||||||
Total | 1,312.2 | 385.8 | 183.9 | 35.3 | 139.1 | 544.6 | 23.5 | 1,344.6 |
Liquidity and refinancing risk
The Group maintains sufficient liquidity reserves at all times by efficient cash management structures such as cash pools, concentration accounts and overdraft financing facilities. To mitigate the refinancing risk, the Group diversifies funding sources as well as the maturity structure of loans and debt facilities. The Group utilizes a EUR 400 million Finnish commercial paper program and uncommitted credit facilities with relationship banks for short-term financing purposes. At the reporting period closing date, the Group had committed credit facilities totaling EUR 400 million (EUR 841 million) of which EUR 353 million (EUR 382 million) remained undrawn. Undrawn committed long-term debt facilities are sufficient to ensure adequate financing resources in all foreseeable circumstances. \u00a0
During the second quarter of 2022, Huhtam\u00e4ki Oyj launched a Sustainability-Linked Bond Framework and issued a EUR 500 million senior unsecured sustainability-linked bond. The proceeds of the issue of the bond were used for refinancing the USD 500 million bridge loan facility and for general corporate purposes. In connection with the bond issuance, S&P Global Ratings assigned a long term credit rating of BB+ to Huhtam\u00e4ki Oyj, with a stable outlook.
On December 16, 2022, Huhtam\u00e4ki Oyj signed a confirmation to extend the maturity of the EUR 400 million syndicated revolving credit facility loan agreement for a further period of one year in accordance with the extension option of the loan agreement.
Debt structure
EUR million including interests | 2022 | ||||||||||
Maturity of facility/loan | |||||||||||
Debt type | Amount | Amount | Total | 2023 | 2024 | 2025 | 2026 | 2027 | Later | ||
Committed revolving facilities | 47.0 | 353.0 | 400.0 | 400.0 | |||||||
Bonds and other loans | 1,377.1 | 1,377.1 | 153.3 | 436.0 | 86.0 | 173.4 | 528.4 | 0.0 | |||
Commercial paper program | 111.5 | 111.5 | 111.5 | ||||||||
Uncommitted loans from financial institutions | 81.4 | 81.4 | 81.4 | ||||||||
Contingent considerations | 20.6 | 20.6 | 20.6 | ||||||||
Lease liabilities | 158.5 | 158.5 | 25.3 | 38.7 | 13.9 | 11.4 | 9.4 | 59.9 | |||
Trade and other current liabilities | 583.8 | 583.8 | 583.8 | ||||||||
Total | 2,379.9 | 353.0 | 2,732.9 | 975.9 | 474.6 | 99.9 | 584.8 | 537.7 | 59.9 |
EUR million including interests | 2021 | |||||||||
Maturity of facility/loan | ||||||||||
Debt type | Amount | Amount | Total | 2022 | 2023 | 2024 | 2025 | 2026 | Later | |
Committed revolving facilities | 458.8 | 382.4 | 841.2 | 441.2 | 400.0 | |||||
Bonds and other loans | 785.0 | 785.0 | 130.2 | 163.0 | 191.3 | 87.8 | 174.3 | 38.6 | ||
Commercial paper program | 150.0 | 150.0 | 150.0 | |||||||
Uncommitted loans from financial institutions | 114.9 | 114.9 | 114.9 | |||||||
Contingent considerations | 18.4 | 18.4 | 3.3 | 15.2 | ||||||
Lease liabilities | 175.6 | 175.6 | 28.8 | 22.6 | 19.1 | 16.4 | 13.0 | 75.6 | ||
Trade and other current liabilities | 663.8 | 663.8 | 663.8 | |||||||
Total | 2,366.6 | 382.4 | 2,749.0 | 1,091.0 | 641.9 | 210.4 | 504.2 | 187.3 | 114.2 |
Credit risk
The Group is exposed to credit risk from its commercial receivables and receivables from financial institutions based on short-term investment of liquid funds as well as derivatives transactions.
The business units are responsible for the management of commercial credit risk in accordance with policies defined by the business units and approved by the Finance Committee. A Group policy sets out certain minimum requirements as to credit quality, sales terms and collection. The commercial credit risk for the Group as a whole is considered low as the receivable portfolio is diversified and historical credit loss frequency is low (see note 4.2.).
Liquid funds are from time to time invested in short-term bank deposits at relationship banks with a solid credit rating, in government bonds, treasury bills or in commercial papers issued by corporate borrowers with an investment grade rating. Credit risk stemming from receivables from financial institutions, including derivative transaction settlements, is considered small and is managed centrally by the Group Treasury department and in accordance with limits set by the Finance Committee.
Capital management
The Group\u2019s objective is to maintain an efficient capital structure. Consequently, the Group aims to maintain in the long term the net debt to earnings before interest, taxes, depreciation and amortization (EBITDA) ratio in a range between 2\u20133. Net debt is defined as interest-bearing liabilities less interest-bearing receivables, cash and cash equivalents.
The Group is subject to a restriction on its net debt to EBITDA ratio (excluding items affecting comparability) through a clause in a key financing agreement. This restriction is not seen hindering the Group\u2019s ability to carry out its business or its strategy.
Changes in the capital structure are resulting from capital investments in the business and cash returns to shareholders, which are funded by the stable cash flow.
Capital structure
EUR million | 2022 | 2021 |
Interest-bearing liabilities | 1,775.4 | 1,702.8 |
Interest-bearing receivables, cash and cash equivalents | 325.3 | 182.6 |
Net debt | 1,470.8 | 1,520.2 |
Total equity | 1,922.2 | 1,597.2 |
Net debt to equity (Gearing ratio) | 0.77 | 0.95 |
Net debt to EBITDA (excluding items affecting comparability) | 2.46 | 3.11 |
Nominal values of derivative financial instruments
EUR million | 2022 | 2021 | ||||||||
Nominal\u00a0Value | Maturity\u00a0Structure | Nominal\u00a0Value | ||||||||
Instrument | 2023 | 2024 | 2025 | 2026 | 2027 | Later | ||||
Currency forwards | ||||||||||
for transaction risk | ||||||||||
Outflow | -210.4 | -208.2 | -2.2 | -128.4 | ||||||
Inflow | 210.8 | 208.6 | 2.2 | 129.1 | ||||||
for translation risk | ||||||||||
Outflow | -185.0 | -185.0 | -141.2 | |||||||
Inflow | 194.0 | 194.0 | 134.8 | |||||||
for financing purposes | ||||||||||
Outflow | -589.1 | -589.1 | -1,136.8 | |||||||
Inflow | 590.0 | 590.0 | 1,146.0 | |||||||
Currency options | ||||||||||
for transaction risk | ||||||||||
Bought options | ||||||||||
Sold options | ||||||||||
Interest rate swaps | ||||||||||
EUR | -50.0 | -50.0 | 25.0 | |||||||
USD | 93.9 | 32.9 | 9.4 | 14.1 | 14.1 | 23.5 | 119.1 | |||
Cross currency swaps | ||||||||||
EUR | -18.3 | |||||||||
USD | 17.6 |
Fair values of derivative financial instruments
EUR million | 2022 | 2021 | ||||||
Positive | Negative | Net\u00a0Fair | Positive | Negative | Net\u00a0Fair | |||
Instrument | Fair\u00a0values | Fair\u00a0values | values | Fair\u00a0values | Fair\u00a0values | values | ||
Currency forwards | ||||||||
for transaction risk | 2.7 | -2.4 | 0.3 | 1.8 | -0.6 | 1.1 | ||
of which cash flow hedges 1 | 1.7 | -1.2 | 0.5 | 0.9 | -0.6 | 0.3 | ||
for translation risk | 11.3 | -1.1 | 10.3 | -5.4 | -5.4 | |||
of which hedges of net investment 2 | 11.3 | -1.1 | 10.3 | -5.4 | -5.4 | |||
for financing purposes | 9.9 | -7.3 | 2.6 | 19.5 | -9.5 | 10.0 | ||
Currency options | ||||||||
for transaction risk | ||||||||
Interest rate swaps 3 | ||||||||
EUR | -6.1 | -6.1 | 0.6 | -0.4 | 0.2 | |||
of which fair value hedges 4 | -6.1 | -6.1 | -0.4 | -0.4 | ||||
of which cash flow hedges 5 | 0.6 | 0.6 | ||||||
USD | 7.0 | -0.1 | 6.9 | 0.3 | -1.4 | -1.1 | ||
of which cash flow hedges 5 | 7.0 | -0.1 | 6.9 | 0.3 | -1.4 | -1.1 | ||
Cross currency swaps | ||||||||
EURUSD | -0.7 | -0.7 | ||||||
of which cash flow hedges 6 | ||||||||
of which fair value hedges 7 | -0.7 | -0.7 |
1 Fair values of currency forwards designated as cash flow hedges are reported in fair value and other reserves.
2 Fair values of currency forwards designated as hedges of net investment in foreign subsidiaries are reported in equity in translation difference.
3 Fair values of interest rate swaps include accrued interest which is reported in the income statement in financial expense.
4 Fair values of interest rate swaps designated as fair value hedges are reported in the income statement in financial income.
5 Fair values of interest rate swaps designated as cash flow hedges are reported in fair value and other reserves.
6 The interest rate revaluation result of cross currency swaps designated as cash flow hedges is reported in fair value and other reserves. The fair value includes accrued interest which is reported in the income statement in financial expense.
7 The foreign exchange revaluation result of cross currency swaps designated as fair value hedges is reported in the income statement in net financial items.
6. Other disclosures
6.1. CLIMATE RELATED MATTERS
Sustainability is integral to Huhtamaki\u2019s 2030 Strategy. The ambition is to become the first choice in sustainable packaging solutions. The sustainability agenda focuses on two key topics: transitioning to a circular economy and taking climate action, whilst not forgetting other environmental and social aspects of sustainability.
\u200b
To achieve Huhtamaki\u2019s ambition, management is continuously considering climate related matters when conducting the business. These considerations and related assumptions have been reflected in the estimates and judgements of the reported amounts of assets, liabilities, income and expense.
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The items in the consolidated financial statements that are impacted by climate related assumptions in particular:
| \u25cf | Goodwill: The Group has defined EBIT and discount rates as the key assumptions in the goodwill impairment testing. Climate related risks and opportunities have been recognized and evaluated as part of the strategy-based EBIT estimates together with other factors impacting the business development. (Note 3.2. Goodwill) |
| \u25cf | Intangible and tangible assets: |
| o | Climate related matters may impact the recognition and measurement of intangible and tangible assets. In the end of the reporting period, climate related matters did not have material impact to the estimated useful lives of the assets, nor to the impairment of assets. The Group continues to invest in sustainable packaging solutions. (Note 3.3 Intangible assets and Note 3.4. Tangible assets) |
| o | Emission rights and renewable energy certificates are in scope of IAS 38 Intangible assets. (Note 3.3 Intangible assets) |
| \u25cf | Other non-current assets: The Group has signed two major virtual power purchase agreements to reach its target for using 100 % renewable electricity and carbon neutral production by 2030. The agreements are in scope of IFRS 9 Financial Instruments. (Note 5.7 Financial assets and liabilities by category). |
| \u25cf | Inventory: Climate related matters may impact the measurement of the inventories. In the end of the reporting period, climate related matters did not have material impact to the net realizable value. (Note 4.1. Inventories) |
| \u25cf | Interest-bearing liabilities: |
| o | The Group has signed a EUR 400 million sustainability-linked syndicated multicurrency revolving credit facility loan agreement (\u201cRCF\u201d). The interest margin is tied to three sustainability indicators: 1) Reduction of the absolute greenhouse gas emission amount; 2) Share of non-hazardous waste recycled; 3) EcoVadis rating. The loan margin decreases or increases according to the number of targets achieved for the three sustainability indicators. (Note 5.6 Interest-bearing liabilities) |
| o | The Group has issued a EUR 500 million senior unsecured sustainability-linked bond under its newly established Sustainability-Linked Bond Framework. The interest rate is subject to increase upon the failure to satisfy certain sustainability performance targets. The chosen targets for the sustainability-linked bond are related to greenhouse gas reductions. (Note 5.6 Interest-bearing liabilities) |
\u200b
6.2. RELATED PARTY TRANSACTIONS
Huhtamaki Group\u2019s related parties include the parent company, subsidiaries, associates, joint ventures and pension funds that are separate entities. Related parties also include the key management, their close family members and entities in which they have control or joint control. The key management personnel are the members of the Global Executive Team and the Board of Directors. Related parties also include Shareholders of Huhtam\u00e4ki Oyj controlling more than ten per cent of the shares or voting rights of Huhtam\u00e4ki Oyj.
Details of transactions and outstanding balances between the Group and its related parties are disclosed below. Intragroup related party transactions and balances are eliminated on consolidation.
The Global Executive Team and the Board of Directors
Compensation to the Global Executive Team and the Board of Directors is disclosed in the following tables. In addition, the key management is receiving dividends based on their ownership of Huhtam\u00e4ki Oyj shares. There has
not been any other transactions between the Group and the key management, their close family members or entities in which they have control or joint control.
The President and CEO Charles H\u00e9aulm\u00e9's pension coverage is arranged by the President and CEO himself. The company contributes towards the pension through monthly cash payments to the President and CEO. The total cash payment is EUR 294 thousand per annum. Some of the other Global Executive Team members belong to a supplementary defined contribution pension plan. In 2022, the Company paid a total of EUR 322 thousand (EUR 245 thousand) to pension arrangements of the other GET members, excluding the CEO. Members of the Board of Directors and the Global Executive Team owned a total of 101,689 shares (94,409 shares) shares at the end of the year 2022.
Employee benefits of CEO and members of the Global Executive Team
EUR million | \u00a0\u00a0\u00a0\u00a0 | 2022 | \u00a0\u00a0\u00a0\u00a0 | 2021 |
Salaries and other short-term employee benefits | 7.4 | 5.5 | ||
Post-employment benefits | 0.3 | 0.2 | ||
Share based payments | 5.1 | 2.8 | ||
CEO and members of the Global Executive Team in total | \u00a0\u00a0\u00a0\u00a0 | 12.8 | \u00a0\u00a0\u00a0\u00a0 | 8.5 |
Remunerations of CEO and members of the Board of Directors
In thousand euros | \u00a0\u00a0\u00a0\u00a0 | 2022 | 2021 | |
CEO Charles H\u00e9aulm\u00e9 | 2,063 | 2,699 | ||
Board members | ||||
Ala-Pietil\u00e4 Pekka | 198 | 179 | ||
Tuomas Kerttu | 121 | 118 | ||
Baillie Doug | 104 | 103 | ||
Barker William R. | 104 | 103 | ||
Korhonen Anja | 118 | 117 | ||
Turner Sandra | 106 | 105 | ||
Wunderlich Ralf K. | 107 | 102 | ||
Alonso Mercedes | 72 | - | ||
Takala Heikki | 73 | - | ||
CEO and Board in total | 3,061 | 3,526 |
Pension funds
The Group\u2019s related parties include post-employment benefit plans that are separate entities. These entities are in Finland, India, the UK and the U.S.. For more information, see note 2.2. Employee benefits. The Group made EUR 2.6 million (EUR 2.1 million) contributions to the plans and there was related outstanding balance of EUR 0.2 million (EUR 0.2 million). There was no other transactions or outstanding balances.
6.3. SHARE-BASED PAYMENTS
Performance Share Arrangement 2010
On March 12, 2010 the Board of Directors of the Company decided on establishing a Performance Share Arrangement to form a part of the long-term incentive and retention program for the key personnel of the Company and its subsidiaries. The Performance Share Arrangement offers a possibility to earn the Company shares as remuneration for achieving established targets. The Arrangement consists of annually commencing individual three-year performance share plans. A possible reward shall be paid during the calendar year following each three-year plan. Commencement of each three-year plan will be separately decided by the Board of Directors.
GET members that are participants to the performance share plan shall hold at least half (50%) of the shares received until he/she holds shares received from the performance share plans corresponding in aggregate to the value of his/her annual gross base salary. Other participants to the plan (Performance Share Plan 2019-2021 and earlier
plans), shall hold at least half (50%) of the shares received until he/she holds shares received from the performance share plans corresponding in aggregate to the value of his/her six (6) months\u2019 gross base salary. The ownership requirement applies until termination of employment or service. The maximum value of the reward payable to the participants based on the Performance Share Arrangement is limited by a cap linked to Company\u2019s share price development (Performance Share Plan 2021-2023 and onwards).
Performance Share Plan 2019\u20132021
The Performance Share Plan 2019\u20132021 commenced in 2019 and the possible reward will be based on the Group\u2019s adjusted earnings per share (EPS) in 2021. The reward, if any, will be paid during 2022. The Performance Share Plan 2019\u20132021 was directed to 87 persons at the end of 2021.
The performance criteria, Group\u2019s adjusted earnings per share (EPS) in 2021, set forth in the Performance Share Arrangement 2010 for the earnings period 2019\u20132021, was not reached. Pursuant to the IFRS standards, no expense relating to the Performance Share Plan 2019\u20132021 was recorded for the reporting periods 2019\u20132021. For the reporting period ending 31 December 2021, a positive impact totaling EUR 3,687,657 resulting from prior years\u2019 accrual reversing was recorded.
Performance Share Plan 2020-2022
The Performance Share Plan 2020-2022 commenced in 2020 and the possible reward will be based on the Group\u2019s cumulative adjusted earnings per share (EPS) for the earning period 2020-2022. The reward, if any, will be paid during 2023. The Performance Share Plan 2020-2022 was directed to 101 persons at the end of 2022.
The achievement of performance criteria, Group\u2019s cumulative adjusted earnings per share (EPS) for the earning period 2020-2022, set forth in the Performance Share Arrangement 2010 for the earnings period 2020\u20132022, was 54.88% of maximum. According to the terms and conditions of the Performance Share Arrangement, achieved shares as on January 31, 2023 is 249,761 shares (gross) and shares will be paid in March 2023. Applicable taxes are withheld from the gross reward before paying remaining net shares to the participants. Fair value of the paid shares on the grant date was EUR 33.96 per share. Pursuant to the IFRS standards, an expense relating to the Performance Share Plan 2020\u20132022 totaling 7,559,961 was recorded for the reporting periods 2020\u20132022. This amount includes an expense totaling EUR 2,352,132 which was recorded in the reporting period ending 31 December 2022.
Performance Share Plan 2021-2023
The Performance Share Plan 2021-2023 commenced in 2021 and the possible reward will be based on the Group\u2019s cumulative adjusted earnings per share (EPS) for the earning period 2021-2023. The reward, if any, will be paid during 2024. The Performance Share Plan 2021-2023 was directed to 122 persons at the end of 2022.
Performance Share Plan 2022-2024
The Performance Share Plan 2022-2024 commenced in 2022 and the possible reward will be based on the Group\u2019s cumulative adjusted earnings per share (EPS) for the earning period 2022-2024. The reward, if any, will be paid during 2025. The Performance Share Plan 2022-2024 was directed to 139 persons at the end of 2022.
Performance Share Plan | 2019-2021 | 2020-2022 | 2021-2023 | 2022-2024 | ||||
Amount of granted shares (gross) | 310,000 | 1 | 601,600 | 2 | 582,000 | 2 | 600,000 | 2 |
Share price at grant date, eur | 33.53/37.28 | 3 | 33.96 | 39.18 | 35.86 | |||
Actual achievement (% of maximum) | 0% | 55% | ||||||
Number of achieved shares (gross) based on performance criteria | 0.0 | 249,761 | 4 | - | - | |||
Number of participants of December 31, 2022 | 87.0 | 101 | 122 | 139 | ||||
Share delivery | 2022 | 2023 | 2024 | 2025 | ||||
Perfomance criteria | adjusted EPS | adjusted EPS | adjusted EPS | adjusted EPS |
1PSP 2019-2021 grant was determined as net shares and as part of the reward, a cash payment equivalent to taxes and tax-like charges arising to the key personnel from the reward may be granted.
2In case shares are paid as reward, the net number of shares which remains after deducting the number of shares corresponding to the applicable taxes will be delivered to participants.
3Cash portion share price
4As on January 31, 2023. Achieved shares under PSP 2020-2022 will be paid in March 2023.
Restricted Share Arrangement 2021
As part of the long-term incentive and retention program for the key personnel of Huhtamaki, the Board of Directors of the Company decided on February 10, 2021 on establishing a restricted share arrangement as a share-based long-term incentive arrangement (Restricted Share Arrangement). The aim of the restricted share arrangement is to retain, motivate and reward selected key employees in order to increase the shareholder value in the long term. The restricted share arrangement consists of individual share plans. The commencement of each plan will be separately decided by the Board of Directors. Each plan comprises of three consecutive calendar years.
Share rewards will be paid in shares of the Company. No reward will be paid if the participant's employment or service ends before the payment of the reward. The members of the Global Executive Team shall retain at least 50% of the shares received until the value of their share ownership in the Company corresponds to their annual gross base salary. The maximum value of the reward payable to the participants based on the restricted share arrangement is limited by a cap linked to Company\u2019s share price development.
The first share plan within the Restricted Share Arrangement, covering the years 2021-2023, commenced as of the beginning of the year 2021. The aggregate maximum number of shares payable based on the first plan is 163,500 shares (gross) and possible rewards will be paid in 2023 and 2024. For potential subsequent share plans the aggregate maximum number of shares payable is 60,000 shares (gross) per plan. Applicable taxes are withheld from the gross reward before paying remaining net shares to the participants
Restricted Share Plan 2021-2023 (2-year vesting)
The Restricted Share Plan 2021-2023 (2-year vesting) commenced in 2021 and the reward will be paid during 2023 based on continuous employment. Group\u2019s adjusted EBIT margin of 8% for the result release preceding the payment is used as an underlying threshold criterion for share payment. The Restricted Share Plan 2021-2023 (2-year vesting) was directed to 64 persons at the end of 2022.
Financial year 2022 Group adjusted EBIT margin was 8.8% and thus there are no restriction to payout. According to the terms and conditions of the Restricted Share Arrangement, achieved shares as on January 31, 2023 is 83,000 shares (gross) and shares will be paid in March 2023. Applicable taxes are withheld from the gross reward before paying remaining net shares to the participants. Fair value of the paid shares on the grant date was EUR 39.18 per share. Pursuant to the IFRS standards, an expense relating to the Restricted Share Plan 2021-2023 (2-year vesting) totaling 3,273,480 was recorded for the reporting periods 2021-2022. This amount includes an expense totaling EUR 1,796,256 which was recorded in the reporting period ending 31 December 2022.
Restricted Share Plan 2021-2023
The Restricted Share Plan 2021-2023 commenced in 2021 and the reward will be paid during 2024 based on continuous employment. Group\u2019s adjusted EBIT margin of 8% for the result release preceding the payment is used as an underlying threshold criterion for share payment. The Restricted Share Plan 2021-2023 was directed to 8 persons at the end of 2022.
Restricted Share Plan 2022-2024
The Restricted Share Plan 2022-2024 commenced in 2022 and the reward will be paid during 2025 based on continuous employment. Group\u2019s adjusted EBIT margin of 8% for the result release preceding the payment is used as an underlying threshold criterion for share payment. The Restricted Share Plan 2022-2024 was directed to 1 person at the end of 2022.
Restricted Share Plan | 2021-2023 (2-year vesting) | 2021-2023 | 2022-2024 | |||
Amount of granted shares (gross)1 | 100,800 | 25,700 | 3,000 | |||
Share price at grant date, eur | 39.18 | 45.20-33.80 | 32.60 | |||
Number of achieved shares (gross) based on performance criteria | 83,000 | 2 | - | - | ||
Number of participants of December 31, 2022 | 64 | 8 | 1 | |||
Share delivery | 2023 | 2024 | 2025 | |||
Perfomance criteria | Continuous employment3 |
1In case shares are paid as reward, the net number of shares which remains after deducting the number of shares corresponding to the applicable taxes will be delivered to participants.
2As on January 31, 2023. Shares under RSP 2021-2023 (2-year vesting) will be paid in March 2023.
3However, if Huhtamaki Group\u2019s adjusted EBIT margin in the result release preceding the payment of the rewards is under 8%, no shares will be paid
CEO sign-in bonus
The signing bonus of the President and CEO consisted of two parts. The second part of the signing bonus (15,000 shares (net)) was paid in April 2021 and the first part (15,000 shares (net)) of the signing bonus was paid in April 2019. The second part of the signing bonus was subject to reaching an EBIT target for 2020 which was reached. In addition, the Company processed a cash payment to cover taxes and tax related payments. A lock-in period of 12 months will apply.
ACCOUNTING PRINCIPLES
The Group has incentive plans which include equity-settled or cash-settled share-based payment transactions. The fair value of equity-settled share-based payments granted is recognized as an employee expense with a corresponding increase in equity. The fair value of cash-settled share-based payments is valued at each reporting period closing date and the changes in fair value of liability are recognized as expense when incurred. The fair value is measured at grant date and spread over the vesting period during which the employees become unconditionally entitled to the awards. The amount recognized as an expense is adjusted to reflect the actual number of awards that will be vested. Non-market vesting conditions are not included in the value of share-based instruments but in the number of instruments that are expected to vest. At each reporting period closing date, the estimates about the number of awards that are expected to vest are revised and the impact is recognized in income statement.
6.4. LEASES
Right of use assets are presented in note 3.4 Tangible Assets. Right of use depreciations are presented in note 2.3 Depreciation, amortization and impairment. Lease liabilities are presented in note 5.6 Interest bearing liabilities. Lease liability interests are presented in note 5.1 Net Financial Items. Items where Huhtamaki is the lessor are presented in note 5.2. Interest Bearing receivables.
Lease expenses
EUR million | 2022 | 2021 |
Short-term leases | 6.5 | 4.2 |
Low-value leases | 0.5 | 0.3 |
Variable lease payments based on use/performance | 2.6 | 3.8 |
Lease payments in Profit or Loss | 9.6 | 8.3 |
Cash based lease payments in total | 42.9 | 37.1 |
ACCOUNTING PRINCIPLES
Leases
The leases that the Group recognizes in the statement of financial position include mainly land, building, machinery and equipment. Short-term leases (lease term of 12\u00a0months or less) and leases for which the underlying asset is of low value are not booked to the statement of financial position. Payments for short-term and low-value leases and variable lease payments are expensed in P&L.
Right of use (ROU) assets are recognized at the commencement date of the lease. ROU assets are measured at cost less accumulated depreciation and impairment losses. The costs include the amount of the initial measurement of the lease liability, any lease payments made at or before the commencement date less lease incentives received, any direct costs and an estimate of dismantling costs. The carrying amount is further adjusted for any remeasurement of the lease liability. Depreciation is expensed to the income statement on a straight-line basis over the lease term. The lease term includes the noncancelable period of lease together with any extension or termination options that are reasonably certain to be exercised. ROU assets are presented as tangible assets in the statement of financial position.
Lease liabilities are recognized at the commencement date of the lease. Lease liabilities are measured at the present value of future lease payments using an effective interest method. The carrying amount is reduced to reflect the lease payments made and the interest expense is allocated over the lease term. A lease liability is remeasured, when there is a lease modification or reassessment. Lease liabilities are presented as current and non-current interest-bearing liabilities in the statement of financial position.
6.5. COMMITMENTS
EUR million | 2022 | 2021 |
Capital expenditure | 115.9 | 81.4 |
Total commitments | 115.9 | 81.4 |
EUR million | 2022 | 2021 |
Capital expenditure commitments | ||
Under 1 year | 115.9 | 81.4 |
Total | 115.9 | 81.4 |
ACCOUNTING PRINCIPLES
Commitments
Capital expenditure commitments are commitments at the balance sheet date to acquire tangible and intangible assets in the future.
6.6. LITIGATIONS
The European Commission announced on March 7, 2019 to open an investigation into Luxembourg's tax practices, in particular Huhtamaki tax rulings from the years 2009, 2012 and 2013. The investigation is not targeted at Huhtamaki and Huhtamaki has not been approached by the European Commission. The European Commission is investigating whether the tax ruling could potentially be considered as prohibited state aid by Luxembourg. State aid means that a public authority has granted a selective (not available for everyone) competitive advantage to a company in Europe. Huhtamaki monitors the situation and is cooperating with authorities. Huhtamaki complies with all laws and regulations and it is important for Huhtamaki to secure predictability in financial and tax affairs. In Huhtamaki\u2019s view, the structure in question is legal and approved by tax authorities, and was not set up to gain unfair competitive advantage in Europe.
6.7. SIGNIFICANT EVENTS AFTER THE REPORTING PERIOD
There were no significant events after the reporting period.
Subsidiaries
The list contains significant subsidiaries. A complete list is enclosed in the official statutory accounts which may be obtained from the company on request.
Country | \u00a0\u00a0\u00a0\u00a0 | Company | \u00a0\u00a0\u00a0\u00a0 | Group\u00a0holding % |
Australia | \u00a0 | Huhtamaki Australia Pty Limited | \u00a0 | 100.0 |
\u00a0 | Huhtamaki Tailored Packaging Pty Ltd - Group | \u00a0 | 74.5 | |
Brazil | \u00a0 | Huhtamaki do Brasil Ltda | \u00a0 | 100.0 |
Huhtamaki Embalagens Flex\u00edveis do Brasil Ltda | 100.0 | |||
Czech Republic | \u00a0 | Huhtamaki Ceska republika, a.s. | \u00a0 | 100.0 |
\u00a0 | Huhtamaki Flexible Packaging Czech a.s. | \u00a0 | 100.0 | |
\u00a0 | LeoCzech spol s r.o. | \u00a0 | 100.0 | |
Egypt | Elif Global Packaging S.A.E. | 100.0 | ||
\u00a0 | Huhtamaki Egypt L.L.C. | \u00a0 | 75.0 | |
\u00a0 | Huhtamaki Flexible Packaging Egypt LLC | \u00a0 | 100.0 | |
Finland | \u00a0 | Huhtamaki Foodservice Nordic Oy | \u00a0 | 100.0 |
France | \u00a0 | Huhtamaki Foodservice France S.A.S | \u00a0 | 100.0 |
\u00a0 | Huhtamaki La Rochelle S.A.S | \u00a0 | 100.0 | |
Germany | \u00a0 | Huhtamaki Flexible Packaging Germany GmbH & Co. KG | \u00a0 | 100.0 |
\u00a0 | Huhtamaki Foodservice Germany Operations GmbH & Co. KG | \u00a0 | 100.0 | |
\u00a0 | Huhtamaki Foodservice Germany Sales GmbH & Co. KG | \u00a0 | 100.0 | |
Hungary | \u00a0 | Huhtamaki Hungary Kft | \u00a0 | 100.0 |
India | \u00a0 | Huhtamaki Foodservice Packaging India Private Limited | \u00a0 | 100.0 |
\u00a0 | Huhtamaki India Limited 3 | \u00a0 | 67.7 | |
Ireland | \u00a0 | Huhtamaki CupPrint Limited | \u00a0 | 100.0 |
Italy | \u00a0 | Huhtamaki Flexibles Italy S.r.l. | \u00a0 | 100.0 |
Luxembourg | \u00a0 | Huhtamaki S.\u00e0 r.l. | \u00a0 | 100.0 |
Malaysia | \u00a0 | Huhtamaki Foodservice Malaysia Sdn. Bhd. | \u00a0 | 100.0 |
Mexico | \u00a0 | Huhtamaki Mexicana S.A. de C.V. | \u00a0 | 100.0 |
Netherlands | \u00a0 | Huhtamaki B.V. | \u00a0 | 100.0 |
Huhtamaki Finance B.V. | 100.0 | |||
\u00a0 | Huhtamaki Molded Fiber Technology B.V. | \u00a0 | 100.0 | |
\u00a0 | Huhtamaki Nederland B.V. | \u00a0 | 100.0 | |
\u00a0 | Huhtamaki Paper Recycling B.V. | \u00a0 | 100.0 | |
New Zealand | \u00a0 | Huhtamaki Henderson Limited | \u00a0 | 100.0 |
\u00a0 | Huhtamaki New Zealand Limited | \u00a0 | 100.0 | |
Philippines | Huhtamaki Philippines, Inc. | 100.0 | ||
People\u2019s Republic of China | \u00a0 | Huhtamaki Foodservice (Shanghai) Limited | \u00a0 | 100.0 |
\u00a0 | Huhtamaki Foodservice (Tianjin) Ltd. | \u00a0 | 100.0 | |
Huhtamaki Foodservice (Xuzhou) Ltd. | 100.0 | |||
\u00a0 | Huhtamaki (Guangzhou) Limited | \u00a0 | 100.0 | |
People\u2019s Republic of China/Hong Kong | \u00a0 | Huhtamaki Hong Kong Limited | 100.0 | |
Poland | \u00a0 | Huhtamaki Foodservice Gliwice Sp. z o.o. | \u00a0 | 100.0 |
\u00a0 | Huhtamaki Foodservice Poland Sp. z o.o. | \u00a0 | 100.0 | |
Saudi Arabia | \u00a0 | Arabian Paper Products Company | \u00a0 | 50.01 |
Singapore | \u00a0 | Huhtamaki Singapore Pte. Ltd. | \u00a0 | 100.0 |
South Africa | \u00a0 | Gravics Systems South Africa (Pty) Limited | \u00a0 | 100.0 |
\u00a0 | Huhtamaki South Africa Holdings (Pty) Ltd | \u00a0 | 70.0 | |
\u00a0 | Huhtamaki South Africa (Pty) Ltd. | \u00a0 | 70.0 | |
\u00a0 | Huhtamaki Flexible Packaging South Africa (Pty) Limited | \u00a0 | 70.0 | |
Spain | \u00a0 | Huhtamaki Spain S.L. | \u00a0 | 100.0 |
Switzerland | Huhtamaki AG | 100.0 | ||
Thailand | \u00a0 | Huhtamaki (Thailand) Ltd. | \u00a0 | 100.0 |
Turkey | \u00a0 | Elif Global Ambalaj Pazarlama Anonim \u015eirketi | \u00a0 | 100.0 |
Elif Holding Anonim \u015eirketi | 100.0 | |||
Elif Plastik Ambalaj Sanayi ve Ticaret Anonim \u015eirketi | 100.0 | |||
Huhtamaki Turkey G\u0131da Servisi Ambalaj\u0131 A.\u015e. | 100.0 | |||
Ukraine | \u00a0 | Huhtamaki Foodservice Ukraine LLC | \u00a0 | 100.0 |
United Arab Emirates | \u00a0 | Arabian Paper Products FZCO | \u00a0 | 50.01 |
\u00a0 | Huhtamaki Flexible Packaging Middle East LLC | \u00a0 | 49.02 | |
\u00a0 | Positive Packaging United (M.E.) FZCO | \u00a0 | 100.0 | |
\u00a0 | Primetech (M.E.) FZE | \u00a0 | 100.0 | |
United Kingdom | \u00a0 | Huhtamaki BCP Limited | \u00a0 | 100.0 |
\u00a0 | Huhtamaki Foodservice Delta Limited | \u00a0 | 100.0 | |
\u00a0 | Huhtamaki (Lisburn) Limited | \u00a0 | 100.0 | |
\u00a0 | Huhtamaki (Lurgan) Limited | \u00a0 | 100.0 | |
\u00a0 | Huhtamaki (UK) Limited | \u00a0 | 100.0 | |
United States | \u00a0 | CupPrint LLC | \u00a0 | 100.0 |
\u00a0 | Huhtamaki, Inc. | \u00a0 | 100.0 |
Vietnam | \u00a0 | Huhtamaki (Vietnam) Limited | \u00a0 | 100.0 |
1 The Group\u2019s control is based on a Shareholders\u2019 Agreement according to which the Group has control in the company.
2 The Group has control in the company and can consolidate the company as a fully owned subsidiary based on a Shareholders\u2019 Agreement.
3 For more information: www.huhtamaki.com/en-in/flexible-packaging/investors/
The following German subsidiaries are included in these annual accounts of the Huhtamaki Group and exempt from the duty of corporations to audit and disclose financial statements pursuant to German legislation (Sec. 264b HGB): Huhtamaki Flexible Packaging Germany GmbH\u00a0& Co. KG, Huhtamaki Foodservice Germany Operations GmbH\u00a0& Co. KG, Huhtamaki Foodservice Germany Sales GmbH\u00a0& Co. KG, Huhtamaki Real Estate Holding B.V.\u00a0& Co. KG.
", "dimensions": { "concept": "ifrs-full:DisclosureOfNotesAndOtherExplanatoryInformationExplanatory", "language": "en", "entity": "scheme:5493007050SJVMXN6L29", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Narr_Fxw_gJKZKEC0kBM5CaD0NA": { "value": "Huhtamaki Group is a global specialist in packaging for food and drink with operations in 37 countries. The Group\u2019s focus and expertise are in paperboard based foodservice packaging, smooth and rough molded fiber packaging as well as flexible packaging. Huhtamaki offers standardized products, customized designs as well as total packaging systems and solutions. Main customers are food and beverage companies, quick service and fast casual restaurants, foodservice operators, fresh produce packers and retailers.", "dimensions": { "concept": "ifrs-full:DescriptionOfNatureOfEntitysOperationsAndPrincipalActivities", "language": "en", "entity": "scheme:5493007050SJVMXN6L29", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Narr_Bao-8BCRO0O7Qf7_BgUhXw": { "value": "Huhtamaki Group", "dimensions": { "concept": "ifrs-full:NameOfReportingEntityOrOtherMeansOfIdentification", "language": "en", "entity": "scheme:5493007050SJVMXN6L29", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Narr_pHpXdvE5IE6lIZTEY8Ctng": { "value": "Huhtam\u00e4ki Oyj", "dimensions": { "concept": "ifrs-full:NameOfParentEntity", "language": "en", "entity": "scheme:5493007050SJVMXN6L29", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Narr_uwVtn4tYekeqXC7LisG6rA": { "value": "public limited liability company", "dimensions": { "concept": "ifrs-full:LegalFormOfEntity", "language": "en", "entity": "scheme:5493007050SJVMXN6L29", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Narr_eyx0xV19uU6NtT-nYnKehQ": { "value": "Finland", "dimensions": { "concept": "ifrs-full:PrincipalPlaceOfBusiness", "language": "en", "entity": "scheme:5493007050SJVMXN6L29", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Narr_-fR4mcte60e9KgpMi9bbZw": { "value": "Revontulenkuja 1, 02100 Espoo, Finland", "dimensions": { "concept": "ifrs-full:AddressOfRegisteredOfficeOfEntity", "language": "en", "entity": "scheme:5493007050SJVMXN6L29", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Narr_xLzZLt5s30mAiEe4tdbx0w": { "value": "Finland", "dimensions": { "concept": "ifrs-full:DomicileOfEntity", "language": "en", "entity": "scheme:5493007050SJVMXN6L29", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tb_uoCBdlvHj0i8PdvbTrDqDQ": { "value": "These Group consolidated financial statements were authorized for issue by the Board of Directors on February\u00a08, 2023. According to the Finnish Companies Act shareholders decide on the adoption of financial statements at the general meeting of shareholders held after the publication of the financial statements.
", "dimensions": { "concept": "ifrs-full:DisclosureOfAuthorisationOfFinancialStatementsExplanatory", "language": "en", "entity": "scheme:5493007050SJVMXN6L29", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Group_K_IUBOqtnEKOfheE4j25JQ": { "value": "1.2. BASIS OF PREPARATION
The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) and the IAS and IFRS standards as well as SIC- and IFRIC- interpretations which were valid on December\u00a031, 2022. IFRS, referred to in the Finnish Accounting Act and in ordinances issued based on the provisions of said Act, refer to the standards and their interpretations adopted in accordance with the procedure laid down in regulations (EC) No 1606/2002 of the EU.
The consolidated financial statements have been prepared under the historical cost convention except for other investments at fair value through other comprehensive income, financial instruments at fair value through profit or loss, derivative instruments and cash-settled share-based payment arrangements that are measured at fair value. The preparation of financial statements in accordance with IFRS requires the use of certain critical accounting estimates. The use of estimates and assumptions is described in more detail in Note 1.8. Use of estimates and judgments. The consolidated financial statements are presented in millions of euros. Figures presented are exact figures and consequently the sum of individual figures may deviate from the sum presented.
1.6. PRINCIPLES OF CONSOLIDATION
Subsidiaries
The consolidated financial statements include the parent company Huhtam\u00e4ki Oyj and all its subsidiaries where over 50% of the subsidiary\u2019s voting rights are controlled directly or indirectly by the parent company, or the parent company is otherwise in control of the company for example based on Shareholder\u2019s Agreement.
Acquired subsidiaries are accounted for using the acquisition method. Subsidiaries are fully consolidated from the date on which the control is transferred to the Group. Divested subsidiaries are included up to the date the control ceases.
All intercompany transactions, receivables, liabilities and unrealized profits, as well as distribution of profits within the Group, are eliminated.
Profit and loss for the period attributable to equity holders of the parent company and to non-controlling interest is presented in the income statement. Comprehensive income attributable to equity holders of the parent company and to non-controlling interest is presented in the statement of comprehensive income. Comprehensive income is attributed to the owners of the parent company and to the non-controlling interest even if this results in the non-controlling interest having a deficit balance. Non-controlling interest is disclosed as a separate item within equity.
", "dimensions": { "concept": "ifrs-full:DisclosureOfBasisOfConsolidationExplanatory", "language": "en", "entity": "scheme:5493007050SJVMXN6L29", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tb_8jDJ7m_tI0GoFpv4OG9YrA": { "value": "The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) and the IAS and IFRS standards as well as SIC- and IFRIC- interpretations which were valid on December\u00a031, 2022. IFRS, referred to in the Finnish Accounting Act and in ordinances issued based on the provisions of said Act, refer to the standards and their interpretations adopted in accordance with the procedure laid down in regulations (EC) No 1606/2002 of the EU.
", "dimensions": { "concept": "ifrs-full:StatementOfIFRSCompliance", "language": "en", "entity": "scheme:5493007050SJVMXN6L29", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tb_Zhz0HabHx0WWVFarvOQk0Q": { "value": "1.5. ADOPTION OF NEW AND AMENDED STANDARDS AND INTERPRETATIONS
The following amended standards have been adopted as of January\u00a01, 2022 and they did not have material impact on the consolidated financial statements:
| \u25cf | Revised IFRS 3 Business Combinations. The amendments update the outdated reference to the Conceptual Framework. |
| \u25cf | Revised IAS 16 Property, Plant and Equipment. Under the amendments, proceeds from selling items before the related item of PPE is available for use should be recognized in profit or loss, together with the costs of producing those items. |
| \u25cf | Revised IAS 37 Provisions, Contingent Liabilities and Contingent Assets. When an onerous contract is accounted for based on the costs of fulfilling the contract, the amendments clarify that these costs comprise both the incremental costs and an allocation of other direct costs. |
| \u25cf | Annual Improvements to IFRS standards 2018-2020. Annual improvements include smaller amendments to four standards. |
The Group plans to adopt the following amendments in 2023 and they are not expected to have material impact on the consolidated financial statements:
| \u25cf | Revised IAS 1 Presentation of Financial Statements ad IFRS Practice Statement 2. The amendments clarify the application of materiality to disclosure of accounting policies. |
| \u25cf | Revised IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors. The amendments clarify how companies should distinguish changes in accounting policies from changes in accounting estimates, with a primary focus on the definition of and clarifications on accounting estimates. |
| \u25cf | Revised IFRS 12 Income Taxes. The amendments narrow the initial recognition exemption (IRE) and clarify that the exemption does not apply to transactions such as leases and decommissioning obligations which give rise to equal and offsetting temporary differences. |
The Group plans to adopt the following amendments later than 2023 and they are not expected to have material impact on the consolidated financial statements (amendments not yet endorsed by the European Union):
| \u25cf | Revised IAS 1 Presentation of Financial Statements. The amendments are to promote consistency in application and clarify the requirements on determining if a liability is current or non-current. |
| \u25cf | Revised IAS 1 Presentation of Financial Statements. The amendments specify that covenants to be complied with after the reporting date do not affect the classification of debt as current or non-current at the reporting date. The amendments require to disclose information about these covenants in the notes to the financial statements. |
| \u25cf | Revised IFRS 16 Leases. The amendments introduce a new accounting model for variable payments and will require seller-lessees to reassess and potentially restate sale-and-leaseback transactions entered into since 2019. |
", "dimensions": { "concept": "ifrs-full:DisclosureOfChangesInAccountingPoliciesExplanatory", "language": "en", "entity": "scheme:5493007050SJVMXN6L29", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tb_4pvCMTvuhUqCRr9-7miIkA": { "value": "
Associated companies and joint ventures
Associated companies, where the Group holds voting rights of between 20% and 50% and in which the Group has significant influence, but not control, over the financial and operating policies, are consolidated using the equity method. Joint arrangements are companies over whose activities the Group has joint control, established by contractual agreement. The joint arrangements classified as joint ventures are consolidated using the equity method. When the Group\u2019s share of losses exceeds the carrying amount of the equity accounted investment, the carrying amount is reduced to nil and recognition of further losses is discontinued except to the extent that the Group has incurred obligations in respect of the equity-accounted investments. The Group\u2019s share of result of equity-accounted investments is presented as a separate item above Earnings before interest and taxes. Correspondingly the Group\u2019s share of changes in other comprehensive income is recognized in the Group statement of comprehensive income.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForInvestmentInAssociatesAndJointVenturesExplanatory", "language": "en", "entity": "scheme:5493007050SJVMXN6L29", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tb_U2-TZtXPZEu02y6WNV4bDA": { "value": "1.7 FOREIGN CURRENCY TRANSLATION
Foreign currency transactions are translated into functional currency at the rates of exchange prevailing at the date of the transaction. The consolidated financial statements are presented in EUR, which is the Group\u2019s presentation currency and the parent company\u2019s functional currency. Monetary assets and liabilities are translated at the rates of exchange at the reporting period closing date. The exchange rate used at the reporting period closing date is the rate of the date prior to the last working day of the reporting period closing date. Foreign exchange differences arising from translation are recognized in the income statement. Foreign exchange gains and losses relating to operating activities are recognized in the same account as the underlying transaction above Earnings before interest and taxes. Foreign exchange differences relating to financial liability are recognized in financial income or expense except for those currency differences that relate to loans designated as a hedge of the net investment in foreign operations. Those currency differences are recognized as translation differences in other comprehensive income.
On consolidation the income statements of foreign entities are translated into euros at the average exchange rate for the accounting period. The statements of financial position of foreign entities are translated at the exchange rate of reporting period closing date. The exchange rate used at the reporting period closing date is the rate of the date prior to the last working day of the reporting period closing date. Differences resulting from the translation of income statement items at the average rate and items in the statement of financial position at the closing rate are recognized as part of translation differences in other comprehensive income.
On consolidation, exchange differences arising on the translation of the net investments in foreign subsidiaries, associated companies and joint ventures are recognized as translation differences in other comprehensive income. A similar treatment is applied to intragroup permanent loans, which in substance are equity. On disposal of a foreign entity, accumulated exchange differences are recognized in the income statement as part of the gain or loss on sale.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForForeignCurrencyTranslationExplanatory", "language": "en", "entity": "scheme:5493007050SJVMXN6L29", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tb_kFCFiJIsXEeIfrbWVWH71w": { "value": "1.8. USE OF ESTIMATES AND JUDGMENTS
Preparation of the consolidated financial statements in accordance with IFRS requires management to make estimates and assumptions affecting the reported amounts of assets, liabilities, income and expenses, as well as the disclosure of contingent assets and liabilities. The estimates and assumptions are based on historical experience and other factors that are believed to be reasonable under the circumstances, which form the basis of making the judgments about carrying values. These estimates and assumptions are reviewed on an ongoing basis. Possible effect of the changes in estimates and assumptions are recognized during the period they are changed.
The following items and related notes include significant estimates and judgments that are subject to a risk of changes in the carrying values within next financial year: impairment testing (Note 3.2 Goodwill), measurement of pension liabilities (Note 2.2 Employee benefits), litigation and tax risks (Notes 2.7 Income taxes and 6.6. Litigations), restructuring plans (Note 2.4 Restructuring items), provision for inventory obsolescence (Note 4.1 Inventories), probability of deferred tax assets being recovered against future taxable profits (Note 2.7 Income taxes), business combinations related contingent considerations (Note 5.6 Interest-bearing liabilities) and purchase price allocations (Note 3.1 Business combinations).
", "dimensions": { "concept": "ifrs-full:DisclosureOfAccountingJudgementsAndEstimatesExplanatory", "language": "en", "entity": "scheme:5493007050SJVMXN6L29", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tb_FX1SsHg4wEuHZx1UBYN6vA": { "value": "2.1. SEGMENT AND REVENUE
Information
The Group\u2019s operating segments are strategic business units which produce different products and which are managed as separate units. The Group\u2019s segment information is based on internal management reporting. The Group has three business areas which are organized into four reporting segments:
Foodservice Packaging:
| \u25cf | Foodservice Europe-Asia-Oceania: Foodservice paper and plastic disposable tableware is supplied to foodservice operators, fast food restaurants and coffee shops. The segment has production in Europe, Middle East, Asia, Africa and Oceania. |
| \u25cf | North America: The segment serves local markets in North America with Chinet\u00ae disposable tableware products, foodservice packaging products, as well as ice cream containers and other consumer goods packaging products. The segment has rigid paper, plastic and molded fiber manufacturing units in the United States and Mexico. |
Flexible Packaging:
Flexible packaging is used for a wide range of consumer products including food, pet food, hygiene and health care products. The segment serves global markets from production units in Europe, Middle East, Asia and South America.
Fiber Packaging:
Recycled fiber is used to make fresh product packaging, such as egg and fruit packaging. The segment has production in Europe, Oceania, Africa and South America.
ACCOUNTING PRINCIPLES
In the Group the performance assessment of segments and decisions on allocation of resources to segments are based on a segment\u2019s potential to generate earnings before interest and taxes (EBIT), operating cash flow and return on net assets. In management\u2019s opinion these are the most suitable key indicators for analyzing the segments\u2019 performance. The Chief Executive Officer is the highest decision maker regarding the above mentioned assessments and allocation of resources.
Segment\u2019s net assets include items directly attributable to a segment and items which can be allocated on a reasonable basis. Net assets comprise intangible assets (including goodwill), tangible assets, equity-accounted investments, inventories, trade and other receivables, accrued income and prepayments, trade payables, other payables and accrued expense. Capital expenditure includes acquisition of tangible and intangible assets which will be used during more than one reporting period. Intersegment pricing is based on fair market value.
Other activities include unallocated corporate costs and royalty income and related net assets. Unallocated assets and liabilities relate to post-employment benefits, taxes and financial items.
Group income statement and balance sheet items 2022
Segments 2022
Foodservice\u00a0Europe- | North | Flexible | Fiber | Segments | ||||||||
EUR million | Note | Asia-Oceania | \u00a0\u00a0\u00a0\u00a0 | America | \u00a0\u00a0\u00a0\u00a0 | Packaging | \u00a0\u00a0\u00a0\u00a0 | Packaging | \u00a0\u00a0\u00a0\u00a0 | total | ||
Net sales | 1,107.3 | 1,464.1 | 1,551.4 | 356.2 | 4,479.0 | |||||||
Intersegment net sales | 3.4 | 4.2 | 6.7 | 6.8 | -21.1 | |||||||
EBIT | 121.7 | 165.9 | 82.2 | 58.0 | 427.9 | |||||||
Net Assets | 3.1, 3.3, 3.4, 4 | 965.4 | 1,013.2 | 1,407.1 | 294.4 | 3,680.1 | ||||||
Capital Expenditure | 118.9 | 99.8 | 68.2 | 31.2 | 318.1 | |||||||
Depreciation and amortization | 2.3 | 60.6 | 58.4 | 64.6 | 23.3 | 206.8 |
Segments 2021
Foodservice\u00a0Europe- | North | Flexible | Fiber | Segments | ||||||||
EUR million | Note | Asia-Oceania | \u00a0\u00a0\u00a0\u00a0 | America | \u00a0\u00a0\u00a0\u00a0 | Packaging | \u00a0\u00a0\u00a0\u00a0 | Packaging | \u00a0\u00a0\u00a0\u00a0 | total | ||
Net sales | 937.8 | 1,156.1 | 1,165.6 | 315.4 | 3,574.9 | |||||||
Intersegment net sales | 4.0 | 4.2 | 0.9 | 18.3 | -27.4 | |||||||
EBIT | 78.5 | 137.3 | 63.6 | 35.2 | 314.7 | |||||||
Net Assets | 3.1, 3.3, 3.4, 4 | 930.9 | 838.1 | 1,272.7 | 272.8 | 3,314.6 | ||||||
Capital Expenditure | 85.0 | 70.6 | 46.0 | 56.2 | 257.7 | |||||||
Depreciation and amortization | 2.3 | 55.3 | 50.9 | 42.9 | 21.8 | 170.9 | ||||||
\u200b | \u200b | \u200b | \u200b | \u200b | \u200b | \u200b | \u200b | \u200b | \u200b | \u200b | \u200b | \u200b |
Intersegment net sales are eliminated on consolidation.
Net sales from transactions with a single customer do not amount 10\u00a0percent or more of the Group\u2019s net sales.
ACCOUNTING PRINCIPLES
Revenue recognition
The revenue is recognized at an amount of consideration to which the Group expects to be entitled in exchange for transferring promised goods or services to a customer. The transaction price is usually fixed but may also include variable considerations such as volume or cash discounts. The variable considerations are estimated using the most likely value method if not yet realized in the end of reporting period. The revenue further adjusted with indirect sales taxes and exchange rate differences relating to sales in foreign currency is presented as net sales.
Typical contracts with customers include a sale of goods to a customer with only one performance obligation. The revenue recognition occurs at a point in time, when the control of the goods is transferred to the customer according to the delivery terms. Payment terms are typical to the business and contracts do not include significant financing components.
Earnings before interest and taxes
Earnings before interest and taxes consists of net sales less costs of goods sold, sales and marketing expenses, research and development expenses, administration expenses, other operating expenses plus other operating income and share of result of equity-accounted investments. Foreign exchange gains and losses and changes of fair value of the derivative financial instruments relating to business are included in Earnings before interest and taxes.
Reconciliation calculations
Result
EUR million | \u00a0\u00a0\u00a0\u00a0 | 2022 | \u00a0\u00a0\u00a0\u00a0 | 2021 | ||
Total EBIT for reportable segments | 427.9 | 314.7 | ||||
EBIT for other activities | -22.7 | -18.7 | ||||
Net financial items | -53.2 | -33.0 | ||||
Profit before taxes | 352.1 | 263.0 |
Assets
EUR million | \u00a0\u00a0\u00a0\u00a0 | 2022 | \u00a0\u00a0\u00a0\u00a0 | 2021 | ||
Total assets for reportable segments | 4,323.4 | 4,099.3 | ||||
Assets in other activities | 35.3 | 106.7 | ||||
Unallocated assets | 462.5 | 336.3 | ||||
Group's total assets | 4,821.3 | 4,542.2 |
Liabilities
EUR million | \u00a0\u00a0\u00a0\u00a0 | 2022 | \u00a0\u00a0\u00a0\u00a0 | 2021 | ||
Total liabilities for reportable segments | 683.9 | 784.8 | ||||
Liabilities in other activities | 34.2 | 45.0 | ||||
Unallocated liabilities | 2,181.0 | 2,115.2 | ||||
Group's total liabilities | 2,899.1 | 2,945.0 |
Geographical information
In presenting information on geographical basis revenues are reported based on the selling entity\u2019s location. Assets are reported based on geographical location of the assets. Non-current assets are presented excluding financial instruments, deferred tax assets and post-employment benefit assets.
2022
Non-current | ||||||
EUR million | \u00a0\u00a0\u00a0\u00a0 | External net sales | \u00a0\u00a0\u00a0\u00a0 | assets | ||
United States | 1460.7 | 604.9 | ||||
Germany | 518.9 | 180.6 | ||||
India | 336.2 | 87.0 | ||||
The United Kingdom | 303.4 | 46.6 | ||||
Australia | 204.7 | 44.9 | ||||
Turkey | 203.7 | 393.7 | ||||
Thailand | 158.9 | -20.6 | ||||
South Africa | 133.0 | 8.8 | ||||
China | 121.2 | 54.9 | ||||
Poland | 108.9 | 54.1 | ||||
Finland | 76.2 | 79.5 | ||||
Other countries | 853.3 | 488.7 | ||||
Total | 4,479.0 | 2,023.1 |
2021
Non-current | ||||||
EUR million | \u00a0\u00a0\u00a0\u00a0 | External net sales | \u00a0\u00a0\u00a0\u00a0 | assets | ||
United States | 1154.0 | 606.2 | ||||
Germany | 455.4 | 147.2 | ||||
India | 276.2 | 91.1 | ||||
The United Kingdom | 255.1 | 58.9 | ||||
Australia | 172.1 | 49.6 | ||||
Thailand | 133.2 | -23.3 | ||||
China | 110.2 | 63.2 | ||||
South Africa | 104.2 | 2.9 | ||||
Russia | 99.5 | 65.4 | ||||
United Arab Emirates | 87.2 | 39.8 | ||||
Finland | 62.3 | 83.0 | ||||
Other countries | 665.6 | 732.0 | ||||
Total | 3,574.9 | 1,916.1 |
", "dimensions": { "concept": "ifrs-full:DisclosureOfRevenueExplanatory", "language": "en", "entity": "scheme:5493007050SJVMXN6L29", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tb_yg4owx7R7UulX_W-SN0Q8Q": { "value": "
2.1. SEGMENT AND REVENUE
Information
The Group\u2019s operating segments are strategic business units which produce different products and which are managed as separate units. The Group\u2019s segment information is based on internal management reporting. The Group has three business areas which are organized into four reporting segments:
Foodservice Packaging:
| \u25cf | Foodservice Europe-Asia-Oceania: Foodservice paper and plastic disposable tableware is supplied to foodservice operators, fast food restaurants and coffee shops. The segment has production in Europe, Middle East, Asia, Africa and Oceania. |
| \u25cf | North America: The segment serves local markets in North America with Chinet\u00ae disposable tableware products, foodservice packaging products, as well as ice cream containers and other consumer goods packaging products. The segment has rigid paper, plastic and molded fiber manufacturing units in the United States and Mexico. |
Flexible Packaging:
Flexible packaging is used for a wide range of consumer products including food, pet food, hygiene and health care products. The segment serves global markets from production units in Europe, Middle East, Asia and South America.
Fiber Packaging:
Recycled fiber is used to make fresh product packaging, such as egg and fruit packaging. The segment has production in Europe, Oceania, Africa and South America.
ACCOUNTING PRINCIPLES
In the Group the performance assessment of segments and decisions on allocation of resources to segments are based on a segment\u2019s potential to generate earnings before interest and taxes (EBIT), operating cash flow and return on net assets. In management\u2019s opinion these are the most suitable key indicators for analyzing the segments\u2019 performance. The Chief Executive Officer is the highest decision maker regarding the above mentioned assessments and allocation of resources.
Segment\u2019s net assets include items directly attributable to a segment and items which can be allocated on a reasonable basis. Net assets comprise intangible assets (including goodwill), tangible assets, equity-accounted investments, inventories, trade and other receivables, accrued income and prepayments, trade payables, other payables and accrued expense. Capital expenditure includes acquisition of tangible and intangible assets which will be used during more than one reporting period. Intersegment pricing is based on fair market value.
Other activities include unallocated corporate costs and royalty income and related net assets. Unallocated assets and liabilities relate to post-employment benefits, taxes and financial items.
Group income statement and balance sheet items 2022
Segments 2022
Foodservice\u00a0Europe- | North | Flexible | Fiber | Segments | ||||||||
EUR million | Note | Asia-Oceania | \u00a0\u00a0\u00a0\u00a0 | America | \u00a0\u00a0\u00a0\u00a0 | Packaging | \u00a0\u00a0\u00a0\u00a0 | Packaging | \u00a0\u00a0\u00a0\u00a0 | total | ||
Net sales | 1,107.3 | 1,464.1 | 1,551.4 | 356.2 | 4,479.0 | |||||||
Intersegment net sales | 3.4 | 4.2 | 6.7 | 6.8 | -21.1 | |||||||
EBIT | 121.7 | 165.9 | 82.2 | 58.0 | 427.9 | |||||||
Net Assets | 3.1, 3.3, 3.4, 4 | 965.4 | 1,013.2 | 1,407.1 | 294.4 | 3,680.1 | ||||||
Capital Expenditure | 118.9 | 99.8 | 68.2 | 31.2 | 318.1 | |||||||
Depreciation and amortization | 2.3 | 60.6 | 58.4 | 64.6 | 23.3 | 206.8 |
Segments 2021
Foodservice\u00a0Europe- | North | Flexible | Fiber | Segments | ||||||||
EUR million | Note | Asia-Oceania | \u00a0\u00a0\u00a0\u00a0 | America | \u00a0\u00a0\u00a0\u00a0 | Packaging | \u00a0\u00a0\u00a0\u00a0 | Packaging | \u00a0\u00a0\u00a0\u00a0 | total | ||
Net sales | 937.8 | 1,156.1 | 1,165.6 | 315.4 | 3,574.9 | |||||||
Intersegment net sales | 4.0 | 4.2 | 0.9 | 18.3 | -27.4 | |||||||
EBIT | 78.5 | 137.3 | 63.6 | 35.2 | 314.7 | |||||||
Net Assets | 3.1, 3.3, 3.4, 4 | 930.9 | 838.1 | 1,272.7 | 272.8 | 3,314.6 | ||||||
Capital Expenditure | 85.0 | 70.6 | 46.0 | 56.2 | 257.7 | |||||||
Depreciation and amortization | 2.3 | 55.3 | 50.9 | 42.9 | 21.8 | 170.9 | ||||||
\u200b | \u200b | \u200b | \u200b | \u200b | \u200b | \u200b | \u200b | \u200b | \u200b | \u200b | \u200b | \u200b |
Intersegment net sales are eliminated on consolidation.
Net sales from transactions with a single customer do not amount 10\u00a0percent or more of the Group\u2019s net sales.
", "dimensions": { "concept": "ifrs-full:DisclosureOfEntitysReportableSegmentsExplanatory", "language": "en", "entity": "scheme:5493007050SJVMXN6L29", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tb_WjZcN3pqFEyaphrhH9PhHg": { "value": "In the Group the performance assessment of segments and decisions on allocation of resources to segments are based on a segment\u2019s potential to generate earnings before interest and taxes (EBIT), operating cash flow and return on net assets. In management\u2019s opinion these are the most suitable key indicators for analyzing the segments\u2019 performance. The Chief Executive Officer is the highest decision maker regarding the above mentioned assessments and allocation of resources.
Segment\u2019s net assets include items directly attributable to a segment and items which can be allocated on a reasonable basis. Net assets comprise intangible assets (including goodwill), tangible assets, equity-accounted investments, inventories, trade and other receivables, accrued income and prepayments, trade payables, other payables and accrued expense. Capital expenditure includes acquisition of tangible and intangible assets which will be used during more than one reporting period. Intersegment pricing is based on fair market value.
Other activities include unallocated corporate costs and royalty income and related net assets. Unallocated assets and liabilities relate to post-employment benefits, taxes and financial items.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForSegmentReportingExplanatory", "language": "en", "entity": "scheme:5493007050SJVMXN6L29", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Group_F83Gc6zFRE-XENrIkn0hfw": { "value": "ACCOUNTING PRINCIPLES
Revenue recognition
The revenue is recognized at an amount of consideration to which the Group expects to be entitled in exchange for transferring promised goods or services to a customer. The transaction price is usually fixed but may also include variable considerations such as volume or cash discounts. The variable considerations are estimated using the most likely value method if not yet realized in the end of reporting period. The revenue further adjusted with indirect sales taxes and exchange rate differences relating to sales in foreign currency is presented as net sales.
Typical contracts with customers include a sale of goods to a customer with only one performance obligation. The revenue recognition occurs at a point in time, when the control of the goods is transferred to the customer according to the delivery terms. Payment terms are typical to the business and contracts do not include significant financing components.
Earnings before interest and taxes
Earnings before interest and taxes consists of net sales less costs of goods sold, sales and marketing expenses, research and development expenses, administration expenses, other operating expenses plus other operating income and share of result of equity-accounted investments. Foreign exchange gains and losses and changes of fair value of the derivative financial instruments relating to business are included in Earnings before interest and taxes.
ACCOUNTING PRINCIPLES
Employee benefits
Employee benefits are all forms of consideration given in exchange for service rendered by employees or for the termination of employment.
The Group companies have various pension and other postemployment benefit plans in accordance with local conditions and practices worldwide. These plans are classified as either defined contribution plans or defined benefit plans.
In defined contribution plans, the Group pay fixed contributions into a separate entity such as an insurance company. The Group has no legal or constructive obligations to pay further contributions. The contributions are recognized in the income statement as personnel expenses in the period to which they relate.
In defined benefit plans, the Group is obligated for the current contributions, but also for sufficiency of the plan assets to provide agreed benefits for employees. The liability recognized in the statement of financial position is the present value of defined benefit obligation at the end of the reporting period less the fair value of plan assets. The present value of defined benefit plan obligation is calculated annually by independent actuaries using projected unit credit method. The present value is determined by discounting estimated future cash flows using interest rates of high-quality corporate bonds that are denominated in the currency in which the benefits will be paid and that have maturity terms approximating to the terms of the related obligation. The cost of providing defined benefit plans is recognized in the income statement as personnel expense, when the service is rendered by employees or when a plan amendment or curtailment takes place. The net interest expense is recognized in the income statement as financial expense. Remeasurements, including actuarial gains or losses, are recognized through other comprehensive income in shareholder\u2019s equity in the period which they rise and are not reclassified to profit or loss in subsequent periods.
ACCOUNTING PRINCIPLES
Depreciation and amortization
Depreciation and amortization is recorded on a straight-line basis over the estimated useful lives of the owned tangible and intangible assets or over the lease term of right-of-use assets. Land is not depreciated.
The estimated useful lives of the owned tangible and intangible assets are (years):
Buildings and other structures | \u00a0\u00a0\u00a0\u00a0 | 20\u201340 |
Machinery and equipment | 5\u201315 | |
Other tangible assets | 3\u201312 | |
Intangible assets | 3\u201320 |
ACCOUNTING PRINCIPLES
Other operating income
Other operating income includes gains from disposal of assets and regular incomes, such as royalty income, rental income and gains relating to business combinations, which have not been derived from primary activities.
Other operating income includes also grants. Government or other grants are recognized in the income statement on a systematic basis in the same periods in which the expenses are incurred. Investment grants are presented in the statement of financial position as deferred income and recognized as income on a systematic basis over the useful life of the asset. \u00a0
ACCOUNTING PRINCIPLESACCOUNTING PRINCIPLESACCOUNTING PRINCIPLESAssets held for saleSensitivity analysis
As part of the impairment testing a sensitivity analysis around the key assumptions is performed. The assumptions used in the impairment testing, that are considered to be most sensitive for changes, are EBIT and discount rates. Sensitivity analysis around these key assumptions have been performed, and management believes that any reasonably possible change (decrease of 2 percentage points in EBIT margin, increase of 1.5 percentage points in discount rates or combined effect of these changes) in the key assumptions would not cause carrying amount of group of CGUs to exceed its recoverable amount in North America, Foodservice Europe-Asia-Oceania or Fiber Packaging. Based on the sensitivity analysis for Flexible Packaging, the before mentioned changes in the key assumptions would cause the carrying amount of the group of CGUs to exceed its recoverable amount.
ACCOUNTING PRINCIPLES
Goodwill
Goodwill arising from an acquisition represents the excess of the consideration transferred over the fair value of the net identifiable assets acquired. Goodwill is allocated to groups of cash-generating units that are expected to benefit from the synergies of the acquisition and is not amortized but tested annually for impairment. For associates and joint ventures, the carrying amount of goodwill is included in the carrying amount of the investment. Goodwill is valued at cost less impairment losses.
Impairment testing
Goodwill is tested annually or more frequently if there are indications of impairment. In assessing whether goodwill has been impaired, the carrying value of the group of cash generating units (group of CGUs) has been compared to the recoverable amount of the group of CGUs. The recoverable amount is based on value-in-use, which is estimated using a discounted cash flow model. The cash flows are determined using five-year cash flow forecasts, which are based on business plans. Business plans are based on past experience as well as future expected market trends. Management approves business plans for impairment testing purposes. Cash flows for future periods are extrapolated by using defined growth rates for developed countries, developing countries and emerging countries. The discount rate used in the calculation reflects the weighted average cost of capital (WACC) and risks to the asset under review.
A goodwill impairment loss is recognized immediately as an expense in the income statement and is not subsequently reversed.
\u00a0
ACCOUNTING PRINCIPLESACCOUNTING PRINCIPLESACCOUNTING PRINCIPLESACCOUNTING PRINCIPLESACCOUNTING PRINCIPLES
ACCOUNTING PRINCIPLES
Net financial items
Gains and losses on fair value hedges are reported net of the gain or loss on the hedged item. Only foreign exchange revaluation gains and losses arising from purely financial exposures such as loans denominated in foreign currencies are reported in other financial items. Changes in fair value of contingent considerations related to business combinations are reported as other financial income or expense. \u00a0 \u00a0
ACCOUNTING PRINCIPLESACCOUNTING PRINCIPLES
Equity, dividends and own shares
The Group\u2019s equity includes instruments that evidences a residual interest in the assets of an entity after deducting all of its liabilities and contains no contractual obligation for the issuer to deliver cash or other financial asset to another entity or to exchange financial assets or financial liabilities with another entity under conditions which are unfavorable to the issuer. When Huhtam\u00e4ki Oyj\u2019s own shares are repurchased, the amount of the consideration paid, including directly attributable costs, is recognized as a deduction in equity. Dividends proposed by the Board of Directors are not recognized in the financial statements until the shareholders have approved them at the Annual General Meeting.
ACCOUNTING PRINCIPLESACCOUNTING PRINCIPLESACCOUNTING PRINCIPLESACCOUNTING PRINCIPLES", "dimensions": { "concept": "ifrs-full:DisclosureOfSummaryOfSignificantAccountingPoliciesExplanatory", "language": "en", "entity": "scheme:5493007050SJVMXN6L29", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tb_8waiEA_LiEqUBPLSHdPJhw": { "value": "Revenue recognition
The revenue is recognized at an amount of consideration to which the Group expects to be entitled in exchange for transferring promised goods or services to a customer. The transaction price is usually fixed but may also include variable considerations such as volume or cash discounts. The variable considerations are estimated using the most likely value method if not yet realized in the end of reporting period. The revenue further adjusted with indirect sales taxes and exchange rate differences relating to sales in foreign currency is presented as net sales.
Typical contracts with customers include a sale of goods to a customer with only one performance obligation. The revenue recognition occurs at a point in time, when the control of the goods is transferred to the customer according to the delivery terms. Payment terms are typical to the business and contracts do not include significant financing components.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForRecognitionOfRevenue", "language": "en", "entity": "scheme:5493007050SJVMXN6L29", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Group_ZpCnePn1VEGrBFD47e6ohg": { "value": "2.2. EMPLOYEE BENEFITS
Personnel expenses
EUR million | Note | 2022 | \u00a0\u00a0\u00a0\u00a0 | 2021 |
Wages and Salaries | 659.7 | 584.3 | ||
Compulsory social security contributions | 67.0 | 53.5 | ||
Pensions | ||||
Defined benefit plans | 7.1 | 7.1 | ||
Defined contribution plans | 19.2 | 17.2 | ||
Other post-employment benefits | 2.2 | -2.7 | ||
Share-based payments | 6.3. | 13.8 | 2.7 | |
Other personnel costs | 50.8 | 48.1 | ||
Total | 819.9 | 710.3 |
Remuneration paid by the parent company to the members of the Board of Directors as well as the Chief Executive Officer (CEO) of Huhtam\u00e4ki Oyj (10 people) amounted to EUR 3.1 million (EUR 3.5 million).
Average number of personnel | \u00a0\u00a0\u00a0\u00a0 | 2022 | \u00a0\u00a0\u00a0\u00a0 | 2021 |
Group | 19,550 | 18,385 | ||
Huhtam\u00e4ki Oyj | 138 | 134 |
See note 6.2 Related party transactions, 6.3 Share-based payments and Remuneration Statement.
Pension plans
The Group has established a number of de\ufb01ned benefit plans providing pensions and other post-employment benefits for its personnel worldwide. The US, the UK, Germany and the Netherlands are the countries having major de\ufb01ned bene\ufb01t plans comprising approximately 90% of the Group consolidated de\ufb01ned bene\ufb01t obligation.
The US and the UK de\ufb01ned bene\ufb01t plans are organized through a pension fund and the German and Dutch defined benefit plans through an insurance company. The major pension plans are funded and the assets of these plans are segregated from the assets of the Group. The subsidiaries\u2019 level of funding of the plans and asset allocation to asset categories meet local authority requirements.
In the de\ufb01ned bene\ufb01t pension plans the pensions payable are based on salary level before retirement and number of service\u00a0years. Some plans can include early retirement. The calculations for de\ufb01ned bene\ufb01t obligations at reporting period closing date have been made by quali\ufb01ed actuaries.
The Group has also unfunded post-employment medical benefit plans, principally in the US. The method of accounting, assumptions and the frequency of valuations are similar to those used for the defined benefit pension schemes.
These defined benefit plans expose the Group to actuarial risks, such as inflation risk, interest rate risk, life expectancy and market risk.
ACCOUNTING PRINCIPLES
Employee benefits
Employee benefits are all forms of consideration given in exchange for service rendered by employees or for the termination of employment.
The Group companies have various pension and other postemployment benefit plans in accordance with local conditions and practices worldwide. These plans are classified as either defined contribution plans or defined benefit plans.
In defined contribution plans, the Group pay fixed contributions into a separate entity such as an insurance company. The Group has no legal or constructive obligations to pay further contributions. The contributions are recognized in the income statement as personnel expenses in the period to which they relate.
In defined benefit plans, the Group is obligated for the current contributions, but also for sufficiency of the plan assets to provide agreed benefits for employees. The liability recognized in the statement of financial position is the present value of defined benefit obligation at the end of the reporting period less the fair value of plan assets. The present value of defined benefit plan obligation is calculated annually by independent actuaries using projected unit credit method. The present value is determined by discounting estimated future cash flows using interest rates of high-quality corporate bonds that are denominated in the currency in which the benefits will be paid and that have maturity terms approximating to the terms of the related obligation. The cost of providing defined benefit plans is recognized in the income statement as personnel expense, when the service is rendered by employees or when a plan amendment or curtailment takes place. The net interest expense is recognized in the income statement as financial expense. Remeasurements, including actuarial gains or losses, are recognized through other comprehensive income in shareholder\u2019s equity in the period which they rise and are not reclassified to profit or loss in subsequent periods.
Defined benefit | Fair value of | Effect from | Net defined | |||||||||||||
obligations | plan assets | asset ceiling | benefit liability | |||||||||||||
EUR million | \u00a0\u00a0\u00a0\u00a0 | 2022 | \u00a0\u00a0\u00a0\u00a0 | 2021 | \u00a0\u00a0\u00a0\u00a0 | 2022 | \u00a0\u00a0\u00a0\u00a0 | 2021 | \u00a0\u00a0\u00a0\u00a0 | 2022 | \u00a0\u00a0\u00a0\u00a0 | 2021 | \u00a0\u00a0\u00a0\u00a0 | 2022 | \u00a0\u00a0\u00a0\u00a0 | 2021 |
Balance at January 1 | 569.6 | 592.1 | -444.3 | -421.1 | 4.1 | - | 129.5 | 171.0 | ||||||||
Included in Income statement | ||||||||||||||||
Current service cost | 9.3 | 9.4 | 9.3 | 9.4 | ||||||||||||
Plan amendment and curtailment cost (+) / income (-) | 0.0 | -5.0 | 0.0 | -5.0 | ||||||||||||
Interest cost (+) / income (-) | 10.1 | 8.6 | -9.1 | -7.1 | 1.0 | 1.6 | ||||||||||
19.5 | 13.1 | -9.1 | -7.1 | 10.3 | 6.0 | |||||||||||
Included in Other comprehensive income | ||||||||||||||||
Remeasurements | ||||||||||||||||
Actuarial loss (+) / gain (-) arising from | ||||||||||||||||
Demographic assumptions | -1.5 | -1.3 | -1.5 | -1.3 | ||||||||||||
Financial assumptions | -144.7 | -23.1 | -144.7 | -23.1 | ||||||||||||
Experience adjustment | 14.5 | 2.6 | 14.5 | 2.6 | ||||||||||||
Actual return on plan assets less interest income | 90.6 | -18.1 | 90.6 | -18.1 | ||||||||||||
Changes in asset ceiling less interest | -3.0 | 4.1 | -3.0 | 4.1 | ||||||||||||
-131.7 | -21.8 | 90.6 | -18.1 | -3.0 | 4.1 | -44.1 | -35.7 | |||||||||
Other movements | ||||||||||||||||
Benefits paid | -35.5 | -40.8 | 29.0 | 34.5 | -6.5 | -6.3 | ||||||||||
Contribution by employer | -4.1 | -5.0 | -4.1 | -5.0 | ||||||||||||
Contribution by employee | -0.2 | -0.2 | -0.2 | -0.2 | ||||||||||||
Obligations and assets assumed in business combinations | - | 1.7 | - | 0.0 | - | 1.7 | ||||||||||
Assets extinguished on plan amendment | 0.0 | -0.7 | 0.0 | -0.7 | ||||||||||||
Effect of movements in exchange rates | 0.5 | 25.2 | -6.7 | -26.6 | 0.1 | -6.1 | -1.4 | |||||||||
Balance at December 31 | 422.4 | 569.6 | -344.7 | -444.3 | 1.2 | 4.1 | 78.9 | 129.5 |
Reflected to statement of financial position | \u00a0\u00a0\u00a0\u00a0 | 2022 | \u00a0\u00a0\u00a0\u00a0 | 2021 |
Employee benefit assets | 57.8 | 67.6 | ||
Employee benefit liabilities | 136.7 | 197.2 | ||
78.9 | 129.5 |
Amounts of funded and unfunded obligations | \u00a0\u00a0\u00a0\u00a0 | 2022 | \u00a0\u00a0\u00a0\u00a0 | 2021 |
Present value of funded obligations | 395.4 | 537.5 | ||
Present value of unfunded obligations | 27.0 | 32.0 | ||
422.4 | 569.6 |
Plan assets comprise: | \u00a0\u00a0\u00a0\u00a0 | 2022 | \u00a0\u00a0\u00a0\u00a0 | 2021 |
European equities | 8.9 | 14.8 | ||
North American equities | 26.4 | 61.0 | ||
European debt instruments | 2.7 | 20.5 | ||
North American debt instruments | 125.3 | 134.7 | ||
Property | 21.1 | 22.6 | ||
Insured plans | 87.6 | 92.5 | ||
Other | 72.8 | 98.2 | ||
344.7 | 444.3 |
All equity and debt instruments have quoted prices in active markets.
Expected contribution to defined benefit plans during 2023 is EUR 4.4 million.
The weighted average duration of defined benefit obligation was 12\u00a0years (15\u00a0years).
Significant actuarial assumptions | 2022 | 2021 | ||||||||||||||
Discount rate % | \u00a0\u00a0\u00a0\u00a0 | \u00a0\u00a0\u00a0\u00a0 | \u00a0\u00a0\u00a0\u00a0 | \u00a0\u00a0\u00a0\u00a0 | \u00a0\u00a0\u00a0\u00a0 | |||||||||||
Europe | 1.9 | \u2013 | 4.8 | 0.3 | \u2013 | 1.9 | ||||||||||
Americas | 5.2 | \u2013 | 9.7 | 2.6 | \u2013 | 6.8 | ||||||||||
Asia,Oceania,Africa | 5.2 | \u2013 | 10.9 | 2.2 | \u2013 | 9.8 | ||||||||||
Annual increase in healthcare costs % | ||||||||||||||||
Americas | 6.7 | 7.0 | ||||||||||||||
Asia,Oceania,Africa | 6.9 | 6.6 |
The effect of changes of significant actuarial assumptions on the defined benefit obligations
EUR million | \u00a0\u00a0\u00a0\u00a0 | 2022 | \u00a0\u00a0\u00a0\u00a0 | 2021 |
1% p. increase in discount rate | -40.3 | -74.2 | ||
1% p. decrease in discount rate | 43.9 | 84.4 | ||
1% p. increase of estimated healthcare cost | 0.6 | 0.5 | ||
1% p. decrease of estimated healthcare cost | -0.6 | -0.5 |
The Global Executive Team and the Board of Directors
Compensation to the Global Executive Team and the Board of Directors is disclosed in the following tables. In addition, the key management is receiving dividends based on their ownership of Huhtam\u00e4ki Oyj shares. There has
not been any other transactions between the Group and the key management, their close family members or entities in which they have control or joint control.
The President and CEO Charles H\u00e9aulm\u00e9's pension coverage is arranged by the President and CEO himself. The company contributes towards the pension through monthly cash payments to the President and CEO. The total cash payment is EUR 294 thousand per annum. Some of the other Global Executive Team members belong to a supplementary defined contribution pension plan. In 2022, the Company paid a total of EUR 322 thousand (EUR 245 thousand) to pension arrangements of the other GET members, excluding the CEO. Members of the Board of Directors and the Global Executive Team owned a total of 101,689 shares (94,409 shares) shares at the end of the year 2022.
Employee benefits of CEO and members of the Global Executive Team
EUR million | \u00a0\u00a0\u00a0\u00a0 | 2022 | \u00a0\u00a0\u00a0\u00a0 | 2021 |
Salaries and other short-term employee benefits | 7.4 | 5.5 | ||
Post-employment benefits | 0.3 | 0.2 | ||
Share based payments | 5.1 | 2.8 | ||
CEO and members of the Global Executive Team in total | \u00a0\u00a0\u00a0\u00a0 | 12.8 | \u00a0\u00a0\u00a0\u00a0 | 8.5 |
Remunerations of CEO and members of the Board of Directors
In thousand euros | \u00a0\u00a0\u00a0\u00a0 | 2022 | 2021 | |
CEO Charles H\u00e9aulm\u00e9 | 2,063 | 2,699 | ||
Board members | ||||
Ala-Pietil\u00e4 Pekka | 198 | 179 | ||
Tuomas Kerttu | 121 | 118 | ||
Baillie Doug | 104 | 103 | ||
Barker William R. | 104 | 103 | ||
Korhonen Anja | 118 | 117 | ||
Turner Sandra | 106 | 105 | ||
Wunderlich Ralf K. | 107 | 102 | ||
Alonso Mercedes | 72 | - | ||
Takala Heikki | 73 | - | ||
CEO and Board in total | 3,061 | 3,526 |
Pension funds
The Group\u2019s related parties include post-employment benefit plans that are separate entities. These entities are in Finland, India, the UK and the U.S.. For more information, see note 2.2. Employee benefits. The Group made EUR 2.6 million (EUR 2.1 million) contributions to the plans and there was related outstanding balance of EUR 0.2 million (EUR 0.2 million). There was no other transactions or outstanding balances.
CEO sign-in bonus
The signing bonus of the President and CEO consisted of two parts. The second part of the signing bonus (15,000 shares (net)) was paid in April 2021 and the first part (15,000 shares (net)) of the signing bonus was paid in April 2019. The second part of the signing bonus was subject to reaching an EBIT target for 2020 which was reached. In addition, the Company processed a cash payment to cover taxes and tax related payments. A lock-in period of 12 months will apply.
", "dimensions": { "concept": "ifrs-full:DisclosureOfEmployeeBenefitsExplanatory", "language": "en", "entity": "scheme:5493007050SJVMXN6L29", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tb_65HXtxeaeEywy_ZQ66lWfA": { "value": "
Average number of personnel | \u00a0\u00a0\u00a0\u00a0 | 2022 | \u00a0\u00a0\u00a0\u00a0 | 2021 |
Group | 19,550 | 18,385 | ||
Huhtam\u00e4ki Oyj | 138 | 134 |
See note 6.2 Related party transactions, 6.3 Share-based payments and Remuneration Statement.
", "dimensions": { "concept": "ifrs-full:DisclosureOfInformationAboutEmployeesExplanatory", "language": "en", "entity": "scheme:5493007050SJVMXN6L29", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tb_sz75Mwxa_EmL72F-sYaWbQ": { "value": "Employee benefits
Employee benefits are all forms of consideration given in exchange for service rendered by employees or for the termination of employment.
The Group companies have various pension and other postemployment benefit plans in accordance with local conditions and practices worldwide. These plans are classified as either defined contribution plans or defined benefit plans.
In defined contribution plans, the Group pay fixed contributions into a separate entity such as an insurance company. The Group has no legal or constructive obligations to pay further contributions. The contributions are recognized in the income statement as personnel expenses in the period to which they relate.
In defined benefit plans, the Group is obligated for the current contributions, but also for sufficiency of the plan assets to provide agreed benefits for employees. The liability recognized in the statement of financial position is the present value of defined benefit obligation at the end of the reporting period less the fair value of plan assets. The present value of defined benefit plan obligation is calculated annually by independent actuaries using projected unit credit method. The present value is determined by discounting estimated future cash flows using interest rates of high-quality corporate bonds that are denominated in the currency in which the benefits will be paid and that have maturity terms approximating to the terms of the related obligation. The cost of providing defined benefit plans is recognized in the income statement as personnel expense, when the service is rendered by employees or when a plan amendment or curtailment takes place. The net interest expense is recognized in the income statement as financial expense. Remeasurements, including actuarial gains or losses, are recognized through other comprehensive income in shareholder\u2019s equity in the period which they rise and are not reclassified to profit or loss in subsequent periods.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForEmployeeBenefitsExplanatory", "language": "en", "entity": "scheme:5493007050SJVMXN6L29", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Group_OjgqmUxWWU-cWXxODVMk6Q": { "value": "The effect of changes of significant actuarial assumptions on the defined benefit obligations
EUR million | \u00a0\u00a0\u00a0\u00a0 | 2022 | \u00a0\u00a0\u00a0\u00a0 | 2021 |
1% p. increase in discount rate | -40.3 | -74.2 | ||
1% p. decrease in discount rate | 43.9 | 84.4 | ||
1% p. increase of estimated healthcare cost | 0.6 | 0.5 | ||
1% p. decrease of estimated healthcare cost | -0.6 | -0.5 |
Currency risk
The Group is exposed to exchange rate risk through cross-border trade within the Group, exports and imports, funding of foreign subsidiaries and currency denominated equities.
Transaction risk
The largest transaction exposures derive from capital flows, imports, exports and royalty receivables. The objective of currency transaction risk management is to protect the Group from negative exchange rate movements. Business units are responsible for actively managing their currency risks related to future commercial cash flows, in accordance with policies and limits defined by the business unit and approved by the Finance Committee. As a rule, commercial receivables and payables recorded on the balance sheet are always fully hedged, as well as 25% of probable flows over a minimum 12-month horizon. Eligible hedging instruments include currency forwards and in authorized subsidiaries also currency options. The business units\u2019 counterparty in hedging transactions is mainly Huhtam\u00e4ki Oyj.
EUR million | EUR exposure | CNY exposure | USD exposure | USD exposure | USD exposure | ||||||||||
2022 | 2021 | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | 2022 | \u00a0\u00a0\u00a0\u00a0 | 2021 | |||||
Trade receivables | 2.1 | 3.4 | 0.1 | 0.1 | 1.9 | 1.4 | 0.1 | 0.1 | 14.5 | \u00a0\u00a0\u00a0\u00a0 | 17.8 | ||||
Trade payables | -23.2 | -14.9 | -6.7 | -4.7 | -7.3 | -4.5 | -7.3 | -11.3 | -6.4 | -7.9 | |||||
Net balance sheet exposure | -21.1 | -11.5 | -6.6 | -4.7 | -5.5 | -3.2 | -7.2 | -11.2 | 8.1 | 9.9 | |||||
Forecasted sales (12 months) | 16.5 | 13.4 | 1.0 | 3.5 | 5.3 | 6.1 | 1.2 | 0.6 | 66.7 | 58.2 | |||||
Forecasted purchases (12 months) | -113.9 | -74.2 | -23.6 | -16.2 | -47.8 | -45.4 | -33.0 | -32.0 | -45.4 | -44.8 | |||||
Net forecasted exposure | -97.4 | -60.8 | -22.7 | -12.8 | -42.6 | -39.3 | -31.8 | -31.4 | 21.3 | 13.4 | |||||
Hedges | |||||||||||||||
Currency forwards (12 months) | 48.6 | 36.6 | 9.8 | 6.7 | 17.3 | 16.2 | 19.8 | 24.7 | -17.9 | -17.4 | |||||
Currency options (12 months) | - | - | - | - | |||||||||||
Total net exposure | -69.9 | -35.7 | -19.5 | -10.8 | -30.7 | -26.3 | -19.2 | -17.9 | 11.4 | 5.8 |
Translation risk
As a main rule\u00a0individual subsidiaries do not carry translation risk as they are financed in local currencies. As an exception, the Finance Committee can approve the use of foreign currency borrowing in countries with high local interest rates. In 2022 and 2021 on reporting period closing dates no such borrowings were outstanding.
The main translation exposures derive from equities and permanent loans, which in substance form a part of the net investment in the US, India and UK based subsidiaries. The Group hedges its translation risks selectively by using foreign currency loans and derivatives. Equity hedging decisions are made by the Finance Committee, who in its decision making considers the hedge\u2019s estimated impact on the Group\u2019s key indicators, long-term cash flows and hedging cost. On the reporting period closing date the Group had outstanding translation risk hedges of USD 223
million (of which USD 50 million in the form of currency loans and USD 173 million in the form of derivatives) and of GBP 20 million (of which GBP 20 million in the form of derivatives) (USD 223 million, of which USD 90 million in the form of currency loans and USD 133 million in the form of derivatives and GBP 20 million, of which GBP 20 million in the form of derivatives).
A 10% appreciation of the EUR versus the USD, INR and GBP would as of the reporting period closing date decrease the result before taxes by EUR 14.4 million (EUR 9.9 million) and the Group consolidated equity by EUR 117.3 million (EUR 107,4 million).
Interest rate risk
The interest-bearing debt exposes the Group to interest rate risk, namely re-pricing and price risk caused by interest rate movements. Management of interest rate risk is centralized to the Group Treasury. The Group\u2019s policy is to maintain in the main currency debt portfolios a duration that matches a benchmark duration range based on the Group\u2019s estimated cash flow, selected balance sheet ratios and also the shape of the yield curve. The objective of interest rate risk management is to reduce the fluctuation of the interest charge, enabling a more stable net income. The Group manages interest rate risk by selection of debt interest periods and by using derivatives such as futures, forward rate agreements, interest rate swaps and options.
At the reporting period closing date the average interest rate on Group interest-bearing net debt was 3.4% (1.6%) and average duration 2.2 years (1.6\u00a0years). A one\u00a0percentage point rise in market interest rates would increase Group net interest expense by EUR 5.1 million (EUR 6.6 million) over the following 12\u00a0months. A similar rise in interest rates would increase Group equity with EUR 1.9 million (EUR 7.5 million) due to mark-to-market revaluations of interest rate derivatives designated for cash flow hedges.
Currency split and repricing schedule of outstanding net debt including hedges (excl. lease liabilities)
2022 | 2021 | |||||||||
Debt repricing in period, incl. derivatives | ||||||||||
Amount | Amount | |||||||||
Currency | EUR million | 2023 | 2024 | 2025 | 2026 | 2027 | Later | EUR million | ||
EUR | 990.8 | 125.5 | 174.5 | 35.3 | 125.0 | 530.5 | 939.2 | |||
USD | 108.9 | 47.9 | 9.4 | 14.1 | 14.1 | 23.5 | 107.6 | |||
GBP | 92.5 | 92.5 | 121.7 | |||||||
HKD | 84.8 | 84.8 | 77.6 | |||||||
PLN | 21.4 | 21.4 | 23.4 | |||||||
Other | 13.8 | 13.8 | 75.2 | |||||||
Total | 1,312.2 | 385.8 | 183.9 | 35.3 | 139.1 | 544.6 | 23.5 | 1,344.6 |
", "dimensions": { "concept": "ifrs-full:DisclosureOfMarketRiskExplanatory", "language": "en", "entity": "scheme:5493007050SJVMXN6L29", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tb_ZPDZ6IR260WfxWZNv_HDTA": { "value": "
2.3. DEPRECIATION, AMORTIZATION AND IMPAIRMENT
EUR million | 2022 | 2021 | |
Depreciation and amortization by function: | |||
Cost of Goods Sold | 180.8 | 152.7 | |
Sales and marketing | 10.1 | 6.6 | |
Research and development | 4.4 | 0.2 | |
Administration | 14.3 | 14.2 | |
Total | 209.7 | 173.7 |
Depreciation and amortization by asset type: | \u00a0\u00a0\u00a0\u00a0 | \u00a0\u00a0\u00a0\u00a0 | |||
Land | 0.7 | 0.4 | |||
Buildings | 39.4 | 32.8 | |||
Machinery and equipment | 142.3 | 121.1 | |||
Other tangible assets | 8.0 | 7.4 | |||
Intangible assets | 19.3 | 12.1 | |||
Total | 209.7 | 173.7 | |||
\u200b | \u200b | ||||
Impairments reversed by asset type: | |||||
Buildings | - | -2.8 | |||
Machinery and equipment | - | - | |||
Goodwill | - | - | |||
Other Intangible assets | - | - | |||
Total | - | -2.8 |
ACCOUNTING PRINCIPLES
Depreciation and amortization
Depreciation and amortization is recorded on a straight-line basis over the estimated useful lives of the owned tangible and intangible assets or over the lease term of right-of-use assets. Land is not depreciated.
The estimated useful lives of the owned tangible and intangible assets are (years):
Buildings and other structures | \u00a0\u00a0\u00a0\u00a0 | 20\u201340 |
Machinery and equipment | 5\u201315 | |
Other tangible assets | 3\u201312 | |
Intangible assets | 3\u201320 |
", "dimensions": { "concept": "ifrs-full:DisclosureOfDepreciationAndAmortisationExpenseExplanatory", "language": "en", "entity": "scheme:5493007050SJVMXN6L29", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Group_-ayYKqB6mkqbGfYtmWlsGg": { "value": "
2.3. DEPRECIATION, AMORTIZATION AND IMPAIRMENT
EUR million | 2022 | 2021 | |
Depreciation and amortization by function: | |||
Cost of Goods Sold | 180.8 | 152.7 | |
Sales and marketing | 10.1 | 6.6 | |
Research and development | 4.4 | 0.2 | |
Administration | 14.3 | 14.2 | |
Total | 209.7 | 173.7 |
Depreciation and amortization by asset type: | \u00a0\u00a0\u00a0\u00a0 | \u00a0\u00a0\u00a0\u00a0 | |||
Land | 0.7 | 0.4 | |||
Buildings | 39.4 | 32.8 | |||
Machinery and equipment | 142.3 | 121.1 | |||
Other tangible assets | 8.0 | 7.4 | |||
Intangible assets | 19.3 | 12.1 | |||
Total | 209.7 | 173.7 | |||
\u200b | \u200b | ||||
Impairments reversed by asset type: | |||||
Buildings | - | -2.8 | |||
Machinery and equipment | - | - | |||
Goodwill | - | - | |||
Other Intangible assets | - | - | |||
Total | - | -2.8 |
ACCOUNTING PRINCIPLES
Depreciation and amortization
Depreciation and amortization is recorded on a straight-line basis over the estimated useful lives of the owned tangible and intangible assets or over the lease term of right-of-use assets. Land is not depreciated.
The estimated useful lives of the owned tangible and intangible assets are (years):
Buildings and other structures | \u00a0\u00a0\u00a0\u00a0 | 20\u201340 |
Machinery and equipment | 5\u201315 | |
Other tangible assets | 3\u201312 | |
Intangible assets | 3\u201320 |
Impairment testing
Goodwill is tested annually or more frequently if there are indications of impairment. In assessing whether goodwill has been impaired, the carrying value of the group of cash generating units (group of CGUs) has been compared to the recoverable amount of the group of CGUs. The recoverable amount is based on value-in-use, which is estimated using a discounted cash flow model. The cash flows are determined using five-year cash flow forecasts, which are based on business plans. Business plans are based on past experience as well as future expected market trends. Management approves business plans for impairment testing purposes. Cash flows for future periods are extrapolated by using defined growth rates for developed countries, developing countries and emerging countries. The discount rate used in the calculation reflects the weighted average cost of capital (WACC) and risks to the asset under review.
A goodwill impairment loss is recognized immediately as an expense in the income statement and is not subsequently reversed.
", "dimensions": { "concept": "ifrs-full:DisclosureOfImpairmentOfAssetsExplanatory", "language": "en", "entity": "scheme:5493007050SJVMXN6L29", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Group_41blJ2Z8E0-IzOm9qn78Wg": { "value": "ACCOUNTING PRINCIPLES
Depreciation and amortization
Depreciation and amortization is recorded on a straight-line basis over the estimated useful lives of the owned tangible and intangible assets or over the lease term of right-of-use assets. Land is not depreciated.
The estimated useful lives of the owned tangible and intangible assets are (years):
Buildings and other structures | \u00a0\u00a0\u00a0\u00a0 | 20\u201340 |
Machinery and equipment | 5\u201315 | |
Other tangible assets | 3\u201312 | |
Intangible assets | 3\u201320 |
ACCOUNTING PRINCIPLES
Goodwill
See note 3.2 Goodwill for the accounting principles relating to goodwill.
Other intangible asset
Other intangible assets include customer relations, patents, copyrights, trademarks, emission rights, renewable energy certificates and software licenses. These are measured at cost and typically amortized on a straight-line basis over the estimated useful lives, which may vary from 3 to 20\u00a0years. Other intangible assets with definite useful lives are tested for impairment when there are indications of impairment, see more information on impairment of assets in Note 3.4 Tangible assets.
Cloud computing arrangements that meet the definition of an intangible asset and comply with the recognition criteria are capitalized on the balance sheet. Implementation costs (customization and configuration) relating to cloud
computing arrangements that don't meet the definition of an intangible asset and are distinct from the access to the software are expensed when the services are received. If the customization and configuration services are not distinct from the access to the software, the costs are recognized as prepayments and expensed over the software contract term.
Research and development
Research costs are recognized in the income statement as incurred. Expenditure on development activities related to new products and processes are capitalized in the statement of financial position from the moment they are expected to bring future economic benefits and the Group has intention and resources to finalize the development. Previously expensed development expenditure is not capitalized later.
Emission rights and renewable energy certificates
Emission rights and renewable energy certificates are measured at cost. Rights and certificates received free of charge are recognized at their nominal value (nil). Emission rights are derecognized against actual emissions. A provision to cover the obligation to return emission rights is recognized at the fair value in the end of the reporting period if the emission allowances held by the Group do not cover actual emissions. Renewable energy certificates are derecognized against actual consumption of energy.
The estimated useful lives are (years):
Intangible assets up to | \u00a0\u00a0\u00a0\u00a0 | 20 |
Software | 3\u20135 | |
Customer relations | 7 |
Subsequent expenditure on capitalized other intangible assets is capitalized only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure is expensed as incurred.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForDepreciationExpenseExplanatory", "language": "en", "entity": "scheme:5493007050SJVMXN6L29", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Group_Pq-Jz8s5YEakO5Bof-5fMA": { "value": "2.4. RESTRUCTURING ITEMS
In 2022 restructuring cost of EUR 9.9 million (EUR 6.0 million) were booked to improve competitiveness and efficiency. Restructuring related items have been booked to Consolidated statement of income according to the table below:
EUR million | 2022 | 2021 |
Cost of goods sold | 4.9 | 8.3 |
Administration expenses | 3.9 | 2.8 |
Other operating income | -3.2 | -4.8 |
Other operating expenses | 4.3 | -0.2 |
Total | 9.8 | 6.0 |
2.6. OTHER OPERATING EXPENSES
EUR million | \u00a0\u00a0\u00a0\u00a0 | 2022 | \u00a0\u00a0\u00a0\u00a0 | 2021 |
Settlement of industrial dispute | 2.6 | - | ||
Environmental provision | 7.0 | - | ||
Strategic project expenses | - | 0.3 | ||
Loss on disposal of tangible assets | 4.0 | 0.7 | ||
Other | 3.2 | 3.7 | ||
Total | 16.8 | 4.8 |
Auditor\u2019s Fees
EUR million | \u00a0\u00a0\u00a0\u00a0 | 2022 | \u00a0\u00a0\u00a0\u00a0 | 2021 |
Audit fees | 2.9 | 2.5 | ||
Audit-related services | 0.0 | 0.0 | ||
Tax services | 0.0 | 0.0 | ||
Other services | 0.8 | 0.9 | ||
Total | 3.7 | 3.4 |
KPMG is acting as the principal auditor for Huhtamaki Group. KPMG network has also provided other consultancy not related to auditing worth of EUR 0.8 million (EUR 0.9 million) of which KPMG Oy Ab accounted for EUR 0.7 million (EUR 0.5 million). Non-audit services are subject to separate review and approval process concerning the provision of non-audit services by the Auditor and included e.g. advisory in connection with various tax, reporting and other local compliance matters.
", "dimensions": { "concept": "ifrs-full:DisclosureOfExpensesExplanatory", "language": "en", "entity": "scheme:5493007050SJVMXN6L29", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tb_JbiT34tIsEm-Je_CPUdmow": { "value": "2.5. OTHER OPERATING INCOME
EUR million | \u00a0\u00a0\u00a0\u00a0 | 2022 | 2021 | |
Grants | 1.2 | 3.1 | ||
Gain on disposal of tangible assets | 5.6 | 6.6 | ||
Insurance reimbursements for property damage incidents | 2.0 | 3.9 | ||
Sale of subsidiaries | 44.5 | \u2013 | ||
Royalty income | 0.1 | 0.2 | ||
Rental income | 1.3 | 0.9 | ||
Other | 20.0 | 9.7 | ||
Total | 74.8 | 24.4 |
See also note 3.1. Business combinations.
ACCOUNTING PRINCIPLES
Other operating income
Other operating income includes gains from disposal of assets and regular incomes, such as royalty income, rental income and gains relating to business combinations, which have not been derived from primary activities.
Other operating income includes also grants. Government or other grants are recognized in the income statement on a systematic basis in the same periods in which the expenses are incurred. Investment grants are presented in the statement of financial position as deferred income and recognized as income on a systematic basis over the useful life of the asset. \u00a0
2.6. OTHER OPERATING EXPENSES
EUR million | \u00a0\u00a0\u00a0\u00a0 | 2022 | \u00a0\u00a0\u00a0\u00a0 | 2021 |
Settlement of industrial dispute | 2.6 | - | ||
Environmental provision | 7.0 | - | ||
Strategic project expenses | - | 0.3 | ||
Loss on disposal of tangible assets | 4.0 | 0.7 | ||
Other | 3.2 | 3.7 | ||
Total | 16.8 | 4.8 |
Auditor\u2019s Fees
EUR million | \u00a0\u00a0\u00a0\u00a0 | 2022 | \u00a0\u00a0\u00a0\u00a0 | 2021 |
Audit fees | 2.9 | 2.5 | ||
Audit-related services | 0.0 | 0.0 | ||
Tax services | 0.0 | 0.0 | ||
Other services | 0.8 | 0.9 | ||
Total | 3.7 | 3.4 |
KPMG is acting as the principal auditor for Huhtamaki Group. KPMG network has also provided other consultancy not related to auditing worth of EUR 0.8 million (EUR 0.9 million) of which KPMG Oy Ab accounted for EUR 0.7 million (EUR 0.5 million). Non-audit services are subject to separate review and approval process concerning the provision of non-audit services by the Auditor and included e.g. advisory in connection with various tax, reporting and other local compliance matters.
ACCOUNTING PRINCIPLES
Other operating expenses
Other operating expenses include amortization of intangible assets, losses from disposal of assets and other costs not directly related to production or sale of products such as strategic project expenses.
", "dimensions": { "concept": "ifrs-full:DisclosureOfOtherOperatingIncomeExpenseExplanatory", "language": "en", "entity": "scheme:5493007050SJVMXN6L29", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tb_C-t3TTTF_EWSHlThkpkaEA": { "value": "2.5. OTHER OPERATING INCOME
EUR million | \u00a0\u00a0\u00a0\u00a0 | 2022 | 2021 | |
Grants | 1.2 | 3.1 | ||
Gain on disposal of tangible assets | 5.6 | 6.6 | ||
Insurance reimbursements for property damage incidents | 2.0 | 3.9 | ||
Sale of subsidiaries | 44.5 | \u2013 | ||
Royalty income | 0.1 | 0.2 | ||
Rental income | 1.3 | 0.9 | ||
Other | 20.0 | 9.7 | ||
Total | 74.8 | 24.4 |
See also note 3.1. Business combinations.
ACCOUNTING PRINCIPLES
Other operating income
Other operating income includes gains from disposal of assets and regular incomes, such as royalty income, rental income and gains relating to business combinations, which have not been derived from primary activities.
Other operating income includes also grants. Government or other grants are recognized in the income statement on a systematic basis in the same periods in which the expenses are incurred. Investment grants are presented in the statement of financial position as deferred income and recognized as income on a systematic basis over the useful life of the asset. \u00a0
", "dimensions": { "concept": "ifrs-full:DisclosureOfOtherOperatingIncomeExplanatory", "language": "en", "entity": "scheme:5493007050SJVMXN6L29", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tb_v4lZHncjkUa0M_Z_1TBL2g": { "value": "ACCOUNTING PRINCIPLES
Other operating income
Other operating income includes gains from disposal of assets and regular incomes, such as royalty income, rental income and gains relating to business combinations, which have not been derived from primary activities.
Other operating income includes also grants. Government or other grants are recognized in the income statement on a systematic basis in the same periods in which the expenses are incurred. Investment grants are presented in the statement of financial position as deferred income and recognized as income on a systematic basis over the useful life of the asset. \u00a0
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForGovernmentGrants", "language": "en", "entity": "scheme:5493007050SJVMXN6L29", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tb_KjH-g6FycEmYB-riTs96Qg": { "value": "2.6. OTHER OPERATING EXPENSES
EUR million | \u00a0\u00a0\u00a0\u00a0 | 2022 | \u00a0\u00a0\u00a0\u00a0 | 2021 |
Settlement of industrial dispute | 2.6 | - | ||
Environmental provision | 7.0 | - | ||
Strategic project expenses | - | 0.3 | ||
Loss on disposal of tangible assets | 4.0 | 0.7 | ||
Other | 3.2 | 3.7 | ||
Total | 16.8 | 4.8 |
Auditor\u2019s Fees
EUR million | \u00a0\u00a0\u00a0\u00a0 | 2022 | \u00a0\u00a0\u00a0\u00a0 | 2021 |
Audit fees | 2.9 | 2.5 | ||
Audit-related services | 0.0 | 0.0 | ||
Tax services | 0.0 | 0.0 | ||
Other services | 0.8 | 0.9 | ||
Total | 3.7 | 3.4 |
KPMG is acting as the principal auditor for Huhtamaki Group. KPMG network has also provided other consultancy not related to auditing worth of EUR 0.8 million (EUR 0.9 million) of which KPMG Oy Ab accounted for EUR 0.7 million (EUR 0.5 million). Non-audit services are subject to separate review and approval process concerning the provision of non-audit services by the Auditor and included e.g. advisory in connection with various tax, reporting and other local compliance matters.
ACCOUNTING PRINCIPLES
Other operating expenses
Other operating expenses include amortization of intangible assets, losses from disposal of assets and other costs not directly related to production or sale of products such as strategic project expenses.
", "dimensions": { "concept": "ifrs-full:DisclosureOfOtherOperatingExpenseExplanatory", "language": "en", "entity": "scheme:5493007050SJVMXN6L29", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tb_gWY_4h9pLkuT-gLHdIVLxg": { "value": "Auditor\u2019s Fees
EUR million | \u00a0\u00a0\u00a0\u00a0 | 2022 | \u00a0\u00a0\u00a0\u00a0 | 2021 |
Audit fees | 2.9 | 2.5 | ||
Audit-related services | 0.0 | 0.0 | ||
Tax services | 0.0 | 0.0 | ||
Other services | 0.8 | 0.9 | ||
Total | 3.7 | 3.4 |
KPMG is acting as the principal auditor for Huhtamaki Group. KPMG network has also provided other consultancy not related to auditing worth of EUR 0.8 million (EUR 0.9 million) of which KPMG Oy Ab accounted for EUR 0.7 million (EUR 0.5 million). Non-audit services are subject to separate review and approval process concerning the provision of non-audit services by the Auditor and included e.g. advisory in connection with various tax, reporting and other local compliance matters.
", "dimensions": { "concept": "ifrs-full:DisclosureOfAuditorsRemunerationExplanatory", "language": "en", "entity": "scheme:5493007050SJVMXN6L29", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tb_-uJkoWfhNk67Lpiw4ogsEw": { "value": "Other operating expenses
Other operating expenses include amortization of intangible assets, losses from disposal of assets and other costs not directly related to production or sale of products such as strategic project expenses.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForExpensesExplanatory", "language": "en", "entity": "scheme:5493007050SJVMXN6L29", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tb_AEGa7eL24EG4-kpW93ywuA": { "value": "2.7. INCOME TAXES
EUR million | \u00a0\u00a0\u00a0\u00a0 | 2022 | \u00a0\u00a0\u00a0\u00a0 | 2021 |
Current period taxes | 90.1 | 50.9 | ||
Previous period taxes | -0.5 | 11.6 | ||
Deferred tax expense | -23.0 | -2.2 | ||
Total tax expense | 66.7 | 60.3 | ||
Profit before taxes | 352.1 | 263.0 | ||
Tax calculated at domestic rate (20%) | 70.4 | 52.6 | ||
Effect of different tax rates in foreign subsidiaries | 4.9 | 2.9 | ||
Non-deductible expenses and tax-exempt income | -7.2 | 3.8 | ||
Tax effect of unrecognized tax losses | -5.3 | -0.0 | ||
Previous period taxes | -0.5 | 11.6 | ||
Adjustments to prior year's deferred taxes | 0.2 | -14.5 | ||
Deferred tax liability on undistributed earnings | -0.4 | -0.3 | ||
Other items\u00b9 | 4.4 | 4.2 | ||
Total tax expense | 66.7 | 60.3 |
1 Other items include changes in local tax rates.
Tax effects relating to components of other comprehensive income
2022 | 2021 | |||||||||||
Before\u00a0tax | Tax\u00a0expense/ | Net\u00a0of\u00a0tax | Before\u00a0tax | Tax\u00a0expense/ | Net\u00a0of\u00a0tax | |||||||
EUR million | \u00a0\u00a0\u00a0\u00a0 | amount | \u00a0\u00a0\u00a0\u00a0 | benefit | \u00a0\u00a0\u00a0\u00a0 | amount | \u00a0\u00a0\u00a0\u00a0 | amount | \u00a0\u00a0\u00a0\u00a0 | benefit | \u00a0\u00a0\u00a0\u00a0 | amount |
Cash flow hedges | 17.4 | -3.4 | 14.0 | 4.9 | -1.1 | 3.9 | ||||||
Remeasurements on defined benefit plans | 44.1 | -16.3 | 27.8 | 35.7 | -8.0 | 27.8 |
In 2022, income tax liabilities and assets include a net liability of EUR 41 million (EUR 34 million) relating to uncertain tax positions with inherently uncertain timing of cash outflows.
Certain Huhtamaki Group companies' prior period income tax returns are under examination by local tax authorities, and in 2022 Huhtamaki had ongoing tax investigations in various jurisdictions, including France, Germany, Finland, Hong Kong, India, Kenya, the Netherlands, New Zealand, Spain and the United States.
Huhtamaki\u2019s business and investments, especially in emerging markets, may be subject to uncertainties, including unpredictable tax treatment. Management judgment and a degree of estimation are required in determining the amount of tax expense. Liabilities for uncertain tax positions are recorded based on estimates and assumptions of the amount and likelihood of outflow of economic resources when it is more likely than not that certain filing positions may not be fully sustained upon review by local tax authorities. Even though management does not expect that any significant additional taxes in excess of those already provided for will arise as a result of these examinations, the outcome or actual cost of settlement may vary materially from estimates.
ACCOUNTING PRINCIPLES
Income taxes
The Group income statement includes current taxes of Group companies based on taxable profit for the financial period according to local tax regulations as well as adjustments to prior\u00a0year taxes and changes in deferred taxes. Tax effect relating to items recognized directly in equity or in other comprehensive income is recognized in equity or in other comprehensive income.
Deferred tax assets and liabilities are recognized using the liability method for all temporary differences arising from the difference between the tax basis of assets and liabilities and their carrying values for IFRS reporting purposes. Deferred tax is not recognized for non-deductible goodwill and for differences in investments in subsidiaries to the extent that they probably will not reverse in the foreseeable future.
Deferred tax is not recognized in the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit. In the determination of deferred income tax the enacted tax rate is used.
Principal temporary differences arise from tangible assets, untaxed reserves, tax losses carried forward, financial instruments and defined benefit plans. Deferred tax assets are recognized only to the extent that it is probable that future taxable profit will be available against which such assets can be utilized.
In accordance with IFRIC 23 the Group recognizes provisions for uncertain tax positions when the Group has a present obligation as a result of a past event and management judge that it is probable that there will be a future outflow of economic benefits from the Group to settle the obligation. Uncertain tax positions are assessed and measured on an issue by issue basis within the jurisdictions that we operate either using management\u2019s estimate of the most likely outcome where the issues are binary, or the expected value approach where the issues have a range of possible outcomes. The Group recognizes interest on late paid taxes as part of financing costs, and any penalties, if applicable, as part of the income tax expense.
", "dimensions": { "concept": "ifrs-full:DisclosureOfIncomeTaxExplanatory", "language": "en", "entity": "scheme:5493007050SJVMXN6L29", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tb_C_OpvItAbUyv7SWJ4weoQA": { "value": "ACCOUNTING PRINCIPLES
Income taxes
The Group income statement includes current taxes of Group companies based on taxable profit for the financial period according to local tax regulations as well as adjustments to prior\u00a0year taxes and changes in deferred taxes. Tax effect relating to items recognized directly in equity or in other comprehensive income is recognized in equity or in other comprehensive income.
Deferred tax assets and liabilities are recognized using the liability method for all temporary differences arising from the difference between the tax basis of assets and liabilities and their carrying values for IFRS reporting purposes. Deferred tax is not recognized for non-deductible goodwill and for differences in investments in subsidiaries to the extent that they probably will not reverse in the foreseeable future.
Deferred tax is not recognized in the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit. In the determination of deferred income tax the enacted tax rate is used.
Principal temporary differences arise from tangible assets, untaxed reserves, tax losses carried forward, financial instruments and defined benefit plans. Deferred tax assets are recognized only to the extent that it is probable that future taxable profit will be available against which such assets can be utilized.
In accordance with IFRIC 23 the Group recognizes provisions for uncertain tax positions when the Group has a present obligation as a result of a past event and management judge that it is probable that there will be a future outflow of economic benefits from the Group to settle the obligation. Uncertain tax positions are assessed and measured on an issue by issue basis within the jurisdictions that we operate either using management\u2019s estimate of the most likely outcome where the issues are binary, or the expected value approach where the issues have a range of possible outcomes. The Group recognizes interest on late paid taxes as part of financing costs, and any penalties, if applicable, as part of the income tax expense.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForIncomeTaxExplanatory", "language": "en", "entity": "scheme:5493007050SJVMXN6L29", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tb_xxnnGZsdZke-3OYA5VtCxA": { "value": "Deferred tax assets and liabilities are recognized using the liability method for all temporary differences arising from the difference between the tax basis of assets and liabilities and their carrying values for IFRS reporting purposes. Deferred tax is not recognized for non-deductible goodwill and for differences in investments in subsidiaries to the extent that they probably will not reverse in the foreseeable future.
Deferred tax is not recognized in the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit. In the determination of deferred income tax the enacted tax rate is used.
Principal temporary differences arise from tangible assets, untaxed reserves, tax losses carried forward, financial instruments and defined benefit plans. Deferred tax assets are recognized only to the extent that it is probable that future taxable profit will be available against which such assets can be utilized.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForDeferredIncomeTaxExplanatory", "language": "en", "entity": "scheme:5493007050SJVMXN6L29", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tb_B0Gnchz_tECLyzmQym-fww": { "value": "Deferred taxes
EUR million | \u00a0\u00a0\u00a0\u00a0 | 2022 | \u00a0\u00a0\u00a0\u00a0 | 2021 |
Deferred tax assets | ||||
Tangible assets | 12.3 | 6.0 | ||
Employee benefit | 25.9 | 45.3 | ||
Provisions | 10.2 | 7.0 | ||
Unused tax losses | 20.7 | 13.8 | ||
Other temporary differences | 31.3 | 19.2 | ||
Total | 100.4 | 91.4 | ||
Deferred tax liabilities | ||||
Tangible assets | 96.7 | 92.1 | ||
Intangible assets | 29.8 | 5.1 | ||
Employee benefit | 19.2 | 20.2 | ||
Undistributed earnings | 25.9 | 21.7 | ||
Other temporary differences | 13.6 | 29.1 | ||
Total | 185.3 | 168.2 | ||
Net deferred tax liabilities | 84.9 | 76.8 | ||
Reflected in statement of financial position as follows: | ||||
Deferred tax assets | 48.4 | 55.1 | ||
Deferred tax liabilities | 133.3 | 131.9 | ||
Total | 84.9 | 76.8 |
December 31, 2022 the Group had EUR 91 million (EUR 111 million) worth of deductible temporary differences, for which no deferred tax asset was recognized. EUR 63 million of these temporary differences have unlimited expiry, EUR 6 million expire over five years and EUR 22 million in five years.
Movements in the net deferred tax balance during the year
EUR million | \u00a0\u00a0\u00a0\u00a0 | 2022 | \u00a0\u00a0\u00a0\u00a0 | 2021 |
Net deferred tax balance at January 1 | -76.8 | -37.8 | ||
Recognized in income statement | 23.0 | 2.2 | ||
Recognized in other comprehensive income | -19.7 | -9.0 | ||
Acquisitions and disposals | -5.9 | -30.8 | ||
Translation differences | -5.4 | -1.3 | ||
Net deferred tax balance at December 31 | -84.9 | -76.8 |
", "dimensions": { "concept": "ifrs-full:DisclosureOfDeferredTaxesExplanatory", "language": "en", "entity": "scheme:5493007050SJVMXN6L29", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Group_AdWHAvrzxEy0-0XW1f1IFg": { "value": "
Earnings per share
EUR million | \u00a0\u00a0\u00a0\u00a0 | 2022 | 2021 |
Net income attributable to equity holders of the parent company (basic/diluted), EUR million | 276.2 | 198.8 | |
Weighted average number of shares outstanding, in thousands | 104,365 | 104,360 | |
Effect of share-based payments, in thousands | 308 | \u2014 | |
Diluted weighted average number of shares outstanding, in thousands | 104,673 | 104,360 | |
Earnings per share from the profit for the period attributable to equity holders of the parent company | |||
Basic earnings per share, EUR | 2.65 | 1.91 | |
Diluted earnings per share, EUR | 2.64 | 1.91 |
ACCOUNTING PRINCIPLES
Earnings per share
The basic earnings per share figure is calculated by dividing the net income attributable to the shareholders of the parent company by the weighted average number of shares outstanding during the period. Diluted earnings per share is calculated by adjusting the weighted average number of shares by the effect of diluting shares due to Performance Share Arrangement in the Group.
", "dimensions": { "concept": "ifrs-full:DisclosureOfEarningsPerShareExplanatory", "language": "en", "entity": "scheme:5493007050SJVMXN6L29", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Group_aJRR2yNyIEKoMNxaTK_f1g": { "value": "Dividend per share
The dividends paid in 2022 were EUR 0.94 per share, totaling EUR 98.1 million (EUR 0.92 per share, totaling EUR 96.0 million). A dividend of EUR 1.00 per share will be proposed at the Annual General Meeting on April 27, 2023. This corresponds total dividends of EUR 104.4 million for 2022, calculated based on outstanding shares at December 31, 2022. This dividend is not reflected in the financial statements.
Dividend per shareOn December\u00a031, 2022 Huhtam\u00e4ki Oyj\u2019s non-restricted equity was EUR 907,930,195.21 of which the result for the financial period was EUR 552,824,918.57. The Board of Directors proposes that dividend will be distributed at EUR 1.00 per share. No dividend for the own shares held by the Company on the record date shall be distributed.
The total amount of dividend on the date of this proposal would be EUR 104,364,676.
", "dimensions": { "concept": "ifrs-full:DisclosureOfDividendsExplanatory", "language": "en", "entity": "scheme:5493007050SJVMXN6L29", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Narr_FgxoEjsM8EOMdh2b2F47zA": { "value": "0.94", "decimals": 2, "dimensions": { "concept": "ifrs-full:DividendsRecognisedAsDistributionsToOwnersPerShare", "entity": "scheme:5493007050SJVMXN6L29", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00", "unit": "iso4217:EUR/xbrli:shares" } }, "Narr_LeViMketR0-92LgzBAJZ7w": { "value": "0.92", "decimals": 2, "dimensions": { "concept": "ifrs-full:DividendsRecognisedAsDistributionsToOwnersPerShare", "entity": "scheme:5493007050SJVMXN6L29", "period": "2021-01-01T00:00:00/2022-01-01T00:00:00", "unit": "iso4217:EUR/xbrli:shares" } }, "Narr_JXAubukTeUG0c2KmuDDZmQ": { "value": "1", "decimals": 2, "dimensions": { "concept": "ifrs-full:DividendsProposedOrDeclaredBeforeFinancialStatementsAuthorisedForIssueButNotRecognisedAsDistributionToOwnersPerShare", "entity": "scheme:5493007050SJVMXN6L29", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00", "unit": "iso4217:EUR/xbrli:shares" } }, "Narr_ouqJJcuV3Uuf2zQpcGHApw": { "value": "104400000", "decimals": -5, "dimensions": { "concept": "ifrs-full:DividendsProposedOrDeclaredBeforeFinancialStatementsAuthorisedForIssueButNotRecognisedAsDistributionToOwners", "entity": "scheme:5493007050SJVMXN6L29", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00", "unit": "iso4217:EUR" } }, "Tb_pI_gMVogL0ObdgTTs0KL2A": { "value": "Earnings per share
The basic earnings per share figure is calculated by dividing the net income attributable to the shareholders of the parent company by the weighted average number of shares outstanding during the period. Diluted earnings per share is calculated by adjusting the weighted average number of shares by the effect of diluting shares due to Performance Share Arrangement in the Group.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForEarningsPerShareExplanatory", "language": "en", "entity": "scheme:5493007050SJVMXN6L29", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tb_eZ7nGwc9bUGcsEZNyRDSIQ": { "value": "Dividend per share
Dividends proposed by the Board of Directors are not recognized in the financial statements until they have been approved by the Company\u2019s shareholders at the Annual General Meeting.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForDividendsExplanatory", "language": "en", "entity": "scheme:5493007050SJVMXN6L29", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tb_oGSdKhBbM0SsA8j1yuMyKA": { "value": "3.1. BUSINESS COMBINATIONS
Elif Holding A.\u015e.
On September 23, 2021 Huhtamaki completed the acquisition of Elif Holding A.\u015e. (Elif), a major supplier of sustainable flexible packaging to global FMCG brand owners, with operations in Turkey and in Egypt. The acquired business is reported as part of Huhtamaki\u00b4s Flexible Packaging business segment as of September 23, 2021.
In the year 2022, Huhtamaki has completed the initial accounting for the acquisition. The acquired assets and liabilities were recognized with the following values as of the acquisition date. The values for interest bearing liabilities and deferred tax liabilities have changed from the draft values presented in the end of the year 2021, when the initial accounting for the acquisition was still incomplete.
EUR million | \u200b | \u200b |
Other intangible assets | \u200b | 78.5 |
Tangible assets | \u200b | 96.8 |
Inventory | \u200b | 58.7 |
Trade and other current receivables | \u200b | 53.4 |
Cash and cash equivalents | \u200b | 28.4 |
Total assets | \u200b | 315.8 |
\u200b | \u200b | \u200b |
Interest bearing liabilities | \u200b | 111.3 |
Deferred tax liabilities | \u200b | 33.0 |
Trade and other liabilities | \u200b | 35.3 |
Total liabilities | \u200b | 179.5 |
\u200b | \u200b | \u200b |
Net assets total | \u200b | 136.3 |
Goodwill | \u200b | 222.0 |
Consideration | \u200b | 358.3 |
Consideration, paid in cash | \u200b | 358.3 |
\u200b | \u200b | \u200b |
\u200b | \u200b | \u200b |
Analysis of cash flows of acquisition | \u200b | \u200b |
\u200b | \u200b | \u200b |
EUR million | \u200b | \u200b |
Purchase consideration, cash payment | \u200b | -358.3 |
Cash and cash equivalents in acquired companies | \u200b | 28.4 |
Transaction costs of the acquisitions | \u200b | -9.2 |
Net cash flow on acquisitions | \u200b | -339.0 |
Contingent considerations
In the beginning of the reporting period, Huhtamaki had EUR 18.4 million of financial liabilities for contingent considerations. The payments are contingent mainly on the financial performance on the acquired businesses after the acquisition. In the year 2022, Huhtamaki settled EUR 2.2 million of the liabilities. The net fair valuations through the profit or loss were EUR 4.8 million. The impact from the change in exchange rates was EUR -0.4 million. In the end of the period, the fair value of the liabilities is EUR 20.6 million.
Non-current assets held for sale
The Group has reclassified certain assets consisting of leasehold land, building, furniture and fixtures and plant and machinery from property, plant and equipment to Assets held for sale. The Group expects to dispose these assets over the course of next 12 months.
ACCOUNTING PRINCIPLES
Acquisitions
Business combinations are accounted for using the acquisition method. The identifiable assets and liabilities are measured at their fair value at the date of acquisition, any non-controlling interest is measured either at fair value or at the non-controlling interest\u2019s proportionate share of the acquiree\u2019s net assets. In a business combination achieved in stages, the previously held equity interest in the acquiree is remeasured at its acquisition-date fair value and any resulting gain or loss is recognized in profit or loss or other comprehensive income, as appropriate. The aggregate of consideration transferred, any non-controlling interest and any previously held equity interest, less acquired net assets is recognized as goodwill.
Any possible contingent consideration is recognized at fair value at the acquisition date and it is classified as a financial liability or equity. Contingent consideration classified as a financial liability is remeasured at reporting period closing date and the related profit or loss is recognized in the income statement. Contingent consideration classified as equity is not remeasured.
Acquisition related costs are expensed as incurred.
Assets held for sale
Assets are classified as held for sale, if their carrying amounts will be recovered mainly through a sale transaction rather than through continuing use. The assets must be available for immediate sale in their present condition subject only to terms that are usual and customary for sale of such assets. Also, the sale must be highly probable and expected to be completed within one year from the date of classification. These assets are presented separately in the consolidated statement of financial position and measured at the lower of the carrying amount and fair value less costs to sell. Comparative information is not restated. Assets classified as held for sale are not depreciated.
The Group has reclassified certain assets consisting of leasehold land, building, furniture and fixtures and plant and machinery from property, plant and equipment to Assets held for sale. The Group expects to dispose these assets over the course of next 12 months.
Assets held for sale", "dimensions": { "concept": "ifrs-full:DisclosureOfNoncurrentAssetsOrDisposalGroupsClassifiedAsHeldForSaleExplanatory", "language": "en", "entity": "scheme:5493007050SJVMXN6L29", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tb_6_aeBsxt_02SrVinTPKNhg": { "value": "
Acquisitions
Business combinations are accounted for using the acquisition method. The identifiable assets and liabilities are measured at their fair value at the date of acquisition, any non-controlling interest is measured either at fair value or at the non-controlling interest\u2019s proportionate share of the acquiree\u2019s net assets. In a business combination achieved in stages, the previously held equity interest in the acquiree is remeasured at its acquisition-date fair value and any resulting gain or loss is recognized in profit or loss or other comprehensive income, as appropriate. The aggregate of consideration transferred, any non-controlling interest and any previously held equity interest, less acquired net assets is recognized as goodwill.
Any possible contingent consideration is recognized at fair value at the acquisition date and it is classified as a financial liability or equity. Contingent consideration classified as a financial liability is remeasured at reporting period closing date and the related profit or loss is recognized in the income statement. Contingent consideration classified as equity is not remeasured.
Acquisition related costs are expensed as incurred.
Assets held for sale
Assets are classified as held for sale, if their carrying amounts will be recovered mainly through a sale transaction rather than through continuing use. The assets must be available for immediate sale in their present condition subject only to terms that are usual and customary for sale of such assets. Also, the sale must be highly probable and expected to be completed within one year from the date of classification. These assets are presented separately in the consolidated statement of financial position and measured at the lower of the carrying amount and fair value less costs to sell. Comparative information is not restated. Assets classified as held for sale are not depreciated.
Assets held for sale
Assets are classified as held for sale, if their carrying amounts will be recovered mainly through a sale transaction rather than through continuing use. The assets must be available for immediate sale in their present condition subject only to terms that are usual and customary for sale of such assets. Also, the sale must be highly probable and expected to be completed within one year from the date of classification. These assets are presented separately in the consolidated statement of financial position and measured at the lower of the carrying amount and fair value less costs to sell. Comparative information is not restated. Assets classified as held for sale are not depreciated.
3.2. GOODWILL
Goodwill allocation by groups of cash-generating units
Goodwill acquired through business combinations has been allocated to the level of groups of cash-generating units (groups of CGUs) that are expected to benefit from the synergies of the acquisition, which represent the lowest level at which the goodwill is monitored for internal management purposes. The group of CGU in which goodwill can be allocated represents the operating segment or lower regional level within the operating segment. Goodwill allocation by segments, and the weighted average pre-tax discount interest rates used in discounting the projected cash flows to their present value, are presented in the table below:
2022 | \u00a0\u00a0\u00a0\u00a0 | 2021 | ||||||
EUR million | \u00a0\u00a0\u00a0\u00a0 | Goodwill | \u00a0\u00a0\u00a0\u00a0 | Discount\u00a0interest | \u00a0\u00a0\u00a0\u00a0 | Goodwill | \u00a0\u00a0\u00a0\u00a0 | Discount\u00a0interest |
Flexible Packaging | 555.6 | 12.9 | 527.0 | 9.7 | ||||
North America | 231.9 | 10.8 | 224.3 | 7.6 | ||||
Foodservice Europe-Asia-Oceania | 183.7 | 10.2 | 185.9 | 8.1 | ||||
Fiber Packaging | 63.7 | 10.8 | 63.7 | 9.0 | ||||
Total goodwill | 1,035.0 | 1,000.9 |
Impairment testing
Goodwill has been tested for impairment and since the recoverable value of the groups of the cash-generating units (CGUs) has been higher than the carrying value, no impairment charges has been recognized.
In assessing whether goodwill has been impaired, the carrying value of the group of CGUs units has been compared to the recoverable amount of the group of CGUs. The recoverable amount is based on value-in-use, which is estimated using a discounted cash flow model. The cash flows are determined using five-year cash flow forecasts, which are based on business plans. The plans are based on experience as well as future expected market trends.
The plans are approved by management and are valid when impairment test is performed. Cash flows for future periods are extrapolated by using 1.0\u00a0percent growth rate (1.5 percent) in developed countries, 1.3\u00a0percent growth rate (1.7 percent) in developing countries and 2.4\u00a0percent growth rate (2.7 percent) in high growth countries. The management views these growth rates as being appropriate for the business, given the long time horizon of the testing period.
Sensitivity analysis
As part of the impairment testing a sensitivity analysis around the key assumptions is performed. The assumptions used in the impairment testing, that are considered to be most sensitive for changes, are EBIT and discount rates. Sensitivity analysis around these key assumptions have been performed, and management believes that any reasonably possible change (decrease of 2 percentage points in EBIT margin, increase of 1.5 percentage points in discount rates or combined effect of these changes) in the key assumptions would not cause carrying amount of group of CGUs to exceed its recoverable amount in North America, Foodservice Europe-Asia-Oceania or Fiber Packaging. Based on the sensitivity analysis for Flexible Packaging, the before mentioned changes in the key assumptions would cause the carrying amount of the group of CGUs to exceed its recoverable amount.
ACCOUNTING PRINCIPLES
Goodwill
Goodwill arising from an acquisition represents the excess of the consideration transferred over the fair value of the net identifiable assets acquired. Goodwill is allocated to groups of cash-generating units that are expected to benefit from the synergies of the acquisition and is not amortized but tested annually for impairment. For associates and joint ventures, the carrying amount of goodwill is included in the carrying amount of the investment. Goodwill is valued at cost less impairment losses.
Impairment testing
Goodwill is tested annually or more frequently if there are indications of impairment. In assessing whether goodwill has been impaired, the carrying value of the group of cash generating units (group of CGUs) has been compared to the recoverable amount of the group of CGUs. The recoverable amount is based on value-in-use, which is estimated using a discounted cash flow model. The cash flows are determined using five-year cash flow forecasts, which are based on business plans. Business plans are based on past experience as well as future expected market trends. Management approves business plans for impairment testing purposes. Cash flows for future periods are extrapolated by using defined growth rates for developed countries, developing countries and emerging countries. The discount rate used in the calculation reflects the weighted average cost of capital (WACC) and risks to the asset under review.
A goodwill impairment loss is recognized immediately as an expense in the income statement and is not subsequently reversed.
\u00a0
", "dimensions": { "concept": "ifrs-full:DisclosureOfGoodwillExplanatory", "language": "en", "entity": "scheme:5493007050SJVMXN6L29", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tb_0cWVUg72BEG8J6F_H0Np1g": { "value": "
Goodwill
Goodwill arising from an acquisition represents the excess of the consideration transferred over the fair value of the net identifiable assets acquired. Goodwill is allocated to groups of cash-generating units that are expected to benefit from the synergies of the acquisition and is not amortized but tested annually for impairment. For associates and joint ventures, the carrying amount of goodwill is included in the carrying amount of the investment. Goodwill is valued at cost less impairment losses.
Impairment testing
Goodwill is tested annually or more frequently if there are indications of impairment. In assessing whether goodwill has been impaired, the carrying value of the group of cash generating units (group of CGUs) has been compared to the recoverable amount of the group of CGUs. The recoverable amount is based on value-in-use, which is estimated using a discounted cash flow model. The cash flows are determined using five-year cash flow forecasts, which are based on business plans. Business plans are based on past experience as well as future expected market trends. Management approves business plans for impairment testing purposes. Cash flows for future periods are extrapolated by using defined growth rates for developed countries, developing countries and emerging countries. The discount rate used in the calculation reflects the weighted average cost of capital (WACC) and risks to the asset under review.
A goodwill impairment loss is recognized immediately as an expense in the income statement and is not subsequently reversed.
\u00a0
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForGoodwillExplanatory", "language": "en", "entity": "scheme:5493007050SJVMXN6L29", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tb_T9OYp5VSu0mhM1aS3RmtMw": { "value": "
Impairment testing
Goodwill is tested annually or more frequently if there are indications of impairment. In assessing whether goodwill has been impaired, the carrying value of the group of cash generating units (group of CGUs) has been compared to the recoverable amount of the group of CGUs. The recoverable amount is based on value-in-use, which is estimated using a discounted cash flow model. The cash flows are determined using five-year cash flow forecasts, which are based on business plans. Business plans are based on past experience as well as future expected market trends. Management approves business plans for impairment testing purposes. Cash flows for future periods are extrapolated by using defined growth rates for developed countries, developing countries and emerging countries. The discount rate used in the calculation reflects the weighted average cost of capital (WACC) and risks to the asset under review.
A goodwill impairment loss is recognized immediately as an expense in the income statement and is not subsequently reversed.
\u00a0
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForImpairmentOfAssetsExplanatory", "language": "en", "entity": "scheme:5493007050SJVMXN6L29", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tb_yj1fljubQUG1eksJKYKSBg": { "value": "3.3. INTANGIBLE ASSETS
EUR million | \u00a0\u00a0\u00a0\u00a0 | Goodwill | \u00a0\u00a0\u00a0\u00a0 | Customer | \u00a0\u00a0\u00a0\u00a0 | Software | \u00a0\u00a0\u00a0\u00a0 | Other | \u00a0\u00a0\u00a0\u00a0 | Total 2022 |
Acquisition cost on January 1, 2022 | 1,115.7 | 114.1 | 92.7 | 74.9 | 1,397.4 | |||||
Additions | - | - | 1.0 | 1.8 | 2.8 | |||||
Disposals | - | -0.4 | -0.7 | -1.3 | -2.4 | |||||
Intra-balance sheet transfer | - | - | 5.0 | 3.8 | 8.8 | |||||
Business combinations | 3.0 | - | - | - | 3.0 | |||||
Reclassification to assets held for sale | - | - | - | -0.8 | -0.8 | |||||
Changes in exchange rates | 32.6 | 5.3 | 0.5 | 1.0 | 39.4 | |||||
Acquisition cost on December 31, 2022 | 1,151.4 | 119.0 | 98.5 | 79.3 | 1,448.3 | |||||
Accumulated amortization and impairment on January 1, 2022 | -114.8 | -39.9 | -82.5 | -37.8 | -275.0 | |||||
Accumulated amortization on disposals and transfers | - | 0.4 | 0.5 | 0.1 | 1.0 | |||||
Amortization during the financial year | - | -9.5 | -4.6 | -5.2 | -19.3 | |||||
Reclassification to assets held for sale | - | - | - | 0.1 | 0.1 | |||||
Changes in exchange rates | -1.6 | -0.6 | -0.2 | 0.1 | -2.3 | |||||
Accumulated amortization and impairment on December 31, 2022 | -116.4 | -49.6 | -86.8 | -42.7 | -295.4 | |||||
Book value on December 31, 2022 | 1,035.0 | 69.4 | 11.8 | 36.7 | 1,152.9 |
EUR million | \u00a0\u00a0\u00a0\u00a0 | Goodwill | \u00a0\u00a0\u00a0\u00a0 | Customer | \u00a0\u00a0\u00a0\u00a0 | Software | \u00a0\u00a0\u00a0\u00a0 | Other | \u00a0\u00a0\u00a0\u00a0 | Total 2021 |
Acquisition cost on January 1, 2021 | 844.3 | 49.1 | 87.4 | 46.9 | 1,027.7 | |||||
Additions | - | - | 1.1 | 1.7 | 2.8 | |||||
Disposals | - | - | -1.5 | -0.3 | -1.8 | |||||
Intra-balance sheet transfer | - | - | 3.3 | 6.1 | 9.4 | |||||
Business combinations | 230.5 | 60.2 | 0.5 | 18.6 | 309.8 | |||||
Reclassification to assets held for sale | - | - | - | - | - | |||||
Changes in exchange rates | 40.9 | 4.8 | 1.9 | 1.9 | 49.6 | |||||
Acquisition cost on December 31, 2021 | 1,115.7 | 114.1 | 92.7 | 74.9 | 1,397.4 | |||||
Accumulated amortization and impairment on January 1, 2021 | -111.9 | -31.3 | -78.6 | -36.0 | -257.9 | |||||
Accumulated amortization on disposals and transfers | - | - | 1.5 | 0.0 | 1.5 | |||||
Amortization during the financial year | - | -6.8 | -3.8 | -1.5 | -12.1 | |||||
Reclassification to assets held for sale | - | - | - | - | - | |||||
Changes in exchange rates | -2.8 | -1.8 | -1.6 | -0.3 | -6.4 | |||||
Accumulated amortization and impairment on December 31, 2021 | -114.8 | -39.9 | -82.5 | -37.8 | -275.0 | |||||
Book value on December 31, 2021 | 1,000.9 | 74.2 | 10.3 | 37.1 | 1,122.4 |
ACCOUNTING PRINCIPLES
Goodwill
See note 3.2 Goodwill for the accounting principles relating to goodwill.
Other intangible asset
Other intangible assets include customer relations, patents, copyrights, trademarks, emission rights, renewable energy certificates and software licenses. These are measured at cost and typically amortized on a straight-line basis over the estimated useful lives, which may vary from 3 to 20\u00a0years. Other intangible assets with definite useful lives are tested for impairment when there are indications of impairment, see more information on impairment of assets in Note 3.4 Tangible assets.
Cloud computing arrangements that meet the definition of an intangible asset and comply with the recognition criteria are capitalized on the balance sheet. Implementation costs (customization and configuration) relating to cloud
computing arrangements that don't meet the definition of an intangible asset and are distinct from the access to the software are expensed when the services are received. If the customization and configuration services are not distinct from the access to the software, the costs are recognized as prepayments and expensed over the software contract term.
Research and development
Research costs are recognized in the income statement as incurred. Expenditure on development activities related to new products and processes are capitalized in the statement of financial position from the moment they are expected to bring future economic benefits and the Group has intention and resources to finalize the development. Previously expensed development expenditure is not capitalized later.
Emission rights and renewable energy certificates
Emission rights and renewable energy certificates are measured at cost. Rights and certificates received free of charge are recognized at their nominal value (nil). Emission rights are derecognized against actual emissions. A provision to cover the obligation to return emission rights is recognized at the fair value in the end of the reporting period if the emission allowances held by the Group do not cover actual emissions. Renewable energy certificates are derecognized against actual consumption of energy.
The estimated useful lives are (years):
Intangible assets up to | \u00a0\u00a0\u00a0\u00a0 | 20 |
Software | 3\u20135 | |
Customer relations | 7 |
Subsequent expenditure on capitalized other intangible assets is capitalized only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure is expensed as incurred.
", "dimensions": { "concept": "ifrs-full:DisclosureOfIntangibleAssetsExplanatory", "language": "en", "entity": "scheme:5493007050SJVMXN6L29", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tb_Q6vb_aOiykuN6W6PZh9ofw": { "value": "3.3. INTANGIBLE ASSETS
EUR million | \u00a0\u00a0\u00a0\u00a0 | Goodwill | \u00a0\u00a0\u00a0\u00a0 | Customer | \u00a0\u00a0\u00a0\u00a0 | Software | \u00a0\u00a0\u00a0\u00a0 | Other | \u00a0\u00a0\u00a0\u00a0 | Total 2022 |
Acquisition cost on January 1, 2022 | 1,115.7 | 114.1 | 92.7 | 74.9 | 1,397.4 | |||||
Additions | - | - | 1.0 | 1.8 | 2.8 | |||||
Disposals | - | -0.4 | -0.7 | -1.3 | -2.4 | |||||
Intra-balance sheet transfer | - | - | 5.0 | 3.8 | 8.8 | |||||
Business combinations | 3.0 | - | - | - | 3.0 | |||||
Reclassification to assets held for sale | - | - | - | -0.8 | -0.8 | |||||
Changes in exchange rates | 32.6 | 5.3 | 0.5 | 1.0 | 39.4 | |||||
Acquisition cost on December 31, 2022 | 1,151.4 | 119.0 | 98.5 | 79.3 | 1,448.3 | |||||
Accumulated amortization and impairment on January 1, 2022 | -114.8 | -39.9 | -82.5 | -37.8 | -275.0 | |||||
Accumulated amortization on disposals and transfers | - | 0.4 | 0.5 | 0.1 | 1.0 | |||||
Amortization during the financial year | - | -9.5 | -4.6 | -5.2 | -19.3 | |||||
Reclassification to assets held for sale | - | - | - | 0.1 | 0.1 | |||||
Changes in exchange rates | -1.6 | -0.6 | -0.2 | 0.1 | -2.3 | |||||
Accumulated amortization and impairment on December 31, 2022 | -116.4 | -49.6 | -86.8 | -42.7 | -295.4 | |||||
Book value on December 31, 2022 | 1,035.0 | 69.4 | 11.8 | 36.7 | 1,152.9 |
EUR million | \u00a0\u00a0\u00a0\u00a0 | Goodwill | \u00a0\u00a0\u00a0\u00a0 | Customer | \u00a0\u00a0\u00a0\u00a0 | Software | \u00a0\u00a0\u00a0\u00a0 | Other | \u00a0\u00a0\u00a0\u00a0 | Total 2021 |
Acquisition cost on January 1, 2021 | 844.3 | 49.1 | 87.4 | 46.9 | 1,027.7 | |||||
Additions | - | - | 1.1 | 1.7 | 2.8 | |||||
Disposals | - | - | -1.5 | -0.3 | -1.8 | |||||
Intra-balance sheet transfer | - | - | 3.3 | 6.1 | 9.4 | |||||
Business combinations | 230.5 | 60.2 | 0.5 | 18.6 | 309.8 | |||||
Reclassification to assets held for sale | - | - | - | - | - | |||||
Changes in exchange rates | 40.9 | 4.8 | 1.9 | 1.9 | 49.6 | |||||
Acquisition cost on December 31, 2021 | 1,115.7 | 114.1 | 92.7 | 74.9 | 1,397.4 | |||||
Accumulated amortization and impairment on January 1, 2021 | -111.9 | -31.3 | -78.6 | -36.0 | -257.9 | |||||
Accumulated amortization on disposals and transfers | - | - | 1.5 | 0.0 | 1.5 | |||||
Amortization during the financial year | - | -6.8 | -3.8 | -1.5 | -12.1 | |||||
Reclassification to assets held for sale | - | - | - | - | - | |||||
Changes in exchange rates | -2.8 | -1.8 | -1.6 | -0.3 | -6.4 | |||||
Accumulated amortization and impairment on December 31, 2021 | -114.8 | -39.9 | -82.5 | -37.8 | -275.0 | |||||
Book value on December 31, 2021 | 1,000.9 | 74.2 | 10.3 | 37.1 | 1,122.4 |
ACCOUNTING PRINCIPLES
Goodwill
See note 3.2 Goodwill for the accounting principles relating to goodwill.
Other intangible asset
Other intangible assets include customer relations, patents, copyrights, trademarks, emission rights, renewable energy certificates and software licenses. These are measured at cost and typically amortized on a straight-line basis over the estimated useful lives, which may vary from 3 to 20\u00a0years. Other intangible assets with definite useful lives are tested for impairment when there are indications of impairment, see more information on impairment of assets in Note 3.4 Tangible assets.
Cloud computing arrangements that meet the definition of an intangible asset and comply with the recognition criteria are capitalized on the balance sheet. Implementation costs (customization and configuration) relating to cloud
computing arrangements that don't meet the definition of an intangible asset and are distinct from the access to the software are expensed when the services are received. If the customization and configuration services are not distinct from the access to the software, the costs are recognized as prepayments and expensed over the software contract term.
Research and development
Research costs are recognized in the income statement as incurred. Expenditure on development activities related to new products and processes are capitalized in the statement of financial position from the moment they are expected to bring future economic benefits and the Group has intention and resources to finalize the development. Previously expensed development expenditure is not capitalized later.
Emission rights and renewable energy certificates
Emission rights and renewable energy certificates are measured at cost. Rights and certificates received free of charge are recognized at their nominal value (nil). Emission rights are derecognized against actual emissions. A provision to cover the obligation to return emission rights is recognized at the fair value in the end of the reporting period if the emission allowances held by the Group do not cover actual emissions. Renewable energy certificates are derecognized against actual consumption of energy.
The estimated useful lives are (years):
Intangible assets up to | \u00a0\u00a0\u00a0\u00a0 | 20 |
Software | 3\u20135 | |
Customer relations | 7 |
Subsequent expenditure on capitalized other intangible assets is capitalized only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure is expensed as incurred.
", "dimensions": { "concept": "ifrs-full:DisclosureOfIntangibleAssetsAndGoodwillExplanatory", "language": "en", "entity": "scheme:5493007050SJVMXN6L29", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tb_FZQ8Xp3gLEaolOGg6EpaBg": { "value": "ACCOUNTING PRINCIPLES
Goodwill
See note 3.2 Goodwill for the accounting principles relating to goodwill.
Other intangible asset
Other intangible assets include customer relations, patents, copyrights, trademarks, emission rights, renewable energy certificates and software licenses. These are measured at cost and typically amortized on a straight-line basis over the estimated useful lives, which may vary from 3 to 20\u00a0years. Other intangible assets with definite useful lives are tested for impairment when there are indications of impairment, see more information on impairment of assets in Note 3.4 Tangible assets.
Cloud computing arrangements that meet the definition of an intangible asset and comply with the recognition criteria are capitalized on the balance sheet. Implementation costs (customization and configuration) relating to cloud
computing arrangements that don't meet the definition of an intangible asset and are distinct from the access to the software are expensed when the services are received. If the customization and configuration services are not distinct from the access to the software, the costs are recognized as prepayments and expensed over the software contract term.
Research and development
Research costs are recognized in the income statement as incurred. Expenditure on development activities related to new products and processes are capitalized in the statement of financial position from the moment they are expected to bring future economic benefits and the Group has intention and resources to finalize the development. Previously expensed development expenditure is not capitalized later.
Emission rights and renewable energy certificates
Emission rights and renewable energy certificates are measured at cost. Rights and certificates received free of charge are recognized at their nominal value (nil). Emission rights are derecognized against actual emissions. A provision to cover the obligation to return emission rights is recognized at the fair value in the end of the reporting period if the emission allowances held by the Group do not cover actual emissions. Renewable energy certificates are derecognized against actual consumption of energy.
The estimated useful lives are (years):
Intangible assets up to | \u00a0\u00a0\u00a0\u00a0 | 20 |
Software | 3\u20135 | |
Customer relations | 7 |
Subsequent expenditure on capitalized other intangible assets is capitalized only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure is expensed as incurred.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForIntangibleAssetsOtherThanGoodwillExplanatory", "language": "en", "entity": "scheme:5493007050SJVMXN6L29", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tb_OvGHtldT-EW2m4e_i8AtSw": { "value": "Research and development
Research costs are recognized in the income statement as incurred. Expenditure on development activities related to new products and processes are capitalized in the statement of financial position from the moment they are expected to bring future economic benefits and the Group has intention and resources to finalize the development. Previously expensed development expenditure is not capitalized later.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForResearchAndDevelopmentExpenseExplanatory", "language": "en", "entity": "scheme:5493007050SJVMXN6L29", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tb_VYKCi4dNBke4isIQgNAv8g": { "value": "
Emission rights and renewable energy certificates
Emission rights and renewable energy certificates are measured at cost. Rights and certificates received free of charge are recognized at their nominal value (nil). Emission rights are derecognized against actual emissions. A provision to cover the obligation to return emission rights is recognized at the fair value in the end of the reporting period if the emission allowances held by the Group do not cover actual emissions. Renewable energy certificates are derecognized against actual consumption of energy.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForEmissionRightsExplanatory", "language": "en", "entity": "scheme:5493007050SJVMXN6L29", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tb_Tow7saqirkC2CjJvfl5eyw": { "value": "3.4. TANGIBLE ASSETS
EUR million | \u00a0\u00a0\u00a0\u00a0 | 2022 | \u00a0\u00a0\u00a0\u00a0 | 2021 |
Owned property, plant and equipment | 1,588.4 | 1,510.4 | ||
Right-of-use assets | 147.4 | 163.7 | ||
Total tangible assets | 1,735.8 | 1,674.1 |
Owned assets | ||||||||||||
EUR million | \u00a0\u00a0\u00a0\u00a0 | Land and land improvements | \u00a0\u00a0\u00a0\u00a0 | Buildings | \u00a0\u00a0\u00a0\u00a0 | Machinery | \u00a0\u00a0\u00a0\u00a0 | Construction | \u00a0\u00a0\u00a0\u00a0 | Other | \u00a0\u00a0\u00a0\u00a0 | Total |
Acquisition cost on January 1, 2022 | 39.9 | 474.4 | 2,108.2 | 257.0 | 105.4 | 2,985.0 | ||||||
Additions | - | 3.8 | 14.0 | 302.2 | 5.2 | 325.2 | ||||||
Disposals | -0.3 | -20.1 | -103.9 | -29.0 | -3.8 | -157.1 | ||||||
Intra-balance sheet transfer | 0.1 | 31.1 | 106.2 | -168.4 | 4.7 | -26.3 | ||||||
Business combinations | - | - | - | - | - | - | ||||||
Reclassification to assets held for sale | -0.3 | -4.1 | -2.3 | - | -0.4 | -7.2 | ||||||
Changes in exchange rates | 0.2 | 10.1 | 43.3 | 4.4 | 0.2 | 58.1 | ||||||
Acquisition cost on December 31, 2022 | 39.6 | 495.2 | 2,165.5 | 366.1 | 111.2 | 3,177.7 | ||||||
Accumulated depreciation and impairment on January 1, 2022 | -1.5 | -203.3 | -1,196.8 | - | -73.0 | -1,474.6 | ||||||
Accumulated depreciation on disposals and transfers | - | 8.9 | 62.9 | - | 3.6 | 75.4 | ||||||
Depreciation during the financial year | -0.1 | -19.5 | -133.7 | - | -7.7 | -161.0 | ||||||
Impairments reversed during the financial year | - | - | - | - | - | - | ||||||
Reclassification to assets held for sale | - | 1.2 | 1.9 | - | 0.4 | 3.5 | ||||||
Changes in exchange rates | -0.1 | -4.3 | -28.4 | - | 0.2 | -32.6 | ||||||
Accumulated depreciation and impairment on December 31, 2022 | -1.7 | -217.0 | -1,294.0 | - | -76.4 | -1,589.2 | ||||||
Book value on December 31, 2022 | 37.9 | 278.2 | 871.4 | 366.1 | 34.8 | 1,588.4 |
Owned assets |
EUR\u00a0million | \u00a0\u00a0\u00a0\u00a0 | Land and land improvements | \u00a0\u00a0\u00a0\u00a0 | Buildings\u00a0and | \u00a0\u00a0\u00a0\u00a0 | Machinery\u00a0and | \u00a0\u00a0\u00a0\u00a0 | Construction | \u00a0\u00a0\u00a0\u00a0 | Other tangible | \u00a0\u00a0\u00a0\u00a0 | Total 2021 |
Acquisition cost on January 1, 2021 | 30.0 | 423.7 | 1,816.4 | 178.6 | 93.9 | 2,542.5 | ||||||
Additions | 0.1 | 2.1 | 15.8 | 258.6 | 2.5 | 279.1 | ||||||
Disposals | -0.6 | -2.2 | -80.1 | -1.8 | -1.5 | -86.2 | ||||||
Intra-balance sheet transfer | 4.4 | 12.7 | 155.7 | -188.0 | 5.9 | -9.4 | ||||||
Business combinations | 4.5 | 9.7 | 77.8 | 1.1 | 0.1 | 93.2 | ||||||
Reclassification to assets held for sale | - | - | - | - | - | - | ||||||
Changes in exchange rates | 1.7 | 28.4 | 122.6 | 8.5 | 4.5 | 165.7 | ||||||
Acquisition cost on December 31, 2021 | 39.9 | 474.4 | 2,108.2 | 257.0 | 105.4 | 2,985.0 | ||||||
Accumulated depreciation and impairment on January 1, 2021 | - | -176.2 | -1,081.7 | - | -64.9 | -1,322.7 | ||||||
Accumulated depreciation on disposals and transfers | -1.4 | 0.8 | 77.7 | - | 2.5 | 79.7 | ||||||
Depreciation during the financial year | -0.1 | -17.3 | -112.3 | - | -7.2 | -136.8 | ||||||
Impairments reversed during the financial year | - | 2.8 | - | - | - | 2.8 | ||||||
Reclassification to assets held for sale | - | - | - | - | - | - | ||||||
Changes in exchange rates | -0.1 | -13.5 | -80.6 | - | -3.4 | -97.5 | ||||||
Accumulated depreciation and impairment on December 31, 2021 | -1.5 | -203.3 | -1,196.8 | - | -73.0 | -1,474.6 | ||||||
Book value on December 31, 2021 | 38.4 | 271.1 | 911.4 | 257.0 | 32.5 | 1,510.4 |
\u200b | \u200b | Right-of-use assets | ||||||||
EUR\u00a0million | \u00a0\u00a0\u00a0\u00a0 | Land | \u00a0\u00a0\u00a0\u00a0 | Buildings | \u00a0\u00a0\u00a0\u00a0 | Machinery\u00a0and | \u00a0\u00a0\u00a0\u00a0 | Other | \u00a0\u00a0\u00a0\u00a0 | Total\u00a02022 |
Acquisition cost on January 1, 2022 | 14.9 | 201.2 | 39.3 | 0.7 | 256.1 | |||||
Additions | 0.2 | 9.4 | 7.2 | 1.0 | 17.9 | |||||
Disposals | -1.8 | -14.9 | -8.9 | -0.1 | -25.6 | |||||
Intra-balance sheet transfer | - | - | - | - | - | |||||
Business combinations | - | 1.7 | - | - | 1.7 | |||||
Changes in exchange rates | 0.2 | 0.2 | 0.4 | -0.0 | 0.7 | |||||
Acquisition cost on December 31, 2022 | 13.5 | 197.7 | 38.0 | 1.6 | 250.8 | |||||
Accumulated depreciation and impairment on January 1, 2022 | -5.4 | -68.0 | -18.7 | -0.4 | -92.5 | |||||
Accumulated depreciation on disposals and transfers | 0.2 | 10.0 | 8.0 | 0.1 | 18.4 | |||||
Depreciation during the financial year | -0.5 | -19.9 | -8.6 | -0.3 | -29.4 | |||||
Changes in exchange rates | -0.1 | 0.4 | -0.2 | 0.0 | 0.1 | |||||
Accumulated depreciation and impairment on December 31, 2022 | -5.8 | -77.5 | -19.4 | -0.6 | -103.4 | |||||
Book value on December 31, 2022 | 7.7 | 120.2 | 18.6 | 1.0 | 147.4 |
\u200b | \u200b | Right-of-use assets | ||||||||
EUR million | \u00a0\u00a0\u00a0\u00a0 | Land | \u00a0\u00a0\u00a0\u00a0 | Buildings | \u00a0\u00a0\u00a0\u00a0 | Machinery\u00a0and | \u00a0\u00a0\u00a0\u00a0 | Other | \u00a0\u00a0\u00a0\u00a0 | Total\u00a02021 |
Acquisition cost on January 1, 2021 | 14.5 | 177.1 | 35.9 | 0.6 | 228.1 | |||||
Additions | 0.3 | 18.1 | 8.4 | 0.1 | 26.9 | |||||
Disposals | -1.0 | -15.4 | -6.1 | -0.2 | -22.6 | |||||
Intra-balance sheet transfer | - | - | - | - | - | |||||
Business combinations | - | 14.7 | - | 0.2 | 14.9 | |||||
Changes in exchange rates | 1.1 | 6.7 | 1.1 | 0.0 | 8.9 | |||||
Acquisition cost on December 31, 2021 | 14.9 | 201.2 | 39.3 | 0.7 | 256.1 | |||||
Accumulated depreciation and impairment on January 1, 2021 | -4.6 | -62.3 | -15.2 | -0.4 | -82.5 | |||||
Accumulated depreciation on disposals and transfers | - | 14.8 | 5.8 | 0.2 | 20.8 | |||||
Depreciation during the financial year | -0.4 | -18.3 | -8.7 | -0.2 | -27.6 | |||||
Changes in exchange rates | -0.4 | -2.3 | -0.5 | -0.0 | -3.1 | |||||
Accumulated depreciation and impairment on December 31, 2021 | -5.4 | -68.0 | -18.7 | -0.4 | -92.5 | |||||
Book value on December 31, 2021 | 9.5 | 133.2 | 20.6 | 0.3 | 163.7 |
ACCOUNTING PRINCIPLES
Tangible asset
Tangible assets include both owned property, plant and equipment and right-of-use (ROU) assets.
Tangible assets comprising mainly of land, buildings, machinery, tooling and equipment are valued at cost less accumulated depreciation and impairment losses. The cost of self-constructed assets includes the cost of material, direct labor costs and an appropriated proportion of production overheads. When an asset includes major components that have different useful lives, they are accounted for as separate items. The costs of right-of-use assets include the amount of the initial measurement of the lease liability, any lease payments made at or before the commencement date less lease incentives received, any direct costs and an estimate of dismantling costs. The carrying amount is further adjusted for any remeasurement of the lease liability.
Expenditure incurred to replace a component in a tangible asset that is accounted for separately, including major inspection and overhaul costs, is capitalized. Other subsequent expenditure is capitalized only when it increases the future economic benefits embodied in the asset. All other expenditure such as ordinary maintenance and repairs is recognized in the income statement as an expense as incurred. The borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset are capitalized as part of the acquisition cost.
Depreciation is charged to the income statement on a straight-line basis over the estimated useful lives of the owned property, plant and equipment or over the lease term of right-of-use assets. Land is not depreciated.
The estimated useful lives of the owned property, plant and equipment are (years):
Buildings and other structures | \u00a0\u00a0\u00a0\u00a0 | 20\u201340 |
Machinery and equipment | 5\u201315 | |
Other tangible assets and land improvements | 3\u201312 |
Tangible assets which are classified as held for sale are valued at lower of its carrying amount or fair value less costs to sell. The depreciation of these assets will be ceased when assets are classified as held for sale. Gains or losses arising from the disposal of tangible assets are included in Earnings before interest and taxes.
Impairment of assets
The carrying amounts of assets are assessed at each reporting period closing date to determine whether there is any indication of impairment. If such indication exists, the recoverable amount is estimated. An impairment loss is recognized whenever the carrying amount of assets or cash-generating unit exceeds the recoverable amount. Impairment losses are recognized in the income statement. Impairment losses recognized in respect of cash-generating units are allocated first to reduce the carrying value of goodwill allocated to groups of cash-generating units and then to reduce the carrying amount of other assets in the group of units on pro rata bases.
For intangible and tangible assets the recoverable amount is the higher of the fair value less costs to sell and value-in-use. In assessing value-in-use, the estimated future cash flows are discounted to their present value based on the average cost of capital rate (pre-tax) of the cash-generating unit where the assets are located, adjusted for risks specific to the assets.
In respect of tangible assets, and other intangible assets excluding goodwill, impairment losses recognized in prior periods are assessed at each reporting date for any indication that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is only reversed to the extent that the asset\u2019s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortization, if no impairment loss had been recognized. An impairment loss in respect of goodwill is never reversed.
", "dimensions": { "concept": "ifrs-full:DisclosureOfPropertyPlantAndEquipmentExplanatory", "language": "en", "entity": "scheme:5493007050SJVMXN6L29", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Group_2bgH75Kt2UioemfXS9kiSA": { "value": "
\u200b | \u200b | Right-of-use assets | ||||||||
EUR\u00a0million | \u00a0\u00a0\u00a0\u00a0 | Land | \u00a0\u00a0\u00a0\u00a0 | Buildings | \u00a0\u00a0\u00a0\u00a0 | Machinery\u00a0and | \u00a0\u00a0\u00a0\u00a0 | Other | \u00a0\u00a0\u00a0\u00a0 | Total\u00a02022 |
Acquisition cost on January 1, 2022 | 14.9 | 201.2 | 39.3 | 0.7 | 256.1 | |||||
Additions | 0.2 | 9.4 | 7.2 | 1.0 | 17.9 | |||||
Disposals | -1.8 | -14.9 | -8.9 | -0.1 | -25.6 | |||||
Intra-balance sheet transfer | - | - | - | - | - | |||||
Business combinations | - | 1.7 | - | - | 1.7 | |||||
Changes in exchange rates | 0.2 | 0.2 | 0.4 | -0.0 | 0.7 | |||||
Acquisition cost on December 31, 2022 | 13.5 | 197.7 | 38.0 | 1.6 | 250.8 | |||||
Accumulated depreciation and impairment on January 1, 2022 | -5.4 | -68.0 | -18.7 | -0.4 | -92.5 | |||||
Accumulated depreciation on disposals and transfers | 0.2 | 10.0 | 8.0 | 0.1 | 18.4 | |||||
Depreciation during the financial year | -0.5 | -19.9 | -8.6 | -0.3 | -29.4 | |||||
Changes in exchange rates | -0.1 | 0.4 | -0.2 | 0.0 | 0.1 | |||||
Accumulated depreciation and impairment on December 31, 2022 | -5.8 | -77.5 | -19.4 | -0.6 | -103.4 | |||||
Book value on December 31, 2022 | 7.7 | 120.2 | 18.6 | 1.0 | 147.4 |
\u200b | \u200b | Right-of-use assets | ||||||||
EUR million | \u00a0\u00a0\u00a0\u00a0 | Land | \u00a0\u00a0\u00a0\u00a0 | Buildings | \u00a0\u00a0\u00a0\u00a0 | Machinery\u00a0and | \u00a0\u00a0\u00a0\u00a0 | Other | \u00a0\u00a0\u00a0\u00a0 | Total\u00a02021 |
Acquisition cost on January 1, 2021 | 14.5 | 177.1 | 35.9 | 0.6 | 228.1 | |||||
Additions | 0.3 | 18.1 | 8.4 | 0.1 | 26.9 | |||||
Disposals | -1.0 | -15.4 | -6.1 | -0.2 | -22.6 | |||||
Intra-balance sheet transfer | - | - | - | - | - | |||||
Business combinations | - | 14.7 | - | 0.2 | 14.9 | |||||
Changes in exchange rates | 1.1 | 6.7 | 1.1 | 0.0 | 8.9 | |||||
Acquisition cost on December 31, 2021 | 14.9 | 201.2 | 39.3 | 0.7 | 256.1 | |||||
Accumulated depreciation and impairment on January 1, 2021 | -4.6 | -62.3 | -15.2 | -0.4 | -82.5 | |||||
Accumulated depreciation on disposals and transfers | - | 14.8 | 5.8 | 0.2 | 20.8 | |||||
Depreciation during the financial year | -0.4 | -18.3 | -8.7 | -0.2 | -27.6 | |||||
Changes in exchange rates | -0.4 | -2.3 | -0.5 | -0.0 | -3.1 | |||||
Accumulated depreciation and impairment on December 31, 2021 | -5.4 | -68.0 | -18.7 | -0.4 | -92.5 | |||||
Book value on December 31, 2021 | 9.5 | 133.2 | 20.6 | 0.3 | 163.7 |
Finance lease receivables
EUR million | 2022 | \u00a0\u00a0\u00a0\u00a0 | 2021 | ||
Finance lease receivable is payable as follows: | |||||
In less than one year | 1.6 | 1.0 | |||
Between one and five years | 0.9 | 2.0 | |||
Total minimum lease payments | 2.5 | 3.1 | |||
Present value of minimum lease payments | |||||
In less than one year | 1.1 | 0.9 | |||
Between one and five years | 1.3 | 1.9 | |||
Total present value of minimum lease payments | 2.5 | 2.8 | |||
Unearned future financial income | - | 0.3 |
Finance lease receivables relate to packaging machines leased to customers.
6.4. LEASES
Right of use assets are presented in note 3.4 Tangible Assets. Right of use depreciations are presented in note 2.3 Depreciation, amortization and impairment. Lease liabilities are presented in note 5.6 Interest bearing liabilities. Lease liability interests are presented in note 5.1 Net Financial Items. Items where Huhtamaki is the lessor are presented in note 5.2. Interest Bearing receivables.
Lease expenses
EUR million | 2022 | 2021 |
Short-term leases | 6.5 | 4.2 |
Low-value leases | 0.5 | 0.3 |
Variable lease payments based on use/performance | 2.6 | 3.8 |
Lease payments in Profit or Loss | 9.6 | 8.3 |
Cash based lease payments in total | 42.9 | 37.1 |
ACCOUNTING PRINCIPLES
Leases
The leases that the Group recognizes in the statement of financial position include mainly land, building, machinery and equipment. Short-term leases (lease term of 12\u00a0months or less) and leases for which the underlying asset is of low value are not booked to the statement of financial position. Payments for short-term and low-value leases and variable lease payments are expensed in P&L.
Right of use (ROU) assets are recognized at the commencement date of the lease. ROU assets are measured at cost less accumulated depreciation and impairment losses. The costs include the amount of the initial measurement of the lease liability, any lease payments made at or before the commencement date less lease incentives received, any direct costs and an estimate of dismantling costs. The carrying amount is further adjusted for any remeasurement of the lease liability. Depreciation is expensed to the income statement on a straight-line basis over the lease term. The lease term includes the noncancelable period of lease together with any extension or termination options that are reasonably certain to be exercised. ROU assets are presented as tangible assets in the statement of financial position.
Lease liabilities are recognized at the commencement date of the lease. Lease liabilities are measured at the present value of future lease payments using an effective interest method. The carrying amount is reduced to reflect the lease payments made and the interest expense is allocated over the lease term. A lease liability is remeasured, when there is a lease modification or reassessment. Lease liabilities are presented as current and non-current interest-bearing liabilities in the statement of financial position.
", "dimensions": { "concept": "ifrs-full:DisclosureOfLeasesExplanatory", "language": "en", "entity": "scheme:5493007050SJVMXN6L29", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tb_cjLBPcfIO024BkkPCD2zMA": { "value": "ACCOUNTING PRINCIPLES
Tangible asset
Tangible assets include both owned property, plant and equipment and right-of-use (ROU) assets.
Tangible assets comprising mainly of land, buildings, machinery, tooling and equipment are valued at cost less accumulated depreciation and impairment losses. The cost of self-constructed assets includes the cost of material, direct labor costs and an appropriated proportion of production overheads. When an asset includes major components that have different useful lives, they are accounted for as separate items. The costs of right-of-use assets include the amount of the initial measurement of the lease liability, any lease payments made at or before the commencement date less lease incentives received, any direct costs and an estimate of dismantling costs. The carrying amount is further adjusted for any remeasurement of the lease liability.
Expenditure incurred to replace a component in a tangible asset that is accounted for separately, including major inspection and overhaul costs, is capitalized. Other subsequent expenditure is capitalized only when it increases the future economic benefits embodied in the asset. All other expenditure such as ordinary maintenance and repairs is recognized in the income statement as an expense as incurred. The borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset are capitalized as part of the acquisition cost.
Depreciation is charged to the income statement on a straight-line basis over the estimated useful lives of the owned property, plant and equipment or over the lease term of right-of-use assets. Land is not depreciated.
The estimated useful lives of the owned property, plant and equipment are (years):
Buildings and other structures | \u00a0\u00a0\u00a0\u00a0 | 20\u201340 |
Machinery and equipment | 5\u201315 | |
Other tangible assets and land improvements | 3\u201312 |
Tangible assets which are classified as held for sale are valued at lower of its carrying amount or fair value less costs to sell. The depreciation of these assets will be ceased when assets are classified as held for sale. Gains or losses arising from the disposal of tangible assets are included in Earnings before interest and taxes.
Impairment of assets
The carrying amounts of assets are assessed at each reporting period closing date to determine whether there is any indication of impairment. If such indication exists, the recoverable amount is estimated. An impairment loss is recognized whenever the carrying amount of assets or cash-generating unit exceeds the recoverable amount. Impairment losses are recognized in the income statement. Impairment losses recognized in respect of cash-generating units are allocated first to reduce the carrying value of goodwill allocated to groups of cash-generating units and then to reduce the carrying amount of other assets in the group of units on pro rata bases.
For intangible and tangible assets the recoverable amount is the higher of the fair value less costs to sell and value-in-use. In assessing value-in-use, the estimated future cash flows are discounted to their present value based on the average cost of capital rate (pre-tax) of the cash-generating unit where the assets are located, adjusted for risks specific to the assets.
In respect of tangible assets, and other intangible assets excluding goodwill, impairment losses recognized in prior periods are assessed at each reporting date for any indication that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is only reversed to the extent that the asset\u2019s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortization, if no impairment loss had been recognized. An impairment loss in respect of goodwill is never reversed.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForImpairmentOfNonfinancialAssetsExplanatory", "language": "en", "entity": "scheme:5493007050SJVMXN6L29", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tb_9BUXMMvP80izTAJEJH2gGg": { "value": "
Tangible asset
Tangible assets include both owned property, plant and equipment and right-of-use (ROU) assets.
Tangible assets comprising mainly of land, buildings, machinery, tooling and equipment are valued at cost less accumulated depreciation and impairment losses. The cost of self-constructed assets includes the cost of material, direct labor costs and an appropriated proportion of production overheads. When an asset includes major components that have different useful lives, they are accounted for as separate items. The costs of right-of-use assets include the amount of the initial measurement of the lease liability, any lease payments made at or before the commencement date less lease incentives received, any direct costs and an estimate of dismantling costs. The carrying amount is further adjusted for any remeasurement of the lease liability.
Expenditure incurred to replace a component in a tangible asset that is accounted for separately, including major inspection and overhaul costs, is capitalized. Other subsequent expenditure is capitalized only when it increases the future economic benefits embodied in the asset. All other expenditure such as ordinary maintenance and repairs is recognized in the income statement as an expense as incurred. The borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset are capitalized as part of the acquisition cost.
Depreciation is charged to the income statement on a straight-line basis over the estimated useful lives of the owned property, plant and equipment or over the lease term of right-of-use assets. Land is not depreciated.
The estimated useful lives of the owned property, plant and equipment are (years):
Buildings and other structures | \u00a0\u00a0\u00a0\u00a0 | 20\u201340 |
Machinery and equipment | 5\u201315 | |
Other tangible assets and land improvements | 3\u201312 |
Tangible assets which are classified as held for sale are valued at lower of its carrying amount or fair value less costs to sell. The depreciation of these assets will be ceased when assets are classified as held for sale. Gains or losses arising from the disposal of tangible assets are included in Earnings before interest and taxes.
Impairment of assets
The carrying amounts of assets are assessed at each reporting period closing date to determine whether there is any indication of impairment. If such indication exists, the recoverable amount is estimated. An impairment loss is recognized whenever the carrying amount of assets or cash-generating unit exceeds the recoverable amount. Impairment losses are recognized in the income statement. Impairment losses recognized in respect of cash-generating units are allocated first to reduce the carrying value of goodwill allocated to groups of cash-generating units and then to reduce the carrying amount of other assets in the group of units on pro rata bases.
For intangible and tangible assets the recoverable amount is the higher of the fair value less costs to sell and value-in-use. In assessing value-in-use, the estimated future cash flows are discounted to their present value based on the average cost of capital rate (pre-tax) of the cash-generating unit where the assets are located, adjusted for risks specific to the assets.
In respect of tangible assets, and other intangible assets excluding goodwill, impairment losses recognized in prior periods are assessed at each reporting date for any indication that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is only reversed to the extent that the asset\u2019s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortization, if no impairment loss had been recognized. An impairment loss in respect of goodwill is never reversed.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForPropertyPlantAndEquipmentExplanatory", "language": "en", "entity": "scheme:5493007050SJVMXN6L29", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tb_VVprgRd4Y0mr6GfcYAXazQ": { "value": "
4.1. INVENTORIES
EUR million | \u00a0\u00a0\u00a0\u00a0 | 2022 | \u00a0\u00a0\u00a0\u00a0 | 2021 |
Raw and packaging material | 320.9 | 261.1 | ||
Work-In-Process | 104.6 | 102.8 | ||
Finished goods | 307.6 | 280.2 | ||
Goods in transit | 22.3 | 21.6 | ||
Total | 755.4 | 665.7 |
The value at cost for finished goods amounts to EUR 343.3 million (EUR 310.6 million). An allowance of EUR 35.7 million (EUR \u00a030.4 million) has been established for obsolete items. Total inventories include EUR 2.5 million resulting from reversals of previously written down values (EUR 1.2 million). Reversals relate to sold finished goods inventories.
ACCOUNTING PRINCIPLES
Inventories
Inventories are measured at the lower of cost and net realizable value. Net realizable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses.
Cost of inventories is determined using the first-in first-out (FIFO) principle and include expenditure incurred in acquiring the inventories and bringing them to their existing location and condition. Costs for produced finished goods and work-in-process represent the purchase price of materials, direct labor costs, other direct costs and related production overheads excluding selling and financial costs.
", "dimensions": { "concept": "ifrs-full:DisclosureOfInventoriesExplanatory", "language": "en", "entity": "scheme:5493007050SJVMXN6L29", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tb_Si-f5cb5VESGyCcUd0Gumw": { "value": "
Inventories
Inventories are measured at the lower of cost and net realizable value. Net realizable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses.
Cost of inventories is determined using the first-in first-out (FIFO) principle and include expenditure incurred in acquiring the inventories and bringing them to their existing location and condition. Costs for produced finished goods and work-in-process represent the purchase price of materials, direct labor costs, other direct costs and related production overheads excluding selling and financial costs.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForMeasuringInventories", "language": "en", "entity": "scheme:5493007050SJVMXN6L29", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tb_Es0Ky6zoi0GZv9cZfcRWQw": { "value": "4.2. TRADE AND OTHER CURRENT RECEIVABLES
EUR million | \u00a0\u00a0\u00a0\u00a0 | 2022 | \u00a0\u00a0\u00a0\u00a0 | 2021 |
Trade receivables | 563.2 | 568.5 | ||
Other receivables | 77.0 | 106.7 | ||
Accrued interest and other financial items | 28.0 | 27.7 | ||
Other accrued income and prepaid expenses | 41.1 | 42.0 | ||
Total | 709.4 | 744.9 |
Other accrued income and prepaid expenses include prepayments for goods, accrued royalty income, rebates and other miscellaneous accruals.
Aging and impairment losses of trade receivables at the closing date
Gross | Impairment | Net | Gross | Impairment | Net | ||||
EUR million | \u00a0\u00a0\u00a0\u00a0 | 2022 | 2022 | 2022 | 2021 | 2021 | 2021 | ||
Not past due | 495.7 | 0.7 | 495.0 | 502.9 | 1.3 | 501.6 | |||
Past due 0-30 days | 47.9 | -0.2 | 48.1 | 47.2 | -0.2 | 47.4 | |||
Past due 31-120 days | 15.9 | 0.2 | 15.7 | 15.1 | 0.6 | 14.5 | |||
Past due more than 120 days | 10.1 | 5.7 | 4.4 | 13.1 | 8.1 | 5.0 | |||
Total | 569.5 | 6.3 | 563.2 | 578.3 | 9.8 | 568.5 |
ACCOUNTING PRINCIPLES
Trade and other current receivables
Trade and other current receivables are financial assets initially measured at fair value and subsequently measured at amortized cost by using the effective interest method. The Group uses simplified approach to measure a loss
allowance for expected credit losses on trade receivables that do not contain a significant financing component, where the Group always measures the loss allowance at an amount equal to the lifetime expected credit losses. For this purpose, trade receivables are grouped based on geographical location, product type and customer rating. The Group uses its historical credit losses experience adjusted with supportable information about current and future conditions to define the expected credit losses. The amount of expected credit losses is updated at each reporting date.
In factoring arrangements for trade receivables, the sold trade receivables are derecognized once the contractual cash flows and substantially all risks and rewards of ownership are transferred.
", "dimensions": { "concept": "ifrs-full:DisclosureOfTradeAndOtherReceivablesExplanatory", "language": "en", "entity": "scheme:5493007050SJVMXN6L29", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tb_r9avXkRbU0mf8tvQfu85Ag": { "value": "Trade and other current receivables
Trade and other current receivables are financial assets initially measured at fair value and subsequently measured at amortized cost by using the effective interest method. The Group uses simplified approach to measure a loss
allowance for expected credit losses on trade receivables that do not contain a significant financing component, where the Group always measures the loss allowance at an amount equal to the lifetime expected credit losses. For this purpose, trade receivables are grouped based on geographical location, product type and customer rating. The Group uses its historical credit losses experience adjusted with supportable information about current and future conditions to define the expected credit losses. The amount of expected credit losses is updated at each reporting date.
In factoring arrangements for trade receivables, the sold trade receivables are derecognized once the contractual cash flows and substantially all risks and rewards of ownership are transferred.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForTradeAndOtherReceivablesExplanatory", "language": "en", "entity": "scheme:5493007050SJVMXN6L29", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tb_-MkdXpTpyUyB2PWF94dYLw": { "value": "4.3. PROVISIONS
Restructuring provisions
Restructuring provisions include mainly costs for various ongoing projects to streamline operations. Provisions relate to employee termination benefits.
Other provisions
Other provisions include mainly captive insurance provisions relating to workers, environmental and litigation provisions.
Restructuring | ||||
EUR million | reserve | Other | Total 2022 | Total 2021 |
Provision on January 1, 2022 | 3.6 | 14.2 | 17.8 | 34.2 |
Translation difference | -0.3 | 0.6 | 0.3 | 1.4 |
Provisions made during the year | 0.9 | 16.7 | 17.6 | 10.0 |
Provisions used during the year | -2.9 | -5.4 | -8.2 | -27.1 |
Unused provisions reversed during the year | -0.7 | -3.5 | -4.2 | -0.3 |
Unwind of discount | 0.0 | -0.1 | -0.1 | -0.3 |
Provision on December 31, 2022 | 0.7 | 22.5 | 23.1 | 17.8 |
Current | 0.7 | 9.2 | 9.8 | 4.7 |
Non-current | 0.0 | 13.3 | 13.3 | 13.1 |
ACCOUNTING PRINCIPLES
Provisions
Provisions are recognized in the statement of financial position when the Group has a present legal or constructive obligation as a result of a past event and it is probable that an outflow of economic benefits will be required to settle such obligation, and a reliable estimate of the amount of the obligation can be made. Provisions arise from restructuring plans, onerous contracts, legal proceedings and from environmental litigation risks. Obligations arising from restructuring plans are recognized when the detailed and formal plans have been established and when there is a valid expectation that such plan will be carried out (plan has been announced). Provision from emissions is recognized according to actual emissions.
", "dimensions": { "concept": "ifrs-full:DisclosureOfProvisionsExplanatory", "language": "en", "entity": "scheme:5493007050SJVMXN6L29", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tb_5M5OexPXwk-gO0lG5PEKPw": { "value": "Provisions
Provisions are recognized in the statement of financial position when the Group has a present legal or constructive obligation as a result of a past event and it is probable that an outflow of economic benefits will be required to settle such obligation, and a reliable estimate of the amount of the obligation can be made. Provisions arise from restructuring plans, onerous contracts, legal proceedings and from environmental litigation risks. Obligations arising from restructuring plans are recognized when the detailed and formal plans have been established and when there is a valid expectation that such plan will be carried out (plan has been announced). Provision from emissions is recognized according to actual emissions.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForProvisionsExplanatory", "language": "en", "entity": "scheme:5493007050SJVMXN6L29", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tb_Dm5qjiTgC0-iZPbThh5nsA": { "value": "4.4. TRADE AND OTHER CURRENT LIABILITIES
EUR million | \u00a0\u00a0\u00a0\u00a0 | 2022 | \u00a0\u00a0\u00a0\u00a0 | 2021 |
Trade payables | 491.0 | 550.0 | ||
Other payables | 82.0 | 97.7 | ||
Accrued interest expense and other financial items | 27.0 | 21.6 | ||
Personnel and social security accruals | 79.0 | 84.8 | ||
Other accrued expenses | 55.8 | 81.3 | ||
Total | 734.9 | 835.3 |
Other accrued expenses include accruals for purchases of material and other miscellaneous accruals.
ACCOUNTING PRINCIPLES
Trade and other current liabilities are measured at amortized cost.
", "dimensions": { "concept": "ifrs-full:DisclosureOfTradeAndOtherPayablesExplanatory", "language": "en", "entity": "scheme:5493007050SJVMXN6L29", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tb_wcYBm-xbcEWtSpSLrz1Zlw": { "value": "Trade and other current liabilities are measured at amortized cost.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForTradeAndOtherPayablesExplanatory", "language": "en", "entity": "scheme:5493007050SJVMXN6L29", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tb_NJDkO_uv6UqLdPIPR73K9A": { "value": "5.1. NET FINANCIAL ITEMS
EUR million | \u00a0\u00a0\u00a0\u00a0 | 2022 | \u00a0\u00a0\u00a0\u00a0 | 2021 |
Interest income | ||||
Financial assets at amortized cost | ||||
Interest-bearing receivables and other receivables | 7.2 | 2.2 | ||
Financial assets at fair value through profit or loss | ||||
Derivatives | 1.8 | 0.4 | ||
Defined benefit plans | 1.9 | 1.2 | ||
Dividend income | ||||
Other investments | 0.2 | 0.2 | ||
Other financial income | ||||
FX revaluation gains | ||||
Interest-bearing assets and liabilities | 0.0 | 0.0 | ||
Derivatives | 0.1 | 0.0 | ||
Financial income | 11.1 | 4.0 | ||
Interest expense | ||||
Financial liabilities measured at amortized cost | ||||
Interest-bearing liabilities (excl. lease liabilities) | -32.2 | -19.9 | ||
Lease liabilities | -5.7 | -3.6 | ||
Financial liabilities at fair value through profit or loss | ||||
Derivatives | -11.2 | -3.8 | ||
Defined benefit plans | -2.8 | -2.8 | ||
Other financial expense | ||||
FX revaluation losses | ||||
Interest-bearing assets and liabilities | -4.4 | -2.1 | ||
Derivatives | 0.0 | -0.1 | ||
Change in fair value of contingent consideration | -4.8 | -0.7 | ||
Fees related to committed credit facilities | -2.5 | -4.3 | ||
Other fees | -0.7 | |||
Financial expense | -64.3 | -37.2 | ||
Net financial items | -53.2 | -33.2 |
ACCOUNTING PRINCIPLES
Net financial items
Gains and losses on fair value hedges are reported net of the gain or loss on the hedged item. Only foreign exchange revaluation gains and losses arising from purely financial exposures such as loans denominated in foreign currencies are reported in other financial items. Changes in fair value of contingent considerations related to business combinations are reported as other financial income or expense. \u00a0 \u00a0
", "dimensions": { "concept": "ifrs-full:DisclosureOfFinanceIncomeExplanatory", "language": "en", "entity": "scheme:5493007050SJVMXN6L29", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tb_LdF8LKv1NESDaGGuqqsyXg": { "value": "5.1. NET FINANCIAL ITEMS
EUR million | \u00a0\u00a0\u00a0\u00a0 | 2022 | \u00a0\u00a0\u00a0\u00a0 | 2021 |
Interest income | ||||
Financial assets at amortized cost | ||||
Interest-bearing receivables and other receivables | 7.2 | 2.2 | ||
Financial assets at fair value through profit or loss | ||||
Derivatives | 1.8 | 0.4 | ||
Defined benefit plans | 1.9 | 1.2 | ||
Dividend income | ||||
Other investments | 0.2 | 0.2 | ||
Other financial income | ||||
FX revaluation gains | ||||
Interest-bearing assets and liabilities | 0.0 | 0.0 | ||
Derivatives | 0.1 | 0.0 | ||
Financial income | 11.1 | 4.0 | ||
Interest expense | ||||
Financial liabilities measured at amortized cost | ||||
Interest-bearing liabilities (excl. lease liabilities) | -32.2 | -19.9 | ||
Lease liabilities | -5.7 | -3.6 | ||
Financial liabilities at fair value through profit or loss | ||||
Derivatives | -11.2 | -3.8 | ||
Defined benefit plans | -2.8 | -2.8 | ||
Other financial expense | ||||
FX revaluation losses | ||||
Interest-bearing assets and liabilities | -4.4 | -2.1 | ||
Derivatives | 0.0 | -0.1 | ||
Change in fair value of contingent consideration | -4.8 | -0.7 | ||
Fees related to committed credit facilities | -2.5 | -4.3 | ||
Other fees | -0.7 | |||
Financial expense | -64.3 | -37.2 | ||
Net financial items | -53.2 | -33.2 |
ACCOUNTING PRINCIPLES
Net financial items
Gains and losses on fair value hedges are reported net of the gain or loss on the hedged item. Only foreign exchange revaluation gains and losses arising from purely financial exposures such as loans denominated in foreign currencies are reported in other financial items. Changes in fair value of contingent considerations related to business combinations are reported as other financial income or expense. \u00a0 \u00a0
", "dimensions": { "concept": "ifrs-full:DisclosureOfFinanceIncomeExpenseExplanatory", "language": "en", "entity": "scheme:5493007050SJVMXN6L29", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tb_tj7sTZRf9UKFZ8KMWfYVLw": { "value": "EUR million | \u00a0\u00a0\u00a0\u00a0 | 2022 | \u00a0\u00a0\u00a0\u00a0 | 2021 |
Interest income | ||||
Financial assets at amortized cost | ||||
Interest-bearing receivables and other receivables | 7.2 | 2.2 | ||
Financial assets at fair value through profit or loss | ||||
Derivatives | 1.8 | 0.4 | ||
Defined benefit plans | 1.9 | 1.2 | ||
Dividend income | ||||
Other investments | 0.2 | 0.2 | ||
Other financial income | ||||
FX revaluation gains | ||||
Interest-bearing assets and liabilities | 0.0 | 0.0 | ||
Derivatives | 0.1 | 0.0 | ||
Financial income | 11.1 | 4.0 | ||
Interest expense | ||||
Financial liabilities measured at amortized cost | ||||
Interest-bearing liabilities (excl. lease liabilities) | -32.2 | -19.9 | ||
Lease liabilities | -5.7 | -3.6 | ||
Financial liabilities at fair value through profit or loss | ||||
Derivatives | -11.2 | -3.8 | ||
Defined benefit plans | -2.8 | -2.8 | ||
Other financial expense | ||||
FX revaluation losses | ||||
Interest-bearing assets and liabilities | -4.4 | -2.1 | ||
Derivatives | 0.0 | -0.1 | ||
Change in fair value of contingent consideration | -4.8 | -0.7 | ||
Fees related to committed credit facilities | -2.5 | -4.3 | ||
Other fees | -0.7 | |||
Financial expense | -64.3 | -37.2 | ||
Net financial items | -53.2 | -33.2 |
ACCOUNTING PRINCIPLES
Net financial items
Gains and losses on fair value hedges are reported net of the gain or loss on the hedged item. Only foreign exchange revaluation gains and losses arising from purely financial exposures such as loans denominated in foreign currencies are reported in other financial items. Changes in fair value of contingent considerations related to business combinations are reported as other financial income or expense. \u00a0 \u00a0
", "dimensions": { "concept": "ifrs-full:DisclosureOfFinanceCostExplanatory", "language": "en", "entity": "scheme:5493007050SJVMXN6L29", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tb_jgtSlKOVXkSfTPSPw6vOVA": { "value": "Net financial items
Gains and losses on fair value hedges are reported net of the gain or loss on the hedged item. Only foreign exchange revaluation gains and losses arising from purely financial exposures such as loans denominated in foreign currencies are reported in other financial items. Changes in fair value of contingent considerations related to business combinations are reported as other financial income or expense. \u00a0 \u00a0
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFinanceIncomeAndCostsExplanatory", "language": "en", "entity": "scheme:5493007050SJVMXN6L29", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tb_yOoO5bilT0ezxDUpJ_-Yyg": { "value": "5.2. INTEREST-BEARING RECEIVABLES
2022 | 2022 | 2021 | 2021 | |||
EUR million | Carrying amount | Fair value | \u00a0\u00a0\u00a0\u00a0 | Carrying amount | Fair value | |
Current | ||||||
Loan receivables | 13.4 | 13.4 | 0.8 | 0.8 | ||
Finance lease receivables | 1.6 | 1.6 | 1.0 | 1.0 | ||
Current interest-bearing receivables | 14.9 | 14.9 | 1.9 | 1.9 | ||
Non-current | ||||||
Loan receivables | 0.0 | 0.0 | 0.0 | 0.0 | ||
Finance lease receivables | 0.9 | 0.9 | 2.0 | 2.0 | ||
Non-current interest-bearing receivables | 0.9 | 0.9 | 2.0 | 2.0 |
", "dimensions": { "concept": "ifrs-full:DisclosureOfFinancialAssetsExplanatory", "language": "en", "entity": "scheme:5493007050SJVMXN6L29", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Group_smQh_XhYDUuGZGcPku3Ufg": { "value": "
Interest-bearing receivables
Interest-bearing receivables are measured at amortized cost. Fair values have been calculated by discounting future cash flows of each major receivable at the appropriate market interest rate prevailing at closing date. The fair value of current interest-bearing receivables is estimated to equal the carrying amount. \u00a0 \u00a0
Financial assets and liabilities
Financial assets are classified according to IFRS 9 on the basis of the Group\u2019s business model for managing the financial assets and the contractual cash flow characteristics to the following categories: financial assets at fair value through profit or loss, financial assets at fair value through OCI and financial assets at amortized cost. Financial liabilities are classified to financial liabilities at fair value through profit and loss and financial liabilities at amortized cost.
Publicly traded and unlisted shares are classified as financial assets at fair value through OCI. Publicly traded shares are recognized at fair value, which is based on quoted market prices at the reporting period closing date. Gains or losses arising from changes in fair value are recognized in other comprehensive income and are presented in equity in fair value reserves. Unlisted shares are measured at cost, as their fair value cannot be measured reliably.
Non-derivative assets with fixed or determinable payments that are not quoted in an active market are classified as financial assets at amortized cost. Trade receivables and other receivables are included in this category. Trade and other receivables are measured at amortized cost by using the effective interest rate method.
The Group recognizes a loss allowance for expected credit losses on financial assets based on the general approach, where a loss allowance is measured at amount equal to 12-month expected credit losses if there has not been a significant increase in credit risk since the initial recognition. The Group measures expected credit losses based on historical credit losses experience, current and future conditions. Simplified approach is used for trade receivables that do not contain a significant financing component, where the Group always measures the loss allowance at an amount equal to the lifetime expected credit losses. The amount of expected credit losses is updated at each reporting date.
Fair values of foreign exchange forwards are calculated using market rates on the reporting period closing date. Fair values of foreign exchange options are calculated with the Garman-Kohlhagen model. Fair values of interest rate swaps, futures and forwards are based on net present values of estimated future cash flows. Cash, short-term loans
and overdrafts have fair values that approximate to their carrying amounts because of their short-term nature. The recoverable amount for financial investments is calculated as the present value of expected future cash flows, discounted at the original effective interest rate. Short-term receivables are not discounted. \u00a0
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFinancialAssetsExplanatory", "language": "en", "entity": "scheme:5493007050SJVMXN6L29", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tb_jMzuitXesEGrDvMw_BO8eQ": { "value": "5.3. CASH AND CASH EQUIVALENTS
EUR million | \u00a0\u00a0\u00a0\u00a0 | 2022 | 2021 |
Cash and bank | 305.0 | 176.7 | |
Liquid marketable securities | 4.4 | 1.9 | |
Total | 309.4 | 178.7 |
ACCOUNTING PRINCIPLES
Cash and cash equivalents
Cash and cash equivalents comprise of cash at bank and short-term highly liquid money market securities for the Group\u2019s cash management purposes that are subject to insignificant risk of changes in value.
", "dimensions": { "concept": "ifrs-full:DisclosureOfCashAndCashEquivalentsExplanatory", "language": "en", "entity": "scheme:5493007050SJVMXN6L29", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tb_JJdT23xAr0mgvqB0WGOJVQ": { "value": "Cash and cash equivalents
Cash and cash equivalents comprise of cash at bank and short-term highly liquid money market securities for the Group\u2019s cash management purposes that are subject to insignificant risk of changes in value.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyToDetermineComponentsOfCashAndCashEquivalents", "language": "en", "entity": "scheme:5493007050SJVMXN6L29", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tb_v9oZtvP6sk6z1zSLsGZolA": { "value": "5.4. SHAREHOLDERS\u2019 EQUITY
Share capital | \u00a0\u00a0\u00a0\u00a0 | Number\u00a0of\u00a0shares | Share\u00a0capital\u00a0EUR | Share\u00a0premium\u00a0EUR | Treasury\u00a0shares\u00a0EUR | Total\u00a0EUR |
January 1, 2021 | 107,760,385 | 366,385,309.00 | 115,023,103.38 | -31,343,038.88 | 450,065,373.50 | |
Own shares conveyance through performance share incentive plan | - | - | - | 137,850.00 | 137,850.00 | |
December 31, 2021 | 107,760,385 | 366,385,309.00 | 115,023,103.38 | -31,205,188.88 | 450,203,223.50 | |
Own shares conveyance through performance share incentive plan | - | - | - | |||
December 31, 2022 | 107,760,385 | 366,385,309.00 | 115,023,103.38 | -31,205,188.88 | 450,203,223.50 |
All shares issued are fully paid.
Share capital of the parent company
Huhtam\u00e4ki Oyj has one series of shares. Each share entitles its holder to equal voting rights and equal distribution of dividend and other assets. The Company\u2019s Articles of Association do not contain rules regarding the minimum or maximum number of shares or the minimum or maximum share capital. Shares do not have a nominal value. All shares issued are fully paid.
The amount of the subscription price exceeding the par value of shares (EUR 3.40) received by the Company in connection with share subscriptions based on option rights granted under the option rights plan established under the old Companies Act (734/1978) has been recorded in the share premium. The Company\u2019s last existing option rights plan ceased on April 30, 2014.
Based on the authorization given by the Annual General Meeting of Shareholders on March 25, 2002, the Company repurchased in total 5,061,089 own shares during 2002 and 2003. After 2003 no own shares have been repurchased. The Annual General Meeting of Shareholders on April 27, 2022 authorized the Board of Directors to decide on the repurchase of the Company\u2019s own shares. The authorization remains in force until the end of the next Annual General Meeting, however, no longer than until June 30, 2023. The authorization by Annual General Meeting on April 29, 2020 to the Board of Directors to resolve on the repurchase of own shares terminated at the end of the Annual General Meeting on April 27, 2022.
The Annual General Meeting of Shareholders on April 22, 2022 authorized the Board of Directors to decide on the issuance of shares as well as the issuance of special rights entitling to shares. The authorization remains in force until the end of the next Annual General Meeting, however, no longer than until June 30, 2023. This authorization cancelled the authorization given by the Annual General Meeting on April 22, 2021 to decide on the issuance of shares as well as the issuance of special rights entitling to shares. During 2022 no own shares were transferred (during 2021 a total of 15,000 own shares were transferred based on the authorization in force at that time).
On December 31, 2022 the Company owned a total of 3,395,709 own shares (3,395,709 own shares).
Members of the Board of Directors and the CEO of the Company owned on December 31, 2022 a total of 69,850 shares (56,600 shares). These shares represented 0.06% (0.05%) of the total number of shares and voting rights in the Company on December 31, 2022.
Proposal of the Board of Directors to distribute the earnings
On December\u00a031, 2022 Huhtam\u00e4ki Oyj\u2019s non-restricted equity was EUR 907,930,195.21 of which the result for the financial period was EUR 552,824,918.57. The Board of Directors proposes that dividend will be distributed at EUR 1.00 per share. No dividend for the own shares held by the Company on the record date shall be distributed.
The total amount of dividend on the date of this proposal would be EUR 104,364,676.
No significant changes have taken place in the Company\u2019s financial position since the end of the financial\u00a0year. The Company\u2019s liquidity position is good and the proposed distribution does not, in the view of the Board of Directors, risk the Company\u2019s ability to fulfill its obligations.
Treasury shares
Treasury shares include the purchase price of Huhtam\u00e4ki Oyj\u2019s shares held by Group companies. In 2022 no own shares were transferred \u00a0(in 2021 \u00a0own shares were transferred according to the terms and conditions of the CEO signing bonus). There are no additions in treasury shares in 2022.
Translation differences
Translation differences contain the differences resulting from the translation of foreign entities\u2019 financial statements into euros. Also gains and losses from net investments in foreign entities are reported in translation differences. Hedges of those investments are reported in translation differences, if hedge accounting criteria is met.
ACCOUNTING PRINCIPLES
Equity, dividends and own shares
The Group\u2019s equity includes instruments that evidences a residual interest in the assets of an entity after deducting all of its liabilities and contains no contractual obligation for the issuer to deliver cash or other financial asset to another entity or to exchange financial assets or financial liabilities with another entity under conditions which are unfavorable to the issuer. When Huhtam\u00e4ki Oyj\u2019s own shares are repurchased, the amount of the consideration paid, including directly attributable costs, is recognized as a deduction in equity. Dividends proposed by the Board of Directors are not recognized in the financial statements until the shareholders have approved them at the Annual General Meeting.
5.5. FAIR VALUE AND OTHER RESERVES
EUR million | \u00a0\u00a0\u00a0\u00a0 | |
December 31, 2020 | -103.8 | |
Cash flow hedges recognized in other comprehensive income | 5.5 | |
Cash flow hedges transferred to profit or loss | -0.5 | |
Cash flow hedges transferred to statement of financial position | -0.1 | |
Deferred taxes | -1.1 | |
Change of remeasurements on defined benefit plans | 35.7 | |
Deferred taxes | -8.0 | |
Change of non-controlling interest in other comprehensive income | -0.3 | |
December 31, 2021 | -72.4 | |
Cash flow hedges recognized in other comprehensive income | 7.5 | |
Cash flow hedges transferred to profit or loss | -0.4 | |
Cash flow hedges transferred to statement of financial position | 10.3 | |
Deferred taxes | -3.4 | |
Change of remeasurements on defined benefit plans | 44.1 | |
Deferred taxes | -16.3 | |
Change of non-controlling interest in other comprehensive income | 0.1 | |
December 31, 2022 | -30.4 |
Fair value and other reserves
Fair value and other reserves contain the effective portion of fair value changes of derivative instruments designated as cash flow hedges, the change in fair value of other investments, the change of remeasurements on defined benefit plans and the change of non-controlling interest. Also deferred taxes in equity are reported in fair value and other reserves.
ACCOUNTING PRINCIPLES
Fair value and other reserves
All derivative financial instruments are measured at fair value. The Group applies hedge accounting for certain interest rate swaps and foreign exchange forwards that meet hedge accounting criteria as defined in IFRS 9. The hedged item must be highly probable to occur and must ultimately affect the income statement. The hedges must be
highly effective prospectively. For qualifying cash flow hedges, the portion of any change in fair value that is effective is included in other comprehensive income, and any remaining ineffective portion is recognized in the income statement. The cumulative changes of fair value of the hedging instrument that have been recognized in equity are transferred from equity and included in the income statement when the forecasted transaction is recognized in the income statement. When the hedged forecast transaction subsequently results in the recognition of non-financial asset or non-financial liability, the cumulative change of fair value of the hedging instrument that has been recognized in equity is transferred from equity and included in the initial carrying amount of the asset or liability at the time it is recognized.
For qualifying fair value hedges, the valuation is recognized in the income statement relating to the hedged risk. Derivative instruments that are designated as hedging instruments but not accounted for according to the principles of hedge accounting or which do not fulfill IFRS 9 hedge accounting requirements are classified as financial instruments at fair value through profit or loss and valued at fair value. Changes in fair values of these derivative financial instruments are recognized in the income statement. A non-split presentation is applied to liabilities at fair value through profit or loss because the presentation in OCI would create or enlarge an accounting mismatch in profit or loss.
The Group uses foreign exchange forwards and foreign currency loans to hedge net investments in foreign entities. Hedges of net investment in foreign entities must meet the same hedge accounting criteria as cash flow hedges as detailed in IFRS 9. All changes in fair value arising from the hedges are recognized as a translation difference in other comprehensive income if hedge accounting criteria are met. If the hedged entity is disposed of, the cumulative changes in fair value of the hedging instrument that have been recognized in equity are included in the income statement at the time of disposal. \u00a0
", "dimensions": { "concept": "ifrs-full:DisclosureOfShareCapitalReservesAndOtherEquityInterestExplanatory", "language": "en", "entity": "scheme:5493007050SJVMXN6L29", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tb_AqE9-oCwGkm_CdN1IDcXmg": { "value": "Based on the authorization given by the Annual General Meeting of Shareholders on March 25, 2002, the Company repurchased in total 5,061,089 own shares during 2002 and 2003. After 2003 no own shares have been repurchased. The Annual General Meeting of Shareholders on April 27, 2022 authorized the Board of Directors to decide on the repurchase of the Company\u2019s own shares. The authorization remains in force until the end of the next Annual General Meeting, however, no longer than until June 30, 2023. The authorization by Annual General Meeting on April 29, 2020 to the Board of Directors to resolve on the repurchase of own shares terminated at the end of the Annual General Meeting on April 27, 2022.
The Annual General Meeting of Shareholders on April 22, 2022 authorized the Board of Directors to decide on the issuance of shares as well as the issuance of special rights entitling to shares. The authorization remains in force until the end of the next Annual General Meeting, however, no longer than until June 30, 2023. This authorization cancelled the authorization given by the Annual General Meeting on April 22, 2021 to decide on the issuance of shares as well as the issuance of special rights entitling to shares. During 2022 no own shares were transferred (during 2021 a total of 15,000 own shares were transferred based on the authorization in force at that time).
On December 31, 2022 the Company owned a total of 3,395,709 own shares (3,395,709 own shares).
", "dimensions": { "concept": "ifrs-full:DisclosureOfTreasurySharesExplanatory", "language": "en", "entity": "scheme:5493007050SJVMXN6L29", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tb_8TEPZrafzk-FtMJxm0k3Aw": { "value": "The Annual General Meeting of Shareholders on April 22, 2022 authorized the Board of Directors to decide on the issuance of shares as well as the issuance of special rights entitling to shares. The authorization remains in force until the end of the next Annual General Meeting, however, no longer than until June 30, 2023. This authorization cancelled the authorization given by the Annual General Meeting on April 22, 2021 to decide on the issuance of shares as well as the issuance of special rights entitling to shares. During 2022 no own shares were transferred (during 2021 a total of 15,000 own shares were transferred based on the authorization in force at that time).
", "dimensions": { "concept": "ifrs-full:DisclosureOfIssuedCapitalExplanatory", "language": "en", "entity": "scheme:5493007050SJVMXN6L29", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Narr_DddUo9Yme0-pTYRdwHy6PA": { "value": "1", "decimals": 2, "dimensions": { "concept": "ifrs-full:DividendsProposedOrDeclaredBeforeFinancialStatementsAuthorisedForIssueButNotRecognisedAsDistributionToOwnersPerShare", "entity": "scheme:5493007050SJVMXN6L29", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00", "unit": "iso4217:EUR/xbrli:shares" } }, "Group_6gqNbH75ekm63zf4ZnhtYw": { "value": "Treasury shares
Treasury shares include the purchase price of Huhtam\u00e4ki Oyj\u2019s shares held by Group companies. In 2022 no own shares were transferred \u00a0(in 2021 \u00a0own shares were transferred according to the terms and conditions of the CEO signing bonus). There are no additions in treasury shares in 2022.
Translation differences
Translation differences contain the differences resulting from the translation of foreign entities\u2019 financial statements into euros. Also gains and losses from net investments in foreign entities are reported in translation differences. Hedges of those investments are reported in translation differences, if hedge accounting criteria is met.
", "dimensions": { "concept": "ifrs-full:DisclosureOfReservesAndOtherEquityInterestExplanatory", "language": "en", "entity": "scheme:5493007050SJVMXN6L29", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tb_uSBiU61dqEKVS9fN5-wKhQ": { "value": "When Huhtam\u00e4ki Oyj\u2019s own shares are repurchased, the amount of the consideration paid, including directly attributable costs, is recognized as a deduction in equity.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForTreasurySharesExplanatory", "language": "en", "entity": "scheme:5493007050SJVMXN6L29", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Group_8f1w1Crwl0uFxb3oJN9xhg": { "value": "5.6. INTEREST-BEARING LIABILITIES
\u200b | 2022 | 2021 | |||
EUR million | Carrying amount | Fair value | Carrying amount | Fair value | |
Current | |||||
Loans from financial institutions | |||||
fixed rate | 277.6 | 277.5 | 320.4 | 320.3 | |
floating rate | 63.5 | 63.5 | 74.4 | 74.4 | |
Bonds | |||||
fixed rate | - | - | - | - | |
Other current loans | |||||
floating rate | 5.1 | 5.1 | 0.2 | 0.2 | |
Contingent considerations | 20.6 | 20.6 | 3.3 | 3.3 | |
Lease liabilities | 25.3 | 25.3 | 28.8 | 28.8 | |
Total | 392.2 | 392.0 | 427.2 | 427.1 | |
Non-current | |||||
Loans from financial institutions | |||||
fixed rate | 79.3 | 74.3 | 98.0 | 92.0 | |
floating rate | 371.0 | 371.0 | 691.3 | 691.3 | |
Bonds | |||||
fixed rate | 815.8 | 777.6 | 323.7 | 305.8 | |
Other non-current loans | |||||
floating rate | 4.6 | 4.6 | 0.7 | 0.7 | |
Contingent considerations | - | - | 15.2 | 15.2 | |
Lease liabilities | 133.2 | 133.2 | 146.8 | 146.8 | |
Total | 1,403.9 | 1,360.7 | 1,275.6 | 1,251.7 |
Loan repayments
Repayment | Loans from | Bonds | Other loans | Contingent considerations | Lease liabilities | Total |
2023 | 341.1 | - | 5.1 | 20.6 | 25.3 | 392.1 |
2024 | 286.0 | 149.9 | - | - | 38.7 | 474.6 |
2025 | 86.0 | - | - | 13.9 | 99.9 | |
2026 | 47.5 | 168.3 | 4.6 | - | 11.4 | 231.7 |
2027 | 30.8 | 497.6 | - | - | 9.4 | 537.7 |
2028- | - | - | - | - | 59.9 | 59.9 |
ACCOUNTING PRINCIPLES
Interest-bearing liabilities
Interest-bearing loans and borrowings are classified as other liabilities. Interest-bearing loans and borrowings are originated loans and bank loans, and are carried at amortized cost by using the effective interest rate method. All interest-bearing liabilities are other liabilities than liabilities for trading purposes or derivative financial instruments defined in IFRS 9 and as such are carried at amortized cost. Fair values have been calculated by discounting future cash flows at the appropriate market interest rate prevailing at period end closing date. Interest rates for measuring fair values of interest-bearing liabilities were\u00a03.55%\u20136.17%. The fair value of current interest-bearing liabilities is estimated to equal the carrying amount.
Contingent considerations related to business combinations classified as financial liabilities are measured at fair value through profit or loss and reported in the interest-bearing liabilities.
Lease liabilities are recognized at the commencement date of the lease. Lease liabilities are measured at the present value of future lease payments using an effective interest rate method. The carrying amount is reduced to reflect the lease payments made and the interest expense is allocated over the lease term. A lease liability is remeasured, when there is a lease modification or reassessment.
Reconciliation of liabilities arising from financing activities
2022 | 2021 | |||||||
Non-cash changes | ||||||||
EUR million | Total | Cash flows | Business combinations | Contingent considerations | Foreign exchange movement | Reclassification from long-term to short-term | Other | Total |
Long-term loans | 1,270.6 | 293.7 | - | -15.2 | 31.3 | -155.8 | -12.2 | 1,128.8 |
Short-term loans | 346.2 | -186.1 | - | 20.0 | 0.8 | 155.8 | -42.6 | 398.4 |
Long-term lease liabilities | 133.2 | 0.0 | -1.8 | - | 1.0 | -17.3 | 4.5 | 146.8 |
Short-term lease liabilities | 25.3 | -28.8 | 1.9 | - | -0.1 | 17.3 | 6.2 | 28.8 |
Total liabilities from financing activities | 1,775.4 | 78.8 | 0.1 | 4.8 | 33.0 | 0.0 | -44.1 | 1,702.8 |
2021 | 2020 | |||||||
Non-cash changes | ||||||||
EUR million | Total | Cash flows | Business combinations | Contingent considerations | Foreign exchange movement | Reclassification from long-term to short-term | Other | Total |
Long-term loans | 1,128.8 | 364.0 | 31.6 | 15.2 | 21.4 | -86.8 | -26.6 | 810.0 |
Short-term loans | 398.4 | 13.0 | 67.0 | 3.3 | 7.0 | 86.8 | -7.3 | 228.6 |
Long-term lease liabilities | 146.8 | 0.0 | 14.6 | - | 5.2 | -21.9 | 17.4 | 131.4 |
Short-term lease liabilities | 28.8 | -28.8 | 1.8 | - | 1.0 | 21.9 | 9.9 | 23.0 |
Total liabilities from financing activities | 1,702.8 | 348.2 | 115.1 | 18.4 | 34.6 | 0.0 | -6.5 | 1,193.0 |
5.7. FINANCIAL ASSETS AND LIABILITIES BY CATEGORY
EUR million | \u00a0\u00a0\u00a0\u00a0 | 2022 | \u00a0\u00a0\u00a0\u00a0 | 2021 |
Financial assets at fair value through profit or loss | ||||
Derivatives | 10.9 | 20.4 | ||
Derivatives designated for hedge accounting | 20.0 | 1.8 | ||
Financial assets at amortized cost | ||||
Non-current interest-bearing receivables | 0.9 | 2.0 | ||
Other non-current assets | 28.7 | 4.7 | ||
Current interest-bearing receivables | 14.9 | 1.9 | ||
Trade and other current receivables | 611.8 | 675.2 | ||
Cash and cash equivalents | 309.4 | 178.7 | ||
Other investments | 2.4 | 2.2 | ||
Financial assets total | 999.0 | 886.9 | ||
Financial liabilities at fair value through profit or loss | ||||
Derivatives | 14.7 | 9.5 | ||
Contingent considerations | 20.6 | 18.4 | ||
Derivatives designated for hedge accounting | 2.3 | 8.5 | ||
Financial liabilities at amortized cost | ||||
Non-current interest-bearing liabilities | 1,403.9 | 1,260.5 | ||
Other non-current liabilities | 10.5 | 3.3 | ||
Current portion of long-term loans | 168.9 | 153.8 | ||
Short term loans | 202.6 | 270.1 | ||
Trade and other current liabilities | 541.4 | 640.5 | ||
Financial liabilities total | 2,364.9 | 2,364.5 |
In the statement of financial position derivatives are included in the following groups: non-current interest-bearing liabilities, other non-current assets, trade and other current receivables, other non-current liabilities and trade and other current liabilities.
ACCOUNTING PRINCIPLES
Financial assets and liabilities
Financial assets are classified according to IFRS 9 on the basis of the Group\u2019s business model for managing the financial assets and the contractual cash flow characteristics to the following categories: financial assets at fair value through profit or loss, financial assets at fair value through OCI and financial assets at amortized cost. Financial liabilities are classified to financial liabilities at fair value through profit and loss and financial liabilities at amortized cost.
Publicly traded and unlisted shares are classified as financial assets at fair value through OCI. Publicly traded shares are recognized at fair value, which is based on quoted market prices at the reporting period closing date. Gains or losses arising from changes in fair value are recognized in other comprehensive income and are presented in equity in fair value reserves. Unlisted shares are measured at cost, as their fair value cannot be measured reliably.
Non-derivative assets with fixed or determinable payments that are not quoted in an active market are classified as financial assets at amortized cost. Trade receivables and other receivables are included in this category. Trade and other receivables are measured at amortized cost by using the effective interest rate method.
The Group recognizes a loss allowance for expected credit losses on financial assets based on the general approach, where a loss allowance is measured at amount equal to 12-month expected credit losses if there has not been a significant increase in credit risk since the initial recognition. The Group measures expected credit losses based on historical credit losses experience, current and future conditions. Simplified approach is used for trade receivables that do not contain a significant financing component, where the Group always measures the loss allowance at an amount equal to the lifetime expected credit losses. The amount of expected credit losses is updated at each reporting date.
Fair values of foreign exchange forwards are calculated using market rates on the reporting period closing date. Fair values of foreign exchange options are calculated with the Garman-Kohlhagen model. Fair values of interest rate swaps, futures and forwards are based on net present values of estimated future cash flows. Cash, short-term loans
and overdrafts have fair values that approximate to their carrying amounts because of their short-term nature. The recoverable amount for financial investments is calculated as the present value of expected future cash flows, discounted at the original effective interest rate. Short-term receivables are not discounted. \u00a0
Contingent considerations related to business combinations classified as financial liabilities are measured at fair value through profit or loss and reported in the interest-bearing liabilities.
\u200b | \u200b | \u200b | \u200b | \u200b | \u200b | \u200b | \u200b | |
\u200b | \u200b | \u200b | \u200b | \u200b | \u200b | \u200b | \u200b | |
EUR million | \u200b | \u200b | \u200b | \u200b | \u200b | \u200b | ||
\u200b | \u200b | \u200b | \u200b | \u200b | \u200b | |||
Financial instruments measured at fair value | \u00a0\u00a0\u00a0\u00a0 | Level 1 | \u00a0\u00a0\u00a0\u00a0 | Level 2 | \u00a0\u00a0\u00a0\u00a0 | Level 3 | \u00a0\u00a0\u00a0\u00a0 | Total 2022 |
Assets | ||||||||
Derivatives | ||||||||
Currency derivatives | - | 23.9 | - | 23.9 | ||||
Interest rate derivatives | - | 7.0 | - | 7.0 | ||||
Other investments | - | - | 2.4 | 2.4 | ||||
Total | - | 30.9 | 2.4 | 33.3 | ||||
Liabilities | ||||||||
Derivatives | ||||||||
Currency derivatives | - | 10.8 | - | 10.8 | ||||
Interest rate derivatives | - | 6.2 | - | 6.2 | ||||
Contingent considerations | - | 20.6 | 20.6 | |||||
Total | - | 17.0 | 20.6 | 37.6 |
\u200b | \u200b | \u200b | \u200b | \u200b | \u200b | \u200b | \u200b | |
\u200b | \u200b | \u200b | \u200b | \u200b | \u200b | \u200b | \u200b | |
EUR million | \u200b | \u200b | \u200b | \u200b | \u200b | \u200b | ||
\u200b | \u200b | \u200b | \u200b | \u200b | \u200b | |||
Financial instruments measured at fair value | \u00a0\u00a0\u00a0\u00a0 | Level 1 | \u00a0\u00a0\u00a0\u00a0 | Level 2 | \u00a0\u00a0\u00a0\u00a0 | Level 3 | \u00a0\u00a0\u00a0\u00a0 | Total 2021 |
Assets | ||||||||
Derivatives | ||||||||
Currency derivatives | - | 21.3 | - | 21.3 | ||||
Interest rate derivatives | - | 0.9 | - | 0.9 | ||||
Other investments | - | - | 2.2 | 2.2 | ||||
Total | - | 22.2 | 2.2 | 24.4 | ||||
Liabilities | ||||||||
Derivatives | ||||||||
Currency derivatives | - | 16.2 | - | 16.2 | ||||
Interest rate derivatives | - | 1.8 | - | 1.8 | ||||
Contingent considerations | - | - | 18.4 | 18.4 | ||||
Total | - | 18.0 | 18.4 | 36.5 |
The Group uses income approach in determining the fair value. Inputs used are foreign exchange rates, interest rates and yield curves as well as implied volatilities.
Group\u2019s currency and interest rate derivatives are subject to International Swaps and Derivatives Association (ISDA) master netting agreements. The amounts are not offset in the statement of financial position.
Unquoted investments are carried at cost, as their fair value cannot be measured reliably.
The levels of the fair value hierarchy are defined as follows:
Level 1: Quoted prices in active markets.
Level 2: Valuation techniques based on observable market data.
Level 3: Valuation techniques incorporating information other than observable market data.\u00b6\u00b6
5.8. MANAGEMENT OF FINANCIAL RISKS
The objective of financial risk management is to ensure that the Group has access to sufficient funding in the most cost-efficient way and to minimize the impact on the Group from adverse movements in the financial markets. As defined in the Group Treasury Policy, management of financial risks is guided and controlled by a Finance Committee, led by the Chief Financial Officer (CFO). The Finance Committee reviews risk reports on the Group\u2019s interest-bearing balance sheet items, commercial flows, derivatives and foreign exchange exposures and approves required measures on a\u00a0monthly basis.
The Group Treasury department at the Espoo headquarters is responsible for the Group\u2019s funding and risk management and serves the business units in daily financing, foreign exchange transactions and cash management coordination.
Currency risk
The Group is exposed to exchange rate risk through cross-border trade within the Group, exports and imports, funding of foreign subsidiaries and currency denominated equities.
Transaction risk
The largest transaction exposures derive from capital flows, imports, exports and royalty receivables. The objective of currency transaction risk management is to protect the Group from negative exchange rate movements. Business units are responsible for actively managing their currency risks related to future commercial cash flows, in accordance with policies and limits defined by the business unit and approved by the Finance Committee. As a rule, commercial receivables and payables recorded on the balance sheet are always fully hedged, as well as 25% of probable flows over a minimum 12-month horizon. Eligible hedging instruments include currency forwards and in authorized subsidiaries also currency options. The business units\u2019 counterparty in hedging transactions is mainly Huhtam\u00e4ki Oyj.
EUR million | EUR exposure | CNY exposure | USD exposure | USD exposure | USD exposure | ||||||||||
2022 | 2021 | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | 2022 | \u00a0\u00a0\u00a0\u00a0 | 2021 | |||||
Trade receivables | 2.1 | 3.4 | 0.1 | 0.1 | 1.9 | 1.4 | 0.1 | 0.1 | 14.5 | \u00a0\u00a0\u00a0\u00a0 | 17.8 | ||||
Trade payables | -23.2 | -14.9 | -6.7 | -4.7 | -7.3 | -4.5 | -7.3 | -11.3 | -6.4 | -7.9 | |||||
Net balance sheet exposure | -21.1 | -11.5 | -6.6 | -4.7 | -5.5 | -3.2 | -7.2 | -11.2 | 8.1 | 9.9 | |||||
Forecasted sales (12 months) | 16.5 | 13.4 | 1.0 | 3.5 | 5.3 | 6.1 | 1.2 | 0.6 | 66.7 | 58.2 | |||||
Forecasted purchases (12 months) | -113.9 | -74.2 | -23.6 | -16.2 | -47.8 | -45.4 | -33.0 | -32.0 | -45.4 | -44.8 | |||||
Net forecasted exposure | -97.4 | -60.8 | -22.7 | -12.8 | -42.6 | -39.3 | -31.8 | -31.4 | 21.3 | 13.4 | |||||
Hedges | |||||||||||||||
Currency forwards (12 months) | 48.6 | 36.6 | 9.8 | 6.7 | 17.3 | 16.2 | 19.8 | 24.7 | -17.9 | -17.4 | |||||
Currency options (12 months) | - | - | - | - | |||||||||||
Total net exposure | -69.9 | -35.7 | -19.5 | -10.8 | -30.7 | -26.3 | -19.2 | -17.9 | 11.4 | 5.8 |
Translation risk
As a main rule\u00a0individual subsidiaries do not carry translation risk as they are financed in local currencies. As an exception, the Finance Committee can approve the use of foreign currency borrowing in countries with high local interest rates. In 2022 and 2021 on reporting period closing dates no such borrowings were outstanding.
The main translation exposures derive from equities and permanent loans, which in substance form a part of the net investment in the US, India and UK based subsidiaries. The Group hedges its translation risks selectively by using foreign currency loans and derivatives. Equity hedging decisions are made by the Finance Committee, who in its decision making considers the hedge\u2019s estimated impact on the Group\u2019s key indicators, long-term cash flows and hedging cost. On the reporting period closing date the Group had outstanding translation risk hedges of USD 223
million (of which USD 50 million in the form of currency loans and USD 173 million in the form of derivatives) and of GBP 20 million (of which GBP 20 million in the form of derivatives) (USD 223 million, of which USD 90 million in the form of currency loans and USD 133 million in the form of derivatives and GBP 20 million, of which GBP 20 million in the form of derivatives).
A 10% appreciation of the EUR versus the USD, INR and GBP would as of the reporting period closing date decrease the result before taxes by EUR 14.4 million (EUR 9.9 million) and the Group consolidated equity by EUR 117.3 million (EUR 107,4 million).
Interest rate risk
The interest-bearing debt exposes the Group to interest rate risk, namely re-pricing and price risk caused by interest rate movements. Management of interest rate risk is centralized to the Group Treasury. The Group\u2019s policy is to maintain in the main currency debt portfolios a duration that matches a benchmark duration range based on the Group\u2019s estimated cash flow, selected balance sheet ratios and also the shape of the yield curve. The objective of interest rate risk management is to reduce the fluctuation of the interest charge, enabling a more stable net income. The Group manages interest rate risk by selection of debt interest periods and by using derivatives such as futures, forward rate agreements, interest rate swaps and options.
At the reporting period closing date the average interest rate on Group interest-bearing net debt was 3.4% (1.6%) and average duration 2.2 years (1.6\u00a0years). A one\u00a0percentage point rise in market interest rates would increase Group net interest expense by EUR 5.1 million (EUR 6.6 million) over the following 12\u00a0months. A similar rise in interest rates would increase Group equity with EUR 1.9 million (EUR 7.5 million) due to mark-to-market revaluations of interest rate derivatives designated for cash flow hedges.
Currency split and repricing schedule of outstanding net debt including hedges (excl. lease liabilities)
2022 | 2021 | |||||||||
Debt repricing in period, incl. derivatives | ||||||||||
Amount | Amount | |||||||||
Currency | EUR million | 2023 | 2024 | 2025 | 2026 | 2027 | Later | EUR million | ||
EUR | 990.8 | 125.5 | 174.5 | 35.3 | 125.0 | 530.5 | 939.2 | |||
USD | 108.9 | 47.9 | 9.4 | 14.1 | 14.1 | 23.5 | 107.6 | |||
GBP | 92.5 | 92.5 | 121.7 | |||||||
HKD | 84.8 | 84.8 | 77.6 | |||||||
PLN | 21.4 | 21.4 | 23.4 | |||||||
Other | 13.8 | 13.8 | 75.2 | |||||||
Total | 1,312.2 | 385.8 | 183.9 | 35.3 | 139.1 | 544.6 | 23.5 | 1,344.6 |
Liquidity and refinancing risk
The Group maintains sufficient liquidity reserves at all times by efficient cash management structures such as cash pools, concentration accounts and overdraft financing facilities. To mitigate the refinancing risk, the Group diversifies funding sources as well as the maturity structure of loans and debt facilities. The Group utilizes a EUR 400 million Finnish commercial paper program and uncommitted credit facilities with relationship banks for short-term financing purposes. At the reporting period closing date, the Group had committed credit facilities totaling EUR 400 million (EUR 841 million) of which EUR 353 million (EUR 382 million) remained undrawn. Undrawn committed long-term debt facilities are sufficient to ensure adequate financing resources in all foreseeable circumstances. \u00a0
During the second quarter of 2022, Huhtam\u00e4ki Oyj launched a Sustainability-Linked Bond Framework and issued a EUR 500 million senior unsecured sustainability-linked bond. The proceeds of the issue of the bond were used for refinancing the USD 500 million bridge loan facility and for general corporate purposes. In connection with the bond issuance, S&P Global Ratings assigned a long term credit rating of BB+ to Huhtam\u00e4ki Oyj, with a stable outlook.
On December 16, 2022, Huhtam\u00e4ki Oyj signed a confirmation to extend the maturity of the EUR 400 million syndicated revolving credit facility loan agreement for a further period of one year in accordance with the extension option of the loan agreement.
Debt structure
EUR million including interests | 2022 | ||||||||||
Maturity of facility/loan | |||||||||||
Debt type | Amount | Amount | Total | 2023 | 2024 | 2025 | 2026 | 2027 | Later | ||
Committed revolving facilities | 47.0 | 353.0 | 400.0 | 400.0 | |||||||
Bonds and other loans | 1,377.1 | 1,377.1 | 153.3 | 436.0 | 86.0 | 173.4 | 528.4 | 0.0 | |||
Commercial paper program | 111.5 | 111.5 | 111.5 | ||||||||
Uncommitted loans from financial institutions | 81.4 | 81.4 | 81.4 | ||||||||
Contingent considerations | 20.6 | 20.6 | 20.6 | ||||||||
Lease liabilities | 158.5 | 158.5 | 25.3 | 38.7 | 13.9 | 11.4 | 9.4 | 59.9 | |||
Trade and other current liabilities | 583.8 | 583.8 | 583.8 | ||||||||
Total | 2,379.9 | 353.0 | 2,732.9 | 975.9 | 474.6 | 99.9 | 584.8 | 537.7 | 59.9 |
EUR million including interests | 2021 | |||||||||
Maturity of facility/loan | ||||||||||
Debt type | Amount | Amount | Total | 2022 | 2023 | 2024 | 2025 | 2026 | Later | |
Committed revolving facilities | 458.8 | 382.4 | 841.2 | 441.2 | 400.0 | |||||
Bonds and other loans | 785.0 | 785.0 | 130.2 | 163.0 | 191.3 | 87.8 | 174.3 | 38.6 | ||
Commercial paper program | 150.0 | 150.0 | 150.0 | |||||||
Uncommitted loans from financial institutions | 114.9 | 114.9 | 114.9 | |||||||
Contingent considerations | 18.4 | 18.4 | 3.3 | 15.2 | ||||||
Lease liabilities | 175.6 | 175.6 | 28.8 | 22.6 | 19.1 | 16.4 | 13.0 | 75.6 | ||
Trade and other current liabilities | 663.8 | 663.8 | 663.8 | |||||||
Total | 2,366.6 | 382.4 | 2,749.0 | 1,091.0 | 641.9 | 210.4 | 504.2 | 187.3 | 114.2 |
Credit risk
The Group is exposed to credit risk from its commercial receivables and receivables from financial institutions based on short-term investment of liquid funds as well as derivatives transactions.
The business units are responsible for the management of commercial credit risk in accordance with policies defined by the business units and approved by the Finance Committee. A Group policy sets out certain minimum requirements as to credit quality, sales terms and collection. The commercial credit risk for the Group as a whole is considered low as the receivable portfolio is diversified and historical credit loss frequency is low (see note 4.2.).
Liquid funds are from time to time invested in short-term bank deposits at relationship banks with a solid credit rating, in government bonds, treasury bills or in commercial papers issued by corporate borrowers with an investment grade rating. Credit risk stemming from receivables from financial institutions, including derivative transaction settlements, is considered small and is managed centrally by the Group Treasury department and in accordance with limits set by the Finance Committee.
Capital management
The Group\u2019s objective is to maintain an efficient capital structure. Consequently, the Group aims to maintain in the long term the net debt to earnings before interest, taxes, depreciation and amortization (EBITDA) ratio in a range between 2\u20133. Net debt is defined as interest-bearing liabilities less interest-bearing receivables, cash and cash equivalents.
The Group is subject to a restriction on its net debt to EBITDA ratio (excluding items affecting comparability) through a clause in a key financing agreement. This restriction is not seen hindering the Group\u2019s ability to carry out its business or its strategy.
Changes in the capital structure are resulting from capital investments in the business and cash returns to shareholders, which are funded by the stable cash flow.
Capital structure
EUR million | 2022 | 2021 |
Interest-bearing liabilities | 1,775.4 | 1,702.8 |
Interest-bearing receivables, cash and cash equivalents | 325.3 | 182.6 |
Net debt | 1,470.8 | 1,520.2 |
Total equity | 1,922.2 | 1,597.2 |
Net debt to equity (Gearing ratio) | 0.77 | 0.95 |
Net debt to EBITDA (excluding items affecting comparability) | 2.46 | 3.11 |
Nominal values of derivative financial instruments
EUR million | 2022 | 2021 | ||||||||
Nominal\u00a0Value | Maturity\u00a0Structure | Nominal\u00a0Value | ||||||||
Instrument | 2023 | 2024 | 2025 | 2026 | 2027 | Later | ||||
Currency forwards | ||||||||||
for transaction risk | ||||||||||
Outflow | -210.4 | -208.2 | -2.2 | -128.4 | ||||||
Inflow | 210.8 | 208.6 | 2.2 | 129.1 | ||||||
for translation risk | ||||||||||
Outflow | -185.0 | -185.0 | -141.2 | |||||||
Inflow | 194.0 | 194.0 | 134.8 | |||||||
for financing purposes | ||||||||||
Outflow | -589.1 | -589.1 | -1,136.8 | |||||||
Inflow | 590.0 | 590.0 | 1,146.0 | |||||||
Currency options | ||||||||||
for transaction risk | ||||||||||
Bought options | ||||||||||
Sold options | ||||||||||
Interest rate swaps | ||||||||||
EUR | -50.0 | -50.0 | 25.0 | |||||||
USD | 93.9 | 32.9 | 9.4 | 14.1 | 14.1 | 23.5 | 119.1 | |||
Cross currency swaps | ||||||||||
EUR | -18.3 | |||||||||
USD | 17.6 |
Fair values of derivative financial instruments
EUR million | 2022 | 2021 | ||||||
Positive | Negative | Net\u00a0Fair | Positive | Negative | Net\u00a0Fair | |||
Instrument | Fair\u00a0values | Fair\u00a0values | values | Fair\u00a0values | Fair\u00a0values | values | ||
Currency forwards | ||||||||
for transaction risk | 2.7 | -2.4 | 0.3 | 1.8 | -0.6 | 1.1 | ||
of which cash flow hedges 1 | 1.7 | -1.2 | 0.5 | 0.9 | -0.6 | 0.3 | ||
for translation risk | 11.3 | -1.1 | 10.3 | -5.4 | -5.4 | |||
of which hedges of net investment 2 | 11.3 | -1.1 | 10.3 | -5.4 | -5.4 | |||
for financing purposes | 9.9 | -7.3 | 2.6 | 19.5 | -9.5 | 10.0 | ||
Currency options | ||||||||
for transaction risk | ||||||||
Interest rate swaps 3 | ||||||||
EUR | -6.1 | -6.1 | 0.6 | -0.4 | 0.2 | |||
of which fair value hedges 4 | -6.1 | -6.1 | -0.4 | -0.4 | ||||
of which cash flow hedges 5 | 0.6 | 0.6 | ||||||
USD | 7.0 | -0.1 | 6.9 | 0.3 | -1.4 | -1.1 | ||
of which cash flow hedges 5 | 7.0 | -0.1 | 6.9 | 0.3 | -1.4 | -1.1 | ||
Cross currency swaps | ||||||||
EURUSD | -0.7 | -0.7 | ||||||
of which cash flow hedges 6 | ||||||||
of which fair value hedges 7 | -0.7 | -0.7 |
1 Fair values of currency forwards designated as cash flow hedges are reported in fair value and other reserves.
2 Fair values of currency forwards designated as hedges of net investment in foreign subsidiaries are reported in equity in translation difference.
3 Fair values of interest rate swaps include accrued interest which is reported in the income statement in financial expense.
4 Fair values of interest rate swaps designated as fair value hedges are reported in the income statement in financial income.
5 Fair values of interest rate swaps designated as cash flow hedges are reported in fair value and other reserves.
6 The interest rate revaluation result of cross currency swaps designated as cash flow hedges is reported in fair value and other reserves. The fair value includes accrued interest which is reported in the income statement in financial expense.
7 The foreign exchange revaluation result of cross currency swaps designated as fair value hedges is reported in the income statement in net financial items.
", "dimensions": { "concept": "ifrs-full:DisclosureOfFairValueOfFinancialInstrumentsExplanatory", "language": "en", "entity": "scheme:5493007050SJVMXN6L29", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tb_k60SNYTzD0C3ce7ZVCfBGQ": { "value": "5.6. INTEREST-BEARING LIABILITIES
\u200b | 2022 | 2021 | |||
EUR million | Carrying amount | Fair value | Carrying amount | Fair value | |
Current | |||||
Loans from financial institutions | |||||
fixed rate | 277.6 | 277.5 | 320.4 | 320.3 | |
floating rate | 63.5 | 63.5 | 74.4 | 74.4 | |
Bonds | |||||
fixed rate | - | - | - | - | |
Other current loans | |||||
floating rate | 5.1 | 5.1 | 0.2 | 0.2 | |
Contingent considerations | 20.6 | 20.6 | 3.3 | 3.3 | |
Lease liabilities | 25.3 | 25.3 | 28.8 | 28.8 | |
Total | 392.2 | 392.0 | 427.2 | 427.1 | |
Non-current | |||||
Loans from financial institutions | |||||
fixed rate | 79.3 | 74.3 | 98.0 | 92.0 | |
floating rate | 371.0 | 371.0 | 691.3 | 691.3 | |
Bonds | |||||
fixed rate | 815.8 | 777.6 | 323.7 | 305.8 | |
Other non-current loans | |||||
floating rate | 4.6 | 4.6 | 0.7 | 0.7 | |
Contingent considerations | - | - | 15.2 | 15.2 | |
Lease liabilities | 133.2 | 133.2 | 146.8 | 146.8 | |
Total | 1,403.9 | 1,360.7 | 1,275.6 | 1,251.7 |
Loan repayments
Repayment | Loans from | Bonds | Other loans | Contingent considerations | Lease liabilities | Total |
2023 | 341.1 | - | 5.1 | 20.6 | 25.3 | 392.1 |
2024 | 286.0 | 149.9 | - | - | 38.7 | 474.6 |
2025 | 86.0 | - | - | 13.9 | 99.9 | |
2026 | 47.5 | 168.3 | 4.6 | - | 11.4 | 231.7 |
2027 | 30.8 | 497.6 | - | - | 9.4 | 537.7 |
2028- | - | - | - | - | 59.9 | 59.9 |
ACCOUNTING PRINCIPLES
Interest-bearing liabilities
Interest-bearing loans and borrowings are classified as other liabilities. Interest-bearing loans and borrowings are originated loans and bank loans, and are carried at amortized cost by using the effective interest rate method. All interest-bearing liabilities are other liabilities than liabilities for trading purposes or derivative financial instruments defined in IFRS 9 and as such are carried at amortized cost. Fair values have been calculated by discounting future cash flows at the appropriate market interest rate prevailing at period end closing date. Interest rates for measuring fair values of interest-bearing liabilities were\u00a03.55%\u20136.17%. The fair value of current interest-bearing liabilities is estimated to equal the carrying amount.
Contingent considerations related to business combinations classified as financial liabilities are measured at fair value through profit or loss and reported in the interest-bearing liabilities.
Lease liabilities are recognized at the commencement date of the lease. Lease liabilities are measured at the present value of future lease payments using an effective interest rate method. The carrying amount is reduced to reflect the lease payments made and the interest expense is allocated over the lease term. A lease liability is remeasured, when there is a lease modification or reassessment.
Reconciliation of liabilities arising from financing activities
2022 | 2021 | |||||||
Non-cash changes | ||||||||
EUR million | Total | Cash flows | Business combinations | Contingent considerations | Foreign exchange movement | Reclassification from long-term to short-term | Other | Total |
Long-term loans | 1,270.6 | 293.7 | - | -15.2 | 31.3 | -155.8 | -12.2 | 1,128.8 |
Short-term loans | 346.2 | -186.1 | - | 20.0 | 0.8 | 155.8 | -42.6 | 398.4 |
Long-term lease liabilities | 133.2 | 0.0 | -1.8 | - | 1.0 | -17.3 | 4.5 | 146.8 |
Short-term lease liabilities | 25.3 | -28.8 | 1.9 | - | -0.1 | 17.3 | 6.2 | 28.8 |
Total liabilities from financing activities | 1,775.4 | 78.8 | 0.1 | 4.8 | 33.0 | 0.0 | -44.1 | 1,702.8 |
2021 | 2020 | |||||||
Non-cash changes | ||||||||
EUR million | Total | Cash flows | Business combinations | Contingent considerations | Foreign exchange movement | Reclassification from long-term to short-term | Other | Total |
Long-term loans | 1,128.8 | 364.0 | 31.6 | 15.2 | 21.4 | -86.8 | -26.6 | 810.0 |
Short-term loans | 398.4 | 13.0 | 67.0 | 3.3 | 7.0 | 86.8 | -7.3 | 228.6 |
Long-term lease liabilities | 146.8 | 0.0 | 14.6 | - | 5.2 | -21.9 | 17.4 | 131.4 |
Short-term lease liabilities | 28.8 | -28.8 | 1.8 | - | 1.0 | 21.9 | 9.9 | 23.0 |
Total liabilities from financing activities | 1,702.8 | 348.2 | 115.1 | 18.4 | 34.6 | 0.0 | -6.5 | 1,193.0 |
5.7. FINANCIAL ASSETS AND LIABILITIES BY CATEGORY
EUR million | \u00a0\u00a0\u00a0\u00a0 | 2022 | \u00a0\u00a0\u00a0\u00a0 | 2021 |
Financial assets at fair value through profit or loss | ||||
Derivatives | 10.9 | 20.4 | ||
Derivatives designated for hedge accounting | 20.0 | 1.8 | ||
Financial assets at amortized cost | ||||
Non-current interest-bearing receivables | 0.9 | 2.0 | ||
Other non-current assets | 28.7 | 4.7 | ||
Current interest-bearing receivables | 14.9 | 1.9 | ||
Trade and other current receivables | 611.8 | 675.2 | ||
Cash and cash equivalents | 309.4 | 178.7 | ||
Other investments | 2.4 | 2.2 | ||
Financial assets total | 999.0 | 886.9 | ||
Financial liabilities at fair value through profit or loss | ||||
Derivatives | 14.7 | 9.5 | ||
Contingent considerations | 20.6 | 18.4 | ||
Derivatives designated for hedge accounting | 2.3 | 8.5 | ||
Financial liabilities at amortized cost | ||||
Non-current interest-bearing liabilities | 1,403.9 | 1,260.5 | ||
Other non-current liabilities | 10.5 | 3.3 | ||
Current portion of long-term loans | 168.9 | 153.8 | ||
Short term loans | 202.6 | 270.1 | ||
Trade and other current liabilities | 541.4 | 640.5 | ||
Financial liabilities total | 2,364.9 | 2,364.5 |
In the statement of financial position derivatives are included in the following groups: non-current interest-bearing liabilities, other non-current assets, trade and other current receivables, other non-current liabilities and trade and other current liabilities.
ACCOUNTING PRINCIPLES
Financial assets and liabilities
Financial assets are classified according to IFRS 9 on the basis of the Group\u2019s business model for managing the financial assets and the contractual cash flow characteristics to the following categories: financial assets at fair value through profit or loss, financial assets at fair value through OCI and financial assets at amortized cost. Financial liabilities are classified to financial liabilities at fair value through profit and loss and financial liabilities at amortized cost.
Publicly traded and unlisted shares are classified as financial assets at fair value through OCI. Publicly traded shares are recognized at fair value, which is based on quoted market prices at the reporting period closing date. Gains or losses arising from changes in fair value are recognized in other comprehensive income and are presented in equity in fair value reserves. Unlisted shares are measured at cost, as their fair value cannot be measured reliably.
Non-derivative assets with fixed or determinable payments that are not quoted in an active market are classified as financial assets at amortized cost. Trade receivables and other receivables are included in this category. Trade and other receivables are measured at amortized cost by using the effective interest rate method.
The Group recognizes a loss allowance for expected credit losses on financial assets based on the general approach, where a loss allowance is measured at amount equal to 12-month expected credit losses if there has not been a significant increase in credit risk since the initial recognition. The Group measures expected credit losses based on historical credit losses experience, current and future conditions. Simplified approach is used for trade receivables that do not contain a significant financing component, where the Group always measures the loss allowance at an amount equal to the lifetime expected credit losses. The amount of expected credit losses is updated at each reporting date.
Fair values of foreign exchange forwards are calculated using market rates on the reporting period closing date. Fair values of foreign exchange options are calculated with the Garman-Kohlhagen model. Fair values of interest rate swaps, futures and forwards are based on net present values of estimated future cash flows. Cash, short-term loans
and overdrafts have fair values that approximate to their carrying amounts because of their short-term nature. The recoverable amount for financial investments is calculated as the present value of expected future cash flows, discounted at the original effective interest rate. Short-term receivables are not discounted. \u00a0
Contingent considerations related to business combinations classified as financial liabilities are measured at fair value through profit or loss and reported in the interest-bearing liabilities.
\u200b | \u200b | \u200b | \u200b | \u200b | \u200b | \u200b | \u200b | |
\u200b | \u200b | \u200b | \u200b | \u200b | \u200b | \u200b | \u200b | |
EUR million | \u200b | \u200b | \u200b | \u200b | \u200b | \u200b | ||
\u200b | \u200b | \u200b | \u200b | \u200b | \u200b | |||
Financial instruments measured at fair value | \u00a0\u00a0\u00a0\u00a0 | Level 1 | \u00a0\u00a0\u00a0\u00a0 | Level 2 | \u00a0\u00a0\u00a0\u00a0 | Level 3 | \u00a0\u00a0\u00a0\u00a0 | Total 2022 |
Assets | ||||||||
Derivatives | ||||||||
Currency derivatives | - | 23.9 | - | 23.9 | ||||
Interest rate derivatives | - | 7.0 | - | 7.0 | ||||
Other investments | - | - | 2.4 | 2.4 | ||||
Total | - | 30.9 | 2.4 | 33.3 | ||||
Liabilities | ||||||||
Derivatives | ||||||||
Currency derivatives | - | 10.8 | - | 10.8 | ||||
Interest rate derivatives | - | 6.2 | - | 6.2 | ||||
Contingent considerations | - | 20.6 | 20.6 | |||||
Total | - | 17.0 | 20.6 | 37.6 |
\u200b | \u200b | \u200b | \u200b | \u200b | \u200b | \u200b | \u200b | |
\u200b | \u200b | \u200b | \u200b | \u200b | \u200b | \u200b | \u200b | |
EUR million | \u200b | \u200b | \u200b | \u200b | \u200b | \u200b | ||
\u200b | \u200b | \u200b | \u200b | \u200b | \u200b | |||
Financial instruments measured at fair value | \u00a0\u00a0\u00a0\u00a0 | Level 1 | \u00a0\u00a0\u00a0\u00a0 | Level 2 | \u00a0\u00a0\u00a0\u00a0 | Level 3 | \u00a0\u00a0\u00a0\u00a0 | Total 2021 |
Assets | ||||||||
Derivatives | ||||||||
Currency derivatives | - | 21.3 | - | 21.3 | ||||
Interest rate derivatives | - | 0.9 | - | 0.9 | ||||
Other investments | - | - | 2.2 | 2.2 | ||||
Total | - | 22.2 | 2.2 | 24.4 | ||||
Liabilities | ||||||||
Derivatives | ||||||||
Currency derivatives | - | 16.2 | - | 16.2 | ||||
Interest rate derivatives | - | 1.8 | - | 1.8 | ||||
Contingent considerations | - | - | 18.4 | 18.4 | ||||
Total | - | 18.0 | 18.4 | 36.5 |
The Group uses income approach in determining the fair value. Inputs used are foreign exchange rates, interest rates and yield curves as well as implied volatilities.
Group\u2019s currency and interest rate derivatives are subject to International Swaps and Derivatives Association (ISDA) master netting agreements. The amounts are not offset in the statement of financial position.
Unquoted investments are carried at cost, as their fair value cannot be measured reliably.
The levels of the fair value hierarchy are defined as follows:
Level 1: Quoted prices in active markets.
Level 2: Valuation techniques based on observable market data.
Level 3: Valuation techniques incorporating information other than observable market data.\u00b6\u00b6
", "dimensions": { "concept": "ifrs-full:DisclosureOfFinancialInstrumentsAtFairValueThroughProfitOrLossExplanatory", "language": "en", "entity": "scheme:5493007050SJVMXN6L29", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Group_qDXJj6P6P0GQsJqNZk_mMQ": { "value": "
5.6. INTEREST-BEARING LIABILITIES
\u200b | 2022 | 2021 | |||
EUR million | Carrying amount | Fair value | Carrying amount | Fair value | |
Current | |||||
Loans from financial institutions | |||||
fixed rate | 277.6 | 277.5 | 320.4 | 320.3 | |
floating rate | 63.5 | 63.5 | 74.4 | 74.4 | |
Bonds | |||||
fixed rate | - | - | - | - | |
Other current loans | |||||
floating rate | 5.1 | 5.1 | 0.2 | 0.2 | |
Contingent considerations | 20.6 | 20.6 | 3.3 | 3.3 | |
Lease liabilities | 25.3 | 25.3 | 28.8 | 28.8 | |
Total | 392.2 | 392.0 | 427.2 | 427.1 | |
Non-current | |||||
Loans from financial institutions | |||||
fixed rate | 79.3 | 74.3 | 98.0 | 92.0 | |
floating rate | 371.0 | 371.0 | 691.3 | 691.3 | |
Bonds | |||||
fixed rate | 815.8 | 777.6 | 323.7 | 305.8 | |
Other non-current loans | |||||
floating rate | 4.6 | 4.6 | 0.7 | 0.7 | |
Contingent considerations | - | - | 15.2 | 15.2 | |
Lease liabilities | 133.2 | 133.2 | 146.8 | 146.8 | |
Total | 1,403.9 | 1,360.7 | 1,275.6 | 1,251.7 |
Loan repayments
Repayment | Loans from | Bonds | Other loans | Contingent considerations | Lease liabilities | Total |
2023 | 341.1 | - | 5.1 | 20.6 | 25.3 | 392.1 |
2024 | 286.0 | 149.9 | - | - | 38.7 | 474.6 |
2025 | 86.0 | - | - | 13.9 | 99.9 | |
2026 | 47.5 | 168.3 | 4.6 | - | 11.4 | 231.7 |
2027 | 30.8 | 497.6 | - | - | 9.4 | 537.7 |
2028- | - | - | - | - | 59.9 | 59.9 |
ACCOUNTING PRINCIPLES
Interest-bearing liabilities
Interest-bearing loans and borrowings are classified as other liabilities. Interest-bearing loans and borrowings are originated loans and bank loans, and are carried at amortized cost by using the effective interest rate method. All interest-bearing liabilities are other liabilities than liabilities for trading purposes or derivative financial instruments defined in IFRS 9 and as such are carried at amortized cost. Fair values have been calculated by discounting future cash flows at the appropriate market interest rate prevailing at period end closing date. Interest rates for measuring fair values of interest-bearing liabilities were\u00a03.55%\u20136.17%. The fair value of current interest-bearing liabilities is estimated to equal the carrying amount.
Contingent considerations related to business combinations classified as financial liabilities are measured at fair value through profit or loss and reported in the interest-bearing liabilities.
Lease liabilities are recognized at the commencement date of the lease. Lease liabilities are measured at the present value of future lease payments using an effective interest rate method. The carrying amount is reduced to reflect the lease payments made and the interest expense is allocated over the lease term. A lease liability is remeasured, when there is a lease modification or reassessment.
Reconciliation of liabilities arising from financing activities
2022 | 2021 | |||||||
Non-cash changes | ||||||||
EUR million | Total | Cash flows | Business combinations | Contingent considerations | Foreign exchange movement | Reclassification from long-term to short-term | Other | Total |
Long-term loans | 1,270.6 | 293.7 | - | -15.2 | 31.3 | -155.8 | -12.2 | 1,128.8 |
Short-term loans | 346.2 | -186.1 | - | 20.0 | 0.8 | 155.8 | -42.6 | 398.4 |
Long-term lease liabilities | 133.2 | 0.0 | -1.8 | - | 1.0 | -17.3 | 4.5 | 146.8 |
Short-term lease liabilities | 25.3 | -28.8 | 1.9 | - | -0.1 | 17.3 | 6.2 | 28.8 |
Total liabilities from financing activities | 1,775.4 | 78.8 | 0.1 | 4.8 | 33.0 | 0.0 | -44.1 | 1,702.8 |
2021 | 2020 | |||||||
Non-cash changes | ||||||||
EUR million | Total | Cash flows | Business combinations | Contingent considerations | Foreign exchange movement | Reclassification from long-term to short-term | Other | Total |
Long-term loans | 1,128.8 | 364.0 | 31.6 | 15.2 | 21.4 | -86.8 | -26.6 | 810.0 |
Short-term loans | 398.4 | 13.0 | 67.0 | 3.3 | 7.0 | 86.8 | -7.3 | 228.6 |
Long-term lease liabilities | 146.8 | 0.0 | 14.6 | - | 5.2 | -21.9 | 17.4 | 131.4 |
Short-term lease liabilities | 28.8 | -28.8 | 1.8 | - | 1.0 | 21.9 | 9.9 | 23.0 |
Total liabilities from financing activities | 1,702.8 | 348.2 | 115.1 | 18.4 | 34.6 | 0.0 | -6.5 | 1,193.0 |
5.7. FINANCIAL ASSETS AND LIABILITIES BY CATEGORY
EUR million | \u00a0\u00a0\u00a0\u00a0 | 2022 | \u00a0\u00a0\u00a0\u00a0 | 2021 |
Financial assets at fair value through profit or loss | ||||
Derivatives | 10.9 | 20.4 | ||
Derivatives designated for hedge accounting | 20.0 | 1.8 | ||
Financial assets at amortized cost | ||||
Non-current interest-bearing receivables | 0.9 | 2.0 | ||
Other non-current assets | 28.7 | 4.7 | ||
Current interest-bearing receivables | 14.9 | 1.9 | ||
Trade and other current receivables | 611.8 | 675.2 | ||
Cash and cash equivalents | 309.4 | 178.7 | ||
Other investments | 2.4 | 2.2 | ||
Financial assets total | 999.0 | 886.9 | ||
Financial liabilities at fair value through profit or loss | ||||
Derivatives | 14.7 | 9.5 | ||
Contingent considerations | 20.6 | 18.4 | ||
Derivatives designated for hedge accounting | 2.3 | 8.5 | ||
Financial liabilities at amortized cost | ||||
Non-current interest-bearing liabilities | 1,403.9 | 1,260.5 | ||
Other non-current liabilities | 10.5 | 3.3 | ||
Current portion of long-term loans | 168.9 | 153.8 | ||
Short term loans | 202.6 | 270.1 | ||
Trade and other current liabilities | 541.4 | 640.5 | ||
Financial liabilities total | 2,364.9 | 2,364.5 |
In the statement of financial position derivatives are included in the following groups: non-current interest-bearing liabilities, other non-current assets, trade and other current receivables, other non-current liabilities and trade and other current liabilities.
ACCOUNTING PRINCIPLES
Financial assets and liabilities
Financial assets are classified according to IFRS 9 on the basis of the Group\u2019s business model for managing the financial assets and the contractual cash flow characteristics to the following categories: financial assets at fair value through profit or loss, financial assets at fair value through OCI and financial assets at amortized cost. Financial liabilities are classified to financial liabilities at fair value through profit and loss and financial liabilities at amortized cost.
Publicly traded and unlisted shares are classified as financial assets at fair value through OCI. Publicly traded shares are recognized at fair value, which is based on quoted market prices at the reporting period closing date. Gains or losses arising from changes in fair value are recognized in other comprehensive income and are presented in equity in fair value reserves. Unlisted shares are measured at cost, as their fair value cannot be measured reliably.
Non-derivative assets with fixed or determinable payments that are not quoted in an active market are classified as financial assets at amortized cost. Trade receivables and other receivables are included in this category. Trade and other receivables are measured at amortized cost by using the effective interest rate method.
The Group recognizes a loss allowance for expected credit losses on financial assets based on the general approach, where a loss allowance is measured at amount equal to 12-month expected credit losses if there has not been a significant increase in credit risk since the initial recognition. The Group measures expected credit losses based on historical credit losses experience, current and future conditions. Simplified approach is used for trade receivables that do not contain a significant financing component, where the Group always measures the loss allowance at an amount equal to the lifetime expected credit losses. The amount of expected credit losses is updated at each reporting date.
Fair values of foreign exchange forwards are calculated using market rates on the reporting period closing date. Fair values of foreign exchange options are calculated with the Garman-Kohlhagen model. Fair values of interest rate swaps, futures and forwards are based on net present values of estimated future cash flows. Cash, short-term loans
and overdrafts have fair values that approximate to their carrying amounts because of their short-term nature. The recoverable amount for financial investments is calculated as the present value of expected future cash flows, discounted at the original effective interest rate. Short-term receivables are not discounted. \u00a0
Contingent considerations related to business combinations classified as financial liabilities are measured at fair value through profit or loss and reported in the interest-bearing liabilities.
\u200b | \u200b | \u200b | \u200b | \u200b | \u200b | \u200b | \u200b | |
\u200b | \u200b | \u200b | \u200b | \u200b | \u200b | \u200b | \u200b | |
EUR million | \u200b | \u200b | \u200b | \u200b | \u200b | \u200b | ||
\u200b | \u200b | \u200b | \u200b | \u200b | \u200b | |||
Financial instruments measured at fair value | \u00a0\u00a0\u00a0\u00a0 | Level 1 | \u00a0\u00a0\u00a0\u00a0 | Level 2 | \u00a0\u00a0\u00a0\u00a0 | Level 3 | \u00a0\u00a0\u00a0\u00a0 | Total 2022 |
Assets | ||||||||
Derivatives | ||||||||
Currency derivatives | - | 23.9 | - | 23.9 | ||||
Interest rate derivatives | - | 7.0 | - | 7.0 | ||||
Other investments | - | - | 2.4 | 2.4 | ||||
Total | - | 30.9 | 2.4 | 33.3 | ||||
Liabilities | ||||||||
Derivatives | ||||||||
Currency derivatives | - | 10.8 | - | 10.8 | ||||
Interest rate derivatives | - | 6.2 | - | 6.2 | ||||
Contingent considerations | - | 20.6 | 20.6 | |||||
Total | - | 17.0 | 20.6 | 37.6 |
\u200b | \u200b | \u200b | \u200b | \u200b | \u200b | \u200b | \u200b | |
\u200b | \u200b | \u200b | \u200b | \u200b | \u200b | \u200b | \u200b | |
EUR million | \u200b | \u200b | \u200b | \u200b | \u200b | \u200b | ||
\u200b | \u200b | \u200b | \u200b | \u200b | \u200b | |||
Financial instruments measured at fair value | \u00a0\u00a0\u00a0\u00a0 | Level 1 | \u00a0\u00a0\u00a0\u00a0 | Level 2 | \u00a0\u00a0\u00a0\u00a0 | Level 3 | \u00a0\u00a0\u00a0\u00a0 | Total 2021 |
Assets | ||||||||
Derivatives | ||||||||
Currency derivatives | - | 21.3 | - | 21.3 | ||||
Interest rate derivatives | - | 0.9 | - | 0.9 | ||||
Other investments | - | - | 2.2 | 2.2 | ||||
Total | - | 22.2 | 2.2 | 24.4 | ||||
Liabilities | ||||||||
Derivatives | ||||||||
Currency derivatives | - | 16.2 | - | 16.2 | ||||
Interest rate derivatives | - | 1.8 | - | 1.8 | ||||
Contingent considerations | - | - | 18.4 | 18.4 | ||||
Total | - | 18.0 | 18.4 | 36.5 |
The Group uses income approach in determining the fair value. Inputs used are foreign exchange rates, interest rates and yield curves as well as implied volatilities.
Group\u2019s currency and interest rate derivatives are subject to International Swaps and Derivatives Association (ISDA) master netting agreements. The amounts are not offset in the statement of financial position.
Unquoted investments are carried at cost, as their fair value cannot be measured reliably.
The levels of the fair value hierarchy are defined as follows:
Level 1: Quoted prices in active markets.
Level 2: Valuation techniques based on observable market data.
Level 3: Valuation techniques incorporating information other than observable market data.\u00b6\u00b6
", "dimensions": { "concept": "ifrs-full:DisclosureOfFinancialInstrumentsExplanatory", "language": "en", "entity": "scheme:5493007050SJVMXN6L29", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Group_EIqj6Y61x0uJ2FEA2Ck0kw": { "value": "
ACCOUNTING PRINCIPLES
Interest-bearing liabilities
Interest-bearing loans and borrowings are classified as other liabilities. Interest-bearing loans and borrowings are originated loans and bank loans, and are carried at amortized cost by using the effective interest rate method. All interest-bearing liabilities are other liabilities than liabilities for trading purposes or derivative financial instruments defined in IFRS 9 and as such are carried at amortized cost. Fair values have been calculated by discounting future cash flows at the appropriate market interest rate prevailing at period end closing date. Interest rates for measuring fair values of interest-bearing liabilities were\u00a03.55%\u20136.17%. The fair value of current interest-bearing liabilities is estimated to equal the carrying amount.
Contingent considerations related to business combinations classified as financial liabilities are measured at fair value through profit or loss and reported in the interest-bearing liabilities.
Lease liabilities are recognized at the commencement date of the lease. Lease liabilities are measured at the present value of future lease payments using an effective interest rate method. The carrying amount is reduced to reflect the lease payments made and the interest expense is allocated over the lease term. A lease liability is remeasured, when there is a lease modification or reassessment.
Financial assets and liabilities
Financial assets are classified according to IFRS 9 on the basis of the Group\u2019s business model for managing the financial assets and the contractual cash flow characteristics to the following categories: financial assets at fair value through profit or loss, financial assets at fair value through OCI and financial assets at amortized cost. Financial liabilities are classified to financial liabilities at fair value through profit and loss and financial liabilities at amortized cost.
Publicly traded and unlisted shares are classified as financial assets at fair value through OCI. Publicly traded shares are recognized at fair value, which is based on quoted market prices at the reporting period closing date. Gains or losses arising from changes in fair value are recognized in other comprehensive income and are presented in equity in fair value reserves. Unlisted shares are measured at cost, as their fair value cannot be measured reliably.
Non-derivative assets with fixed or determinable payments that are not quoted in an active market are classified as financial assets at amortized cost. Trade receivables and other receivables are included in this category. Trade and other receivables are measured at amortized cost by using the effective interest rate method.
The Group recognizes a loss allowance for expected credit losses on financial assets based on the general approach, where a loss allowance is measured at amount equal to 12-month expected credit losses if there has not been a significant increase in credit risk since the initial recognition. The Group measures expected credit losses based on historical credit losses experience, current and future conditions. Simplified approach is used for trade receivables that do not contain a significant financing component, where the Group always measures the loss allowance at an amount equal to the lifetime expected credit losses. The amount of expected credit losses is updated at each reporting date.
Fair values of foreign exchange forwards are calculated using market rates on the reporting period closing date. Fair values of foreign exchange options are calculated with the Garman-Kohlhagen model. Fair values of interest rate swaps, futures and forwards are based on net present values of estimated future cash flows. Cash, short-term loans
and overdrafts have fair values that approximate to their carrying amounts because of their short-term nature. The recoverable amount for financial investments is calculated as the present value of expected future cash flows, discounted at the original effective interest rate. Short-term receivables are not discounted. \u00a0
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFinancialLiabilitiesExplanatory", "language": "en", "entity": "scheme:5493007050SJVMXN6L29", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tb_mOueTqDI0kuQeJJFk7NDiw": { "value": "Interest-bearing liabilities
Interest-bearing loans and borrowings are classified as other liabilities. Interest-bearing loans and borrowings are originated loans and bank loans, and are carried at amortized cost by using the effective interest rate method. All interest-bearing liabilities are other liabilities than liabilities for trading purposes or derivative financial instruments defined in IFRS 9 and as such are carried at amortized cost. Fair values have been calculated by discounting future cash flows at the appropriate market interest rate prevailing at period end closing date. Interest rates for measuring fair values of interest-bearing liabilities were\u00a03.55%\u20136.17%. The fair value of current interest-bearing liabilities is estimated to equal the carrying amount.
Contingent considerations related to business combinations classified as financial liabilities are measured at fair value through profit or loss and reported in the interest-bearing liabilities.
Lease liabilities are recognized at the commencement date of the lease. Lease liabilities are measured at the present value of future lease payments using an effective interest rate method. The carrying amount is reduced to reflect the lease payments made and the interest expense is allocated over the lease term. A lease liability is remeasured, when there is a lease modification or reassessment.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForBorrowingsExplanatory", "language": "en", "entity": "scheme:5493007050SJVMXN6L29", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tb_Ezc3X51I606XqXXvWBik6Q": { "value": "Financial assets and liabilities
Financial assets are classified according to IFRS 9 on the basis of the Group\u2019s business model for managing the financial assets and the contractual cash flow characteristics to the following categories: financial assets at fair value through profit or loss, financial assets at fair value through OCI and financial assets at amortized cost. Financial liabilities are classified to financial liabilities at fair value through profit and loss and financial liabilities at amortized cost.
Publicly traded and unlisted shares are classified as financial assets at fair value through OCI. Publicly traded shares are recognized at fair value, which is based on quoted market prices at the reporting period closing date. Gains or losses arising from changes in fair value are recognized in other comprehensive income and are presented in equity in fair value reserves. Unlisted shares are measured at cost, as their fair value cannot be measured reliably.
Non-derivative assets with fixed or determinable payments that are not quoted in an active market are classified as financial assets at amortized cost. Trade receivables and other receivables are included in this category. Trade and other receivables are measured at amortized cost by using the effective interest rate method.
The Group recognizes a loss allowance for expected credit losses on financial assets based on the general approach, where a loss allowance is measured at amount equal to 12-month expected credit losses if there has not been a significant increase in credit risk since the initial recognition. The Group measures expected credit losses based on historical credit losses experience, current and future conditions. Simplified approach is used for trade receivables that do not contain a significant financing component, where the Group always measures the loss allowance at an amount equal to the lifetime expected credit losses. The amount of expected credit losses is updated at each reporting date.
Fair values of foreign exchange forwards are calculated using market rates on the reporting period closing date. Fair values of foreign exchange options are calculated with the Garman-Kohlhagen model. Fair values of interest rate swaps, futures and forwards are based on net present values of estimated future cash flows. Cash, short-term loans
and overdrafts have fair values that approximate to their carrying amounts because of their short-term nature. The recoverable amount for financial investments is calculated as the present value of expected future cash flows, discounted at the original effective interest rate. Short-term receivables are not discounted. \u00a0
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForDerivativeFinancialInstrumentsAndHedgingExplanatory", "language": "en", "entity": "scheme:5493007050SJVMXN6L29", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tb_s8tmRHjYH0OIXWnniAoKRA": { "value": "
Financial assets are classified according to IFRS 9 on the basis of the Group\u2019s business model for managing the financial assets and the contractual cash flow characteristics to the following categories: financial assets at fair value through profit or loss, financial assets at fair value through OCI and financial assets at amortized cost. Financial liabilities are classified to financial liabilities at fair value through profit and loss and financial liabilities at amortized cost.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFinancialInstrumentsAtFairValueThroughProfitOrLossExplanatory", "language": "en", "entity": "scheme:5493007050SJVMXN6L29", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tb_gtVWCeWcn0m4ETnBOCahIA": { "value": "5.8. MANAGEMENT OF FINANCIAL RISKS
The objective of financial risk management is to ensure that the Group has access to sufficient funding in the most cost-efficient way and to minimize the impact on the Group from adverse movements in the financial markets. As defined in the Group Treasury Policy, management of financial risks is guided and controlled by a Finance Committee, led by the Chief Financial Officer (CFO). The Finance Committee reviews risk reports on the Group\u2019s interest-bearing balance sheet items, commercial flows, derivatives and foreign exchange exposures and approves required measures on a\u00a0monthly basis.
The Group Treasury department at the Espoo headquarters is responsible for the Group\u2019s funding and risk management and serves the business units in daily financing, foreign exchange transactions and cash management coordination.
Currency risk
The Group is exposed to exchange rate risk through cross-border trade within the Group, exports and imports, funding of foreign subsidiaries and currency denominated equities.
Transaction risk
The largest transaction exposures derive from capital flows, imports, exports and royalty receivables. The objective of currency transaction risk management is to protect the Group from negative exchange rate movements. Business units are responsible for actively managing their currency risks related to future commercial cash flows, in accordance with policies and limits defined by the business unit and approved by the Finance Committee. As a rule, commercial receivables and payables recorded on the balance sheet are always fully hedged, as well as 25% of probable flows over a minimum 12-month horizon. Eligible hedging instruments include currency forwards and in authorized subsidiaries also currency options. The business units\u2019 counterparty in hedging transactions is mainly Huhtam\u00e4ki Oyj.
EUR million | EUR exposure | CNY exposure | USD exposure | USD exposure | USD exposure | ||||||||||
2022 | 2021 | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | 2022 | \u00a0\u00a0\u00a0\u00a0 | 2021 | |||||
Trade receivables | 2.1 | 3.4 | 0.1 | 0.1 | 1.9 | 1.4 | 0.1 | 0.1 | 14.5 | \u00a0\u00a0\u00a0\u00a0 | 17.8 | ||||
Trade payables | -23.2 | -14.9 | -6.7 | -4.7 | -7.3 | -4.5 | -7.3 | -11.3 | -6.4 | -7.9 | |||||
Net balance sheet exposure | -21.1 | -11.5 | -6.6 | -4.7 | -5.5 | -3.2 | -7.2 | -11.2 | 8.1 | 9.9 | |||||
Forecasted sales (12 months) | 16.5 | 13.4 | 1.0 | 3.5 | 5.3 | 6.1 | 1.2 | 0.6 | 66.7 | 58.2 | |||||
Forecasted purchases (12 months) | -113.9 | -74.2 | -23.6 | -16.2 | -47.8 | -45.4 | -33.0 | -32.0 | -45.4 | -44.8 | |||||
Net forecasted exposure | -97.4 | -60.8 | -22.7 | -12.8 | -42.6 | -39.3 | -31.8 | -31.4 | 21.3 | 13.4 | |||||
Hedges | |||||||||||||||
Currency forwards (12 months) | 48.6 | 36.6 | 9.8 | 6.7 | 17.3 | 16.2 | 19.8 | 24.7 | -17.9 | -17.4 | |||||
Currency options (12 months) | - | - | - | - | |||||||||||
Total net exposure | -69.9 | -35.7 | -19.5 | -10.8 | -30.7 | -26.3 | -19.2 | -17.9 | 11.4 | 5.8 |
Translation risk
As a main rule\u00a0individual subsidiaries do not carry translation risk as they are financed in local currencies. As an exception, the Finance Committee can approve the use of foreign currency borrowing in countries with high local interest rates. In 2022 and 2021 on reporting period closing dates no such borrowings were outstanding.
The main translation exposures derive from equities and permanent loans, which in substance form a part of the net investment in the US, India and UK based subsidiaries. The Group hedges its translation risks selectively by using foreign currency loans and derivatives. Equity hedging decisions are made by the Finance Committee, who in its decision making considers the hedge\u2019s estimated impact on the Group\u2019s key indicators, long-term cash flows and hedging cost. On the reporting period closing date the Group had outstanding translation risk hedges of USD 223
million (of which USD 50 million in the form of currency loans and USD 173 million in the form of derivatives) and of GBP 20 million (of which GBP 20 million in the form of derivatives) (USD 223 million, of which USD 90 million in the form of currency loans and USD 133 million in the form of derivatives and GBP 20 million, of which GBP 20 million in the form of derivatives).
A 10% appreciation of the EUR versus the USD, INR and GBP would as of the reporting period closing date decrease the result before taxes by EUR 14.4 million (EUR 9.9 million) and the Group consolidated equity by EUR 117.3 million (EUR 107,4 million).
Interest rate risk
The interest-bearing debt exposes the Group to interest rate risk, namely re-pricing and price risk caused by interest rate movements. Management of interest rate risk is centralized to the Group Treasury. The Group\u2019s policy is to maintain in the main currency debt portfolios a duration that matches a benchmark duration range based on the Group\u2019s estimated cash flow, selected balance sheet ratios and also the shape of the yield curve. The objective of interest rate risk management is to reduce the fluctuation of the interest charge, enabling a more stable net income. The Group manages interest rate risk by selection of debt interest periods and by using derivatives such as futures, forward rate agreements, interest rate swaps and options.
At the reporting period closing date the average interest rate on Group interest-bearing net debt was 3.4% (1.6%) and average duration 2.2 years (1.6\u00a0years). A one\u00a0percentage point rise in market interest rates would increase Group net interest expense by EUR 5.1 million (EUR 6.6 million) over the following 12\u00a0months. A similar rise in interest rates would increase Group equity with EUR 1.9 million (EUR 7.5 million) due to mark-to-market revaluations of interest rate derivatives designated for cash flow hedges.
Currency split and repricing schedule of outstanding net debt including hedges (excl. lease liabilities)
2022 | 2021 | |||||||||
Debt repricing in period, incl. derivatives | ||||||||||
Amount | Amount | |||||||||
Currency | EUR million | 2023 | 2024 | 2025 | 2026 | 2027 | Later | EUR million | ||
EUR | 990.8 | 125.5 | 174.5 | 35.3 | 125.0 | 530.5 | 939.2 | |||
USD | 108.9 | 47.9 | 9.4 | 14.1 | 14.1 | 23.5 | 107.6 | |||
GBP | 92.5 | 92.5 | 121.7 | |||||||
HKD | 84.8 | 84.8 | 77.6 | |||||||
PLN | 21.4 | 21.4 | 23.4 | |||||||
Other | 13.8 | 13.8 | 75.2 | |||||||
Total | 1,312.2 | 385.8 | 183.9 | 35.3 | 139.1 | 544.6 | 23.5 | 1,344.6 |
Liquidity and refinancing risk
The Group maintains sufficient liquidity reserves at all times by efficient cash management structures such as cash pools, concentration accounts and overdraft financing facilities. To mitigate the refinancing risk, the Group diversifies funding sources as well as the maturity structure of loans and debt facilities. The Group utilizes a EUR 400 million Finnish commercial paper program and uncommitted credit facilities with relationship banks for short-term financing purposes. At the reporting period closing date, the Group had committed credit facilities totaling EUR 400 million (EUR 841 million) of which EUR 353 million (EUR 382 million) remained undrawn. Undrawn committed long-term debt facilities are sufficient to ensure adequate financing resources in all foreseeable circumstances. \u00a0
During the second quarter of 2022, Huhtam\u00e4ki Oyj launched a Sustainability-Linked Bond Framework and issued a EUR 500 million senior unsecured sustainability-linked bond. The proceeds of the issue of the bond were used for refinancing the USD 500 million bridge loan facility and for general corporate purposes. In connection with the bond issuance, S&P Global Ratings assigned a long term credit rating of BB+ to Huhtam\u00e4ki Oyj, with a stable outlook.
On December 16, 2022, Huhtam\u00e4ki Oyj signed a confirmation to extend the maturity of the EUR 400 million syndicated revolving credit facility loan agreement for a further period of one year in accordance with the extension option of the loan agreement.
Debt structure
EUR million including interests | 2022 | ||||||||||
Maturity of facility/loan | |||||||||||
Debt type | Amount | Amount | Total | 2023 | 2024 | 2025 | 2026 | 2027 | Later | ||
Committed revolving facilities | 47.0 | 353.0 | 400.0 | 400.0 | |||||||
Bonds and other loans | 1,377.1 | 1,377.1 | 153.3 | 436.0 | 86.0 | 173.4 | 528.4 | 0.0 | |||
Commercial paper program | 111.5 | 111.5 | 111.5 | ||||||||
Uncommitted loans from financial institutions | 81.4 | 81.4 | 81.4 | ||||||||
Contingent considerations | 20.6 | 20.6 | 20.6 | ||||||||
Lease liabilities | 158.5 | 158.5 | 25.3 | 38.7 | 13.9 | 11.4 | 9.4 | 59.9 | |||
Trade and other current liabilities | 583.8 | 583.8 | 583.8 | ||||||||
Total | 2,379.9 | 353.0 | 2,732.9 | 975.9 | 474.6 | 99.9 | 584.8 | 537.7 | 59.9 |
EUR million including interests | 2021 | |||||||||
Maturity of facility/loan | ||||||||||
Debt type | Amount | Amount | Total | 2022 | 2023 | 2024 | 2025 | 2026 | Later | |
Committed revolving facilities | 458.8 | 382.4 | 841.2 | 441.2 | 400.0 | |||||
Bonds and other loans | 785.0 | 785.0 | 130.2 | 163.0 | 191.3 | 87.8 | 174.3 | 38.6 | ||
Commercial paper program | 150.0 | 150.0 | 150.0 | |||||||
Uncommitted loans from financial institutions | 114.9 | 114.9 | 114.9 | |||||||
Contingent considerations | 18.4 | 18.4 | 3.3 | 15.2 | ||||||
Lease liabilities | 175.6 | 175.6 | 28.8 | 22.6 | 19.1 | 16.4 | 13.0 | 75.6 | ||
Trade and other current liabilities | 663.8 | 663.8 | 663.8 | |||||||
Total | 2,366.6 | 382.4 | 2,749.0 | 1,091.0 | 641.9 | 210.4 | 504.2 | 187.3 | 114.2 |
Credit risk
The Group is exposed to credit risk from its commercial receivables and receivables from financial institutions based on short-term investment of liquid funds as well as derivatives transactions.
The business units are responsible for the management of commercial credit risk in accordance with policies defined by the business units and approved by the Finance Committee. A Group policy sets out certain minimum requirements as to credit quality, sales terms and collection. The commercial credit risk for the Group as a whole is considered low as the receivable portfolio is diversified and historical credit loss frequency is low (see note 4.2.).
Liquid funds are from time to time invested in short-term bank deposits at relationship banks with a solid credit rating, in government bonds, treasury bills or in commercial papers issued by corporate borrowers with an investment grade rating. Credit risk stemming from receivables from financial institutions, including derivative transaction settlements, is considered small and is managed centrally by the Group Treasury department and in accordance with limits set by the Finance Committee.
Capital management
The Group\u2019s objective is to maintain an efficient capital structure. Consequently, the Group aims to maintain in the long term the net debt to earnings before interest, taxes, depreciation and amortization (EBITDA) ratio in a range between 2\u20133. Net debt is defined as interest-bearing liabilities less interest-bearing receivables, cash and cash equivalents.
The Group is subject to a restriction on its net debt to EBITDA ratio (excluding items affecting comparability) through a clause in a key financing agreement. This restriction is not seen hindering the Group\u2019s ability to carry out its business or its strategy.
Changes in the capital structure are resulting from capital investments in the business and cash returns to shareholders, which are funded by the stable cash flow.
Capital structure
EUR million | 2022 | 2021 |
Interest-bearing liabilities | 1,775.4 | 1,702.8 |
Interest-bearing receivables, cash and cash equivalents | 325.3 | 182.6 |
Net debt | 1,470.8 | 1,520.2 |
Total equity | 1,922.2 | 1,597.2 |
Net debt to equity (Gearing ratio) | 0.77 | 0.95 |
Net debt to EBITDA (excluding items affecting comparability) | 2.46 | 3.11 |
Nominal values of derivative financial instruments
EUR million | 2022 | 2021 | ||||||||
Nominal\u00a0Value | Maturity\u00a0Structure | Nominal\u00a0Value | ||||||||
Instrument | 2023 | 2024 | 2025 | 2026 | 2027 | Later | ||||
Currency forwards | ||||||||||
for transaction risk | ||||||||||
Outflow | -210.4 | -208.2 | -2.2 | -128.4 | ||||||
Inflow | 210.8 | 208.6 | 2.2 | 129.1 | ||||||
for translation risk | ||||||||||
Outflow | -185.0 | -185.0 | -141.2 | |||||||
Inflow | 194.0 | 194.0 | 134.8 | |||||||
for financing purposes | ||||||||||
Outflow | -589.1 | -589.1 | -1,136.8 | |||||||
Inflow | 590.0 | 590.0 | 1,146.0 | |||||||
Currency options | ||||||||||
for transaction risk | ||||||||||
Bought options | ||||||||||
Sold options | ||||||||||
Interest rate swaps | ||||||||||
EUR | -50.0 | -50.0 | 25.0 | |||||||
USD | 93.9 | 32.9 | 9.4 | 14.1 | 14.1 | 23.5 | 119.1 | |||
Cross currency swaps | ||||||||||
EUR | -18.3 | |||||||||
USD | 17.6 |
Fair values of derivative financial instruments
EUR million | 2022 | 2021 | ||||||
Positive | Negative | Net\u00a0Fair | Positive | Negative | Net\u00a0Fair | |||
Instrument | Fair\u00a0values | Fair\u00a0values | values | Fair\u00a0values | Fair\u00a0values | values | ||
Currency forwards | ||||||||
for transaction risk | 2.7 | -2.4 | 0.3 | 1.8 | -0.6 | 1.1 | ||
of which cash flow hedges 1 | 1.7 | -1.2 | 0.5 | 0.9 | -0.6 | 0.3 | ||
for translation risk | 11.3 | -1.1 | 10.3 | -5.4 | -5.4 | |||
of which hedges of net investment 2 | 11.3 | -1.1 | 10.3 | -5.4 | -5.4 | |||
for financing purposes | 9.9 | -7.3 | 2.6 | 19.5 | -9.5 | 10.0 | ||
Currency options | ||||||||
for transaction risk | ||||||||
Interest rate swaps 3 | ||||||||
EUR | -6.1 | -6.1 | 0.6 | -0.4 | 0.2 | |||
of which fair value hedges 4 | -6.1 | -6.1 | -0.4 | -0.4 | ||||
of which cash flow hedges 5 | 0.6 | 0.6 | ||||||
USD | 7.0 | -0.1 | 6.9 | 0.3 | -1.4 | -1.1 | ||
of which cash flow hedges 5 | 7.0 | -0.1 | 6.9 | 0.3 | -1.4 | -1.1 | ||
Cross currency swaps | ||||||||
EURUSD | -0.7 | -0.7 | ||||||
of which cash flow hedges 6 | ||||||||
of which fair value hedges 7 | -0.7 | -0.7 |
1 Fair values of currency forwards designated as cash flow hedges are reported in fair value and other reserves.
2 Fair values of currency forwards designated as hedges of net investment in foreign subsidiaries are reported in equity in translation difference.
3 Fair values of interest rate swaps include accrued interest which is reported in the income statement in financial expense.
4 Fair values of interest rate swaps designated as fair value hedges are reported in the income statement in financial income.
5 Fair values of interest rate swaps designated as cash flow hedges are reported in fair value and other reserves.
6 The interest rate revaluation result of cross currency swaps designated as cash flow hedges is reported in fair value and other reserves. The fair value includes accrued interest which is reported in the income statement in financial expense.
7 The foreign exchange revaluation result of cross currency swaps designated as fair value hedges is reported in the income statement in net financial items.
", "dimensions": { "concept": "ifrs-full:DisclosureOfFinancialRiskManagementExplanatory", "language": "en", "entity": "scheme:5493007050SJVMXN6L29", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tb__YBVQGjTiUahz2l1m3St6g": { "value": "Liquidity and refinancing risk
The Group maintains sufficient liquidity reserves at all times by efficient cash management structures such as cash pools, concentration accounts and overdraft financing facilities. To mitigate the refinancing risk, the Group diversifies funding sources as well as the maturity structure of loans and debt facilities. The Group utilizes a EUR 400 million Finnish commercial paper program and uncommitted credit facilities with relationship banks for short-term financing purposes. At the reporting period closing date, the Group had committed credit facilities totaling EUR 400 million (EUR 841 million) of which EUR 353 million (EUR 382 million) remained undrawn. Undrawn committed long-term debt facilities are sufficient to ensure adequate financing resources in all foreseeable circumstances. \u00a0
During the second quarter of 2022, Huhtam\u00e4ki Oyj launched a Sustainability-Linked Bond Framework and issued a EUR 500 million senior unsecured sustainability-linked bond. The proceeds of the issue of the bond were used for refinancing the USD 500 million bridge loan facility and for general corporate purposes. In connection with the bond issuance, S&P Global Ratings assigned a long term credit rating of BB+ to Huhtam\u00e4ki Oyj, with a stable outlook.
On December 16, 2022, Huhtam\u00e4ki Oyj signed a confirmation to extend the maturity of the EUR 400 million syndicated revolving credit facility loan agreement for a further period of one year in accordance with the extension option of the loan agreement.
Debt structure
EUR million including interests | 2022 | ||||||||||
Maturity of facility/loan | |||||||||||
Debt type | Amount | Amount | Total | 2023 | 2024 | 2025 | 2026 | 2027 | Later | ||
Committed revolving facilities | 47.0 | 353.0 | 400.0 | 400.0 | |||||||
Bonds and other loans | 1,377.1 | 1,377.1 | 153.3 | 436.0 | 86.0 | 173.4 | 528.4 | 0.0 | |||
Commercial paper program | 111.5 | 111.5 | 111.5 | ||||||||
Uncommitted loans from financial institutions | 81.4 | 81.4 | 81.4 | ||||||||
Contingent considerations | 20.6 | 20.6 | 20.6 | ||||||||
Lease liabilities | 158.5 | 158.5 | 25.3 | 38.7 | 13.9 | 11.4 | 9.4 | 59.9 | |||
Trade and other current liabilities | 583.8 | 583.8 | 583.8 | ||||||||
Total | 2,379.9 | 353.0 | 2,732.9 | 975.9 | 474.6 | 99.9 | 584.8 | 537.7 | 59.9 |
EUR million including interests | 2021 | |||||||||
Maturity of facility/loan | ||||||||||
Debt type | Amount | Amount | Total | 2022 | 2023 | 2024 | 2025 | 2026 | Later | |
Committed revolving facilities | 458.8 | 382.4 | 841.2 | 441.2 | 400.0 | |||||
Bonds and other loans | 785.0 | 785.0 | 130.2 | 163.0 | 191.3 | 87.8 | 174.3 | 38.6 | ||
Commercial paper program | 150.0 | 150.0 | 150.0 | |||||||
Uncommitted loans from financial institutions | 114.9 | 114.9 | 114.9 | |||||||
Contingent considerations | 18.4 | 18.4 | 3.3 | 15.2 | ||||||
Lease liabilities | 175.6 | 175.6 | 28.8 | 22.6 | 19.1 | 16.4 | 13.0 | 75.6 | ||
Trade and other current liabilities | 663.8 | 663.8 | 663.8 | |||||||
Total | 2,366.6 | 382.4 | 2,749.0 | 1,091.0 | 641.9 | 210.4 | 504.2 | 187.3 | 114.2 |
", "dimensions": { "concept": "ifrs-full:DisclosureOfLiquidityRiskExplanatory", "language": "en", "entity": "scheme:5493007050SJVMXN6L29", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tb_mYHEr0RfjEm4zTL1T1XAow": { "value": "
Debt structure
EUR million including interests | 2022 | ||||||||||
Maturity of facility/loan | |||||||||||
Debt type | Amount | Amount | Total | 2023 | 2024 | 2025 | 2026 | 2027 | Later | ||
Committed revolving facilities | 47.0 | 353.0 | 400.0 | 400.0 | |||||||
Bonds and other loans | 1,377.1 | 1,377.1 | 153.3 | 436.0 | 86.0 | 173.4 | 528.4 | 0.0 | |||
Commercial paper program | 111.5 | 111.5 | 111.5 | ||||||||
Uncommitted loans from financial institutions | 81.4 | 81.4 | 81.4 | ||||||||
Contingent considerations | 20.6 | 20.6 | 20.6 | ||||||||
Lease liabilities | 158.5 | 158.5 | 25.3 | 38.7 | 13.9 | 11.4 | 9.4 | 59.9 | |||
Trade and other current liabilities | 583.8 | 583.8 | 583.8 | ||||||||
Total | 2,379.9 | 353.0 | 2,732.9 | 975.9 | 474.6 | 99.9 | 584.8 | 537.7 | 59.9 |
EUR million including interests | 2021 | |||||||||
Maturity of facility/loan | ||||||||||
Debt type | Amount | Amount | Total | 2022 | 2023 | 2024 | 2025 | 2026 | Later | |
Committed revolving facilities | 458.8 | 382.4 | 841.2 | 441.2 | 400.0 | |||||
Bonds and other loans | 785.0 | 785.0 | 130.2 | 163.0 | 191.3 | 87.8 | 174.3 | 38.6 | ||
Commercial paper program | 150.0 | 150.0 | 150.0 | |||||||
Uncommitted loans from financial institutions | 114.9 | 114.9 | 114.9 | |||||||
Contingent considerations | 18.4 | 18.4 | 3.3 | 15.2 | ||||||
Lease liabilities | 175.6 | 175.6 | 28.8 | 22.6 | 19.1 | 16.4 | 13.0 | 75.6 | ||
Trade and other current liabilities | 663.8 | 663.8 | 663.8 | |||||||
Total | 2,366.6 | 382.4 | 2,749.0 | 1,091.0 | 641.9 | 210.4 | 504.2 | 187.3 | 114.2 |
", "dimensions": { "concept": "ifrs-full:DisclosureOfDebtSecuritiesExplanatory", "language": "en", "entity": "scheme:5493007050SJVMXN6L29", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tb_KnhKGw-l7kWllBkYsWSCtA": { "value": "
Credit risk
The Group is exposed to credit risk from its commercial receivables and receivables from financial institutions based on short-term investment of liquid funds as well as derivatives transactions.
The business units are responsible for the management of commercial credit risk in accordance with policies defined by the business units and approved by the Finance Committee. A Group policy sets out certain minimum requirements as to credit quality, sales terms and collection. The commercial credit risk for the Group as a whole is considered low as the receivable portfolio is diversified and historical credit loss frequency is low (see note 4.2.).
Liquid funds are from time to time invested in short-term bank deposits at relationship banks with a solid credit rating, in government bonds, treasury bills or in commercial papers issued by corporate borrowers with an investment grade rating. Credit risk stemming from receivables from financial institutions, including derivative transaction settlements, is considered small and is managed centrally by the Group Treasury department and in accordance with limits set by the Finance Committee.
", "dimensions": { "concept": "ifrs-full:DisclosureOfCreditRiskExplanatory", "language": "en", "entity": "scheme:5493007050SJVMXN6L29", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tb_5i_hIr_C7EiTYsNuotIqgA": { "value": "Capital management
The Group\u2019s objective is to maintain an efficient capital structure. Consequently, the Group aims to maintain in the long term the net debt to earnings before interest, taxes, depreciation and amortization (EBITDA) ratio in a range between 2\u20133. Net debt is defined as interest-bearing liabilities less interest-bearing receivables, cash and cash equivalents.
The Group is subject to a restriction on its net debt to EBITDA ratio (excluding items affecting comparability) through a clause in a key financing agreement. This restriction is not seen hindering the Group\u2019s ability to carry out its business or its strategy.
Changes in the capital structure are resulting from capital investments in the business and cash returns to shareholders, which are funded by the stable cash flow.
Capital structure
EUR million | 2022 | 2021 |
Interest-bearing liabilities | 1,775.4 | 1,702.8 |
Interest-bearing receivables, cash and cash equivalents | 325.3 | 182.6 |
Net debt | 1,470.8 | 1,520.2 |
Total equity | 1,922.2 | 1,597.2 |
Net debt to equity (Gearing ratio) | 0.77 | 0.95 |
Net debt to EBITDA (excluding items affecting comparability) | 2.46 | 3.11 |
Nominal values of derivative financial instruments
EUR million | 2022 | 2021 | ||||||||
Nominal\u00a0Value | Maturity\u00a0Structure | Nominal\u00a0Value | ||||||||
Instrument | 2023 | 2024 | 2025 | 2026 | 2027 | Later | ||||
Currency forwards | ||||||||||
for transaction risk | ||||||||||
Outflow | -210.4 | -208.2 | -2.2 | -128.4 | ||||||
Inflow | 210.8 | 208.6 | 2.2 | 129.1 | ||||||
for translation risk | ||||||||||
Outflow | -185.0 | -185.0 | -141.2 | |||||||
Inflow | 194.0 | 194.0 | 134.8 | |||||||
for financing purposes | ||||||||||
Outflow | -589.1 | -589.1 | -1,136.8 | |||||||
Inflow | 590.0 | 590.0 | 1,146.0 | |||||||
Currency options | ||||||||||
for transaction risk | ||||||||||
Bought options | ||||||||||
Sold options | ||||||||||
Interest rate swaps | ||||||||||
EUR | -50.0 | -50.0 | 25.0 | |||||||
USD | 93.9 | 32.9 | 9.4 | 14.1 | 14.1 | 23.5 | 119.1 | |||
Cross currency swaps | ||||||||||
EUR | -18.3 | |||||||||
USD | 17.6 |
Fair values of derivative financial instruments
EUR million | 2022 | 2021 | ||||||
Positive | Negative | Net\u00a0Fair | Positive | Negative | Net\u00a0Fair | |||
Instrument | Fair\u00a0values | Fair\u00a0values | values | Fair\u00a0values | Fair\u00a0values | values | ||
Currency forwards | ||||||||
for transaction risk | 2.7 | -2.4 | 0.3 | 1.8 | -0.6 | 1.1 | ||
of which cash flow hedges 1 | 1.7 | -1.2 | 0.5 | 0.9 | -0.6 | 0.3 | ||
for translation risk | 11.3 | -1.1 | 10.3 | -5.4 | -5.4 | |||
of which hedges of net investment 2 | 11.3 | -1.1 | 10.3 | -5.4 | -5.4 | |||
for financing purposes | 9.9 | -7.3 | 2.6 | 19.5 | -9.5 | 10.0 | ||
Currency options | ||||||||
for transaction risk | ||||||||
Interest rate swaps 3 | ||||||||
EUR | -6.1 | -6.1 | 0.6 | -0.4 | 0.2 | |||
of which fair value hedges 4 | -6.1 | -6.1 | -0.4 | -0.4 | ||||
of which cash flow hedges 5 | 0.6 | 0.6 | ||||||
USD | 7.0 | -0.1 | 6.9 | 0.3 | -1.4 | -1.1 | ||
of which cash flow hedges 5 | 7.0 | -0.1 | 6.9 | 0.3 | -1.4 | -1.1 | ||
Cross currency swaps | ||||||||
EURUSD | -0.7 | -0.7 | ||||||
of which cash flow hedges 6 | ||||||||
of which fair value hedges 7 | -0.7 | -0.7 |
1 Fair values of currency forwards designated as cash flow hedges are reported in fair value and other reserves.
2 Fair values of currency forwards designated as hedges of net investment in foreign subsidiaries are reported in equity in translation difference.
3 Fair values of interest rate swaps include accrued interest which is reported in the income statement in financial expense.
4 Fair values of interest rate swaps designated as fair value hedges are reported in the income statement in financial income.
5 Fair values of interest rate swaps designated as cash flow hedges are reported in fair value and other reserves.
6 The interest rate revaluation result of cross currency swaps designated as cash flow hedges is reported in fair value and other reserves. The fair value includes accrued interest which is reported in the income statement in financial expense.
7 The foreign exchange revaluation result of cross currency swaps designated as fair value hedges is reported in the income statement in net financial items.
", "dimensions": { "concept": "ifrs-full:DisclosureOfObjectivesPoliciesAndProcessesForManagingCapitalExplanatory", "language": "en", "entity": "scheme:5493007050SJVMXN6L29", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tb_L6j3nsBJBEGQowyvtD_Bzg": { "value": "Nominal values of derivative financial instruments
EUR million | 2022 | 2021 | ||||||||
Nominal\u00a0Value | Maturity\u00a0Structure | Nominal\u00a0Value | ||||||||
Instrument | 2023 | 2024 | 2025 | 2026 | 2027 | Later | ||||
Currency forwards | ||||||||||
for transaction risk | ||||||||||
Outflow | -210.4 | -208.2 | -2.2 | -128.4 | ||||||
Inflow | 210.8 | 208.6 | 2.2 | 129.1 | ||||||
for translation risk | ||||||||||
Outflow | -185.0 | -185.0 | -141.2 | |||||||
Inflow | 194.0 | 194.0 | 134.8 | |||||||
for financing purposes | ||||||||||
Outflow | -589.1 | -589.1 | -1,136.8 | |||||||
Inflow | 590.0 | 590.0 | 1,146.0 | |||||||
Currency options | ||||||||||
for transaction risk | ||||||||||
Bought options | ||||||||||
Sold options | ||||||||||
Interest rate swaps | ||||||||||
EUR | -50.0 | -50.0 | 25.0 | |||||||
USD | 93.9 | 32.9 | 9.4 | 14.1 | 14.1 | 23.5 | 119.1 | |||
Cross currency swaps | ||||||||||
EUR | -18.3 | |||||||||
USD | 17.6 |
Fair values of derivative financial instruments
EUR million | 2022 | 2021 | ||||||
Positive | Negative | Net\u00a0Fair | Positive | Negative | Net\u00a0Fair | |||
Instrument | Fair\u00a0values | Fair\u00a0values | values | Fair\u00a0values | Fair\u00a0values | values | ||
Currency forwards | ||||||||
for transaction risk | 2.7 | -2.4 | 0.3 | 1.8 | -0.6 | 1.1 | ||
of which cash flow hedges 1 | 1.7 | -1.2 | 0.5 | 0.9 | -0.6 | 0.3 | ||
for translation risk | 11.3 | -1.1 | 10.3 | -5.4 | -5.4 | |||
of which hedges of net investment 2 | 11.3 | -1.1 | 10.3 | -5.4 | -5.4 | |||
for financing purposes | 9.9 | -7.3 | 2.6 | 19.5 | -9.5 | 10.0 | ||
Currency options | ||||||||
for transaction risk | ||||||||
Interest rate swaps 3 | ||||||||
EUR | -6.1 | -6.1 | 0.6 | -0.4 | 0.2 | |||
of which fair value hedges 4 | -6.1 | -6.1 | -0.4 | -0.4 | ||||
of which cash flow hedges 5 | 0.6 | 0.6 | ||||||
USD | 7.0 | -0.1 | 6.9 | 0.3 | -1.4 | -1.1 | ||
of which cash flow hedges 5 | 7.0 | -0.1 | 6.9 | 0.3 | -1.4 | -1.1 | ||
Cross currency swaps | ||||||||
EURUSD | -0.7 | -0.7 | ||||||
of which cash flow hedges 6 | ||||||||
of which fair value hedges 7 | -0.7 | -0.7 |
1 Fair values of currency forwards designated as cash flow hedges are reported in fair value and other reserves.
2 Fair values of currency forwards designated as hedges of net investment in foreign subsidiaries are reported in equity in translation difference.
3 Fair values of interest rate swaps include accrued interest which is reported in the income statement in financial expense.
4 Fair values of interest rate swaps designated as fair value hedges are reported in the income statement in financial income.
5 Fair values of interest rate swaps designated as cash flow hedges are reported in fair value and other reserves.
6 The interest rate revaluation result of cross currency swaps designated as cash flow hedges is reported in fair value and other reserves. The fair value includes accrued interest which is reported in the income statement in financial expense.
7 The foreign exchange revaluation result of cross currency swaps designated as fair value hedges is reported in the income statement in net financial items.
", "dimensions": { "concept": "ifrs-full:DisclosureOfDerivativeFinancialInstrumentsExplanatory", "language": "en", "entity": "scheme:5493007050SJVMXN6L29", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tb_Te1ao2QrVUy1PWcoTc4FrA": { "value": "6.1. CLIMATE RELATED MATTERS
Sustainability is integral to Huhtamaki\u2019s 2030 Strategy. The ambition is to become the first choice in sustainable packaging solutions. The sustainability agenda focuses on two key topics: transitioning to a circular economy and taking climate action, whilst not forgetting other environmental and social aspects of sustainability.
\u200b
To achieve Huhtamaki\u2019s ambition, management is continuously considering climate related matters when conducting the business. These considerations and related assumptions have been reflected in the estimates and judgements of the reported amounts of assets, liabilities, income and expense.
\u200b
The items in the consolidated financial statements that are impacted by climate related assumptions in particular:
| \u25cf | Goodwill: The Group has defined EBIT and discount rates as the key assumptions in the goodwill impairment testing. Climate related risks and opportunities have been recognized and evaluated as part of the strategy-based EBIT estimates together with other factors impacting the business development. (Note 3.2. Goodwill) |
| \u25cf | Intangible and tangible assets: |
| o | Climate related matters may impact the recognition and measurement of intangible and tangible assets. In the end of the reporting period, climate related matters did not have material impact to the estimated useful lives of the assets, nor to the impairment of assets. The Group continues to invest in sustainable packaging solutions. (Note 3.3 Intangible assets and Note 3.4. Tangible assets) |
| o | Emission rights and renewable energy certificates are in scope of IAS 38 Intangible assets. (Note 3.3 Intangible assets) |
| \u25cf | Other non-current assets: The Group has signed two major virtual power purchase agreements to reach its target for using 100 % renewable electricity and carbon neutral production by 2030. The agreements are in scope of IFRS 9 Financial Instruments. (Note 5.7 Financial assets and liabilities by category). |
| \u25cf | Inventory: Climate related matters may impact the measurement of the inventories. In the end of the reporting period, climate related matters did not have material impact to the net realizable value. (Note 4.1. Inventories) |
| \u25cf | Interest-bearing liabilities: |
| o | The Group has signed a EUR 400 million sustainability-linked syndicated multicurrency revolving credit facility loan agreement (\u201cRCF\u201d). The interest margin is tied to three sustainability indicators: 1) Reduction of the absolute greenhouse gas emission amount; 2) Share of non-hazardous waste recycled; 3) EcoVadis rating. The loan margin decreases or increases according to the number of targets achieved for the three sustainability indicators. (Note 5.6 Interest-bearing liabilities) |
| o | The Group has issued a EUR 500 million senior unsecured sustainability-linked bond under its newly established Sustainability-Linked Bond Framework. The interest rate is subject to increase upon the failure to satisfy certain sustainability performance targets. The chosen targets for the sustainability-linked bond are related to greenhouse gas reductions. (Note 5.6 Interest-bearing liabilities) |
\u200b
", "dimensions": { "concept": "ifrs-full:DisclosureOfAdditionalInformationExplanatory", "language": "en", "entity": "scheme:5493007050SJVMXN6L29", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tb_Pm6dEMR7_EyRaSJ-L_o0YA": { "value": "6.2. RELATED PARTY TRANSACTIONS
Huhtamaki Group\u2019s related parties include the parent company, subsidiaries, associates, joint ventures and pension funds that are separate entities. Related parties also include the key management, their close family members and entities in which they have control or joint control. The key management personnel are the members of the Global Executive Team and the Board of Directors. Related parties also include Shareholders of Huhtam\u00e4ki Oyj controlling more than ten per cent of the shares or voting rights of Huhtam\u00e4ki Oyj.
Details of transactions and outstanding balances between the Group and its related parties are disclosed below. Intragroup related party transactions and balances are eliminated on consolidation.
The Global Executive Team and the Board of Directors
Compensation to the Global Executive Team and the Board of Directors is disclosed in the following tables. In addition, the key management is receiving dividends based on their ownership of Huhtam\u00e4ki Oyj shares. There has
not been any other transactions between the Group and the key management, their close family members or entities in which they have control or joint control.
The President and CEO Charles H\u00e9aulm\u00e9's pension coverage is arranged by the President and CEO himself. The company contributes towards the pension through monthly cash payments to the President and CEO. The total cash payment is EUR 294 thousand per annum. Some of the other Global Executive Team members belong to a supplementary defined contribution pension plan. In 2022, the Company paid a total of EUR 322 thousand (EUR 245 thousand) to pension arrangements of the other GET members, excluding the CEO. Members of the Board of Directors and the Global Executive Team owned a total of 101,689 shares (94,409 shares) shares at the end of the year 2022.
Employee benefits of CEO and members of the Global Executive Team
EUR million | \u00a0\u00a0\u00a0\u00a0 | 2022 | \u00a0\u00a0\u00a0\u00a0 | 2021 |
Salaries and other short-term employee benefits | 7.4 | 5.5 | ||
Post-employment benefits | 0.3 | 0.2 | ||
Share based payments | 5.1 | 2.8 | ||
CEO and members of the Global Executive Team in total | \u00a0\u00a0\u00a0\u00a0 | 12.8 | \u00a0\u00a0\u00a0\u00a0 | 8.5 |
Remunerations of CEO and members of the Board of Directors
In thousand euros | \u00a0\u00a0\u00a0\u00a0 | 2022 | 2021 | |
CEO Charles H\u00e9aulm\u00e9 | 2,063 | 2,699 | ||
Board members | ||||
Ala-Pietil\u00e4 Pekka | 198 | 179 | ||
Tuomas Kerttu | 121 | 118 | ||
Baillie Doug | 104 | 103 | ||
Barker William R. | 104 | 103 | ||
Korhonen Anja | 118 | 117 | ||
Turner Sandra | 106 | 105 | ||
Wunderlich Ralf K. | 107 | 102 | ||
Alonso Mercedes | 72 | - | ||
Takala Heikki | 73 | - | ||
CEO and Board in total | 3,061 | 3,526 |
Pension funds
The Group\u2019s related parties include post-employment benefit plans that are separate entities. These entities are in Finland, India, the UK and the U.S.. For more information, see note 2.2. Employee benefits. The Group made EUR 2.6 million (EUR 2.1 million) contributions to the plans and there was related outstanding balance of EUR 0.2 million (EUR 0.2 million). There was no other transactions or outstanding balances.
", "dimensions": { "concept": "ifrs-full:DisclosureOfRelatedPartyExplanatory", "language": "en", "entity": "scheme:5493007050SJVMXN6L29", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tb_Oi_VgfK4kk24wFg5eUbCAw": { "value": "The key management personnel are the members of the Global Executive Team and the Board of Directors. Related parties also include Shareholders of Huhtam\u00e4ki Oyj controlling more than ten per cent of the shares or voting rights of Huhtam\u00e4ki Oyj.", "dimensions": { "concept": "ifrs-full:DisclosureOfInformationAboutKeyManagementPersonnelExplanatory", "language": "en", "entity": "scheme:5493007050SJVMXN6L29", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tb_cRX0b_C3RUu2pJnF-KEUQw": { "value": "
6.3. SHARE-BASED PAYMENTS
Performance Share Arrangement 2010
On March 12, 2010 the Board of Directors of the Company decided on establishing a Performance Share Arrangement to form a part of the long-term incentive and retention program for the key personnel of the Company and its subsidiaries. The Performance Share Arrangement offers a possibility to earn the Company shares as remuneration for achieving established targets. The Arrangement consists of annually commencing individual three-year performance share plans. A possible reward shall be paid during the calendar year following each three-year plan. Commencement of each three-year plan will be separately decided by the Board of Directors.
GET members that are participants to the performance share plan shall hold at least half (50%) of the shares received until he/she holds shares received from the performance share plans corresponding in aggregate to the value of his/her annual gross base salary. Other participants to the plan (Performance Share Plan 2019-2021 and earlier
plans), shall hold at least half (50%) of the shares received until he/she holds shares received from the performance share plans corresponding in aggregate to the value of his/her six (6) months\u2019 gross base salary. The ownership requirement applies until termination of employment or service. The maximum value of the reward payable to the participants based on the Performance Share Arrangement is limited by a cap linked to Company\u2019s share price development (Performance Share Plan 2021-2023 and onwards).
Performance Share Plan 2019\u20132021
The Performance Share Plan 2019\u20132021 commenced in 2019 and the possible reward will be based on the Group\u2019s adjusted earnings per share (EPS) in 2021. The reward, if any, will be paid during 2022. The Performance Share Plan 2019\u20132021 was directed to 87 persons at the end of 2021.
The performance criteria, Group\u2019s adjusted earnings per share (EPS) in 2021, set forth in the Performance Share Arrangement 2010 for the earnings period 2019\u20132021, was not reached. Pursuant to the IFRS standards, no expense relating to the Performance Share Plan 2019\u20132021 was recorded for the reporting periods 2019\u20132021. For the reporting period ending 31 December 2021, a positive impact totaling EUR 3,687,657 resulting from prior years\u2019 accrual reversing was recorded.
Performance Share Plan 2020-2022
The Performance Share Plan 2020-2022 commenced in 2020 and the possible reward will be based on the Group\u2019s cumulative adjusted earnings per share (EPS) for the earning period 2020-2022. The reward, if any, will be paid during 2023. The Performance Share Plan 2020-2022 was directed to 101 persons at the end of 2022.
The achievement of performance criteria, Group\u2019s cumulative adjusted earnings per share (EPS) for the earning period 2020-2022, set forth in the Performance Share Arrangement 2010 for the earnings period 2020\u20132022, was 54.88% of maximum. According to the terms and conditions of the Performance Share Arrangement, achieved shares as on January 31, 2023 is 249,761 shares (gross) and shares will be paid in March 2023. Applicable taxes are withheld from the gross reward before paying remaining net shares to the participants. Fair value of the paid shares on the grant date was EUR 33.96 per share. Pursuant to the IFRS standards, an expense relating to the Performance Share Plan 2020\u20132022 totaling 7,559,961 was recorded for the reporting periods 2020\u20132022. This amount includes an expense totaling EUR 2,352,132 which was recorded in the reporting period ending 31 December 2022.
Performance Share Plan 2021-2023
The Performance Share Plan 2021-2023 commenced in 2021 and the possible reward will be based on the Group\u2019s cumulative adjusted earnings per share (EPS) for the earning period 2021-2023. The reward, if any, will be paid during 2024. The Performance Share Plan 2021-2023 was directed to 122 persons at the end of 2022.
Performance Share Plan 2022-2024
The Performance Share Plan 2022-2024 commenced in 2022 and the possible reward will be based on the Group\u2019s cumulative adjusted earnings per share (EPS) for the earning period 2022-2024. The reward, if any, will be paid during 2025. The Performance Share Plan 2022-2024 was directed to 139 persons at the end of 2022.
Performance Share Plan | 2019-2021 | 2020-2022 | 2021-2023 | 2022-2024 | ||||
Amount of granted shares (gross) | 310,000 | 1 | 601,600 | 2 | 582,000 | 2 | 600,000 | 2 |
Share price at grant date, eur | 33.53/37.28 | 3 | 33.96 | 39.18 | 35.86 | |||
Actual achievement (% of maximum) | 0% | 55% | ||||||
Number of achieved shares (gross) based on performance criteria | 0.0 | 249,761 | 4 | - | - | |||
Number of participants of December 31, 2022 | 87.0 | 101 | 122 | 139 | ||||
Share delivery | 2022 | 2023 | 2024 | 2025 | ||||
Perfomance criteria | adjusted EPS | adjusted EPS | adjusted EPS | adjusted EPS |
1PSP 2019-2021 grant was determined as net shares and as part of the reward, a cash payment equivalent to taxes and tax-like charges arising to the key personnel from the reward may be granted.
2In case shares are paid as reward, the net number of shares which remains after deducting the number of shares corresponding to the applicable taxes will be delivered to participants.
3Cash portion share price
4As on January 31, 2023. Achieved shares under PSP 2020-2022 will be paid in March 2023.
Restricted Share Arrangement 2021
As part of the long-term incentive and retention program for the key personnel of Huhtamaki, the Board of Directors of the Company decided on February 10, 2021 on establishing a restricted share arrangement as a share-based long-term incentive arrangement (Restricted Share Arrangement). The aim of the restricted share arrangement is to retain, motivate and reward selected key employees in order to increase the shareholder value in the long term. The restricted share arrangement consists of individual share plans. The commencement of each plan will be separately decided by the Board of Directors. Each plan comprises of three consecutive calendar years.
Share rewards will be paid in shares of the Company. No reward will be paid if the participant's employment or service ends before the payment of the reward. The members of the Global Executive Team shall retain at least 50% of the shares received until the value of their share ownership in the Company corresponds to their annual gross base salary. The maximum value of the reward payable to the participants based on the restricted share arrangement is limited by a cap linked to Company\u2019s share price development.
The first share plan within the Restricted Share Arrangement, covering the years 2021-2023, commenced as of the beginning of the year 2021. The aggregate maximum number of shares payable based on the first plan is 163,500 shares (gross) and possible rewards will be paid in 2023 and 2024. For potential subsequent share plans the aggregate maximum number of shares payable is 60,000 shares (gross) per plan. Applicable taxes are withheld from the gross reward before paying remaining net shares to the participants
Restricted Share Plan 2021-2023 (2-year vesting)
The Restricted Share Plan 2021-2023 (2-year vesting) commenced in 2021 and the reward will be paid during 2023 based on continuous employment. Group\u2019s adjusted EBIT margin of 8% for the result release preceding the payment is used as an underlying threshold criterion for share payment. The Restricted Share Plan 2021-2023 (2-year vesting) was directed to 64 persons at the end of 2022.
Financial year 2022 Group adjusted EBIT margin was 8.8% and thus there are no restriction to payout. According to the terms and conditions of the Restricted Share Arrangement, achieved shares as on January 31, 2023 is 83,000 shares (gross) and shares will be paid in March 2023. Applicable taxes are withheld from the gross reward before paying remaining net shares to the participants. Fair value of the paid shares on the grant date was EUR 39.18 per share. Pursuant to the IFRS standards, an expense relating to the Restricted Share Plan 2021-2023 (2-year vesting) totaling 3,273,480 was recorded for the reporting periods 2021-2022. This amount includes an expense totaling EUR 1,796,256 which was recorded in the reporting period ending 31 December 2022.
Restricted Share Plan 2021-2023
The Restricted Share Plan 2021-2023 commenced in 2021 and the reward will be paid during 2024 based on continuous employment. Group\u2019s adjusted EBIT margin of 8% for the result release preceding the payment is used as an underlying threshold criterion for share payment. The Restricted Share Plan 2021-2023 was directed to 8 persons at the end of 2022.
Restricted Share Plan 2022-2024
The Restricted Share Plan 2022-2024 commenced in 2022 and the reward will be paid during 2025 based on continuous employment. Group\u2019s adjusted EBIT margin of 8% for the result release preceding the payment is used as an underlying threshold criterion for share payment. The Restricted Share Plan 2022-2024 was directed to 1 person at the end of 2022.
Restricted Share Plan | 2021-2023 (2-year vesting) | 2021-2023 | 2022-2024 | |||
Amount of granted shares (gross)1 | 100,800 | 25,700 | 3,000 | |||
Share price at grant date, eur | 39.18 | 45.20-33.80 | 32.60 | |||
Number of achieved shares (gross) based on performance criteria | 83,000 | 2 | - | - | ||
Number of participants of December 31, 2022 | 64 | 8 | 1 | |||
Share delivery | 2023 | 2024 | 2025 | |||
Perfomance criteria | Continuous employment3 |
1In case shares are paid as reward, the net number of shares which remains after deducting the number of shares corresponding to the applicable taxes will be delivered to participants.
2As on January 31, 2023. Shares under RSP 2021-2023 (2-year vesting) will be paid in March 2023.
3However, if Huhtamaki Group\u2019s adjusted EBIT margin in the result release preceding the payment of the rewards is under 8%, no shares will be paid
CEO sign-in bonus
The signing bonus of the President and CEO consisted of two parts. The second part of the signing bonus (15,000 shares (net)) was paid in April 2021 and the first part (15,000 shares (net)) of the signing bonus was paid in April 2019. The second part of the signing bonus was subject to reaching an EBIT target for 2020 which was reached. In addition, the Company processed a cash payment to cover taxes and tax related payments. A lock-in period of 12 months will apply.
ACCOUNTING PRINCIPLES
The Group has incentive plans which include equity-settled or cash-settled share-based payment transactions. The fair value of equity-settled share-based payments granted is recognized as an employee expense with a corresponding increase in equity. The fair value of cash-settled share-based payments is valued at each reporting period closing date and the changes in fair value of liability are recognized as expense when incurred. The fair value is measured at grant date and spread over the vesting period during which the employees become unconditionally entitled to the awards. The amount recognized as an expense is adjusted to reflect the actual number of awards that will be vested. Non-market vesting conditions are not included in the value of share-based instruments but in the number of instruments that are expected to vest. At each reporting period closing date, the estimates about the number of awards that are expected to vest are revised and the impact is recognized in income statement.
", "dimensions": { "concept": "ifrs-full:DisclosureOfSharebasedPaymentArrangementsExplanatory", "language": "en", "entity": "scheme:5493007050SJVMXN6L29", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tb_81BgTcE1aEeYWuHseVX3KQ": { "value": "ACCOUNTING PRINCIPLES
The Group has incentive plans which include equity-settled or cash-settled share-based payment transactions. The fair value of equity-settled share-based payments granted is recognized as an employee expense with a corresponding increase in equity. The fair value of cash-settled share-based payments is valued at each reporting period closing date and the changes in fair value of liability are recognized as expense when incurred. The fair value is measured at grant date and spread over the vesting period during which the employees become unconditionally entitled to the awards. The amount recognized as an expense is adjusted to reflect the actual number of awards that will be vested. Non-market vesting conditions are not included in the value of share-based instruments but in the number of instruments that are expected to vest. At each reporting period closing date, the estimates about the number of awards that are expected to vest are revised and the impact is recognized in income statement.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForSharebasedPaymentTransactionsExplanatory", "language": "en", "entity": "scheme:5493007050SJVMXN6L29", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tb_Is4ifeEMPkqIfSGJkcW46w": { "value": "ACCOUNTING PRINCIPLES
Leases
The leases that the Group recognizes in the statement of financial position include mainly land, building, machinery and equipment. Short-term leases (lease term of 12\u00a0months or less) and leases for which the underlying asset is of low value are not booked to the statement of financial position. Payments for short-term and low-value leases and variable lease payments are expensed in P&L.
Right of use (ROU) assets are recognized at the commencement date of the lease. ROU assets are measured at cost less accumulated depreciation and impairment losses. The costs include the amount of the initial measurement of the lease liability, any lease payments made at or before the commencement date less lease incentives received, any direct costs and an estimate of dismantling costs. The carrying amount is further adjusted for any remeasurement of the lease liability. Depreciation is expensed to the income statement on a straight-line basis over the lease term. The lease term includes the noncancelable period of lease together with any extension or termination options that are reasonably certain to be exercised. ROU assets are presented as tangible assets in the statement of financial position.
Lease liabilities are recognized at the commencement date of the lease. Lease liabilities are measured at the present value of future lease payments using an effective interest method. The carrying amount is reduced to reflect the lease payments made and the interest expense is allocated over the lease term. A lease liability is remeasured, when there is a lease modification or reassessment. Lease liabilities are presented as current and non-current interest-bearing liabilities in the statement of financial position.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForLeasesExplanatory", "language": "en", "entity": "scheme:5493007050SJVMXN6L29", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tb_1nrl6mfXzEK8Z0htycKFNg": { "value": "6.5. COMMITMENTS
EUR million | 2022 | 2021 |
Capital expenditure | 115.9 | 81.4 |
Total commitments | 115.9 | 81.4 |
EUR million | 2022 | 2021 |
Capital expenditure commitments | ||
Under 1 year | 115.9 | 81.4 |
Total | 115.9 | 81.4 |
ACCOUNTING PRINCIPLES
Commitments
Capital expenditure commitments are commitments at the balance sheet date to acquire tangible and intangible assets in the future.
", "dimensions": { "concept": "ifrs-full:DisclosureOfCommitmentsExplanatory", "language": "en", "entity": "scheme:5493007050SJVMXN6L29", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tb_x-5vH-LmT0aqvYElcQYkyg": { "value": "6.6. LITIGATIONS
The European Commission announced on March 7, 2019 to open an investigation into Luxembourg's tax practices, in particular Huhtamaki tax rulings from the years 2009, 2012 and 2013. The investigation is not targeted at Huhtamaki and Huhtamaki has not been approached by the European Commission. The European Commission is investigating whether the tax ruling could potentially be considered as prohibited state aid by Luxembourg. State aid means that a public authority has granted a selective (not available for everyone) competitive advantage to a company in Europe. Huhtamaki monitors the situation and is cooperating with authorities. Huhtamaki complies with all laws and regulations and it is important for Huhtamaki to secure predictability in financial and tax affairs. In Huhtamaki\u2019s view, the structure in question is legal and approved by tax authorities, and was not set up to gain unfair competitive advantage in Europe.
", "dimensions": { "concept": "huh:DisclosureOfLitigationTextBlock", "language": "en", "entity": "scheme:5493007050SJVMXN6L29", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tb_GO4HAFT8jEiQ157G6mI5yg": { "value": "6.7. SIGNIFICANT EVENTS AFTER THE REPORTING PERIOD
There were no significant events after the reporting period.
", "dimensions": { "concept": "ifrs-full:DisclosureOfEventsAfterReportingPeriodExplanatory", "language": "en", "entity": "scheme:5493007050SJVMXN6L29", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "Tb_WbJL2yYCQEGsb775Ez8-9Q": { "value": "Subsidiaries
The list contains significant subsidiaries. A complete list is enclosed in the official statutory accounts which may be obtained from the company on request.
Country | \u00a0\u00a0\u00a0\u00a0 | Company | \u00a0\u00a0\u00a0\u00a0 | Group\u00a0holding % |
Australia | \u00a0 | Huhtamaki Australia Pty Limited | \u00a0 | 100.0 |
\u00a0 | Huhtamaki Tailored Packaging Pty Ltd - Group | \u00a0 | 74.5 | |
Brazil | \u00a0 | Huhtamaki do Brasil Ltda | \u00a0 | 100.0 |
Huhtamaki Embalagens Flex\u00edveis do Brasil Ltda | 100.0 | |||
Czech Republic | \u00a0 | Huhtamaki Ceska republika, a.s. | \u00a0 | 100.0 |
\u00a0 | Huhtamaki Flexible Packaging Czech a.s. | \u00a0 | 100.0 | |
\u00a0 | LeoCzech spol s r.o. | \u00a0 | 100.0 | |
Egypt | Elif Global Packaging S.A.E. | 100.0 | ||
\u00a0 | Huhtamaki Egypt L.L.C. | \u00a0 | 75.0 | |
\u00a0 | Huhtamaki Flexible Packaging Egypt LLC | \u00a0 | 100.0 | |
Finland | \u00a0 | Huhtamaki Foodservice Nordic Oy | \u00a0 | 100.0 |
France | \u00a0 | Huhtamaki Foodservice France S.A.S | \u00a0 | 100.0 |
\u00a0 | Huhtamaki La Rochelle S.A.S | \u00a0 | 100.0 | |
Germany | \u00a0 | Huhtamaki Flexible Packaging Germany GmbH & Co. KG | \u00a0 | 100.0 |
\u00a0 | Huhtamaki Foodservice Germany Operations GmbH & Co. KG | \u00a0 | 100.0 | |
\u00a0 | Huhtamaki Foodservice Germany Sales GmbH & Co. KG | \u00a0 | 100.0 | |
Hungary | \u00a0 | Huhtamaki Hungary Kft | \u00a0 | 100.0 |
India | \u00a0 | Huhtamaki Foodservice Packaging India Private Limited | \u00a0 | 100.0 |
\u00a0 | Huhtamaki India Limited 3 | \u00a0 | 67.7 | |
Ireland | \u00a0 | Huhtamaki CupPrint Limited | \u00a0 | 100.0 |
Italy | \u00a0 | Huhtamaki Flexibles Italy S.r.l. | \u00a0 | 100.0 |
Luxembourg | \u00a0 | Huhtamaki S.\u00e0 r.l. | \u00a0 | 100.0 |
Malaysia | \u00a0 | Huhtamaki Foodservice Malaysia Sdn. Bhd. | \u00a0 | 100.0 |
Mexico | \u00a0 | Huhtamaki Mexicana S.A. de C.V. | \u00a0 | 100.0 |
Netherlands | \u00a0 | Huhtamaki B.V. | \u00a0 | 100.0 |
Huhtamaki Finance B.V. | 100.0 | |||
\u00a0 | Huhtamaki Molded Fiber Technology B.V. | \u00a0 | 100.0 | |
\u00a0 | Huhtamaki Nederland B.V. | \u00a0 | 100.0 | |
\u00a0 | Huhtamaki Paper Recycling B.V. | \u00a0 | 100.0 | |
New Zealand | \u00a0 | Huhtamaki Henderson Limited | \u00a0 | 100.0 |
\u00a0 | Huhtamaki New Zealand Limited | \u00a0 | 100.0 | |
Philippines | Huhtamaki Philippines, Inc. | 100.0 | ||
People\u2019s Republic of China | \u00a0 | Huhtamaki Foodservice (Shanghai) Limited | \u00a0 | 100.0 |
\u00a0 | Huhtamaki Foodservice (Tianjin) Ltd. | \u00a0 | 100.0 | |
Huhtamaki Foodservice (Xuzhou) Ltd. | 100.0 | |||
\u00a0 | Huhtamaki (Guangzhou) Limited | \u00a0 | 100.0 | |
People\u2019s Republic of China/Hong Kong | \u00a0 | Huhtamaki Hong Kong Limited | 100.0 | |
Poland | \u00a0 | Huhtamaki Foodservice Gliwice Sp. z o.o. | \u00a0 | 100.0 |
\u00a0 | Huhtamaki Foodservice Poland Sp. z o.o. | \u00a0 | 100.0 | |
Saudi Arabia | \u00a0 | Arabian Paper Products Company | \u00a0 | 50.01 |
Singapore | \u00a0 | Huhtamaki Singapore Pte. Ltd. | \u00a0 | 100.0 |
South Africa | \u00a0 | Gravics Systems South Africa (Pty) Limited | \u00a0 | 100.0 |
\u00a0 | Huhtamaki South Africa Holdings (Pty) Ltd | \u00a0 | 70.0 | |
\u00a0 | Huhtamaki South Africa (Pty) Ltd. | \u00a0 | 70.0 | |
\u00a0 | Huhtamaki Flexible Packaging South Africa (Pty) Limited | \u00a0 | 70.0 | |
Spain | \u00a0 | Huhtamaki Spain S.L. | \u00a0 | 100.0 |
Switzerland | Huhtamaki AG | 100.0 | ||
Thailand | \u00a0 | Huhtamaki (Thailand) Ltd. | \u00a0 | 100.0 |
Turkey | \u00a0 | Elif Global Ambalaj Pazarlama Anonim \u015eirketi | \u00a0 | 100.0 |
Elif Holding Anonim \u015eirketi | 100.0 | |||
Elif Plastik Ambalaj Sanayi ve Ticaret Anonim \u015eirketi | 100.0 | |||
Huhtamaki Turkey G\u0131da Servisi Ambalaj\u0131 A.\u015e. | 100.0 | |||
Ukraine | \u00a0 | Huhtamaki Foodservice Ukraine LLC | \u00a0 | 100.0 |
United Arab Emirates | \u00a0 | Arabian Paper Products FZCO | \u00a0 | 50.01 |
\u00a0 | Huhtamaki Flexible Packaging Middle East LLC | \u00a0 | 49.02 | |
\u00a0 | Positive Packaging United (M.E.) FZCO | \u00a0 | 100.0 | |
\u00a0 | Primetech (M.E.) FZE | \u00a0 | 100.0 | |
United Kingdom | \u00a0 | Huhtamaki BCP Limited | \u00a0 | 100.0 |
\u00a0 | Huhtamaki Foodservice Delta Limited | \u00a0 | 100.0 | |
\u00a0 | Huhtamaki (Lisburn) Limited | \u00a0 | 100.0 | |
\u00a0 | Huhtamaki (Lurgan) Limited | \u00a0 | 100.0 | |
\u00a0 | Huhtamaki (UK) Limited | \u00a0 | 100.0 | |
United States | \u00a0 | CupPrint LLC | \u00a0 | 100.0 |
\u00a0 | Huhtamaki, Inc. | \u00a0 | 100.0 |
Vietnam | \u00a0 | Huhtamaki (Vietnam) Limited | \u00a0 | 100.0 |
1 The Group\u2019s control is based on a Shareholders\u2019 Agreement according to which the Group has control in the company.
2 The Group has control in the company and can consolidate the company as a fully owned subsidiary based on a Shareholders\u2019 Agreement.
3 For more information: www.huhtamaki.com/en-in/flexible-packaging/investors/
The following German subsidiaries are included in these annual accounts of the Huhtamaki Group and exempt from the duty of corporations to audit and disclose financial statements pursuant to German legislation (Sec. 264b HGB): Huhtamaki Flexible Packaging Germany GmbH\u00a0& Co. KG, Huhtamaki Foodservice Germany Operations GmbH\u00a0& Co. KG, Huhtamaki Foodservice Germany Sales GmbH\u00a0& Co. KG, Huhtamaki Real Estate Holding B.V.\u00a0& Co. KG.
", "dimensions": { "concept": "ifrs-full:DisclosureOfSignificantInvestmentsInSubsidiariesExplanatory", "language": "en", "entity": "scheme:5493007050SJVMXN6L29", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } } } }