BORG Automotive A/S
CVR no.: 87 32 24 16
Bergsøesvej 12
DK-8600 Silkeborg
Approved at the Annual General Meeting,
x March 2021
Conductor
Carsten Gyldenlev Kristoffersen
BORG Automotive A/S
CVR: 87 32 24 16
Bergsøesvej 12
DK-8600 Silkeborg
Approved at the Annual General Meeting,
5 March 2021
Conductor
Carsten Gyldenlev Kristoffersen
BORG Automotive A/S
CVR: 87 32 24 16
Bergsøesvej 12
DK-8600 Silkeborg
Approved at the Annual General
Meeting, 4 March 2022
Conductor
Carsten Gyldenlev Kristoffersen
2
CONTENT
CORPORATE INFORMATION ............................................................................................................................................................ 3
STATEMENT BY MANAGEMENT ....................................................................................................................................................... 4
INDEPENDENT AUDITOR’S REPORT ................................................................................................................................................ 5
FINANCIAL HIGHLIGHTS AND KEY RATIOS .................................................................................................................................... 7
GROUP STRUCTURE ......................................................................................................................................................................... 9
MANAGEMENT REVIEW ................................................................................................................................................................. 10
STATEMENTS OF INCOME AND OTHER COMPREHENSIVE INCOME .......................................................................................... 14
NOTES TO THE FINANCIAL STATEMENTS .................................................................................................................................... 20
3
CORPORATE INFORMATION
Phone: +45 86 80 11 77
Web: www.borgautomotive.com
CVR no.: 87 32 24 16
Registered in: Denmark, Silkeborg
Financial year: 1 January – 31 December
Board of Directors
Jens Bjerg Sørensen, Chairman
Kurt Bering Sørensen, Vice Chairman
Søren Ulrik Toft-Jensen
Peter Eriksen Jensen
Jørn Ankær Thomsen
Carsten Thygesen
Executive Management
Kim Kruse Andersen, CEO
Auditors
PricewaterhouseCoopers
Statsautoriseret Revisionspartnerselskab
Nobelparken
Jens Chr. Skous Vej 1
8000 Aarhus C
CVR-nr.: 33 77 12 31
4
STATEMENT BY MANAGEMENT
Executive Management
Board of Directors
5
INDEPENDENT AUDITOR’S REPORT
Opinion
Basis for opinion
Statement on the Management's review
Management's responsibilities for the financial statements
6
INDEPENDE
NT AUDITOR’S REPORT
Auditor's responsibilities for the audit of the financial statements
CVR no. 33 77 12 31
mne-no. 23328 mne-no. 23333
FINANCIAL HIGHLIGHTS AND KEY RATIOS
2021 2020 2019 2018
Revenue and income
Revenue 1.368.358 870.568 917.678 951.564
EBITDA 162.123 108.211 110.000 130.647
Depreciation and amortization 46.484 25.834 25.308 12.566
Operating profit (EBIT) 115.639 82.377 84.692 118.081
Net Financial items -17.227 -3.382 -985 -6.762
Profit for the year 73.999 61.257 60.364 84.621
Cash flows for the year
Cash flow from operating activities 52.525 139.487 84.728 149.209
Cash flow from investing activities -21.257 -71.059 -26.684 -40.939
Cash flow from financing activities -16.285 -62.438 -60.092 -113.946
Cash flows for the year 23.689 8.804 3.029 4.911
Invested capital and financing
Investments in property, plant and equipment 24.709 9.867 20.537 27.422
Net working capital 326.537 124.941 156.034 141.011
Invested capital 530.519 275.365 261.572 241.663
Total Assets 1.378.143 779.487 749.261 715.712
Equity 337.444 324.927 344.179 345.296
Net interest-bearing debt* -137.776 -5.274 -1.591 41.974
Financial ratios
EBITDA margin (%) 11,8% 12,4% 12,0% 13,7%
EBIT margin (%) 8,5% 9,5% 9,2% 12,4%
Net margin (%) 5,4% 7,0% 6,6% 8,9%
Return on equity (%) 22,3% 18,3% 17,5% 15,9%
Return on invested capital (%) 40,2% 40,3% 43,7% 50,9%
Solvency (%) 24,5% 41,7% 45,9% 48,2%
Financial data
Average number of employees 2.002 1.466 1.615 1.599
* A positive Net interest-bearing debt means that the deposits exceeds the debt.
CONSOLIDATED
With reference to the Danish Financial Statements Act paragraph 128, section 4 key figures and ratios for comparison year 2017 have not
been included.
7
FINANCIAL HIGHLIGHTS AND KEY RATIOS
(continued)
The ratios included in financial highlights are defined
and calculated as follows:
EBITDA margin (%)
EBIT margin (%)
Net margin (%)
Return on equity (%)
Return on invested capital (%)
Solvency (%)
Additionally the following alternative performance measures are applied and calculated in the following manner:
2021 2020 2019 2018
Inventories
714.177 370.070 369.421 336.632
Trade receivables
213.555 105.532 112.043 124.777
Other receivables
55.324 18.414 19.169 19.283
Prepayments
3.769 3.271 3.938 4.302
Trade payables
-273.028 -79.570 -53.473 -49.941
Paybles to related parties, non-interest bearing
000-25
Other payables
-387.260 -292.776 -295.064 -294.017
Net working capital
326.537 124.941 156.034 141.011
Net working capital 326.537 124.941 156.034 141.011
Intangible assets 85.414 65.150 21.328 21.016
Property, plant and equipment 132.306 96.797 97.170 90.780
Provisions -13.738 -11.523 -12.960 -11.144
Invested capital 530.519 275.365 261.572 241.663
Non-current interest-bearing debt -48.843 -27.675 -25.983 -10.369
Current interest-bearing debt -22.153 -10.784 -10.921 -3.841
Interest-bearing debt -70.996 -38.459 -36.904 -14.210
Interest-bearing debt -70.996 -38.459 -36.904 -14.210
Other receivables, interest bearing 72 73 327 254
Receivables from related parties 0 24.308 31.957 51.019
Payables to related parties -90.541 0 0 0
Cash and cash equivalents 23.689 8.804 3.029 4.911
EBITDA x 100
Revenue
EBIT x 100
Revenue
Profit for the year x 100
Average equity and average invested capital is calculated as a simple average of equity or invested capital beginnning of the year and
equity or invested capital end of year.
Equity x 100
Total assets
Revenue
Profit for the year x 100
Average equity
EBITDA x 100
Average invested capital
8
9
GROUP STRUCTURE
BORG Automotive Group legal structure is illustrated below:
All shares in subsidiaries are owned 100%.
Aktieselskabet Schouw & Co. owns 100% of the shares in Borg Automotive A/S.
Borg Automotive A/S
Silkeborg, Danmark
Nom. DKK 1.000.000
Borg Automotive Sp. z.o.o.
Zdunska Wola, Polen
Nom. PLN 20.597.580
Borg Automotive UK Ltd.
Wednesbury, UK
Nom. GBP 10.600.001
Electro Steer Ltd.
Wednesbury, UK
Nom GBP 1
Car Parts Industries Belgium SPRL
Nivelles, Belgium
Nom. EUR 18.550
Borg Automotive Spain S.L.U
Pamplona, Spain
Nom. EUR 3.000
SBS Automotive A/S
Støvring, Denmark
Nom. DKK 40.000.000
SBS Deutschland GmbH
Eisenach, Germany
Nom. EUR 1.022.938
SBS France SAS
Beauvais, France
Nom. EUR 327.000
10
MANAGEMENT REVIEW
BORG Automotive Group (BORG Group or Group) is an independent remanufacturer of automotive parts, covering the product
groups starters, alternators, air condition compressors, brake calipers, EGR valves, steering products, and turbo chargers. The
remanufacturing of parts take place at the production facilities in Poland, UK and, Spain, while the products are sold throughout
Europe by sales teams in Denmark and Belgium. At 1 July Borg Automotive acquired SBS Automotive Group which supplies
spare parts for the automotive business. SBS Automotive has distribution facilities in Denmark, Germany, France, and Poland
and the products are sold throughout Europe by sales teams in Denmark, Germany, Russia, and France.
2021 AT A GLANCE
Revenue for the fiscal year for the Group was MDKK 1.368 compared to MDKK 871 in 2020, corresponding to an increase of
57,2%. The profits before tax ended at MDKK 98 against last year of MDKK 79 corresponding to an increase of 24,6%. Excluding
SBS Group revenue and earnings from the Group 2021 results, comparable revenue for the BORG Group amounted to MDKK
1.125, corresponding to an increase of 29,3%, while a comparable profit before tax amounted to MDKK 106, corresponding to
a 34,1% increase in 2021. For the parent company revenue for the fiscal year was MDKK 971 compared to MDKK 753 in 2020,
while profits before tax amounted to MDKK 90 compared to MDKK 73 in 2020.
For the Group profit for the year amounted to MDKK 74 (2020: MDKK 61), and to MDKK 74 (2020: MDKK 61) for the parent
company.
The increase in revenue and thus higher profit before tax was a result of the acquisition of the new turbo chargers business as
well as the addition of the SBS Automotive Group. The increase was further fuelled by the reopening of the markets where Borg
Automotive operates, after a 2020 which was heavily impacted by COVID-19. Additionally, initiatives and cost reductions made
during the corona pandemic in 2020 had a positive impact on the profit. BREXIT on 1 January 2021 had, as expected, a negative
effect on the profit due to custom duties as well as delays and higher costs caused by the increased complexity and problems
at the border. However, BREXIT has not resulted in loss of customers or revenue.
Overall the performance in 2021 are considered satisfactory compared to the expected level, where both comparable revenue
(+29,3%) and earnings before tax (+34,1%) are realised higher in 2021 compared to the expected range of 15-25%. Last year,
the higher revenue can be attributed primarily to the lower than expected impact of COVID-19 in 2021, as well as an impact of
cost reductions and capacity adjustments during the year on earnings before tax.
During 2021 one of the focus areas for the Group has been navigating through the COVID-19 pandemic and strengthening and
future proofing the organisation to be able to meet and resist the current challenges, but also to have the organisation in place
to meet the expected increase in demand for remanufactured auto parts in the coming years. As part of this process, continued
focus has been on strengthening the product portfolio and optimizing the production setup at the production facilities in Poland,
UK, and Spain. The acquired activities of Turbo Motor Inyección S.L.U. and Turbos Y Componentes Automoción S.L.U in
December 2020 has successfully been integrated in the Borg Group during 2021. The production facility established in Lublin
2019 is growing as planned and is expected to grow further in 2022. The acquisition of SBS Automotive Group 1 July 2021
added a trading business to the remanufacturing business in Borg Automotive Group. SBS Automotive operates under the two
brands NK and Euro Brakes.
The continued R&D activities consisting primarily of development activities cover development of new remanufacturing
methods, processes, and products as well as customer specific amendments to the existing portfolio. The development
activities in the Group are placed together with the production facilities in Poland, UK and Spain in order to fully optimize and
utilize all synergies between the various activities.
The headquarter in Silkeborg was sold in December 2021, and a 2 1/2 year lease contract has been made with the new owners.
At the same time land just outside Silkeborg has been acquired for a new headquarter. Construction will begin in 2022 and it is
expected that the new facilities will be ready in beginning of 2024.
At year-end 2021, total assets for the Group amounted to MDKK 1.378 against MDKK 779 in 2020, while total equity ended at
MDKK 337 against MDKK 325 at year-end 2020. The average number of employees increased from 1.466 in 2020 to 2.002 in
2021, of which 173 related to the addition of the SBS Group. For the parent company assets amounted to MDKK 1.530 at year-
end compared to MDKK 1.127 in 2020, while equity was MDKK 337 against MDKK 325 last year.
The cash flow from operating activities for 2021 amounted to MDKK 53 (2020: MDKK 139), while the investing activities
amounted to MDKK 21 (2020: MDKK 71), of which MDKK 7,8 are related to the purchase of the business in Spain. The financing
activities in 2021 accounted for a total of MDKK 16 (2020: MDKK 62), of which MDKK 60 relates to dividend paid for the year
(2020: MDKK 60).
Overall, the development in 2021 shows a healthy and well-developed business with a strong base of both competent
employees and an appropriate production footprint in Europe.
EVENTS SUBSEQUENT TO THE FINANCIAL YEAR-END
No material events have occurred after the end of the financial year.
11
OUTLOOK FOR 2022
The market upon which BORG Group operates is in these years characterized and affected by considerable customer
consolidations. A consequence of this consolidation is an increase in purchasing power of the customers and a change in the
existing trading patterns in the market. On the positive side of this consolidation is the potential increase in sales to the
consolidated customer groups. With existing broad product portfolio and a strong pipeline in place it is expected that this will
ensure a positive development in sales to both the free aftermarket and the OES customers and the turbo chargers acquisition
supports that development.
The current expectations of a positive development in sales levels is one of the main reasons for the turbo charger acquisition.
The larger product range and broader and more present geographical coverage brings in new customers as well as new products
to existing customers together with a level of service that lives up to a continuously increasing demand on quality, delivery
capability and, product range.
Adding a third trading leg to the free aftermarket and the OES market via SBS Automotive will open up new opportunities in the
future both in relation to offering wear and tear products such as brake disks to customers but also synergies in purchasing and
market approach.
The expected future growth in sales levels will potentially entail that the current distribution centre in Zduńska Wola, Poland
within the coming few years will reach its maximum capacity without no expandability options at the current site. Based on this
a suitable plot has been acquired in late 2019 near the current production facility in Zduńska Wola. The necessary licenses are
in place, and it is expected that the construction of the new distribution centre will commence during 2022. In 2022 the BORG
Group will have a continued focus on capacity levels and invest in extended capacity when deemed necessary.
The challenges experienced in 2020 and 2021 related to COVID-19 are expected to continue into 2022, however at a lessor
scale as the business has been adjusted to the situation. The type of business Borg Automotive operates in is linked to the
mobility of people and will mainly be affected if borders are closed or if the mobility is reduced compared to the current level.
BREXIT will continue to influence the Group as more than 15% of the revenue was generated on this market in 2021. The effects
in 2022 are however considered limited as a setup has been implemented to handle VAT and custom duty. However delay at
borders and process handling at the customs offices at borders is making the UK trade more complex.
BORG Group expects a growth in sales volumes in 2022 compared to 2021 and based on this both revenue and earnings before
tax is expected to increase. It is expected that revenue will be in the range of MDKK 1.600-1.800, primarily due to the full year
effect from SBS Automotive. The earnings before interests and tax (EBITDA) are expected to be in the range of MDKK 170-200.
EMPLOYEE DEVELOPMENT AND APPRAISAL
An essential prerequisite for the continued development of BORG Group is the employees, which entails a focus on both
attracting new and competent employees, but also a very keen and determined focus to retain, develop, and motivate the
existing workforce to ensure that the necessary skills and capabilities are present. Important elements to support this goal
include delegation of responsibility and competencies, establishment of cross-organisational solutions, compulsory annual
employee appraisals, and employee surveys.
ENVIRONMENTAL MANAGEMENT
BORG Group makes continuous efforts to mitigate the environmental impact of the business activities. The largest
environmental impact identified relates to the consumption of energy, raw materials, and the derived materials waste at the
production facilities.
Group policy is always to comply with applicable local legislation, rules, and regulations and commits to progress at the
established initiatives within environment as well as health and safety. In 2018 to 2021 focus was specifically on reducing
electricity consumption as well as the use of cardboard and plastic, and the Lost Time Injury Frequency Rate (LTIFR). All KPI’s
are showing a positive trend. Further information about this can be found here:
In addition to the internal focus BORG Group is also determined to contribute to ensure environmental management as well as
promote responsible behaviour throughout the value chain. Since the Group is an international supplier of auto parts, it is
imperative that all environmental and quality requirements are channelled to the Group´s partners and suppliers to ensure the
same high levels of quality, environment, safety, and ethics.
QUALITY MANAGEMENT
BORG Group’s quality system is based on the standard ISO 9001a. In addition to this platform the Group has a close cooperation
with several customers who challenge the existing production setup as well as the quality management. This collaboration is
considered to have a very positive impact on the current and future quality of the products within the portfolio and is a valuable
and important aspect of the Group’s ability to continuously update, renew, and improve the product quality.
12
RESEARCH AND DEVELOPMENT ACTIVITIES
The Group is continuously developing new methods, processes, and products as well as customer specific amendments to the
existing portfolio. The development activities have during 2021 taken place in the subsidiaries in Poland, UK, and also Spain
after the acquisition of the turbo charger activity.
In Poland remanufacturing of products within hybrid technology has been in focus to secure necessary skills and processes for
reverse engineering of future products and technologies. Several products are in a screening process with customers for
potentially being incorporated into BORG's future product portfolio.
CORPORATE RESPONSIBILITY
BORG Group is dedicated to being a responsible employer and a good corporate citizen. Our Code of Conduct (COC) represents
how suppliers are expected to act when doing business with the Group. A continuous focus is on updating the COC to reflect the
expectations both from the community and customers.
Any suspicions related to a breach of the COC are considered very serious and are always acted upon. In severe cases of non-
compliance with the COC, a termination of the business relationship will take place. As part of the Group’s business is the audit
of external suppliers of finished goods and spare parts. Since 2020 compliance with the COC has been part of these supplier
audits.
STATUTORY DESCRIPTION OF CORPORATE SOCIAL RESPONSIBILITY (CSR) AND GENDER REPRESENTATION
For BORG Group’s statutory description of Corporate Social Responsibility, including human rights, social and labour conditions,
climate, environment, and anti-corruption, in accordance with §99a and §99b in the Financials Statements act, please refer to
Schouw & Co at:
The Group continually strives to improve the work environment and aim to strengthen and implement a shared corporate culture
to ensure that all colleagues are treated equally irrespective of location, gender, origin, or employment.
DATA ETHICS
In Borg Group we strive to achieve at high standard of data integrity and transparency for securing the trust of our business
partners and employees. A continuous focus and acknowledgement of the responsibility and co-responsibility are on all links of
the data processing chain to ensure the technical and organization measures which must be in place to support the ethically
responsible data processing.
Borg Groups ultimate parent company Schouw & Co. have in accordance with § 99d, paragraph 1 in the Financial Statements
act prepared a Data Ethics Policy covering all Schouw & Co. Group. The policy can be found here:
WORKING ENVIRONMENT
In BORG Group the number of working hours is always set to comply with local labour legislation. In situations where overtime
is needed, the Group compensate according to the requirements related to all additional payments. No employees shall work
more than the hours set as a maximum by the UN Human Rights.
The Group continuously improves the internal work instructions and workflows to ensure that all phases of the supply chain are
planned and organised to promote a safe, healthy, and responsible working environment. The purpose is to avoid accidents and
to ensure that the physical and mental conditions of the employees will not deteriorate. It is indeed important to the Group to
have healthy employees.
During 2019, Schouw & Co established a whistle-blower-system for all companies within the Schouw & Co. Group, also covering
BORG Group. The system provides a secure channel for all employees and business partners for reporting suspected criminal
or unethical matters.
OUTSTANDING ENVIRONMENTAL ISSUES
The Group always aims at conducting its business and operating in compliance with all existing environmental rules and
regulations and has set up internal task forces to handle the Group’s environmental affairs.
There are currently no known material environmental issues outstanding within the Group.
13
SPECIAL BUSINESS RISKS
The general financial risks relevant for the BORG Group are described more detailed in note 29 to which reference is made, but
below is included a brief highlight of the special risks to which the Group is exposed.
OPERATIONAL RISKS
The Group is not considered to have special operational risks. The operations are located within a business area with a low
sensitivity to the general conjunctural changes and where the customer portfolio is considered broad and loyal. The risk to which
the Group is exposed relates more to the conjunctural changes within the automotive business.
RAW MATERIALS RISKS RELATED TO PURCHASE OF CORES
A large part of the raw materials (cores) is continuously purchased at prices that may fluctuate depending on market demand,
and with a correlation to significant changes in the metal prices.
FOREIGN CURRENCY RISK
The cross-country activities within the Group entails that both income, cash flow, and equity are affected by changes in
currencies especially PLN to DKK and USD to DKK. To reduce the currency risk, hedging of cash flows are carried out to cover
the exposure of trading between PLN and USD to DKK. The hedging is done based on 12 months rolling forecast. Reference is
made to note 30.
CREDIT RISK
The majority of the Group’s production is delivered to large international customers, who has a long history with the Group. Any
credit risk related to the customers and trade receivables are covered by Group policy and with effective management of customer
credit assessments and regular and thorough analyses of customer creditworthiness. Furthermore, as part of the business setup
within the Group, customers pay a core charge (deposit) on top of the purchase price for the product. The deposit will be repaid
if the customer returns a used unit (a core). This setup (depos system) is an additional safeguard regarding potential losses
related to customers, since the depos amount placed within the Group can be offset in any outstanding balances.
These factors combined with external credit insurance have entailed that no material losses have been recorded in recent years.
CAPITAL STRUCTURE
Borg Group is predominately financed by resources of the parent company Schouw & Co. as well as a number of committed and to
a lesser extent uncommitted credit facilities. Borg Group, like other major subsidiaries in the Schouw & Co. Group, co-guarantees
for these facilities, see further details in note 31.
Based on the policies set by and for all companies within the Schouw Group the equity ratio for each individual company shall be
within a range which enables an assessment of this company as credit-worthy on a stand-alone basis.
STATEMENTS OF INCOME AND OTHER COMPREHENSIVE INCOME
INCOME STATEMENT
Note 2021 2020 2021 2020
Revenue 3 1.368.358 870.568 970.796 753.350
Cost of sales 4,5,7,8 -1.012.994 -671.013 -801.250 -631.882
Gross profit 355.364 199.555 169.546 121.468
Other operating income 9 1.581 888 21.365 15.728
Distribution expenses 5,8 -173.015 -75.918 -70.078 -47.398
Administrative expenses 5,6,8 -67.962 -41.759 -48.008 -38.200
Other operating expenses 9 -329 -389 0 -74
Operating profit (EBIT) 115.639 82.377 72.825 51.524
Income from subsidiaries 16 0 0 25.123 26.157
Financial income 10 1.954 3.935 5.151 2.316
Financial expenses 11 -19.181 -7.317 -12.849 -7.457
Profit before tax 98.412 78.995 90.250 72.540
Tax for the year 12 -24.413 -17.738 -16.251 -11.283
Profit for the year 73.999 61.257 73.999 61.257
STATEMENT OF OTHER COMPREHENSIVE INCOME
Items that may be reclassified subsequently to the income
statement:
Exchange differences on translation of foreign operations -1.681 -17.954 -1.681 -17.954
Value adjustment of hedging instruments for the year 3.334 -3.252 2.659 -3.252
Hedging instruments transferred to cost of sales
-3.079 -23 -3.079 -23
Tax on other comprehensive income
12 -56 720 93 720
Value adjustment of subsidiaries
16 0 0 526 0
Other comprehensive income after tax
-1.482 -20.509 -1.482 -20.509
Profit for the year
Total comprehensive income 72.517 40.748 72.517 40.748
Attributable to:
Shareholders of Borg Automotive A/S 72.517 40.748 72.517 40.748
CONSOLIDATED PARENT COMPANY
14
BALANCE SHEET
ASSETS
Note 2021 2020 2021 2020
Completed development projects 308 6.463 294 6.463
Development projects in progress 839 1.242 838 1.241
Customer relations 19.947 22.167 16.615 18.461
Brands 29.583 0 0 0
Know-how 24.470 27.189 24.470 27.189
IT projects 10.138 7.978 5.555 6.950
Other intangible assets 129 111 14 85
Intangible assets 13 85.414 65.150 47.786 60.389
Land and buildings 77.062 61.985 0 12.001
Plant and machinery 23.388 22.676 0 9
Other fixtures, tools and equipment 9.394 8.007 31 102
Assets under construction, etc. 22.462 4.129 1.263 0
Property, plant and equipment 14 132.306 96.797 1.294 12.112
Investment in subsidiaries 16 0 0 471.387 337.651
Deferred tax 18 88.447 48.982 35.536 21.746
Lease assets 15 46.909 28.676 4.846 1.306
Receivables from related parties
21,23 0 0 246.317 193.618
Other receivables 12.130 1.017 0 0
Other non-current assets 147.486 78.675 758.086 554.321
Total non-current assets 365.206 240.622 807.166 626.822
Inventories 19 714.177 370.070 503.884 392.202
Trade receivables 29 213.555 105.532 121.282 74.026
Receivables from related parties
21,23 0 24.308 83.534 19.484
Corporate income tax 20 2.423 1.548 0 0
Joint taxation contribution 20 0 6.918 0 6.918
Other receivables 55.324 18.414 28 95
Prepayments 3.769 3.271 1.437 1.006
Cash and cash equivalents 23.689 8.804 12.602 6.254
Total current assets 1.012.937 538.865 722.767 499.985
Total assets 1.378.143 779.487 1.529.933 1.126.807
CONSOLIDATED PARENT COMPANY
15
BALANCE SHEET
EQUITY AND LIABILITIES
Note 2021 2020 2021 2020
Share capital 22 1.000 1.000 1.000 1.000
Hedge transaction reserve -1.227 -1.426 -1.753 -1.426
Net revaluation reserve as per the equity method
Reserve for development projects
Exchange adjustment reserve -18.549 -16.868 0 0
Retained earnings 281.220 282.221 60.022 36.724
Proposed dividend 75.000 60.000 75.000 60.000
Total Equity 337.444 324.927 337.444 324.927
Deferred tax 18 195 121 0 0
Other payables 24 241.936 67.106 221.376 45.481
Payables to related parties 21,23 0 0 77.970 126.992
Interest bearing debt 15,23 48.843 27.675 2.527 8.595
Provisions 25 12.617 10.583 12.492 10.483
Total non-current liabilities 303.591 105.485 314.365 191.551
Current portion of non-current interest bearing debt
15,23 22.153 10.784 5.728 1.142
Payables to related parties
21,23 90.541 0 619.955 409.575
Trade payables 273.028 79.570 24.529 14.311
Others payables 24 316.967 241.296 207.323 173.888
Corporation tax payable 20 13.692 5.902 0 0
Joint taxation contribution 20 6.989 0 6.989 0
Provisions 25 13.738 11.523 13.600 11.413
Total current liabilities 737.108 349.075 878.124 610.329
Total liabilities 1.040.699 454.560 1.192.489 801.880
Total equite and liabilities 1.378.143 779.487 1.529.933 1.126.807
Changes in working capital 27
Financial assets and liabilities 28
Financial risks 29
Derivative Financial instruments 30
Contingent liabilities 31
Related parties 32
CONSOLIDATED PARENT COMPANY
16
CASH FLOW STATEMENT
Note 2021 2020 2021 2020
Profit before tax 98.412 78.995 90.250 72.540
Adjustment for operating items of a non-cash nature,
etc.:
Depreciation and impairment losses 8 46.484 25.834 15.264 9.805
Other non-cash operating items, net -1.484 7.169 -624 2.908
Provisions 4.122 6.801 4.196 9.172
Income from subsidiaries 16 0 0 -25.123 -26.157
Financial income 10 -1.954 -3.935 -5.151 -2.316
Financial expenses 11 19.181 7.317 12.849 7.457
Cash flows from operating activities before changes
in working capital
Changes in working capital 27 -80.252 34.630 -25.874 40.876
Cash flows from operating activities after changes in
working capital
Interest income received 113 12 529 2
Interest expenses paid -2.756 -1.625 -10.796 -625
Cash flow from ordinary activities 81.866 155.198 55.520 113.662
Income tax paid 20 -29.341 -15.711 -16.041 -8.042
Cash flows from operating activities 52.525 139.487 39.479 105.620
Purchase of intangible assets 26 -4.016 -2.066 -804 -47.628
Purchase of property, plant and equipment 26 -23.505 -9.299 -921 -175
Sale of property, plant and equipment 12.335 540 12.280 0
Acqusition of subsidiary 16 -7.801 0 0 -22
Acqusition of business 17 1.775 -60.487 0 0
Dividend received from subsidiaries 16 0 0 44.610 0
Change in financial assets -45 253 0 0
Cash flows from investing activities -21.257 -71.059 55.165 -47.825
Repayment of non-current liabilities 23 -5.794 -1.608 -4.891 -525
Repayment of lease liabilities 23 -14.589 -9.289 -1.327 -1.071
Repayment of creditfacilties 23 -52.052 0 0 0
Change in net payables/receivables to group companies 23 116.150 8.459 -22.014 10.055
Shareholders:
Dividend paid -60.000 -60.000 -60.000 -60.000
Cash flows from financing activities -16.285 -62.438 -88.232 -51.541
Cash flows for the year 14.983 5.990 6.412 6.254
Cash at the beginning of the year 8.804 3.029 6.254 45
Value adjustment of cash and cash equivalents 23 -98 -215 -64 -45
Cash at the end of the year 23.689 8.804 12.602 6.254
CONSOLIDATED PARENT COMPANY
17
EQUITY STATEMENT
CONSOLIDATED
Share
Capital
Hedge
transaction
reserve
Exchange
adjustment
reserve
Retained
earnings
Proposed
dividend Total equity
Equity at 1 January 2021 1.000 -1.426 -16.868 282.221 60.000 324.927
Profit and other comprehensive income in 2021:
Exchange rate adjustment of foreign
subsidiaries
Hedging instruments transferred to cost of
sales
Value adjustment of hedging instruments
recognised during the year
Tax on hedging instruments
Profit for the year 0 0 0 -1.001 75.000 73.999
Total recognised comprehensive income
Transactions with the owners:
Dividend distributed 0 0 0 0 -60.000 -60.000
Transactions with the owners for the
period
Equity at 31 December 2021 1.000 -1.227 -18.549 281.220 75.000 337.444
Share
Capital
Hedge
transaction
reserve
Exchange
adjustment
reserve
Retained
earnings
Proposed
dividend Total equity
Equity at 1 January 2020 1.000 1.129 1.086 280.964 60.000 344.179
Profit and other comprehensive income in 2020:
Exchange rate adjustment of foreign
subsidiaries
Hedging instruments transferred to cost of
sales
Value adjustment of hedging instruments
recognised during the year
Tax on hedging instruments
Profit for the year 0 0 0 1.257 60.000 61.257
Total recognised comprehensive income
Transactions with the owners
Dividend distributed 0 0 0 0 -60.000 -60.000
Transactions with the owners for the
period
Equity at 31 December 2020 1.000 -1.426 -16.868 282.221 60.000 324.927
18
EQUITY STATEMENT
PARENT COMPANY
Share
capital
Hedge
transaction
reserve
Net
revaluation
reserve as per
the equity
method
Reserve for
development
projects
Retained
earnings
Proposed
dividend Total Equity
Equity at 1 January 2021 1.000 -1.426 223.588 5.041 36.724 60.000 324.927,00
Profit and other comprehensive income in 2021:
Exchange rate adjustment of
foreign subsidiaries
Hedging instruments transferred
to cost of sales
Value adjustment of hedging
instruments recognised during the
year
Tax on hedging instruments
0 93 0 00093
Value adjustment of hedging
instruments in subsidiary
Profit for the year 0 0 -19.487 -4.812 23.298 75.000 73.999
Total recognised comprehensive
income
Transactions with the owners:
Dividend distributed 0 0 0 0 0 -60.000 -60.000
Transactions with the owners for
the period
Equity at 31 December 2021 1.000 -1.753 202.946 229 60.022 75.000 337.444
Share
capital
Hedge
transaction
reserve
Net
revaluation
reserve as per
the equity
method
Reserve for
development
projects
Retained
earnings
Proposed
dividend Total Equity
Equity at 1 January 2020 1.000 1.129 215.385 9.855 56.810 60.000 344.179
Profit and other comprehensive income in 2020:
Exchange rate adjustment of
foreign subsidiaries
Hedging instruments transferred
to cost of sales
Value adjustment of hedging
instruments recognised during the
year
Tax on hedging instruments
Profit for the year 0 0 26.157 -4.814 -20.086 60.000 61.257
Total recognised comprehensive
income
Transactions with the owners:
Dividend distributed 0 0 0 0 -60.000 -60.000
Transactions with the owners for
the period
Equity at 31 December 2020 1.000 -1.426 223.588 5.041 36.724 60.000 324.927
19
20
NOTES TO THE FINANCIAL STATEMENTS
CONTENT
1.
ACCOUNTING POLICIES ....................................................................................................................................................................... 21
2.
SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS ................................................................................ 29
3.
REVENUE ................................................................................................................................................................................................ 30
4.
COST OF SALES ...................................................................................................................................................................................... 30
5.
STAFF COST ........................................................................................................................................................................................... 30
6.
FEES TO AUDITORS APPOINTED BY THE GENERAL MEETING ........................................................................................................... 32
7.
RESEARCH AND DEVELEOPMENT COSTS ............................................................................................................................................ 32
8.
DEPRECIATION, AMORTIZATION AND IMPAIRMENT LOSSES .......................................................................................................... 32
9.
OTHER OPERATING INCOME AND EXPENSES ..................................................................................................................................... 33
10.
FINANCIAL INCOME .............................................................................................................................................................................. 33
11.
FINANCIAL EXPENSES .......................................................................................................................................................................... 33
12.
TAX ON PROFIT FOR THE YEAR ............................................................................................................................................................ 34
13.
INTANGIBLE ASSETS ............................................................................................................................................................................ 35
14.
PROPERTY, PLANT AND EQUIPMENT ................................................................................................................................................... 37
15.
LEASE ASSETS ....................................................................................................................................................................................... 39
16.
INVESTMENTS IN SUBSIDIARIES (PARENT COMPANY) ..................................................................................................................... 42
17.
ACQUISITION OF BUSINESS ................................................................................................................................................................ 43
18.
DEFERRED TAX ...................................................................................................................................................................................... 44
19.
INVENTORIES ........................................................................................................................................................................................ 46
20.
CORPORATE INCOME TAX .................................................................................................................................................................... 46
21.
RECEIVABLES AND PAYABLES WITH RELATED PARTIES ................................................................................................................... 47
22.
SHARE CAPITAL ..................................................................................................................................................................................... 47
23.
INTEREST-BEARING DEBT ................................................................................................................................................................... 48
24.
OTHER PAYABLES .................................................................................................................................................................................. 51
25.
PROVISIONS .......................................................................................................................................................................................... 51
26.
ADJUSTMENTS FOR NON-CASH TRANSACTIONS ............................................................................................................................... 52
27.
CHANGES INWORKING CAPITAL ......................................................................................................................................................... 52
28.
FINANCIAL ASSETS AND LIABILITIES ................................................................................................................................................. 53
29.
FINANCIAL RISKS .................................................................................................................................................................................. 56
30.
DERIVATIVE FINANCIAL INFORMATION ............................................................................................................................................. 60
31.
CONTINGENT LIABILITIES AND GUARANTEES ................................................................................................................................... 61
32.
RELATED PARTIES ................................................................................................................................................................................. 62
21
NOTES TO THE FINANCIAL STATEMENTS
1. ACCOUNTING POLICIES
Borg Automotive A/S is a limited liability company incorporated and domiciled in Denm ark. The annual report for the period 1.
January – 31. December 2021 comprises both the consolidated accounts for Borg Automotive A/S and its subsidiaries (BORG
Group or Group) and the annual accounts for the parent company Borg Automotive A /S.
The consolidated financial statements of Borg Automotive A/S and its subsidiaries have been prepared in accordance with
International Financial Reporting Standards (IFRS) as adopted by the European Union and additional Danish disclosure
requirements for annual reports applying for class C entities.
Basis of preparation
The consolidated financial statements and the parent company financial statements are presented in Danish kroner (DKK), which
is the presentation currency for the Group and the functional currency of the parent company. If not stated otherwise, all amounts
rounded to nearest thousands (‘000 or TDKK).
The consolidated financial statements and the parent company financial statements have been prepared on the basis of historical
cost, except for share based remuneration and derivative financial instruments that are measured at fair value.
Going concern
The Board of Directors and Executive Management have in connection to the preparation of the Financial Statements assessed
the Group´s and the Parent Company´s ability to continue as a going concern and thus whether this assumption can be applied.
Based in the knowledge of the Group and Parent Company including the future expectations including budgets, developments in
liquidity, the identified risks and uncertainties connected to the regular business the Board of Directors and Executive
Management considers it fair and justified to apply the going concern principle.
Change in accounting principles and presentation
New and amended standards and interpretations
The Group applied for the first-time certain standards and amendments, which are effective for annual periods beginning on or
after 1 January 2021. The Group has not early adopted any other standard, interpretation or amendment that has been issued
but is not yet effective.
The new and amended standards are:
IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16: IBOR-reform, phase 2.
These amendments had no material impact on the consolidated financial statements of the Group.
The following new or amended IFRS Standards and Interpretations of relevance to the Group have been issued but not yet
adopted by the EU:
Amendments to IAS 1 Presentation of Financial Statements: Classification of Liabilities as Current and Non-current
Annual Improvements to IFRSs 2018-2020 Cycle
Amendments to IAS 1 Presentation of Financial Statements and IFRS Practice Statements 2: Disclosure of Accounting
Policies
Amendments to IAS 8 Accounting policies, Changes in Accounting Estimates and Errors: Definition of Accounting
Estimates
Amendments to IAS 12 Income Taxes: Deferred Tax related to Assets and liabilities arising from Singe Transactions
The new and amended Standards and Interpretations are not mandatory for the financial reporting for 2021. The Group expects
to adopt the new Standards and Interpretations when they become mandatory. It has been assessed that the implementation of
the new standards will not have any significant effect on the recognition and measurement of the balance sheet at 1 January
2022.
Basis of consolidation
The consolidated financial statements comprise Borg Automotive A/S and its subsidiaries at 31 December 2021.
Subsidiaries are entities controlled by Borg Group. Control exists when the Group is exposed, or has rights, to variable returns
from its involvement with the investee and has the ability to affect those returns through its power over the investee. Specifically,
the Group controls an investee if, and only if, the Group has all of the following:
Power over the investee (i.e., existing rights that give it the current ability to direct the relevant activities of the investee)
Exposure, or rights, to variable returns from its involvement with the investee
The ability to use its power over the investee to affect its returns
22
Consolidation of a subsidiary begins when the Group obtains control over the subsidiary and ceases when the Group loses control
of the subsidiary.
The consolidated financial statements have been prepared by aggregating the financial statements of the parent company and
the individual subsidiaries prepared in accordance with the Group’s accounting policies. Intra-group income and expenses,
shareholdings, dividends, balances as well as realised and unrealised gains or losses on transactions between the consolidated
companies are eliminated. Assets, liabilities, income and expenses of a subsidiary acquired or disposed of during the year are
included in the consolidated financial statements from the date the Group gains control until the date the Group ceases to control
the subsidiary.
Business combinations
Newly acquired or newly established companies are recognised in the consolidated financial statements from the date of
acquisition. Comparative figures are not adjusted to reflect acquisitions.
The purchase method is applied on acquisitions if the Parent Company gains control of the company acquired. Assets, liabilities
and contingent liabilities in companies acquired are measured at their fair value at the date of acquisition. Intangible assets are
recognised if they can be separated or if they arise from a contractual right and the fair value can be reliably measured. Deferred
tax on revaluations made is recognised.
Any excess of the consideration paid for the business over the fair value of the acquired assets, liabilities and contingent liabilities
is recognised as goodwill under intangible assets. In the event of uncertainty regarding measurement, goodwill may be adjusted
until 12 months after the acquisition. Goodwill is not amortised but is tested for impairment annually. The first impairment test is
performed before the end of the year of acquisition. On acquisition, goodwill is transferred to the cash-generating units that will
subsequently form the basis for future impairment tests.
Foreign currency translation
The Group’s consolidated financial statements are presented in Danish Kroner (DKK), which is also the Parent Company’s
functional currency. A functional currency is determined for each of the reporting entities in the Group. The functional currency is
the currency in the primary economic environment in which the reporting entity operates. Transactions in other currencies other
than the functional currency are considered transactions in foreign currencies.
On initial recognition, foreign currency transactions are translated applying the exchange rate at the transaction date. Receivables,
payables and other monetary items denominated in foreign currencies that have not been settled at the balance sheet date are
translated using the exchange rate at the balance sheet date. Exchange differences that arise between the exchange rate at the
transaction date and the exchange rate at the payment date, as well as the exchange rate at the balance sheet date are recognised
in the income statement as financial income or financial expenses.
Property, plant and equipment, intangible assets, inventories and other non-monetary assets that have been purchased in foreign
currencies are translated using historical exchange rates.
On consolidation of entities with functional currency different from Danish Kroner (DKK), the income statements are translated at
monthly average exchange rates prevailing at the dates of the transactions and the balance sheets are translated at the exchange
rate prevailing at the balance sheet date. The exchange differences arising on the translation are recognised in other
comprehensive income.
On disposal of a foreign operation, the component of other comprehensive related to that specific foreign operation is recognised
in the income statement.
Derivative financial instruments
The Group uses derivative financial instruments such as forward currency contracts to hedge its foreign currency risks (cash flow
hedges).
Derivative financial instruments are measured at fair value and recognised in the balance sheet under other receivables or other
payables, respectively. The fair value of derivative financial instruments is calculated based on current market data and
recognised valuation methods.
Changes in the fair value of derivative financial instruments that effectively hedge the fair value of a recognised asset or a
recognised liability are recognised in the income statement together with any changes in the value of the hedged asset or hedged
liability. Hedging of future cash flows under agreements are treated as hedging of the fair value of a recognised asset or a
recognised liability.
Changes in the part of the fair value of derivative financial instruments effectively hedging future cash flows are recognised in
other comprehensive income in the reserve for hedging transactions under equity. On realisation of the hedged transaction, any
gains or losses relating to such hedge transactions are transferred from other comprehensive income and recognised in the same
item as the hedged item.
23
For derivative financial instruments that do not qualify for hedge accounting, changes in fair value are recognised as interest
income or expenses and similar items in the income statement as they occur.
Government grants
Government grants are recognised where there is reasonable assurance that the grant will be received and all attached conditions
will be complied with. When the grans relates to an expense item, it is recognised as income on systematic basis over the periods
that the related costs, for which it is intended to compensate, are expensed. When the grant relates to and asset, it is recognised
as income in equal amounts over he expected useful life of the related asset.
When the Group receives grants of non-monetary assets, the asset and the grant are recorded at nominal amounts and released
to profit or loss over the expected useful life of the asset, based on the pattern of consumption of the benefits of the underlying
asset by equal annual instalments.
INCOME STATEMENT
Revenue
Revenue from contracts with customers comprises sales of finished goods and remanufactured products, added the market value
of cores and adjustment of core provisions. Revenue from the sale is recognised at the point in time when the control of products
is transferred to the customer, which is generally upon delivery. For contracts providing the customer with a right of return within
a specified period, the Group considers the timing of recognition.
Revenue from contracts with customers is measured at an amount that reflects the consideration to which the Group expects to
be entitled in exchange for those products. Amounts disclosed as net revenue exclude discounts, VAT and other duties.
The Group considers whether contracts include other promises that constitute separate performance obligations and to which a
portion of the transaction price needs to be allocated. In determining the transaction price, the Group considers the effects of
variable consideration. No element of financing is deemed present, as payment is generally received as cash - on delivery or up
to generally 60-90 days of credit.
Variable consideration:
The Group pays various discounts depending on the nature of the customer and business. Customer discounts comprise off-
invoice discounts, volume- and activity-related discounts. Off-invoice discounts arise from sales transactions where the customer
immediately receives a reduction in the sales price. This also includes cash discounts and incentives for early payments. Volume-
and activity-related discounts is a broad term covering incentives for customers to sustain business with the Group over a longer
time and may be related to a current campaign or a sales target measured in volumes or total value. Examples include discounts
paid as a lump sum, discounts for meeting all or certain sales targets or for exceeding targets, or progressive discounts offered in
step with increasing sales to a customer.
Cost of sales
Cost of sales comprises cost related to generating the revenue for the year. While trading companies recognise the costs of goods
sold, the manufacturing companies recognise production costs corresponding to the year’s revenue, including direct and indirect
costs for raw materials and consumables, wages and salaries, depreciation on leasing assets and on minor rent and leasing
arrangements, amortisation and impairment of intangible assets, depreciation and impairment of production buildings and
equipment and impairment of inventory.
Cost of sales also includes costs and expenses relating to the operation, administration and management of the production sites.
Additionally, is included costs for research and product development that do not meet the criteria for capitalization, as well as
amortisation and impairment of capitalized product development costs.
Distribution costs
Distribution costs comprise expenses incurred in connection with the distribution of goods sold during the year and in connection
with sales campaigns, etc. launched during the year under review, including cost of sales and logistics staff, advertising and
exhibition costs, as well as depreciation/amortisation and impairment losses.
Administrative expenses
Administrative expenses comprise expenses incurred during the year for management and administration, including expenses
for administrative staff, office premises and office expenses, and depreciation and impairment losses. Administrative expenses
also comprise write-downs on receivables.
24
Employee benefits
Executive Management and selected Key Management in Borg Group are covered by the parent company Schouw & Co.’s share
option programme. The costs related to the programme are calculated according to “Black & Scholes” and are expensed as staff
costs linearly over the period of the option and settled to the parent company.
Other operating income and expenses
Other operating income and expenses comprise items of a secondary nature relative to the companies’ primary activities and
consist of the following:
Gains and losses on disposal of intangible assets and property, plant and equipment and lease assets.
Compensation from external parties for e.g. claims or insurance
Income from rental of facilities to external parties
Profit or loss in subsidiaries (Parent company)
The proportionate share of the profit or loss from individual subsidiaries after tax and after elimination of the proportionate
share of intra-group gains or losses is recognised in the income statement.
Financial income and expenses
Financial income comprises interest income and expenses including interest to group enterprises, net capital gains or losses on
securities, payables and transactions in foreign currencies, amortisation of financial assets, interests related to leases as well as
tax relief or surcharge under the Danish Tax Prepayment Scheme etc.
Tax for the year
Tax for the year comprise current tax including joint taxation contribution and deferred tax for the year. Tax relating to the result
for the year is recognised in the income statement, while tax expenses or income relating to changes in equity is recognised in
other comprehensive income.
BALANCE SHEET
Completed development projects
Completed development projects comprise specific projects related to the development of new products and processes and are
recognised as intangible assets when they are clearly defined, identifiable, and for which technical feasibility, sufficient resources
and a potential future market or application in the enterprise can be demonstrated. In addition, it is the intention with these
projects to manufacture, market or use the project for future commercial purposes. This applies if cost can be measured reliably
and sufficient certainty exists that future earnings or the net selling price can cover production costs, distribution costs, and
administration costs as well as research and development costs. Within Borg Group this is underpinned by a gate process, where
these judgements are made at specific gates. Other development costs which does not fulfil the criteria for capitalization are
recognised in the income statement and incurred as research and development costs under cost of sales.
Development costs comprise salaries, external costs, amortisation and other costs attributable to the projects. Following
completion of the development work, development projects are amortised on a straight-line basis over their estimated useful
lives. The amortisation period is three to five years. The basis of amortisation is calculated net of any impairment losses. The
projects are measured at cost less accumulated amortisation and impairment losses.
IT-projects
IT projects comprises internally developed IT solutions and software for the purpose of supporting business operations.
Development costs comprise salaries, external costs, amortisation and other costs attributable to the projects. Following
completion of the development work, development projects are amortised on a straight-line basis over their estimated useful
lives. The amortisation period is three to five years. The basis of amortisation is calculated net of any impairment losses. The
projects are measured at cost less accumulated amortisation and impairment losses.
Other intangible assets
Other intangible assets comprise customers, know-how and IT licenses.
The cost of other intangible assets acquired from an external party are capitalized at cost at the date of acquisition. Following
initial recognition, intangible assets are carried at cost less any accumulated amortisation and accumulated impairment losses.
25
Other intangible assets are amortised on a straight-line basis over the expected useful lives of the assets which are as follows:
Customer relations: 10-15 years
Brands: 3-20 years
Know-how: 10-15 years
Other intangible assets: 1-10 years
Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal
proceeds and the carrying amount of the asset and are recognised in the statement of profit or loss when the asset is
derecognised.
Intangible assets are assessed for impairment whenever there is an indication that the intangible asset may be impaired. The
amortisation period and the amortisation method for an intangible asset with a finite useful life are reviewed at least at the end
of each reporting period. Changes in the expected useful life or the expected pattern of consumption of future economic benefits
embodied in the asset are considered to modify the amortisation period or method, as appropriate, and are treated as changes in
accounting estimates. The amortisation expense on intangible assets with finite lives is recognised in the statement of profit or
loss in the expense category that is consistent with the function of the intangible assets.
Property, plant and equipment
Land and buildings, plant and machinery as well as other fixtures, tools and equipment are measured at cost less accumulated
depreciation and impairment.
Cost comprises the acquisition price and any costs directly attributable to the acquisition and preparation of the asset until the
time when it is ready to be put into operation. The total cost of an asset is divided into separate components which are depreciated
separately if their useful lives differ.
Subsequent costs, such as the cost of replacing components of property, plant and equipment, are included in the asset´s
carrying amount when deemed likely that it will result in economic benefit. The replaced components are no longer recognised in
the balance sheet and the carrying amount is transferred to the income statement. All other ordinary repair and maintenance
costs are recognised in the income statement when incurred.
Property, plant and equipment are depreciated on a straight-line basis over the expected useful lives of the asset/components,
which are expected to be as follows:
Buildings: 5-40 years
Plant and machinery: 5-18 years
Other fixtures and fittings, tools and equipment: 3-18 years
Land is not depreciated
The basis for depreciations are calculated with due considerations to the asset´s scrap value, useful life and reduced by any
impairment losses. The residual value is determined at the acquisition date and reassessed annually and adjusted prospectively,
if appropriate.
In case of changes to the depreciation period or residual value the effect on depreciations going forward is recognised as a change
in accounting estimates.
Depreciation are recognised in the income statement as production costs, distribution costs or administrative expenses.
Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial
period of time to get ready for its intended use or sale are capitalised as part of the cost of the asset. All other borrowing costs are
expensed in the period in which they occur. Borrowing costs consist of interest and other costs that an entity incurs in connection
with the borrowing of funds. Usually borrowing costs do not exist.
Lease assets
Lease assets are “right-of-use-assets” arising from lease agreements. Lease assets are initially measured at cost comprising the
following:
the amount of the initial measurement of lease liability
any lease payments made at or before the commencement date less any lease incentives received
any initial direct costs
restoration costs
26
The lease assets are depreciated on a straight-line basis over the shorter period of the assets useful life and the lease term in the
contract. The lease assets can be adjusted due to modifications to the lease agreement or reassessment of the lease term.
The depreciation periods are as follows:
Property: 1-7 years
Cars: 1-3 years
Production equipment: 3-5 years
Other lease assets: 3-5 years
Payments associated with short-term leases and leases of low-value assets are recognised on a straight-line basis as an
expense in the income statement. Short-term leases are leases with a term of 12 month or less, while low value assets comprise
assets with a value below TDKK 75.
The Group sublets a share of a leased property which is classified as financial leasing, “Right-of-use-assets”. The future
expected income from this sublet is accounted for in assets as a receivables, non-current and current respectively.
Investments in subsidiaries (Parent company)
Investments in subsidiaries are, at first recognition measured at cost and subsequently at the proportionate share of the
companies' net asset values calculated in accordance with the parent company’s accounting policies with the deduction or
addition of unrealised intra-group gains or losses and with the addition or deduction of goodwill calculated according to the
acquisition method.
Investments in subsidiaries with negative net asset values are measured at cost at DKK 0 (nil). If the parent company has a legal
or contractual obligation to support a provision is recognised.
Net revaluation of investments in subsidiaries is recognised in the reserve for net revaluation under equity according to the equity
method to the extent that the carrying amount exceeds cost.
Subsidiaries acquired or established during the year are initially recognised in the financial statement from the date of acquisition,
while sold or liquidated companies are recognised until the date of disposal.
Impairment of non-current assets
Deferred tax assets are assessed on a yearly basis and are only recognised in case it is deemed likely that they will be utilized.
The carrying amount of development projects in progress is tested for impairment at least annually, and where the carrying
amount exceeds the net present value of the future net cash flows expected to be generated by the development project, the
project is written down to its recoverable amount in the income statement. Finished development projects are tested for
impairment if there is indication of impairment from the annual review.
The carrying amount of other non-current assets are tested annually to determine whether there is any indication of impairment.
If such an amount exists, the recoverable amount of the assets is calculated. The recoverable amount is the higher of the fair
value of the asset less expected costs to sell and the value in use. For the purpose of assessing impairment, assets are grouped
at the lowest levels for which there are separately identifiable cash flows (cash-generating units).
A write-down is recognised when the carrying amount of an asset or a cash-generating unit exceeds the recoverable amount of
the asset or the cash-generating unit. Write-downs are recognised in the income statement as production, distribution or
administration expenses.
Inventories
Inventories are measured at cost in accordance with the FIFO. Where the net realisable is lower than the cost, inventories are
written down to this lower value. The net realisable value of inventories is calculated as the estimated selling price less completion
costs and costs incurred to execute sale and is determined in consideration of marketability, obsolescence and movements in the
expected selling price.
The cost of goods for resale, raw materials and consumables comprise the purchase price and delivery costs.
The cost of finished goods and work in progress comprise of raw materials, consumables, direct labour and indirect production
costs, based on a normal operating activity. Indirect production costs comprise indirect materials and labour as well as
maintenance of and depreciation and impairment of the relating to machines, factory buildings and equipment used in the
manufacturing process as well as costs of factory management and administration. Financing costs are not included in cost.
Provision related to obsolescence is calculated based on 12-months sales forecast and is adjusted when sales forecast and stock
volumes changes.
27
Receivables
Receivables comprises of trade receivables, receivables from group companies, and other receivables. Receivables are
recognized initially at fair value and subsequently measured at amortized cost less impairment losses.
For trade receivables, Borg Group applies the simplified approach related to impairment assessment, which permits the use of
lifetime Expected Credit Loss model (ECL). The ECL model involves a three-stage approach under which financial assets move
through the stages as their credit quality changes. The stages determine how impairment losses are measured and the effective
interest is applied. Provisions are determined based on grouping of trade receivables sharing the same credit risk characteristics
and days past due.
Regarding group intercompany loans, impairment losses will be recognized based on 12-month or lifetime ECL depending on
whether a significant increase in credit risk has arisen since initial recognition.
Corporate income tax
Current tax consists of tax payable or receivable including joint taxation contribution and is recognised in the balance sheet as
calculated tax on the taxable income for the year, adjusted for tax on prior years’ taxable income and for tax paid under the on-
account scheme. Receivables and payables regarding the joint taxation is presented separately in the balance sheet.
Borg Automotive A/S is taxed jointly with its parent company and other Danish subsidiaries. The current Danish income tax liability
is allocated among the companies of the tax pool in proportion to their taxable income. Companies that utilize tax losses from
other companies pay a joint contribution to the parent company at an amount corresponding to the tax value of the tax losses
utilized. Companies whose tax losses are utilized by other companies receive joint tax contribution from the parent company
corresponding to the tax value of the utilised losses (full absorption). The jointly taxed companies pay tax under the Danish on-
account tax scheme.
Prepayments
Prepayments include expenses paid in respect of subsequent financial years and are measured at cost.
Cash
Cash comprises cash in hand and short-term bank deposits.
SHAREHOLDERS EQUITY
Dividend
Dividend is recognised as a liability at the time of adoption by the shareholders at the annual general meeting (the date of
declaration). Dividends expected to be declared in respect of the year are stated as a separate line item under equity.
Hedge transaction reserve
The hedge transaction reserve contains the accumulated net change in the fair value of hedging transactions that meet the criteria
for hedging future cash flows and for which the hedged transaction has yet to be realised.
The hedge transaction reserve is dissolved, when the hedged transaction is realised, if the hedged cash flow are no longer
expected realised, or if the hedge is no longer effective.
Reserve for development projects (Parent company)
The reserve for development costs comprise recognized development costs reduced by amortizations and taxes. The reserve
cannot be used to distribute dividend or cover losses. The reserve will be reduced or dissolved if the recognised development
costs are no longer part of the Company´s operations by a transfer directly to the distributable reserves under equity.
Exchange adjustment reserve
The exchange adjustment reserve comprises exchange differences arising on the translation of the financial statements of foreign
enterprises from their functional currencies into Danish kroner including exchange differences on financial instruments
considered to be a part of the net investment or as hedging of the net investment. On realisation, accumulated value adjustments
are taken from equity to financial income and expenses in the income statement.
The exchange adjustment reserve is dissolved upon disposal of the subsidiary, or if the conditions for efficient hedging is no longer
present.
Net revaluation reserve (Parent company)
Net revaluation of investments in subsidiaries are recognised at cost in the reserve for net revaluation according to the equity
method. The reserve cannot be recognised at a negative amount. The reserve is dissolved upon disposal of the subsidiary.
28
Provisions
Provisions relates to warranty commitments which recognized when, as a consequence of an event occurring before or at the
balance sheet date, the Group has a legal or constructive obligation, the settlement of which is likely to result in an outflow from
the Group of economic benefit.
Financial liabilities
Debt to credit institutions is recognised at the raising of a loan at fair value less transaction costs. In subsequent periods, financial
liabilities are measured at amortised cost, applying the “effective interest rate method”, to the s effect that the difference between
the proceeds and the nominal value is recognised in the income statement under financial expenses over the term of the loan. In
addition, the capitalised lease liability is recognised under financial liabilities.
Other liabilities
Other liabilities including core liability (customer rebates) are measured at amortised cost, which normally will be equal to nominal
value.
Earn-out
The earn-out liability is measured at fair value. The liability is determined by discounting the expected payments, taking into
account the probability of the balance of the purchase price to be paid. The pre-tax discount rate used reflects the general level
of interest rates and the specific risk related to the earn-out. The differences for the financial year In the discount elements are
recognized in financial expenses. Changes in the fair value of the earn out which may not be attributed to the discount element
of the earn out is recognised in profit or loss.
Deferred tax
Deferred tax is measured using the balance sheet liability method on temporary differences between the carrying amount and
the tax base of assets and liabilities. However, no deferred tax is recognised on timing differences on non-deductible items for
which timing differences have arisen at the acquisition date without affecting the financial results or taxable income.
Deferred tax is measured based on the tax rules and rates in the respective countries that will apply under the legislation in force
on the balance sheet date when the deferred tax asset is expected to crystallise as current tax. Changes in deferred tax resulting
from changes in tax rates are recognised in the income statement.
Deferred tax assets, including the tax base of tax loss carry-forwards, are recognised under other noncurrent assets at the
expected value of their utilisation, either as a set-off against tax on future income or as a set-off against deferred tax liabilities
within the same legal tax entity and jurisdiction. Deferred tax adjustments are made regarding eliminations of unrealised
intercompany gains and losses.
Deferred tax assets are reviewed annually and recognised only to the extent that it is probable that they will be utilized within the
period of five years.
Fair value measurement
Fair value measurements are based on the principal market. If no principal market exists, the measurement is based on the
most advantageous market, i.e. the market that maximizes the price of the asset or liability less transaction and/or
transportation costs.
All assets and liabilities which are measured at fair value, or whose fair value is disclosed, are classified based on the fair value
hierarchy, see below:
Level 1: Value in an active market for similar assets/liabilities
Level 2: Value based on recognized valuation methods based on observable market information
Level 3: Value based on recognised valuation methods and reasonable estimates (non-observable market information).
Cash flow statement
The cash flow statement shows cash flows for the year distributed on operating, investing and financing activities, net changes
for the year in cash as well as cash and cash equivalents at the beginning and end of the year.
Cash flows from operating activities are calculated according to the indirect method as the profit for the year before tax adju
sted
for non-cash operating items, changes in working capital and income taxes paid.
Cash flows from investing activities comprise payments in connection with acquisition and divestment of companies and
operation and the acquisition and disposal of intangible assets, property, plant and equipment.
Cash flows from financing activities comprise payments to and from shareholders and related expenses as well as the raising of
loans, re-payments of interest-bearing debt and repayment of lease liabilities.
29
2. SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS
The preparation of the Group’s consolidated financial statements requires Management to make judgements, estimates and
assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures,
and the disclosure of contingent liabilities. Uncertainty about these assumptions and estimates could result in outcomes that
require a material adjustment to the carrying amount of assets or liabilities affected in future periods. Management continuously
reassesses these estimates and judgements based on several factors in the given circumstances. The following accounting
estimates are considered significant for the financial reporting:
Revenue
Offset in revenue are amounts related to the value of cores when these are later returned to BORG Group from the external
customers, as well as an estimate related to the share of outstanding repayment obligations which are not expected to become
an obligation based on the historical rate of return rates from the external customers.
Reference is made to further details of the repayment obligation and value of cores in note 24.
Acquisitions
Acquisitions are accounted for using the purchase method, according to which the acquired enterprise’s identifiable assets,
liabilities and contingent liabilities are recognised in the balance sheet at fair value. The principal assets are generally goodwill,
property, plant and equipment, intangible assets and inventories and any tax thereon. As there is generally no efficient market for
the individual assets, the valuation of the respective assets are generally based on significant accounting estimates. See the note
17, “Acquisitions”.
Inventories
The uncertainty related to inventories of cores cover both the assessment of core market prices and the valuation related to cores
considered to be obsolete or lack of marketability.
Cores repurchased from customers for remanufacturing are valued based on the historical external purchase prices at the
production facilities. The uncertainty related to the core market price is the fact that the historical prices, though being the best
indicator available, are not necessarily equal to the price development in the market.
Goods considered to be obsolete or to have impaired marketability are written down to net realisable value. The assumption
applied regards to the valuation of cores on inventory relates to the principle applied that cores on stock for more than 1 years
expected sales are considered obsolete and thus written down to the scrap price.
Core liability
The core liability is composed of the core charge (deposit) paid be the customer upon purchase of a unit which is returned to
the customer conditional on and at the same rate as return of the used units (cores). The core charge is offset by the expected
value of the returned cores and the expected core return rate, which constitutes the elements of the core liability. The
uncertainty related to the core liability therefore covers both the estimation of the expected core return rate of cores as well as
the value of the outstanding cores.
Reference is made to further details of the repayment obligation and value of cores in note 24.
Deferred tax assets
Deferred tax assets are recognised for unused tax losses to the extent that it is probable that taxable profit will be available against
which the losses can be utilised. Significant management judgement is required to determine the amount of deferred tax assets
that can be recognised, based upon the likely timing and the level of future taxable profits, together with future tax planning
strategies.
A part of the deferred tax assets are tax losses carried forward, which relate to the subsidiary in UK. The tax loss carried forward
do not expire and they may not be used to offset taxable income elsewhere in the Group. The tax value of tax losses carried
forward has been recognised, as it has been considered sufficiently probably that the losses will be utilised within five years.
Further details on taxes are disclosed in Note 18.
3
REVENUE
2021 2020 2021 2020
Denmark
82.978 62.614 67.329 62.614
Europe, other than Denmark
1.285.380 807.954 903.467 690.736
Total revenue
1.368.358 870.568 970.796 753.350
Vital
634.604 392.180 333.159 295.374
Less vital
32.623 17.212 17.824 16.197
Non vital
701.131 461.176 619.813 441.779
Total revenue
1.368.358 870.568 970.796 753.350
4
COST OF SALES
2021 2020 2021 2020
Cost of goods sold
692.054 436.972 531.163 406.568
Inventory impairments
28.937 34.360 1.584 393
Reversed inventory impairments
-32.446 -18.137 -240 -398
5
STAFF COST
2021 2020 2021 2020
Wages and salaries
271.656 165.554 46.590 39.769
Defined contribution pension plans
5.939 4.770 4.538 4.023
Other social security costs
40.570 23.324 816 675
Share-based payment
2.485 1.305 2.297 1.305
Total staff costs
320.650 194.953 54.241 45.772
Staff costs are recognised as follows:
Cost of sales
211.952 140.460 8.778 10.330
Distribution
80.436 37.544 26.167 21.273
Administration
28.452 16.454 19.296 13.674
Development projects
0 495 0 495
Staff costs recognised in the income statement
320.840 194.953 54.241 45.772
Average number of employees
Salary compensation deducted in staff costs:
Cost of sales 0 7.431 0 0
Distribution 0 588 0 0
Administration 0 1.951 0 1.735
Received salary compensation from government
0 9.970 0 1.735
Remuneration to the Board of Directors, Executive Management and Key Management
2021 2020 2021 2020
Board of Directors and Executive Management
5.266 4.028 5.266 3.979
With reference to the Danish Financial Statements Act Paragraph 98b, section 3 remuneration to the Key Management have not been
disclosed separately for the Parent company to ensure that remuneration for one single member is not disclosed.
Vital products relates to the control, steering or stopping of the vehicle when driving, less vital products are linked to the performance
of the car, while non vital products have no influence on the vehicle capabilities to steer nor break, but wether the engine can start.
CONSOLIDATED PARENT COMPANY
CONSOLIDATED PARENT COMPANY
30
5 STAFF COST (Continued)
Remuneration to Key Management Personnel (Group Directors) 2021 2020
Salaries
10.659 10.234
Pensions
711 743
Short term-incentive plans
2.485 1.305
Total Remuneration
13.855 12.282
Headcount of Group Directors at year-end
55
Share-based payment: Share option programme
Outstanding share options
Executive
Management Others Total
Granted in 2018 10.000 18.000 28.000
Lapsed (from 2018 grant) 0 -2.167 -2.167
Granted in 2019 10.000 18.000 28.000
Lapsed (from 2019 grant) 0 -4.167 -4.167
Total outstanding options at 31 December 2019
20.000 29.666 49.666
Granted in 2020 12.000 16.000 28.000
Lapsed (from 2018 grant) 0 -3.833 -3.833
Lapsed (from 2019 grant) 0 -1.833 -1.833
Total outstanding options at 31 December 2020
32.000 40.000 72.000
Granted in 2021 20.000 26.000 46.000
Total outstanding options at 31 December 2021
52.000 66.000 118.000
The assumptions for determining the fair value of unexercised share options at the date of allocation as follows:
On the date of allocation:
2021 grant 2020 grant
2019 grant
2018 grant
Expected volatility 31,58% 22,21% 29,23% 21,10%
Expected option life 49 mth. 48 mth. 48 mth. 48 mth.
Expected dividend per share 14 DKK 13 DKK 13 DKK 12 DKK
Risk free interest rate -0,54% -0,97% -0,52% -0,38%
Other information on option programme:
Exercise price in DKK (1) 678,19 528,40 574,35 705,58
Fair value in DKK per option (2) 125,37 44,10 71,47 58,51
Total fair value in '000 (2) 5.767 4.094 3.215 1.511
Can be exercised from March 2024 March 2023 March 2022 March 2021
Can be exercised until March 2025 March 2024 March 2023
March 2022
Remuneration to Key Management Personnel as in accordance with IAS 1, comprise the Group Directors and covers Executive
Management and Key Management.
CONSOLIDATED
The expected volatility is calculated as 12 months' historical volatility based on average share prices. If the option holders have not
exercised their options at the end of the specified period, the options will lapse without any compensation to the holders. Exercise of
the share options is contingent to the holder being in continuing employment during the above-mentioned periods. If the share option
holder resigns before the vesting date, the holder may in some cases have a right to exercise the share option early during a four-week
period following the next interim report from Schouw & Co. In the event of early exercise, the number of options will be reduced
proportionally.
(2) At the date of allocation
(1) On exercise after 4 years (at the latest possible moments)
Management and Senior Managers in the Group are covered by the parent company Schouw & Co.´s share option programme. The
programme entitles participants to acquire shares in Aktieselskabet Schouw & Co. at a price based on the market price at the allocation
date (2021: DKK 666,40) plus a calculated rate (2021: 2%) from the allocation date to the date of exercise. The exercise price is
adjusted less ordinary dividends, which, however, cannot exceed the accrued premium. The costs related to the programme are
calculated according to “Black & Scholes” and are expensed as staff costs linearly over the period of the option and settled to the
parent company.
31
6 FEES TO AUDITORS APPOINTED BY THE GENERAL MEETING 2021 2020
Audit fees
1.646 714
Fees for tax- and VAT-related services
68 24
Fees for other services
200 1.141
Total fees
1.914 1.879
Total fees to other accountants
Audit fees
216 227
Fee for other assurance engagements
015
Fees for other services
023
Total fees
216 265
Total fees
2.130 2.144
7
RESEARCH AND DEVELOPMENT COSTS
2021 2020 2021 2020
Research & Development costs expensed and development costs
incurred are shown below:
Research and development costs incurred
8.936 7.760 9.686 8.381
Goverment grant received
0 -1.150 0 -1.150
Amortisation and impairment of recognised development costs
6.163 6.172 6.163 6.172
Research and development costs expensed and recognised in
the income statements
15.099 12.782 15.849 13.403
8 DEPRECIATION, AMORTISATION AND IMPAIRMENT LOSSES 2021 2020 2021 2020
Amortisation of intangible assets
20.404 8.716 13.550 8.213
Depreciation of property plant and equipment
11.299 7.528 548 577
Depreciation of lease assets
14.827 9.542 1.166 1.015
Impairment of property plant and equipment
-46 48 0 0
Total depreciation, amortisation and impairment losses
46.484 25.834 15.264 9.805
Depreciation/amortisation and impairment is recognised in the
income statement as follows:
Cost of sales
22.488 18.920 6.422 6.429
Distribution
18.568 3.752 5.182 512
Administration
5.428 3.162 3.660 2.864
Total depreciation, amortisation and impairment losses
46.484 25.834 15.264 9.805
CONSOLIDATED
With reference to the Danish Financial Statements Act Paragraph 96, section 3 Fees to auditors appointed by the General Meeting
have only been provided for the Group.
CONSOLIDATED PARENT COMPANY
CONSOLIDATED PARENT COMPANY
32
9 OTHER OPERATING INCOME AND EXPENSES 2021 2020 2021 2020
Gains on the disposal of property, plant and equipment and
intangible assets
225 177 34 0
Charged to Group companies (i.e. management services)
0 0 21.001 15.442
Other operating income
1.356 711 330 286
Total other operating income
1.581 888 21.365 15.728
Losses on the disposal of property, plant and equipment and
intangible assets
158 91 0 74
Other operating expenses
171 298 0 0
Total other operating expenses
329 389 0 74
10
FINANCIAL INCOME
2021 2020 2021 2020
Interest
112 8 0 0
Interests from group loans and cash pool
1 4 4.020 2.277
Interest income on financial assets measured at amortised cost
113 12 4.020 2.277
Exchange rate adjustments
1.841 3.923 1.131 39
Total financial income
1.954 3.935 5.151 2.316
11
FINANCIAL EXPENSES
2021 2020 2021 2020
Interest expense
10.053 264 9.570 86
Interests from leasing
886 805 20 14
Interests from group loans and cash pool
1.275 556 2.175 2.661
Interest expenses from financial liabilities measured at amortised
cost
12.214 1.625 11.765 2.761
Exchange rate adjustments
6.967 5.692 1.084 4.696
Total financial expenses
19.181 7.317 12.849 7.457
CONSOLIDATED PARENT COMPANY
33
12 TAX ON PROFIT FOR THE YEAR
2021 2020 2021 2020
Tax for the year is composed as follows:
Tax on profit for the year
24.413 17.738 16.251 11.283
Tax on other comprehensive income
56 -720 -93 -720
Total tax
24.469 17.018 16.158 10.563
Tax on the profit for the year has been calculated as follows:
Current tax
46.727 9.944 29.398 4.390
Deferred tax
-22.362 7.684 -13.697 6.787
Adjustment of prior-year tax charge
48 110 550 106
Total tax recognised in the income statement
24.413 17.738 16.251 11.283
Effective tax rate:
Calculated 22.0% tax of the profit for the year
21.651 17.379 19.855 15.959
Adjustment of tax related to subsidiaries and PEs
-2.026 -452 -5.529 -5.758
Non-deductible costs and non-taxable income
5.073 2.240 1.375 1.083
Adjustment of prior-year tax charge
49 110 550 106
Adjustment of deferred tax asset regarding previous years
-334 -1.539 0 -107
Recognised tax income
24.413 17.738 16.251 11.283
Effective tax rate
24,8% 22,5% 18,0% 15,6%
Tax recognised in other comprehensive income:
2021
Before tax Tax After tax
Exchange rate adjustment of foreign subsidiaries 1.681 0 1.681
Value adjustment of hedging instruments for the year -3.334 734 -2.600
Hedging instruments transferred to cost of sales 3.079 -678 2.401
Tax on items recognised in other comprehensive income 1.426 56 1.482
2020
Before tax Tax After tax
Exchange rate adjustment of foreign subsidiaries -17.954 0 -17.954
Value adjustment of hedging instruments for the year -3.252 715 -2.537
Hedging instruments transferred to cost of sales -23 5 -18
Tax on items recognised in other comprehensive income -21.229 720 -20.509
2021
Before tax Tax After tax
Exchange rate adjustment of foreign subsidiaries 1.681 0 1.681
Value adjustment of hedging instruments for the year -2.659 585 -2.074
Hedging instruments transferred to cost of sales 3.079 -678 2.401
Other comprehensive income from subsidiaries -675 149 -526
Tax on items recognised in other comprehensive income 1.426 56 1.482
2020
Before tax Tax After tax
Exchange rate adjustment of foreign subsidiaries -17.954 0 -17.954
Value adjustment of hedging instruments for the year -3.252 715 -2.537
Hedging instruments transferred to cost of sales -23 5 -18
Tax on items recognised in other comprehensive income -21.229 720 -20.509
CONSOLIDATED PARENT COMPANY
CONSOLIDATED
PARENT COMPANY
34
13
INTANGIBLE ASSETS
2021
Completed
development
projects
Development
projects in
progress
Customer
relations Brands
Know-
how
IT
projects
Other
intangible
assets Total
Cost at 1 January
18.490 1.242 22.167 0 27.189 19.739 1.398 90.225
Foreign exchange adjustment
0 0 -3 0 0 -9 -1 -13
Additions
0 719 0 0 0 4.184 21 4.924
Additions on company acqusitions
0 0 0 35.500 0 166 0 35.666
Disposals
000000-85-85
Transferred/reclassified
0 -1.122 0 0 0 1.122 154 154
Cost at 31 December
18.490 839 22.164 35.500 27.189 25.202 1.487 130.871
Amortisation and impairment at 1
January
12.027 0 0 0 0 11.761 1.287 25.075
Foreign exchange adjustment
0 0 0 0 0-7 -1-8
Amortisation
6.169 0 2.217 5.917 2.719 3.310 72 20.404
Amortisation and impairment of
disposed assets
000000-14-14
Transferred/reclassified
-14 0 0 0 0 0 14 0
Amortisation and impairment at 31
December
18.182 0 2.217 5.917 2.719 15.064 1.358 45.457
Carrying amount at 31 December
308 839 19.947 29.583 24.470 10.138 129 85.414
Amortized over (years)
3 0 10-15 3-20 10-15 3-5 1-3
Legal obligation at 31 December for
the purchase of intangible assets
0 0 0 0 0 1.594 0 1.594
2020
Completed
development
projects
Development
projects in
progress
Customer
relations Brands
Know-
how
IT
projects
Other
intangible
assets Total
Cost at 1 January
18.490 5.194 0 0 0 12.725 1.318 37.727
Foreign exchange adjustment
0 0 0 0 0 -55 -5 -60
Additions
0 1.643 0 0 0 593 0 2.236
Additions on company acqusitions
0 0 22.167 0 27.189 0 0 49.356
Disposals
0 -75 0 0 0 0 0 -75
Transferred/reclassified
0 -5.520 0 0 0 6.476 85 1.041
Cost at 31 December
18.490 1.242 22.167 0 27.189 19.739 1.398 90.225
Amortisation and impairment at 1
January
5.855 0 0 0 0 9.484 1.060 16.399
Foreign exchange adjustment
0 0 0 0 0 -38 -2 -40
Amortisation
6.172 0 0 0 0 2.315 229 8.716
Amortisation and impairment at 31
December
12.027 0 0 0 0 11.761 1.287 25.075
Carrying amount at 31 December
6.463 1.242 22.167 0 27.189 7.978 111 65.150
Amortized over (years)
3 10-15 10 3-5 3-5
CONSOLIDATED
Management have not identified issues, which indicate need for impairment regarding intangible assets.
35
13 INTANGIBLE ASSETS
(Continued)
2021
Completed
development
projects
Development
projects in
progress
Customer
relations Brands
Know-
how
IT
projects
Other
intangible
assets Total
Cost at 1 January
18.490 1.241 18.461 0 27.189 17.795 1.323 84.499
Additions
0 719 0 0 0 299 0 1.018
Disposals
000000-85-85
Transferred/reclassified
0 -1.122 0 0 0 1.122 0 0
Cost at 31 December
18.490 838 18.461 0 27.189 19.216 1.238 85.432
Amortisation and impairment at 1
January
12.027 0 0 0 0 10.845 1.238 24.110
Amortisation
6.169 0 1.846 0 2.719 2.816 0 13.550
Amortisation and impairment of
disposed assets
000000-14-14
Amortisation and impairment at 31
December
18.196 0 1.846 0 2.719 13.661 1.224 37.646
Carrying amount at 31 December
294 838 16.615 0 24.470 5.555 14 47.786
Amortized over (years)
3 10-15 10-15 3-5 3
2020
Completed
development
projects
Development
projects in
progress
Customer
relations Brands
Know-
how
IT
projects
Other
intangible
assets Total
Cost at 1 January
18.490 5.194 0 0 0 11.855 1.238 36.777
Additions
0 1.643 18.461 0 27.189 505 0 47.798
Disposals
0 -76 0 0 0 0 0 -76
Transferred/reclassified
0 -5.520 0 0 0 5.435 85 0
Cost at 31 December
18.490 1.241 18.461 0 27.189 17.795 1.323 84.499
Amortisation and impairment at 1
January
5.855 0 0 0 0 9.008 1.034 15.897
Amortisation
6.172 0 0 0 0 1.837 204 8.213
Amortisation and impairment at 31
December
12.027 0 0 0 0 10.845 1.238 24.110
Carrying amount at 31 December
6.463 1.241 18.461 0 27.189 6.950 85 60.389
Amortized over (years) 3
10-15 10-15
3-5 3-5
PARENT COMPANY
Management have not identified issues, which indicate need for impairment regarding intangible assets.
36
14 PROPERTY, PLANT AND EQUIPMENT
2021
Land and
buildings
Plant and
machinery
Other fixtures,
tools and
equipment
Assets under
construction Total
Cost at 1 January
68.323 30.426 14.210 4.174 117.133
Foreign exchange adjustment
-716 73 -148 -42 -833
Additions
456 2.801 2.833 18.619 24.709
Additions on company acqusitions
29.785 2.347 2.606 0 34.738
Disposals
-13.656 -243 -340 -83 -14.322
Transferred/reclassified
0 52 0 -206 -154
Cost at 31 December
84.192 35.456 19.161 22.462 161.271
Depreciation and impairment at 1 January
6.338 7.750 6.203 45 20.336
Foreign exchange adjustment
-47 11 -60 0 -96
Impairment
00 0-46-46
Depreciation
3.005 4.414 3.880 0 11.299
Depreciation and impairment of disposed assets
-2.166 -107 -256 0 -2.529
Transferred/reclassified
00 011
Depreciation and impairment at 31 December
7.130 12.068 9.767 0 28.965
Carrying amount at 31 December
77.062 23.388 9.394 22.462 132.306
Depreciated over (years)
5-40 5-18 3-18
Legal obligation at 31 December for the purchase of
property, plant and equipment
0 60 878 938
2020
Land and
buildings
Plant and
machinery
Other fixtures,
tools and
equipment
Assets under
construction Total
Cost at 1 January
69.439 22.894 11.048 7.723 111.104
Foreign exchange adjustment
-3.538 -1.458 -696 -479 -6.171
Additions
527 1.225 1.418 6.697 9.867
Additions on company acqusitions
1.618 1.327 994 0 3.939
Disposals
0 -148 -417 0 -565
Transferred to leased assets/reclassified
277 6.586 1.863 -9.767 -1.041
Cost at 31 December
68.323 30.426 14.210 4.174 117.133
Depreciation and impairment at 1 January
4.478 4.986 4.472 -2 13.934
Foreign exchange adjustment
-240 -393 -322 -1 -956
Impairment
00 04848
Depreciation
2.100 3.263 2.165 0 7.528
Depreciation and impairment of disposed assets
0 -106 -112 0 -218
Depreciation and impairment at 31 December
6.338 7.750 6.203 45 20.336
Carrying amount at 31 December
61.985 22.676 8.007 4.129 96.797
Depreciated over (years)
5-40 5-10 3-10
Legal obligation at 31 December for the purchase of
property, plant and equipment
707 1.588 1.360 3.655
CONSOLIDATED
No changes have been made in accounting estimates regarding property, plant and equipment.
No interests has been recognised during the period.
Management have not identified issues, which indicate need for impairment regarding property, plant and equipment.
37
14 PROPERTY, PLANT AND EQUIPMENT
(Continued)
2021
Land and
buildings
Plant and
machinery
Other fixtures,
tools and
equipment
Assets under
construction Total
Cost at 1 January
13.656 67 365 0 14.088
Additions
0 0 41 1.263 1.304
Disposals
-13.656 -28 -297 0 -13.981
Cost at 31 December
0 39 109 1.263 1.411
Depreciation and impairment at 1 January
1.655 58 263 0 1.976
Depreciation
511 6 32 0 549
Disposals
-2.166 -25 -217 0 -2.408
Depreciation and impairment at 31 December
0 39 78 0 117
Carrying amount at 31 December
0 0 31 1.263 1.294
Depreciated over (years)
5-30 5 3-10
2020
Land and
buildings
Plant and
machinery
Other fixtures,
tools and
equipment
Assets under
construction Total
Cost at 1 January
13.481 60 365 0 13.906
Additions
175 0 0 0 175
Transfer
07 007
Cost at 31 December
13.656 67 365 0 14.088
Depreciation and impairment at 1 January
1.156 40 196 0 1.392
Depreciation
499 11 67 0 577
Transfer
07 007
Depreciation and impairment at 31 December
1.655 58 263 0 1.976
Carrying amount at 31 December
12.001 9 102 0 12.112
Depreciated over (years)
5-30 5 3-10
PARENT COMPANY
No significant changes have been made in accounting estimates regarding property, plant and equipment.
Management have not identified issues, which indicate need for impairment regarding property, plant and equipment.
No interests has been recognised during the period.
38
15 LEASE ASSETS
2021
Buildings
Production
equipment Cars Other assets Total
Cost at 1 January
34.634 4.366 5.604 240 44.844
Foreign exchange adjustment
774 14 -30 0 758
Additions
16.452 1.887 2.611 64 21.014
Additions on company acqusitions
8.343 1.095 1.943 630 12.011
Disposals
-363 -1.203 -1.817 -240 -3.623
Cost at 31 December
59.840 6.159 8.311 694 75.004
Amortisation and impairment at 1 January
10.810 2.332 2.828 198 16.168
Foreign exchange adjustment
380 -17 -16 -3 344
Impairment
0 1.629 0 0 1.629
Amortisation
8.935 1.621 2.602 40 13.198
Amortisation and impairment of disposed assets
-146 -1.203 -1.662 -233 -3.244
Amortisation and impairment at 31 December
19.979 4.362 3.752 2 28.095
Carrying amount at 31 December
39.861 1.797 4.559 692 46.909
Depreciated over (years)
2-7 3 3 3-5
2020
Buildings
Production
equipment Cars Other assets Total
Cost at 1 January
29.140 5.230 5.472 351 40.193
Foreign exchange adjustment
-1.714 -326 -120 -2 -2.162
Additions
2.030 376 1.526 0 3.932
Additions on company acqusitions
6.427 0 0 0 6.427
Disposals
-1.249 -914 -1.274 -109 -3.546
Cost at 31 December
34.634 4.366 5.604 240 44.844
Amortisation and impairment at 1 January
6.578 1.785 1.882 117 10.362
Foreign exchange adjustment
-448 -125 -46 0 -619
Amortisation
5.846 1.604 2.011 81 9.542
Amortisation and impairment of disposed assets
-1.166 -932 -1.019 0 -3.117
Amortisation and impairment at 31 December
10.810 2.332 2.828 198 16.168
Carrying amount at 31 December
23.824 2.034 2.776 42 28.676
CONSOLIDATED
39
15
LEASE ASSETS (Continued)
2021
Buildings
Production
equipment Cars Other assets Total
Cost at 1 January
0 0 2.672 0 2.672
Additions
2.864 0 1.997 0 4.861
Disposals
0 0 -1.108 0 -1.108
Cost at 31 December
2.864 0 3.561 0 6.425
Amortisation and impairment at 1 January
0 0 1.366 0 1.366
Amortisation
0 0 1.166 0 1.166
Amortisation and impairment of disposed assets
0 0 -953 0 -953
Amortisation and impairment at 31 December
0 0 1.579 0 1.579
Carrying amount at 31 December
2.864 0 1.982 0 4.846
Depreciated over (years)
23
2020
Buildings
Production
equipment Cars Other assets Total
Cost at 1 January
0 0 2.496 0 2.496
Additions
0 0 815 0 815
Disposals
0 0 -639 0 -639
Adjusted cost at 1 January
0 0 2.672 0 2.672
Amortisation and impairment at 1 January
0 0 896 0 896
Amortisation
0 0 1.015 0 1.015
Amortisation and impairment of disposed assets
0 0 -545 0 -545
Amortisation and impairment at 31 December
0 0 1.366 0 1.366
Carrying amount at 31 December
0 0 1.306 0 1.306
LEASE LIABILITIES
Lease liabilities expiring within the following
periods from the balance sheet date:
2021 2020 2021 2020
Within 1 year 18.391 9.356 1.966 618
Between 1 and 5 years 42.707 19.548 2.527 467
After 5 years 6.136 0 0 0
Total lease liability, non-discounted 67.234 28.904 4.493 1.085
Lease liabilities are recognised in the balance sheet as follows:
Non-current liabilities 48.843 19.548 2.527 467
Current liabilities 18.391 9.356 1.966 618
Total lease liabilities 67.234 28.904 4.493 1.085
Repayment of lease debt 14.589 9.292 1.327 1.071
Recognised interests on lease contracts 886 805 20 14
Lease payments in the year 15.475 10.097 1.347 1.085
PARENT COMPANY
CONSOLIDATED PARENT COMPANY
40
15
LEASE ASSETS (Continued)
Lease agreements not recognised in the balance sheet
Service*
Small
value
assets
Short term
leases Total Service*
Small
value
assets
Short
term
leases Total
Due for payment within 1 year 321 117 1.286 1.724 185 87 45 317
Due for payment within >1-5 years 133 1.199 0 1.332 18 69 0 87
Due for payment after 5 years 0 0 0 0 0 0 0 0
Total commitments 454 1.316 1.286 3.056 203 156 45 404
Recognised in the income statement
462 72 710 1.244 419 58 11 488
Service*
Small
value
assets
Short term
leases Total Service*
Small
value
assets
Short
term
leases Total
Due for payment within 1 year 185 11 0 196 184 11 0 195
Due for payment within >1-5 years 10 14 0 24 18 25 0 43
Due for payment after 5 years 0 0 0 0 0 0 0 0
Total commitments 195 25 0 220 202 36 0 238
Recognised in the income statement
318 11 0 329 418 11 0 429
Other leasing information
0-1 years 1-5 years > 5 years
Total
cash flow
Sublease 1.648 7.183 2.958 11.789
Sale-and lease back 1.137 1.727 0 2.864
Total cash-flow impact 2.785 8.910 2.958 14.653
The Group have subleased a part of a Right-of-use assets to an external party. The expected income related to the sublease amounts to
a total of TDKK 12.588, of which TDKK 799 have impacted cash flow in 2021.
Further the Group and parent company have, related to the property sold in Denmark in 2021, entered into a sale-and leaseback
agreement with the external buyer. The gain related to the sales of the property are included in the cash flow with positive MDKK 0,5 in
2021.
The sublease and sale-and lease back arrangement will impact the cash-flows as listed below:
*) Comment: The service (variable) element of lease contracts is the part of the lease commitment that are not included in the lease
obligation in the balance sheet.
CONSOLIDATED
PARENT COMPANY
2021 2020
41
16 INVESTMENTS IN SUBSIDIARIES
2021 2020
Cost at 1 January
114.063 114.041
Additions
154.378 22
Cost at 31 December
268.441 114.063
Adjustments at 1 January
223.588 215.385
Foreign exchange adjustments
-1.681 -17.954
Share of profit/(loss) after tax for the year
25.123 26.157
Other value adjustments
526 0
Dividends paid
-44.610 0
Adjustments at 31 December
202.946 223.588
Carrying amount at 31 December
471.387 337.651
Name Registered Office
Ownership
interest
2021
Ownership
interest
2020
Borg Automotive Sp. z.o.o. 100% 100%
Borg Automotive UK Ltd. 100% 100%
Electro Steer UK Ltd. 100% 100%
Car Parts Industries Belgium SPRL 100% 100%
Borg Automotive Spain S.L.U
Spain, Palermo
100% 100%
SBS Automotive A/S 100% 0%
SBS Deutschland GmbH Germany, Eisenach 100% 0%
SBS France SAS France, Beauvais 100% 0%
All subsidiaries are Limited Liability Companies.
Poland, Zdunska Wola
UK, Birmingham
Belgium, Nivelles
Denmark, Støvring
UK, Birmingham
42
17 ACQUISITION OF BUSINESS
The assets and liabilitites recognised as a result of the acqusition are as follows: 2021 2020
Customer relations 0 22.167
Know-how 0 27.189
Brands 35.500 0
Other intangible assets 166 0
Property, plant and equipmet 34.738 3.939
Lease assets 12.011 6.427
Financial asset 855 0
Inventories 160.025 23.809
Receivables 120.434 15.708
Tax asset 16.842 0
Cash 1.775 0
Interest-bearing debt -52.052 0
Provisions 0 -2.346
Lease liabilitites -31.403 -6.427
Trade payables -101.684 -6.841
Other liabilities -39.430 -7.512
Tax payable -3.399 0
Net assets acquired
154.378 76.113
Goodwill 00
Acquisition cost
154.378 76.113
Deferred conditional purchase price -154.378 -15.626
Total cash acquisition costs
0 60.487
Since the purchase price does not fall due until beginning of 2023, interest are added to the purchase price liability until this point in
time. Interests added in 2021 amounts to MDKK 9,5, and the liability at year-end as accounted for in other debt amount to MDKK 164,
reference to note 24.
Effective 1 July 2021, BORG Automotive Group acquired 100% of the issued share capital of SBS Automotive A/S, including the
subsidiaries SBS Deutschland GmbH and SBS France SAS (SBS Automotive Group). SBS Automotive Group is a trading business,
engaged in the purchase, sales and dsitribution of externally purchased automotive parts and will supplement the existing
remanufacturing business within the BORG Automotive Group. SBS Group have distribution centres in Denmark, Germany, France and
Poland and a workforce of approx. 135 employees. The SBS Group primarily markets products under the recognised brand of NK, but
also under the brand EuroBrake and private label. NK is used for all product groups and is widely distributed in established markets as
a strong alternative to premium brands.
The purchase price is based on an earn-out determined as 5 times the SBS Groups reported operating profit before depreciation and
amortisation (EBITDA) in 2022 adjusted for interest-bearing debt and with usual adjustments for net working capital. The fair value of
the earn-out has been determined based on different estimated levels of EBITDA and using different probability weighted outcomes.
Based on this the fair value has been estimated to MDKK 154. There is no maximum on the earn-out as it is based on EBITDA.
In 2021, the acquisition has affected group revenue with MDKK 243 and profit for the year with negative TDKK 7.513 since the
effective date. Full-year revenue and results if the acquisition had taken place on January 1st would have been MDKK 505 and positive
TDKK 1.552. The low profitability of the SBS Group is caused by purchase-price adjustments related to future profit on stock upon
acqusition. It is expected that SBS Group will be considerably more profitable in 2022.
Transaction costs incurred in connection with the acquisition amount to MDKK 7,1, of which MDKK 3,6 has been recognised as
administrative expenses in 2021, while MDKK 3,5 was recognised in 2020.
43
17 ACQUISITION OF BUSINESS
Property, plant and equipment as well as lease assets are measured at market-value, and receivables at net-realisable value.
18 DEFERRED TAX
2021 2020 2021 2020
Defered tax at 1 January 48.861 56.634 21.746 27.813
Foreign exchange adjustment
242 -809 0 0
Addition on company acqusition
16.842 0 0 0
Deferred tax for the year recognised in profit for the year
22.363 -7.684 13.697 -6.787
Deferred tax for the year recognised in equity -56 720 93 720
Deferred tax at 31 December, net
88.252 48.861 35.536 21.746
Deferred tax is recognised as follows in the balance sheet:
Deferred tax asset
88.447 48.982 35.536 21.746
Deferred tax liability
-195 -121 0 0
Net deferred tax at 31 December
88.252 48.861 35.536 21.746
Deferred tax pertains to:
Intangible assets
3.686 -9.096 -6.991 -9.096
Property, plant and equipment
2.279 -1.697 88 -1.717
Inventories
8.787 7.119 0 0
Other current assets
1.707 0 0 0
Equity
345 401 494 401
Provisions
1.988 1.629 0 0
Liabilities other than provisions
55.031 45.439 41.945 32.158
Recaptured losses
5.085 283 0 0
Tax losses
9.344 4.783 0 0
Total deferred tax (net liability)
88.252 48.861 35.536 21.746
The value of the identified brands has been calculated based on the Income approach (Multiperiod Excess Earnings Method) taking
into account both a discounting factor and tax.
Liabilities, covering interest-bearing debt, trade payables, lease liabilitites and other liabilities such as customer bonus are measured
at the present value of the liquidity expected to liberate the company from the obligation.
Tax losses carried forward are recognised in the balance sheet only if they are expected to be utilised within a period of 5 (five) years.
This principle entails that an amount of MDKK 14,0 (2020: MDKK 13,3) related to the subsidiary Borg Automotive UK Ltd. have not
been recognised in the balance sheet. The unrecognised tax loss may be carried forward for an unlimited period.
CONSOLIDATED PARENT COMPANY
Inventories are measured at expected sales values under normale business circumstances with the deduction of excpected costs to
prepare the goods for final sale as well as costs related to selling the goods.
In 2020, the Group acquired a business in form of assets from Turbo Motor Inyección, S.L.U. (TMI) and Turbos y componentes
automoción, S.L.U. (TCA) in Spain. The acquisition entailed two conditional payments in 2021 and 2022 respectively, where the first
payment of MDKK 7,8 was paid in 2021. The second payment is expected to be paid in full in 2022.
44
18 DEFERRED TAX
(Continued)
2021
1 Jan.
Foreign
exchange
adjustment
Additions on
acquisition
Recognised in
profit for the
year
Recognised in
equity 31 Dec.
Intangible assets
-9.096 -2 8.355 4.429 0 3.686
Property, plant and equipment
-1.697 0 2.111 1.865 0 2.279
Inventories
7.119 -81 1.007 742 0 8.787
Other current assets
0 0 -220 1.927 0 1.707
Equity, Hedging
401 0 0 0 -56 345
Provisions
1.629 -25 0 384 0 1.988
Liabilities other than provisions
45.440 -10 772 8.829 0 55.031
Recaptured losses
283 -5 0 4.807 0 5.085
Tax losses
4.782 365 4.817 -620 0 9.344
Deferred tax at 31 December, net
48.861 242 16.842 22.363 -56 88.252
2020
1 Jan.
Foreign
exchange
adjustment
Additions on
acquisition
Recognised in
profit for the
year
Recognised in
equity 31 Dec.
Intangible assets
-2.817 0 0 -6.279 0 -9.096
Property, plant and equipment
-1.741 -1 0 45 0 -1.697
Inventories
6.333 -340 0 1.126 0 7.119
Equity, Hedging
-319 0 0 0 720 401
Provisions
1.251 -88 0 466 0 1.629
Liabilities other than provisions
48.479 -56 0 -2.983 0 45.440
Recaptured losses
511 -29 0 -199 0 283
Tax losses
4.937 -295 0 140 0 4.782
Deferred tax at 31 December, net
56.634 -809 0 -7.684 720 48.861
2021
1 Jan.
Foreign
exchange
adjustment
Additions on
acquisition
Recognised in
profit for the
year
Recognised in
equity 31 Dec.
Intangible assets
-9.096 0 0 2.105 0 -6.991
Property, plant and equipment
-1.717 0 0 1.805 0 88
Equity, Hedging
401 0 0 0 93 494
Liabilities other than provisions
32.158 0 0 9.787 0 41.945
Deferred tax at 31 December, net
21.746 0 0 13.697 93 35.536
2020
1 Jan.
Foreign
exchange
adjustment
Additions on
acquisition
Recognised in
profit for the
year
Recognised in
equity 31 Dec.
Intangible assets
-2.816 0 0 -6.280 0 -9.096
Property, plant and equipment
-1.754 0 0 37 0 -1.717
Equity, Hedging
-319 0 0 0 720 401
Liabilities other than provisions
32.702 0 0 -544 0 32.158
Deferred tax at 31 December, net
27.813 0 0 -6.787 720 21.746
PARENT COMPANY
CONSOLIDATED
45
19 INVENTORIES
2021 2020 2021 2020
Raw materials and consumables
295.669 207.739 305.949 217.628
Finished goods and goods for resale
418.508 162.331 197.935 174.574
Total inventories
714.177 370.070 503.884 392.202
Inventory values are presented at lower of cost and net realisable value.
Cost of inventories for which impairment losses have been
recognised
319.165 178.044 217.626 186.907
Accumulated impairment losses on inventories -69.480 -46.244 -47.424 -48.529
Net sales value 249.685 131.800 170.202 138.378
20 CORPORATE INCOME TAX
2021 2020 2021 2020
Income tax payable at 1 Janaury
2.564 -3.271 6.919 3.373
Exchange adjustments
11 178 0 0
Current tax for the year
-46.727 -9.944 -29.398 -4.390
Adjustment related to prior years
-48 -110 -551 -106
Additions on acquisitions
-3.399 0 0 0
Corporate income tax paid during the year
13.309 7.679 9 10
Joint taxation contribution paid during the year
16.032 8.032 16.032 8.032
Income tax at 31 December
-18.258 2.564 -6.989 6.919
Which is distributed as follows:
Corporate income tax, receivable
2.423 1.548 0 1
Joint taxation contribution, receivable
0 6.918 0 6.918
Corporate income tax, payable
-13.692 -5.902 0 0
Joint taxation contribution, payable
-6.989 0 -6.989 0
Income tax at 31 December
-18.258 2.564 -6.989 6.919
CONSOLIDATED PARENT COMPANY
During 2021, TDKK 3.789 (2020: TDKK 6.185) was recognised in inventory as write-down of inventory to net realisable value at Group
level. The adjustment of TDKK 2.387 (2020: TDKK 395, as an income) is recognised in cost of sales as an income.
In the Parent Company, TDKK 2.387 (2020: TDKK 395) was recognised during 2021 as an income for inventories carried at net
realisable value. This is recognised in cost sales or as a part of result in shares in subsidiaries.
CONSOLIDATED PARENT COMPANY
46
21 RECEIVABLES AND PAYABLES WITH RELATED PARTIES
2021 2020 2021 2020
Receivables from related parties, interest-bearing, non-current
0 0 246.317 193.618
Receivables from related parties, interest-bearing, current
0 24.308 80.886 16.747
Receivables from related parties, current
0 0 2.648 2.737
Payables to related parties, interest-bearing, non-current
0 0 -77.970 -126.992
Payables to related parties, interest-bearing, current
-90.541 0 -140.100 0
Payables to related parties, current
0 0 -479.855 -409.575
-90.541 24.308 -368.074 -323.465
Recognised as follows in assets:
Receivables from related parties, non-current 0 0 246.317 193.618
Receivables from related parties, current 0 24.308 83.534 19.484
Payables to related parties, non-current 0 0 -77.970 -126.992
Payables to related parties, current -90.541 0 -619.955 -409.575
-90.541 24.308 -368.074 -323.465
22 SHARE CAPITAL 2021 2020
The share capital consists of 5.000 shares of each DKK 200 1.000 1.000
Aktieselskabet Schouw & Co.
Chr. Filtenborgs Plads 1, 8000 Aarhus C
Company registration number: 63 96 58 12
The following shareholder is registered to hold 100 % of the shares and voting capital of the company:
CONSOLIDATED PARENT COMPANY
The shares have not been divided into classes. During the last five years, no changes have been made to the share capital.
47
23 INTEREST-BEARING DEBT
2021 2020 2021 2020
Debt recognised in the balance sheet:
Mortgage debt
0 3.760 0 3.760
Credit institutions
0 4.368 0 4.368
Lease liabilities
48.843 19.547 2.527 467
Payables to related parties
0 0 77.970 126.992
Non-current interest bearing debt
48.843 27.675 80.497 135.587
Current portion of non-current interest-bearing debt
22.153 10.784 5.728 1.142
Payables to related parties
90.541 0 140.100 0
Current interest-bearing debt
112.694 10.784 145.828 1.142
Total interest-bearing debt
161.537 38.459 226.325 136.729
Fair-value of interest-bearing debt
161.537 38.459 226.325 136.729
Weighted average effective rate of interest for the year was (%)
0,9% 1,6% 0,8% 0,9%
Weighted average effective rate of interest for the balance sheet
date was (%)
2,1% 1,5% 1,1% 1,1%
Interest-bearing debt per currency:
DKK
139.549 9.737 114.452 9.737
EUR
-2.362 7.972 95.742 126.992
PLN 24.599 12.230 16.130 0
GBP
11.135 8.520 0 0
USD
-11.385 0 0 0
Other
10 10
Total interest-bearing debt 161.537 38.459 226.325 136.729
PARENT COMPANYCONSOLIDATED
Borg Group netborrowings are mainly in DKK, PLN and GBP with floating rates. The fair value of the floating rate loans are
approximately the carrying amounts.
48
23 INTEREST-BEARING DEBT (Continued)
Development in Net interest-bearing debt
2021
1 Jan.
Cash flow
Acquisi-
tions
Currency
exchange
movements Other
31 Dec.
Interest-bearing assets
Non-current receivables
73 0 0 -1 0 72
Receivables from related parties, current
24.308 -24.308 0000
Cash
8.805 13.210 1.775 -98 -3 23.689
Interest-bearing liabilities
Non-current mortgage debt
-3.759 0 0 0 3.759 0
Non-current credit institutions
-4.368 4.368 0000
Non-current lease liabilities
-19.547 0 -25.935 -336 -3.025 -48.843
Current part of non-current mortgage debt
-525 523 0 0 -3.760 -3.762
Current part of non-current, credit institutions
-901 903 0 11 -13 0
Current part of non-current lease debt
-9.359 14.589 -5.468 -144 -18.009 -18.391
Current debt to group companies
0 -91.842 0 1.317 -16 -90.541
Repayment of creditfacilities
0 52.052 -52.052 0 0 0
Net interest-bearing debt
-5.274 -30.505 -81.680 749 -21.067 -137.776
2020
1 Jan.
Cash flow
Acquisi-
tions
Currency
exchange
movements Other
31 Dec.
Interest-bearing assets
Non-current receivables
327 -253 0 -1 0 73
Current receivables from related parties
31.957 -8.459 0 810 0 24.308
Cash
3.029 5.991 0 -215 0 8.805
Interest-bearing liabilities
Non-current mortgage debt
-4.286 0 0 0 527 -3.759
Non-current credit institutions
-964 0 0 61 -3.465 -4.368
Non-current lease liabilities
-20.733 50 -5.159 1.218 5.077 -19.547
Current part of non-current mortgage debt
-523 525 0 0 -527 -525
Current part of non-current, credit institutions
-1.154 1.083 0 73 -903 -901
Current part of non-current lease debt
-9.244 9.239 -1.268 470 -8.556 -9.359
Net interest-bearing debt
-1.591 8.176 -6.427 2.416 -7.847 -5.274
CONSOLIDATED
Non-cash changes
Non-cash changes
49
23 INTEREST-BEARING DEBT (Continued)
Development in Net interest-bearing debt
2021
1 Jan.
Cash flow
Acquisi-
tions
Currency
exchange
movements Other
31 Dec.
Interest-bearing assets
Non-current receivables from related parties 193.618 47.802 0 1.405 3.492 246.317
Current receivables from related parties 16.747 64.139 0 0 0 80.886
Cash 6.254 6.412 0 -64 0 12.602
Interest-bearing liabilities
Non-current credit institutions -4.368 4.368 0000
Non-current mortgage debt -3.759 0 0 0 3.759 0
Non-current lease liabilities -467 0 0 0 -2.060 -2.527
Non-current payables to related parties -126.992 49.897 0 94 -968 -77.969
Current part of non-current mortgage debt -525 523 0 0 -3.760 -3.762
Current part of non-current lease debt -618 1.327 0 0 -2.675 -1.966
Current payables to related parties 0 -139.824 0 -276 0 -140.100
Net interest-bearing debt 79.890 34.644 0 1.159 -2.212 113.481
2020
1 Jan.
Cash flow
Acquisi-
tions
Currency
exchange
movements Other
31 Dec.
Interest-bearing assets
Non-current receivables from related parties
0 5.342 0 -9.158 197.434 193.618
Current receivables from related parties
169.046 -3.873 0 1.083 -149.509 16.747
Cash
45 6.254 0 -45 0 6.254
Interest-bearing liabilities
Non-current credit institutions
0000-4.368 -4.368
Non-current mortgage debt
-4.286 0 0 0 527 -3.759
Non-current lease liabilities
-530 0 0 0 63 -467
Non-current payables to related parties
-113.784 -11.524 0 453 -2.137 -126.992
Current part of non-current mortgage debt
-523 525 0 0 -527 -525
Current part of non-current lease debt
-905 1.071 0 0 -784 -618
Net interest-bearing debt
49.063 -2.205 0 -7.667 40.699 79.890
PARENT COMPANY
Non-cash changes
Non-cash changes
50
24
OTHER PAYABLES
2021 2020 2021 2020
Core liability, specification below 70.191 59.293 54.810 45.481
Earn-out 163.836 7.813 163.836 0
Employee related debt 7.810 0 2.631 0
Other payables 99 0 99 0
Other payables, non-current 241.936 67.106 221.376 45.481
Core liability, specification below 210.573 177.880 164.431 136.442
Employee related debt
36.628 20.486 9.634 6.694
Hedging instruments
2.248 1.826 2.248 1.826
Customer bonus
33.367 17.340 20.500 17.340
VAT
8.101 5.645 7.921 5.645
Earn-out
7.807 7.813 0 0
Other payables
18.243 10.306 2.589 5.941
Other payables, current
316.967 241.296 207.323 173.888
Total other payables 558.903 308.402 428.699 219.369
CORE LIABILITY 2021 2020 2021 2020
The Group has a repayment obligation in respect of deposits
received from customers conditional on and at the same rate as
customers return of used units (cores).
Repayment obligation at year-end
613.050 559.891 487.968 437.753
Estimated value of cores
-332.286 -322.718 -268.727 -255.830
Net core liability accrued for in the balance sheet
280.764 237.173 219.241 181.923
25 PROVISIONS 2021 2020 2021 2020
At 1 January
22.106 12.960 21.896 12.725
Utilized during the year
-11.523 -6.755 -11.413 -6.633
Additions
15.772 15.901 15.609 15.804
At 31 December
26.355 22.106 26.092 21.896
Recognised in the balance sheet as follows:
Non-current liabilities
12.617 10.583 12.492 10.483
Current liabilities
13.738 11.523 13.600 11.413
Provisions 31 December
26.355 22.106 26.092 21.896
Recognised in the income statement:
Cost of sales
15.772 15.901 15.609 15.804
Provisions recognised in the income statement
15.772 15.901 15.609 15.804
The historical return rate of warranty units in 2021 was on average 11-12 months, which is the same levels in 2020.
CONSOLIDATED PARENT COMPANY
CONSOLIDATED PARENT COMPANY
Provisions made comprise of warranty commitments related to goods sold, since the company has a contractual obligation to provide
warranties up to 24 months. Under these warranties the company either replace or repair goods which do not function according to
promised standards. The statement of expected expiry dates is based on historical data and previous experience related to the typical
receival or return of goods.
51
26 ADJUSTMENT FOR NON-CASH TRANSACTIONS
2021 2020 2021 2020
Purchase of intangible assets
-4.924 -2.236 -1.018 -47.798
Of which had not been paid at the balance sheet date/adjustment
for the year
908 170 214 170
Amount paid in relation to intangible assets
-4.016 -2.066 -804 -47.628
Purchase of property, plant and equipment
-24.709 -9.867 -1.304 -175
Of which had not been paid at the balance sheet date/adjustment
for the year
1.204 568 383 0
Amount paid in relation to purchase of property, plant and
equipment
-23.505 -9.299 -921 -175
Incurring financial liabilities
21.014 10.360 4.861 815
Of which lease debt
-21.014 -10.360 -4.861 -815
Proceeds from incurring financial liabilities
00 00
27 CHANGES IN WORKING CAPITAL
2021 2020 2021 2020
Change in inventories
-188.218 2.689 -686 -3.547
Change in receivables
-32.978 20.828 -47.256 26.684
Change in trade payables and other payables
140.944 11.113 22.068 17.739
Changes in working capital in total -80.252 34.630 -25.874 40.876
CONSOLIDATED PARENT COMPANY
CONSOLIDATED PARENT COMPANY
52
28 FINANCIAL ASSETS AND LIABILITIES
CONSOLIDATED
2021
Carrying
amount Fair value 0-1 years 1-5 years > 5 years
Total
cash flow
Trade receivables
213.555 213.555 213.555 0 0 213.555
Receivables from related parties
0 00000
Other receivables
66.709 66.709 54.276 9.447 2.986 66.709
Cash in hand and in bank
23.014 23.014 23.014 0 0 23.014
Receivables measured at amortised cost 303.278 303.278 290.845 9.447 2.986 303.278
Derivative financial assets (fair value hierarchy level 2)
675 675 675 0 0 675
Financial derivaties used for hedging purposes 675 675 675 0 0 675
Total financial assets 303.953 303.953 291.520 9.447 2.986 303.953
Interest bearing debt 3.762 3.762 3.794 0 0 3.794
Lease liabilities 67.234 67.234 19.229 44.006 6.201 69.436
Payables to related parties 90.541 90.541 90.541 0 0 90.541
Trade payables 273.028 273.028 273.028 0 0 273.028
Other payables 384.318 384.318 310.096 74.222 0 384.318
Financial liabilities measured at amortised cost 818.883 818.883 696.688 118.228 6.201 821.117
Derivative financial liabilities (fair value hierarchy level 2)
2.248 2.248 2.248 0 0 2.248
Earn-out (fair value hierarchy level 3)
163.836 163.836 0 163.836 0 163.836
Financial derivaties used for hedging purposes 166.084 166.084 2.248 163.836 0 166.084
Total financial liabilities 984.967 984.967 698.936 282.064 6.201 987.201
Non-contractual items such as accruals and dererred income are excluded from other receivables and other debt.
The maturity profile of financial assets and liabilities is disclosed below according to category and calss distributed on period to
maturity. All interest payments on and repayments of financial asasets and liabilitites are based on contracts. None of the cash flows
are discounted.
At 31 December 2021 exchange rate contracts have been applied for hedging of cash flows covering future periods. The hedging
relates to the Groups purchase of finished goods in USD as well as the internal trade of finished goods in PLN. All contracts are
expected to expire - and thus affect results - in the financial year 2022. Derivatives are disclosed in note 30.
Due to the short term nature of trade receivables and trade payables as well as other receivables and other debt falling due within 1
year, their carrying amount are considered to be approximately the same as their fair value.
The fair value of the contingent consideration arrangement (earn out) was estimated by applying the income approach.
The fair value estimates are based on a discount rate of 8.2% and assumed probability adjusted outcome of the earnout arrangement.
This is a level 3 fair value measurement. The earnout is recognised at MDKK 164 and is due for payment in the beginning of 2023.
53
28 FINANCIAL ASSETS AND LIABILITIES
CONSOLIDATED
2020
Carrying
amount Fair value 0-1 years 1-5 years > 5 years
Total
cash flow
Trade receivables
105.532 105.532 105.532 0 0 105.532
Receivables from related parties
24.308 24.308 24.308 0 0 24.308
Other receivables
17.532 17.532 16.587 945 0 17.532
Cash in hand and in bank
8.804 8.804 8.804 0 0 8.804
Receivables measured at amortised cost 156.176 156.176 155.231 945 0 156.176
Derivative financial assets (fair value hierarchy level 2)
1.828 1.828 1.828 0 0 1.828
Financial derivaties used for hedging purposes 1.828 1.828 1.828 0 0 1.828
Total financial assets 158.004 158.004 157.059 945 0 158.004
Interest bearing debt 9.553 9.553 1.484 2.212 1.707 5.403
Lease liabilities 28.906 28.906 9.881 20.131 0 30.012
Trade payables 79.570 79.570 79.570 0 0 79.570
Other payables 298.437 298.437 231.331 67.106 0 298.437
Financial liabilities measured at amortised cost 416.466 416.466 322.266 89.449 1.707 413.422
Derivative financial liabilities (fair value hierarchy level 2)
1.828 1.828 1.828 0 0 1.828
Financial derivaties used for hedging purposes 1.828 1.828 1.828 0 0 1.828
Total financial liabilities 418.294 418.294 324.094 89.449 1.707 415.250
PARENT COMPANY
2021
Carrying
amount Fair value 0-1 years 1-5 years > 5 years
Total
cash flow
Trade receivables
121.282 121.282 121.282 0 0 121.282
Receivables from related parties
329.851 329.851 83.534 255.420 0 338.954
Other receivables
28 28 28 0 0 28
Cash in hand and in bank
12.602 12.602 12.602 0 0 12.602
Receivables measured at amortised cost 463.763 463.763 217.446 255.420 0 472.866
Derivative financial assets (fair value hierarchy level 2)
0 00000
Financial derivaties used for hedging purposes 0 00000
Total financial assets 463.763 463.763 217.446 255.420 0 472.866
Interest bearing debt 3.762 3.762 3.794 0 0 3.794
Lease liabilities 4.493 4.493 2.007 2.549 0 4.556
Payables to related parties 697.925 697.925 697.925 0 0 697.925
Trade payables 24.529 24.529 24.529 0 0 24.529
Other payables 259.793 259.793 204.599 57.441 0 262.040
Financial liabilities measured at amortised cost 990.502 990.502 932.854 59.990 0 992.844
Derivative financial liabilities (fair value hierarchy level 2)
2.247 2.247 2.247 0 0 2.247
Earn-out (fair value hierarchy level 3)
163.836 163.836 0 163.836 0 163.836
Financial derivaties used for hedging purposes 166.083 166.083 2.247 163.836 0 166.083
Total financial liabilities 1.156.585 1.156.585 935.101 223.826 0 1.158.927
54
28 FINANCIAL ASSETS AND LIABILITIES
PARENT COMPANY
2020
Carrying
amount Fair value 0-1 years 1-5 years > 5 years
Total
cash flow
Trade receivables
74.026 74.026 74.026 0 0 74.026
Receivables from related parties
213.102 213.102 19.484 210.647 0 230.131
Other receivables
95 95 95 0 0 95
Cash in hand and in bank
6.254 6.254 6.254 0 0 6.254
Receivables measured at amortised cost 293.477 293.477 99.859 210.647 0 310.506
Derivative financial assets (fair value hierarchy level 2)
0 00000
Financial derivaties used for hedging purposes 0 00000
Total financial assets 293.477 293.477 99.859 210.647 0 310.506
Interest bearing debt 8.652 8.652 4.940 2.212 1.707 8.859
Lease liabilities 1.085 1.085 627 471 0 1.098
Payables to related parties 536.567 536.567 409.575 133.762 0 543.337
Trade payables 14.311 14.311 14.311 0 0
Other payables 211.177 180.008 180.008 45.481 0 225.489
Financial liabilities measured at amortised cost 771.792 740.623 609.461 181.926 1.707 778.783
Derivative financial liabilities (fair value hierarchy level 2)
1.826 1.826 1.826 0 0 1.826
Financial derivaties used for hedging purposes 1.826 1.826 1.826 0 0 1.826
Total financial liabilities 773.618 742.449 611.287 181.926 1.707 780.609
55
29 FINANCIAL RISKS
GROUP RISK MANAGEMENT
RAW MATERIAL PRICE RISK
The raw material risk for the Group is considered medium and the potential impact high on both the Groups results and equity.
The following table shows the groups and parent companies sensitivity to changes in raw material prices of cores:
CONSOLIDATED
Change 2021 2020
Revenue +5% 29.007 24.720
Profit for the year/Equity +5% 16.052 14.305
The opposite effect will impact revenue and profit for the year/equity per a 5% decrease in the raw material prices.
PARENT COMPANY
Change 2021 2020
Revenue +5% 24.462 20.701
Profit for the year/Equity +5% 14.199 12.485
The opposite effect will impact revenue and profit for the year/equity per a 5% decrease in the raw material prices.
FOREIGN CURRENCY RISK
The BORG Group actively monitors and manages financial risks to which the Group is exposed through its operations, investments
and financing activities. The financial risk management covers all areas of the business such as raw material price risk, foreign
exchange risk, interest rate risk, credit risk, liquidity risk and the capital structure of the Group.
As a main rule, the Group hedges significant foreign exchange risks regarding in- and out going payments in foreign currencies in
accordance with the Group hedging policy. The sensitivity analysis shows the impact on the income statement and equity from likely
changes in the exchange rates for the currencies where a risk is identified.
The raw material risk relates to the risk of changes in the market prices of raw materials, the cores, to which BORG Group is exposed.
The development in raw material prices not only affect the direct cost of purchasing the cores for production, but also the value of the
net core liability to customers accounted for in the balance sheet. The COVID-19 pandemic and the close down of the countries
around Europe illustrated that the reduced free flow of cores and also the reduced quantities of finished goods from China, increased
the prices of available cores in the market. Further, the core market price is upon significant changes in the metal scrap value since
the beginning of the pandemic has also increased the core market prices in general. Usually the core market prices are not impacted
upon minor changes in the metal-scrap values.
A reduction in the core market price will result in a short term loss for the Group due to the change in the purchase obligation to the
customers, but will in the longer perspective reduce the cost price of the raw materials thus affecting the result positively. The
opposite is also applicable.
The potential impact on the financial results may be of a significant size, since the price change of the cores can not immediately be
transferred to the sales prices. The development of the prices in the unregulated core market are therefore monitered continously
and closely, since the timing of the core purchases are of the essence, both in regards to the required quantities and prices. The skills
and market knowledge of the core purchasers are thus very crucial to reduce this raw material price risk.
The BORG Group´s presentation currency is DKK, but a large part of the Groups activities and investments is dominated in other
currencies. The Group is with reference to the high intercompany trading of both cores and finished goods therefore exposed to the
exchange rate risk when trading in PLN, EUR and GBP respectively. Consequently there is an inherent risk of exchange rate
fluctuations impacting both profits and the financial posisition in DKK.
56
29 FINANCIAL RISKS
Currency
Securities
and cash/
equivalents Receivables Debt
Net position before
hedging
Hedged by
financial
instruments
Net position
after
hedging
EUR / DKK 5.191 280.471 -556.759 -271.097 0 -271.097
EUR / GBP 1.144 8.892 -2.957 7.079 0 7.079
EUR / PLN 0 3.638 -3.692 -54 0 -54
GBP / DKK 1.245 45.035 -10.527 35.753 0 35.753
PLN / DKK 1.218 105.638 -32.014 74.842 0 74.842
USD/ DKK 11.397 1 -42.054 -30.656 0 -30.656
USD/ EUR 0 0 -48.270 -48.270 0 -48.270
Currency
Securities
and cash/
equivalents Receivables Debt
Net position before
hedging
Hedged by
financial
instruments
Net position
after
hedging
EUR / DKK 9.801 164.269 -558.668 -384.598 0 -384.598
EUR / GBP 3.190 14.209 -6.319 11.080 0 11.080
EUR / PLN 24 1.812 -11.885 -10.049 0 -10.049
GBP / DKK 0 31.352 -6.101 25.251 0 25.251
PLN / DKK 6.227 107.658 -38.346 75.539 0 75.539
Sensitivity of currency risk
Change 2021 2020
PLN/DKK + 5% -2.919 -2.946
GBP/DKK + 5% -1.394 -985
USD/DKK + 5% -445 0
EUR /GBP + 5% -276 -432
USD /EUR + 5% 1.883 0
To measure currency risk in accordance with IFRS 7, sensitivity is calculated as the change in fair value of future cash flow from
financial instruments as a result of fluctuations in exchange rates at the Balance Sheet date. Below analysis includes the effect on
profit after tax on a 5% increase in the exchange rates, all other things being equal. A 5% decrease are expected to have a
corresponding inverse effect.
T
h
e
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ore
i
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i
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i
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d
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ow,
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h
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i
a
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i
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/(l
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medium.
CONSOLIDATED
The group's foreign exchange risks recognised in the balance sheet at 31 December 2020:
The Group's foreign exchange risks recognised in the balance sheet at 31 December 2021:
Below for both the Group and the parent company is illustrated the most significant foreign exchange exposures at year-end:
The largest currency risk exposures for the BORG Group and the Parent Company is the purchase of goods from the subsidiary in
Poland in PLN as well as the purchase of finished goods from China in USD by SBS. As a safeguard to this exposure a “rolling” hedge
strategy is applied by the Group Management, where the expected requirements of PLN and USD on a rolling 12 months basis is
hedged.
EUR cash flows are not hedged due to the Danish fixed exchange rate policy against EUR, while the GBP exposure relates mainly to
internal sales of a more limited size and are therefore not hedged.
The parent company also incure the foreign exchange risk related to Intercompany loans with subsidiaries which are in the local
currency of the subsidiaries and the risk relate to the net investments in foreign subsidiaries. Ths risk is not hedged.
Due to the DKK being fixed to the EUR, significant fluctuations on this exposure are not included in the sensitivity analysis below.
57
29 FINANCIAL RISKS
Currency
Securities
and cash/
equivalents Receivables Debt
Net position before
hedging
Hedged by
financial
instruments
Net position
after
hedging
EUR / DKK 0 253.310 -547.086 -293.776 0 -293.776
GBP / DKK 1 34.419 -10.527 23.893 0 23.893
PLN / DKK 641 105.638 -31.756 74.523 0 74.523
Currency
Securities
and cash/
equivalents Receivables Debt
Net position before
hedging
Hedged by
financial
instruments
Net position
after
hedging
EUR / DKK 9.801 164.269 -558.668 -384.598 0 -384.598
GBP / DKK 0 31.352 -6.101 25.251 0 25.251
PLN / DKK 6.227 107.658 -38.346 75.539 0 75.539
Sensitivity of currency risk
Change 2021 2020
GBP/ DKK +5% -932 -985
PLN/ DKK +5% -2.906 -2.946
INTEREST RATE RISK
The interest rate risk is not hedged since the risk and threat is considered low.
CONSOLIDATED
Change 2021 2020
Profit for the year
+1% -1.240 -161
Equity +1% -1.240 -161
The opposite effect will impact revenue and profit for the year/equity per a 5% decrease in the raw material prices.
BORG Groups interest rate risk related to interest-bearing debt and interest-bearing assets. The Groups interest-bearing assets and
debt relates mainly to deposits and borrowings with the parent company in the form of cash-pool accounts and to a minor extent to
deposits or borrowings with local external banks as well as leasing obligations towards external leasing companies. As of 31
December 2021 interest-bearing assets amounted to TDKK 23.762 (2020: TDKK 33.186) and interest-bearing debt of TDKK 211.766
(2020: TDKK 38.459).
PARENT COMPANY
The Parent Company's foreign exchange risks recognised in the balance sheet at 31 December 2021:
The Parent Company´s foreign exchange risks recognised in the balance sheet at 31 December 2020:
Below analysis includes the effect on profit after tax on a 5% increase in the exchange rates for the Parent company, all other things
being equal. A 5% decrease are expected to have a corresponding inverse effect.
Due to the DKK being fixed to the EUR, significant fluctuations on this exposure are not included in the sensitivity analysis below.
Below tables shows the sensitivity to changes in the interest rates as per Net Interest-bearing debt (NIBD) balance as per 31
December:
58
29 FINANCIAL RISKS
PARENT COMPANY
Change 2021 2020
Profit for the year
+1% -885 -691
Equity +1% 1.059 172
CREDIT RISK
Trade receivables can be specified as follows:
2021 2020 2021 2020
Not overdue 164.258 91.298
92.200
65.575
Due below 30 days 36.246 12.543
22.796
7.692
Due between 31 and 90 days 12.624 1.677
6.281
745
Due above 90 days 8.119 14
5
14
Trade receivables before allowance 221.247 105.532 121.282 74.026
Impairment -7.692 0 0 0
Total trade receivables 213.555 105.532 121.282 74.026
96,5% 100,0% 100,0% 100,0%
Impairment rate
3,5% 0,0% 0,0% 0,0%
The impairment of TDKK 7.692 relate primarily to trade receivables due above 90 days.
Impairment losses on trade receivables 2021 2020 2021 2020
Impairment losses at 1 January 0 -814 0 -814
Addition from acqusitions -6.528 0 0 0
Reversed impairment losses 0 814 0 814
Impairment losses during the year -1.270 -2 0 -2
Realised loss 106 2 0 2
Impairment losses at 31 December -7.692 0 0 0
The overall credit risk of the BORG Group is considered to be low.
The parent company have positive NIBD and thus a 1% increase in the interest rate levels will impact positively the Profit for the year,
but due to intercompanies loans with subsidiaries this effect is reduced significantly with an offsetting effect from profit for the year
from subsidiaries and thus affecting equity negatively.
CONSOLIDATED PARENT COMPANY
Proportion of the total receivables which is
expected to be settled
The risk credit risk related to deposits on the cash pool accounts with Schouw & Co. via Danske bank as well as receviables from the
subsidiaries by the parent company are considered low.
CONSOLIDATED PARENT COMPANY
The Group is exposed to credit risks arising from receivables and from balances with banks including derivative financial instruments.
Risks related to receivables are primarily with reference to external customers not fullfilling their contractual obligations. Credit risk
with banks occur when it is uncertain whether the bank is capable of settling its obligations when due towards the Group.
The credit risk in relation to customers (trade receivables) is countered by Group policy, with effective management of customer
credit and thorough regular analyses based on customer type, country, and specific conditions. Generally, customers are
creditworthy and historically only a small and insignificant losses has been realized. Additionally external credit insurance from Euler
Hermes are generally used on all customers if possible, which together with the possibility to offset outstanding deposits (core
liability) on the outstanding amounts from customers reduces the risk of losses significantly. The risk of losses is therefore
considered low which is illustrated by the very insignificant losses incurred.
59
29 FINANCIAL RISKS
LIQUIDY RISK
CAPITAL STRUCTURE
30 DERIVATIVE FINANCIAL INSTRUMENTS
CONSOLIDATED
Currency Period 2021 2020 2021 2020 2021 2020
PLN 0-1 year 120.000 120.000 4,6349 4,4976 -1.754 -1.426
USD 0-1 year 12.000 0 6,4895 0,0000 526 0
Tax -347 -401
Total before tax -1.574 -1.826
PARENT COMPANY
Currency Period 2021 2020 2021 2020 2021 2020
PLN 0-1 year 120.000 120.000 4,6349 4,4976 -1.754 -1.426
Tax -495 -401
Total before tax -2.248 -1.826
The BORG Group Management monitors the capital structure of all legal entities within the Group and takes adequate measures to
ensure the Group is capitalised in the best interest of the Group and its shareholders. The overall objective is to ensure a continued
development and of the Group which support the Groups strategy and growth ambitions.
BORG Group uses forward contracts to hedge specific currency exposure related to the purchase of raw materials (cores) and
finished goods. Hedging contracts are not entered into for speculative purposes, but are only used to reduce the exposure to changes
in exchange rates relates to purchase or sales transactions.
Contractual value in
currency Average price
Gains and losses
recognized in the equity
Gains and losses
recognized in the equity
Contractual value in
currency Average price
Liquidity is managed centrally and is continously monitored and assesed, to ensure that financial ressources are availables in all Group
companies at any given time.
It is the Management´s opinion that the Group has suffcient financial ressources to settle its oustanding obligations as they become
due, and the liquidity risk of the Group is considered to be low.
At year-end 2021 the Groups liquidity reserve consist of both cash at hand and deposits at creditinstitutions and cash pool accounts
amounts to TDKK 73.918, of which TDKK 50.229 are cash-pool deposits. Based on the available facilities from the ultimate parent
company Schouw & Co., sufficient liquidity is consired to be in place.
Borg Group is predominately financed by resources of the parent company Schouw & Co. as well as a number of committed and to a
lesser extent uncommitted credit facilities.The available facilities are continuously reviewed and the ultimate parent company
Schouw & Co. provides the adequate funds required for the Group to support the BORG Group.
60
31
CONTINGENT LIABILITIES AND GUARANTEES
2021 2020 2021 2020
Guarantees
As security for the engageemnt with mortgage institutions,
mortgage deeds have been issued with a total value at year-end of: 9.870 9.870 9.870 9.870
The value of the related assets amounts to the following
0 12.001 0 12.001
Debt to the mortgage-institution at year-end amouted to
3.762 4.284 3.762 4.284
The asset to which the security of TDKK 9.870 relates to have been
sold in 2021, but the loan have not been redeemed until January
2022.
Borg Automotive A/S have issued a mortgage deed, which is in the
possession of the company. The mortgage deed amounts to: 35.000 35.000 35.000 35.000
Borg Automotive A/S have issued a guarantee towards HMRC in UK
related to postponed VAT accounting, a total of TGBP 900. The
guarantee in TDKK amounts to: 7.977 0 7.977 0
As security for the engagement with an external supplier a
subsidiary in BROG Group have issued a bankguarantee of TEUR
270 with a total value at year-end of: 2.007 0 0 0
2021 2020 2021 2020
The following amount was drawn on the credit facilties as
mentioned above at year-end 140.770 16 140.100 16
Contractual commitments
BORG Group have commited to the purchase of assets in the next
year of the following amounts: 2.532 3.655 0 0
Joint taxation liability
CONSOLIDATED PARENT COMPANY
Borg Automotive A/S is jointly taxed with the other danish companies of Schouw & Co. Group. According to the joint taxation
provisions of the Danish Corporation Tax Act, the company is therefore liable for income taxes etc. for the jointly taxed companies
and also for obligations, if any, relating to the withholding of tax on interest, royalties and dividends for these companies. Schouw &
Co. serves as the administration company in a Danish joint taxation agreement.
Borg Group is predominately financed by resources of the parent company Schouw & Co. as well as a number of committed and to a
lesser extent uncommitted credit facilities.
The parent company Schouw & Co’s source of financing is primarily composed of a syndicated banking facility, which in December
2020 was refinanced with a total facility framework of MDKK 3.275. The facility is for a three-year period with the possibility of a one-
year extension after years one and two. In connection with the refinancing of the banking facility, the previous banking consortium,
consisting of Danske Bank, DNB and Nordea, was expanded with the international bank Hong Kong & Shanghai Banking Corporation
(HSBC). The first refinancing extension was used in December 2021.
In addition, Schouw & Co established a 7-year loan of MDKK 400 with Nordic investment Bank directly related to specific capacity
and development costs in Denmark.
Borg Group, like other major subsidiaries in the Schouw & Co. Group, co-guarantees the aforementioned facilities of MDKK 3.675 of
which MDKK 938 has been deducted as of 31 December 2021.
CONSOLIDATED PARENT COMPANY
61
32 RELATED PARTIES
2021 2020 2021 2020
Sale of goods to subsidiaries
0 0 188.454 165.621
Purchase of goods from subsidiaries
0 0 782.920 611.114
Sale of services to subsidiaries
0 0 21.001 15.442
Purchase of services from subsidiaires
0 0 14.740 7.533
Purchase of assets in connection with acquisition of business
0 0 0 34.915
Purchase of customer and core liability, net from subsidiaires
0 0 -1.155 0
Purchase of research and development from subsidiaries
0 0 9.686 7.231
Royalty income from subsidiaries
0 0 0 4.659
Interests paid to subsidiaries
0 0 968 2.137
Interests paid to parent company
1.275 556 1.207 524
Interests received from subsidiaries
0 0 4.019 2.275
Interests received from parent company
14 1 2
Management fee paid to parent company
1.400 1.400 1.400 1.400
Dividend paid to parent company
60.000 60.000 60.000 60.000
Dividend received from subsidiaries
0 0 44.610 0
Receivables from subsidiaries
0 0 329.851 196.355
Receivables from parent company
0 24.308 0 16.747
Payables to subsidiaires
90.541 0 638.711 536.567
Payables to parent company
0 0 59.214 0
The consolidated financial accounts for Schouw & Co. is publicly available and can be aquired at the following website:
www.schouw.dk
The Parent Company of BORG Group, Borg Automotive A/S is owned 100% by Aktieselskabet Schouw & Co.
Additionally members of the Board of Directors, Executive management as well as their familiy members are considered related
parties. Furthermore, related parties are companies in which the above mentioned group of people has significant interests.
Transactions between companies within the BORG Group and other entities within the Schouw & Co. Group are included below:
CONSOLIDATED PARENT COMPANY
The consolidated figures of BORG Group is included in the consolidated financial statements of the ultimate parent company
Aktieselskabet Schouw & Co., Aarhus, Denmark.
All companies within the Schouw & Co.Group including BORG Group companies are considered related parties.
62