Azelis Group NV (the \u201cCompany\u201d), formerly named Akita Midco 1 NV, was incorporated on 10th of June 2021 and is domiciled in Belgium. The address of the Company is Posthofbrug 12 box 6, 2600 Antwerp, Belgium. The Company's principal place of business is Belgium. The Company is registered in Belgium under the number 0769.555.240.
The main shareholder of Azelis Group NV is Akita I S.\u00e0 r.l., 26A Boulevard Royal, 2449 Luxembourg (hereinafter referred to as \u201cEQT\u201d). Based on the most recent transparency declaration filed by EQT, the ultimate controlling party of Akita I S.\u00e0.r.l. is EQT VIII Collect SCSp which is not controlled by any of its shareholders but is managed by EQT VIII (GP) SCS.
The consolidated financial statements of the Company for the period ended December 31, 2022 comprise the Company and its subsidiaries (together referred to as the \u201cgroup\u201d or as \u201cAzelis\u201d being the trade name of the group) and the group\u2019s interest in associates.
The group is primarily involved in the distribution of speciality chemical products used in the Life Sciences (Personal Care, Home Care & Industrial Cleaning, Pharmaceuticals & Healthcare, Food & Nutrition, Animal Nutrition, Agricultural & Environmental Solutions) and Industrial Chemicals industry (CASE, Advanced Materials & Additives, Lubricants & Metalworking Fluids, Electronics, Essentials and Fine Chemicals, Textiles Leather & Paper).
Azelis is well positioned to face challenges across the globe, on the basis of its diversified specialty chemicals portfolio, but also based on its asset-light business model. Azelis' cost base, other than payroll and some other predominantly fixed costs, is mostly variable. Azelis has multiple cost levers that can be activated to mitigate the impact of downturns, which enables it to react rapidly to downturns or economic crises and furthers the group's resilience. Recent challenges that Azelis has faced successfully include for example the impact of the Covid-19 pandemic, but also the currently ongoing uncertain economic and geopolitical circumstances.
With its laboratories, the Company is well positioned to support its customers with many new formulations that are necessitated as a result of changing conditions. Azelis is helping its customers and its principals to respond to climate-changes, and to achieve their sustainability goals by, for example, promoting sustainable products and product development, encouraging sustainable formulation creation in its laboratories, and assessing its principals and implementing corporate social responsibility due diligence procedures when selecting and onboarding principals.
Alongside sustainability, innovation and digitalization form the pillars of Azelis\u2019 strategy for creating value. Investments in innovation centers, application laboratories, e-Labs, principal portals, and customer portals are helping to accelerate the supply of sustainable products.
The consolidated financial statements for the period ended December 31, 2022, were authorized for issue by the Board of Directors on 1 March 2023 and will be submitted for approval to the Shareholders' Meeting to be held on 8 June 2023.
The consolidated financial statements have been prepared in accordance with the International Financial Reporting Standards as adopted in the European Union (IFRS). The group has consistently applied the accounting policies as set out below to all periods presented in these consolidated financial statements. Changes to the accounting policies in the current year are limited to the changes in IFRS below and are applied starting as per 1st January 2022.
The following amendments to standards are mandatory for the first time for the financial year beginning 1 January 2022 and have been endorsed by the European Union. They have been implemented by the group without significant impact on the financial statements:
Amendments to IFRS 3 Business Combinations; IAS 16 Property, Plant and Equipment; IAS 37 Provisions, Contingent Liabilities and Contingent Assets as well as Annual Improvements (effective 1 January 2022). The package of amendments includes narrow-scope amendments to three Standards as well as the Board\u2019s Annual Improvements, which are changes that clarify the wording or correct minor consequences, oversights or conflicts between requirements in the Standards.
Amendments to IFRS 3 Business Combinations update a reference in IFRS 3 to the Conceptual Framework for Financial Reporting without changing the accounting requirements for business combinations.
Amendments to IAS 16 Property, Plant and Equipment prohibit a company from deducting from the cost of property, plant and equipment amounts received from selling items produced while the company is preparing the asset for its intended use. Instead, a company will recognise such sales proceeds and related cost in profit or loss.
Amendments to IAS 37 Provisions, Contingent Liabilities and Contingent Assets specify which costs a company includes when assessing whether a contract will be loss-making.
Annual Improvements 2018-2020 make minor amendments to IFRS 1 First-time Adoption of International Financial Reporting Standards, IFRS 9 Financial Instruments, IAS 41 Agriculture and the Illustrative Examples accompanying IFRS 16 Leases.
Amendment to IFRS 16 Leases Covid 19-Related Rent Concessions beyond 30 June 2021 (effective 01/04/2021), with early application permitted). The amendments extend, by one year, the May 2020 amendment that provides lessees with an exemption from assessing whether a COVID-19-related rent concession is a lease modification. In particular, the amendment permits a lessee to apply the practical expedient regarding COVID-19-related rent concessions to rent concessions for which any reduction in lease payments affects only payments originally due on or before 30 June 2022 (rather than only payments originally due on or before 30 June 2021). The amendment is effective for annual reporting periods beginning on or after 1 April 2021 (earlier application permitted, including in financial statements not yet authorized for issue at the date the amendment is issued).
The following new standard and amendments have been issued, are not mandatory for the first time for the financial year beginning 1 January 2022 but have been endorsed by the European Union:
IFRS 17 \u2018Insurance contracts\u2019 (effective 1 January 2023). This standard replaces IFRS 4, which currently permits a wide variety of practices in accounting for insurance contracts. IFRS 17 will fundamentally change the accounting by all entities that issue insurance contracts and investment contracts with discretionary participation features. On 17 March 2020, IASB decided to defer pop effective date to annual reporting periods beginning on or after 1 January 2023. The endorsement includes the amendments issued by the Board in June 2020, which are aimed at helping companies implement the Standard and making it easier for them to explain their financial performance. The EU regulation provides an optional exemption from applying the annual cohort requirement that relates to the timing of the recognition of the profit in the contract, the contractual service margin, in profit or loss. Entities making use of the exemption are not applying IFRSs as issued by the IASB and need to disclose the fact.
Amendments to IAS 1 Presentation of Financial Statements and IFRS Practice Statement 2: Disclosure of Accounting policies (effective 1 January 2023). The amendments aim to improve accounting policy disclosures and to help users of the financial statements to distinguish between changes in accounting estimates and changes in accounting policies. The IAS 1 amendment requires companies to disclose their material accounting policy information rather than their significant accounting policies. Further, the amendment to IAS 1 clarifies that immaterial accounting policy information need not be disclosed. To support this amendment, the Board also amended IFRS Practice Statement 2, \u2018Making Materiality Judgements\u2019, to provide guidance on how to apply the concept of materiality to accounting policy disclosures. The amendments are effective for annual reporting periods beginning on or after 1 January 2023. Earlier application is permitted (subject to any local endorsement process).
Amendments to IAS 8 Accounting policies, Changes in Accounting Estimates and Errors: Definition of Accounting Estimates (effective 1 January 2023). The amendment to IAS 8, \u2018Accounting Policies, Changes in Accounting Estimates and Errors\u2019, clarifies how companies should distinguish changes in accounting policies from changes in accounting estimates. The amendments are effective for annual reporting periods beginning on or after 1 January 2023. Earlier application is permitted (subject to any local endorsement process).
Amendments to IAS 12 Income Taxes: Deferred Tax related to Assets and Liabilities arising from a Single Transaction (effective 1 January 2023). The amendments clarify how companies account for deferred tax on transactions such as leases and decommissioning obligations. The main change in the amendments is an exemption from the initial recognition exemption of IAS 12.15(b) and IAS 12.24. Accordingly, the initial recognition exemption does not apply to transactions in which equal amounts of deductible and taxable temporary differences arise on initial recognition. The amendments are effective for annual reporting periods beginning on or after 1 January 2023. Early adoption is permitted.
Amendments to IFRS 17 Insurance contracts: Initial Application of IFRS 17 and IFRS 9 \u2013 Comparative Information (effective 1 January 2023). The amendment is a transition option relating to comparative information about financial assets presented on initial application of IFRS 17. The amendment is aimed at helping entities to avoid temporary accounting mismatches between financial assets and insurance contract liabilities, and therefore improve the usefulness of comparative information for users of financial statements.
The following amendments have been issued, but are not mandatory for the first time for the financial year beginning 1 January 2022 and have not been endorsed by the European Union:
Amendments to IAS 1 \u2018Presentation of Financial Statements: Classification of Liabilities as current or non-current\u2019 (effective 01/01/2024), affect only the presentation of liabilities in the statement of financial position \u2014 not the amount or timing of recognition of any asset, liability income or expenses, or the information that entities disclose about those items. They:
Clarify that the classification of liabilities as current or non-current should be based on rights that are in existence at the end of the reporting period and align the wording in all affected paragraphs to refer to the \"right\" to defer settlement by at least twelve months and make explicit that only rights in place \"at the end of the reporting period\" should affect the classification of a liability;
Clarify that classification is unaffected by expectations about whether an entity will exercise its right to defer settlement of a liability; and make clear that settlement refers to the transfer to the counterparty of cash, equity instruments, other assets or services;
Clarify how conditions with which an entity must comply within 12 months after the reporting period, such as covenants, affect the corresponding liability\u2019s classification.
Amendments to IFRS 16 Leases: Lease Liability in a Sale and Leaseback (effective 1 January 2024). The amendments explain how an entity accounts for a sale and leaseback after the date of the transaction, specifically where some or all the lease payments are variable lease payments that do not depend on an index or rate. They state that, in subsequently measuring the lease liability, the seller-lessee determines \u2018lease payments\u2019 and \u2018revised lease payments\u2019 in a way that does not result in the seller-lessee recognizing any amount of the gain or loss that relates to the right of use it retains. Any gains and losses relating to the full or partial termination of a lease continue to be recognised when they occur as these relate to the right of use terminated and not the right of use retained.
This annual report is required to be published in the European Single Electronic Format, as determined by and according to the requirements set out in the Commission Delegated Regulation (EU) 2019/815 of December 17, 2018, supplementing Directive 2004/109/EC. The PDF version of the annual report is not ESEF compliant and has been solely prepared for ease of use of readers. The group's official reporting package in ESEF can be found on the group's website.
In anticipation of the group's Initial Public Offering on Euronext Brussels, effective 21 September 2021, the Company has undergone a capital reorganization under common control, in relation to its IPO and the related share transactions amongst the group's shareholders and entities. Under the capital reorganization under common control, the predecessor value method has been applied. As a consequence, comparative information presented in the Azelis Group NV consolidated financial statements partly represents the information of Azelis Holding S.\u00e0 r.l. for prior periods, as the legal life of Azelis Group NV as a company has started on 10 June 2021. As such, prior period profit and loss, cash flows and equity represent those of Azelis Holding S.\u00e0 r.l. for the periods before 10 June 2021.
The Company and its shareholders have proceeded to an IPO (Primary Tranche) and Listing (Secondary Tranche) on Euronext Brussels, effective 21 September 2021. During the IPO a total of 59,242,577 shares was sold, of which 33,846,153 were new shares and 25,396,424 existing shares, at an offer price of \u20ac26 per share, totaling proceeds of \u20ac1,540 million. On 1 October 2021, the over-allotment option was settled and an additional tranche of 8,886,386 shares was sold by the existing shareholders, increasing total shares sold to 68,128,963 and total proceeds to \u20ac1,771 million.
The total gross proceeds for Azelis Group NV resulting from the new shares sold were approximately \u20ac880 million, recognized as a capital increase in equity. The Company has incurred a total of \u20ac58.9 million transaction expenses, of which \u20ac50.5 million are incremental costs related to the issuance of new shares and deducted from equity (other reserves), and of which \u20ac8.4 million are related to the listing procedure and recognized as an expense.
As of 2022, Turkey is categorized as a country with a three-year cumulative inflation rate greater than 100%, which is an indicator for hyperinflation. Also considering qualitative indicators, the Turkish economy is considered to be hyper-inflationary. As a consequence, as of 30 June 2022, IAS 29 Financial Reporting in Hyperinflationary Economies is applied for those entities whose functional currency is the Turkish Lira, retrospectively starting January 1, 2022.
The application of IAS 29 has led to an increase in Azelis' equity of approx. \u20ac27.5 million, and a related increase that is mainly reflected in goodwill and intangible assets. As the majority of Azelis' operational activities in Turkey are settled in hard currencies (USD and EUR mainly), no material impact is observed in Azelis' income statement.
The relevant price index used for the restatement of the financial statements of Azelis' Turkish subsidiaries is the consumer price index (\"CPI\") based on data of the Turkish Statistical Institute. Since end of 2020, the consumer price index has moved as follows:
| \u00a0 | Year (31st December) | Turkey CPI | Change (%) | EUR/TRL exchange rate |
|---|---|---|---|---|
| \u00a0 | 2020 | 5.0481 | N/A | 9.0079 |
| \u00a0 | 2021 | 6.8695 | 36.08% | 14.6823 |
| \u00a0 | 2022 | 11.2845 | 64.27% | 19.9349 |
In 2022, Azelis has launched a long-term incentive plan (\"LTIP\"), granting share awards to certain directors, employees and self-employed managers of the group. In accordance with IFRS 2, the LTIP qualifies as an equity-settled share-based payment transaction.
To cover future obligations under the LTIP, Azelis has purchased treasury shares on Euronext Brussels for a total amount of \u20ac3.0 million.
In 2022, Azelis has changed the presentation of its cash flow statement, solely moving the interests paid cash flows from the operating activities to the financing activities. Accordingly, the same change in presentation was executed for the comparative figures. Accordingly, interest paid of \u20ac41.2 million (2021: \u20ac72.0 million) is now presented in the financing activities. This change in presentation does not affect the consolidated statement of financial position, consolidated statement of profit or loss and other comprehensive income, consolidated statement of changes in equity and the notes to the consolidated financial statements. Azelis has executed this change in presentation because it considers interests paid to be costs of obtaining financial resources.
The financial period is the calendar year starting as of January 1, 2022 and ending as of December 31, 2022 (further mentioned as 2022).
The comparative period is reflecting the financial performance of the group starting January 1, 2021 and ending as of December 31, 2021.
The consolidated financial statements incorporate the financial statements of the Company and all entities controlled by the Company made up to December 31, 2022. All intra-group transactions, balances, income and expenses are eliminated on consolidation.
Subsidiaries are entities controlled by the Company. Control is achieved when the Company 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 Company controls an investee if, and only if, the Company has:
Power over the investee (i.e., existing rights to direct relevant activities);
Exposure, or rights, to variable returns from its involvement in the investee; and
The ability to use its power to affect the investee\u2019s returns.
Generally, there is a presumption that having a majority of voting rights results in control. To support this presumption and when the group has less than a majority of the voting or similar rights of an investee, the group considers all relevant facts and circumstances in assessing whether it has power over an investee.
Non-controlling interests in subsidiaries are identified separately from the group\u2019s equity therein. The interests of non-controlling shareholders may be initially measured at fair value or at the non-controlling interests\u2019 proportionate share of the fair value of the acquiree\u2019s identifiable net assets. A choice of measurement is made on an acquisition-by-acquisition basis. For its current non-controlling interests in subsidiaries, the group has opted to measure at the proportionate share of the acquiree's identifiable net assets. Subsequent to acquisition, the carrying amount of non-controlling interests is the amount of those interests at initial recognition plus the non-controlling interests\u2019 share of subsequent changes in equity. Total comprehensive income is attributed to non-controlling interests even if this results in the non-controlling interests having a deficit balance.
A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction between shareholders.
Acquisitions of subsidiaries and businesses are accounted for using the acquisition method. The consideration transferred for each acquisition is measured at the aggregate of the fair values at the date of exchange of assets given, liabilities incurred or assumed, and equity instruments issued by the group in exchange for control of the acquiree. Where applicable, the consideration for the acquisition includes any asset or liability resulting from a contingent consideration arrangement, measured at its acquisition-date fair value. Subsequent changes in such fair values are adjusted against the cost of acquisition where they qualify as measurement period adjustments.
The acquiree\u2019s identifiable assets, liabilities and contingent liabilities that meet the conditions for recognition at the balance sheet are recognized at their fair value at the acquisition date, except for deferred tax assets or liabilities and liabilities and assets related to employee benefit arrangements.
The difference between the fair value of the consideration transferred and the fair value of the identified assets, liabilities and contingent consideration is recorded as goodwill. If the fair value of the net assets acquired exceeds the aggregate consideration transferred, this purchase bargain is included in the profit or loss, after the group has re-assessed whether it has correctly identified all of the assets acquired and all of the liabilities assumed. Acquisition-related costs are recognized in profit or loss as incurred.
If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, the group reports provisional amounts for the items for which the accounting is incomplete. Those provisional amounts are adjusted during the measurement period, or additional assets or liabilities are recognized, to reflect new information obtained about facts and circumstances that existed as of the acquisition date that, if known, would have affected the amounts recognized as of that date. The measurement period to finalize the valuations is subject to a maximum of one year after acquisition date.
Associates are entities over which the group has significant influence, but no control. Significant influence is the power to participate in the financial and operating policy decisions of the investee.
Associates are accounted for under the equity method and are recognized initially at cost as adjusted for post-acquisition changes in the group\u2019s share of the net assets of the associate. The group\u2019s investment includes goodwill on acquisition, net of any accumulated impairment losses. The consolidated financial statements include the group\u2019s share of the income and expense and the equity movements of the investments accounted within equity, after the alignment of the accounting policies to those of the group, from the day significant influence commences until the day significant influence ceases. When the group\u2019s share of losses exceeds its interest in an equity accounted investee, the carrying amount of that interest (including any long-term investments) is reduced to zero and no further losses are recognized except for losses arising from the group\u2019s obligation or payments on behalf of the investee.
The consolidated financial statements are presented in Euro, which is the group\u2019s presentation currency. The group companies determine their functional currency based on the primary economic environment in which they operate. The main indicators to determine the functional currency is the currency of the sales, expenses and financing activities.
The group operates in different currency environments, but mainly in Euro and USD. Transactions in foreign currencies are translated to the respective functional currencies of the group entities at exchange rates at the date of the transaction. Monetary assets and liabilities denominated in foreign currency at the reporting date are translated to the functional currency of the entity at the exchange rate at that date. Non-monetary assets and liabilities denominated in foreign currency and measured at fair value are translated to the functional currency of the entity at the exchange rate at the date that the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated. Foreign currency differences arising from this operational translation are recognized in the income statement.
The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising from acquisition, are translated to Euro at exchange rates at the reporting date. The income and expenses of foreign operations are translated to Euro at average exchange rates.
Foreign currency differences are recognized in other comprehensive income and accumulated in equity. These differences have been recognized in the foreign currency translation reserve (FCTR). When the group loses control over a foreign operation the accumulated foreign translation amount of the subsidiary is transferred from equity to the profit or loss.
Foreign exchange gains and losses, arising from a monetary item to be received from or paid to a foreign operation for which the settlement is neither planned nor likely to occur in the foreseeable future, are included in the value of net investment in a foreign operation and recognized directly in equity in FCTR.
Non-monetary assets and liabilities, equity, and the income statement of subsidiaries operating in hyperinflationary economies are restated for changes in the general purchasing power of the local currency applying a general price index. These re-measured amounts are used for conversion into the group reporting currency at the period closing exchange rate. As a result, the balance sheet and net results of subsidiaries operating in hyperinflation economies are stated in terms of the measuring unit current at the end of the reporting period. In accordance with IAS 21 The Effects of Changes in Foreign Exchange Rates, multinational companies that have subsidiaries with the hyperinflationary currency as their functional currency are not required to restate comparative amounts as those were presented previously in a stable currency.
The carrying amounts of the group\u2019s non-current non-financial assets are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, the group performs an impairment test. For goodwill and intangible assets with indefinite lives an impairment test is performed every year.
The recoverable amount of an asset or cash-generating unit is the higher of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future pre-tax cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For the purpose of impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or groups of assets (the \u201ccash-generating unit\u201d). The goodwill acquired in a business combination, for the purpose of impairment testing, is allocated to (groups of) cash-generating units that are expected to benefit from the synergies of the combination.
Corporate assets are assets that do not generate cash inflows independently, and their carrying amounts need to be allocated to the cash-generating units on a reasonable and consistent basis. If a corporate asset cannot be allocated to cash-generating units on a reasonable and consistent basis, the group performs the goodwill impairment test in two stages: first on the level of the cash-generating units, and secondly on the level of the smallest group of cash-generating units to which the corporate asset can be allocated on a reasonable and consistent basis.
An impairment loss is recognized if the carrying amount of an asset or its cash-generating unit exceeds its estimated recoverable amount. Impairment losses are recognized in the income statement. Impairment losses recognized in respect of cash-generating units are allocated first to reduce the carrying amount of goodwill allocated to the units and then to reduce the carrying amount of the other assets in the unit (group of units) on a pro rata basis.
An impairment loss in respect of goodwill will not be reversed afterwards. In respect of other assets, impairment losses recognized in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset\u2019s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortization, if no impairment loss had been recognized.
Goodwill is initially measured at cost, the excess of the aggregate of the consideration transferred and the amount recognized for the assets acquired and liabilities assumed in a business combination. After initial recognition, goodwill is measured at cost less any accumulated impairment losses. In the event of disposal of a cash-generating unit, the attributable amount of goodwill is included in the determination of the profit or loss on disposal.
Research activity expenses, undertaken with the prospect of gaining new scientific or technical knowledge and understanding, are recognized in the income statement when incurred.
Development expenses for which the group has the technical feasibility, intention and means to complete the intangible assets and the economic future benefits of the assets will flow to the group are capitalized at cost.
Other intangible assets with finite useful lives, are measured at cost less accumulated amortization and accumulated impairment losses. Amortization is recognized in the income statement on a straight-line basis over the estimated useful lives of intangible assets, other than goodwill, from the date when the asset is ready for use. The estimated useful lives of intangible assets and their residual value (if applicable) are reviewed every year.
The estimated useful lives for the current and comparative period are as follows:
| Intangible assets | Economic lifetime |
|---|---|
| Trademarks | Indefinite |
| Customer lists | 5 to 10 years |
| Distribution rights | 20 years |
| Other intangible assets | 3 to 7 years |
Items of property, plant and equipment are measured at cost less accumulated depreciation and accumulated impairment losses. Cost includes expenditure that is directly attributable to the acquisition of the asset. Components of property, plant and equipment with separate useful lives are accounted for as separate items (major components) of property, plant and equipment.
Gains and losses on disposal of an item of property, plant and equipment are determined by comparing the net proceeds from disposal with the carrying amount of property, plant and equipment and are recognized in other income or other expenses in the income statement.
Depreciation is recognized in the income statement on a straight-line basis over the estimated useful lives of each component of property, plant and equipment to their residual values. Leasehold improvements are depreciated over the shorter of the lease term and their useful lives. Land is not depreciated.
The estimated useful lives for the current and comparative period are as follows:
| Property, plant and equipment | Economic lifetime |
|---|---|
| Buildings | 20 to 33 years |
| Plant and equipment | 5 to 10 years |
| Other property, plant and equipment | 5 to 10 years |
Depreciation methods, useful lives and residual values are reviewed at each reporting date.
Assets and liabilities arising from a lease are initially measured on a present value basis.
Lease liabilities include the net present value of the following lease payments:
fixed payments, less any lease incentives receivable
variable lease payment that are based on an index or a rate, initially measured using the index or rate as of the commencement date.
amounts expected to be payable by the group under residual value guarantees.
the exercise price of a purchase option if the group is reasonably certain to exercise that option, and
payments of penalties for terminating the lease, if the term reflects the group exercising that option.
Lease payments to be made under reasonably certain extension options are also included in the measurement of the liability.
The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be readily determined, which is generally the case for leases in the group, the lessee's incremental borrowing rate is used, being the rate that the individual lessee would have to pay to borrow the funds necessary to obtain an asset of similar value to the right-of-use asset in a similar economic environment with similar terms, security and conditions.
The group is exposed to potential future increases in variable lease payments based on an index or rate, which are not included in the lease liability until they take effect. When adjustments to lease payments based on an index or rate take effect, the lease liability is reassessed and adjusted against the right-of-use asset.
Lease payments are allocated between principal and finance cost. The finance cost is charged to profit or loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period.
Right-of-use assets are 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, and
restoration costs.
Payments associated with short-term leases of equipment and vehicles and all leases of low-value assets are recognized on a straight-line basis as an expense in profit or loss. Short-term leases are leases with a lease term of 12 months or less. Low-value assets comprise IT equipment and small items of office furniture.
The group remeasures the lease liability (and makes a corresponding adjustment to the related right-of-use asset) whenever:
The lease term has changed or there is a significant event or change in circumstances resulting in a change in the assessment of exercising a purchase option, in which case the lease liability is remeasured by discounting the revised lease payments using a revised discount rate.
The lease payments change due to changes in an index or rate or a change in expected payment under a guaranteed residual value, in which cases the lease liability is remeasured by discounting the revised lease payments using an unchanged discount rate.
A lease contract is modified and the lease modification is not accounted for as a separate lease, in which case the lease liability is remeasured based on the lease term of the modified lease by discounting the revised lease payments using a revised discount rate at the effective date of the modification.
Financial assets and liabilities are classified into three categories: Measured at amortized cost, at fair value through other comprehensive income (FVTOCI) and at fair value through Profit and Loss (FVTPL). Currently, Azelis has no financial assets or liaibilities measured at FVTOCI.
The group recognizes financial instruments when it enters into a contract. Financial instruments are derecognized when the contractual rights to the cash flows of the asset expire, or it transfers the rights to receive the contractual cash flows on the financial asset in a transaction in which substantially all the risks and rewards of ownership of the financial asset are transferred. With regard to its trade receivables, the group engages in non-recourse factoring programs. Receivables are derecognized when the factor pays the group, which also triggers a fee to be paid for the credit risk assumed by the factor. Factoring fees are recognized in the group's financial expenses.
Initially, financial instruments are recognized at their fair value. Transaction costs directly attributable to the acquisition or issue of financial instruments are recognized at the initial measurement date, except for financial instruments measured at FVTPL. Transaction costs related to FVTPL financial instruments are recorded in the profit or loss at initial recognition.
The classification of financial assets is based on two criteria: the objective of the company's business model for managing the assets, and whether the instruments' contractual cash flows represent \"solely payments of principal and interest\" on the principal amount outstanding (known as the 'SPPI-test').
Trade receivables are recognized initially at the amount of consideration that is unconditional, unless they contain significant financing components, when they are recognized at fair value. The group holds trade receivables with the objective of collecting the contractual cash flows and therefore measures them subsequently at amortized cost using the effective interest method. Other receivables are initially measured at fair value and subsequently measured at amortized cost.
Trade and other payables are recognized initially at their fair value and subsequently measured at amortized cost using the effective interest method. Loans and borrowings are initially recognized at fair value, net of transaction costs incurred. Loans and borrowings are subsequently measured at amortized cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognized in profit or loss over the period of the borrowings using the effective interest method.
An exchange between an existing borrower and lender of financial liabilities with substantially different terms is accounted for as an extinguishment of the original financial liability and the recognition of a new financial liability. Similarly, a substantial modification of the terms of an existing financial liability or a part of it (whether or not attributable to the financial difficulty of the debtor) is accounted for as an extinguishment of the original financial liability and the recognition of a new financial liability.
The terms are substantially different if the discounted present value of the cash flows under the new terms, including any fees paid net of any fees received and discounted using the original effective interest rate, is at least 10 percent different from the discounted present value of the remaining cash flows of the original financial liability. If an exchange of debt instruments or modification of terms is accounted for as an extinguishment, any costs or fees incurred are recognized as part of the gain or loss on the extinguishment. However, costs or fees that are incremental and directly related to the issue of the new debt instrument are treated as transaction costs of the new liability, and hence are spread forward by adjusting the effective interest rate.
The group uses derivative financial instruments such as forward exchange contracts, interest rate swaps to hedge its foreign currency risk and interest rate risk and interest rate cap, to hedge its interest rate risks associated with floating-rate borrowings under the group\u2019s credit facilities.
Derivatives are initially recognized as other financial assets at fair value on the date a derivative contract is entered into, and they are subsequently remeasured to their fair value through profit and loss at the end of each reporting period. The derivative is only used for economic hedging purposes and not as a speculative investment.\u00a0 The group does not apply hedge accounting. Therefore, changes in the fair value of the group\u2019s derivative financial instrument are recognized immediately in the consolidated statement of profit or loss and are included in finance costs.
The group has granted put options for remaining non-controlling interests in acquired companies, giving the holders the right to sell to the group their investments in these subsidiaries. These financial liabilities do not bear interest. In accordance with IAS 32, the group recognizes a redemption liability corresponding to the present value of the estimated exercise price of the option. The redemption liability is included in other current and non-current liabilities and the counterpart is a reduction from the group's equity. At the end of each reporting period, the liability is adjusted to reflect changes in the estimated exercise price. These subsequent changes are accounted for in the income statement.
If the group has also obtained a call option on the same remaining non-controlling interests of the acquired companies, this option is taken into account for the control assessment in respect of the business combination.
The group recognizes an allowance for expected credit losses (ECL) for all financial assets that are not held at FVTPL. ECLs are based on the difference between the contractual cash flows due in accordance with the contract and all the cash flows that the group expects to receive, discounted at an approximation of the original effective interest rate.
The impairment methodology applied depends on whether there has been a significant increase in credit risk: if so, the loss allowance is measured as the lifetime expected credit loss. If not, the allowance is measured as the 12-month expected credit loss. For Trade receivables, the group applies the simplified approach permitted by IFRS 9, which requires lifetime expected losses to be recognized from initial recognition of the receivables (see note 4.1 for further details). While cash and cash equivalents and other loan receivables are also subject to the impairment requirements of IFRS 9, no impairment loss was identified as these assets are considered as low-credit risk.
Individually significant financial assets are tested for impairment on an individual basis. The remaining financial assets are assessed collectively in groups that share similar credit risk characteristics.
Impairment losses of financial assets are recognized in the income statement. An impairment loss is reversed if the reversal can be related objectively to an event occurring after the impairment loss was recognized.
Financial assets and liabilities are offset, and the net amount presented in the statement of financial position when, and only when, the group has a legal right to offset the amounts and intends either to settle on a net basis or to realize the asset and settle the liability simultaneously.
Cash and cash equivalents comprise cash balances and call deposits. Bank overdrafts that are repayable on demand and form an integral part of the group\u2019s cash management are included as a component of cash and cash equivalents for the purpose of the statement of cash flows.
Income tax expense comprises current and deferred taxes. Income tax expense is recognized in the income statement except to the extent that it relates to items recognized in other comprehensive income, in which case it is recognized in other comprehensive income.
Current tax is the expected tax payable (receivable) on the taxable income (loss) for the period, using tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous years.
Deferred income tax is provided, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. However, deferred tax liabilities are not recognized if they arise from the initial recognition of goodwill. Deferred income tax is also not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the end of the reporting period and are expected to apply when the related deferred income tax asset is realized or the deferred income tax liability is settled.
A deferred tax asset is recognized to the extent that it is probable that future taxable profits will be available against which the temporary difference can be utilized. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realized.
Inventories are measured at the lower of cost and net realizable value. The inventories are measured at their weighted average costs increased with cost comprising direct materials, direct labor and an appropriate proportion of variable and fixed overhead expenditure, the latter being allocated on the basis of normal operating capacity. Net realizable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses. Impairments of inventories to net realizable value are recognized in the profit or loss as part of \u2018Cost for goods and consumables\u2019. In case the value of impaired inventories increases the impairment will be reversed to the lowest of the increased net realizable value and the original weighted average cost.
Ordinary shares are classified as equity. Incremental costs directly attributable to the issuance of ordinary shares and share options are recognized in equity net of tax.
The share premium consists of additional paid-in capital exceeding the par value of outstanding shares.
Treasury share purchases are recognized as a deduction from equity (section other reserves). No gain or loss is recognized on the purchase, sale, issue or cancellation of treasury shares. Consideration paid or received is recognized directly in equity.
The group operates several defined benefit pension plans.
The liability or asset recognized in the balance sheet of defined benefit pension plans is the present value of the defined benefit obligation at the end of the reporting period less the fair value of plan assets. The defined benefit obligation is calculated annually by independent qualified actuaries using the projected unit credit method.
The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows using interest rates of high-quality corporate bonds that are denominated in the currency in which the benefits will be paid, and that have terms approximating to the terms of the related obligation. The net interest cost is calculated by applying the discount rate to the net balance of the defined benefit obligation and the fair value of plan assets. This cost is included in finance expense in the income statement. Changes in the present value of the defined benefit obligation resulting from plan amendments or curtailments are recognized immediately in the income statement as past service costs.
Remeasurement gains and losses arising from experience adjustments and changes in actuarial assumptions are recognized in the period in which they occur, directly in other comprehensive income. They are included in retained earnings in the statement of changes in equity and in the balance sheet.
For defined contribution plans, the group pays contributions to publicly or privately administered pension insurance plans on a mandatory, contractual or voluntary basis. The group has no further payment obligations once the contributions have been paid. The contributions are recognized as employee benefit expense when they are due.
The cost of all short-term employee benefits, such as salaries, employee entitlements to leave pay, bonuses, medical aid and other contributions, are recognized during the period in which the employee renders the related service. The group recognizes those costs only when it has a present legal or constructive obligation to make such payment and a reliable estimate of the liability can be made.
The group\u2019s net obligation in respect of long-term employee benefits is the amount of future benefit that employees have earned in return for their service in the current and prior periods. That benefit is discounted to determine its present value. The calculation of the other long-term employee benefits is performed using the projected unit credit method. Any actuarial gains and losses are recognized in profit or loss in the period in which they arise.
The group has a performance share plan for key management, qualifying as an equity-settled share-based payment plan. Equity-settled share-based payment transactions are transactions in which the entity receives goods or services in exchange for its own equity instruments (e.g. shares, options).
Goods or services received in equity-settled share-based payment transactions are measured at their fair value, unless they cannot be estimated reliably, in which case it is determined in accordance with the fair value of the equity instruments granted. The fair value is determined at grant date and the value incorporates market conditions using a Monte Carlo calculation. This value remains unchanged over the vesting period. Service conditions and non-market conditions do not affect the fair value of the instruments granted, but are taken into account by adjusting the number of equity instruments included in the measurement of the transaction, an estimate which is revised at each reporting date until the vesting period has lapsed. Azelis accounts for the equity-settled share-based payment transaction in the other reserves section of the equity, and its initial recognition and subsequent changes are accounted for in employee expenses.
A provision is recognized if, as a result of a past event, the group has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. Unwinding of the discount of provisions is recorded as financial expenses.
Revenue from product sales is recognized at point in time when the performance obligation is satisfied. For the group, this is usually upon delivery of the goods to the client. Revenue is measured at the fair value of the consideration received, net of returns, trade discounts and volume rebates. Revenue is only recognized to the extent that it is highly probable that a significant reversal will not occur.
When the outcome of a commission transaction can be estimated reliably, revenue associated with the transaction shall be recognized by reference to the stage of completion of the transaction at the end of the reporting period. When the group acts in the capacity of an agent rather than as principal in a transaction, the revenue recognized is the net amount of commission made by the group. The group acts as an agent when it does not take title and is not exposed to risks of the goods, when the risks are born by the supplier and when the selling prices are set by the suppliers.
An operating segment is a component of the group that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the group\u2019s other components. The segmentation used by the group is based on geography, organization and management structure and commercial interdependencies.
Segment results that are reported to the CEO include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. Unallocated items comprise mainly head office expenses and income tax assets and liabilities, and are presented in a separate reporting unit \u2018group holding & other\u2019.
The reporting segments used are defined as follows:
EMEA: all operating companies in Europe, Middle East and Africa
Americas: all operating companies in the United States of America, Canada, Mexico and South America (mainly Colombia).
Asia-Pacific: all operating companies in Asia, South-East Asia and the Pacific region.
group holding & other: all non-operating companies, including the corporate service center and headquarter in Belgium.
Government grants are recognized in profit or loss on a systematic basis over the periods in which the entity recognizes as expenses the related expenses for which the grants are intended to compensate. Government grants are not recognized until there is reasonable assurance that the group will comply with the conditions attaching to them and that the grants will be received.
The consolidated statement of cash flows is prepared using the indirect method. Cash is defined as cash and cash equivalents less bank overdrafts. Cash flows are presented separately in the statement of cash flows as cash flows from operating activities, investing activities and financing activities.
A number of the group\u2019s accounting policies and disclosures require the determination of fair value, for both financial and non-financial assets and liabilities. Fair values have been determined for measurement or disclosure purposes based on the following methods. When applicable, further information about the assumptions made in determining fair values is disclosed in the notes specific to that asset or liability.
The fair value of property, plant and equipment recognized as a result of a business combination is based on market values. The market value of property is the estimated amount for which a property could be exchanged on the date of valuation between a willing buyer and a willing seller in an arm\u2019s length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion.
The fair value of trademarks and distribution rights acquired in business combinations are measured using the income approach (relief from royalty and multi-period excess earning method, respectively). The fair value of other intangible assets is mainly based on the cost approach.
The fair value of inventories is determined based on its estimated selling price in the ordinary course of business less the estimated costs of completion and sale.
The fair value of financial assets at FVTPL and FVTOCI financial assets is determined by reference to their quoted bid price at the reporting date. In case no market prices are available the instruments are measured using the present value of the expected future cash flows, discounted at the market rate of interest at measurement date.
The fair value of trade and other receivables is determined as the present value of future cash flows, discounted at the market rate of interest at measurement date.
The fair value of forward exchange contracts is based on their listed market price, if available. If a listed market price is not available, then fair value is estimated by discounting the difference between the contractual forward price and the current forward price for the residual maturity of the contract using a risk-free interest rate increased by an appropriate additional spread related to the credit risk of the group and the risk of the counterparty.
Fair value is calculated based on the present value of future principal and interest cash flows, discounted at the market rate of interest at measurement date, including the group\u2019s credit risk.
The fair value of contingent consideration qualifying as earnout, recognized in relation to business combinations, is calculated based on a forecast of the underlying performance measure and is discounted at the market rate of interest at measurement date. The fair value of contingent consideration constituting a mere fixed deferred payment is determined as the present value of future cash flows and discounted at the market rate of interest at measurement date.
The redemption value of put options on non-controlling interests, recognised in relation to business combinations, is calculated based on specific contractual specifications consisting mostly of a combination of a multiple on a future performance measure and the balance of certain net working capital items upon exercise of the option.
Assets and liabilities for which fair value is measured or disclosed in the consolidated financial statements are categorized within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:
Level 1: quoted (unadjusted) prices in active markets for identical assets or liabilities;
Level 2: valuation techniques for which all inputs which have a significant effect on the recorded fair value are observable for the asset or liability, either directly or indirectly;
Level 3: valuation techniques for which all inputs which have a significant effect on the recorded fair value are not based on observable market data.
In the process of applying accounting policies and preparing the consolidated financial statements, the group has made certain judgements (other than those involving estimates) that affect the reported amounts of assets and liabilities, income and expenses.
In addition, the group is required to make certain estimates and assumptions that affect the measurement and presentation of reported figures. Estimates are based on past experience and on additional knowledge obtained on transactions to be reported, and are reviewed on an ongoing basis. Actual amounts may differ from these estimates. The most critical accounting judgements and estimates related to uncertainties with significant risk of causing material adjustment and applied in the consolidated financial statements are described below:
The group has judged that the Azelis trademark has an indefinite useful life. As a consequence, the trademark is not amortized. At each reporting date, the group reviews this judgement and assesses whether the circumstances continue to support the indefinite useful life. The trademark is part of the yearly impairment test. (See note 15).
In assessing the realization of deferred tax assets, management considers the extent to which it is probable that the deferred tax asset will be realized (note 14). The ultimate realization of deferred tax assets is dependent upon the generation of future taxable profit during the periods in which those temporary differences and tax loss carry forwards are available. Management considers the expected reversal of deferred tax liabilities and projected future taxable income in making this assessment. (See note 14.2)
In determining the lease term, management considers all facts and circumstances that create an economic incentive to exercise an extension option. Extension options are only included in the lease term if the lease is reasonably certain to be extended. (See note 16.2)
In a business combination the acquired assets and liabilities are measured at fair value. The group uses assumptions and non-observable information to prepare fair value of the assessed, where no observable information is available. Afterwards the actual market performance can differ from the assumptions. The most important assumptions are disclosed in the note for business combinations. (See note 7).
The group tests whether goodwill has suffered any impairment on an annual basis. The recoverable amount of a cash generating unit (CGU) is determined based on value-in-use calculations which require the use of assumptions. The calculations use cash flow projections based on financial budgets approved by management covering a five-year period, incorporating estimates for sales growth and margin growth. Cash flows beyond the five-year period are extrapolated using the estimated growth rates. These growth rates are consistent with forecasts included in industry reports specific to the industry in which each CGU operates. (See note 15.2).
Azelis is exposed to several financial and other risks, amongst which:
Credit risk
Liquidity risk
Market risks
Operational risks
Azelis has a risk management framework in place to mitigate those risks. The Board of Directors oversees how management monitors compliance with the group\u2019s risk management policies and procedures and reviews the adequacy of the risk management framework in relation to the risks faced by the group.
Credit risk is the risk of financial loss to the group if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the group\u2019s receivables from customers.
As of December 31, the main credit risk can be summarized as follows:
| (in thousands of \u20ac) | 31-12-2022 | 31-12-2021 |
|---|---|---|
| Trade and other receivables | 538,381 | 428,950 |
| Cash and cash equivalents | 268,160 | 141,293 |
| Other financial assets | 12,038 | 2,877 |
| \u00a0 | 818,578 | 573,121 |
The group applies the IFRS 9 simplified approach (refer to Note 2.7.2).
The group's exposure to credit risk is influenced mainly by the individual characteristics of each customer. The demographics of the group\u2019s customer base, including the default risk of the industry and country in which customers operate, has less of an influence on credit risk. The group has no significant concentration of credit risk.
The group has a credit policy under which each new customer is analyzed individually for creditworthiness before the group\u2019s standard payment and delivery terms and conditions are offered. The group\u2019s review includes external ratings, when available, and in some cases bank references. Purchase limits are established for each customer.
Customers that fail to meet the group\u2019s benchmark creditworthiness may transact with the group only on a prepayment basis. The group\u2019s credit policy includes suspension of further deliveries, if customers fail to pay their debts on time. Moreover, the group engages in non-recourse factoring for the majority of its revenue in the EMEA region, which is used as an efficiency program in its credit collection processes. No other credit insurance programs are deemed to be necessary.
A significant portion of the group\u2019s customers have been transacting with the group companies for many years and losses have occurred infrequently. The group does not require collateral in respect of trade and other receivables.
The group establishes an allowance for impairment that represents its estimate of expected losses in respect of trade receivables. The main components of this allowance are a specific loss component that relates to individually significant exposures and a collective loss component established for groups of similar assets in respect of losses that have been incurred but not yet identified. The collective loss allowance is determined based on historical data of payment statistics for similar financial assets, adjusted for forward-looking information through an assessment of both the current and projected direction of economic conditions at the reporting date.
At year-end the aging of the trade receivables is constituted as follows:
| (in thousands of \u20ac) | Gross | % of total | Impairment | % Impaired |
|---|---|---|---|---|
| Not due | 334,132 | 69.3% | 2,590 | 0.8% |
| Between 0 and 2 months | 98,192 | 20.4% | 10,725 | 10.9% |
| Between 2 and 12 months | 38,990 | 8.1% | 14,713 | 37.7% |
| More than 12 months | 10,885 | 2.3% | 10,885 | 100.0% |
| \u00a0 | 482,200 | 100.0% | 38,912 | 8.1% |
| (in thousands of \u20ac) | Gross | % of total | Impairment | % Impaired |
|---|---|---|---|---|
| Not due | 302,458 | 76.1% | 1,549 | 0.5% |
| Between 0 and 2 months | 74,397 | 18.7% | 4,593 | 6.2% |
| Between 2 and 12 months | 11,852 | 3.0% | 6,973 | 58.8% |
| More than 12 months | 8,668 | 2.2% | 8,668 | 100.0% |
| \u00a0 | 397,375 | 100.0% | 21,783 | 5.5% |
The loss allowances for trade receivables as of December 31 reconcile to the opening loss allowances as follows:
| (in thousands of \u20ac) | 31-12-2022 | 31-12-2021 |
|---|---|---|
| Balance at 1 January | 21,783 | 15,763 |
| Business combination | 12,235 | 4,190 |
| Provisions made in the year | 6,513 | 2,451 |
| Decrease on impairment losses | -579 | -838 |
| Exchange rate differences | -1,040 | 217 |
| Balance at December 31 | 38,912 | 21,783 |
The group\u2019s exposure to credit risk is insignificant as the group deals with highly rated banks for its cash deposits.
The group\u2019s policy is to provide financial guarantees only in favor of wholly owned subsidiaries. At balance sheet date, no other material guarantees were outstanding.
Liquidity risk is the risk that the group will not be able to meet its financial obligations as they fall due. The group\u2019s approach to managing liquidity is to ensure that it will have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses.
The group ensures that it has sufficient cash on hand and unused credit facilities to meet expected operational expenses for the respective planning horizon, including the servicing of financial obligations.
The following are the contractual maturities of financial liabilities, including estimated interest payments and excluding the impact of any netting agreements at year-end:
| (in thousands of \u20ac) | Carrying amount | Undiscounted contractual Cash flows | Less than 1 Year | 1 to 5 Years | More than 5 Years |
|---|---|---|---|---|---|
| Loans and borrowings | 1,303,717 | 1,465,226 | 260,431 | 1,204,795 | 0 |
| Lease obligation (IFRS16) | 101,558 | 102,806 | 20,639 | 52,412 | 29,755 |
| Derivatives | 377 | 377 | 377 | 0 | 0 |
| Trade and other payables | 869,574 | 869,574 | 869,574 | 0 | 0 |
| Bank Overdrafts | 30,412 | 30,412 | 30,412 | 0 | 0 |
| \u00a0 | 2,305,637 | 2,468,394 | 1,181,432 | 1,257,207 | 29,755 |
Loans and borrowings are primarily to be repaid in 2026.
| (in thousands of \u20ac) | Carrying amount | Undiscounted contractual Cash flows | Less than 1 Year | 1 to 5 Years | More than 5 Years |
|---|---|---|---|---|---|
| Loans and borrowings | 902,634 | 996,252 | 116,317 | 879,935 | 0 |
| Lease obligation (IFRS16) | 69,278 | 69,278 | 15,200 | 37,831 | 16,247 |
| Derivatives | 155 | 155 | 155 | 0 | 0 |
| Trade and other payables | 550,576 | 550,576 | 550,576 | 0 | 0 |
| Bank Overdrafts | 40,524 | 40,524 | 40,524 | 0 | 0 |
| \u00a0 | 1,563,167 | 1,656,785 | 722,772 | 917,766 | 16,247 |
Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices will affect the group\u2019s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimizing the return. The group buys and sells derivatives in order to manage its market risks.
The group is exposed to currency risk on sales, purchases and borrowings that are denominated in various currencies. The main currencies are Euro (\u20ac), Pound Sterling (GBP), US Dollars (USD) and Canadian Dollars (CAD).
At any point in time, the group hedges a significant part of its foreign currency exposure in respect of sales and purchases orders via natural hedges within its operational portfolio. The group uses mainly forward exchange contracts to hedge its remaining currency risk, all with a maturity of less than one year from the reporting date. When necessary, forward exchange contracts are rolled over at maturity. The group has not applied hedge accounting.
Interest on borrowings is denominated in currencies that predominantly match the cash flows generated by the underlying operations of the group, primarily Euro (\u20ac), US Dollars (USD), Pound Sterling (GBP) and Canadian Dollar (CAD). This provides an economic hedge without derivatives being entered into and therefore the group has not applied hedge accounting.
The group\u2019s investments in foreign non-euro subsidiaries are considered to be long-term operations of the group and are therefore not hedged. Currency translation differences on these long-term operations are reported in the translation reserve in equity.
The exposure to foreign currency risk in current assets and current liabilities is mainly related to balances denominated in USD, GBP and CAD, for which the notional amounts (stated in \u20ac) amount to:
| (in thousands of \u20ac) | 31-12-2022 | 31-12-2022 | 31-12-2022 | 31-12-2021 | 31-12-2021 | 31-12-2021 |
|---|---|---|---|---|---|---|
| \u00a0 | USD | GBP | CAD | USD | GBP | CAD |
| Trade receivables | 197,296 | 927 | 10,955 | 138,345 | 1,759 | 49,139 |
| Cash and cash equivalents | 65,637 | 4,270 | -33 | 16,722 | 2,296 | 7,120 |
| Trade payables | -152,045 | -2,721 | -5,497 | -68,068 | -4,418 | -31,346 |
| Gross balance sheet exposure | 110,888 | 2,476 | 5,426 | 86,999 | -363 | 24,913 |
A 10% strengthening of the Euro against the USD, GBP and CAD at year-end would have increased (decreased) equity and the income statement by the amounts shown below. This analysis assumes that all other variables, in particular interest rates, remain constant.
| (in thousands of \u20ac) | 31-12-2022 | 31-12-2021 | ||
|---|---|---|---|---|
| \u00a0 | Profit or loss | Equity | Profit or loss | Equity |
| USD | -10,081 | -10,081 | -7,909 | -7,909 |
| CAD | -493 | -493 | -2,265 | -2,265 |
| GBP | -225 | -225 | 33 | 33 |
A 10% weakening of the Euro against the USD, GBP and CAD at year-end would have had the equal but opposite effect in Euro to the amounts shown above, on the basis that all other variables remain constant.
The group adopts a policy of carefully managing its interest rate risk. On a regular basis, the Board of Directors assesses the group's interest rates versus external benchmarks, ensuring that management will affect financial transactions resulting in fixed borrowing interest rates in case limits are exceeded. As of the reporting date, the external bank borrowings are on a floating interest rate basis.
The group\u2019s main interest rate risk arises from a long-term borrowing with a variable rates (EURIBOR and SONIA), which exposes the group to cash flow interest rate risk. The cash flow risk is mitigated through the usage of an interest rate cap.\u00a0
At the reporting date the interest rate profile of the group\u2019s interest-bearing financial instruments expressed in their carrying amounts was:
| (in thousands of \u20ac) | 31-12-2022 | 31-12-2021 |
|---|---|---|
| Variable rate instruments | \u00a0 | \u00a0 |
| Financial assets | 268,160 | 141,293 |
| Financial liabilities | -1,435,687 | -1,012,436 |
| \u00a0 | -1,167,526 | -871,143 |
An increase (decrease) of 100 basis points in interest rates at the reporting date would have decreased (increased) equity and the income statement (not considering income tax impact) by the annual amounts shown below. This analysis assumes that all other variables, in particular foreign currency rates and the potential mitigating effect of the interest rate cap, remain constant.
| (in thousands of \u20ac) | Profit or loss - 2022 | Equity - 2022 | ||
|---|---|---|---|---|
| \u00a0 | 100 bp | 100 bp | 100 bp | 100 bp |
| \u00a0 | Increase | Decrease | Increase | Decrease |
| Variable rate instruments | -14,357 | 14,357 | -14,357 | 14,357 |
| Cash flow sensitivity (net) | -14,357 | 14,357 | -14,357 | 14,357 |
| (in thousands of \u20ac) | Profit or loss - 2021 | Equity - 2021 | ||
|---|---|---|---|---|
| \u00a0 | 100 bp | 100 bp | 100 bp | 100 bp |
| \u00a0 | Increase | Decrease | Increase | Decrease |
| Variable rate instruments | -10,124 | 10,124 | -10,124 | 10,124 |
| Cash flow sensitivity (net) | -10,124 | 10,124 | -10,124 | 10,124 |
Operational risk is the risk of direct or indirect loss arising from a wide variety of causes associated with the group's processes, personnel, technology and infrastructure and from external factors other than credit, market and liquidity risks such as those arising from legal and regulatory requirements and generally accepted standards of corporate behavior. Operational risks arise from all of the group's operations. The group's objective is to manage operational risks so as to balance the avoidance of financial losses and damage to the group's reputation with overall cost effectiveness and to avoid control procedures that restrict initiative and creativity.
On a selective basis, the group has outstanding foreign exchange swap contracts to manage the exposure to foreign currency risk on outstanding foreign currency receivables/payables, as well as an interest rate swap relating to its variable rate interest risk.
In May 2022, the group entered into an interest rate cap agreement (\u201cinterest rate cap\u201d) to limit its interest rate risk exposure (see note 22.1.1). The interest rate cap modifies the Company\u2019s exposure to interest rate risk by converting a portion of the Company\u2019s floating-rate debt to a fixed-rate basis, thereby reducing the impact of interest rate changes on interest expense. The upfront fee paid for the interest rate cap for an amount of \u20ac4.6 million was recorded under other financial assets. Subsequently, in the consolidated statement of profit or loss for the year ended December 31, 2022, the group recognized the change in fair value of the interest rate cap within financial income and expenses. During the year ended December 31, 2022, the group recognized a fair value gain of \u20ac5.0 million in the consolidated statement of profit or loss, within financial income.
In connection with business combinations, the group has outstanding liabilities for contingent consideration and for put options on non-controlling interests. The group\u2019s financial instruments per category are shown below including the fair value and hierarchy information.
The interest rate cap qualifies for the level 2 category in the fair value hierarchy due to the fact that it is not traded in an active market and the fair value is\u00a0determined using valuation techniques (option pricing model) which maximize the use of observable market data. Since\u00a0all significant inputs required to fair value the instrument are observable, the instrument is classified as level 2. All derivatives related to forward exchange contracts are classified as Level 2. Contingent consideration qualifying as earnout and put options on non-controlling interests are classified as Level 3. For the calculation basis of fair values, see also note 2.17 \u2013 Determination of fair values.
The carrying amount of the other financial assets and liabilities approximates their fair value.
| (in thousands of \u20ac) | Note | Fair value through P&L | Amortized cost | Total book value | Level 1 | Level 2 | Level 3 | TOTAL |
|---|---|---|---|---|---|---|---|---|
| Assets | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Non current assets | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Other Financial receivables | 4 | \u00a0 | 832 | 832 | \u00a0 | 832 | \u00a0 | 832 |
| Derivatives | 4 | 9,556 | \u00a0 | 9,556 | \u00a0 | 9,556 | \u00a0 | 9,556 |
| Other investments | 4 | 698 | 809 | 1,506 | \u00a0 | 1,506 | \u00a0 | 1,506 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Current assets | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Trade receivables | 19 | \u00a0 | 443,288 | 443,288 | \u00a0 | 443,288 | \u00a0 | 443,288 |
| Other receivables | 19 | \u00a0 | 95,093 | 95,093 | \u00a0 | 95,093 | \u00a0 | 95,093 |
| Other financial receivables | \u00a0 | \u00a0 | 81 | 81 | \u00a0 | 81 | \u00a0 | 81 |
| Derivatives | 4 | 199 | \u00a0 | 199 | \u00a0 | 199 | \u00a0 | 199 |
| Cash & Cash equivalents | 20 | \u00a0 | 268,160 | 268,160 | \u00a0 | 268,160 | \u00a0 | 268,160 |
| Total financial assets | \u00a0 | 10,453 | 808,263 | 818,716 | 0 | 818,716 | 0 | 818,716 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Liabilities | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Non Current Liabilities | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Interest bearing | 22 | \u00a0 | 1,259,562 | 1,259,562 | \u00a0 | 1,259,562 | \u00a0 | 1,259,562 |
| Other Financial liabilities | \u00a0 | 73,420 | 24,844 | 98,264 | \u00a0 | 24,844 | 73,420 | 98,264 |
| Current liabilities | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Interest bearing | 22 | \u00a0 | 145,713 | 145,713 | \u00a0 | 145,713 | \u00a0 | 145,713 |
| Bank overdraft | 20 | \u00a0 | 30,412 | 30,412 | \u00a0 | 30,412 | \u00a0 | 30,412 |
| Trade payables | 24 | \u00a0 | 462,728 | 462,728 | \u00a0 | 462,728 | \u00a0 | 462,728 |
| Other current liabilities excl derivatives | 24 | 50,657 | 257,924 | 308,582 | \u00a0 | 257,924 | 50,657 | 308,582 |
| Derivatives | 24 | 377 | \u00a0 | 377 | \u00a0 | 377 | \u00a0 | 377 |
| Total financial liabilities | \u00a0 | 124,454 | 2,181,183 | 2,305,637 | 0 | 2,181,560 | 124,077 | 2,305,637 |
| (in thousands of \u20ac) | Note | Fair value through P&L | Amortized cost | Total book value | Level 1 | Level 2 | Level 3 | TOTAL |
|---|---|---|---|---|---|---|---|---|
| Assets | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Non current assets | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Other Financial receivables | 4 | \u00a0 | 1113 | 1,113 | \u00a0 | 1,113 | \u00a0 | 1,113 |
| Other investments | 4 | \u00a0 | 422 | 422 | \u00a0 | 422 | \u00a0 | 422 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Current assets | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Trade receivables | 19 | \u00a0 | 375,591 | 375,591 | \u00a0 | 375,591 | \u00a0 | 375,591 |
| Other receivables | 19 | \u00a0 | 53,359 | 53,359 | \u00a0 | 53,359 | \u00a0 | 53,359 |
| Other financial receivables | \u00a0 | \u00a0 | 1,479 | 1,479 | \u00a0 | 1,479 | \u00a0 | 1,479 |
| Derivatives | 4 | 44 | \u00a0 | 44 | \u00a0 | 44 | \u00a0 | 44 |
| Cash & Cash equivalents | 20 | \u00a0 | 141,293 | 141,293 | \u00a0 | 141,293 | \u00a0 | 141,293 |
| Total financial assets | \u00a0 | 44 | 573,257 | 573,301 | 0 | 573,301 | 0 | 573,301 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Liabilities | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Non Current Liabilities | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Interest bearing | 22 | \u00a0 | 894,108 | 894,108 | \u00a0 | 894,108 | \u00a0 | 894,108 |
| Other Financial liabilities | \u00a0 | 1,371 | 8,284 | 9,655 | \u00a0 | 8,284 | 1,371 | 9,655 |
| Current liabilities | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Interest bearing | 22 | \u00a0 | 77,804 | 77,804 | \u00a0 | 77,804 | \u00a0 | 77,804 |
| Bank overdraft | 20 | \u00a0 | 40,524 | 40,524 | \u00a0 | 40,524 | \u00a0 | 40,524 |
| Trade payables | 24 | \u00a0 | 368,657 | 368,657 | \u00a0 | 368,657 | \u00a0 | 368,657 |
| Other current liabilities excl derivatives | 24 | 37,286 | 134,976 | 172,262 | \u00a0 | 134,976 | 37,286 | 172,262 |
| Derivatives | 24 | 155 | \u00a0 | 155 | \u00a0 | 155 | \u00a0 | 155 |
| Total financial liabilities | \u00a0 | 38,813 | 1,524,352 | 1,563,165 | 0 | 1,524,507 | 38,658 | 1,563,165 |
The Board of Directors\u2019 policy is to maintain a good capital base so as to maintain investor, creditor and market confidence and to sustain future profitable development of the business. The Board monitors the return on capital, and seeks to maintain a balance between the returns on equity versus the levels of borrowings as well as the advantages and security afforded by a sound capital position.
The group defines its capital as its equity and its net interest borrowing loans:
| (in thousands of \u20ac) | 31-12-2022 | 31-12-2021 |
|---|---|---|
| Equity | 2,439,675 | 2,251,345 |
| Other interest-bearing loans | 1,435,687 | 1,012,436 |
| Less: Cash & Cash equivalents | -268,160 | -141,293 |
| Total Capital | 3,607,201 | 3,122,488 |
The group is not exposed to external capital requirements other than covenant requirements from the syndicated external debt (refer to note 22).
The group\u2019s reportable segments are based on the regions in which it operates: EMEA, Americas and Asia-Pacific. This reflects the organization of the group, providing its specialty chemicals distribution services in all these regions.
Operating expenses of non-operating companies are reported in the segment group Holding. Adjusted EBITA of group Holding represents\u00a0costs related to corporate activities and central support services, mainly at the group\u2019s service center and the headquarter in Belgium.
Transactions between companies within an operating segment have been eliminated. Revenue therefore represents external sales. Transactions between operating segments are based on arm\u2019s length principle.
The performance of the operating segments is assessed based on a measure of \"Adjusted EBITA\". The group currently uses Adjusted EBITA in its business operations to, among others, develop budgets, measure its performance against those budgets and evaluate the performance of its operations.
Gross profit is defined as income less cost of goods and consumables (as disclosed in Note 10), before outbound distribution cost.
Total assets per segment are not being measured and/or reported to the key decision makers on a regular basis, whereas Net Working Capital is used as a major performance indicator of the operating segments1.
Results of the operating segments are reflected in the below table:
| (in thousands of \u20ac) | EMEA | Americas | Asia-Pacific | Group holding & other | Total |
|---|---|---|---|---|---|
| Revenue | 1,811,643 | 1,549,913 | 747,546 | 0 | 4,109,102 |
| Gross profit | 432,907 | 385,200 | 142,601 | 34 | 960,742 |
| Adjusted EBITA | 215,376 | 211,867 | 58,112 | -28,477 | 456,878 |
| Operating profit | \u00a0 | \u00a0 | \u00a0 | \u00a0 | 388,426 |
| Net Working Capital | 182,205 | 237,811 | 194,516 | -6,247 | 608,285 |
| (in thousands of \u20ac) | EMEA | Americas | Asia-Pacific | Group holding & other | Total |
|---|---|---|---|---|---|
| Revenue | 1,232,253 | 1,164,233 | 430,809 | 0 | 2,827,295 |
| Gross profit | 292,820 | 270,947 | 86,220 | 154 | 650,143 |
| Adjusted EBITA | 125,298 | 137,643 | 29,633 | -24,652 | 267,922 |
| Operating profit | \u00a0 | \u00a0 | \u00a0 | \u00a0 | 207,814 |
| Net Working Capital | 146,945 | 188,487 | 142,754 | -3,779 | 474,407 |
'Group holding & other' mainly includes the operating expenses for the group holding activities and limited gross profit that remain unallocated to EMEA, Americas or Asia-Pacific.
The group does not have material intercompany revenue across its segments. The group has a diverse customer base in all of its reportable segments and has no individual material customers. The group's non-financial non-current assets are broken down over its country of domicile and regions as follows:
| (in thousands of \u20ac) | 31-12-2022 | 31-12-2021 | ||
|---|---|---|---|---|
| Belgium | 18,610 | 0.5% | 19,851 | 0.7% |
| Rest of EMEA | 1,433,660 | 41.0% | 1,197,514 | 40.9% |
| EMEA | 1,452,270 | 41.5% | 1,217,364 | 41.6% |
| Americas | 1,536,305 | 43.9% | 1,302,878 | 44.5% |
| Asia Pacific | 511,267 | 14.6% | 406,048 | 13.9% |
| \u00a0 | 3,499,842 | 100.0% | 2,926,291 | 100.0% |
The group completed the below acquisitions during the financial year 2022:
On 31 January 2022, Azelis acquired 90% of the shares of Umongo, a market-leading lubricants and metalworking fluids distributor active in South Africa, providing technical support and innovative solutions through its application laboratory. The transaction reinforces Azelis\u2019 lateral value chain by expanding its product offering for the lubricants and metalworking fluid end markets and strengthens the group\u2019s foothold in industrial specialty chemicals in South Africa and the rest of the region. As Azelis gained control, Umongo is consolidated for 100%, and the minority interest has been recognized separately in the financial statements.
On 28 February 2022, Azelis acquired 51% of the shares of Catalite Co., Ltd. (\u201cCatalite\u201d), a well-established distributor of specialty chemicals in the Personal Care and Home Care market segments, as well as industrial formulators, intermediates and coatings, in Thailand. With an attractive portfolio of products from several key principals, Catalite serves a large, growing customer base from its site in Bangkok, providing the group a solid platform to accelerate its growth in the domestic market, and the wider Asia Pacific region. As Azelis gained control, Catalite is consolidated for 100%, and the minority interest has been recognized separately in the financial statements.
On 12 March 2022, Azelis acquired 100% of the shares of Whitfield Chemical Group Limited, the ultimate parent company of WhitChem, a well-regarded distributor focused on CASE (coatings, adhesives, sealants and elastomers) and AM&A (advanced materials & additives) in the UK. WhitChem\u2019s long-standing relationships with blue-chip principals and product portfolio strengthen Azelis\u2019 lateral value chain in the UK, whilst their wide customer base and strong local technical sales team further expands the group\u2019s product offering and customer reach.
On 16 May 2022, Azelis acquired 100% of the shares of Tun\u00e7kaya, a prominent distributor of food ingredients and additives in Turkey, as well as a range of blended products for various segments of the food market, supported by longstanding relationships with principals. Tun\u00e7kaya\u2019s portfolio of products complements the group\u2019s lateral value chain for the domestic market, thereby further expanding its expertise and product offering to customers.
On 31 May 2022, Azelis acquired the distribution assets of the Indian companies Chemo India and Unipharm Laboratories. Both companies are renowned local distributors of specialty chemicals and ingredients for the CASE (coatings, adhesives, sealants, elastomers), L&MWF (lubricants & metalworking fluids) and pharmaceutical market segments in India. The acquisition strengthens the group\u2019s industrial chemicals portfolio and its footprint in the pharmaceutical market, further reinforcing Azelis\u2019 lateral value chain for these market segments. The transaction represents a solid fit with the group\u2019s growth ambitions in India, as well as its wider strategic vision for the Asia Pacific region.
On 1 July 2022, Azelis completed the acquisition of 63% of the shares of ROCSA Colombia S.A. (\"ROCSA\"), one of the leading specialty chemical distributors in Colombia, with a rapidly growing presence in Peru and Central America. It is active in the life sciences market, primarily in Food & Nutrition, Personal Care, and Home Care & Industrial Cleaning, as well as in industrial chemicals, with a strong presence in CASE (coatings, adhesives, sealants, elastomers) and Plastic Additives. The agreements made in the Shareholders Agreement combined with a call option make it virtually certain that the 37% will be purchased by Azelis, hence no non-controlling interest was recognized. A financial liability has been accrued for the purchase of the remaining 37% of the shares.
On 5 September 2022, Azelis acquired 100% of the shares of Chemical Solutions Sdn Bhd (\u201cChemSol\u201d), one of the leading distributors of raw materials in the Personal Care, Cosmetics and Household markets in Malaysia. The acquisition strengthens Azelis\u2019 presence in the domestic market, further reinforcing the group\u2019s in-depth coverage of the Asia Pacific region. The addition of ChemSol\u2019s extensive and well-known product portfolio, specifically in actives and functional ingredients, significantly expands Azelis\u2019 lateral value chain for the local Personal Care market. With this acquisition, Azelis is ideally placed to benefit from the growing Personal Care market in Malaysia, especially in the attractive Halal cosmetic industry.
On 7 September 2022, Azelis completed the acquisition of 70% shares of Ashapura Aromas Private Limited (\u201cAshapura\u201d), a leading distributor of ingredients in the flavors & fragrances market in India. This acquisition provides Azelis with a strong F&F platform in Asia Pacific, creating a global F&F network, following its 2021 acquisitions of Vigon in the US and Quimdis in France, serving the Americas and EMEA regions respectively. Ashapura\u2019s extensive product portfolio strategically complements the group\u2019s lateral value chain (LVC) in the fast-growing F&F market segment, strengthening the offering and technical expertise Azelis provides to customers. As Azelis gained control, Ashapura is consolidated for 100%, and the minority interest has been recognized separately in the financial statements.
On 3 October 2022, Azelis acquired the specialty lubricant (L&MWF) distribution assets of Ak-ta\u015f\u00a0in Turkey. The transaction includes the oil additive business of Ak-ta\u015f as well as the base oil distribution business of Whitechem, a subsidiary of Ak-ta\u015f. Ak-ta\u015f and WhiteChem partner with blue-chip principals and have long-standing relationships with customers in Turkey and the surrounding region. The acquisition further strengthens Azelis\u2019 lateral value chain (LVC) in the L&MWF market segment, following the acquisition of Umongo in South-Africa earlier this year. It is a further reflection of Azelis\u2019 commitment to sustainability, expanding key relationships with principals with a strong agenda in renewable and sustainable base oils. With an application laboratory dedicated to L&MWF, Azelis\u2019 technical specialists aim to consistently drive innovation and sustainability within the segment, as well as the wider market.
On 14 October 2022, Azelis acquired 100% of the shares of Chemical Partners and Chempart Polymers\u2019 entities in Lebanon and Belgium. The company is an independent distributor of specialty chemicals with a strong foothold in the industrial chemicals market, particularly in CASE\u00a0and R&PA, in Africa and the Middle East. Chemical Partners represents a strategic acquisition to strengthen Azelis\u2019 lateral value chain in industrial chemicals following the acquisition of Umongo earlier this year, providing the group with a strong portfolio of products and expertise spanning the key end markets in industrial chemicals in the region (CASE, R&PA and L&MWF). This would also complement Azelis\u2019 existing lateral value chain in life sciences in the region, optimizing the group\u2019s portfolio to reach more customers and principals and serve them more efficiently. In addition, the acquisition expands Azelis\u2019 geographical footprint, with Chemical Partners present in over 30 countries across the Middle East and Africa, including the Levant and Sub-Saharan Africa, providing further opportunity for growth.
On 27 October 2022, Azelis acquired 100% of the shares of Eurotrading S.p.A (\u201cEurotrading\u201d), one of the leading distributors of specialty chemicals to the personal care market in Italy. The acquisition reinforces Azelis\u2019 leading footprint in the thriving Italian market for personal care, as well as in the broader life sciences segment. Eurotrading\u2019s extensive product portfolio in actives, emollients and emulsifiers further enhances the group\u2019s lateral value chain and solidifies its market leadership in the local personal care industry.
On 10 November 2022, Azelis acquired 50.0005% of the shares of Da\u011falt\u0131 Kau\u00e7uk San. (\"Da\u011falt\u0131\"), a specialty chemicals distributor active in the Turkish rubber and plastics additives (R&PA) market. The acquisition of Da\u011falt\u0131 strengthens Azelis\u2019 R&PA footprint in Turkey. Da\u011falt\u0131\u2019s extensive product portfolio strategically complements the group\u2019s lateral value chain in industrial chemicals, enhancing the offerings and technical expertise Azelis provides to customers. The agreements made in the Shareholders Agreement combined with a call option make it virtually certain that the 49.9995% will be purchased by Azelis, hence no non-controlling interest was recognized. A financial liability has been accrued for the purchase of the remaining 49.9995% of the shares.
These aforementioned acquisitions together generate over \u20ac620 million of revenues on an annual basis. In 2022, these acquisitions together have added \u20ac341.1 million of revenue and a positive \u20ac25.0 million of net profit to the group's net result.
| (in thousands of \u20ac) | 2022 | 2021 |
|---|---|---|
| Assets acquired and liabilities assumed | \u00a0 | \u00a0 |
| Distribution rights | 195,252 | 175,571 |
| Other intangible assets | 2,179 | 3,384 |
| Property, plant and equipment | 4,863 | 18,665 |
| Right-of-use assets | 11,340 | 9,253 |
| Deferred tax assets | 7,082 | 3,598 |
| Other long-term receivables | 16,562 | 466 |
| Other non-current financial assets | 814 | - |
| Inventories | 99,543 | 85,052 |
| Trade and other receivables | 143,176 | 116,726 |
| Cash and cash equivalents | 39,583 | 42,006 |
| Other current financial assets | 3,775 | - |
| Loans and borrowings non current | -19,481 | -7,306 |
| Lease liabilities non current | -9,340 | -7,356 |
| Deferred tax liabilities | -42,542 | -22,291 |
| Other non-current payables | - | -409 |
| Trade and other payables | -95,131 | -70,267 |
| Bank overdrafts | -32 | - |
| Loans and borrowings current | -48,286 | -71,301 |
| Lease liabilities current | -2,000 | -1,897 |
| Provisions | -136 | -1,282 |
| Employee benefit obligations | -1,253 | -2,213 |
| Total fair value identified assets acquired and liabilities assumed | 305,970 | 270,422 |
| Non-controlling interests | -29,404 | -18,307 |
| Estimated earnout liabilities | 5,732 | 1,329 |
| Deferred payments | 114,892 | 34,972 |
| Consideration paid in cash | 512,845 | 597,282 |
| Total consideration | 633,469 | 633,584 |
| Goodwill | 356,903 | 381,469 |
The fair values of the acquired identifiable assets and liabilities and the value of the consideration paid are accounted for on a provisional basis. Based on currently available information, Azelis does not foresee significant adjustments to these provisional amounts. The purchase price allocations will be finalized at a later stage and may result in adjustments to provisional values as a result of completing the initial accounting from the acquisition date. The fair values of the acquired net assets, based on a provisional assessment, are summarized in the table above. No indemnification assets or contingent liabilities had to be recognized in the business combinations.
The acquisitions of distribution assets, without acquiring any shares, qualify as business combinations in conformity with IFRS 3, as the acquired assets constitute a business.
The considerations are primarily paid for in cash and, depending on the acquisition, also consist of deferred payments and/or accruals for estimated earnout. For 2022 acquisitions, deferred payments and initial earnout liabilities, recognized as part of the consideration paid, total \u20ac120.6 million (2021: \u20ac36.3 million). Earnout payments are all contingent on the profitability of the acquired company at a future point in time, and have been estimated based on the business plan of the acquired company.
In connection with the acquisitions in 2022 of Umongo in South Africa, Catalite in Thailand and Ashapura in India, put options were granted for the remaining 10%, 49%, and 30% respectively. Their fair value is calculated based on specific contractual specifications consisting mostly of a combination of a multiple on a performance measure and the balance of certain net working capital items upon exercise of the option. Put options are not part of the consideration paid and are accounted for separately of the business combination.
Total goodwill of Azelis has increased by \u20ac371.0 million in 2022, of which \u20ac356.9 million is attributable to the abovementioned acquisitions in 2022. The remainder is mainly attributable to currency translation and reflected in other comprehensive income, and adjustments for hyperinflation.
Acquisitions are accounted for using the acquisition method. Goodwill represents the excess of acquisition cost over the fair values of identified acquired assets and liabilities, and mainly represents the business knowledge and the qualified staff. Goodwill is not deductible for tax purposes. The trademark and the distribution rights have been valued based upon the expected return being generated through strategic mandates. The trade and other receivables include an amount of \u20ac11.3 million for expected credit loss provisions. Certain transactions relating to key employees\u2019 compensation plans are considered as separate transactions and are not included in the business combination accounting in accordance with IFRS 3.
If the above acquisitions would have occurred at the start of 2022, management estimates that, for 2022, the consolidated revenue would have been \u20ac4,402.4 million and the consolidated net result for the year would have been \u20ac249.8 million.
During 2022, the group incurred acquisition-related expenses of \u20ac6.9 million (2021: \u20ac8.9 million) in total, in connection with the costs of external advisors, due diligence and fees paid to the institutions involved. These expenses are recognized in the consolidated income statement as part of external services, and are considered as part of adjustments to determine Adjusted EBITA of the period.
| (in thousands of \u20ac) | 2022 | 2021 |
|---|---|---|
| Revenue from sales, net of discounts | 4,098,131 | 2,819,606 |
| Revenue from commercial services | 1,106 | 355 |
| \u00a0 | 4,099,237 | 2,819,961 |
| Commissions received | 9,866 | 7,335 |
| \u00a0 | 4,109,102 | 2,827,295 |
The group's revenues are broken down over product group as follows:
| (in thousands of \u20ac) | 2022 | 2021 | ||
|---|---|---|---|---|
| Life Sciences | 2,474,632 | 60.2% | 1,758,913 | 62.2% |
| Industrial Chemicals | 1,634,470 | 39.8% | 1,068,382 | 37.8% |
| \u00a0 | 4,109,102 | 100.0% | 2,827,295 | 100.0% |
The group's revenues are broken down over its country of domicile and regions as follows:
| (in thousands of \u20ac) | 2022 | 2021 | ||
|---|---|---|---|---|
| Belgium | 83,717 | 2.0% | 58,202 | 2.1% |
| Rest of EMEA | 1,727,926 | 42.1% | 1,174,051 | 41.5% |
| EMEA Total | 1,811,643 | 44.1% | 1,232,253 | 43.6% |
| Americas | 1,549,913 | 37.7% | 1,164,233 | 41.2% |
| Asia Pacific | 747,546 | 18.2% | 430,809 | 15.2% |
| \u00a0 | 4,109,102 | 100.0% | 2,827,295 | 100.0% |
| (in thousands of \u20ac) | 2022 | 2021 |
|---|---|---|
| Recharge of expenses to customers | 8,681 | 5,105 |
| Other income | 7,114 | 3,366 |
| \u00a0 | 15,795 | 8,470 |
| (in thousands of \u20ac) | 2022 | 2021 |
|---|---|---|
| Purchase of goods including change in inventory | 3,092,704 | 2,138,140 |
| Freight and additional charges on purchases | 71,451 | 47,483 |
| \u00a0 | 3,164,155 | 2,185,622 |
Wages and salaries include managers\u2019 fees and current service costs from employee benefits.
| (in thousands of \u20ac) | 2022 | 2021 |
|---|---|---|
| Wages and salaries and other personnel related expenses | 254,897 | 208,488 |
| Social charges | 30,055 | 23,727 |
| \u00a0 | 284,952 | 232,215 |
The average number of employees (FTE) located in the regions is set out below:
| \u00a0 | 31-12-2022 | 31-12-2021 |
|---|---|---|
| EMEA | 1,735 | 1,486 |
| Americas | 966 | 805 |
| Asia Pacific | 969 | 744 |
| Holdings | 155 | 142 |
| \u00a0 | 3,825 | 3,177 |
The number of employees reported for EMEA includes the holding employees.
The group is subject to the following defined benefit obligations:
| (in thousands of \u20ac) | 2022 | 2021 |
|---|---|---|
| German companies | 639 | 743 |
| Belgian companies | 1,572 | 6,190 |
| French companies | 1,971 | 2,045 |
| Italian companies | 5,046 | 1,823 |
| Other companies | 1,077 | 155 |
| Total present value of unfunded obligations | 10,305 | 10,956 |
| Present value of funded obligations (Azelis UK) | 5,398 | 9,560 |
| Total present value of obligations | 15,703 | 20,516 |
| Fair value of plan assets | -12,625 | -14,347 |
| Amounts not recognized as asset due to asset ceiling | 2,496 | 0 |
| Recognized liability for defined benefit obligations | 5,574 | 6,169 |
| Liability for long-service leave and other employees' benefits | 2,951 | 2,653 |
| Total employee benefits recognised in the balance sheet | 8,525 | 8,822 |
The group recognized net obligation is based on the difference between the present values of the defined benefit obligations and the plan assets.
Both defined benefit plans and defined contribution plans are in place. Charges for defined contribution schemes amount to \u20ac3.3 million (2021: \u20ac2.5 million). Expenses for all plans are included in 'Wages, salaries and other personnel related expenses'.
There are four pension plans in place in Belgium which are all legally structured as defined contribution plans.
Because of the Belgian legislation applicable to 2nd pillar pension plans (so-called \"Law Vandenbroucke\"), all Belgian defined contribution plans have to be considered under IFRS as defined benefit plans. In the context of defined contribution plans, Law Vandenbroucke states the following:
The employer must continue to guarantee a minimum return of 3.75% on employee contributions and 3.25% on employer contributions made until December 31, 2015;
As from 2016 the employer must guarantee a minimum return ranging between 1.75% and 3.75% for all contributions, depending on the development of the average interest on OLO 10 years over a period of 24 months. The current guaranteed minimum return is 1.75%.
Because of this minimum guaranteed return for defined contribution plans in Belgium, the employer is exposed to a financial risk (there is a legal obligation to pay further contributions if the fund does not hold sufficient assets to pay all employee benefits relating to employee service in the current and prior periods). These plans should therefore be classified and accounted for as defined benefit plans under IAS 19.
Actuarial calculations have been made as of December 31, 2022 and these were recognized in the balance sheet. For information, some key figures related to the plans are given below:
Employer\u2019s contributions in the financial year: \u20ac0.6 million (2021: \u20ac0.7 million)
Amount of the plan assets as of December 31, 2022: \u20ac5.6 million (2021: \u20ac5.8 million)
In the UK, the defined benefit pension plan is financed through the accumulation of plan assets held separately from those of the group in an independently administered fund.
Actuarial calculations have been made per 31st December 2022 and these were recognized in the balance sheet. The duration of Scheme obligations at 31 December 2022 is 20 years; plan assets are primarily invested in equity instruments. For information, some key figures related to the plans are given below:
Employer\u2019s contributions in the financial year: \u20ac0.6 million (2021: \u20ac0.6 million)
Amount of the plan assets as of December 31, 2021: \u20ac7.7 million (2021: \u20ac8.6 million).
The actuarial calculations of the present value of defined benefit obligations were based on the following main assumptions:
| \u00a0 | 2022 | 2021 |
|---|---|---|
| Discount rate | 2,82% - 7,26% | 0,8% - 2,1% |
| Inflation | 3,1% - 3,1% | 2,5% - 5,0% |
| Future pension increases | 0% - 6% | 2,5% - 3,0% |
| Future salary increases | 0% - 6% | 0%- 2,5% |
In the event that the discount rate was to be raised or lowered by 0.5% in the context of a sensitivity analysis, the obligation ensuring from the defined benefit plan would amount to \u20ac1.2 million or \u20ac1.3 million, respectively.
The benefits paid are mainly related to Belgium, France, Italy and UK. The 2023 benefits to be paid are expected to be in line with the 2022 benefits.
The following table shows the changes in the present value of the defined benefit obligations:
| (in thousands of \u20ac) | 2022 | 2021 |
|---|---|---|
| Liability for defined benefit obligations at the beginning of period | 20,516 | 19,653 |
| Current service costs and interest | 1,039 | 971 |
| Benefits paid | -1,811 | -1,035 |
| Remeasurement arising from changes in demographic assumptions | -91 | -1 |
| Remeasurement arising from changes in financial assumptions | -5,447 | -754 |
| Remeasurement arising from experience | 310 | -167 |
| Business combination | 979 | 1,208 |
| Exchange rate differences | -374 | 640 |
| Liability for defined benefit obligations at 31 December | 15,122 | 20,516 |
The following table shows the changes in the plan assets.
| (in thousands of \u20ac) | 2022 | 2021 |
|---|---|---|
| Fair value of plan assets at the beginning of the period | 14,347 | 12,839 |
| Contributions paid into the plan | 1,252 | 1,341 |
| Benefits paid by the plan | -1,062 | -745 |
| Expected return on plan assets | 54 | 436 |
| Return on assets excluding amounts in net interests | -2,174 | 22 |
| Exchange rate differences | -374 | 454 |
| Fair value of plan assets at 31 December | 12,044 | 14,347 |
At year-end, the plan assets consisted mainly of equity instruments.
The net periodic cost for defined benefit obligations recognized in the income statement is shown in the following table:
| (in thousands of \u20ac) | 2022 | 2021 |
|---|---|---|
| Current service costs | -883 | -854 |
| Interest on obligation | -191 | -155 |
| Interest on assets | -674 | 436 |
| \u00a0 | -1,748 | -573 |
The changes in actuarial gains and losses from defined benefit obligations and plan assets recognized in other comprehensive income are shown in the following table:
| (in thousands of \u20ac) | 2022 | 2021 |
|---|---|---|
| Return on assets, excluding amounts in net interests | -2,202 | 412 |
| Actuarial gains and losses on benefit obligations | 5,390 | 701 |
| Effect of changes in asset ceiling | -2,596 | 0 |
| Exchange rate differences | -22 | 0 |
| \u00a0 | 570 | 1,113 |
In 2022, Azelis has launched a long-term incentive plan for certain directors, employees and self-employed managers of the group. Under this LTIP, Azelis has granted share awards to certain directors, employees and self-employed managers of the group. The grant of share awards is subject to a three-year performance period (starting January 1st) and takes into account the following metrics and weightings: 50% relative total shareholders' return (market condition), 35% Adjusted EBITA (non-market condition) and 15% sustainability-linked criteria (non-market condition). The awards are subject to a vesting period of three years starting from the grant date and are dependent on the Remuneration and Nomination Committee determining whether performance targets have been met. Based on performance delivered, the number of performance shares awarded will vest and become unconditionally owned by the participant.
The movement in number of performance shares outstanding and the related weighted average fair value per share are as follows:
| \u00a0 | 2022 | |
|---|---|---|
| (in number of shares and \u20ac) | Number of shares | Weighted average fair value |
| Outstanding as of 1 January | 0 | N/A |
| Granted during the year | 138,546 | 19.24 |
| Forfeited during the year | 6,062 | 19.24 |
| Outstanding as of 31 December | 132,484 | \u00a0 |
The fair value of the performance shares was measured on the basis of Azelis' share price at grant date, and has been discounted with the sum of the expected dividend yield for the performance period. The expected dividend yield has been determined based on target pay-out ratio and consensus figures for net profit, divided by market capitalization. The market condition of total shareholders return was embedded in the fair value based on a Monte Carlo simulation incorporating a number of assumptions (volatility, expected dividend yield and the correlation coefficients between the share price returns of the peer companies).
In 2022, the vesting of performance shares resulted in an expense of \u20ac0.8 million which is recognized in the consolidated income statement as part of employee benefits expenses.
| (in thousands of \u20ac) | 2022 | 2021 |
|---|---|---|
| Distribution | 87,797 | 62,486 |
| Utilities, communication, insurance and administrative expenses | 40,984 | 26,570 |
| Commercial expenses | 10,093 | 4,269 |
| Professional service fees | 29,975 | 28,265 |
| Lease expenses | 1,954 | 2,785 |
| Other expenses | 31,828 | 26,356 |
| \u00a0 | 202,631 | 150,731 |
The professional services & other expenses of 2022 include adjustments of \u20ac9.0 million (2021: \u20ac19.0 million) mainly regarding M&A activities (2021: \u20ac10.6 million). The professional services & other expenses in 2021 also include expenses with regard to the Company's IPO on Euronext Brussels (\u20ac8.4 million).
Audit fees included under professional service fees in the above table:
| (in thousands of \u20ac) | 2022 | 2021 |
|---|---|---|
| Audit fees | \u00a0 | \u00a0 |
| Total fees for the audit of the annual accounts | 1,930 | 1,373 |
| Total fees for audit by non-PWC companies | 559 | 336 |
| Non-audit fees paid to group auditor network | \u00a0 | \u00a0 |
| Total fees for other attestation | 82 | 2,399 |
| Total fees for other non-audit services (incl. tax) | 7 | 34 |
| \u00a0 | 2,578 | 4,143 |
The fees for other attestation in 2021 are primarily related to the Company's IPO.
| (in thousands of \u20ac) | 2022 | 2021 |
|---|---|---|
| Financial income | \u00a0 | \u00a0 |
| Interest income | 621 | 618 |
| Gains on changes in fair value of derivatives | 5,132 | 0 |
| Other financial income | 256 | 113 |
| \u00a0 | 6,008 | 731 |
| Financial expenses | \u00a0 | \u00a0 |
| Interest expense on bank loans and overdrafts | -34,795 | -46,948 |
| Interest lease commitments | -3,423 | -2,951 |
| Fair value adjustment on financial liabilities | -17,585 | -7,282 |
| Transaction costs for bank loans | -1,444 | -3,336 |
| Accelerated amortization of transaction costs due to IPO | 0 | -19,616 |
| Losses on changes in FV of derivative instruments | -754 | 0 |
| Monetary loss on hyperinflation | -6,957 | 0 |
| Foreign exchange losses | -2,093 | -1,238 |
| Other financial expenses | -12,771 | -6,907 |
| \u00a0 | -79,823 | -88,278 |
The (non-cash) gain on changes in fair value of derivatives primarily relates to the interest rate cap that was entered into in May 2022. The fair value of the interest rate cap increased since then, driven by increasing market interest rates during 2022.
The fair value adjustment on financial liabilities relates to acquisition-related earnout liabilities and put options on non-controlling interests.
Transaction costs for bank loans of \u20ac1.4 million (2021: \u20ac3.3 million) includes the (non-cash) impact of expensing capitalized transaction costs (see note 22). At date of IPO in September 2021, the Company restructured its debt, whereas the remaining capitalized costs of \u20ac19.6 million that related to the previous and repaid financial liabilities were amortized entirely in 2021 (for the majority non-cash).
The monetary loss on hyperinflation relates to the translation of foreign exchange impact regarding Azelis' subsidiaries in Turkey. The majority of the loss (\u20ac6.5 million) relates to translation of its balance sheets, funded by equity mainly, with low exposure to cash and debt in local currencies. The translation-impact on the income statement is limited (\u20ac0.5 million) as operational activities are merely settled in hard currencies (USD, EUR).
The foreign exchange losses include unrealized translation of intercompany loans, mainly relating to non-EUR nominated loans to subsidiaries.
Other financial expenses primarily relate to factoring fees and other bank fees.
The income tax expenses consist of:
| (in thousands of \u20ac) | 2022 | 2021 |
|---|---|---|
| Current period tax expense (-) / income | -86,264 | -51,963 |
| Adjustments to prior years income tax expense (-) / income | -868 | 225 |
| Provisions for tax risks | -203 | -314 |
| \u00a0 | -87,335 | -52,052 |
| Deferred tax income / loss (-) | -8,456 | 2,079 |
| Total income tax income / expense (-) | -95,791 | -49,973 |
Income tax expense consists primarily of income taxes for the current period and prior period of group companies.
The differences between the taxable income related to the Belgian tax rate and the effective tax rate are reconciled as follows:
| (in thousands of \u20ac) | 2022 | 2021 |
|---|---|---|
| Profit/loss (-) before tax | 314,670 | 120,199 |
| \u00a0 | \u00a0 | \u00a0 |
| Income tax using the domestic corporation tax rate | -82,356 | -30,050 |
| Impact of tax in different jurisdictions with difference to domestic rate | -221 | 5,590 |
| Tax effect of expenses not deductible for tax purposes | -14,659 | -2,629 |
| Tax effect of income not subject to tax | 5,062 | 403 |
| Recognition of previously unrecognized tax losses | 1,366 | -1,264 |
| Tax losses for which no deferred income tax asset was recognized | -3,608 | -18,340 |
| Adjustments on applicable tax rate | 666 | 593 |
| Deferred tax asset on stand-alone carry forward losses | -13 | -639 |
| Adjustments to prior year income tax expense (income) | -1,656 | 0 |
| Other | -372 | -3,636 |
| Total income tax income / expense (-) in income statement | -95,791 | -49,973 |
The effective tax rate 2022 has been affected negatively by the following:
Fair value adjustment on financial liabilities of \u20ac17.6 million (2021: \u20ac7.3 million) regarding acquisition-related earnout liabilities and put options on non-controlling interest. Per Azelis' accounting policies (Note 2.7.1), subsequent changes are accounted for in the income statement. On the basis of the further improved performance of the related acquisitions, a fair value adjustment of \u20ac17.6 million is included in the consolidated income statement, for which no tax benefit can and may be recognized.
As of 30 June 2022, hyperinflationary accounting for Turkey has been applied, for which a monetary loss of \u20ac7.0 million is included in the net financial expenses, which is not tax deductible.
The tax expense 2021 included a non-cash and one-off amount of \u20ac18.3 million, almost only due to the impact of moving the group's holding-location (including the funding) from Luxembourg to Belgium in view of the IPO, for which no deferred income tax asset could be recognized due to the partial unwinding of the previous Luxembourg holding-structure, refer to Note 14.3.
The tax included in other comprehensive income is related to:
| (in thousands of \u20ac) | 2022 | 2021 |
|---|---|---|
| Relating to actuarial gains and losses on pensions obligations | -71 | -259 |
| \u00a0 | -71 | -259 |
Deferred tax assets and liabilities are attributable to the following:
| (in thousands of \u20ac) | 1 January | Business combinations | Income statement | OCI | Other | Translation differences | December 31 |
|---|---|---|---|---|---|---|---|
| Property, plant and equipment | -3,470 | 50 | 750 | 0 | 146 | -115 | -2,640 |
| Intangible assets | -144,330 | -39,421 | -6,466 | 0 | 691 | -671 | -190,198 |
| Inventories | 5,725 | 2,938 | 537 | 0 | 360 | 28 | 9,589 |
| Trade receivables | 2,076 | 937 | 789 | 0 | 22 | 10 | 3,835 |
| Loans and borrowings | 114 | 0 | -166 | 0 | 1,868 | -24 | 1,792 |
| Employee benefits | 3,252 | -13 | 293 | -187 | -1,954 | 102 | 1,492 |
| Provisions, derivatives and other items | 109 | -268 | 1,172 | 0 | -304 | 4 | 714 |
| Untaxed reserves | 10,812 | 0 | -2,475 | 0 | -691 | 698 | 8,344 |
| Tax value of loss carry-forwards | 877 | -962 | -2,891 | 0 | -249 | 146 | -3,078 |
| \u00a0 | -124,834 | -36,740 | -8,456 | -187 | -111 | 178 | -170,150 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Deferred Tax liability | -135,315 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | -190,755 |
| Deferred Tax assets | 10,482 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | 20,605 |
| \u00a0 | -124,834 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | -170,150 |
Based upon the level of historical taxable income and projections for future taxable income over the periods in which the deferred tax assets are deductible for the group companies, management believes it is probable that the group will realize the benefits of these deductible differences.
| (in thousands of \u20ac) | 1 January | Business combinations | Income statement | OCI | Other | Translation differences | December 31 |
|---|---|---|---|---|---|---|---|
| Property, plant and equipment | 216 | -1,611 | -2,096 | 0 | 69 | -47 | -3,470 |
| Intangible assets | -115,711 | -18,115 | -909 | 0 | -4,093 | -5,502 | -144,330 |
| Inventories | 2,809 | 2,642 | 320 | 0 | -261 | 216 | 5,725 |
| Trade receivables | 1,095 | 424 | 707 | 0 | -208 | 58 | 2,076 |
| Loans and borrowings | -1 | 0 | 1 | 0 | 113 | 2 | 114 |
| Employee benefits | 1,512 | 43 | 1,726 | -258 | 157 | 72 | 3,252 |
| Provisions, derivatives and other items | 650 | -2,264 | 1,286 | 0 | 489 | -53 | 109 |
| Untaxed reserves | 4,348 | 0 | 1,508 | 0 | 4,206 | 749 | 10,812 |
| Tax value of loss carry-forwards | 1,508 | 170 | -463 | 0 | -343 | 6 | 877 |
| \u00a0 | -103,574 | -18,711 | 2,079 | -258 | 129 | -4,499 | -124,834 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Deferred Tax liability | -109,993 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | -135,315 |
| Deferred Tax assets | 6,419 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | 10,482 |
| \u00a0 | -103,574 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | -124,834 |
Deferred tax assets and liabilities are expected to be recovered or settled over time as follows:
| (in thousands of \u20ac) | Deferred tax assets | Deferred tax liabilities |
|---|---|---|
| To be recovered after more than 12 months | 9,938 | 176,320 |
| To be recovered within 12 months | 10,667 | 14,434 |
| \u00a0 | 20,605 | 190,755 |
The following deferred tax assets related to compensable losses of group companies acquired have not been recognized:
| (in thousands of \u20ac) | 2022 | 2021 | ||
|---|---|---|---|---|
| Gross | Tax | Gross | Tax | |
| Tax losses | 156,017 | 39,004 | 289,102 | 72,275 |
Unrecognized carry forward losses of \u20ac140.2 million (2021: \u20ac171.2 million) can be used unlimited in time and \u20ac15.8 million (2021: \u20ac117.8 million for period 2022-2037) need to be used during the period 2023-2037.
No deferred tax assets have been recognized on these carry forward losses, due to the fact that they do not meet the recognition criteria to recognize a deferred tax asset.
The group may have unrecognized tax liabilities in respect of taxable temporary differences relating to non-distributed reserves of one of its subsidiaries that would be taxed when distributed. No deferred tax liability has been recognized because the group controls whether the liability will be incurred and management is satisfied that the liability will not be incurred in the foreseeable future.
| \u00a0 | Goodwill | Trade- marks | Distribution rights | Concessions and licenses | Develop-ment cost | Customer lists | Other | Intangibles in progress | Total |
|---|---|---|---|---|---|---|---|---|---|
| As of December 31, 2020 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Cost | 1,345,937 | 317,378 | 546,136 | 6,194 | 6,195 | 3,971 | 6,630 | 3,250 | 2,235,691 |
| Accumulated amortization and impairment | - | - | -58,539 | -3,781 | -211 | -489 | -2,269 | -3,106 | -68,395 |
| \u00a0 | 1,345,937 | 317,378 | 487,597 | 2,413 | 5,984 | 3,482 | 4,361 | 144 | 2,167,296 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Changes in 2021 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Business combination | 381,469 | - | 175,571 | 3,048 | - | - | 336 | - | 560,424 |
| Additions | - | - | 1,140 | 72 | 1,833 | 436 | 7,240 | 649 | 11,370 |
| Amortization | - | - | -33,949 | -355 | -1,698 | -472 | -3,007 | - | -39,480 |
| Disposals | -3 | - | -3 | 18 | - | - | -6 | - | 6 |
| Reclassifications | -56 | - | 131 | -1,824 | -2,578 | 3 | 4,543 | 1,307 | 1,527 |
| Translation differences | 75,919 | - | 29,822 | 164 | 0 | 239 | 200 | 38 | 106,382 |
| Changes in the Period | 457,330 | - | 172,712 | 1,122 | -2,443 | 206 | 9,307 | 1,994 | 640,228 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| As of December 31, 2021 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Cost | 1,803,267 | 317,378 | 752,800 | 7,654 | 5,450 | 4,648 | 18,949 | 5,245 | 2,915,394 |
| Accumulated amortization and impairment | - | - | -92,491 | -4,118 | -1,909 | -961 | -5,282 | -3,106 | -107,870 |
| \u00a0 | 1,803,267 | 317,378 | 660,309 | 3,535 | 3,541 | 3,688 | 13,668 | 2,139 | 2,807,524 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Changes in 2022 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Business combination | 360,276 | - | 201,794 | 316 | 345 | - | 1,519 | - | 564,250 |
| Additions | - | - | 1,644 | 56 | 2,044 | 1,028 | 4,604 | 1,690 | 11,067 |
| Amortization | -0 | - | -45,061 | -584 | -1,995 | -703 | -8,507 | - | -56,850 |
| Disposals | -3 | - | -160 | 7 | -0 | - | -261 | -16 | -433 |
| Reclassifications | -5 | - | 253 | -35 | -100 | 13 | 1,635 | -1,571 | 191 |
| Hyperinflation | 15,208 | - | 4,734 | 6 | - | - | 8 | - | 19,956 |
| Translation differences | -4,487 | - | 3,450 | 155 | -0 | -20 | -83 | 23 | -962 |
| Changes in the Period | 370,989 | - | 166,655 | -79 | 293 | 319 | -1,085 | 126 | 537,218 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| As of December 31, 2022 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Cost | 2,174,256 | 317,378 | 964,516 | 8,159 | 7,738 | 5,670 | 26,372 | 5,371 | 3,509,462 |
| Accumulated amortization and impairment | -0 | - | -137,552 | -4,702 | -3,904 | -1,663 | -13,789 | -3,106 | -164,720 |
| \u00a0 | 2,174,256 | 317,378 | 826,964 | 3,456 | 3,834 | 4,007 | 12,583 | 2,265 | 3,344,742 |
The trademark relates to the Azelis name. Azelis uses its name globally, and its trade name is considered to be a key asset of its distribution activities given its status of major distributor in the specialty chemicals sector. The name both supports the group to onboard principals and customers, and for acquisition targets that want to become part of the group as they know that their business will grow being part of it. The Azelis trademark is estimated to have an indefinite economic life for amortization purposes; therefore, effectively no amortization expenses are being booked through Azelis' income statement. The total value of \u20ac317.4 million as of December 31, 2022 originates entirely from the EQT/PSP acquisition in November 2018 and remained unchanged since that date.
The translation differences of \u20ac1.0 million loss (2021: \u20ac106.4 million gain) are recognized in other comprehensive income and accumulated in the translation reserve within equity. Reference is made to note 21.5.
A cash-generating unit (CGU) is the smallest identifiable group of assets that generates cash inflows that are largely independent of the cash inflows from other assets or groups of assets. For the purpose of impairment testing, goodwill is allocated to the following groups of CGUs:
| (in thousands of \u20ac) | 31-12-2022 | 31-12-2021 |
|---|---|---|
| EMEA | 733,032 | 616,570 |
| AMERICAS | 1,119,304 | 919,385 |
| ASIA PACIFIC | 321,919 | 267,311 |
| Total Goodwill | 2,174,256 | 1,803,266 |
All goodwill acquired in the business combinations has been allocated to a regional CGU at the end of the reporting period. The goodwill is allocated on regional level as it is the group's regions that are expected to benefit of the business combinations, and as goodwill is also monitored internally on the regional level. The group's expectation is that synergies will be realized in the region of acquisition.
Trademarks with a book value of \u20ac317.4 million (2021: \u20ac317.4 million) have an indefinite life. These do not generate cash inflows independently and qualify as corporate assets. As their carrying amount cannot be allocated to the regional CGUs on a reasonable and consistent basis, the corporate assets are allocated to the group as a whole and the impairment test is performed in two stages.
The impairment tests have been performed by discounting future pre-tax cash flows from continuing operations of the unit. The recoverable amounts of the regional CGU's as of\u00a0December 31, 2022 have been determined based on a value in use calculation using cash flow projections from a five year detailed business plan which is approved by senior management and serves as a basis to determine the future free cash flows and the Adjusted EBITA\u2019s. The business plan is based on the market growth assumptions and on some general economic indicators (inflation, GDP, etc.). It also properly reflects the future strategy of the regional CGU's. For cash flows beyond the business plan period, an extrapolation was made based on steady terminal growth rates.
The key assumptions used in the impairment tests are the pre-tax WACC, terminal growth rate and Adjusted EBITA margin. The pre-tax WACC is estimated per regional CGU, is consistent with external sources of information, and varies mainly due to differences in risk free rates that increased during 2022. The risk-free rates per regional CGU are based on the weighted average of the rate of return on local sovereign bonds. The terminal growth rates are based on industry benchmarks by region and are consistent with the group's past experience and based on external sources of information. Adjusted EBITA margin reflects the group's past experience and future expectation of regional business development.
The key assumptions used for the second stage impairment test, on the level of the group as a whole including corporate asset, are identical to those used for the regional CGU impairment tests.
The values attributed to pre-tax WACC and the growth rates are as follows:
| Cash Generating Unit | 2022 | 2023-2027 assumptions | |
|---|---|---|---|
| \u00a0 | Pre-tax WACC | Growth rate for terminal value | EBITA% |
| EMEA | 14.55% | 3.2% | 11.6% |
| AMERICAS | 12.99% | 2.6% | 13.7% |
| ASIA PACIFIC | 12.81% | 5.2% | 8.2% |
| Cash Generating Unit | 2021 | 2022-2026 assumptions | |
|---|---|---|---|
| \u00a0 | Pre-tax WACC | Growth rate for terminal value | EBITA% |
| EMEA | 10.67% | 3.0% | 10.4% |
| AMERICAS | 8.56% | 2.5% | 12.4% |
| ASIA PACIFIC | 11.08% | 5.0% | 7.7% |
The increase versus 2021 of the pre-tax WACC is primarily driven by increased market risk-free rates, that have been increasing during 2022 across the globe.
The impairment tests on the recoverable amount of regional CGU's show sufficient headroom on the carrying amount of the Goodwill. In the second stage impairment test, the recoverable amount of the regional CGU's considered as a whole exceeds the carrying amount of the regional CGU's including the carrying amount of the corporate assets.
In order to test the resilience of the headroom against changes in key assumptions, Azelis has selected reasonably expectable changes in the assumptions as follows:
A WACC increase by 2%
A decrease of the growth rate in the terminal value by 2%
A decrease of Adjusted EBITA margin by 0.5%
Versus previous years, also a sensitivity test of Adjusted EBITA has been added, as Adjusted EBITA (rather than Sales) is the major indicator for the outcome of Azelis' impairment test. Azelis' cost base is predominantly variable in nature, enabling to react rapidly on (downward) exposure of revenue, limiting the possible impact on Adjusted EBITA. A sensitivity of 0.5% in Adjusted EBITA margin would result in a decrease of almost 5% in Adjusted EBITA (in EUR).
In each of the above independent scenario's and for each regional CGU, the sensitivity test shows sufficient headroom on the carrying amount of the Goodwill.
| \u00a0 | Land and buildings | Plant and equipment | Other | Total |
|---|---|---|---|---|
| As of December 31, 2020 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Cost | 19,612 | 7,787 | 12,963 | 40,362 |
| Accumulated depreciation and impairment | -1,767 | -2,089 | -4,201 | -8,057 |
| \u00a0 | 17,845 | 5,698 | 8,762 | 32,304 |
| Changes in 2021 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Business combination | 11,412 | 6,276 | 974 | 18,661 |
| Additions | 192 | 1,379 | 5,751 | 7,321 |
| Depreciation | -839 | -1,003 | -2,849 | -4,692 |
| Disposals | -29 | -115 | -306 | -450 |
| Reclassifications | -45 | -3,413 | 2,254 | -1,204 |
| Translation differences | 430 | 390 | 248 | 1,067 |
| Changes in the Period | 11,121 | 3,513 | 6,070 | 20,704 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| As of December 31, 2021 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Cost | 31,572 | 12,303 | 21,883 | 65,757 |
| Accumulated depreciation and impairment | -2,606 | -3,092 | -7,050 | -12,750 |
| \u00a0 | 28,966 | 9,211 | 14,832 | 53,008 |
| Changes in 2022 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Business combination | 2,060 | 480 | 2,420 | 4,961 |
| Additions | 394 | 1,930 | 7,350 | 9,674 |
| Depreciation | -1,538 | -1,784 | -4,131 | -7,453 |
| Disposals | -1,508 | -22 | -334 | -1,865 |
| Reclassifications | -107 | 387 | -1,225 | -946 |
| Hyperinflation | - | 8 | 186 | 195 |
| Translation differences | 80 | 108 | 122 | 310 |
| Changes in the Period | -619 | 1,105 | 4,389 | 4,876 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| As of December 31, 2022 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Cost | 32,491 | 15,193 | 30,403 | 78,086 |
| Accumulated depreciation and impairment | -4,144 | -4,877 | -11,182 | -20,203 |
| \u00a0 | 28,347 | 10,316 | 19,221 | 57,884 |
The reclassifications relate mainly to internal project costs which are recognized at year-end as intangibles.
The category 'Other' mainly relates to leasehold improvements, comprising also an insignificant amount of assets under construction.
At 31st December 2022, the group has not pledged any land and buildings, plant and equipment as security for the bank loans (2021: zero). Other restrictions are mainly related to leasehold improvements and leased machinery.
The Right of Use assets are included since 1 January 2019, following the implementation of IFRS 16 as per that date, and relate to rental agreements for offices, warehouses and cars.
| \u00a0 | Land and buildings | Other | Total |
|---|---|---|---|
| At 31 December 2020 | \u00a0 | \u00a0 | \u00a0 |
| Cost | 63,227 | 17,956 | 81,183 |
| Accumulated depreciation and impairment | -17,175 | -8,351 | -25,526 |
| \u00a0 | 46,052 | 9,605 | 55,657 |
| Changes in 2021 | \u00a0 | \u00a0 | \u00a0 |
| Business combination | 9,097 | 155 | 9,252 |
| Additions | 8,814 | 3,105 | 11,920 |
| Depreciation | -10,424 | -4,785 | -15,208 |
| Disposals | -32 | -46 | -78 |
| Remeasurements | 1,358 | 586 | 1,944 |
| Translation differences | 2,117 | -20 | 2,097 |
| Changes in the Period | 10,930 | -1,005 | 9,925 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| At 31 December 2021 | \u00a0 | \u00a0 | \u00a0 |
| Cost | 84,580 | 21,736 | 106,316 |
| Accumulated depreciation and impairment | -27,599 | -13,136 | -40,734 |
| \u00a0 | 56,981 | 8,600 | 65,582 |
| Changes in 2022 | \u00a0 | \u00a0 | \u00a0 |
| Business combination | 10,916 | 432 | 11,348 |
| Additions | 23,862 | 4,055 | 27,917 |
| Depreciation | -15,230 | -5,080 | -20,310 |
| Disposals | -824 | -103 | -927 |
| Remeasurements | 11,605 | 1,006 | 12,611 |
| Hyperinflation | 190 | 608 | 798 |
| Translation differences | 56 | -92 | -36 |
| Changes in the Period | 30,574 | 826 | 31,400 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| At 31 December 2022 | \u00a0 | \u00a0 | \u00a0 |
| Cost | 130,385 | 27,642 | 158,027 |
| Accumulated depreciation and impairment | -42,829 | -18,215 | -61,045 |
| \u00a0 | 87,555 | 9,426 | 96,982 |
Remeasurements mainly relate to the prolongation of the lease period of existing contracts.
The group has lease contracts that have not yet commenced as of December 31, 2022, with the future lease payments of around \u20ac27.0 million.
Azelis holds a 50% investment in Chemlog S.A.S. (refer to note 26.4). Chemlog's aggregated figures are presented as follows:
| (in thousands of \u20ac) | Assets | Liabilities | Equity | Revenue | Net result for the period |
|---|---|---|---|---|---|
| 31 December 2022 | 863 | 393 | 470 | 1,738 | 131 |
| 31 December 2021 | 863 | 393 | 470 | 1,617 | 131 |
| (in thousands of \u20ac) | 31-12-2022 | 31-12-2021 |
|---|---|---|
| Inventories | 687,540 | 506,379 |
| Valuation allowance/write downs | -59,804 | -38,906 |
| Net carrying amount of inventories | 627,735 | 467,473 |
Azelis' inventories mainly consist of finished goods.
Usage of inventories is recorded in the \"costs for goods and consumables\" in the consolidated income statement. In 2022 an impairment on inventory of \u20ac17.2 million (2021: \u20ac9.6 million) is included in the \"costs for goods and consumables\".
| (in thousands of \u20ac) | 31-12-2022 | 31-12-2021 |
|---|---|---|
| Trade receivables | 443,288 | 375,591 |
| Other receivables | 95,093 | 53,359 |
| \u00a0 | 538,381 | 428,950 |
See note 4.1.1 for ageing and allowance of these receivables. Other receivables relate mainly to prepayments.
| (in thousands of \u20ac) | 31-12-2022 | 31-12-2021 |
|---|---|---|
| Bank balances and cash on hand | 268,160 | 141,293 |
| Bank overdrafts (-) | -30,412 | -40,524 |
| Cash and cash equivalents (net) in the cash flow statement | 237,749 | 100,769 |
Interest rates payable for bank overdrafts used have a variable interest rate based on Euribor plus a margin. The cash and cash equivalents are at free disposal of the group.
As per Belgian regulations and articles of incorporation of the Company, Azelis has to allocate to legal reserve a minimum of 5% of the standalone net profit, if any and until such reserve reaches 10% of the share capital, distribution of the legal reserve is restricted. As of December 31, 2022, the legal reserve amounts to zero (2021: zero).
Given the limited legal life of Azelis Group NV in 2021, and taking into account the capital reorganization under common control during that year, the comparative earnings per share are presented based on the total number of shares of Azelis Group NV as if the shares issued for the contribution in kind of Akita Topco S.\u00e0 r.l. and the IPO were outstanding for the full year 2021.
The basic earnings per share and diluted earnings per share are calculated as:
| \u00a0 | 31-12-2022 | 31-12-2021 |
|---|---|---|
| Net group profit/loss (-) attributable to shareholders (in thousands of \u20ac) | 213,193 | 67,756 |
| Average number of shares (in thousand shares) | 233,750 | 233,846 |
| Basic earnings per share | 0.91 | 0.29 |
| Dilution adjusted average number of shares (in thousand shares) | 233,915 | 233,846 |
| Diluted earnings per share | 0.91 | 0.29 |
The average number of shares are calculated as:
| (in thousands) | 31-12-2022 | 31-12-2021 |
|---|---|---|
| Ordinary shares issued (entitled to dividend) | 233,846 | 233,846 |
| Weighted effect of treasury shares | -96 | 0 |
| Weighted effect of new ordinary shares issued | 0 | 0 |
| Average number of shares for basic EPS | 233,750 | 233,846 |
| Weighted effect of share-based payment | 166 | 0 |
| Average number of shares for diluted EPS | 233,915 | 233,846 |
There were no changes in the share capital during 2022.
During 2021, the following share transactions have occurred:
On 10th June, Azelis Group NV was established by issuance of 61,500 shares, for a share capital of \u20ac61,500;
On 21st September the 61,500 shares, created on 10th June, were cancelled by a capital decrease and the share capital of \u20ac61,500 was repaid to the founding shareholder;
On 21st September, all preference and ordinary shares in Akita Topco S.\u00e0 r.l. were contributed to Azelis Group NV in exchange for 195,539,251 shares issued by Azelis Group NV, each at a fractional value of \u20ac26, resulting in a capital increase by \u20ac5,084,020,526;
On 21st September, shares in Azelis Finance NV were contributed in exchange for the issuance of 4,460,749 shares by Azelis Group NV, each at a fractional value of \u20ac26, resulting in a capital increase by \u20ac115,979,474;
On 21st September, in connection with the group's IPO and listing on Euronext Brussels, 33,846,153 shares were issued, each at a fractional value of \u20ac26, resulting in a capital increase by \u20ac879,999,978 million
On 21st September, the capital of Azelis Group NV was reduced by \u20ac400 million, without destruction or repayment of shares, for the purpose of creating distributable reserves
The subscribed share capital has been fully paid. As of December 31, 2022, a total of 233,846,153 shares (2021: 233,846,153 shares) has been issued without nominal value, representing a total share capital of \u20ac5.68 billion.
Share premium reflects the additional paid-in capital exceeding the par value of the issued shares. Subject to the group's capital reorganization under common control and the IPO on Euronext Brussels in September 2021, the shares issued in the capital increases (contribution in kind of Akita Topco S.\u00e0 r.l. and IPO) were all issued at fractional value of \u20ac26 per share. As a result, the group currently has zero share premium.
Other reserves is part of the Reserves in the consolidated statement of financial position. It includes the equity effect of the capital reorganization under common control in 2021, mainly due to the cancellation of the share capital and share premium of Azelis Holding S.\u00e0 r.l., written put options on non-controlling interests, transactions with treasury shares and other adjustments to equity.
During 2022, the group has recognized put options related to the minority stakes in Catalite, Umongo and Ashapura for a total amount of \u20ac70.5 million.
In 2022, the group has purchased 133,400 treasury shares on Euronext Brussels for a total amount of \u20ac3.0\u00a0million to fund its long-term incentive plan.
Translation reserve is part of the Reserves in the consolidated statement of financial position.
Exchange differences arising on translation of the foreign controlled entities are recognized in other comprehensive income and accumulated in the translation reserve within equity. The cumulative amount is reclassified to profit or loss when the net investment is disposed of.
The majority of the intangible assets on Azelis' statement of financial position relate to the EQT/PSP Acquisition in November 2018. The respective amounts have been allocated to Azelis' three operating segments, and per IFRS also on the basis of the underlying foreign currencies in Azelis' respective jurisdictions (of which a major part relates to Azelis' activities in the United States). Exchange differences arising on translation of the intangible assets are recognized in other comprehensive income and accumulated in the translation reserve within equity.
Retained earnings includes the unappropriated result of previous years.
Reserves available for distribution is part of the Reserves in the consolidated statement of financial position.
In September 2021, and in connection with Azelis' IPO, the group reduced its share capital by \u20ac400 million against reserves available for distribution, in order to create funds for distribution to the shareholders. No capital contributions were repaid to the shareholders in the context of this capital reduction.
On March 1, 2023, a dividend of \u20ac67.8 million, implying \u20ac0.29 dividend per share1, was proposed by the Board of Directors. The dividend will be paid out to the shareholders upon approval by the shareholder's meeting on June 8, 2023.
The dividend relating to 2021 of \u20ac0.03 per share or \u20ac7.0 million was calculated pro rata such that dividend would only be paid in respect to the portion of the financial year for which the group's shares are listed on Euronext Brussels. This dividend was approved by the shareholder's meeting on 9 June 2022 and paid in full during the year 2022.
Non-controlling interests reflects the share of equity ownership in the group's subsidiaries that is not owned by the group, even though those subsidiaries are consolidated in the group's consolidated financial statements. Ashapura Aromas Private Limited, MKVN Chemicals Co. Ltd, Asia Primera Kimika Inc., Phil-Asiatic Supply & Services Inc. and Catalite Co. Ltd are the main contributors for the non-controlling interests, refer also to note 26.4.
The group\u2019s debt finance consists mainly of the following financial instruments:
| (in thousands of \u20ac) | Interest rate (base) | Interest rate (margin) | Duration | Notional amount | Carrying amount |
|---|---|---|---|---|---|
| First lien \u20ac | 1.74% | 1.75% | 2021-2026 | 900,000 | 894,667 |
| First lien GBP | 1.60% | 2.00% | 2021-2026 | 145,209 | 144,349 |
| Revolving Credit Facility | 1.10% | 1.50% | 2021-2027 | 100,000 | 100,000 |
| Schuldschein | 2.63% | 1.9%-2.1% | 2025-2027 | 21,500 | 21,409 |
| Other bank loans | 2,69% - 10,73% | \u00a0 | 2018-2026 | 131,668 | 131,668 |
| Accrued interest | \u00a0 | \u00a0 | \u00a0 | 11,624 | 11,624 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | 1,310,001 | 1,303,717 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Non-current borrowings and loans | \u00a0 | \u00a0 | \u00a0 | 1,184,678 | 1,178,394 |
| Current borrowings and loans | \u00a0 | \u00a0 | \u00a0 | 125,323 | 125,323 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | 1,310,001 | 1,303,717 |
| (in thousands of \u20ac) | Interest rate (base) | Interest rate (margin) | Duration | Notional amount | Carrying amount |
|---|---|---|---|---|---|
| First lien \u20ac | 0.00% | 2.25% | 2021-2026 | 640,000 | 635,533 |
| First lien GBP | 0.17% | 2.50% | 2021-2026 | 153,270 | 152,201 |
| Revolving Credit Facility | 0.00% | 2.00% | 2021-2026 | 40,000 | 40,000 |
| Other bank loans | 0,58% - 5,62% | \u00a0 | 2018-2026 | 69,249 | 69,249 |
| Accrued interest | \u00a0 | \u00a0 | \u00a0 | 5,652 | 5,652 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | 908,171 | 902,634 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Non-current borrowings and loans | \u00a0 | \u00a0 | \u00a0 | 845,567 | 840,030 |
| Current borrowings and loans | \u00a0 | \u00a0 | \u00a0 | 62,604 | 62,604 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | 908,171 | 902,634 |
| (in thousands of \u20ac) | 2022 | 2021 |
|---|---|---|
| As of January 1 | 902,634 | 1,210,817 |
| Cash flows from loans and borrowings | 343,846 | -400,295 |
| Transaction costs paid | -2,191 | -8,338 |
| Changes arising from business combinations | 66,054 | 78,607 |
| Accelerated amortization of transaction costs due to IPO | - | 19,616 |
| Capitalized transactions cost amortized | 1,444 | 3,358 |
| Changes in interest accruals | 5,972 | -19,100 |
| Currency translation differences | -14,043 | 17,971 |
| As of December 31 | 1,303,717 | 902,634 |
A total of \u20ac6.3 million (net book value) of transaction costs have been capitalized and are amortized over the lending period.
Within the context of the IPO on Euronext Brussels, and partly with the proceeds of the IPO, the group has repaid its existing bank borrowings in September 2021. At the same time the group has attracted new bank borrowings from a new lender's syndicate in the form of a Term Loan Facility (\u20ac640 million and GBP 128.8 million) and a Revolving Credit Facility (\u20ac260 million). In April 2022, the group has drawn an Incremental Facility of \u20ac260 million on its \u20ac\u00a0Term Loan Facility by converting \u20ac260 million drawn on the RCF to the Term Loan, totaling to \u20ac900 million. At the same time, the Revolving Credit Facility was extended from \u20ac260 million to \u20ac350 million with simultaneous extension of length until 2027.
Floating interest rates are based on EURIBOR for borrowings drawn in \u20ac\u00a0and SONIA for borrowings drawn in GBP (both capped at a floor of 0%), and a margin based on the group's total Net Leverage. The margin is capped at 2.25% and 2% for the \u20ac\u00a0Term Loan Facility, 2.50% for the GBP Term Loan Facility and 2.00% for the Revolving Credit Facility. In addition, the applicable margins going forward will be subject to +/-10 basis point adjustment depending on the satisfaction of certain ESG criteria.
In accordance with its policy on managing the risk related to interest rates (refer to the Risk management section in the Annual Report 2021) and taking into account the global interest rate developments in the first half year of 2022, Azelis has entered into two interest rate cap agreements for a total loan amount of \u20ac700 million, providing the group with an interest rate cap of 3% on EURIBOR.
In December 2022 the group obtained a bond type semi-private financing of \u20ac150.5 million, a so-called Schuldscheindarlehen. The maturity dates range from 2024 until 2029. Interest charges are partly fixed (4.74% plus margin 2.1%) and partly floating (6m Euribor plus margin 1.9%-2.5%). The financial covenants and related leverage ratio of the Schuldschein are aligned with Azelis' Multicurrency Term and Revolving Facilities Agreement that was entered into during September 2021. The Schuldschein can be repaid in advance under certain conditions. At the reporting date the amount of \u20ac129 million was unused.
| (in thousands of \u20ac) | 2022 | 2021 |
|---|---|---|
| As of January 1 | 69,278 | 58,058 |
| New contracts | 39,331 | 21,507 |
| Remeasurements | 12,610 | 2,352 |
| Cash out | -22,795 | -14,846 |
| Currency translation differences | 3,134 | 2,207 |
| As of December 31 | 101,558 | 69,278 |
For disclosure on the group's right-of-use assets, refer to note 16.2 Right of use assets.
In addition to cash balances, as of December 31, 2022, the group maintained the following lines of credit:
\u20ac180.4 million (2021: \u20ac95.3 million) uncommitted local credit facility, that concerns local credit lines given by local banks and can be revoked as any standard bank credit line. Interest would be payable at the maximum rate of EURIBOR plus 5.00%. As of December 31, 2022, \u20ac162.0 million (2021: \u20ac69.3 million) was utilized.
\u20ac350 million Revolving Credit Facility, of which \u20ac100 million has been utilized (2021: \u20ac260 million facility of which \u20ac40 million utilized). Therefore, as of December 31, 2022, \u20ac250 million (2021: \u20ac220 million) committed facility was unused. Interest would be payable at the maximum rate of EURIBOR plus 2.00%.
The financing arrangements since September 2021 of Azelis Group NV and its subsidiaries contain a financial maintenance covenant, being the total Net Leverage Ratio, which needs to be less than 4.75 : 1.00 (decreasing to 4.50 : 1.00 in 2024) and is tested twice annually.
As of December 31, 2022, the total Net Leverage Ratio is 2.2 : 1.0 (2021: 2.7 : 1.0), therefore the group complied with the financial covenants. The group monitors the compliance with the covenants on the basis of the monthly reporting process and the continuous cash flow forecasts.
| (in thousands of \u20ac) | Tax Claims | Other provisions | Total |
|---|---|---|---|
| As of January 1 2021 | 2,745 | 2,115 | 4,860 |
| Business combination | 446 | 836 | 1,282 |
| Provisions made | 253 | 1,246 | 1,499 |
| Provisions used | -13 | -109 | -122 |
| Provisions released | -962 | -574 | -1,536 |
| Translation differences | 113 | 11 | 124 |
| As of December 31, 2021 | 2,582 | 3,525 | 6,107 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Non-current | 1,982 | 2,145 | 4,127 |
| Current | 601 | 1,380 | 1,981 |
| Total | 2,583 | 3,525 | 6,108 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| 2022 | \u00a0 | \u00a0 | \u00a0 |
| Business combination | 0 | 136 | 136 |
| Provisions made during the period | 1,140 | 3,190 | 4,330 |
| Provisions used during the period | 0 | -355 | -355 |
| Provisions released during the period | -671 | -1,299 | -1,971 |
| Reclassification | 0 | 0 | 0 |
| Translation differences | -55 | -53 | -108 |
| As of December 31, 2022 | 2,996 | 5,144 | 8,141 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Non-current | 2,433 | 2,163 | 4,597 |
| Current | 563 | 2,981 | 3,544 |
| Total | 2,996 | 5,144 | 8,141 |
The provisions relate to tax risks, administrative fines, labor and commercial matters including claims and litigations, concerning the past and current activities of the group companies.
| (in thousands of \u20ac) | 31-12-2022 | 31-12-2021 |
|---|---|---|
| Trade payables | 462,728 | 368,657 |
| Other taxes | 11,805 | 6,618 |
| Employee and social security payables | 87,505 | 71,227 |
| Derivatives | 377 | 155 |
| Other payables | 209,272 | 94,417 |
| Total current payables | 771,686 | 541,074 |
| \u00a0 | \u00a0 | \u00a0 |
| Other payables | 98,264 | 9,655 |
| Other non-current liabilities | 98,264 | 9,655 |
The other current and non-current payables mainly consist of put options over non-controlling interests totaling \u20ac115.1 million (2021: \u20ac31.2 million), and earnouts and deferred payments in connection with acquisitions.
As of December 31, 2022, the group has issued unsecured corporate guarantees toward third parties for a total aggregate amount of \u20ac77.3 million (2021: \u20ac26.5 million).
The group has been constantly gearing up its structure for future growth. In order to support this growth, the structure of the group has been regularly improved by means of integrating acquired businesses, restructuring of legal entities and the continuous process of adapting the legal structure to economic reality, creation of a shared service center and creation of headquarters.
These continued structural improvements were made to the best efforts and considering to the maximum extent possible all legal and local tax matters. There are no tax and other contingencies as of December 31, 2022 (for 2021: none).
The group monitors closely the possible risks and potential implications.
The group has a related party relationship with certain of its subsidiaries, shareholders, managers, executive officers and associates. The group has one minor investment in associates, see Note 17.
As of December 31, 2022, there are no significant outstanding loans to or from related parties.
| (in thousands of \u20ac) | 31-12-2022 | 31-12-2021 |
|---|---|---|
| Board members (non-executive) | 327 | 281 |
| Other members of key management personnel | \u00a0 | \u00a0 |
| Fixed remuneration | 3,198 | 2,894 |
| Variable remuneration | 2,804 | 4,256 |
| \u00a0 | 6,329 | 7,431 |
Post-employment benefits: Details of the transactions between the group and its pension plans are disclosed in Note 11.
The following table lists the group\u2019s subsidiaries:
| Name | Country of incorporation | Type | % of interest 2022 | % of interest 2021 |
|---|---|---|---|---|
| Consolidated companies | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Azelis Group NV (formerly Akita Midco 1 NV) | Belgium | Non-operating | Parent company | Parent company |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Direct Investments | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Azelis Finance NV (formerly Akita Midco 2 NV) | Belgium | Non-operating | 100 | 100 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Indirect Investments | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Orkila Alg\u00e9rie spa | Algeria | Operating | 100 | 100 |
| Azelis Australia Pty Ltd | Australia | Operating | 100 | 100 |
| Chemcolour Industries Australia Pty Ltd | Australia | Operating | 100 | 100 |
| TimTechChem Australia Pty Ltd | Australia | Operating | 100 | 100 |
| EB1 Pty Limited | Australia | Operating | 100 | 100 |
| CW Pacific Specialties Pty Limited | Australia | Operating | 100 | 100 |
| Elle Bee Exports Pty Limited | Australia | Operating | 100 | 100 |
| CW Pacific Pty Ltd | Australia | Operating | 100 | 100 |
| Azelis Austria GmbH | Austria | Operating | 100 | 100 |
| Azelis Benelux N.V. | Belgium | Operating | 100 | 100 |
| Azelis Corporate Services N.V. | Belgium | Non-operating | 100 | 100 |
| Azelis EMEA Hub NV | Belgium | Operating | 100 | 100 |
| Chemical Partners Europe NV | Belgium | Operating | 100 | 0 |
| Chemical Partners Africa NV | Belgium | Operating | 100 | 0 |
| Azelis Bulgaria EAD | Bulgaria | Operating | 100 | 100 |
| Azelis Canada Inc. | Canada | Operating | 100 | 100 |
| Azelis China Ltd | China | Operating | 100 | 100 |
| Azelis (Shanghai) Co. Ltd. | China | Operating | 100 | 100 |
| Azelis (Shanghai) International Trading Co., Ltd | China | Operating | 100 | 100 |
| Azelis Hong Kong Ltd | China | Operating | 100 | 100 |
| Beijing CosBond Trading Co. Ltd | China | Operating | 100 | 100 |
| CosBond China Ltd | China | Operating | 100 | 100 |
| CosBond (Shanghai) International Trading Co. Ltd | China | Operating | 100 | 100 |
| Ingredients Plus (Hong Kong) Limited. | China | Operating | 100 | 100 |
| Ingredients Plus (Shanghai) Co., Ltd. | China | Operating | 100 | 100 |
| Ingredients Plus (Guangzhou) Co., Limited | China | Operating | 100 | 100 |
| WWRC (China) Holdings Ltd | China | Operating | 100 | 100 |
| WWRC Hong Kong Co. Ltd | China | Operating | 100 | 100 |
| WWRC Guangdong Co. Ltd | China | Operating | 100 | 100 |
| WWRC Tianjin Co. Ltd | China | Operating | 100 | 100 |
| WWRC Chengdu Co. Ltd | China | Operating | 100 | 100 |
| WWRC Shanghai Co. Ltd | China | Operating | 100 | 100 |
| Friendship Chemical company Ltd | China | Operating | 100 | 100 |
| Rocsa Colombia S.A. | Colombia | Operating | 63 | 0 |
| CI Inproquim Exports SAS | Colombia | Operating | 63 | 0 |
| Rocsa DCR SA | Costa Rica | Operating | 63 | 0 |
| Azelis Croatia D.O.O. | Croatia | Operating | 100 | 100 |
| Azelis Czech Republic S.R.O. | Czech Republic | Operating | 100 | 100 |
| Azelis Denmark A/S | Denmark | Operating | 100 | 100 |
| Rocsa RD SA | Dominican Republic | Operating | 63 | 0 |
| Orkila Egypt Chemicals SAE | Egypt | Operating | 99 | 99 |
| Orchem for Import and Export LLC | Egypt | Operating | 49 | 49 |
| Azelis Finland OY | Finland | Operating | 100 | 100 |
| Azelis France S.A.S | France | Operating | 100 | 100 |
| Azelis France Holding S.A.S | France | Operating | 100 | 100 |
| Quimdis SAS | France | Operating | 100 | 100 |
| Naturchim SARL | France | Operating | Dissolved | 100 |
| Jerafrance SAS | France | Operating | Dissolved | 100 |
| Azelis Deutschland GmbH | Germany | Operating | 100 | 100 |
| Azelis Deutschland Holding GmbH | Germany | Operating | 100 | 100 |
| Azelis Deutschland Immobilien GmbH | Germany | Operating | 100 | 100 |
| Azelis Deutschland Kosmetik GmbH | Germany | Operating | 90 | 90 |
| Quimdis GmbH | Germany | Operating | In liquidation | 100 |
| Azelis Chemicals Ghana Ltd | Ghana | Operating | 100 | 100 |
| Azelis Greece Single Member SA | Greece | Operating | 100 | 100 |
| Rocsa GT SA | Guatemala | Operating | 63 | 0 |
| Azelis Hungary Kft. | Hungary | Operating | 100 | 100 |
| Azelis India Private Ltd | India | Operating | 100 | 100 |
| Ashapura Aromas Private Limited | India | Operating | 70 | 0 |
| PT Azelis Indonesia Distribusi | Indonesia | Operating | 100 | 67 |
| Azelis Ireland Ltd. | Ireland | Operating | 100 | 100 |
| Azelis Israel Distribution Ltd | Israel | Operating | 100 | 100 |
| Azelis Italia Logistica S.r.L | Italy | Operating | 100 | 100 |
| Azelis Italia S.r.L | Italy | Operating | 100 | 100 |
| Deafarma S.r.l. | Italy | Operating | 100 | 100 |
| Came Chemical Mineral and Engineering S.r.l. | Italy | Operating | 100 | 100 |
| Eurotrading SpA | Italy | Operating | 100 | 0 |
| Azelis C\u00f4te d'Ivoire S.A. | Ivory Coast | Operating | 100 | 100 |
| Azelis Japan K.K. | Japan | Operating | 100 | 100 |
| Orkila Jordan LLC | Jordan | Operating | 50 | 50 |
| Azelis Kenya Ltd | Kenya | Operating | 100 | 100 |
| Azelis Korea Co. Ltd | Korea | Operating | 100 | 100 |
| Coseal Co., Ltd. | Korea | Operating | 100 | 100 |
| Orkila Holding SAL | Lebanon | Operating | 100 | 100 |
| Azelis Lebanon SAL | Lebanon | Operating | 100 | 100 |
| Azelis International (Offshore) SAL | Lebanon | Operating | 100 | 100 |
| Chempart Polymers SAL Offshore | Lebanon | Operating | 100 | 0 |
| Chemical Partners Middle East SAL | Lebanon | Operating | 100 | 0 |
| Akita Topco S.\u00e0 r.l. | Luxembourg | Non-operating | 100 | 100 |
| Azelis S.A. | Luxembourg | Non-operating | 100 | 100 |
| Azelis Malaysia Sdn Bhd | Malaysia | Operating | 100 | 100 |
| Chemical Solutions Sdn Bhd | Malaysia | Operating | 100 | 0 |
| Azelis Mexico SA de CV | Mexico | Operating | 100 | 100 |
| Azelis Morocco Sarl | Morocco | Operating | 100 | 100 |
| Orkila Invest SA | Morocco | Operating | 100 | 100 |
| Azelis Nigeria Specialty Chemicals Ltd | Nigeria | Operating | 100 | 100 |
| Azelis Norway AS | Norway | Operating | 100 | 100 |
| Azelis New Zealand Ltd | New Zealand | Operating | 100 | 100 |
| Element Trading SAC | Peru | Operating | 63 | 0 |
| Asia Primera Kimika Inc. | Philippines | Operating | 51 | 51 |
| Phil-Asiatic Supply & Services Inc. | Philippines | Operating | 51 | 51 |
| Azelis Poland SP Z.o.o | Poland | Operating | 100 | 100 |
| Azelis Romania SRL | Romania | Operating | 100 | 100 |
| Azelis Rus LLC | Russia | Operating | 100 | 100 |
| Azelis Senegal SA | Senegal | Operating | 100 | 100 |
| Azelis d.o.o Beograd | Serbia | Operating | 100 | 100 |
| Azelis Singapore Pte. Ltd | Singapore | Operating | 100 | 100 |
| Bellekimia Singapore Pte. Ltd. | Singapore | Non-operating | 51 | 51 |
| Azelis Slovakia S.R.O. | Slovakia | Operating | 100 | 100 |
| Orkila South Africa (Pty) Ltd | South Africa | Operating | 100 | 100 |
| Umongo Petroleum (Pty) Ltd | South Africa | Operating | 90 | 0 |
| Orbichem Petrochemicals (Pty) Ltd | South Africa | Operating | 90 | 0 |
| Azelis Espa\u00f1a S.A. | Spain | Operating | 100 | 100 |
| Azelis Iberia Holding SL. | Spain | Operating | 100 | 100 |
| Azelis Espana Holding SL | Spain | Operating | 100 | 100 |
| Azelis Sweden AB | Sweden | Operating | 100 | 100 |
| Azelis Switzerland AG | Switzerland | Operating | 100 | 100 |
| Azelis Thailand Ltd | Thailand | Operating | 100 | 100 |
| Catalite Co. Ltd | Thailand | Operating | 51 | 0 |
| Azelis Netherlands B.V. | The Netherlands | Operating | 100 | 100 |
| Azelis Tunisie Sarl | Tunesia | Operating | 100 | 100 |
| Azelis TR Kimya End. Ur.Ith.Ihr.Tic ve San A.S. | Turkey | Operating | 100 | 100 |
| Tun\u00e7kaya Kimyevi Ticaret Ve Sanayi Anonim \u015eirketi | Turkey | Operating | 100 | 0 |
| Da\u011falt\u0131 Kau\u00e7uk ve K\u0130myev\u0130 Maddeler Sanay\u0130 T\u0130caret Anon\u0130m \u015e\u0130rket\u0130 | Turkey | Operating | 100 | 0 |
| Azelis Ukraine LLC | Ukraine | Operating | 100 | 100 |
| Orkila FZE | United Arabic Emirates | Operating | 100 | 100 |
| Azelis UK Holdings Ltd. | United Kingdom | Operating | 100 | 100 |
| Azelis UK Life Sciences Ltd. | United Kingdom | Operating | 100 | 100 |
| Azelis UK Ltd. | United Kingdom | Operating | 100 | 100 |
| Azelis UK Finance Holding Ltd | United Kingdom | Operating | 100 | 100 |
| Azelis UK Finance Ltd | United Kingdom | Operating | 100 | 100 |
| Whitfield Chemical Group Ltd | United Kingdom | Operating | 100 | 0 |
| Whitfield Chemical Holdings Ltd | United Kingdom | Operating | 100 | 0 |
| WhitChem Ltd | United Kingdom | Operating | 100 | 0 |
| WhitChem Distribution Ltd | United Kingdom | Operating | 100 | 0 |
| ADAPCO LLC | United States | Operating | 100 | 100 |
| Azelis Americas LLC | United States | Operating | 100 | 100 |
| Azelis US Holding Inc. | United States | Operating | 100 | 100 |
| Dewolf Chemical LLC | United States | Operating | 100 | 100 |
| Glenn LLC | United States | Operating | 100 | 100 |
| P.T. Hutchins Company LLC | United States | Operating | 100 | 100 |
| Marcor Development LLC | United States | Operating | 100 | 100 |
| Monson Companies LLC | United States | Operating | 100 | 100 |
| Precision Control Technology LLC | United States | Operating | 100 | 100 |
| Azelis Americas Case LLC | United States | Operating | 100 | 100 |
| Red River Specialties LLC | United States | Operating | 100 | 100 |
| C.L. Zimmerman Co. of Delaware LLC | United States | Operating | 100 | 100 |
| Ross Organic Specialty Sales Inc. | United States | Operating | 100 | 100 |
| Vigon International LLC | United States | Operating | 100 | 100 |
| Azelis Vietnam Company Ltd | Vietnam | Operating | 100 | 100 |
| MKVN Chemicals Co, Ltd | Vietnam | Operating | 51 | 51 |
| Viet Chemicals Trading and Service Company Limited | Vietnam | Operating | 51 | 51 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Companies accounted for using the equity method | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Indirect Investments | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Chemlog S.A.S. | France | N/A | 50 | 50 |
Part of the growth trajectory of Azelis is expansion through strategic acquisitions, complementary to the corporate strategy of organic growth. As of December 31, 2022, the following transactions were not closed, but are closed (or are expected to close) in 2023.
In January 2023, Azelis signed an agreement to acquire 100% of the shares of Lidorr Elements (\"Lidorr\"), one of Israel's leading specialty chemical distributors in crop-protection, industrial materials, and care & nutrition. The acquisition expands Azelis\u2019 footprint in Israel, further building on its growing network in the region following the acquisition of Orokia in 2020. Lidorr\u2019s wide portfolio of hundreds of products significantly strengthens Azelis\u2019 lateral value chain in the Agricultural & Environmental Solutions as well as in Advanced Materials & Additives market segments.
On January 10, 2023, Azelis acquired 100% of the shares of the shares of Smoky Light B.V. (\"Smoky Light\"), a well-established distributor in the Benelux smoke ingredients market. The acquisition reinforces Azelis\u2019 position in the Benelux market and expands its footprint in the smoke ingredient market in EMEA. Smoky Light\u2019s portfolio of products strategically complements the group\u2019s lateral value chain for the food & nutrition market, thereby further expanding its expertise and product offering to customers.
On January 31, 2023, Azelis acquired 100% of the shares of Chemiplas Agencies Ltd (\u201cChemiplas\u201d), one of the leading distributors of specialty chemicals, plastic raw materials and ingredients in Australia, New Zealand and the Pacific Islands. The acquisition significantly expands Azelis\u2019 footprint and accelerates its growth in Asia Pacific. The addition of Chemiplas\u2019 attractive portfolio of products from key principals strategically complements the group\u2019s lateral value chain, strengthening market coverage and formulation expertise. This allows the group to provide even more innovative solutions to customers, thereby reinforcing its position in Australia and New Zealand.
These acquisitions are expected to be funded from the group\u2019s current existing liquidity, as well as an amount of \u20ac129 million under Schuldschein credit facility that was unused as of December 31, 2022.
No material subsequent events after December 31, 2022 have been identified that may have had a material or significant effect on the 2022 consolidated financial statements.
", "dimensions": { "concept": "ifrs-full:DisclosureOfNotesAndOtherExplanatoryInformationExplanatory", "language": "en", "entity": "scheme:699400M9RRMTV264FM70", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-346": { "value": "Azelis Group NV (the \u201cCompany\u201d), formerly named Akita Midco 1 NV, was incorporated on 10th of June 2021 and is domiciled in Belgium. The address of the Company is Posthofbrug 12 box 6, 2600 Antwerp, Belgium. The Company's principal place of business is Belgium. The Company is registered in Belgium under the number 0769.555.240.
The main shareholder of Azelis Group NV is Akita I S.\u00e0 r.l., 26A Boulevard Royal, 2449 Luxembourg (hereinafter referred to as \u201cEQT\u201d). Based on the most recent transparency declaration filed by EQT, the ultimate controlling party of Akita I S.\u00e0.r.l. is EQT VIII Collect SCSp which is not controlled by any of its shareholders but is managed by EQT VIII (GP) SCS.
The consolidated financial statements of the Company for the period ended December 31, 2022 comprise the Company and its subsidiaries (together referred to as the \u201cgroup\u201d or as \u201cAzelis\u201d being the trade name of the group) and the group\u2019s interest in associates.
The group is primarily involved in the distribution of speciality chemical products used in the Life Sciences (Personal Care, Home Care & Industrial Cleaning, Pharmaceuticals & Healthcare, Food & Nutrition, Animal Nutrition, Agricultural & Environmental Solutions) and Industrial Chemicals industry (CASE, Advanced Materials & Additives, Lubricants & Metalworking Fluids, Electronics, Essentials and Fine Chemicals, Textiles Leather & Paper).
Azelis is well positioned to face challenges across the globe, on the basis of its diversified specialty chemicals portfolio, but also based on its asset-light business model. Azelis' cost base, other than payroll and some other predominantly fixed costs, is mostly variable. Azelis has multiple cost levers that can be activated to mitigate the impact of downturns, which enables it to react rapidly to downturns or economic crises and furthers the group's resilience. Recent challenges that Azelis has faced successfully include for example the impact of the Covid-19 pandemic, but also the currently ongoing uncertain economic and geopolitical circumstances.
With its laboratories, the Company is well positioned to support its customers with many new formulations that are necessitated as a result of changing conditions. Azelis is helping its customers and its principals to respond to climate-changes, and to achieve their sustainability goals by, for example, promoting sustainable products and product development, encouraging sustainable formulation creation in its laboratories, and assessing its principals and implementing corporate social responsibility due diligence procedures when selecting and onboarding principals.
Alongside sustainability, innovation and digitalization form the pillars of Azelis\u2019 strategy for creating value. Investments in innovation centers, application laboratories, e-Labs, principal portals, and customer portals are helping to accelerate the supply of sustainable products.
The financial period is the calendar year starting as of January 1, 2022 and ending as of December 31, 2022 (further mentioned as 2022).
The comparative period is reflecting the financial performance of the group starting January 1, 2021 and ending as of December 31, 2021.
", "dimensions": { "concept": "ifrs-full:DisclosureOfGeneralInformationAboutFinancialStatementsExplanatory", "language": "en", "entity": "scheme:699400M9RRMTV264FM70", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-0": { "value": "Azelis Group NV", "dimensions": { "concept": "ifrs-full:NameOfReportingEntityOrOtherMeansOfIdentification", "language": "en", "entity": "scheme:699400M9RRMTV264FM70", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-3": { "value": "Belgium", "dimensions": { "concept": "ifrs-full:CountryOfIncorporation", "language": "en", "entity": "scheme:699400M9RRMTV264FM70", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-4": { "value": "Posthofbrug 12 box 6, 2600 Antwerp, Belgium", "dimensions": { "concept": "ifrs-full:AddressOfRegisteredOfficeOfEntity", "language": "en", "entity": "scheme:699400M9RRMTV264FM70", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-5": { "value": "Belgium", "dimensions": { "concept": "ifrs-full:PrincipalPlaceOfBusiness", "language": "en", "entity": "scheme:699400M9RRMTV264FM70", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-1": { "value": "Belgium", "dimensions": { "concept": "ifrs-full:DomicileOfEntity", "language": "en", "entity": "scheme:699400M9RRMTV264FM70", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-347": { "value": "The main shareholder of Azelis Group NV is Akita I S.\u00e0 r.l., 26A Boulevard Royal, 2449 Luxembourg (hereinafter referred to as \u201cEQT\u201d). Based on the most recent transparency declaration filed by EQT, the ultimate controlling party of Akita I S.\u00e0.r.l. is EQT VIII Collect SCSp which is not controlled by any of its shareholders but is managed by EQT VIII (GP) SCS. 17 Investments in associates Azelis holds a 50% investment in Chemlog S.A.S. (refer to note 26.4). Chemlog's aggregated figures are presented as follows: (in thousands of \u20ac) Assets Liabilities Equity Revenue Net result for the period 31 December 2022 863 393 470 1,738 131 31 December 2021 863 393 470 1,617 131 26.1 Identity of related parties The group has a related party relationship with certain of its subsidiaries, shareholders, managers, executive officers and associates. The group has one minor investment in associates, see Note 17. 26.2 Loans to or from related parties As of December 31, 2022, there are no significant outstanding loans to or from related parties. 26.3 Key personnel remuneration (in thousands of \u20ac) 31-12-2022 31-12-2021 Board members (non-executive) 327 281 Other members of key management personnel \u00a0\u00a0Fixed remuneration 3,198 2,894 Variable remuneration 2,804 4,256 \u00a06,329 7,431 Post-employment benefits: Details of the transactions between the group and its pension plans are disclosed in Note 11. ", "dimensions": { "concept": "ifrs-full:DisclosureOfRelatedPartyExplanatory", "language": "en", "entity": "scheme:699400M9RRMTV264FM70", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-2": { "value": "NV", "dimensions": { "concept": "ifrs-full:LegalFormOfEntity", "language": "en", "entity": "scheme:699400M9RRMTV264FM70", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-7": { "value": "Akita I S.\u00e0 r.l.", "dimensions": { "concept": "ifrs-full:NameOfParentEntity", "language": "en", "entity": "scheme:699400M9RRMTV264FM70", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-8": { "value": "EQT VIII Collect SCSp", "dimensions": { "concept": "ifrs-full:NameOfUltimateParentOfGroup", "language": "en", "entity": "scheme:699400M9RRMTV264FM70", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-6": { "value": "The group is primarily involved in the distribution of speciality chemical products used in the Life Sciences (Personal Care, Home Care & Industrial Cleaning, Pharmaceuticals & Healthcare, Food & Nutrition, Animal Nutrition, Agricultural & Environmental Solutions) and Industrial Chemicals industry (CASE, Advanced Materials & Additives, Lubricants & Metalworking Fluids, Electronics, Essentials and Fine Chemicals, Textiles Leather & Paper).", "dimensions": { "concept": "ifrs-full:DescriptionOfNatureOfEntitysOperationsAndPrincipalActivities", "language": "en", "entity": "scheme:699400M9RRMTV264FM70", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-543": { "value": "The consolidated financial statements for the period ended December 31, 2022, were authorized for issue by the Board of Directors on 1 March 2023 and will be submitted for approval to the Shareholders' Meeting to be held on 8 June 2023.
The consolidated financial statements have been prepared in accordance with the International Financial Reporting Standards as adopted in the European Union (IFRS). The group has consistently applied the accounting policies as set out below to all periods presented in these consolidated financial statements. Changes to the accounting policies in the current year are limited to the changes in IFRS below and are applied starting as per 1st January 2022.
The following amendments to standards are mandatory for the first time for the financial year beginning 1 January 2022 and have been endorsed by the European Union. They have been implemented by the group without significant impact on the financial statements:
Amendments to IFRS 3 Business Combinations; IAS 16 Property, Plant and Equipment; IAS 37 Provisions, Contingent Liabilities and Contingent Assets as well as Annual Improvements (effective 1 January 2022). The package of amendments includes narrow-scope amendments to three Standards as well as the Board\u2019s Annual Improvements, which are changes that clarify the wording or correct minor consequences, oversights or conflicts between requirements in the Standards.
Amendments to IFRS 3 Business Combinations update a reference in IFRS 3 to the Conceptual Framework for Financial Reporting without changing the accounting requirements for business combinations.
Amendments to IAS 16 Property, Plant and Equipment prohibit a company from deducting from the cost of property, plant and equipment amounts received from selling items produced while the company is preparing the asset for its intended use. Instead, a company will recognise such sales proceeds and related cost in profit or loss.
Amendments to IAS 37 Provisions, Contingent Liabilities and Contingent Assets specify which costs a company includes when assessing whether a contract will be loss-making.
Annual Improvements 2018-2020 make minor amendments to IFRS 1 First-time Adoption of International Financial Reporting Standards, IFRS 9 Financial Instruments, IAS 41 Agriculture and the Illustrative Examples accompanying IFRS 16 Leases.
Amendment to IFRS 16 Leases Covid 19-Related Rent Concessions beyond 30 June 2021 (effective 01/04/2021), with early application permitted). The amendments extend, by one year, the May 2020 amendment that provides lessees with an exemption from assessing whether a COVID-19-related rent concession is a lease modification. In particular, the amendment permits a lessee to apply the practical expedient regarding COVID-19-related rent concessions to rent concessions for which any reduction in lease payments affects only payments originally due on or before 30 June 2022 (rather than only payments originally due on or before 30 June 2021). The amendment is effective for annual reporting periods beginning on or after 1 April 2021 (earlier application permitted, including in financial statements not yet authorized for issue at the date the amendment is issued).
The following new standard and amendments have been issued, are not mandatory for the first time for the financial year beginning 1 January 2022 but have been endorsed by the European Union:
IFRS 17 \u2018Insurance contracts\u2019 (effective 1 January 2023). This standard replaces IFRS 4, which currently permits a wide variety of practices in accounting for insurance contracts. IFRS 17 will fundamentally change the accounting by all entities that issue insurance contracts and investment contracts with discretionary participation features. On 17 March 2020, IASB decided to defer pop effective date to annual reporting periods beginning on or after 1 January 2023. The endorsement includes the amendments issued by the Board in June 2020, which are aimed at helping companies implement the Standard and making it easier for them to explain their financial performance. The EU regulation provides an optional exemption from applying the annual cohort requirement that relates to the timing of the recognition of the profit in the contract, the contractual service margin, in profit or loss. Entities making use of the exemption are not applying IFRSs as issued by the IASB and need to disclose the fact.
Amendments to IAS 1 Presentation of Financial Statements and IFRS Practice Statement 2: Disclosure of Accounting policies (effective 1 January 2023). The amendments aim to improve accounting policy disclosures and to help users of the financial statements to distinguish between changes in accounting estimates and changes in accounting policies. The IAS 1 amendment requires companies to disclose their material accounting policy information rather than their significant accounting policies. Further, the amendment to IAS 1 clarifies that immaterial accounting policy information need not be disclosed. To support this amendment, the Board also amended IFRS Practice Statement 2, \u2018Making Materiality Judgements\u2019, to provide guidance on how to apply the concept of materiality to accounting policy disclosures. The amendments are effective for annual reporting periods beginning on or after 1 January 2023. Earlier application is permitted (subject to any local endorsement process).
Amendments to IAS 8 Accounting policies, Changes in Accounting Estimates and Errors: Definition of Accounting Estimates (effective 1 January 2023). The amendment to IAS 8, \u2018Accounting Policies, Changes in Accounting Estimates and Errors\u2019, clarifies how companies should distinguish changes in accounting policies from changes in accounting estimates. The amendments are effective for annual reporting periods beginning on or after 1 January 2023. Earlier application is permitted (subject to any local endorsement process).
Amendments to IAS 12 Income Taxes: Deferred Tax related to Assets and Liabilities arising from a Single Transaction (effective 1 January 2023). The amendments clarify how companies account for deferred tax on transactions such as leases and decommissioning obligations. The main change in the amendments is an exemption from the initial recognition exemption of IAS 12.15(b) and IAS 12.24. Accordingly, the initial recognition exemption does not apply to transactions in which equal amounts of deductible and taxable temporary differences arise on initial recognition. The amendments are effective for annual reporting periods beginning on or after 1 January 2023. Early adoption is permitted.
Amendments to IFRS 17 Insurance contracts: Initial Application of IFRS 17 and IFRS 9 \u2013 Comparative Information (effective 1 January 2023). The amendment is a transition option relating to comparative information about financial assets presented on initial application of IFRS 17. The amendment is aimed at helping entities to avoid temporary accounting mismatches between financial assets and insurance contract liabilities, and therefore improve the usefulness of comparative information for users of financial statements.
The following amendments have been issued, but are not mandatory for the first time for the financial year beginning 1 January 2022 and have not been endorsed by the European Union:
Amendments to IAS 1 \u2018Presentation of Financial Statements: Classification of Liabilities as current or non-current\u2019 (effective 01/01/2024), affect only the presentation of liabilities in the statement of financial position \u2014 not the amount or timing of recognition of any asset, liability income or expenses, or the information that entities disclose about those items. They:
Clarify that the classification of liabilities as current or non-current should be based on rights that are in existence at the end of the reporting period and align the wording in all affected paragraphs to refer to the \"right\" to defer settlement by at least twelve months and make explicit that only rights in place \"at the end of the reporting period\" should affect the classification of a liability;
Clarify that classification is unaffected by expectations about whether an entity will exercise its right to defer settlement of a liability; and make clear that settlement refers to the transfer to the counterparty of cash, equity instruments, other assets or services;
Clarify how conditions with which an entity must comply within 12 months after the reporting period, such as covenants, affect the corresponding liability\u2019s classification.
Amendments to IFRS 16 Leases: Lease Liability in a Sale and Leaseback (effective 1 January 2024). The amendments explain how an entity accounts for a sale and leaseback after the date of the transaction, specifically where some or all the lease payments are variable lease payments that do not depend on an index or rate. They state that, in subsequently measuring the lease liability, the seller-lessee determines \u2018lease payments\u2019 and \u2018revised lease payments\u2019 in a way that does not result in the seller-lessee recognizing any amount of the gain or loss that relates to the right of use it retains. Any gains and losses relating to the full or partial termination of a lease continue to be recognised when they occur as these relate to the right of use terminated and not the right of use retained.
This annual report is required to be published in the European Single Electronic Format, as determined by and according to the requirements set out in the Commission Delegated Regulation (EU) 2019/815 of December 17, 2018, supplementing Directive 2004/109/EC. The PDF version of the annual report is not ESEF compliant and has been solely prepared for ease of use of readers. The group's official reporting package in ESEF can be found on the group's website.
In anticipation of the group's Initial Public Offering on Euronext Brussels, effective 21 September 2021, the Company has undergone a capital reorganization under common control, in relation to its IPO and the related share transactions amongst the group's shareholders and entities. Under the capital reorganization under common control, the predecessor value method has been applied. As a consequence, comparative information presented in the Azelis Group NV consolidated financial statements partly represents the information of Azelis Holding S.\u00e0 r.l. for prior periods, as the legal life of Azelis Group NV as a company has started on 10 June 2021. As such, prior period profit and loss, cash flows and equity represent those of Azelis Holding S.\u00e0 r.l. for the periods before 10 June 2021.
The Company and its shareholders have proceeded to an IPO (Primary Tranche) and Listing (Secondary Tranche) on Euronext Brussels, effective 21 September 2021. During the IPO a total of 59,242,577 shares was sold, of which 33,846,153 were new shares and 25,396,424 existing shares, at an offer price of \u20ac26 per share, totaling proceeds of \u20ac1,540 million. On 1 October 2021, the over-allotment option was settled and an additional tranche of 8,886,386 shares was sold by the existing shareholders, increasing total shares sold to 68,128,963 and total proceeds to \u20ac1,771 million.
The total gross proceeds for Azelis Group NV resulting from the new shares sold were approximately \u20ac880 million, recognized as a capital increase in equity. The Company has incurred a total of \u20ac58.9 million transaction expenses, of which \u20ac50.5 million are incremental costs related to the issuance of new shares and deducted from equity (other reserves), and of which \u20ac8.4 million are related to the listing procedure and recognized as an expense.
As of 2022, Turkey is categorized as a country with a three-year cumulative inflation rate greater than 100%, which is an indicator for hyperinflation. Also considering qualitative indicators, the Turkish economy is considered to be hyper-inflationary. As a consequence, as of 30 June 2022, IAS 29 Financial Reporting in Hyperinflationary Economies is applied for those entities whose functional currency is the Turkish Lira, retrospectively starting January 1, 2022.
The application of IAS 29 has led to an increase in Azelis' equity of approx. \u20ac27.5 million, and a related increase that is mainly reflected in goodwill and intangible assets. As the majority of Azelis' operational activities in Turkey are settled in hard currencies (USD and EUR mainly), no material impact is observed in Azelis' income statement.
The relevant price index used for the restatement of the financial statements of Azelis' Turkish subsidiaries is the consumer price index (\"CPI\") based on data of the Turkish Statistical Institute. Since end of 2020, the consumer price index has moved as follows:
| \u00a0 | Year (31st December) | Turkey CPI | Change (%) | EUR/TRL exchange rate |
|---|---|---|---|---|
| \u00a0 | 2020 | 5.0481 | N/A | 9.0079 |
| \u00a0 | 2021 | 6.8695 | 36.08% | 14.6823 |
| \u00a0 | 2022 | 11.2845 | 64.27% | 19.9349 |
In 2022, Azelis has launched a long-term incentive plan (\"LTIP\"), granting share awards to certain directors, employees and self-employed managers of the group. In accordance with IFRS 2, the LTIP qualifies as an equity-settled share-based payment transaction.
To cover future obligations under the LTIP, Azelis has purchased treasury shares on Euronext Brussels for a total amount of \u20ac3.0 million.
In 2022, Azelis has changed the presentation of its cash flow statement, solely moving the interests paid cash flows from the operating activities to the financing activities. Accordingly, the same change in presentation was executed for the comparative figures. Accordingly, interest paid of \u20ac41.2 million (2021: \u20ac72.0 million) is now presented in the financing activities. This change in presentation does not affect the consolidated statement of financial position, consolidated statement of profit or loss and other comprehensive income, consolidated statement of changes in equity and the notes to the consolidated financial statements. Azelis has executed this change in presentation because it considers interests paid to be costs of obtaining financial resources.
The financial period is the calendar year starting as of January 1, 2022 and ending as of December 31, 2022 (further mentioned as 2022).
The comparative period is reflecting the financial performance of the group starting January 1, 2021 and ending as of December 31, 2021.
The consolidated financial statements incorporate the financial statements of the Company and all entities controlled by the Company made up to December 31, 2022. All intra-group transactions, balances, income and expenses are eliminated on consolidation.
Subsidiaries are entities controlled by the Company. Control is achieved when the Company 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 Company controls an investee if, and only if, the Company has:
Power over the investee (i.e., existing rights to direct relevant activities);
Exposure, or rights, to variable returns from its involvement in the investee; and
The ability to use its power to affect the investee\u2019s returns.
Generally, there is a presumption that having a majority of voting rights results in control. To support this presumption and when the group has less than a majority of the voting or similar rights of an investee, the group considers all relevant facts and circumstances in assessing whether it has power over an investee.
Non-controlling interests in subsidiaries are identified separately from the group\u2019s equity therein. The interests of non-controlling shareholders may be initially measured at fair value or at the non-controlling interests\u2019 proportionate share of the fair value of the acquiree\u2019s identifiable net assets. A choice of measurement is made on an acquisition-by-acquisition basis. For its current non-controlling interests in subsidiaries, the group has opted to measure at the proportionate share of the acquiree's identifiable net assets. Subsequent to acquisition, the carrying amount of non-controlling interests is the amount of those interests at initial recognition plus the non-controlling interests\u2019 share of subsequent changes in equity. Total comprehensive income is attributed to non-controlling interests even if this results in the non-controlling interests having a deficit balance.
A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction between shareholders.
Acquisitions of subsidiaries and businesses are accounted for using the acquisition method. The consideration transferred for each acquisition is measured at the aggregate of the fair values at the date of exchange of assets given, liabilities incurred or assumed, and equity instruments issued by the group in exchange for control of the acquiree. Where applicable, the consideration for the acquisition includes any asset or liability resulting from a contingent consideration arrangement, measured at its acquisition-date fair value. Subsequent changes in such fair values are adjusted against the cost of acquisition where they qualify as measurement period adjustments.
The acquiree\u2019s identifiable assets, liabilities and contingent liabilities that meet the conditions for recognition at the balance sheet are recognized at their fair value at the acquisition date, except for deferred tax assets or liabilities and liabilities and assets related to employee benefit arrangements.
The difference between the fair value of the consideration transferred and the fair value of the identified assets, liabilities and contingent consideration is recorded as goodwill. If the fair value of the net assets acquired exceeds the aggregate consideration transferred, this purchase bargain is included in the profit or loss, after the group has re-assessed whether it has correctly identified all of the assets acquired and all of the liabilities assumed. Acquisition-related costs are recognized in profit or loss as incurred.
If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, the group reports provisional amounts for the items for which the accounting is incomplete. Those provisional amounts are adjusted during the measurement period, or additional assets or liabilities are recognized, to reflect new information obtained about facts and circumstances that existed as of the acquisition date that, if known, would have affected the amounts recognized as of that date. The measurement period to finalize the valuations is subject to a maximum of one year after acquisition date.
Associates are entities over which the group has significant influence, but no control. Significant influence is the power to participate in the financial and operating policy decisions of the investee.
Associates are accounted for under the equity method and are recognized initially at cost as adjusted for post-acquisition changes in the group\u2019s share of the net assets of the associate. The group\u2019s investment includes goodwill on acquisition, net of any accumulated impairment losses. The consolidated financial statements include the group\u2019s share of the income and expense and the equity movements of the investments accounted within equity, after the alignment of the accounting policies to those of the group, from the day significant influence commences until the day significant influence ceases. When the group\u2019s share of losses exceeds its interest in an equity accounted investee, the carrying amount of that interest (including any long-term investments) is reduced to zero and no further losses are recognized except for losses arising from the group\u2019s obligation or payments on behalf of the investee.
The consolidated financial statements are presented in Euro, which is the group\u2019s presentation currency. The group companies determine their functional currency based on the primary economic environment in which they operate. The main indicators to determine the functional currency is the currency of the sales, expenses and financing activities.
The group operates in different currency environments, but mainly in Euro and USD. Transactions in foreign currencies are translated to the respective functional currencies of the group entities at exchange rates at the date of the transaction. Monetary assets and liabilities denominated in foreign currency at the reporting date are translated to the functional currency of the entity at the exchange rate at that date. Non-monetary assets and liabilities denominated in foreign currency and measured at fair value are translated to the functional currency of the entity at the exchange rate at the date that the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated. Foreign currency differences arising from this operational translation are recognized in the income statement.
The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising from acquisition, are translated to Euro at exchange rates at the reporting date. The income and expenses of foreign operations are translated to Euro at average exchange rates.
Foreign currency differences are recognized in other comprehensive income and accumulated in equity. These differences have been recognized in the foreign currency translation reserve (FCTR). When the group loses control over a foreign operation the accumulated foreign translation amount of the subsidiary is transferred from equity to the profit or loss.
Foreign exchange gains and losses, arising from a monetary item to be received from or paid to a foreign operation for which the settlement is neither planned nor likely to occur in the foreseeable future, are included in the value of net investment in a foreign operation and recognized directly in equity in FCTR.
Non-monetary assets and liabilities, equity, and the income statement of subsidiaries operating in hyperinflationary economies are restated for changes in the general purchasing power of the local currency applying a general price index. These re-measured amounts are used for conversion into the group reporting currency at the period closing exchange rate. As a result, the balance sheet and net results of subsidiaries operating in hyperinflation economies are stated in terms of the measuring unit current at the end of the reporting period. In accordance with IAS 21 The Effects of Changes in Foreign Exchange Rates, multinational companies that have subsidiaries with the hyperinflationary currency as their functional currency are not required to restate comparative amounts as those were presented previously in a stable currency.
The carrying amounts of the group\u2019s non-current non-financial assets are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, the group performs an impairment test. For goodwill and intangible assets with indefinite lives an impairment test is performed every year.
The recoverable amount of an asset or cash-generating unit is the higher of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future pre-tax cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For the purpose of impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or groups of assets (the \u201ccash-generating unit\u201d). The goodwill acquired in a business combination, for the purpose of impairment testing, is allocated to (groups of) cash-generating units that are expected to benefit from the synergies of the combination.
Corporate assets are assets that do not generate cash inflows independently, and their carrying amounts need to be allocated to the cash-generating units on a reasonable and consistent basis. If a corporate asset cannot be allocated to cash-generating units on a reasonable and consistent basis, the group performs the goodwill impairment test in two stages: first on the level of the cash-generating units, and secondly on the level of the smallest group of cash-generating units to which the corporate asset can be allocated on a reasonable and consistent basis.
An impairment loss is recognized if the carrying amount of an asset or its cash-generating unit exceeds its estimated recoverable amount. Impairment losses are recognized in the income statement. Impairment losses recognized in respect of cash-generating units are allocated first to reduce the carrying amount of goodwill allocated to the units and then to reduce the carrying amount of the other assets in the unit (group of units) on a pro rata basis.
An impairment loss in respect of goodwill will not be reversed afterwards. In respect of other assets, impairment losses recognized in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset\u2019s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortization, if no impairment loss had been recognized.
Goodwill is initially measured at cost, the excess of the aggregate of the consideration transferred and the amount recognized for the assets acquired and liabilities assumed in a business combination. After initial recognition, goodwill is measured at cost less any accumulated impairment losses. In the event of disposal of a cash-generating unit, the attributable amount of goodwill is included in the determination of the profit or loss on disposal.
Research activity expenses, undertaken with the prospect of gaining new scientific or technical knowledge and understanding, are recognized in the income statement when incurred.
Development expenses for which the group has the technical feasibility, intention and means to complete the intangible assets and the economic future benefits of the assets will flow to the group are capitalized at cost.
Other intangible assets with finite useful lives, are measured at cost less accumulated amortization and accumulated impairment losses. Amortization is recognized in the income statement on a straight-line basis over the estimated useful lives of intangible assets, other than goodwill, from the date when the asset is ready for use. The estimated useful lives of intangible assets and their residual value (if applicable) are reviewed every year.
The estimated useful lives for the current and comparative period are as follows:
| Intangible assets | Economic lifetime |
|---|---|
| Trademarks | Indefinite |
| Customer lists | 5 to 10 years |
| Distribution rights | 20 years |
| Other intangible assets | 3 to 7 years |
Items of property, plant and equipment are measured at cost less accumulated depreciation and accumulated impairment losses. Cost includes expenditure that is directly attributable to the acquisition of the asset. Components of property, plant and equipment with separate useful lives are accounted for as separate items (major components) of property, plant and equipment.
Gains and losses on disposal of an item of property, plant and equipment are determined by comparing the net proceeds from disposal with the carrying amount of property, plant and equipment and are recognized in other income or other expenses in the income statement.
Depreciation is recognized in the income statement on a straight-line basis over the estimated useful lives of each component of property, plant and equipment to their residual values. Leasehold improvements are depreciated over the shorter of the lease term and their useful lives. Land is not depreciated.
The estimated useful lives for the current and comparative period are as follows:
| Property, plant and equipment | Economic lifetime |
|---|---|
| Buildings | 20 to 33 years |
| Plant and equipment | 5 to 10 years |
| Other property, plant and equipment | 5 to 10 years |
Depreciation methods, useful lives and residual values are reviewed at each reporting date.
Assets and liabilities arising from a lease are initially measured on a present value basis.
Lease liabilities include the net present value of the following lease payments:
fixed payments, less any lease incentives receivable
variable lease payment that are based on an index or a rate, initially measured using the index or rate as of the commencement date.
amounts expected to be payable by the group under residual value guarantees.
the exercise price of a purchase option if the group is reasonably certain to exercise that option, and
payments of penalties for terminating the lease, if the term reflects the group exercising that option.
Lease payments to be made under reasonably certain extension options are also included in the measurement of the liability.
The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be readily determined, which is generally the case for leases in the group, the lessee's incremental borrowing rate is used, being the rate that the individual lessee would have to pay to borrow the funds necessary to obtain an asset of similar value to the right-of-use asset in a similar economic environment with similar terms, security and conditions.
The group is exposed to potential future increases in variable lease payments based on an index or rate, which are not included in the lease liability until they take effect. When adjustments to lease payments based on an index or rate take effect, the lease liability is reassessed and adjusted against the right-of-use asset.
Lease payments are allocated between principal and finance cost. The finance cost is charged to profit or loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period.
Right-of-use assets are 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, and
restoration costs.
Payments associated with short-term leases of equipment and vehicles and all leases of low-value assets are recognized on a straight-line basis as an expense in profit or loss. Short-term leases are leases with a lease term of 12 months or less. Low-value assets comprise IT equipment and small items of office furniture.
The group remeasures the lease liability (and makes a corresponding adjustment to the related right-of-use asset) whenever:
The lease term has changed or there is a significant event or change in circumstances resulting in a change in the assessment of exercising a purchase option, in which case the lease liability is remeasured by discounting the revised lease payments using a revised discount rate.
The lease payments change due to changes in an index or rate or a change in expected payment under a guaranteed residual value, in which cases the lease liability is remeasured by discounting the revised lease payments using an unchanged discount rate.
A lease contract is modified and the lease modification is not accounted for as a separate lease, in which case the lease liability is remeasured based on the lease term of the modified lease by discounting the revised lease payments using a revised discount rate at the effective date of the modification.
Financial assets and liabilities are classified into three categories: Measured at amortized cost, at fair value through other comprehensive income (FVTOCI) and at fair value through Profit and Loss (FVTPL). Currently, Azelis has no financial assets or liaibilities measured at FVTOCI.
The group recognizes financial instruments when it enters into a contract. Financial instruments are derecognized when the contractual rights to the cash flows of the asset expire, or it transfers the rights to receive the contractual cash flows on the financial asset in a transaction in which substantially all the risks and rewards of ownership of the financial asset are transferred. With regard to its trade receivables, the group engages in non-recourse factoring programs. Receivables are derecognized when the factor pays the group, which also triggers a fee to be paid for the credit risk assumed by the factor. Factoring fees are recognized in the group's financial expenses.
Initially, financial instruments are recognized at their fair value. Transaction costs directly attributable to the acquisition or issue of financial instruments are recognized at the initial measurement date, except for financial instruments measured at FVTPL. Transaction costs related to FVTPL financial instruments are recorded in the profit or loss at initial recognition.
The classification of financial assets is based on two criteria: the objective of the company's business model for managing the assets, and whether the instruments' contractual cash flows represent \"solely payments of principal and interest\" on the principal amount outstanding (known as the 'SPPI-test').
Trade receivables are recognized initially at the amount of consideration that is unconditional, unless they contain significant financing components, when they are recognized at fair value. The group holds trade receivables with the objective of collecting the contractual cash flows and therefore measures them subsequently at amortized cost using the effective interest method. Other receivables are initially measured at fair value and subsequently measured at amortized cost.
Trade and other payables are recognized initially at their fair value and subsequently measured at amortized cost using the effective interest method. Loans and borrowings are initially recognized at fair value, net of transaction costs incurred. Loans and borrowings are subsequently measured at amortized cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognized in profit or loss over the period of the borrowings using the effective interest method.
An exchange between an existing borrower and lender of financial liabilities with substantially different terms is accounted for as an extinguishment of the original financial liability and the recognition of a new financial liability. Similarly, a substantial modification of the terms of an existing financial liability or a part of it (whether or not attributable to the financial difficulty of the debtor) is accounted for as an extinguishment of the original financial liability and the recognition of a new financial liability.
The terms are substantially different if the discounted present value of the cash flows under the new terms, including any fees paid net of any fees received and discounted using the original effective interest rate, is at least 10 percent different from the discounted present value of the remaining cash flows of the original financial liability. If an exchange of debt instruments or modification of terms is accounted for as an extinguishment, any costs or fees incurred are recognized as part of the gain or loss on the extinguishment. However, costs or fees that are incremental and directly related to the issue of the new debt instrument are treated as transaction costs of the new liability, and hence are spread forward by adjusting the effective interest rate.
The group uses derivative financial instruments such as forward exchange contracts, interest rate swaps to hedge its foreign currency risk and interest rate risk and interest rate cap, to hedge its interest rate risks associated with floating-rate borrowings under the group\u2019s credit facilities.
Derivatives are initially recognized as other financial assets at fair value on the date a derivative contract is entered into, and they are subsequently remeasured to their fair value through profit and loss at the end of each reporting period. The derivative is only used for economic hedging purposes and not as a speculative investment.\u00a0 The group does not apply hedge accounting. Therefore, changes in the fair value of the group\u2019s derivative financial instrument are recognized immediately in the consolidated statement of profit or loss and are included in finance costs.
The group has granted put options for remaining non-controlling interests in acquired companies, giving the holders the right to sell to the group their investments in these subsidiaries. These financial liabilities do not bear interest. In accordance with IAS 32, the group recognizes a redemption liability corresponding to the present value of the estimated exercise price of the option. The redemption liability is included in other current and non-current liabilities and the counterpart is a reduction from the group's equity. At the end of each reporting period, the liability is adjusted to reflect changes in the estimated exercise price. These subsequent changes are accounted for in the income statement.
If the group has also obtained a call option on the same remaining non-controlling interests of the acquired companies, this option is taken into account for the control assessment in respect of the business combination.
The group recognizes an allowance for expected credit losses (ECL) for all financial assets that are not held at FVTPL. ECLs are based on the difference between the contractual cash flows due in accordance with the contract and all the cash flows that the group expects to receive, discounted at an approximation of the original effective interest rate.
The impairment methodology applied depends on whether there has been a significant increase in credit risk: if so, the loss allowance is measured as the lifetime expected credit loss. If not, the allowance is measured as the 12-month expected credit loss. For Trade receivables, the group applies the simplified approach permitted by IFRS 9, which requires lifetime expected losses to be recognized from initial recognition of the receivables (see note 4.1 for further details). While cash and cash equivalents and other loan receivables are also subject to the impairment requirements of IFRS 9, no impairment loss was identified as these assets are considered as low-credit risk.
Individually significant financial assets are tested for impairment on an individual basis. The remaining financial assets are assessed collectively in groups that share similar credit risk characteristics.
Impairment losses of financial assets are recognized in the income statement. An impairment loss is reversed if the reversal can be related objectively to an event occurring after the impairment loss was recognized.
Financial assets and liabilities are offset, and the net amount presented in the statement of financial position when, and only when, the group has a legal right to offset the amounts and intends either to settle on a net basis or to realize the asset and settle the liability simultaneously.
Cash and cash equivalents comprise cash balances and call deposits. Bank overdrafts that are repayable on demand and form an integral part of the group\u2019s cash management are included as a component of cash and cash equivalents for the purpose of the statement of cash flows.
Income tax expense comprises current and deferred taxes. Income tax expense is recognized in the income statement except to the extent that it relates to items recognized in other comprehensive income, in which case it is recognized in other comprehensive income.
Current tax is the expected tax payable (receivable) on the taxable income (loss) for the period, using tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous years.
Deferred income tax is provided, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. However, deferred tax liabilities are not recognized if they arise from the initial recognition of goodwill. Deferred income tax is also not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the end of the reporting period and are expected to apply when the related deferred income tax asset is realized or the deferred income tax liability is settled.
A deferred tax asset is recognized to the extent that it is probable that future taxable profits will be available against which the temporary difference can be utilized. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realized.
Inventories are measured at the lower of cost and net realizable value. The inventories are measured at their weighted average costs increased with cost comprising direct materials, direct labor and an appropriate proportion of variable and fixed overhead expenditure, the latter being allocated on the basis of normal operating capacity. Net realizable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses. Impairments of inventories to net realizable value are recognized in the profit or loss as part of \u2018Cost for goods and consumables\u2019. In case the value of impaired inventories increases the impairment will be reversed to the lowest of the increased net realizable value and the original weighted average cost.
Ordinary shares are classified as equity. Incremental costs directly attributable to the issuance of ordinary shares and share options are recognized in equity net of tax.
The share premium consists of additional paid-in capital exceeding the par value of outstanding shares.
Treasury share purchases are recognized as a deduction from equity (section other reserves). No gain or loss is recognized on the purchase, sale, issue or cancellation of treasury shares. Consideration paid or received is recognized directly in equity.
The group operates several defined benefit pension plans.
The liability or asset recognized in the balance sheet of defined benefit pension plans is the present value of the defined benefit obligation at the end of the reporting period less the fair value of plan assets. The defined benefit obligation is calculated annually by independent qualified actuaries using the projected unit credit method.
The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows using interest rates of high-quality corporate bonds that are denominated in the currency in which the benefits will be paid, and that have terms approximating to the terms of the related obligation. The net interest cost is calculated by applying the discount rate to the net balance of the defined benefit obligation and the fair value of plan assets. This cost is included in finance expense in the income statement. Changes in the present value of the defined benefit obligation resulting from plan amendments or curtailments are recognized immediately in the income statement as past service costs.
Remeasurement gains and losses arising from experience adjustments and changes in actuarial assumptions are recognized in the period in which they occur, directly in other comprehensive income. They are included in retained earnings in the statement of changes in equity and in the balance sheet.
For defined contribution plans, the group pays contributions to publicly or privately administered pension insurance plans on a mandatory, contractual or voluntary basis. The group has no further payment obligations once the contributions have been paid. The contributions are recognized as employee benefit expense when they are due.
The cost of all short-term employee benefits, such as salaries, employee entitlements to leave pay, bonuses, medical aid and other contributions, are recognized during the period in which the employee renders the related service. The group recognizes those costs only when it has a present legal or constructive obligation to make such payment and a reliable estimate of the liability can be made.
The group\u2019s net obligation in respect of long-term employee benefits is the amount of future benefit that employees have earned in return for their service in the current and prior periods. That benefit is discounted to determine its present value. The calculation of the other long-term employee benefits is performed using the projected unit credit method. Any actuarial gains and losses are recognized in profit or loss in the period in which they arise.
The group has a performance share plan for key management, qualifying as an equity-settled share-based payment plan. Equity-settled share-based payment transactions are transactions in which the entity receives goods or services in exchange for its own equity instruments (e.g. shares, options).
Goods or services received in equity-settled share-based payment transactions are measured at their fair value, unless they cannot be estimated reliably, in which case it is determined in accordance with the fair value of the equity instruments granted. The fair value is determined at grant date and the value incorporates market conditions using a Monte Carlo calculation. This value remains unchanged over the vesting period. Service conditions and non-market conditions do not affect the fair value of the instruments granted, but are taken into account by adjusting the number of equity instruments included in the measurement of the transaction, an estimate which is revised at each reporting date until the vesting period has lapsed. Azelis accounts for the equity-settled share-based payment transaction in the other reserves section of the equity, and its initial recognition and subsequent changes are accounted for in employee expenses.
A provision is recognized if, as a result of a past event, the group has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. Unwinding of the discount of provisions is recorded as financial expenses.
Revenue from product sales is recognized at point in time when the performance obligation is satisfied. For the group, this is usually upon delivery of the goods to the client. Revenue is measured at the fair value of the consideration received, net of returns, trade discounts and volume rebates. Revenue is only recognized to the extent that it is highly probable that a significant reversal will not occur.
When the outcome of a commission transaction can be estimated reliably, revenue associated with the transaction shall be recognized by reference to the stage of completion of the transaction at the end of the reporting period. When the group acts in the capacity of an agent rather than as principal in a transaction, the revenue recognized is the net amount of commission made by the group. The group acts as an agent when it does not take title and is not exposed to risks of the goods, when the risks are born by the supplier and when the selling prices are set by the suppliers.
An operating segment is a component of the group that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the group\u2019s other components. The segmentation used by the group is based on geography, organization and management structure and commercial interdependencies.
Segment results that are reported to the CEO include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. Unallocated items comprise mainly head office expenses and income tax assets and liabilities, and are presented in a separate reporting unit \u2018group holding & other\u2019.
The reporting segments used are defined as follows:
EMEA: all operating companies in Europe, Middle East and Africa
Americas: all operating companies in the United States of America, Canada, Mexico and South America (mainly Colombia).
Asia-Pacific: all operating companies in Asia, South-East Asia and the Pacific region.
group holding & other: all non-operating companies, including the corporate service center and headquarter in Belgium.
Government grants are recognized in profit or loss on a systematic basis over the periods in which the entity recognizes as expenses the related expenses for which the grants are intended to compensate. Government grants are not recognized until there is reasonable assurance that the group will comply with the conditions attaching to them and that the grants will be received.
The consolidated statement of cash flows is prepared using the indirect method. Cash is defined as cash and cash equivalents less bank overdrafts. Cash flows are presented separately in the statement of cash flows as cash flows from operating activities, investing activities and financing activities.
A number of the group\u2019s accounting policies and disclosures require the determination of fair value, for both financial and non-financial assets and liabilities. Fair values have been determined for measurement or disclosure purposes based on the following methods. When applicable, further information about the assumptions made in determining fair values is disclosed in the notes specific to that asset or liability.
The fair value of property, plant and equipment recognized as a result of a business combination is based on market values. The market value of property is the estimated amount for which a property could be exchanged on the date of valuation between a willing buyer and a willing seller in an arm\u2019s length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion.
The fair value of trademarks and distribution rights acquired in business combinations are measured using the income approach (relief from royalty and multi-period excess earning method, respectively). The fair value of other intangible assets is mainly based on the cost approach.
The fair value of inventories is determined based on its estimated selling price in the ordinary course of business less the estimated costs of completion and sale.
The fair value of financial assets at FVTPL and FVTOCI financial assets is determined by reference to their quoted bid price at the reporting date. In case no market prices are available the instruments are measured using the present value of the expected future cash flows, discounted at the market rate of interest at measurement date.
The fair value of trade and other receivables is determined as the present value of future cash flows, discounted at the market rate of interest at measurement date.
The fair value of forward exchange contracts is based on their listed market price, if available. If a listed market price is not available, then fair value is estimated by discounting the difference between the contractual forward price and the current forward price for the residual maturity of the contract using a risk-free interest rate increased by an appropriate additional spread related to the credit risk of the group and the risk of the counterparty.
Fair value is calculated based on the present value of future principal and interest cash flows, discounted at the market rate of interest at measurement date, including the group\u2019s credit risk.
The fair value of contingent consideration qualifying as earnout, recognized in relation to business combinations, is calculated based on a forecast of the underlying performance measure and is discounted at the market rate of interest at measurement date. The fair value of contingent consideration constituting a mere fixed deferred payment is determined as the present value of future cash flows and discounted at the market rate of interest at measurement date.
The redemption value of put options on non-controlling interests, recognised in relation to business combinations, is calculated based on specific contractual specifications consisting mostly of a combination of a multiple on a future performance measure and the balance of certain net working capital items upon exercise of the option.
Assets and liabilities for which fair value is measured or disclosed in the consolidated financial statements are categorized within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:
Level 1: quoted (unadjusted) prices in active markets for identical assets or liabilities;
Level 2: valuation techniques for which all inputs which have a significant effect on the recorded fair value are observable for the asset or liability, either directly or indirectly;
Level 3: valuation techniques for which all inputs which have a significant effect on the recorded fair value are not based on observable market data.
In the process of applying accounting policies and preparing the consolidated financial statements, the group has made certain judgements (other than those involving estimates) that affect the reported amounts of assets and liabilities, income and expenses.
In addition, the group is required to make certain estimates and assumptions that affect the measurement and presentation of reported figures. Estimates are based on past experience and on additional knowledge obtained on transactions to be reported, and are reviewed on an ongoing basis. Actual amounts may differ from these estimates. The most critical accounting judgements and estimates related to uncertainties with significant risk of causing material adjustment and applied in the consolidated financial statements are described below:
The group has judged that the Azelis trademark has an indefinite useful life. As a consequence, the trademark is not amortized. At each reporting date, the group reviews this judgement and assesses whether the circumstances continue to support the indefinite useful life. The trademark is part of the yearly impairment test. (See note 15).
In assessing the realization of deferred tax assets, management considers the extent to which it is probable that the deferred tax asset will be realized (note 14). The ultimate realization of deferred tax assets is dependent upon the generation of future taxable profit during the periods in which those temporary differences and tax loss carry forwards are available. Management considers the expected reversal of deferred tax liabilities and projected future taxable income in making this assessment. (See note 14.2)
In determining the lease term, management considers all facts and circumstances that create an economic incentive to exercise an extension option. Extension options are only included in the lease term if the lease is reasonably certain to be extended. (See note 16.2)
In a business combination the acquired assets and liabilities are measured at fair value. The group uses assumptions and non-observable information to prepare fair value of the assessed, where no observable information is available. Afterwards the actual market performance can differ from the assumptions. The most important assumptions are disclosed in the note for business combinations. (See note 7).
The group tests whether goodwill has suffered any impairment on an annual basis. The recoverable amount of a cash generating unit (CGU) is determined based on value-in-use calculations which require the use of assumptions. The calculations use cash flow projections based on financial budgets approved by management covering a five-year period, incorporating estimates for sales growth and margin growth. Cash flows beyond the five-year period are extrapolated using the estimated growth rates. These growth rates are consistent with forecasts included in industry reports specific to the industry in which each CGU operates. (See note 15.2).
", "dimensions": { "concept": "ifrs-full:DisclosureOfSummaryOfSignificantAccountingPoliciesExplanatory", "language": "en", "entity": "scheme:699400M9RRMTV264FM70", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-349": { "value": "The consolidated financial statements for the period ended December 31, 2022, were authorized for issue by the Board of Directors on 1 March 2023 and will be submitted for approval to the Shareholders' Meeting to be held on 8 June 2023. ", "dimensions": { "concept": "ifrs-full:DisclosureOfAuthorisationOfFinancialStatementsExplanatory", "language": "en", "entity": "scheme:699400M9RRMTV264FM70", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-350": { "value": "The consolidated financial statements for the period ended December 31, 2022, were authorized for issue by the Board of Directors on 1 March 2023 and will be submitted for approval to the Shareholders' Meeting to be held on 8 June 2023.
Part of the growth trajectory of Azelis is expansion through strategic acquisitions, complementary to the corporate strategy of organic growth. As of December 31, 2022, the following transactions were not closed, but are closed (or are expected to close) in 2023.
In January 2023, Azelis signed an agreement to acquire 100% of the shares of Lidorr Elements (\"Lidorr\"), one of Israel's leading specialty chemical distributors in crop-protection, industrial materials, and care & nutrition. The acquisition expands Azelis\u2019 footprint in Israel, further building on its growing network in the region following the acquisition of Orokia in 2020. Lidorr\u2019s wide portfolio of hundreds of products significantly strengthens Azelis\u2019 lateral value chain in the Agricultural & Environmental Solutions as well as in Advanced Materials & Additives market segments.
On January 10, 2023, Azelis acquired 100% of the shares of the shares of Smoky Light B.V. (\"Smoky Light\"), a well-established distributor in the Benelux smoke ingredients market. The acquisition reinforces Azelis\u2019 position in the Benelux market and expands its footprint in the smoke ingredient market in EMEA. Smoky Light\u2019s portfolio of products strategically complements the group\u2019s lateral value chain for the food & nutrition market, thereby further expanding its expertise and product offering to customers.
On January 31, 2023, Azelis acquired 100% of the shares of Chemiplas Agencies Ltd (\u201cChemiplas\u201d), one of the leading distributors of specialty chemicals, plastic raw materials and ingredients in Australia, New Zealand and the Pacific Islands. The acquisition significantly expands Azelis\u2019 footprint and accelerates its growth in Asia Pacific. The addition of Chemiplas\u2019 attractive portfolio of products from key principals strategically complements the group\u2019s lateral value chain, strengthening market coverage and formulation expertise. This allows the group to provide even more innovative solutions to customers, thereby reinforcing its position in Australia and New Zealand.
These acquisitions are expected to be funded from the group\u2019s current existing liquidity, as well as an amount of \u20ac129 million under Schuldschein credit facility that was unused as of December 31, 2022.
No material subsequent events after December 31, 2022 have been identified that may have had a material or significant effect on the 2022 consolidated financial statements.
", "dimensions": { "concept": "ifrs-full:DisclosureOfEventsAfterReportingPeriodExplanatory", "language": "en", "entity": "scheme:699400M9RRMTV264FM70", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-351": { "value": "The consolidated financial statements have been prepared in accordance with the International Financial Reporting Standards as adopted in the European Union (IFRS). The group has consistently applied the accounting policies as set out below to all periods presented in these consolidated financial statements. Changes to the accounting policies in the current year are limited to the changes in IFRS below and are applied starting as per 1st January 2022. The following amendments to standards are mandatory for the first time for the financial year beginning 1 January 2022 and have been endorsed by the European Union. They have been implemented by the group without significant impact on the financial statements: ", "dimensions": { "concept": "ifrs-full:DisclosureOfBasisOfPreparationOfFinancialStatementsExplanatory", "language": "en", "entity": "scheme:699400M9RRMTV264FM70", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-352": { "value": "The consolidated financial statements have been prepared in accordance with the International Financial Reporting Standards as adopted in the European Union (IFRS). The group has consistently applied the accounting policies as set out below to all periods presented in these consolidated financial statements. Changes to the accounting policies in the current year are limited to the changes in IFRS below and are applied starting as per 1st January 2022. ", "dimensions": { "concept": "ifrs-full:StatementOfIFRSCompliance", "language": "en", "entity": "scheme:699400M9RRMTV264FM70", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-353": { "value": "The consolidated financial statements have been prepared in accordance with the International Financial Reporting Standards as adopted in the European Union (IFRS). The group has consistently applied the accounting policies as set out below to all periods presented in these consolidated financial statements. Changes to the accounting policies in the current year are limited to the changes in IFRS below and are applied starting as per 1st January 2022. The following amendments to standards are mandatory for the first time for the financial year beginning 1 January 2022 and have been endorsed by the European Union. They have been implemented by the group without significant impact on the financial statements: Amendments to IFRS 3 Business Combinations; IAS 16 Property, Plant and Equipment; IAS 37 Provisions, Contingent Liabilities and Contingent Assets as well as Annual Improvements (effective 1 January 2022). The package of amendments includes narrow-scope amendments to three Standards as well as the Board\u2019s Annual Improvements, which are changes that clarify the wording or correct minor consequences, oversights or conflicts between requirements in the Standards. Amendments to IFRS 3 Business Combinations update a reference in IFRS 3 to the Conceptual Framework for Financial Reporting without changing the accounting requirements for business combinations. Amendments to IAS 16 Property, Plant and Equipment prohibit a company from deducting from the cost of property, plant and equipment amounts received from selling items produced while the company is preparing the asset for its intended use. Instead, a company will recognise such sales proceeds and related cost in profit or loss. Amendments to IAS 37 Provisions, Contingent Liabilities and Contingent Assets specify which costs a company includes when assessing whether a contract will be loss-making. Annual Improvements 2018-2020 make minor amendments to IFRS 1 First-time Adoption of International Financial Reporting Standards, IFRS 9 Financial Instruments, IAS 41 Agriculture and the Illustrative Examples accompanying IFRS 16 Leases. Amendment to IFRS 16 Leases Covid 19-Related Rent Concessions beyond 30 June 2021 (effective 01/04/2021), with early application permitted). The amendments extend, by one year, the May 2020 amendment that provides lessees with an exemption from assessing whether a COVID-19-related rent concession is a lease modification. In particular, the amendment permits a lessee to apply the practical expedient regarding COVID-19-related rent concessions to rent concessions for which any reduction in lease payments affects only payments originally due on or before 30 June 2022 (rather than only payments originally due on or before 30 June 2021). The amendment is effective for annual reporting periods beginning on or after 1 April 2021 (earlier application permitted, including in financial statements not yet authorized for issue at the date the amendment is issued). The following new standard and amendments have been issued, are not mandatory for the first time for the financial year beginning 1 January 2022 but have been endorsed by the European Union: IFRS 17 \u2018Insurance contracts\u2019 (effective 1 January 2023). This standard replaces IFRS 4, which currently permits a wide variety of practices in accounting for insurance contracts. IFRS 17 will fundamentally change the accounting by all entities that issue insurance contracts and investment contracts with discretionary participation features. On 17 March 2020, IASB decided to defer pop effective date to annual reporting periods beginning on or after 1 January 2023. The endorsement includes the amendments issued by the Board in June 2020, which are aimed at helping companies implement the Standard and making it easier for them to explain their financial performance. The EU regulation provides an optional exemption from applying the annual cohort requirement that relates to the timing of the recognition of the profit in the contract, the contractual service margin, in profit or loss. Entities making use of the exemption are not applying IFRSs as issued by the IASB and need to disclose the fact. Amendments to IAS 1 Presentation of Financial Statements and IFRS Practice Statement 2: Disclosure of Accounting policies (effective 1 January 2023). The amendments aim to improve accounting policy disclosures and to help users of the financial statements to distinguish between changes in accounting estimates and changes in accounting policies. The IAS 1 amendment requires companies to disclose their material accounting policy information rather than their significant accounting policies. Further, the amendment to IAS 1 clarifies that immaterial accounting policy information need not be disclosed. To support this amendment, the Board also amended IFRS Practice Statement 2, \u2018Making Materiality Judgements\u2019, to provide guidance on how to apply the concept of materiality to accounting policy disclosures. The amendments are effective for annual reporting periods beginning on or after 1 January 2023. Earlier application is permitted (subject to any local endorsement process). Amendments to IAS 8 Accounting policies, Changes in Accounting Estimates and Errors: Definition of Accounting Estimates (effective 1 January 2023). The amendment to IAS 8, \u2018Accounting Policies, Changes in Accounting Estimates and Errors\u2019, clarifies how companies should distinguish changes in accounting policies from changes in accounting estimates. The amendments are effective for annual reporting periods beginning on or after 1 January 2023. Earlier application is permitted (subject to any local endorsement process). Amendments to IAS 12 Income Taxes: Deferred Tax related to Assets and Liabilities arising from a Single Transaction (effective 1 January 2023). The amendments clarify how companies account for deferred tax on transactions such as leases and decommissioning obligations. The main change in the amendments is an exemption from the initial recognition exemption of IAS 12.15(b) and IAS 12.24. Accordingly, the initial recognition exemption does not apply to transactions in which equal amounts of deductible and taxable temporary differences arise on initial recognition. The amendments are effective for annual reporting periods beginning on or after 1 January 2023. Early adoption is permitted. Amendments to IFRS 17 Insurance contracts: Initial Application of IFRS 17 and IFRS 9 \u2013 Comparative Information (effective 1 January 2023). The amendment is a transition option relating to comparative information about financial assets presented on initial application of IFRS 17. The amendment is aimed at helping entities to avoid temporary accounting mismatches between financial assets and insurance contract liabilities, and therefore improve the usefulness of comparative information for users of financial statements. The following amendments have been issued, but are not mandatory for the first time for the financial year beginning 1 January 2022 and have not been endorsed by the European Union: Amendments to IAS 1 \u2018Presentation of Financial Statements: Classification of Liabilities as current or non-current\u2019 (effective 01/01/2024), affect only the presentation of liabilities in the statement of financial position \u2014 not the amount or timing of recognition of any asset, liability income or expenses, or the information that entities disclose about those items. They: Clarify that the classification of liabilities as current or non-current should be based on rights that are in existence at the end of the reporting period and align the wording in all affected paragraphs to refer to the \"right\" to defer settlement by at least twelve months and make explicit that only rights in place \"at the end of the reporting period\" should affect the classification of a liability; Clarify that classification is unaffected by expectations about whether an entity will exercise its right to defer settlement of a liability; and make clear that settlement refers to the transfer to the counterparty of cash, equity instruments, other assets or services; Clarify how conditions with which an entity must comply within 12 months after the reporting period, such as covenants, affect the corresponding liability\u2019s classification. Amendments to IFRS 16 Leases: Lease Liability in a Sale and Leaseback (effective 1 January 2024). The amendments explain how an entity accounts for a sale and leaseback after the date of the transaction, specifically where some or all the lease payments are variable lease payments that do not depend on an index or rate. They state that, in subsequently measuring the lease liability, the seller-lessee determines \u2018lease payments\u2019 and \u2018revised lease payments\u2019 in a way that does not result in the seller-lessee recognizing any amount of the gain or loss that relates to the right of use it retains. Any gains and losses relating to the full or partial termination of a lease continue to be recognised when they occur as these relate to the right of use terminated and not the right of use retained. ", "dimensions": { "concept": "ifrs-full:DisclosureOfChangesInAccountingPoliciesAccountingEstimatesAndErrorsExplanatory", "language": "en", "entity": "scheme:699400M9RRMTV264FM70", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-356": { "value": "The following amendments to standards are mandatory for the first time for the financial year beginning 1 January 2022 and have been endorsed by the European Union. They have been implemented by the group without significant impact on the financial statements: Amendments to IFRS 3 Business Combinations; IAS 16 Property, Plant and Equipment; IAS 37 Provisions, Contingent Liabilities and Contingent Assets as well as Annual Improvements (effective 1 January 2022). The package of amendments includes narrow-scope amendments to three Standards as well as the Board\u2019s Annual Improvements, which are changes that clarify the wording or correct minor consequences, oversights or conflicts between requirements in the Standards. Amendments to IFRS 3 Business Combinations update a reference in IFRS 3 to the Conceptual Framework for Financial Reporting without changing the accounting requirements for business combinations. Amendments to IAS 16 Property, Plant and Equipment prohibit a company from deducting from the cost of property, plant and equipment amounts received from selling items produced while the company is preparing the asset for its intended use. Instead, a company will recognise such sales proceeds and related cost in profit or loss. Amendments to IAS 37 Provisions, Contingent Liabilities and Contingent Assets specify which costs a company includes when assessing whether a contract will be loss-making. Annual Improvements 2018-2020 make minor amendments to IFRS 1 First-time Adoption of International Financial Reporting Standards, IFRS 9 Financial Instruments, IAS 41 Agriculture and the Illustrative Examples accompanying IFRS 16 Leases. Amendment to IFRS 16 Leases Covid 19-Related Rent Concessions beyond 30 June 2021 (effective 01/04/2021), with early application permitted). The amendments extend, by one year, the May 2020 amendment that provides lessees with an exemption from assessing whether a COVID-19-related rent concession is a lease modification. In particular, the amendment permits a lessee to apply the practical expedient regarding COVID-19-related rent concessions to rent concessions for which any reduction in lease payments affects only payments originally due on or before 30 June 2022 (rather than only payments originally due on or before 30 June 2021). The amendment is effective for annual reporting periods beginning on or after 1 April 2021 (earlier application permitted, including in financial statements not yet authorized for issue at the date the amendment is issued). The following new standard and amendments have been issued, are not mandatory for the first time for the financial year beginning 1 January 2022 but have been endorsed by the European Union: IFRS 17 \u2018Insurance contracts\u2019 (effective 1 January 2023). This standard replaces IFRS 4, which currently permits a wide variety of practices in accounting for insurance contracts. IFRS 17 will fundamentally change the accounting by all entities that issue insurance contracts and investment contracts with discretionary participation features. On 17 March 2020, IASB decided to defer pop effective date to annual reporting periods beginning on or after 1 January 2023. The endorsement includes the amendments issued by the Board in June 2020, which are aimed at helping companies implement the Standard and making it easier for them to explain their financial performance. The EU regulation provides an optional exemption from applying the annual cohort requirement that relates to the timing of the recognition of the profit in the contract, the contractual service margin, in profit or loss. Entities making use of the exemption are not applying IFRSs as issued by the IASB and need to disclose the fact. Amendments to IAS 1 Presentation of Financial Statements and IFRS Practice Statement 2: Disclosure of Accounting policies (effective 1 January 2023). The amendments aim to improve accounting policy disclosures and to help users of the financial statements to distinguish between changes in accounting estimates and changes in accounting policies. The IAS 1 amendment requires companies to disclose their material accounting policy information rather than their significant accounting policies. Further, the amendment to IAS 1 clarifies that immaterial accounting policy information need not be disclosed. To support this amendment, the Board also amended IFRS Practice Statement 2, \u2018Making Materiality Judgements\u2019, to provide guidance on how to apply the concept of materiality to accounting policy disclosures. The amendments are effective for annual reporting periods beginning on or after 1 January 2023. Earlier application is permitted (subject to any local endorsement process). Amendments to IAS 8 Accounting policies, Changes in Accounting Estimates and Errors: Definition of Accounting Estimates (effective 1 January 2023). The amendment to IAS 8, \u2018Accounting Policies, Changes in Accounting Estimates and Errors\u2019, clarifies how companies should distinguish changes in accounting policies from changes in accounting estimates. The amendments are effective for annual reporting periods beginning on or after 1 January 2023. Earlier application is permitted (subject to any local endorsement process). Amendments to IAS 12 Income Taxes: Deferred Tax related to Assets and Liabilities arising from a Single Transaction (effective 1 January 2023). The amendments clarify how companies account for deferred tax on transactions such as leases and decommissioning obligations. The main change in the amendments is an exemption from the initial recognition exemption of IAS 12.15(b) and IAS 12.24. Accordingly, the initial recognition exemption does not apply to transactions in which equal amounts of deductible and taxable temporary differences arise on initial recognition. The amendments are effective for annual reporting periods beginning on or after 1 January 2023. Early adoption is permitted. Amendments to IFRS 17 Insurance contracts: Initial Application of IFRS 17 and IFRS 9 \u2013 Comparative Information (effective 1 January 2023). The amendment is a transition option relating to comparative information about financial assets presented on initial application of IFRS 17. The amendment is aimed at helping entities to avoid temporary accounting mismatches between financial assets and insurance contract liabilities, and therefore improve the usefulness of comparative information for users of financial statements. The following amendments have been issued, but are not mandatory for the first time for the financial year beginning 1 January 2022 and have not been endorsed by the European Union: Amendments to IAS 1 \u2018Presentation of Financial Statements: Classification of Liabilities as current or non-current\u2019 (effective 01/01/2024), affect only the presentation of liabilities in the statement of financial position \u2014 not the amount or timing of recognition of any asset, liability income or expenses, or the information that entities disclose about those items. They: Clarify that the classification of liabilities as current or non-current should be based on rights that are in existence at the end of the reporting period and align the wording in all affected paragraphs to refer to the \"right\" to defer settlement by at least twelve months and make explicit that only rights in place \"at the end of the reporting period\" should affect the classification of a liability; Clarify that classification is unaffected by expectations about whether an entity will exercise its right to defer settlement of a liability; and make clear that settlement refers to the transfer to the counterparty of cash, equity instruments, other assets or services; Clarify how conditions with which an entity must comply within 12 months after the reporting period, such as covenants, affect the corresponding liability\u2019s classification. Amendments to IFRS 16 Leases: Lease Liability in a Sale and Leaseback (effective 1 January 2024). The amendments explain how an entity accounts for a sale and leaseback after the date of the transaction, specifically where some or all the lease payments are variable lease payments that do not depend on an index or rate. They state that, in subsequently measuring the lease liability, the seller-lessee determines \u2018lease payments\u2019 and \u2018revised lease payments\u2019 in a way that does not result in the seller-lessee recognizing any amount of the gain or loss that relates to the right of use it retains. Any gains and losses relating to the full or partial termination of a lease continue to be recognised when they occur as these relate to the right of use terminated and not the right of use retained. ", "dimensions": { "concept": "ifrs-full:DisclosureOfChangesInAccountingPoliciesExplanatory", "language": "en", "entity": "scheme:699400M9RRMTV264FM70", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-393": { "value": "As of 2022, Turkey is categorized as a country with a three-year cumulative inflation rate greater than 100%, which is an indicator for hyperinflation. Also considering qualitative indicators, the Turkish economy is considered to be hyper-inflationary. As a consequence, as of 30 June 2022, IAS 29 Financial Reporting in Hyperinflationary Economies is applied for those entities whose functional currency is the Turkish Lira, retrospectively starting January 1, 2022. The application of IAS 29 has led to an increase in Azelis' equity of approx. \u20ac27.5 million, and a related increase that is mainly reflected in goodwill and intangible assets. As the majority of Azelis' operational activities in Turkey are settled in hard currencies (USD and EUR mainly), no material impact is observed in Azelis' income statement. The relevant price index used for the restatement of the financial statements of Azelis' Turkish subsidiaries is the consumer price index (\"CPI\") based on data of the Turkish Statistical Institute. Since end of 2020, the consumer price index has moved as follows: \u00a0Year (31st December) Turkey CPI Change (%) EUR/TRL exchange rate \u00a02020 5.0481 N/A 9.0079 \u00a02021 6.8695 36.08% 14.6823 \u00a02022 11.2845 64.27% 19.9349 2.3.4 Hyperinflation Non-monetary assets and liabilities, equity, and the income statement of subsidiaries operating in hyperinflationary economies are restated for changes in the general purchasing power of the local currency applying a general price index. These re-measured amounts are used for conversion into the group reporting currency at the period closing exchange rate. As a result, the balance sheet and net results of subsidiaries operating in hyperinflation economies are stated in terms of the measuring unit current at the end of the reporting period. In accordance with IAS 21 The Effects of Changes in Foreign Exchange Rates, multinational companies that have subsidiaries with the hyperinflationary currency as their functional currency are not required to restate comparative amounts as those were presented previously in a stable currency. 13 Net financial expenses (in thousands of \u20ac) 2022 2021 Financial income \u00a0\u00a0Interest income 621 618 Gains on changes in fair value of derivatives 5,132 0 Other financial income 256 113 \u00a06,008 731 Financial expenses \u00a0\u00a0Interest expense on bank loans and overdrafts -34,795 -46,948 Interest lease commitments -3,423 -2,951 Fair value adjustment on financial liabilities -17,585 -7,282 Transaction costs for bank loans -1,444 -3,336 Accelerated amortization of transaction costs due to IPO 0 -19,616 Losses on changes in FV of derivative instruments -754 0 Monetary loss on hyperinflation -6,957 0 Foreign exchange losses -2,093 -1,238 Other financial expenses -12,771 -6,907 \u00a0-79,823 -88,278 The (non-cash) gain on changes in fair value of derivatives primarily relates to the interest rate cap that was entered into in May 2022. The fair value of the interest rate cap increased since then, driven by increasing market interest rates during 2022. The fair value adjustment on financial liabilities relates to acquisition-related earnout liabilities and put options on non-controlling interests. Transaction costs for bank loans of \u20ac1.4 million (2021: \u20ac3.3 million) includes the (non-cash) impact of expensing capitalized transaction costs (see note 22). At date of IPO in September 2021, the Company restructured its debt, whereas the remaining capitalized costs of \u20ac19.6 million that related to the previous and repaid financial liabilities were amortized entirely in 2021 (for the majority non-cash). The monetary loss on hyperinflation relates to the translation of foreign exchange impact regarding Azelis' subsidiaries in Turkey. The majority of the loss (\u20ac6.5 million) relates to translation of its balance sheets, funded by equity mainly, with low exposure to cash and debt in local currencies. The translation-impact on the income statement is limited (\u20ac0.5 million) as operational activities are merely settled in hard currencies (USD, EUR). The foreign exchange losses include unrealized translation of intercompany loans, mainly relating to non-EUR nominated loans to subsidiaries. Other financial expenses primarily relate to factoring fees and other bank fees. ", "dimensions": { "concept": "ifrs-full:DisclosureOfHyperinflationaryReportingExplanatory", "language": "en", "entity": "scheme:699400M9RRMTV264FM70", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-397": { "value": "In 2022, Azelis has launched a long-term incentive plan (\"LTIP\"), granting share awards to certain directors, employees and self-employed managers of the group. In accordance with IFRS 2, the LTIP qualifies as an equity-settled share-based payment transaction. To cover future obligations under the LTIP, Azelis has purchased treasury shares on Euronext Brussels for a total amount of \u20ac3.0 million. 2.11.3 Share-based payment The group has a performance share plan for key management, qualifying as an equity-settled share-based payment plan. Equity-settled share-based payment transactions are transactions in which the entity receives goods or services in exchange for its own equity instruments (e.g. shares, options). Goods or services received in equity-settled share-based payment transactions are measured at their fair value, unless they cannot be estimated reliably, in which case it is determined in accordance with the fair value of the equity instruments granted. The fair value is determined at grant date and the value incorporates market conditions using a Monte Carlo calculation. This value remains unchanged over the vesting period. Service conditions and non-market conditions do not affect the fair value of the instruments granted, but are taken into account by adjusting the number of equity instruments included in the measurement of the transaction, an estimate which is revised at each reporting date until the vesting period has lapsed. Azelis accounts for the equity-settled share-based payment transaction in the other reserves section of the equity, and its initial recognition and subsequent changes are accounted for in employee expenses. 11.3 Share-based payment In 2022, Azelis has launched a long-term incentive plan for certain directors, employees and self-employed managers of the group. Under this LTIP, Azelis has granted share awards to certain directors, employees and self-employed managers of the group. The grant of share awards is subject to a three-year performance period (starting January 1st) and takes into account the following metrics and weightings: 50% relative total shareholders' return (market condition), 35% Adjusted EBITA (non-market condition) and 15% sustainability-linked criteria (non-market condition). The awards are subject to a vesting period of three years starting from the grant date and are dependent on the Remuneration and Nomination Committee determining whether performance targets have been met. Based on performance delivered, the number of performance shares awarded will vest and become unconditionally owned by the participant. The movement in number of performance shares outstanding and the related weighted average fair value per share are as follows: \u00a02022 (in number of shares and \u20ac) Number of shares Weighted average fair value Outstanding as of 1 January 0 N/A Granted during the year 138,546 19.24 Forfeited during the year 6,062 19.24 Outstanding as of 31 December 132,484 \u00a0The fair value of the performance shares was measured on the basis of Azelis' share price at grant date, and has been discounted with the sum of the expected dividend yield for the performance period. The expected dividend yield has been determined based on target pay-out ratio and consensus figures for net profit, divided by market capitalization. The market condition of total shareholders return was embedded in the fair value based on a Monte Carlo simulation incorporating a number of assumptions (volatility, expected dividend yield and the correlation coefficients between the share price returns of the peer companies). In 2022, the vesting of performance shares resulted in an expense of \u20ac0.8 million which is recognized in the consolidated income statement as part of employee benefits expenses. ", "dimensions": { "concept": "ifrs-full:DisclosureOfSharebasedPaymentArrangementsExplanatory", "language": "en", "entity": "scheme:699400M9RRMTV264FM70", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-398": { "value": "To cover future obligations under the LTIP, Azelis has purchased treasury shares on Euronext Brussels for a total amount of \u20ac3.0 million. In 2022, the group has purchased 133,400 treasury shares on Euronext Brussels for a total amount of \u20ac3.0\u00a0million to fund its long-term incentive plan. ", "dimensions": { "concept": "ifrs-full:DisclosureOfTreasurySharesExplanatory", "language": "en", "entity": "scheme:699400M9RRMTV264FM70", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-400": { "value": "In 2022, Azelis has changed the presentation of its cash flow statement, solely moving the interests paid cash flows from the operating activities to the financing activities. Accordingly, the same change in presentation was executed for the comparative figures. Accordingly, interest paid of \u20ac41.2 million (2021: \u20ac72.0 million) is now presented in the financing activities. This change in presentation does not affect the consolidated statement of financial position, consolidated statement of profit or loss and other comprehensive income, consolidated statement of changes in equity and the notes to the consolidated financial statements. Azelis has executed this change in presentation because it considers interests paid to be costs of obtaining financial resources. ", "dimensions": { "concept": "ifrs-full:DisclosureOfReclassificationsOrChangesInPresentationExplanatory", "language": "en", "entity": "scheme:699400M9RRMTV264FM70", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-402": { "value": "2.2 Basis of consolidation The consolidated financial statements incorporate the financial statements of the Company and all entities controlled by the Company made up to December 31, 2022. All intra-group transactions, balances, income and expenses are eliminated on consolidation. 2.2.1 Subsidiaries Subsidiaries are entities controlled by the Company. Control is achieved when the Company 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 Company controls an investee if, and only if, the Company has: Power over the investee (i.e., existing rights to direct relevant activities); Exposure, or rights, to variable returns from its involvement in the investee; and The ability to use its power to affect the investee\u2019s returns. Generally, there is a presumption that having a majority of voting rights results in control. To support this presumption and when the group has less than a majority of the voting or similar rights of an investee, the group considers all relevant facts and circumstances in assessing whether it has power over an investee. 2.2.2 Non-controlling interests Non-controlling interests in subsidiaries are identified separately from the group\u2019s equity therein. The interests of non-controlling shareholders may be initially measured at fair value or at the non-controlling interests\u2019 proportionate share of the fair value of the acquiree\u2019s identifiable net assets. A choice of measurement is made on an acquisition-by-acquisition basis. For its current non-controlling interests in subsidiaries, the group has opted to measure at the proportionate share of the acquiree's identifiable net assets. Subsequent to acquisition, the carrying amount of non-controlling interests is the amount of those interests at initial recognition plus the non-controlling interests\u2019 share of subsequent changes in equity. Total comprehensive income is attributed to non-controlling interests even if this results in the non-controlling interests having a deficit balance. A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction between shareholders. 2.2.3 Business combinations Acquisitions of subsidiaries and businesses are accounted for using the acquisition method. The consideration transferred for each acquisition is measured at the aggregate of the fair values at the date of exchange of assets given, liabilities incurred or assumed, and equity instruments issued by the group in exchange for control of the acquiree. Where applicable, the consideration for the acquisition includes any asset or liability resulting from a contingent consideration arrangement, measured at its acquisition-date fair value. Subsequent changes in such fair values are adjusted against the cost of acquisition where they qualify as measurement period adjustments. The acquiree\u2019s identifiable assets, liabilities and contingent liabilities that meet the conditions for recognition at the balance sheet are recognized at their fair value at the acquisition date, except for deferred tax assets or liabilities and liabilities and assets related to employee benefit arrangements. The difference between the fair value of the consideration transferred and the fair value of the identified assets, liabilities and contingent consideration is recorded as goodwill. If the fair value of the net assets acquired exceeds the aggregate consideration transferred, this purchase bargain is included in the profit or loss, after the group has re-assessed whether it has correctly identified all of the assets acquired and all of the liabilities assumed. Acquisition-related costs are recognized in profit or loss as incurred. If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, the group reports provisional amounts for the items for which the accounting is incomplete. Those provisional amounts are adjusted during the measurement period, or additional assets or liabilities are recognized, to reflect new information obtained about facts and circumstances that existed as of the acquisition date that, if known, would have affected the amounts recognized as of that date. The measurement period to finalize the valuations is subject to a maximum of one year after acquisition date. 2.2.4 Associates Associates are entities over which the group has significant influence, but no control. Significant influence is the power to participate in the financial and operating policy decisions of the investee. Associates are accounted for under the equity method and are recognized initially at cost as adjusted for post-acquisition changes in the group\u2019s share of the net assets of the associate. The group\u2019s investment includes goodwill on acquisition, net of any accumulated impairment losses. The consolidated financial statements include the group\u2019s share of the income and expense and the equity movements of the investments accounted within equity, after the alignment of the accounting policies to those of the group, from the day significant influence commences until the day significant influence ceases. When the group\u2019s share of losses exceeds its interest in an equity accounted investee, the carrying amount of that interest (including any long-term investments) is reduced to zero and no further losses are recognized except for losses arising from the group\u2019s obligation or payments on behalf of the investee. ", "dimensions": { "concept": "ifrs-full:DisclosureOfBasisOfConsolidationExplanatory", "language": "en", "entity": "scheme:699400M9RRMTV264FM70", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-544": { "value": " 2.2.1 Subsidiaries Subsidiaries are entities controlled by the Company. Control is achieved when the Company 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 Company controls an investee if, and only if, the Company has: Power over the investee (i.e., existing rights to direct relevant activities); Exposure, or rights, to variable returns from its involvement in the investee; and The ability to use its power to affect the investee\u2019s returns. Generally, there is a presumption that having a majority of voting rights results in control. To support this presumption and when the group has less than a majority of the voting or similar rights of an investee, the group considers all relevant facts and circumstances in assessing whether it has power over an investee. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForSubsidiariesExplanatory", "language": "en", "entity": "scheme:699400M9RRMTV264FM70", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-545": { "value": " 2.2.1 Subsidiaries Subsidiaries are entities controlled by the Company. Control is achieved when the Company 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 Company controls an investee if, and only if, the Company has: Power over the investee (i.e., existing rights to direct relevant activities); Exposure, or rights, to variable returns from its involvement in the investee; and The ability to use its power to affect the investee\u2019s returns. Generally, there is a presumption that having a majority of voting rights results in control. To support this presumption and when the group has less than a majority of the voting or similar rights of an investee, the group considers all relevant facts and circumstances in assessing whether it has power over an investee. 2.2.4 Associates Associates are entities over which the group has significant influence, but no control. Significant influence is the power to participate in the financial and operating policy decisions of the investee. Associates are accounted for under the equity method and are recognized initially at cost as adjusted for post-acquisition changes in the group\u2019s share of the net assets of the associate. The group\u2019s investment includes goodwill on acquisition, net of any accumulated impairment losses. The consolidated financial statements include the group\u2019s share of the income and expense and the equity movements of the investments accounted within equity, after the alignment of the accounting policies to those of the group, from the day significant influence commences until the day significant influence ceases. When the group\u2019s share of losses exceeds its interest in an equity accounted investee, the carrying amount of that interest (including any long-term investments) is reduced to zero and no further losses are recognized except for losses arising from the group\u2019s obligation or payments on behalf of the investee. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForTransactionsWithRelatedPartiesExplanatory", "language": "en", "entity": "scheme:699400M9RRMTV264FM70", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-546": { "value": " 2.2.2 Non-controlling interests Non-controlling interests in subsidiaries are identified separately from the group\u2019s equity therein. The interests of non-controlling shareholders may be initially measured at fair value or at the non-controlling interests\u2019 proportionate share of the fair value of the acquiree\u2019s identifiable net assets. A choice of measurement is made on an acquisition-by-acquisition basis. For its current non-controlling interests in subsidiaries, the group has opted to measure at the proportionate share of the acquiree's identifiable net assets. Subsequent to acquisition, the carrying amount of non-controlling interests is the amount of those interests at initial recognition plus the non-controlling interests\u2019 share of subsequent changes in equity. Total comprehensive income is attributed to non-controlling interests even if this results in the non-controlling interests having a deficit balance. A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction between shareholders. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForTransactionsWithNoncontrollingInterestsExplanatory", "language": "en", "entity": "scheme:699400M9RRMTV264FM70", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-547": { "value": " 2.2.3 Business combinations Acquisitions of subsidiaries and businesses are accounted for using the acquisition method. The consideration transferred for each acquisition is measured at the aggregate of the fair values at the date of exchange of assets given, liabilities incurred or assumed, and equity instruments issued by the group in exchange for control of the acquiree. Where applicable, the consideration for the acquisition includes any asset or liability resulting from a contingent consideration arrangement, measured at its acquisition-date fair value. Subsequent changes in such fair values are adjusted against the cost of acquisition where they qualify as measurement period adjustments. The acquiree\u2019s identifiable assets, liabilities and contingent liabilities that meet the conditions for recognition at the balance sheet are recognized at their fair value at the acquisition date, except for deferred tax assets or liabilities and liabilities and assets related to employee benefit arrangements. The difference between the fair value of the consideration transferred and the fair value of the identified assets, liabilities and contingent consideration is recorded as goodwill. If the fair value of the net assets acquired exceeds the aggregate consideration transferred, this purchase bargain is included in the profit or loss, after the group has re-assessed whether it has correctly identified all of the assets acquired and all of the liabilities assumed. Acquisition-related costs are recognized in profit or loss as incurred. If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, the group reports provisional amounts for the items for which the accounting is incomplete. Those provisional amounts are adjusted during the measurement period, or additional assets or liabilities are recognized, to reflect new information obtained about facts and circumstances that existed as of the acquisition date that, if known, would have affected the amounts recognized as of that date. The measurement period to finalize the valuations is subject to a maximum of one year after acquisition date. The group has granted put options for remaining non-controlling interests in acquired companies, giving the holders the right to sell to the group their investments in these subsidiaries. These financial liabilities do not bear interest. In accordance with IAS 32, the group recognizes a redemption liability corresponding to the present value of the estimated exercise price of the option. The redemption liability is included in other current and non-current liabilities and the counterpart is a reduction from the group's equity. At the end of each reporting period, the liability is adjusted to reflect changes in the estimated exercise price. These subsequent changes are accounted for in the income statement. If the group has also obtained a call option on the same remaining non-controlling interests of the acquired companies, this option is taken into account for the control assessment in respect of the business combination. In a business combination the acquired assets and liabilities are measured at fair value. The group uses assumptions and non-observable information to prepare fair value of the assessed, where no observable information is available. Afterwards the actual market performance can differ from the assumptions. The most important assumptions are disclosed in the note for business combinations. (See note 7). ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForBusinessCombinationsExplanatory", "language": "en", "entity": "scheme:699400M9RRMTV264FM70", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-548": { "value": " 2.2.3 Business combinations Acquisitions of subsidiaries and businesses are accounted for using the acquisition method. The consideration transferred for each acquisition is measured at the aggregate of the fair values at the date of exchange of assets given, liabilities incurred or assumed, and equity instruments issued by the group in exchange for control of the acquiree. Where applicable, the consideration for the acquisition includes any asset or liability resulting from a contingent consideration arrangement, measured at its acquisition-date fair value. Subsequent changes in such fair values are adjusted against the cost of acquisition where they qualify as measurement period adjustments. The acquiree\u2019s identifiable assets, liabilities and contingent liabilities that meet the conditions for recognition at the balance sheet are recognized at their fair value at the acquisition date, except for deferred tax assets or liabilities and liabilities and assets related to employee benefit arrangements. The difference between the fair value of the consideration transferred and the fair value of the identified assets, liabilities and contingent consideration is recorded as goodwill. If the fair value of the net assets acquired exceeds the aggregate consideration transferred, this purchase bargain is included in the profit or loss, after the group has re-assessed whether it has correctly identified all of the assets acquired and all of the liabilities assumed. Acquisition-related costs are recognized in profit or loss as incurred. If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, the group reports provisional amounts for the items for which the accounting is incomplete. Those provisional amounts are adjusted during the measurement period, or additional assets or liabilities are recognized, to reflect new information obtained about facts and circumstances that existed as of the acquisition date that, if known, would have affected the amounts recognized as of that date. The measurement period to finalize the valuations is subject to a maximum of one year after acquisition date. Goodwill is initially measured at cost, the excess of the aggregate of the consideration transferred and the amount recognized for the assets acquired and liabilities assumed in a business combination. After initial recognition, goodwill is measured at cost less any accumulated impairment losses. In the event of disposal of a cash-generating unit, the attributable amount of goodwill is included in the determination of the profit or loss on disposal. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForBusinessCombinationsAndGoodwillExplanatory", "language": "en", "entity": "scheme:699400M9RRMTV264FM70", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-549": { "value": "The difference between the fair value of the consideration transferred and the fair value of the identified assets, liabilities and contingent consideration is recorded as goodwill. If the fair value of the net assets acquired exceeds the aggregate consideration transferred, this purchase bargain is included in the profit or loss, after the group has re-assessed whether it has correctly identified all of the assets acquired and all of the liabilities assumed. Acquisition-related costs are recognized in profit or loss as incurred. Goodwill is initially measured at cost, the excess of the aggregate of the consideration transferred and the amount recognized for the assets acquired and liabilities assumed in a business combination. After initial recognition, goodwill is measured at cost less any accumulated impairment losses. In the event of disposal of a cash-generating unit, the attributable amount of goodwill is included in the determination of the profit or loss on disposal. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForGoodwillExplanatory", "language": "en", "entity": "scheme:699400M9RRMTV264FM70", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-550": { "value": "The difference between the fair value of the consideration transferred and the fair value of the identified assets, liabilities and contingent consideration is recorded as goodwill. If the fair value of the net assets acquired exceeds the aggregate consideration transferred, this purchase bargain is included in the profit or loss, after the group has re-assessed whether it has correctly identified all of the assets acquired and all of the liabilities assumed. Acquisition-related costs are recognized in profit or loss as incurred. 2.5 Intangible assets Goodwill Goodwill is initially measured at cost, the excess of the aggregate of the consideration transferred and the amount recognized for the assets acquired and liabilities assumed in a business combination. After initial recognition, goodwill is measured at cost less any accumulated impairment losses. In the event of disposal of a cash-generating unit, the attributable amount of goodwill is included in the determination of the profit or loss on disposal. Research and development Research activity expenses, undertaken with the prospect of gaining new scientific or technical knowledge and understanding, are recognized in the income statement when incurred. Development expenses for which the group has the technical feasibility, intention and means to complete the intangible assets and the economic future benefits of the assets will flow to the group are capitalized at cost. Other intangible assets Other intangible assets with finite useful lives, are measured at cost less accumulated amortization and accumulated impairment losses. Amortization is recognized in the income statement on a straight-line basis over the estimated useful lives of intangible assets, other than goodwill, from the date when the asset is ready for use. The estimated useful lives of intangible assets and their residual value (if applicable) are reviewed every year. The estimated useful lives for the current and comparative period are as follows: Intangible assets Economic lifetime Trademarks Indefinite Customer lists 5 to 10 years Distribution rights 20 years Other intangible assets 3 to 7 years The group tests whether goodwill has suffered any impairment on an annual basis. The recoverable amount of a cash generating unit (CGU) is determined based on value-in-use calculations which require the use of assumptions. The calculations use cash flow projections based on financial budgets approved by management covering a five-year period, incorporating estimates for sales growth and margin growth. Cash flows beyond the five-year period are extrapolated using the estimated growth rates. These growth rates are consistent with forecasts included in industry reports specific to the industry in which each CGU operates. (See note 15.2). ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForIntangibleAssetsAndGoodwillExplanatory", "language": "en", "entity": "scheme:699400M9RRMTV264FM70", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-551": { "value": " 2.2.4 Associates Associates are entities over which the group has significant influence, but no control. Significant influence is the power to participate in the financial and operating policy decisions of the investee. Associates are accounted for under the equity method and are recognized initially at cost as adjusted for post-acquisition changes in the group\u2019s share of the net assets of the associate. The group\u2019s investment includes goodwill on acquisition, net of any accumulated impairment losses. The consolidated financial statements include the group\u2019s share of the income and expense and the equity movements of the investments accounted within equity, after the alignment of the accounting policies to those of the group, from the day significant influence commences until the day significant influence ceases. When the group\u2019s share of losses exceeds its interest in an equity accounted investee, the carrying amount of that interest (including any long-term investments) is reduced to zero and no further losses are recognized except for losses arising from the group\u2019s obligation or payments on behalf of the investee. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForInvestmentInAssociates", "language": "en", "entity": "scheme:699400M9RRMTV264FM70", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-553": { "value": "2.3.1 Functional and presentation currency The consolidated financial statements are presented in Euro, which is the group\u2019s presentation currency. The group companies determine their functional currency based on the primary economic environment in which they operate. The main indicators to determine the functional currency is the currency of the sales, expenses and financing activities. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFunctionalCurrencyExplanatory", "language": "en", "entity": "scheme:699400M9RRMTV264FM70", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-554": { "value": " 2.3.2 Transactions and balances The group operates in different currency environments, but mainly in Euro and USD. Transactions in foreign currencies are translated to the respective functional currencies of the group entities at exchange rates at the date of the transaction. Monetary assets and liabilities denominated in foreign currency at the reporting date are translated to the functional currency of the entity at the exchange rate at that date. Non-monetary assets and liabilities denominated in foreign currency and measured at fair value are translated to the functional currency of the entity at the exchange rate at the date that the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated. Foreign currency differences arising from this operational translation are recognized in the income statement. 2.3.3 Foreign operations The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising from acquisition, are translated to Euro at exchange rates at the reporting date. The income and expenses of foreign operations are translated to Euro at average exchange rates. Foreign currency differences are recognized in other comprehensive income and accumulated in equity. These differences have been recognized in the foreign currency translation reserve (FCTR). When the group loses control over a foreign operation the accumulated foreign translation amount of the subsidiary is transferred from equity to the profit or loss. Foreign exchange gains and losses, arising from a monetary item to be received from or paid to a foreign operation for which the settlement is neither planned nor likely to occur in the foreseeable future, are included in the value of net investment in a foreign operation and recognized directly in equity in FCTR. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForForeignCurrencyTranslationExplanatory", "language": "en", "entity": "scheme:699400M9RRMTV264FM70", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-403": { "value": " 2.3.2 Transactions and balances The group operates in different currency environments, but mainly in Euro and USD. Transactions in foreign currencies are translated to the respective functional currencies of the group entities at exchange rates at the date of the transaction. Monetary assets and liabilities denominated in foreign currency at the reporting date are translated to the functional currency of the entity at the exchange rate at that date. Non-monetary assets and liabilities denominated in foreign currency and measured at fair value are translated to the functional currency of the entity at the exchange rate at the date that the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated. Foreign currency differences arising from this operational translation are recognized in the income statement. 2.3.3 Foreign operations The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising from acquisition, are translated to Euro at exchange rates at the reporting date. The income and expenses of foreign operations are translated to Euro at average exchange rates. Foreign currency differences are recognized in other comprehensive income and accumulated in equity. These differences have been recognized in the foreign currency translation reserve (FCTR). When the group loses control over a foreign operation the accumulated foreign translation amount of the subsidiary is transferred from equity to the profit or loss. Foreign exchange gains and losses, arising from a monetary item to be received from or paid to a foreign operation for which the settlement is neither planned nor likely to occur in the foreseeable future, are included in the value of net investment in a foreign operation and recognized directly in equity in FCTR. 21.5 Translation reserve Translation reserve is part of the Reserves in the consolidated statement of financial position. Exchange differences arising on translation of the foreign controlled entities are recognized in other comprehensive income and accumulated in the translation reserve within equity. The cumulative amount is reclassified to profit or loss when the net investment is disposed of. The majority of the intangible assets on Azelis' statement of financial position relate to the EQT/PSP Acquisition in November 2018. The respective amounts have been allocated to Azelis' three operating segments, and per IFRS also on the basis of the underlying foreign currencies in Azelis' respective jurisdictions (of which a major part relates to Azelis' activities in the United States). Exchange differences arising on translation of the intangible assets are recognized in other comprehensive income and accumulated in the translation reserve within equity. ", "dimensions": { "concept": "ifrs-full:DisclosureOfEffectOfChangesInForeignExchangeRatesExplanatory", "language": "en", "entity": "scheme:699400M9RRMTV264FM70", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-556": { "value": " 2.3.3 Foreign operations The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising from acquisition, are translated to Euro at exchange rates at the reporting date. The income and expenses of foreign operations are translated to Euro at average exchange rates. Foreign currency differences are recognized in other comprehensive income and accumulated in equity. These differences have been recognized in the foreign currency translation reserve (FCTR). When the group loses control over a foreign operation the accumulated foreign translation amount of the subsidiary is transferred from equity to the profit or loss. Foreign exchange gains and losses, arising from a monetary item to be received from or paid to a foreign operation for which the settlement is neither planned nor likely to occur in the foreseeable future, are included in the value of net investment in a foreign operation and recognized directly in equity in FCTR. 2.4 Impairment of non-financial assets The carrying amounts of the group\u2019s non-current non-financial assets are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, the group performs an impairment test. For goodwill and intangible assets with indefinite lives an impairment test is performed every year. The recoverable amount of an asset or cash-generating unit is the higher of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future pre-tax cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For the purpose of impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or groups of assets (the \u201ccash-generating unit\u201d). The goodwill acquired in a business combination, for the purpose of impairment testing, is allocated to (groups of) cash-generating units that are expected to benefit from the synergies of the combination. Corporate assets are assets that do not generate cash inflows independently, and their carrying amounts need to be allocated to the cash-generating units on a reasonable and consistent basis. If a corporate asset cannot be allocated to cash-generating units on a reasonable and consistent basis, the group performs the goodwill impairment test in two stages: first on the level of the cash-generating units, and secondly on the level of the smallest group of cash-generating units to which the corporate asset can be allocated on a reasonable and consistent basis. An impairment loss is recognized if the carrying amount of an asset or its cash-generating unit exceeds its estimated recoverable amount. Impairment losses are recognized in the income statement. Impairment losses recognized in respect of cash-generating units are allocated first to reduce the carrying amount of goodwill allocated to the units and then to reduce the carrying amount of the other assets in the unit (group of units) on a pro rata basis. An impairment loss in respect of goodwill will not be reversed afterwards. In respect of other assets, impairment losses recognized in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset\u2019s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortization, if no impairment loss had been recognized. 2.5 Intangible assets Goodwill Goodwill is initially measured at cost, the excess of the aggregate of the consideration transferred and the amount recognized for the assets acquired and liabilities assumed in a business combination. After initial recognition, goodwill is measured at cost less any accumulated impairment losses. In the event of disposal of a cash-generating unit, the attributable amount of goodwill is included in the determination of the profit or loss on disposal. Research and development Research activity expenses, undertaken with the prospect of gaining new scientific or technical knowledge and understanding, are recognized in the income statement when incurred. Development expenses for which the group has the technical feasibility, intention and means to complete the intangible assets and the economic future benefits of the assets will flow to the group are capitalized at cost. Other intangible assets Other intangible assets with finite useful lives, are measured at cost less accumulated amortization and accumulated impairment losses. Amortization is recognized in the income statement on a straight-line basis over the estimated useful lives of intangible assets, other than goodwill, from the date when the asset is ready for use. The estimated useful lives of intangible assets and their residual value (if applicable) are reviewed every year. The estimated useful lives for the current and comparative period are as follows: Intangible assets Economic lifetime Trademarks Indefinite Customer lists 5 to 10 years Distribution rights 20 years Other intangible assets 3 to 7 years 2.6.1 Depreciation Depreciation is recognized in the income statement on a straight-line basis over the estimated useful lives of each component of property, plant and equipment to their residual values. Leasehold improvements are depreciated over the shorter of the lease term and their useful lives. Land is not depreciated. The estimated useful lives for the current and comparative period are as follows: Property, plant and equipment Economic lifetime Buildings 20 to 33 years Plant and equipment 5 to 10 years Other property, plant and equipment 5 to 10 years Depreciation methods, useful lives and residual values are reviewed at each reporting date. 2.7.2 Impairment of financial assets The group recognizes an allowance for expected credit losses (ECL) for all financial assets that are not held at FVTPL. ECLs are based on the difference between the contractual cash flows due in accordance with the contract and all the cash flows that the group expects to receive, discounted at an approximation of the original effective interest rate. The impairment methodology applied depends on whether there has been a significant increase in credit risk: if so, the loss allowance is measured as the lifetime expected credit loss. If not, the allowance is measured as the 12-month expected credit loss. For Trade receivables, the group applies the simplified approach permitted by IFRS 9, which requires lifetime expected losses to be recognized from initial recognition of the receivables (see note 4.1 for further details). While cash and cash equivalents and other loan receivables are also subject to the impairment requirements of IFRS 9, no impairment loss was identified as these assets are considered as low-credit risk. Individually significant financial assets are tested for impairment on an individual basis. The remaining financial assets are assessed collectively in groups that share similar credit risk characteristics. Impairment losses of financial assets are recognized in the income statement. An impairment loss is reversed if the reversal can be related objectively to an event occurring after the impairment loss was recognized. 2.8 Income tax Income tax expense comprises current and deferred taxes. Income tax expense is recognized in the income statement except to the extent that it relates to items recognized in other comprehensive income, in which case it is recognized in other comprehensive income. Current tax is the expected tax payable (receivable) on the taxable income (loss) for the period, using tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous years. Deferred income tax is provided, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. However, deferred tax liabilities are not recognized if they arise from the initial recognition of goodwill. Deferred income tax is also not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the end of the reporting period and are expected to apply when the related deferred income tax asset is realized or the deferred income tax liability is settled. A deferred tax asset is recognized to the extent that it is probable that future taxable profits will be available against which the temporary difference can be utilized. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realized. 2.9 Inventories Inventories are measured at the lower of cost and net realizable value. The inventories are measured at their weighted average costs increased with cost comprising direct materials, direct labor and an appropriate proportion of variable and fixed overhead expenditure, the latter being allocated on the basis of normal operating capacity. Net realizable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses. Impairments of inventories to net realizable value are recognized in the profit or loss as part of \u2018Cost for goods and consumables\u2019. In case the value of impaired inventories increases the impairment will be reversed to the lowest of the increased net realizable value and the original weighted average cost. 2.11 Employee benefits 2.11.1 Pensions, other post-employment benefits and termination benefits The group operates several defined benefit pension plans. The liability or asset recognized in the balance sheet of defined benefit pension plans is the present value of the defined benefit obligation at the end of the reporting period less the fair value of plan assets. The defined benefit obligation is calculated annually by independent qualified actuaries using the projected unit credit method. The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows using interest rates of high-quality corporate bonds that are denominated in the currency in which the benefits will be paid, and that have terms approximating to the terms of the related obligation. The net interest cost is calculated by applying the discount rate to the net balance of the defined benefit obligation and the fair value of plan assets. This cost is included in finance expense in the income statement. Changes in the present value of the defined benefit obligation resulting from plan amendments or curtailments are recognized immediately in the income statement as past service costs. Remeasurement gains and losses arising from experience adjustments and changes in actuarial assumptions are recognized in the period in which they occur, directly in other comprehensive income. They are included in retained earnings in the statement of changes in equity and in the balance sheet. For defined contribution plans, the group pays contributions to publicly or privately administered pension insurance plans on a mandatory, contractual or voluntary basis. The group has no further payment obligations once the contributions have been paid. The contributions are recognized as employee benefit expense when they are due. 2.11.2 Short-term and long-term employee benefits The cost of all short-term employee benefits, such as salaries, employee entitlements to leave pay, bonuses, medical aid and other contributions, are recognized during the period in which the employee renders the related service. The group recognizes those costs only when it has a present legal or constructive obligation to make such payment and a reliable estimate of the liability can be made. The group\u2019s net obligation in respect of long-term employee benefits is the amount of future benefit that employees have earned in return for their service in the current and prior periods. That benefit is discounted to determine its present value. The calculation of the other long-term employee benefits is performed using the projected unit credit method. Any actuarial gains and losses are recognized in profit or loss in the period in which they arise. 2.11.3 Share-based payment The group has a performance share plan for key management, qualifying as an equity-settled share-based payment plan. Equity-settled share-based payment transactions are transactions in which the entity receives goods or services in exchange for its own equity instruments (e.g. shares, options). Goods or services received in equity-settled share-based payment transactions are measured at their fair value, unless they cannot be estimated reliably, in which case it is determined in accordance with the fair value of the equity instruments granted. The fair value is determined at grant date and the value incorporates market conditions using a Monte Carlo calculation. This value remains unchanged over the vesting period. Service conditions and non-market conditions do not affect the fair value of the instruments granted, but are taken into account by adjusting the number of equity instruments included in the measurement of the transaction, an estimate which is revised at each reporting date until the vesting period has lapsed. Azelis accounts for the equity-settled share-based payment transaction in the other reserves section of the equity, and its initial recognition and subsequent changes are accounted for in employee expenses. 2.12 Provisions A provision is recognized if, as a result of a past event, the group has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. Unwinding of the discount of provisions is recorded as financial expenses. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForExpensesExplanatory", "language": "en", "entity": "scheme:699400M9RRMTV264FM70", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-557": { "value": " 2.4 Impairment of non-financial assets The carrying amounts of the group\u2019s non-current non-financial assets are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, the group performs an impairment test. For goodwill and intangible assets with indefinite lives an impairment test is performed every year. The recoverable amount of an asset or cash-generating unit is the higher of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future pre-tax cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For the purpose of impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or groups of assets (the \u201ccash-generating unit\u201d). The goodwill acquired in a business combination, for the purpose of impairment testing, is allocated to (groups of) cash-generating units that are expected to benefit from the synergies of the combination. Corporate assets are assets that do not generate cash inflows independently, and their carrying amounts need to be allocated to the cash-generating units on a reasonable and consistent basis. If a corporate asset cannot be allocated to cash-generating units on a reasonable and consistent basis, the group performs the goodwill impairment test in two stages: first on the level of the cash-generating units, and secondly on the level of the smallest group of cash-generating units to which the corporate asset can be allocated on a reasonable and consistent basis. An impairment loss is recognized if the carrying amount of an asset or its cash-generating unit exceeds its estimated recoverable amount. Impairment losses are recognized in the income statement. Impairment losses recognized in respect of cash-generating units are allocated first to reduce the carrying amount of goodwill allocated to the units and then to reduce the carrying amount of the other assets in the unit (group of units) on a pro rata basis. An impairment loss in respect of goodwill will not be reversed afterwards. In respect of other assets, impairment losses recognized in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset\u2019s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortization, if no impairment loss had been recognized. The impairment tests have been performed by discounting future pre-tax cash flows from continuing operations of the unit. The recoverable amounts of the regional CGU's as of\u00a0December 31, 2022 have been determined based on a value in use calculation using cash flow projections from a five year detailed business plan which is approved by senior management and serves as a basis to determine the future free cash flows and the Adjusted EBITA\u2019s. The business plan is based on the market growth assumptions and on some general economic indicators (inflation, GDP, etc.). It also properly reflects the future strategy of the regional CGU's. For cash flows beyond the business plan period, an extrapolation was made based on steady terminal growth rates. The key assumptions used in the impairment tests are the pre-tax WACC, terminal growth rate and Adjusted EBITA margin. The pre-tax WACC is estimated per regional CGU, is consistent with external sources of information, and varies mainly due to differences in risk free rates that increased during 2022. The risk-free rates per regional CGU are based on the weighted average of the rate of return on local sovereign bonds. The terminal growth rates are based on industry benchmarks by region and are consistent with the group's past experience and based on external sources of information. Adjusted EBITA margin reflects the group's past experience and future expectation of regional business development. The key assumptions used for the second stage impairment test, on the level of the group as a whole including corporate asset, are identical to those used for the regional CGU impairment tests. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForImpairmentOfNonfinancialAssetsExplanatory", "language": "en", "entity": "scheme:699400M9RRMTV264FM70", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-558": { "value": " 2.4 Impairment of non-financial assets The carrying amounts of the group\u2019s non-current non-financial assets are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, the group performs an impairment test. For goodwill and intangible assets with indefinite lives an impairment test is performed every year. The recoverable amount of an asset or cash-generating unit is the higher of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future pre-tax cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For the purpose of impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or groups of assets (the \u201ccash-generating unit\u201d). The goodwill acquired in a business combination, for the purpose of impairment testing, is allocated to (groups of) cash-generating units that are expected to benefit from the synergies of the combination. Corporate assets are assets that do not generate cash inflows independently, and their carrying amounts need to be allocated to the cash-generating units on a reasonable and consistent basis. If a corporate asset cannot be allocated to cash-generating units on a reasonable and consistent basis, the group performs the goodwill impairment test in two stages: first on the level of the cash-generating units, and secondly on the level of the smallest group of cash-generating units to which the corporate asset can be allocated on a reasonable and consistent basis. An impairment loss is recognized if the carrying amount of an asset or its cash-generating unit exceeds its estimated recoverable amount. Impairment losses are recognized in the income statement. Impairment losses recognized in respect of cash-generating units are allocated first to reduce the carrying amount of goodwill allocated to the units and then to reduce the carrying amount of the other assets in the unit (group of units) on a pro rata basis. An impairment loss in respect of goodwill will not be reversed afterwards. In respect of other assets, impairment losses recognized in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset\u2019s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortization, if no impairment loss had been recognized. 2.7.2 Impairment of financial assets The group recognizes an allowance for expected credit losses (ECL) for all financial assets that are not held at FVTPL. ECLs are based on the difference between the contractual cash flows due in accordance with the contract and all the cash flows that the group expects to receive, discounted at an approximation of the original effective interest rate. The impairment methodology applied depends on whether there has been a significant increase in credit risk: if so, the loss allowance is measured as the lifetime expected credit loss. If not, the allowance is measured as the 12-month expected credit loss. For Trade receivables, the group applies the simplified approach permitted by IFRS 9, which requires lifetime expected losses to be recognized from initial recognition of the receivables (see note 4.1 for further details). While cash and cash equivalents and other loan receivables are also subject to the impairment requirements of IFRS 9, no impairment loss was identified as these assets are considered as low-credit risk. Individually significant financial assets are tested for impairment on an individual basis. The remaining financial assets are assessed collectively in groups that share similar credit risk characteristics. Impairment losses of financial assets are recognized in the income statement. An impairment loss is reversed if the reversal can be related objectively to an event occurring after the impairment loss was recognized. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForImpairmentOfAssetsExplanatory", "language": "en", "entity": "scheme:699400M9RRMTV264FM70", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-406": { "value": "2.5 Intangible assets Goodwill Goodwill is initially measured at cost, the excess of the aggregate of the consideration transferred and the amount recognized for the assets acquired and liabilities assumed in a business combination. After initial recognition, goodwill is measured at cost less any accumulated impairment losses. In the event of disposal of a cash-generating unit, the attributable amount of goodwill is included in the determination of the profit or loss on disposal. Research and development Research activity expenses, undertaken with the prospect of gaining new scientific or technical knowledge and understanding, are recognized in the income statement when incurred. Development expenses for which the group has the technical feasibility, intention and means to complete the intangible assets and the economic future benefits of the assets will flow to the group are capitalized at cost. Other intangible assets Other intangible assets with finite useful lives, are measured at cost less accumulated amortization and accumulated impairment losses. Amortization is recognized in the income statement on a straight-line basis over the estimated useful lives of intangible assets, other than goodwill, from the date when the asset is ready for use. The estimated useful lives of intangible assets and their residual value (if applicable) are reviewed every year. The estimated useful lives for the current and comparative period are as follows: Intangible assets Economic lifetime Trademarks Indefinite Customer lists 5 to 10 years Distribution rights 20 years Other intangible assets 3 to 7 years 15 Intangible assets \u00a0Goodwill Trade- marks Distribution rights Concessions and licenses Develop-ment cost Customer lists Other Intangibles in progress Total As of December 31, 2020 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Cost 1,345,937 317,378 546,136 6,194 6,195 3,971 6,630 3,250 2,235,691 Accumulated amortization and impairment - - -58,539 -3,781 -211 -489 -2,269 -3,106 -68,395 \u00a01,345,937 317,378 487,597 2,413 5,984 3,482 4,361 144 2,167,296 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Changes in 2021 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Business combination 381,469 - 175,571 3,048 - - 336 - 560,424 Additions - - 1,140 72 1,833 436 7,240 649 11,370 Amortization - - -33,949 -355 -1,698 -472 -3,007 - -39,480 Disposals -3 - -3 18 - - -6 - 6 Reclassifications -56 - 131 -1,824 -2,578 3 4,543 1,307 1,527 Translation differences 75,919 - 29,822 164 0 239 200 38 106,382 Changes in the Period 457,330 - 172,712 1,122 -2,443 206 9,307 1,994 640,228 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0As of December 31, 2021 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Cost 1,803,267 317,378 752,800 7,654 5,450 4,648 18,949 5,245 2,915,394 Accumulated amortization and impairment - - -92,491 -4,118 -1,909 -961 -5,282 -3,106 -107,870 \u00a01,803,267 317,378 660,309 3,535 3,541 3,688 13,668 2,139 2,807,524 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Changes in 2022 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Business combination 360,276 - 201,794 316 345 - 1,519 - 564,250 Additions - - 1,644 56 2,044 1,028 4,604 1,690 11,067 Amortization -0 - -45,061 -584 -1,995 -703 -8,507 - -56,850 Disposals -3 - -160 7 -0 - -261 -16 -433 Reclassifications -5 - 253 -35 -100 13 1,635 -1,571 191 Hyperinflation 15,208 - 4,734 6 - - 8 - 19,956 Translation differences -4,487 - 3,450 155 -0 -20 -83 23 -962 Changes in the Period 370,989 - 166,655 -79 293 319 -1,085 126 537,218 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0As of December 31, 2022 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Cost 2,174,256 317,378 964,516 8,159 7,738 5,670 26,372 5,371 3,509,462 Accumulated amortization and impairment -0 - -137,552 -4,702 -3,904 -1,663 -13,789 -3,106 -164,720 \u00a02,174,256 317,378 826,964 3,456 3,834 4,007 12,583 2,265 3,344,742 The trademark relates to the Azelis name. Azelis uses its name globally, and its trade name is considered to be a key asset of its distribution activities given its status of major distributor in the specialty chemicals sector. The name both supports the group to onboard principals and customers, and for acquisition targets that want to become part of the group as they know that their business will grow being part of it. The Azelis trademark is estimated to have an indefinite economic life for amortization purposes; therefore, effectively no amortization expenses are being booked through Azelis' income statement. The total value of \u20ac317.4 million as of December 31, 2022 originates entirely from the EQT/PSP acquisition in November 2018 and remained unchanged since that date. The translation differences of \u20ac1.0 million loss (2021: \u20ac106.4 million gain) are recognized in other comprehensive income and accumulated in the translation reserve within equity. Reference is made to note 21.5. 15.1 Allocation of assets for impairment testing A cash-generating unit (CGU) is the smallest identifiable group of assets that generates cash inflows that are largely independent of the cash inflows from other assets or groups of assets. For the purpose of impairment testing, goodwill is allocated to the following groups of CGUs: (in thousands of \u20ac) 31-12-2022 31-12-2021 EMEA 733,032 616,570 AMERICAS 1,119,304 919,385 ASIA PACIFIC 321,919 267,311 Total Goodwill 2,174,256 1,803,266 All goodwill acquired in the business combinations has been allocated to a regional CGU at the end of the reporting period. The goodwill is allocated on regional level as it is the group's regions that are expected to benefit of the business combinations, and as goodwill is also monitored internally on the regional level. The group's expectation is that synergies will be realized in the region of acquisition. Trademarks with a book value of \u20ac317.4 million (2021: \u20ac317.4 million) have an indefinite life. These do not generate cash inflows independently and qualify as corporate assets. As their carrying amount cannot be allocated to the regional CGUs on a reasonable and consistent basis, the corporate assets are allocated to the group as a whole and the impairment test is performed in two stages. 15.2 Impairment assessment The impairment tests have been performed by discounting future pre-tax cash flows from continuing operations of the unit. The recoverable amounts of the regional CGU's as of\u00a0December 31, 2022 have been determined based on a value in use calculation using cash flow projections from a five year detailed business plan which is approved by senior management and serves as a basis to determine the future free cash flows and the Adjusted EBITA\u2019s. The business plan is based on the market growth assumptions and on some general economic indicators (inflation, GDP, etc.). It also properly reflects the future strategy of the regional CGU's. For cash flows beyond the business plan period, an extrapolation was made based on steady terminal growth rates. The key assumptions used in the impairment tests are the pre-tax WACC, terminal growth rate and Adjusted EBITA margin. The pre-tax WACC is estimated per regional CGU, is consistent with external sources of information, and varies mainly due to differences in risk free rates that increased during 2022. The risk-free rates per regional CGU are based on the weighted average of the rate of return on local sovereign bonds. The terminal growth rates are based on industry benchmarks by region and are consistent with the group's past experience and based on external sources of information. Adjusted EBITA margin reflects the group's past experience and future expectation of regional business development. The key assumptions used for the second stage impairment test, on the level of the group as a whole including corporate asset, are identical to those used for the regional CGU impairment tests. The values attributed to pre-tax WACC and the growth rates are as follows: Cash Generating Unit 2022 2023-2027 assumptions \u00a0Pre-tax WACC Growth rate for terminal value EBITA% EMEA 14.55% 3.2% 11.6% AMERICAS 12.99% 2.6% 13.7% ASIA PACIFIC 12.81% 5.2% 8.2% Cash Generating Unit 2021 2022-2026 assumptions \u00a0Pre-tax WACC Growth rate for terminal value EBITA% EMEA 10.67% 3.0% 10.4% AMERICAS 8.56% 2.5% 12.4% ASIA PACIFIC 11.08% 5.0% 7.7% The increase versus 2021 of the pre-tax WACC is primarily driven by increased market risk-free rates, that have been increasing during 2022 across the globe. The impairment tests on the recoverable amount of regional CGU's show sufficient headroom on the carrying amount of the Goodwill. In the second stage impairment test, the recoverable amount of the regional CGU's considered as a whole exceeds the carrying amount of the regional CGU's including the carrying amount of the corporate assets. Sensitivity to changes in assumptions In order to test the resilience of the headroom against changes in key assumptions, Azelis has selected reasonably expectable changes in the assumptions as follows: A WACC increase by 2% A decrease of the growth rate in the terminal value by 2% A decrease of Adjusted EBITA margin by 0.5% Versus previous years, also a sensitivity test of Adjusted EBITA has been added, as Adjusted EBITA (rather than Sales) is the major indicator for the outcome of Azelis' impairment test. Azelis' cost base is predominantly variable in nature, enabling to react rapidly on (downward) exposure of revenue, limiting the possible impact on Adjusted EBITA. A sensitivity of 0.5% in Adjusted EBITA margin would result in a decrease of almost 5% in Adjusted EBITA (in EUR). In each of the above independent scenario's and for each regional CGU, the sensitivity test shows sufficient headroom on the carrying amount of the Goodwill. ", "dimensions": { "concept": "ifrs-full:DisclosureOfIntangibleAssetsExplanatory", "language": "en", "entity": "scheme:699400M9RRMTV264FM70", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-564": { "value": "Research activity expenses, undertaken with the prospect of gaining new scientific or technical knowledge and understanding, are recognized in the income statement when incurred. Development expenses for which the group has the technical feasibility, intention and means to complete the intangible assets and the economic future benefits of the assets will flow to the group are capitalized at cost. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForResearchAndDevelopmentExpenseExplanatory", "language": "en", "entity": "scheme:699400M9RRMTV264FM70", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-565": { "value": "Research activity expenses, undertaken with the prospect of gaining new scientific or technical knowledge and understanding, are recognized in the income statement when incurred. Development expenses for which the group has the technical feasibility, intention and means to complete the intangible assets and the economic future benefits of the assets will flow to the group are capitalized at cost. Other intangible assets with finite useful lives, are measured at cost less accumulated amortization and accumulated impairment losses. Amortization is recognized in the income statement on a straight-line basis over the estimated useful lives of intangible assets, other than goodwill, from the date when the asset is ready for use. The estimated useful lives of intangible assets and their residual value (if applicable) are reviewed every year. The estimated useful lives for the current and comparative period are as follows: The group has judged that the Azelis trademark has an indefinite useful life. As a consequence, the trademark is not amortized. At each reporting date, the group reviews this judgement and assesses whether the circumstances continue to support the indefinite useful life. The trademark is part of the yearly impairment test. (See note 15). ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForIntangibleAssetsOtherThanGoodwillExplanatory", "language": "en", "entity": "scheme:699400M9RRMTV264FM70", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-407": { "value": "The estimated useful lives for the current and comparative period are as follows:
| Intangible assets | Economic lifetime |
|---|---|
| Trademarks | Indefinite |
| Customer lists | 5 to 10 years |
| Distribution rights | 20 years |
| Other intangible assets | 3 to 7 years |
The estimated useful lives for the current and comparative period are as follows:
| Property, plant and equipment | Economic lifetime |
|---|---|
| Buildings | 20 to 33 years |
| Plant and equipment | 5 to 10 years |
| Other property, plant and equipment | 5 to 10 years |
In the process of applying accounting policies and preparing the consolidated financial statements, the group has made certain judgements (other than those involving estimates) that affect the reported amounts of assets and liabilities, income and expenses.
In addition, the group is required to make certain estimates and assumptions that affect the measurement and presentation of reported figures. Estimates are based on past experience and on additional knowledge obtained on transactions to be reported, and are reviewed on an ongoing basis. Actual amounts may differ from these estimates. The most critical accounting judgements and estimates related to uncertainties with significant risk of causing material adjustment and applied in the consolidated financial statements are described below:
The group has judged that the Azelis trademark has an indefinite useful life. As a consequence, the trademark is not amortized. At each reporting date, the group reviews this judgement and assesses whether the circumstances continue to support the indefinite useful life. The trademark is part of the yearly impairment test. (See note 15).
In assessing the realization of deferred tax assets, management considers the extent to which it is probable that the deferred tax asset will be realized (note 14). The ultimate realization of deferred tax assets is dependent upon the generation of future taxable profit during the periods in which those temporary differences and tax loss carry forwards are available. Management considers the expected reversal of deferred tax liabilities and projected future taxable income in making this assessment. (See note 14.2)
In determining the lease term, management considers all facts and circumstances that create an economic incentive to exercise an extension option. Extension options are only included in the lease term if the lease is reasonably certain to be extended. (See note 16.2)
In a business combination the acquired assets and liabilities are measured at fair value. The group uses assumptions and non-observable information to prepare fair value of the assessed, where no observable information is available. Afterwards the actual market performance can differ from the assumptions. The most important assumptions are disclosed in the note for business combinations. (See note 7).
The group tests whether goodwill has suffered any impairment on an annual basis. The recoverable amount of a cash generating unit (CGU) is determined based on value-in-use calculations which require the use of assumptions. The calculations use cash flow projections based on financial budgets approved by management covering a five-year period, incorporating estimates for sales growth and margin growth. Cash flows beyond the five-year period are extrapolated using the estimated growth rates. These growth rates are consistent with forecasts included in industry reports specific to the industry in which each CGU operates. (See note 15.2).
", "dimensions": { "concept": "ifrs-full:DisclosureOfAccountingJudgementsAndEstimatesExplanatory", "language": "en", "entity": "scheme:699400M9RRMTV264FM70", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-570": { "value": "Items of property, plant and equipment are measured at cost less accumulated depreciation and accumulated impairment losses. Cost includes expenditure that is directly attributable to the acquisition of the asset. Components of property, plant and equipment with separate useful lives are accounted for as separate items (major components) of property, plant and equipment. Gains and losses on disposal of an item of property, plant and equipment are determined by comparing the net proceeds from disposal with the carrying amount of property, plant and equipment and are recognized in other income or other expenses in the income statement. 2.6.1 Depreciation Depreciation is recognized in the income statement on a straight-line basis over the estimated useful lives of each component of property, plant and equipment to their residual values. Leasehold improvements are depreciated over the shorter of the lease term and their useful lives. Land is not depreciated. The estimated useful lives for the current and comparative period are as follows: Property, plant and equipment Economic lifetime Buildings 20 to 33 years Plant and equipment 5 to 10 years Other property, plant and equipment 5 to 10 years Depreciation methods, useful lives and residual values are reviewed at each reporting date. Assets and liabilities arising from a lease are initially measured on a present value basis. Right-of-use assets are 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, and restoration costs. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForPropertyPlantAndEquipmentExplanatory", "language": "en", "entity": "scheme:699400M9RRMTV264FM70", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-409": { "value": "Items of property, plant and equipment are measured at cost less accumulated depreciation and accumulated impairment losses. Cost includes expenditure that is directly attributable to the acquisition of the asset. Components of property, plant and equipment with separate useful lives are accounted for as separate items (major components) of property, plant and equipment. Gains and losses on disposal of an item of property, plant and equipment are determined by comparing the net proceeds from disposal with the carrying amount of property, plant and equipment and are recognized in other income or other expenses in the income statement. 2.6.1 Depreciation Depreciation is recognized in the income statement on a straight-line basis over the estimated useful lives of each component of property, plant and equipment to their residual values. Leasehold improvements are depreciated over the shorter of the lease term and their useful lives. Land is not depreciated. The estimated useful lives for the current and comparative period are as follows: Property, plant and equipment Economic lifetime Buildings 20 to 33 years Plant and equipment 5 to 10 years Other property, plant and equipment 5 to 10 years Depreciation methods, useful lives and residual values are reviewed at each reporting date. 16.1 Property, plant and equipment \u00a0Land and buildings Plant and equipment Other Total As of December 31, 2020 \u00a0\u00a0\u00a0\u00a0Cost 19,612 7,787 12,963 40,362 Accumulated depreciation and impairment -1,767 -2,089 -4,201 -8,057 \u00a017,845 5,698 8,762 32,304 Changes in 2021 \u00a0\u00a0\u00a0\u00a0Business combination 11,412 6,276 974 18,661 Additions 192 1,379 5,751 7,321 Depreciation -839 -1,003 -2,849 -4,692 Disposals -29 -115 -306 -450 Reclassifications -45 -3,413 2,254 -1,204 Translation differences 430 390 248 1,067 Changes in the Period 11,121 3,513 6,070 20,704 \u00a0\u00a0\u00a0\u00a0\u00a0As of December 31, 2021 \u00a0\u00a0\u00a0\u00a0Cost 31,572 12,303 21,883 65,757 Accumulated depreciation and impairment -2,606 -3,092 -7,050 -12,750 \u00a028,966 9,211 14,832 53,008 Changes in 2022 \u00a0\u00a0\u00a0\u00a0Business combination 2,060 480 2,420 4,961 Additions 394 1,930 7,350 9,674 Depreciation -1,538 -1,784 -4,131 -7,453 Disposals -1,508 -22 -334 -1,865 Reclassifications -107 387 -1,225 -946 Hyperinflation - 8 186 195 Translation differences 80 108 122 310 Changes in the Period -619 1,105 4,389 4,876 \u00a0\u00a0\u00a0\u00a0\u00a0As of December 31, 2022 \u00a0\u00a0\u00a0\u00a0Cost 32,491 15,193 30,403 78,086 Accumulated depreciation and impairment -4,144 -4,877 -11,182 -20,203 \u00a028,347 10,316 19,221 57,884 The reclassifications relate mainly to internal project costs which are recognized at year-end as intangibles. The category 'Other' mainly relates to leasehold improvements, comprising also an insignificant amount of assets under construction. Security At 31st December 2022, the group has not pledged any land and buildings, plant and equipment as security for the bank loans (2021: zero). Other restrictions are mainly related to leasehold improvements and leased machinery. ", "dimensions": { "concept": "ifrs-full:DisclosureOfPropertyPlantAndEquipmentExplanatory", "language": "en", "entity": "scheme:699400M9RRMTV264FM70", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-572": { "value": " 2.6.1 Depreciation Depreciation is recognized in the income statement on a straight-line basis over the estimated useful lives of each component of property, plant and equipment to their residual values. Leasehold improvements are depreciated over the shorter of the lease term and their useful lives. Land is not depreciated. The estimated useful lives for the current and comparative period are as follows: Property, plant and equipment Economic lifetime Buildings 20 to 33 years Plant and equipment 5 to 10 years Other property, plant and equipment 5 to 10 years Depreciation methods, useful lives and residual values are reviewed at each reporting date. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForDepreciationExpenseExplanatory", "language": "en", "entity": "scheme:699400M9RRMTV264FM70", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-575": { "value": " 2.6.2 Leased assets Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include the net present value of the following lease payments: fixed payments, less any lease incentives receivable variable lease payment that are based on an index or a rate, initially measured using the index or rate as of the commencement date. amounts expected to be payable by the group under residual value guarantees. the exercise price of a purchase option if the group is reasonably certain to exercise that option, and payments of penalties for terminating the lease, if the term reflects the group exercising that option. Lease payments to be made under reasonably certain extension options are also included in the measurement of the liability. The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be readily determined, which is generally the case for leases in the group, the lessee's incremental borrowing rate is used, being the rate that the individual lessee would have to pay to borrow the funds necessary to obtain an asset of similar value to the right-of-use asset in a similar economic environment with similar terms, security and conditions. The group is exposed to potential future increases in variable lease payments based on an index or rate, which are not included in the lease liability until they take effect. When adjustments to lease payments based on an index or rate take effect, the lease liability is reassessed and adjusted against the right-of-use asset. Lease payments are allocated between principal and finance cost. The finance cost is charged to profit or loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. Right-of-use assets are 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, and restoration costs. Payments associated with short-term leases of equipment and vehicles and all leases of low-value assets are recognized on a straight-line basis as an expense in profit or loss. Short-term leases are leases with a lease term of 12 months or less. Low-value assets comprise IT equipment and small items of office furniture. The group remeasures the lease liability (and makes a corresponding adjustment to the related right-of-use asset) whenever: The lease term has changed or there is a significant event or change in circumstances resulting in a change in the assessment of exercising a purchase option, in which case the lease liability is remeasured by discounting the revised lease payments using a revised discount rate. The lease payments change due to changes in an index or rate or a change in expected payment under a guaranteed residual value, in which cases the lease liability is remeasured by discounting the revised lease payments using an unchanged discount rate. A lease contract is modified and the lease modification is not accounted for as a separate lease, in which case the lease liability is remeasured based on the lease term of the modified lease by discounting the revised lease payments using a revised discount rate at the effective date of the modification. In determining the lease term, management considers all facts and circumstances that create an economic incentive to exercise an extension option. Extension options are only included in the lease term if the lease is reasonably certain to be extended. (See note 16.2) ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForLeasesExplanatory", "language": "en", "entity": "scheme:699400M9RRMTV264FM70", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-577": { "value": "Lease liabilities include the net present value of the following lease payments: fixed payments, less any lease incentives receivable variable lease payment that are based on an index or a rate, initially measured using the index or rate as of the commencement date. amounts expected to be payable by the group under residual value guarantees. the exercise price of a purchase option if the group is reasonably certain to exercise that option, and payments of penalties for terminating the lease, if the term reflects the group exercising that option. Lease payments to be made under reasonably certain extension options are also included in the measurement of the liability. The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be readily determined, which is generally the case for leases in the group, the lessee's incremental borrowing rate is used, being the rate that the individual lessee would have to pay to borrow the funds necessary to obtain an asset of similar value to the right-of-use asset in a similar economic environment with similar terms, security and conditions. The group is exposed to potential future increases in variable lease payments based on an index or rate, which are not included in the lease liability until they take effect. When adjustments to lease payments based on an index or rate take effect, the lease liability is reassessed and adjusted against the right-of-use asset. Lease payments are allocated between principal and finance cost. The finance cost is charged to profit or loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. The group remeasures the lease liability (and makes a corresponding adjustment to the related right-of-use asset) whenever: The lease term has changed or there is a significant event or change in circumstances resulting in a change in the assessment of exercising a purchase option, in which case the lease liability is remeasured by discounting the revised lease payments using a revised discount rate. The lease payments change due to changes in an index or rate or a change in expected payment under a guaranteed residual value, in which cases the lease liability is remeasured by discounting the revised lease payments using an unchanged discount rate. A lease contract is modified and the lease modification is not accounted for as a separate lease, in which case the lease liability is remeasured based on the lease term of the modified lease by discounting the revised lease payments using a revised discount rate at the effective date of the modification. Trade and other payables are recognized initially at their fair value and subsequently measured at amortized cost using the effective interest method. Loans and borrowings are initially recognized at fair value, net of transaction costs incurred. Loans and borrowings are subsequently measured at amortized cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognized in profit or loss over the period of the borrowings using the effective interest method. An exchange between an existing borrower and lender of financial liabilities with substantially different terms is accounted for as an extinguishment of the original financial liability and the recognition of a new financial liability. Similarly, a substantial modification of the terms of an existing financial liability or a part of it (whether or not attributable to the financial difficulty of the debtor) is accounted for as an extinguishment of the original financial liability and the recognition of a new financial liability. The terms are substantially different if the discounted present value of the cash flows under the new terms, including any fees paid net of any fees received and discounted using the original effective interest rate, is at least 10 percent different from the discounted present value of the remaining cash flows of the original financial liability. If an exchange of debt instruments or modification of terms is accounted for as an extinguishment, any costs or fees incurred are recognized as part of the gain or loss on the extinguishment. However, costs or fees that are incremental and directly related to the issue of the new debt instrument are treated as transaction costs of the new liability, and hence are spread forward by adjusting the effective interest rate. Financial assets and liabilities are offset, and the net amount presented in the statement of financial position when, and only when, the group has a legal right to offset the amounts and intends either to settle on a net basis or to realize the asset and settle the liability simultaneously. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFinancialLiabilitiesExplanatory", "language": "en", "entity": "scheme:699400M9RRMTV264FM70", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-589": { "value": "Financial assets and liabilities are classified into three categories: Measured at amortized cost, at fair value through other comprehensive income (FVTOCI) and at fair value through Profit and Loss (FVTPL). Currently, Azelis has no financial assets or liaibilities measured at FVTOCI.
The group recognizes financial instruments when it enters into a contract. Financial instruments are derecognized when the contractual rights to the cash flows of the asset expire, or it transfers the rights to receive the contractual cash flows on the financial asset in a transaction in which substantially all the risks and rewards of ownership of the financial asset are transferred. With regard to its trade receivables, the group engages in non-recourse factoring programs. Receivables are derecognized when the factor pays the group, which also triggers a fee to be paid for the credit risk assumed by the factor. Factoring fees are recognized in the group's financial expenses.
Initially, financial instruments are recognized at their fair value. Transaction costs directly attributable to the acquisition or issue of financial instruments are recognized at the initial measurement date, except for financial instruments measured at FVTPL. Transaction costs related to FVTPL financial instruments are recorded in the profit or loss at initial recognition.
The classification of financial assets is based on two criteria: the objective of the company's business model for managing the assets, and whether the instruments' contractual cash flows represent \"solely payments of principal and interest\" on the principal amount outstanding (known as the 'SPPI-test').
Trade receivables are recognized initially at the amount of consideration that is unconditional, unless they contain significant financing components, when they are recognized at fair value. The group holds trade receivables with the objective of collecting the contractual cash flows and therefore measures them subsequently at amortized cost using the effective interest method. Other receivables are initially measured at fair value and subsequently measured at amortized cost.
Trade and other payables are recognized initially at their fair value and subsequently measured at amortized cost using the effective interest method. Loans and borrowings are initially recognized at fair value, net of transaction costs incurred. Loans and borrowings are subsequently measured at amortized cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognized in profit or loss over the period of the borrowings using the effective interest method.
An exchange between an existing borrower and lender of financial liabilities with substantially different terms is accounted for as an extinguishment of the original financial liability and the recognition of a new financial liability. Similarly, a substantial modification of the terms of an existing financial liability or a part of it (whether or not attributable to the financial difficulty of the debtor) is accounted for as an extinguishment of the original financial liability and the recognition of a new financial liability.
The terms are substantially different if the discounted present value of the cash flows under the new terms, including any fees paid net of any fees received and discounted using the original effective interest rate, is at least 10 percent different from the discounted present value of the remaining cash flows of the original financial liability. If an exchange of debt instruments or modification of terms is accounted for as an extinguishment, any costs or fees incurred are recognized as part of the gain or loss on the extinguishment. However, costs or fees that are incremental and directly related to the issue of the new debt instrument are treated as transaction costs of the new liability, and hence are spread forward by adjusting the effective interest rate.
The group uses derivative financial instruments such as forward exchange contracts, interest rate swaps to hedge its foreign currency risk and interest rate risk and interest rate cap, to hedge its interest rate risks associated with floating-rate borrowings under the group\u2019s credit facilities.
Derivatives are initially recognized as other financial assets at fair value on the date a derivative contract is entered into, and they are subsequently remeasured to their fair value through profit and loss at the end of each reporting period. The derivative is only used for economic hedging purposes and not as a speculative investment.\u00a0 The group does not apply hedge accounting. Therefore, changes in the fair value of the group\u2019s derivative financial instrument are recognized immediately in the consolidated statement of profit or loss and are included in finance costs.
The group has granted put options for remaining non-controlling interests in acquired companies, giving the holders the right to sell to the group their investments in these subsidiaries. These financial liabilities do not bear interest. In accordance with IAS 32, the group recognizes a redemption liability corresponding to the present value of the estimated exercise price of the option. The redemption liability is included in other current and non-current liabilities and the counterpart is a reduction from the group's equity. At the end of each reporting period, the liability is adjusted to reflect changes in the estimated exercise price. These subsequent changes are accounted for in the income statement.
If the group has also obtained a call option on the same remaining non-controlling interests of the acquired companies, this option is taken into account for the control assessment in respect of the business combination.
The group recognizes an allowance for expected credit losses (ECL) for all financial assets that are not held at FVTPL. ECLs are based on the difference between the contractual cash flows due in accordance with the contract and all the cash flows that the group expects to receive, discounted at an approximation of the original effective interest rate.
The impairment methodology applied depends on whether there has been a significant increase in credit risk: if so, the loss allowance is measured as the lifetime expected credit loss. If not, the allowance is measured as the 12-month expected credit loss. For Trade receivables, the group applies the simplified approach permitted by IFRS 9, which requires lifetime expected losses to be recognized from initial recognition of the receivables (see note 4.1 for further details). While cash and cash equivalents and other loan receivables are also subject to the impairment requirements of IFRS 9, no impairment loss was identified as these assets are considered as low-credit risk.
Individually significant financial assets are tested for impairment on an individual basis. The remaining financial assets are assessed collectively in groups that share similar credit risk characteristics.
Impairment losses of financial assets are recognized in the income statement. An impairment loss is reversed if the reversal can be related objectively to an event occurring after the impairment loss was recognized.
Financial assets and liabilities are offset, and the net amount presented in the statement of financial position when, and only when, the group has a legal right to offset the amounts and intends either to settle on a net basis or to realize the asset and settle the liability simultaneously.
Cash and cash equivalents comprise cash balances and call deposits. Bank overdrafts that are repayable on demand and form an integral part of the group\u2019s cash management are included as a component of cash and cash equivalents for the purpose of the statement of cash flows.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFinancialInstrumentsExplanatory", "language": "en", "entity": "scheme:699400M9RRMTV264FM70", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-590": { "value": "Financial assets and liabilities are classified into three categories: Measured at amortized cost, at fair value through other comprehensive income (FVTOCI) and at fair value through Profit and Loss (FVTPL). Currently, Azelis has no financial assets or liaibilities measured at FVTOCI. The group uses derivative financial instruments such as forward exchange contracts, interest rate swaps to hedge its foreign currency risk and interest rate risk and interest rate cap, to hedge its interest rate risks associated with floating-rate borrowings under the group\u2019s credit facilities. Derivatives are initially recognized as other financial assets at fair value on the date a derivative contract is entered into, and they are subsequently remeasured to their fair value through profit and loss at the end of each reporting period. The derivative is only used for economic hedging purposes and not as a speculative investment.\u00a0 The group does not apply hedge accounting. Therefore, changes in the fair value of the group\u2019s derivative financial instrument are recognized immediately in the consolidated statement of profit or loss and are included in finance costs. The group has granted put options for remaining non-controlling interests in acquired companies, giving the holders the right to sell to the group their investments in these subsidiaries. These financial liabilities do not bear interest. In accordance with IAS 32, the group recognizes a redemption liability corresponding to the present value of the estimated exercise price of the option. The redemption liability is included in other current and non-current liabilities and the counterpart is a reduction from the group's equity. At the end of each reporting period, the liability is adjusted to reflect changes in the estimated exercise price. These subsequent changes are accounted for in the income statement. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFinancialInstrumentsAtFairValueThroughProfitOrLossExplanatory", "language": "en", "entity": "scheme:699400M9RRMTV264FM70", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-591": { "value": "The group recognizes financial instruments when it enters into a contract. Financial instruments are derecognized when the contractual rights to the cash flows of the asset expire, or it transfers the rights to receive the contractual cash flows on the financial asset in a transaction in which substantially all the risks and rewards of ownership of the financial asset are transferred. With regard to its trade receivables, the group engages in non-recourse factoring programs. Receivables are derecognized when the factor pays the group, which also triggers a fee to be paid for the credit risk assumed by the factor. Factoring fees are recognized in the group's financial expenses. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForDerecognitionOfFinancialInstrumentsExplanatory", "language": "en", "entity": "scheme:699400M9RRMTV264FM70", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-592": { "value": "Initially, financial instruments are recognized at their fair value. Transaction costs directly attributable to the acquisition or issue of financial instruments are recognized at the initial measurement date, except for financial instruments measured at FVTPL. Transaction costs related to FVTPL financial instruments are recorded in the profit or loss at initial recognition. The terms are substantially different if the discounted present value of the cash flows under the new terms, including any fees paid net of any fees received and discounted using the original effective interest rate, is at least 10 percent different from the discounted present value of the remaining cash flows of the original financial liability. If an exchange of debt instruments or modification of terms is accounted for as an extinguishment, any costs or fees incurred are recognized as part of the gain or loss on the extinguishment. However, costs or fees that are incremental and directly related to the issue of the new debt instrument are treated as transaction costs of the new liability, and hence are spread forward by adjusting the effective interest rate. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForBorrowingCostsExplanatory", "language": "en", "entity": "scheme:699400M9RRMTV264FM70", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-593": { "value": "Initially, financial instruments are recognized at their fair value. Transaction costs directly attributable to the acquisition or issue of financial instruments are recognized at the initial measurement date, except for financial instruments measured at FVTPL. Transaction costs related to FVTPL financial instruments are recorded in the profit or loss at initial recognition. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForRecognisingDifferenceBetweenFairValueAtInitialRecognitionAndAmountDeterminedUsingValuationTechniqueExplanatory", "language": "en", "entity": "scheme:699400M9RRMTV264FM70", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-594": { "value": "The classification of financial assets is based on two criteria: the objective of the company's business model for managing the assets, and whether the instruments' contractual cash flows represent \"solely payments of principal and interest\" on the principal amount outstanding (known as the 'SPPI-test').
Trade receivables are recognized initially at the amount of consideration that is unconditional, unless they contain significant financing components, when they are recognized at fair value. The group holds trade receivables with the objective of collecting the contractual cash flows and therefore measures them subsequently at amortized cost using the effective interest method. Other receivables are initially measured at fair value and subsequently measured at amortized cost.
The group recognizes an allowance for expected credit losses (ECL) for all financial assets that are not held at FVTPL. ECLs are based on the difference between the contractual cash flows due in accordance with the contract and all the cash flows that the group expects to receive, discounted at an approximation of the original effective interest rate.
The impairment methodology applied depends on whether there has been a significant increase in credit risk: if so, the loss allowance is measured as the lifetime expected credit loss. If not, the allowance is measured as the 12-month expected credit loss. For Trade receivables, the group applies the simplified approach permitted by IFRS 9, which requires lifetime expected losses to be recognized from initial recognition of the receivables (see note 4.1 for further details). While cash and cash equivalents and other loan receivables are also subject to the impairment requirements of IFRS 9, no impairment loss was identified as these assets are considered as low-credit risk.
Individually significant financial assets are tested for impairment on an individual basis. The remaining financial assets are assessed collectively in groups that share similar credit risk characteristics.
Impairment losses of financial assets are recognized in the income statement. An impairment loss is reversed if the reversal can be related objectively to an event occurring after the impairment loss was recognized.
Financial assets and liabilities are offset, and the net amount presented in the statement of financial position when, and only when, the group has a legal right to offset the amounts and intends either to settle on a net basis or to realize the asset and settle the liability simultaneously.
Cash and cash equivalents comprise cash balances and call deposits. Bank overdrafts that are repayable on demand and form an integral part of the group\u2019s cash management are included as a component of cash and cash equivalents for the purpose of the statement of cash flows.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFinancialAssetsExplanatory", "language": "en", "entity": "scheme:699400M9RRMTV264FM70", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-596": { "value": "Trade receivables are recognized initially at the amount of consideration that is unconditional, unless they contain significant financing components, when they are recognized at fair value. The group holds trade receivables with the objective of collecting the contractual cash flows and therefore measures them subsequently at amortized cost using the effective interest method. Other receivables are initially measured at fair value and subsequently measured at amortized cost. The impairment methodology applied depends on whether there has been a significant increase in credit risk: if so, the loss allowance is measured as the lifetime expected credit loss. If not, the allowance is measured as the 12-month expected credit loss. For Trade receivables, the group applies the simplified approach permitted by IFRS 9, which requires lifetime expected losses to be recognized from initial recognition of the receivables (see note 4.1 for further details). While cash and cash equivalents and other loan receivables are also subject to the impairment requirements of IFRS 9, no impairment loss was identified as these assets are considered as low-credit risk. Individually significant financial assets are tested for impairment on an individual basis. The remaining financial assets are assessed collectively in groups that share similar credit risk characteristics. Impairment losses of financial assets are recognized in the income statement. An impairment loss is reversed if the reversal can be related objectively to an event occurring after the impairment loss was recognized. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForTradeAndOtherReceivablesExplanatory", "language": "en", "entity": "scheme:699400M9RRMTV264FM70", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-598": { "value": "Trade and other payables are recognized initially at their fair value and subsequently measured at amortized cost using the effective interest method. Loans and borrowings are initially recognized at fair value, net of transaction costs incurred. Loans and borrowings are subsequently measured at amortized cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognized in profit or loss over the period of the borrowings using the effective interest method. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForInterestIncomeAndExpenseExplanatory", "language": "en", "entity": "scheme:699400M9RRMTV264FM70", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-599": { "value": "Trade and other payables are recognized initially at their fair value and subsequently measured at amortized cost using the effective interest method. Loans and borrowings are initially recognized at fair value, net of transaction costs incurred. Loans and borrowings are subsequently measured at amortized cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognized in profit or loss over the period of the borrowings using the effective interest method. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForTradeAndOtherPayablesExplanatory", "language": "en", "entity": "scheme:699400M9RRMTV264FM70", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-600": { "value": "Trade and other payables are recognized initially at their fair value and subsequently measured at amortized cost using the effective interest method. Loans and borrowings are initially recognized at fair value, net of transaction costs incurred. Loans and borrowings are subsequently measured at amortized cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognized in profit or loss over the period of the borrowings using the effective interest method. An exchange between an existing borrower and lender of financial liabilities with substantially different terms is accounted for as an extinguishment of the original financial liability and the recognition of a new financial liability. Similarly, a substantial modification of the terms of an existing financial liability or a part of it (whether or not attributable to the financial difficulty of the debtor) is accounted for as an extinguishment of the original financial liability and the recognition of a new financial liability. The terms are substantially different if the discounted present value of the cash flows under the new terms, including any fees paid net of any fees received and discounted using the original effective interest rate, is at least 10 percent different from the discounted present value of the remaining cash flows of the original financial liability. If an exchange of debt instruments or modification of terms is accounted for as an extinguishment, any costs or fees incurred are recognized as part of the gain or loss on the extinguishment. However, costs or fees that are incremental and directly related to the issue of the new debt instrument are treated as transaction costs of the new liability, and hence are spread forward by adjusting the effective interest rate. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForBorrowingsExplanatory", "language": "en", "entity": "scheme:699400M9RRMTV264FM70", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-606": { "value": "The group uses derivative financial instruments such as forward exchange contracts, interest rate swaps to hedge its foreign currency risk and interest rate risk and interest rate cap, to hedge its interest rate risks associated with floating-rate borrowings under the group\u2019s credit facilities. Derivatives are initially recognized as other financial assets at fair value on the date a derivative contract is entered into, and they are subsequently remeasured to their fair value through profit and loss at the end of each reporting period. The derivative is only used for economic hedging purposes and not as a speculative investment.\u00a0 The group does not apply hedge accounting. Therefore, changes in the fair value of the group\u2019s derivative financial instrument are recognized immediately in the consolidated statement of profit or loss and are included in finance costs. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForDerivativeFinancialInstrumentsExplanatory", "language": "en", "entity": "scheme:699400M9RRMTV264FM70", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-608": { "value": "The group uses derivative financial instruments such as forward exchange contracts, interest rate swaps to hedge its foreign currency risk and interest rate risk and interest rate cap, to hedge its interest rate risks associated with floating-rate borrowings under the group\u2019s credit facilities. Derivatives are initially recognized as other financial assets at fair value on the date a derivative contract is entered into, and they are subsequently remeasured to their fair value through profit and loss at the end of each reporting period. The derivative is only used for economic hedging purposes and not as a speculative investment.\u00a0 The group does not apply hedge accounting. Therefore, changes in the fair value of the group\u2019s derivative financial instrument are recognized immediately in the consolidated statement of profit or loss and are included in finance costs. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForDerivativeFinancialInstrumentsAndHedgingExplanatory", "language": "en", "entity": "scheme:699400M9RRMTV264FM70", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-615": { "value": " 2.7.2 Impairment of financial assets The group recognizes an allowance for expected credit losses (ECL) for all financial assets that are not held at FVTPL. ECLs are based on the difference between the contractual cash flows due in accordance with the contract and all the cash flows that the group expects to receive, discounted at an approximation of the original effective interest rate. The impairment methodology applied depends on whether there has been a significant increase in credit risk: if so, the loss allowance is measured as the lifetime expected credit loss. If not, the allowance is measured as the 12-month expected credit loss. For Trade receivables, the group applies the simplified approach permitted by IFRS 9, which requires lifetime expected losses to be recognized from initial recognition of the receivables (see note 4.1 for further details). While cash and cash equivalents and other loan receivables are also subject to the impairment requirements of IFRS 9, no impairment loss was identified as these assets are considered as low-credit risk. Individually significant financial assets are tested for impairment on an individual basis. The remaining financial assets are assessed collectively in groups that share similar credit risk characteristics. Impairment losses of financial assets are recognized in the income statement. An impairment loss is reversed if the reversal can be related objectively to an event occurring after the impairment loss was recognized. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForImpairmentOfFinancialAssetsExplanatory", "language": "en", "entity": "scheme:699400M9RRMTV264FM70", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-623": { "value": "Financial assets and liabilities are offset, and the net amount presented in the statement of financial position when, and only when, the group has a legal right to offset the amounts and intends either to settle on a net basis or to realize the asset and settle the liability simultaneously. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForOffsettingOfFinancialInstrumentsExplanatory", "language": "en", "entity": "scheme:699400M9RRMTV264FM70", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-625": { "value": "Cash and cash equivalents comprise cash balances and call deposits. Bank overdrafts that are repayable on demand and form an integral part of the group\u2019s cash management are included as a component of cash and cash equivalents for the purpose of the statement of cash flows.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForRestrictedCashAndCashEquivalentsExplanatory", "language": "en", "entity": "scheme:699400M9RRMTV264FM70", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-627": { "value": "Cash and cash equivalents comprise cash balances and call deposits. Bank overdrafts that are repayable on demand and form an integral part of the group\u2019s cash management are included as a component of cash and cash equivalents for the purpose of the statement of cash flows.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyToDetermineComponentsOfCashAndCashEquivalents", "language": "en", "entity": "scheme:699400M9RRMTV264FM70", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-628": { "value": " 2.8 Income tax Income tax expense comprises current and deferred taxes. Income tax expense is recognized in the income statement except to the extent that it relates to items recognized in other comprehensive income, in which case it is recognized in other comprehensive income. Current tax is the expected tax payable (receivable) on the taxable income (loss) for the period, using tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous years. Deferred income tax is provided, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. However, deferred tax liabilities are not recognized if they arise from the initial recognition of goodwill. Deferred income tax is also not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the end of the reporting period and are expected to apply when the related deferred income tax asset is realized or the deferred income tax liability is settled. A deferred tax asset is recognized to the extent that it is probable that future taxable profits will be available against which the temporary difference can be utilized. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realized. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForIncomeTaxExplanatory", "language": "en", "entity": "scheme:699400M9RRMTV264FM70", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-629": { "value": " 2.8 Income tax Income tax expense comprises current and deferred taxes. Income tax expense is recognized in the income statement except to the extent that it relates to items recognized in other comprehensive income, in which case it is recognized in other comprehensive income. Current tax is the expected tax payable (receivable) on the taxable income (loss) for the period, using tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous years. Deferred income tax is provided, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. However, deferred tax liabilities are not recognized if they arise from the initial recognition of goodwill. Deferred income tax is also not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the end of the reporting period and are expected to apply when the related deferred income tax asset is realized or the deferred income tax liability is settled. A deferred tax asset is recognized to the extent that it is probable that future taxable profits will be available against which the temporary difference can be utilized. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realized. In assessing the realization of deferred tax assets, management considers the extent to which it is probable that the deferred tax asset will be realized (note 14). The ultimate realization of deferred tax assets is dependent upon the generation of future taxable profit during the periods in which those temporary differences and tax loss carry forwards are available. Management considers the expected reversal of deferred tax liabilities and projected future taxable income in making this assessment. (See note 14.2) ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForDeferredIncomeTaxExplanatory", "language": "en", "entity": "scheme:699400M9RRMTV264FM70", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-631": { "value": " 2.9 Inventories Inventories are measured at the lower of cost and net realizable value. The inventories are measured at their weighted average costs increased with cost comprising direct materials, direct labor and an appropriate proportion of variable and fixed overhead expenditure, the latter being allocated on the basis of normal operating capacity. Net realizable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses. Impairments of inventories to net realizable value are recognized in the profit or loss as part of \u2018Cost for goods and consumables\u2019. In case the value of impaired inventories increases the impairment will be reversed to the lowest of the increased net realizable value and the original weighted average cost. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForMeasuringInventories", "language": "en", "entity": "scheme:699400M9RRMTV264FM70", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-414": { "value": " 2.9 Inventories Inventories are measured at the lower of cost and net realizable value. The inventories are measured at their weighted average costs increased with cost comprising direct materials, direct labor and an appropriate proportion of variable and fixed overhead expenditure, the latter being allocated on the basis of normal operating capacity. Net realizable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses. Impairments of inventories to net realizable value are recognized in the profit or loss as part of \u2018Cost for goods and consumables\u2019. In case the value of impaired inventories increases the impairment will be reversed to the lowest of the increased net realizable value and the original weighted average cost. 18 Inventories (in thousands of \u20ac) 31-12-2022 31-12-2021 Inventories 687,540 506,379 Valuation allowance/write downs -59,804 -38,906 Net carrying amount of inventories 627,735 467,473 Azelis' inventories mainly consist of finished goods. Usage of inventories is recorded in the \"costs for goods and consumables\" in the consolidated income statement. In 2022 an impairment on inventory of \u20ac17.2 million (2021: \u20ac9.6 million) is included in the \"costs for goods and consumables\". ", "dimensions": { "concept": "ifrs-full:DisclosureOfInventoriesExplanatory", "language": "en", "entity": "scheme:699400M9RRMTV264FM70", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-415": { "value": "Ordinary shares are classified as equity. Incremental costs directly attributable to the issuance of ordinary shares and share options are recognized in equity net of tax.
The share premium consists of additional paid-in capital exceeding the par value of outstanding shares.
Treasury share purchases are recognized as a deduction from equity (section other reserves). No gain or loss is recognized on the purchase, sale, issue or cancellation of treasury shares. Consideration paid or received is recognized directly in equity.
As per Belgian regulations and articles of incorporation of the Company, Azelis has to allocate to legal reserve a minimum of 5% of the standalone net profit, if any and until such reserve reaches 10% of the share capital, distribution of the legal reserve is restricted. As of December 31, 2022, the legal reserve amounts to zero (2021: zero).
Given the limited legal life of Azelis Group NV in 2021, and taking into account the capital reorganization under common control during that year, the comparative earnings per share are presented based on the total number of shares of Azelis Group NV as if the shares issued for the contribution in kind of Akita Topco S.\u00e0 r.l. and the IPO were outstanding for the full year 2021.
The basic earnings per share and diluted earnings per share are calculated as:
| \u00a0 | 31-12-2022 | 31-12-2021 |
|---|---|---|
| Net group profit/loss (-) attributable to shareholders (in thousands of \u20ac) | 213,193 | 67,756 |
| Average number of shares (in thousand shares) | 233,750 | 233,846 |
| Basic earnings per share | 0.91 | 0.29 |
| Dilution adjusted average number of shares (in thousand shares) | 233,915 | 233,846 |
| Diluted earnings per share | 0.91 | 0.29 |
The average number of shares are calculated as:
| (in thousands) | 31-12-2022 | 31-12-2021 |
|---|---|---|
| Ordinary shares issued (entitled to dividend) | 233,846 | 233,846 |
| Weighted effect of treasury shares | -96 | 0 |
| Weighted effect of new ordinary shares issued | 0 | 0 |
| Average number of shares for basic EPS | 233,750 | 233,846 |
| Weighted effect of share-based payment | 166 | 0 |
| Average number of shares for diluted EPS | 233,915 | 233,846 |
There were no changes in the share capital during 2022.
During 2021, the following share transactions have occurred:
On 10th June, Azelis Group NV was established by issuance of 61,500 shares, for a share capital of \u20ac61,500;
On 21st September the 61,500 shares, created on 10th June, were cancelled by a capital decrease and the share capital of \u20ac61,500 was repaid to the founding shareholder;
On 21st September, all preference and ordinary shares in Akita Topco S.\u00e0 r.l. were contributed to Azelis Group NV in exchange for 195,539,251 shares issued by Azelis Group NV, each at a fractional value of \u20ac26, resulting in a capital increase by \u20ac5,084,020,526;
On 21st September, shares in Azelis Finance NV were contributed in exchange for the issuance of 4,460,749 shares by Azelis Group NV, each at a fractional value of \u20ac26, resulting in a capital increase by \u20ac115,979,474;
On 21st September, in connection with the group's IPO and listing on Euronext Brussels, 33,846,153 shares were issued, each at a fractional value of \u20ac26, resulting in a capital increase by \u20ac879,999,978 million
On 21st September, the capital of Azelis Group NV was reduced by \u20ac400 million, without destruction or repayment of shares, for the purpose of creating distributable reserves
The subscribed share capital has been fully paid. As of December 31, 2022, a total of 233,846,153 shares (2021: 233,846,153 shares) has been issued without nominal value, representing a total share capital of \u20ac5.68 billion.
Share premium reflects the additional paid-in capital exceeding the par value of the issued shares. Subject to the group's capital reorganization under common control and the IPO on Euronext Brussels in September 2021, the shares issued in the capital increases (contribution in kind of Akita Topco S.\u00e0 r.l. and IPO) were all issued at fractional value of \u20ac26 per share. As a result, the group currently has zero share premium.
Other reserves is part of the Reserves in the consolidated statement of financial position. It includes the equity effect of the capital reorganization under common control in 2021, mainly due to the cancellation of the share capital and share premium of Azelis Holding S.\u00e0 r.l., written put options on non-controlling interests, transactions with treasury shares and other adjustments to equity.
During 2022, the group has recognized put options related to the minority stakes in Catalite, Umongo and Ashapura for a total amount of \u20ac70.5 million.
In 2022, the group has purchased 133,400 treasury shares on Euronext Brussels for a total amount of \u20ac3.0\u00a0million to fund its long-term incentive plan.
Translation reserve is part of the Reserves in the consolidated statement of financial position.
Exchange differences arising on translation of the foreign controlled entities are recognized in other comprehensive income and accumulated in the translation reserve within equity. The cumulative amount is reclassified to profit or loss when the net investment is disposed of.
The majority of the intangible assets on Azelis' statement of financial position relate to the EQT/PSP Acquisition in November 2018. The respective amounts have been allocated to Azelis' three operating segments, and per IFRS also on the basis of the underlying foreign currencies in Azelis' respective jurisdictions (of which a major part relates to Azelis' activities in the United States). Exchange differences arising on translation of the intangible assets are recognized in other comprehensive income and accumulated in the translation reserve within equity.
Retained earnings includes the unappropriated result of previous years.
Reserves available for distribution is part of the Reserves in the consolidated statement of financial position.
In September 2021, and in connection with Azelis' IPO, the group reduced its share capital by \u20ac400 million against reserves available for distribution, in order to create funds for distribution to the shareholders. No capital contributions were repaid to the shareholders in the context of this capital reduction.
On March 1, 2023, a dividend of \u20ac67.8 million, implying \u20ac0.29 dividend per share1, was proposed by the Board of Directors. The dividend will be paid out to the shareholders upon approval by the shareholder's meeting on June 8, 2023.
The dividend relating to 2021 of \u20ac0.03 per share or \u20ac7.0 million was calculated pro rata such that dividend would only be paid in respect to the portion of the financial year for which the group's shares are listed on Euronext Brussels. This dividend was approved by the shareholder's meeting on 9 June 2022 and paid in full during the year 2022.
Non-controlling interests reflects the share of equity ownership in the group's subsidiaries that is not owned by the group, even though those subsidiaries are consolidated in the group's consolidated financial statements. Ashapura Aromas Private Limited, MKVN Chemicals Co. Ltd, Asia Primera Kimika Inc., Phil-Asiatic Supply & Services Inc. and Catalite Co. Ltd are the main contributors for the non-controlling interests, refer also to note 26.4.
", "dimensions": { "concept": "ifrs-full:DisclosureOfShareCapitalReservesAndOtherEquityInterestExplanatory", "language": "en", "entity": "scheme:699400M9RRMTV264FM70", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-633": { "value": "2.10 Equity 2.10.1 Ordinary shares Ordinary shares are classified as equity. Incremental costs directly attributable to the issuance of ordinary shares and share options are recognized in equity net of tax. 2.10.2 Share premium The share premium consists of additional paid-in capital exceeding the par value of outstanding shares. 2.10.3 Treasury shares Treasury share purchases are recognized as a deduction from equity (section other reserves). No gain or loss is recognized on the purchase, sale, issue or cancellation of treasury shares. Consideration paid or received is recognized directly in equity. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForIssuedCapitalExplanatory", "language": "en", "entity": "scheme:699400M9RRMTV264FM70", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-634": { "value": " 2.10.3 Treasury shares Treasury share purchases are recognized as a deduction from equity (section other reserves). No gain or loss is recognized on the purchase, sale, issue or cancellation of treasury shares. Consideration paid or received is recognized directly in equity. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForTreasurySharesExplanatory", "language": "en", "entity": "scheme:699400M9RRMTV264FM70", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-635": { "value": " 2.11 Employee benefits 2.11.1 Pensions, other post-employment benefits and termination benefits The group operates several defined benefit pension plans. The liability or asset recognized in the balance sheet of defined benefit pension plans is the present value of the defined benefit obligation at the end of the reporting period less the fair value of plan assets. The defined benefit obligation is calculated annually by independent qualified actuaries using the projected unit credit method. The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows using interest rates of high-quality corporate bonds that are denominated in the currency in which the benefits will be paid, and that have terms approximating to the terms of the related obligation. The net interest cost is calculated by applying the discount rate to the net balance of the defined benefit obligation and the fair value of plan assets. This cost is included in finance expense in the income statement. Changes in the present value of the defined benefit obligation resulting from plan amendments or curtailments are recognized immediately in the income statement as past service costs. Remeasurement gains and losses arising from experience adjustments and changes in actuarial assumptions are recognized in the period in which they occur, directly in other comprehensive income. They are included in retained earnings in the statement of changes in equity and in the balance sheet. For defined contribution plans, the group pays contributions to publicly or privately administered pension insurance plans on a mandatory, contractual or voluntary basis. The group has no further payment obligations once the contributions have been paid. The contributions are recognized as employee benefit expense when they are due. 2.11.2 Short-term and long-term employee benefits The cost of all short-term employee benefits, such as salaries, employee entitlements to leave pay, bonuses, medical aid and other contributions, are recognized during the period in which the employee renders the related service. The group recognizes those costs only when it has a present legal or constructive obligation to make such payment and a reliable estimate of the liability can be made. The group\u2019s net obligation in respect of long-term employee benefits is the amount of future benefit that employees have earned in return for their service in the current and prior periods. That benefit is discounted to determine its present value. The calculation of the other long-term employee benefits is performed using the projected unit credit method. Any actuarial gains and losses are recognized in profit or loss in the period in which they arise. 2.11.3 Share-based payment The group has a performance share plan for key management, qualifying as an equity-settled share-based payment plan. Equity-settled share-based payment transactions are transactions in which the entity receives goods or services in exchange for its own equity instruments (e.g. shares, options). Goods or services received in equity-settled share-based payment transactions are measured at their fair value, unless they cannot be estimated reliably, in which case it is determined in accordance with the fair value of the equity instruments granted. The fair value is determined at grant date and the value incorporates market conditions using a Monte Carlo calculation. This value remains unchanged over the vesting period. Service conditions and non-market conditions do not affect the fair value of the instruments granted, but are taken into account by adjusting the number of equity instruments included in the measurement of the transaction, an estimate which is revised at each reporting date until the vesting period has lapsed. Azelis accounts for the equity-settled share-based payment transaction in the other reserves section of the equity, and its initial recognition and subsequent changes are accounted for in employee expenses. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForEmployeeBenefitsExplanatory", "language": "en", "entity": "scheme:699400M9RRMTV264FM70", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-636": { "value": " 2.11 Employee benefits 2.11.1 Pensions, other post-employment benefits and termination benefits The group operates several defined benefit pension plans. The liability or asset recognized in the balance sheet of defined benefit pension plans is the present value of the defined benefit obligation at the end of the reporting period less the fair value of plan assets. The defined benefit obligation is calculated annually by independent qualified actuaries using the projected unit credit method. The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows using interest rates of high-quality corporate bonds that are denominated in the currency in which the benefits will be paid, and that have terms approximating to the terms of the related obligation. The net interest cost is calculated by applying the discount rate to the net balance of the defined benefit obligation and the fair value of plan assets. This cost is included in finance expense in the income statement. Changes in the present value of the defined benefit obligation resulting from plan amendments or curtailments are recognized immediately in the income statement as past service costs. Remeasurement gains and losses arising from experience adjustments and changes in actuarial assumptions are recognized in the period in which they occur, directly in other comprehensive income. They are included in retained earnings in the statement of changes in equity and in the balance sheet. For defined contribution plans, the group pays contributions to publicly or privately administered pension insurance plans on a mandatory, contractual or voluntary basis. The group has no further payment obligations once the contributions have been paid. The contributions are recognized as employee benefit expense when they are due. 2.11.2 Short-term and long-term employee benefits The cost of all short-term employee benefits, such as salaries, employee entitlements to leave pay, bonuses, medical aid and other contributions, are recognized during the period in which the employee renders the related service. The group recognizes those costs only when it has a present legal or constructive obligation to make such payment and a reliable estimate of the liability can be made. The group\u2019s net obligation in respect of long-term employee benefits is the amount of future benefit that employees have earned in return for their service in the current and prior periods. That benefit is discounted to determine its present value. The calculation of the other long-term employee benefits is performed using the projected unit credit method. Any actuarial gains and losses are recognized in profit or loss in the period in which they arise. 2.11.3 Share-based payment The group has a performance share plan for key management, qualifying as an equity-settled share-based payment plan. Equity-settled share-based payment transactions are transactions in which the entity receives goods or services in exchange for its own equity instruments (e.g. shares, options). Goods or services received in equity-settled share-based payment transactions are measured at their fair value, unless they cannot be estimated reliably, in which case it is determined in accordance with the fair value of the equity instruments granted. The fair value is determined at grant date and the value incorporates market conditions using a Monte Carlo calculation. This value remains unchanged over the vesting period. Service conditions and non-market conditions do not affect the fair value of the instruments granted, but are taken into account by adjusting the number of equity instruments included in the measurement of the transaction, an estimate which is revised at each reporting date until the vesting period has lapsed. Azelis accounts for the equity-settled share-based payment transaction in the other reserves section of the equity, and its initial recognition and subsequent changes are accounted for in employee expenses. 2.12 Provisions A provision is recognized if, as a result of a past event, the group has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. Unwinding of the discount of provisions is recorded as financial expenses. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForProvisionsExplanatory", "language": "en", "entity": "scheme:699400M9RRMTV264FM70", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-638": { "value": " 2.11.3 Share-based payment The group has a performance share plan for key management, qualifying as an equity-settled share-based payment plan. Equity-settled share-based payment transactions are transactions in which the entity receives goods or services in exchange for its own equity instruments (e.g. shares, options). Goods or services received in equity-settled share-based payment transactions are measured at their fair value, unless they cannot be estimated reliably, in which case it is determined in accordance with the fair value of the equity instruments granted. The fair value is determined at grant date and the value incorporates market conditions using a Monte Carlo calculation. This value remains unchanged over the vesting period. Service conditions and non-market conditions do not affect the fair value of the instruments granted, but are taken into account by adjusting the number of equity instruments included in the measurement of the transaction, an estimate which is revised at each reporting date until the vesting period has lapsed. Azelis accounts for the equity-settled share-based payment transaction in the other reserves section of the equity, and its initial recognition and subsequent changes are accounted for in employee expenses. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForSharebasedPaymentTransactionsExplanatory", "language": "en", "entity": "scheme:699400M9RRMTV264FM70", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-641": { "value": " 2.13 Revenue 2.13.1 Goods sold (sales) Revenue from product sales is recognized at point in time when the performance obligation is satisfied. For the group, this is usually upon delivery of the goods to the client. Revenue is measured at the fair value of the consideration received, net of returns, trade discounts and volume rebates. Revenue is only recognized to the extent that it is highly probable that a significant reversal will not occur. 2.13.2 Commissions When the outcome of a commission transaction can be estimated reliably, revenue associated with the transaction shall be recognized by reference to the stage of completion of the transaction at the end of the reporting period. When the group acts in the capacity of an agent rather than as principal in a transaction, the revenue recognized is the net amount of commission made by the group. The group acts as an agent when it does not take title and is not exposed to risks of the goods, when the risks are born by the supplier and when the selling prices are set by the suppliers. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForRecognitionOfRevenue", "language": "en", "entity": "scheme:699400M9RRMTV264FM70", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-642": { "value": "2.13.1 Goods sold (sales) Revenue from product sales is recognized at point in time when the performance obligation is satisfied. For the group, this is usually upon delivery of the goods to the client. Revenue is measured at the fair value of the consideration received, net of returns, trade discounts and volume rebates. Revenue is only recognized to the extent that it is highly probable that a significant reversal will not occur. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForDiscountsAndRebatesExplanatory", "language": "en", "entity": "scheme:699400M9RRMTV264FM70", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-643": { "value": " 2.13.2 Commissions When the outcome of a commission transaction can be estimated reliably, revenue associated with the transaction shall be recognized by reference to the stage of completion of the transaction at the end of the reporting period. When the group acts in the capacity of an agent rather than as principal in a transaction, the revenue recognized is the net amount of commission made by the group. The group acts as an agent when it does not take title and is not exposed to risks of the goods, when the risks are born by the supplier and when the selling prices are set by the suppliers. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFeeAndCommissionIncomeAndExpenseExplanatory", "language": "en", "entity": "scheme:699400M9RRMTV264FM70", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-644": { "value": "An operating segment is a component of the group that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the group\u2019s other components. The segmentation used by the group is based on geography, organization and management structure and commercial interdependencies.
Segment results that are reported to the CEO include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. Unallocated items comprise mainly head office expenses and income tax assets and liabilities, and are presented in a separate reporting unit \u2018group holding & other\u2019.
The reporting segments used are defined as follows:
EMEA: all operating companies in Europe, Middle East and Africa
Americas: all operating companies in the United States of America, Canada, Mexico and South America (mainly Colombia).
Asia-Pacific: all operating companies in Asia, South-East Asia and the Pacific region.
group holding & other: all non-operating companies, including the corporate service center and headquarter in Belgium.
A number of the group\u2019s accounting policies and disclosures require the determination of fair value, for both financial and non-financial assets and liabilities. Fair values have been determined for measurement or disclosure purposes based on the following methods. When applicable, further information about the assumptions made in determining fair values is disclosed in the notes specific to that asset or liability.
The fair value of property, plant and equipment recognized as a result of a business combination is based on market values. The market value of property is the estimated amount for which a property could be exchanged on the date of valuation between a willing buyer and a willing seller in an arm\u2019s length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion.
The fair value of trademarks and distribution rights acquired in business combinations are measured using the income approach (relief from royalty and multi-period excess earning method, respectively). The fair value of other intangible assets is mainly based on the cost approach.
The fair value of inventories is determined based on its estimated selling price in the ordinary course of business less the estimated costs of completion and sale.
The fair value of financial assets at FVTPL and FVTOCI financial assets is determined by reference to their quoted bid price at the reporting date. In case no market prices are available the instruments are measured using the present value of the expected future cash flows, discounted at the market rate of interest at measurement date.
The fair value of trade and other receivables is determined as the present value of future cash flows, discounted at the market rate of interest at measurement date.
The fair value of forward exchange contracts is based on their listed market price, if available. If a listed market price is not available, then fair value is estimated by discounting the difference between the contractual forward price and the current forward price for the residual maturity of the contract using a risk-free interest rate increased by an appropriate additional spread related to the credit risk of the group and the risk of the counterparty.
Fair value is calculated based on the present value of future principal and interest cash flows, discounted at the market rate of interest at measurement date, including the group\u2019s credit risk.
The fair value of contingent consideration qualifying as earnout, recognized in relation to business combinations, is calculated based on a forecast of the underlying performance measure and is discounted at the market rate of interest at measurement date. The fair value of contingent consideration constituting a mere fixed deferred payment is determined as the present value of future cash flows and discounted at the market rate of interest at measurement date.
The redemption value of put options on non-controlling interests, recognised in relation to business combinations, is calculated based on specific contractual specifications consisting mostly of a combination of a multiple on a future performance measure and the balance of certain net working capital items upon exercise of the option.
Assets and liabilities for which fair value is measured or disclosed in the consolidated financial statements are categorized within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:
Level 1: quoted (unadjusted) prices in active markets for identical assets or liabilities;
Level 2: valuation techniques for which all inputs which have a significant effect on the recorded fair value are observable for the asset or liability, either directly or indirectly;
Level 3: valuation techniques for which all inputs which have a significant effect on the recorded fair value are not based on observable market data.
On a selective basis, the group has outstanding foreign exchange swap contracts to manage the exposure to foreign currency risk on outstanding foreign currency receivables/payables, as well as an interest rate swap relating to its variable rate interest risk.
In May 2022, the group entered into an interest rate cap agreement (\u201cinterest rate cap\u201d) to limit its interest rate risk exposure (see note 22.1.1). The interest rate cap modifies the Company\u2019s exposure to interest rate risk by converting a portion of the Company\u2019s floating-rate debt to a fixed-rate basis, thereby reducing the impact of interest rate changes on interest expense. The upfront fee paid for the interest rate cap for an amount of \u20ac4.6 million was recorded under other financial assets. Subsequently, in the consolidated statement of profit or loss for the year ended December 31, 2022, the group recognized the change in fair value of the interest rate cap within financial income and expenses. During the year ended December 31, 2022, the group recognized a fair value gain of \u20ac5.0 million in the consolidated statement of profit or loss, within financial income.
In connection with business combinations, the group has outstanding liabilities for contingent consideration and for put options on non-controlling interests. The group\u2019s financial instruments per category are shown below including the fair value and hierarchy information.
The interest rate cap qualifies for the level 2 category in the fair value hierarchy due to the fact that it is not traded in an active market and the fair value is\u00a0determined using valuation techniques (option pricing model) which maximize the use of observable market data. Since\u00a0all significant inputs required to fair value the instrument are observable, the instrument is classified as level 2. All derivatives related to forward exchange contracts are classified as Level 2. Contingent consideration qualifying as earnout and put options on non-controlling interests are classified as Level 3. For the calculation basis of fair values, see also note 2.17 \u2013 Determination of fair values.
The carrying amount of the other financial assets and liabilities approximates their fair value.
| (in thousands of \u20ac) | Note | Fair value through P&L | Amortized cost | Total book value | Level 1 | Level 2 | Level 3 | TOTAL |
|---|---|---|---|---|---|---|---|---|
| Assets | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Non current assets | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Other Financial receivables | 4 | \u00a0 | 832 | 832 | \u00a0 | 832 | \u00a0 | 832 |
| Derivatives | 4 | 9,556 | \u00a0 | 9,556 | \u00a0 | 9,556 | \u00a0 | 9,556 |
| Other investments | 4 | 698 | 809 | 1,506 | \u00a0 | 1,506 | \u00a0 | 1,506 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Current assets | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Trade receivables | 19 | \u00a0 | 443,288 | 443,288 | \u00a0 | 443,288 | \u00a0 | 443,288 |
| Other receivables | 19 | \u00a0 | 95,093 | 95,093 | \u00a0 | 95,093 | \u00a0 | 95,093 |
| Other financial receivables | \u00a0 | \u00a0 | 81 | 81 | \u00a0 | 81 | \u00a0 | 81 |
| Derivatives | 4 | 199 | \u00a0 | 199 | \u00a0 | 199 | \u00a0 | 199 |
| Cash & Cash equivalents | 20 | \u00a0 | 268,160 | 268,160 | \u00a0 | 268,160 | \u00a0 | 268,160 |
| Total financial assets | \u00a0 | 10,453 | 808,263 | 818,716 | 0 | 818,716 | 0 | 818,716 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Liabilities | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Non Current Liabilities | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Interest bearing | 22 | \u00a0 | 1,259,562 | 1,259,562 | \u00a0 | 1,259,562 | \u00a0 | 1,259,562 |
| Other Financial liabilities | \u00a0 | 73,420 | 24,844 | 98,264 | \u00a0 | 24,844 | 73,420 | 98,264 |
| Current liabilities | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Interest bearing | 22 | \u00a0 | 145,713 | 145,713 | \u00a0 | 145,713 | \u00a0 | 145,713 |
| Bank overdraft | 20 | \u00a0 | 30,412 | 30,412 | \u00a0 | 30,412 | \u00a0 | 30,412 |
| Trade payables | 24 | \u00a0 | 462,728 | 462,728 | \u00a0 | 462,728 | \u00a0 | 462,728 |
| Other current liabilities excl derivatives | 24 | 50,657 | 257,924 | 308,582 | \u00a0 | 257,924 | 50,657 | 308,582 |
| Derivatives | 24 | 377 | \u00a0 | 377 | \u00a0 | 377 | \u00a0 | 377 |
| Total financial liabilities | \u00a0 | 124,454 | 2,181,183 | 2,305,637 | 0 | 2,181,560 | 124,077 | 2,305,637 |
| (in thousands of \u20ac) | Note | Fair value through P&L | Amortized cost | Total book value | Level 1 | Level 2 | Level 3 | TOTAL |
|---|---|---|---|---|---|---|---|---|
| Assets | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Non current assets | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Other Financial receivables | 4 | \u00a0 | 1113 | 1,113 | \u00a0 | 1,113 | \u00a0 | 1,113 |
| Other investments | 4 | \u00a0 | 422 | 422 | \u00a0 | 422 | \u00a0 | 422 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Current assets | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Trade receivables | 19 | \u00a0 | 375,591 | 375,591 | \u00a0 | 375,591 | \u00a0 | 375,591 |
| Other receivables | 19 | \u00a0 | 53,359 | 53,359 | \u00a0 | 53,359 | \u00a0 | 53,359 |
| Other financial receivables | \u00a0 | \u00a0 | 1,479 | 1,479 | \u00a0 | 1,479 | \u00a0 | 1,479 |
| Derivatives | 4 | 44 | \u00a0 | 44 | \u00a0 | 44 | \u00a0 | 44 |
| Cash & Cash equivalents | 20 | \u00a0 | 141,293 | 141,293 | \u00a0 | 141,293 | \u00a0 | 141,293 |
| Total financial assets | \u00a0 | 44 | 573,257 | 573,301 | 0 | 573,301 | 0 | 573,301 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Liabilities | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Non Current Liabilities | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Interest bearing | 22 | \u00a0 | 894,108 | 894,108 | \u00a0 | 894,108 | \u00a0 | 894,108 |
| Other Financial liabilities | \u00a0 | 1,371 | 8,284 | 9,655 | \u00a0 | 8,284 | 1,371 | 9,655 |
| Current liabilities | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Interest bearing | 22 | \u00a0 | 77,804 | 77,804 | \u00a0 | 77,804 | \u00a0 | 77,804 |
| Bank overdraft | 20 | \u00a0 | 40,524 | 40,524 | \u00a0 | 40,524 | \u00a0 | 40,524 |
| Trade payables | 24 | \u00a0 | 368,657 | 368,657 | \u00a0 | 368,657 | \u00a0 | 368,657 |
| Other current liabilities excl derivatives | 24 | 37,286 | 134,976 | 172,262 | \u00a0 | 134,976 | 37,286 | 172,262 |
| Derivatives | 24 | 155 | \u00a0 | 155 | \u00a0 | 155 | \u00a0 | 155 |
| Total financial liabilities | \u00a0 | 38,813 | 1,524,352 | 1,563,165 | 0 | 1,524,507 | 38,658 | 1,563,165 |
In the process of applying accounting policies and preparing the consolidated financial statements, the group has made certain judgements (other than those involving estimates) that affect the reported amounts of assets and liabilities, income and expenses.
In addition, the group is required to make certain estimates and assumptions that affect the measurement and presentation of reported figures. Estimates are based on past experience and on additional knowledge obtained on transactions to be reported, and are reviewed on an ongoing basis. Actual amounts may differ from these estimates. The most critical accounting judgements and estimates related to uncertainties with significant risk of causing material adjustment and applied in the consolidated financial statements are described below:
The group has judged that the Azelis trademark has an indefinite useful life. As a consequence, the trademark is not amortized. At each reporting date, the group reviews this judgement and assesses whether the circumstances continue to support the indefinite useful life. The trademark is part of the yearly impairment test. (See note 15).
In assessing the realization of deferred tax assets, management considers the extent to which it is probable that the deferred tax asset will be realized (note 14). The ultimate realization of deferred tax assets is dependent upon the generation of future taxable profit during the periods in which those temporary differences and tax loss carry forwards are available. Management considers the expected reversal of deferred tax liabilities and projected future taxable income in making this assessment. (See note 14.2)
In determining the lease term, management considers all facts and circumstances that create an economic incentive to exercise an extension option. Extension options are only included in the lease term if the lease is reasonably certain to be extended. (See note 16.2)
In a business combination the acquired assets and liabilities are measured at fair value. The group uses assumptions and non-observable information to prepare fair value of the assessed, where no observable information is available. Afterwards the actual market performance can differ from the assumptions. The most important assumptions are disclosed in the note for business combinations. (See note 7).
The group tests whether goodwill has suffered any impairment on an annual basis. The recoverable amount of a cash generating unit (CGU) is determined based on value-in-use calculations which require the use of assumptions. The calculations use cash flow projections based on financial budgets approved by management covering a five-year period, incorporating estimates for sales growth and margin growth. Cash flows beyond the five-year period are extrapolated using the estimated growth rates. These growth rates are consistent with forecasts included in industry reports specific to the industry in which each CGU operates. (See note 15.2).
A cash-generating unit (CGU) is the smallest identifiable group of assets that generates cash inflows that are largely independent of the cash inflows from other assets or groups of assets. For the purpose of impairment testing, goodwill is allocated to the following groups of CGUs:
| (in thousands of \u20ac) | 31-12-2022 | 31-12-2021 |
|---|---|---|
| EMEA | 733,032 | 616,570 |
| AMERICAS | 1,119,304 | 919,385 |
| ASIA PACIFIC | 321,919 | 267,311 |
| Total Goodwill | 2,174,256 | 1,803,266 |
All goodwill acquired in the business combinations has been allocated to a regional CGU at the end of the reporting period. The goodwill is allocated on regional level as it is the group's regions that are expected to benefit of the business combinations, and as goodwill is also monitored internally on the regional level. The group's expectation is that synergies will be realized in the region of acquisition.
Trademarks with a book value of \u20ac317.4 million (2021: \u20ac317.4 million) have an indefinite life. These do not generate cash inflows independently and qualify as corporate assets. As their carrying amount cannot be allocated to the regional CGUs on a reasonable and consistent basis, the corporate assets are allocated to the group as a whole and the impairment test is performed in two stages.
", "dimensions": { "concept": "ifrs-full:DisclosureOfAssetsAndLiabilitiesWithSignificantRiskOfMaterialAdjustmentExplanatory", "language": "en", "entity": "scheme:699400M9RRMTV264FM70", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-421": { "value": "In the process of applying accounting policies and preparing the consolidated financial statements, the group has made certain judgements (other than those involving estimates) that affect the reported amounts of assets and liabilities, income and expenses.
In addition, the group is required to make certain estimates and assumptions that affect the measurement and presentation of reported figures. Estimates are based on past experience and on additional knowledge obtained on transactions to be reported, and are reviewed on an ongoing basis. Actual amounts may differ from these estimates. The most critical accounting judgements and estimates related to uncertainties with significant risk of causing material adjustment and applied in the consolidated financial statements are described below:
The group has judged that the Azelis trademark has an indefinite useful life. As a consequence, the trademark is not amortized. At each reporting date, the group reviews this judgement and assesses whether the circumstances continue to support the indefinite useful life. The trademark is part of the yearly impairment test. (See note 15).
In assessing the realization of deferred tax assets, management considers the extent to which it is probable that the deferred tax asset will be realized (note 14). The ultimate realization of deferred tax assets is dependent upon the generation of future taxable profit during the periods in which those temporary differences and tax loss carry forwards are available. Management considers the expected reversal of deferred tax liabilities and projected future taxable income in making this assessment. (See note 14.2)
In determining the lease term, management considers all facts and circumstances that create an economic incentive to exercise an extension option. Extension options are only included in the lease term if the lease is reasonably certain to be extended. (See note 16.2)
In a business combination the acquired assets and liabilities are measured at fair value. The group uses assumptions and non-observable information to prepare fair value of the assessed, where no observable information is available. Afterwards the actual market performance can differ from the assumptions. The most important assumptions are disclosed in the note for business combinations. (See note 7).
The group tests whether goodwill has suffered any impairment on an annual basis. The recoverable amount of a cash generating unit (CGU) is determined based on value-in-use calculations which require the use of assumptions. The calculations use cash flow projections based on financial budgets approved by management covering a five-year period, incorporating estimates for sales growth and margin growth. Cash flows beyond the five-year period are extrapolated using the estimated growth rates. These growth rates are consistent with forecasts included in industry reports specific to the industry in which each CGU operates. (See note 15.2).
The impairment tests have been performed by discounting future pre-tax cash flows from continuing operations of the unit. The recoverable amounts of the regional CGU's as of\u00a0December 31, 2022 have been determined based on a value in use calculation using cash flow projections from a five year detailed business plan which is approved by senior management and serves as a basis to determine the future free cash flows and the Adjusted EBITA\u2019s. The business plan is based on the market growth assumptions and on some general economic indicators (inflation, GDP, etc.). It also properly reflects the future strategy of the regional CGU's. For cash flows beyond the business plan period, an extrapolation was made based on steady terminal growth rates.
The key assumptions used in the impairment tests are the pre-tax WACC, terminal growth rate and Adjusted EBITA margin. The pre-tax WACC is estimated per regional CGU, is consistent with external sources of information, and varies mainly due to differences in risk free rates that increased during 2022. The risk-free rates per regional CGU are based on the weighted average of the rate of return on local sovereign bonds. The terminal growth rates are based on industry benchmarks by region and are consistent with the group's past experience and based on external sources of information. Adjusted EBITA margin reflects the group's past experience and future expectation of regional business development.
The key assumptions used for the second stage impairment test, on the level of the group as a whole including corporate asset, are identical to those used for the regional CGU impairment tests.
The values attributed to pre-tax WACC and the growth rates are as follows:
| Cash Generating Unit | 2022 | 2023-2027 assumptions | |
|---|---|---|---|
| \u00a0 | Pre-tax WACC | Growth rate for terminal value | EBITA% |
| EMEA | 14.55% | 3.2% | 11.6% |
| AMERICAS | 12.99% | 2.6% | 13.7% |
| ASIA PACIFIC | 12.81% | 5.2% | 8.2% |
| Cash Generating Unit | 2021 | 2022-2026 assumptions | |
|---|---|---|---|
| \u00a0 | Pre-tax WACC | Growth rate for terminal value | EBITA% |
| EMEA | 10.67% | 3.0% | 10.4% |
| AMERICAS | 8.56% | 2.5% | 12.4% |
| ASIA PACIFIC | 11.08% | 5.0% | 7.7% |
The increase versus 2021 of the pre-tax WACC is primarily driven by increased market risk-free rates, that have been increasing during 2022 across the globe.
The impairment tests on the recoverable amount of regional CGU's show sufficient headroom on the carrying amount of the Goodwill. In the second stage impairment test, the recoverable amount of the regional CGU's considered as a whole exceeds the carrying amount of the regional CGU's including the carrying amount of the corporate assets.
In order to test the resilience of the headroom against changes in key assumptions, Azelis has selected reasonably expectable changes in the assumptions as follows:
A WACC increase by 2%
A decrease of the growth rate in the terminal value by 2%
A decrease of Adjusted EBITA margin by 0.5%
Versus previous years, also a sensitivity test of Adjusted EBITA has been added, as Adjusted EBITA (rather than Sales) is the major indicator for the outcome of Azelis' impairment test. Azelis' cost base is predominantly variable in nature, enabling to react rapidly on (downward) exposure of revenue, limiting the possible impact on Adjusted EBITA. A sensitivity of 0.5% in Adjusted EBITA margin would result in a decrease of almost 5% in Adjusted EBITA (in EUR).
In each of the above independent scenario's and for each regional CGU, the sensitivity test shows sufficient headroom on the carrying amount of the Goodwill.
", "dimensions": { "concept": "ifrs-full:ExplanationOfAssumptionAboutFutureWithSignificantRiskOfResultingInMaterialAdjustments", "language": "en", "entity": "scheme:699400M9RRMTV264FM70", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-422": { "value": "Azelis is exposed to several financial and other risks, amongst which:
Credit risk
Liquidity risk
Market risks
Operational risks
Azelis has a risk management framework in place to mitigate those risks. The Board of Directors oversees how management monitors compliance with the group\u2019s risk management policies and procedures and reviews the adequacy of the risk management framework in relation to the risks faced by the group.
Credit risk is the risk of financial loss to the group if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the group\u2019s receivables from customers.
As of December 31, the main credit risk can be summarized as follows:
| (in thousands of \u20ac) | 31-12-2022 | 31-12-2021 |
|---|---|---|
| Trade and other receivables | 538,381 | 428,950 |
| Cash and cash equivalents | 268,160 | 141,293 |
| Other financial assets | 12,038 | 2,877 |
| \u00a0 | 818,578 | 573,121 |
The group applies the IFRS 9 simplified approach (refer to Note 2.7.2).
The group's exposure to credit risk is influenced mainly by the individual characteristics of each customer. The demographics of the group\u2019s customer base, including the default risk of the industry and country in which customers operate, has less of an influence on credit risk. The group has no significant concentration of credit risk.
The group has a credit policy under which each new customer is analyzed individually for creditworthiness before the group\u2019s standard payment and delivery terms and conditions are offered. The group\u2019s review includes external ratings, when available, and in some cases bank references. Purchase limits are established for each customer.
Customers that fail to meet the group\u2019s benchmark creditworthiness may transact with the group only on a prepayment basis. The group\u2019s credit policy includes suspension of further deliveries, if customers fail to pay their debts on time. Moreover, the group engages in non-recourse factoring for the majority of its revenue in the EMEA region, which is used as an efficiency program in its credit collection processes. No other credit insurance programs are deemed to be necessary.
A significant portion of the group\u2019s customers have been transacting with the group companies for many years and losses have occurred infrequently. The group does not require collateral in respect of trade and other receivables.
The group establishes an allowance for impairment that represents its estimate of expected losses in respect of trade receivables. The main components of this allowance are a specific loss component that relates to individually significant exposures and a collective loss component established for groups of similar assets in respect of losses that have been incurred but not yet identified. The collective loss allowance is determined based on historical data of payment statistics for similar financial assets, adjusted for forward-looking information through an assessment of both the current and projected direction of economic conditions at the reporting date.
At year-end the aging of the trade receivables is constituted as follows:
| (in thousands of \u20ac) | Gross | % of total | Impairment | % Impaired |
|---|---|---|---|---|
| Not due | 334,132 | 69.3% | 2,590 | 0.8% |
| Between 0 and 2 months | 98,192 | 20.4% | 10,725 | 10.9% |
| Between 2 and 12 months | 38,990 | 8.1% | 14,713 | 37.7% |
| More than 12 months | 10,885 | 2.3% | 10,885 | 100.0% |
| \u00a0 | 482,200 | 100.0% | 38,912 | 8.1% |
| (in thousands of \u20ac) | Gross | % of total | Impairment | % Impaired |
|---|---|---|---|---|
| Not due | 302,458 | 76.1% | 1,549 | 0.5% |
| Between 0 and 2 months | 74,397 | 18.7% | 4,593 | 6.2% |
| Between 2 and 12 months | 11,852 | 3.0% | 6,973 | 58.8% |
| More than 12 months | 8,668 | 2.2% | 8,668 | 100.0% |
| \u00a0 | 397,375 | 100.0% | 21,783 | 5.5% |
The loss allowances for trade receivables as of December 31 reconcile to the opening loss allowances as follows:
| (in thousands of \u20ac) | 31-12-2022 | 31-12-2021 |
|---|---|---|
| Balance at 1 January | 21,783 | 15,763 |
| Business combination | 12,235 | 4,190 |
| Provisions made in the year | 6,513 | 2,451 |
| Decrease on impairment losses | -579 | -838 |
| Exchange rate differences | -1,040 | 217 |
| Balance at December 31 | 38,912 | 21,783 |
The group\u2019s exposure to credit risk is insignificant as the group deals with highly rated banks for its cash deposits.
The group\u2019s policy is to provide financial guarantees only in favor of wholly owned subsidiaries. At balance sheet date, no other material guarantees were outstanding.
Liquidity risk is the risk that the group will not be able to meet its financial obligations as they fall due. The group\u2019s approach to managing liquidity is to ensure that it will have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses.
The group ensures that it has sufficient cash on hand and unused credit facilities to meet expected operational expenses for the respective planning horizon, including the servicing of financial obligations.
The following are the contractual maturities of financial liabilities, including estimated interest payments and excluding the impact of any netting agreements at year-end:
| (in thousands of \u20ac) | Carrying amount | Undiscounted contractual Cash flows | Less than 1 Year | 1 to 5 Years | More than 5 Years |
|---|---|---|---|---|---|
| Loans and borrowings | 1,303,717 | 1,465,226 | 260,431 | 1,204,795 | 0 |
| Lease obligation (IFRS16) | 101,558 | 102,806 | 20,639 | 52,412 | 29,755 |
| Derivatives | 377 | 377 | 377 | 0 | 0 |
| Trade and other payables | 869,574 | 869,574 | 869,574 | 0 | 0 |
| Bank Overdrafts | 30,412 | 30,412 | 30,412 | 0 | 0 |
| \u00a0 | 2,305,637 | 2,468,394 | 1,181,432 | 1,257,207 | 29,755 |
Loans and borrowings are primarily to be repaid in 2026.
| (in thousands of \u20ac) | Carrying amount | Undiscounted contractual Cash flows | Less than 1 Year | 1 to 5 Years | More than 5 Years |
|---|---|---|---|---|---|
| Loans and borrowings | 902,634 | 996,252 | 116,317 | 879,935 | 0 |
| Lease obligation (IFRS16) | 69,278 | 69,278 | 15,200 | 37,831 | 16,247 |
| Derivatives | 155 | 155 | 155 | 0 | 0 |
| Trade and other payables | 550,576 | 550,576 | 550,576 | 0 | 0 |
| Bank Overdrafts | 40,524 | 40,524 | 40,524 | 0 | 0 |
| \u00a0 | 1,563,167 | 1,656,785 | 722,772 | 917,766 | 16,247 |
Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices will affect the group\u2019s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimizing the return. The group buys and sells derivatives in order to manage its market risks.
The group is exposed to currency risk on sales, purchases and borrowings that are denominated in various currencies. The main currencies are Euro (\u20ac), Pound Sterling (GBP), US Dollars (USD) and Canadian Dollars (CAD).
At any point in time, the group hedges a significant part of its foreign currency exposure in respect of sales and purchases orders via natural hedges within its operational portfolio. The group uses mainly forward exchange contracts to hedge its remaining currency risk, all with a maturity of less than one year from the reporting date. When necessary, forward exchange contracts are rolled over at maturity. The group has not applied hedge accounting.
Interest on borrowings is denominated in currencies that predominantly match the cash flows generated by the underlying operations of the group, primarily Euro (\u20ac), US Dollars (USD), Pound Sterling (GBP) and Canadian Dollar (CAD). This provides an economic hedge without derivatives being entered into and therefore the group has not applied hedge accounting.
The group\u2019s investments in foreign non-euro subsidiaries are considered to be long-term operations of the group and are therefore not hedged. Currency translation differences on these long-term operations are reported in the translation reserve in equity.
The exposure to foreign currency risk in current assets and current liabilities is mainly related to balances denominated in USD, GBP and CAD, for which the notional amounts (stated in \u20ac) amount to:
| (in thousands of \u20ac) | 31-12-2022 | 31-12-2022 | 31-12-2022 | 31-12-2021 | 31-12-2021 | 31-12-2021 |
|---|---|---|---|---|---|---|
| \u00a0 | USD | GBP | CAD | USD | GBP | CAD |
| Trade receivables | 197,296 | 927 | 10,955 | 138,345 | 1,759 | 49,139 |
| Cash and cash equivalents | 65,637 | 4,270 | -33 | 16,722 | 2,296 | 7,120 |
| Trade payables | -152,045 | -2,721 | -5,497 | -68,068 | -4,418 | -31,346 |
| Gross balance sheet exposure | 110,888 | 2,476 | 5,426 | 86,999 | -363 | 24,913 |
A 10% strengthening of the Euro against the USD, GBP and CAD at year-end would have increased (decreased) equity and the income statement by the amounts shown below. This analysis assumes that all other variables, in particular interest rates, remain constant.
| (in thousands of \u20ac) | 31-12-2022 | 31-12-2021 | ||
|---|---|---|---|---|
| \u00a0 | Profit or loss | Equity | Profit or loss | Equity |
| USD | -10,081 | -10,081 | -7,909 | -7,909 |
| CAD | -493 | -493 | -2,265 | -2,265 |
| GBP | -225 | -225 | 33 | 33 |
A 10% weakening of the Euro against the USD, GBP and CAD at year-end would have had the equal but opposite effect in Euro to the amounts shown above, on the basis that all other variables remain constant.
The group adopts a policy of carefully managing its interest rate risk. On a regular basis, the Board of Directors assesses the group's interest rates versus external benchmarks, ensuring that management will affect financial transactions resulting in fixed borrowing interest rates in case limits are exceeded. As of the reporting date, the external bank borrowings are on a floating interest rate basis.
The group\u2019s main interest rate risk arises from a long-term borrowing with a variable rates (EURIBOR and SONIA), which exposes the group to cash flow interest rate risk. The cash flow risk is mitigated through the usage of an interest rate cap.\u00a0
At the reporting date the interest rate profile of the group\u2019s interest-bearing financial instruments expressed in their carrying amounts was:
| (in thousands of \u20ac) | 31-12-2022 | 31-12-2021 |
|---|---|---|
| Variable rate instruments | \u00a0 | \u00a0 |
| Financial assets | 268,160 | 141,293 |
| Financial liabilities | -1,435,687 | -1,012,436 |
| \u00a0 | -1,167,526 | -871,143 |
An increase (decrease) of 100 basis points in interest rates at the reporting date would have decreased (increased) equity and the income statement (not considering income tax impact) by the annual amounts shown below. This analysis assumes that all other variables, in particular foreign currency rates and the potential mitigating effect of the interest rate cap, remain constant.
| (in thousands of \u20ac) | Profit or loss - 2022 | Equity - 2022 | ||
|---|---|---|---|---|
| \u00a0 | 100 bp | 100 bp | 100 bp | 100 bp |
| \u00a0 | Increase | Decrease | Increase | Decrease |
| Variable rate instruments | -14,357 | 14,357 | -14,357 | 14,357 |
| Cash flow sensitivity (net) | -14,357 | 14,357 | -14,357 | 14,357 |
| (in thousands of \u20ac) | Profit or loss - 2021 | Equity - 2021 | ||
|---|---|---|---|---|
| \u00a0 | 100 bp | 100 bp | 100 bp | 100 bp |
| \u00a0 | Increase | Decrease | Increase | Decrease |
| Variable rate instruments | -10,124 | 10,124 | -10,124 | 10,124 |
| Cash flow sensitivity (net) | -10,124 | 10,124 | -10,124 | 10,124 |
Operational risk is the risk of direct or indirect loss arising from a wide variety of causes associated with the group's processes, personnel, technology and infrastructure and from external factors other than credit, market and liquidity risks such as those arising from legal and regulatory requirements and generally accepted standards of corporate behavior. Operational risks arise from all of the group's operations. The group's objective is to manage operational risks so as to balance the avoidance of financial losses and damage to the group's reputation with overall cost effectiveness and to avoid control procedures that restrict initiative and creativity.
On a selective basis, the group has outstanding foreign exchange swap contracts to manage the exposure to foreign currency risk on outstanding foreign currency receivables/payables, as well as an interest rate swap relating to its variable rate interest risk.
In May 2022, the group entered into an interest rate cap agreement (\u201cinterest rate cap\u201d) to limit its interest rate risk exposure (see note 22.1.1). The interest rate cap modifies the Company\u2019s exposure to interest rate risk by converting a portion of the Company\u2019s floating-rate debt to a fixed-rate basis, thereby reducing the impact of interest rate changes on interest expense. The upfront fee paid for the interest rate cap for an amount of \u20ac4.6 million was recorded under other financial assets. Subsequently, in the consolidated statement of profit or loss for the year ended December 31, 2022, the group recognized the change in fair value of the interest rate cap within financial income and expenses. During the year ended December 31, 2022, the group recognized a fair value gain of \u20ac5.0 million in the consolidated statement of profit or loss, within financial income.
In connection with business combinations, the group has outstanding liabilities for contingent consideration and for put options on non-controlling interests. The group\u2019s financial instruments per category are shown below including the fair value and hierarchy information.
The interest rate cap qualifies for the level 2 category in the fair value hierarchy due to the fact that it is not traded in an active market and the fair value is\u00a0determined using valuation techniques (option pricing model) which maximize the use of observable market data. Since\u00a0all significant inputs required to fair value the instrument are observable, the instrument is classified as level 2. All derivatives related to forward exchange contracts are classified as Level 2. Contingent consideration qualifying as earnout and put options on non-controlling interests are classified as Level 3. For the calculation basis of fair values, see also note 2.17 \u2013 Determination of fair values.
The carrying amount of the other financial assets and liabilities approximates their fair value.
| (in thousands of \u20ac) | Note | Fair value through P&L | Amortized cost | Total book value | Level 1 | Level 2 | Level 3 | TOTAL |
|---|---|---|---|---|---|---|---|---|
| Assets | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Non current assets | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Other Financial receivables | 4 | \u00a0 | 832 | 832 | \u00a0 | 832 | \u00a0 | 832 |
| Derivatives | 4 | 9,556 | \u00a0 | 9,556 | \u00a0 | 9,556 | \u00a0 | 9,556 |
| Other investments | 4 | 698 | 809 | 1,506 | \u00a0 | 1,506 | \u00a0 | 1,506 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Current assets | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Trade receivables | 19 | \u00a0 | 443,288 | 443,288 | \u00a0 | 443,288 | \u00a0 | 443,288 |
| Other receivables | 19 | \u00a0 | 95,093 | 95,093 | \u00a0 | 95,093 | \u00a0 | 95,093 |
| Other financial receivables | \u00a0 | \u00a0 | 81 | 81 | \u00a0 | 81 | \u00a0 | 81 |
| Derivatives | 4 | 199 | \u00a0 | 199 | \u00a0 | 199 | \u00a0 | 199 |
| Cash & Cash equivalents | 20 | \u00a0 | 268,160 | 268,160 | \u00a0 | 268,160 | \u00a0 | 268,160 |
| Total financial assets | \u00a0 | 10,453 | 808,263 | 818,716 | 0 | 818,716 | 0 | 818,716 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Liabilities | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Non Current Liabilities | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Interest bearing | 22 | \u00a0 | 1,259,562 | 1,259,562 | \u00a0 | 1,259,562 | \u00a0 | 1,259,562 |
| Other Financial liabilities | \u00a0 | 73,420 | 24,844 | 98,264 | \u00a0 | 24,844 | 73,420 | 98,264 |
| Current liabilities | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Interest bearing | 22 | \u00a0 | 145,713 | 145,713 | \u00a0 | 145,713 | \u00a0 | 145,713 |
| Bank overdraft | 20 | \u00a0 | 30,412 | 30,412 | \u00a0 | 30,412 | \u00a0 | 30,412 |
| Trade payables | 24 | \u00a0 | 462,728 | 462,728 | \u00a0 | 462,728 | \u00a0 | 462,728 |
| Other current liabilities excl derivatives | 24 | 50,657 | 257,924 | 308,582 | \u00a0 | 257,924 | 50,657 | 308,582 |
| Derivatives | 24 | 377 | \u00a0 | 377 | \u00a0 | 377 | \u00a0 | 377 |
| Total financial liabilities | \u00a0 | 124,454 | 2,181,183 | 2,305,637 | 0 | 2,181,560 | 124,077 | 2,305,637 |
| (in thousands of \u20ac) | Note | Fair value through P&L | Amortized cost | Total book value | Level 1 | Level 2 | Level 3 | TOTAL |
|---|---|---|---|---|---|---|---|---|
| Assets | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Non current assets | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Other Financial receivables | 4 | \u00a0 | 1113 | 1,113 | \u00a0 | 1,113 | \u00a0 | 1,113 |
| Other investments | 4 | \u00a0 | 422 | 422 | \u00a0 | 422 | \u00a0 | 422 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Current assets | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Trade receivables | 19 | \u00a0 | 375,591 | 375,591 | \u00a0 | 375,591 | \u00a0 | 375,591 |
| Other receivables | 19 | \u00a0 | 53,359 | 53,359 | \u00a0 | 53,359 | \u00a0 | 53,359 |
| Other financial receivables | \u00a0 | \u00a0 | 1,479 | 1,479 | \u00a0 | 1,479 | \u00a0 | 1,479 |
| Derivatives | 4 | 44 | \u00a0 | 44 | \u00a0 | 44 | \u00a0 | 44 |
| Cash & Cash equivalents | 20 | \u00a0 | 141,293 | 141,293 | \u00a0 | 141,293 | \u00a0 | 141,293 |
| Total financial assets | \u00a0 | 44 | 573,257 | 573,301 | 0 | 573,301 | 0 | 573,301 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Liabilities | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Non Current Liabilities | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Interest bearing | 22 | \u00a0 | 894,108 | 894,108 | \u00a0 | 894,108 | \u00a0 | 894,108 |
| Other Financial liabilities | \u00a0 | 1,371 | 8,284 | 9,655 | \u00a0 | 8,284 | 1,371 | 9,655 |
| Current liabilities | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Interest bearing | 22 | \u00a0 | 77,804 | 77,804 | \u00a0 | 77,804 | \u00a0 | 77,804 |
| Bank overdraft | 20 | \u00a0 | 40,524 | 40,524 | \u00a0 | 40,524 | \u00a0 | 40,524 |
| Trade payables | 24 | \u00a0 | 368,657 | 368,657 | \u00a0 | 368,657 | \u00a0 | 368,657 |
| Other current liabilities excl derivatives | 24 | 37,286 | 134,976 | 172,262 | \u00a0 | 134,976 | 37,286 | 172,262 |
| Derivatives | 24 | 155 | \u00a0 | 155 | \u00a0 | 155 | \u00a0 | 155 |
| Total financial liabilities | \u00a0 | 38,813 | 1,524,352 | 1,563,165 | 0 | 1,524,507 | 38,658 | 1,563,165 |
Azelis is exposed to several financial and other risks, amongst which:
Credit risk
Liquidity risk
Market risks
Operational risks
Azelis has a risk management framework in place to mitigate those risks. The Board of Directors oversees how management monitors compliance with the group\u2019s risk management policies and procedures and reviews the adequacy of the risk management framework in relation to the risks faced by the group.
Credit risk is the risk of financial loss to the group if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the group\u2019s receivables from customers.
As of December 31, the main credit risk can be summarized as follows:
| (in thousands of \u20ac) | 31-12-2022 | 31-12-2021 |
|---|---|---|
| Trade and other receivables | 538,381 | 428,950 |
| Cash and cash equivalents | 268,160 | 141,293 |
| Other financial assets | 12,038 | 2,877 |
| \u00a0 | 818,578 | 573,121 |
The group applies the IFRS 9 simplified approach (refer to Note 2.7.2).
The group's exposure to credit risk is influenced mainly by the individual characteristics of each customer. The demographics of the group\u2019s customer base, including the default risk of the industry and country in which customers operate, has less of an influence on credit risk. The group has no significant concentration of credit risk.
The group has a credit policy under which each new customer is analyzed individually for creditworthiness before the group\u2019s standard payment and delivery terms and conditions are offered. The group\u2019s review includes external ratings, when available, and in some cases bank references. Purchase limits are established for each customer.
Customers that fail to meet the group\u2019s benchmark creditworthiness may transact with the group only on a prepayment basis. The group\u2019s credit policy includes suspension of further deliveries, if customers fail to pay their debts on time. Moreover, the group engages in non-recourse factoring for the majority of its revenue in the EMEA region, which is used as an efficiency program in its credit collection processes. No other credit insurance programs are deemed to be necessary.
A significant portion of the group\u2019s customers have been transacting with the group companies for many years and losses have occurred infrequently. The group does not require collateral in respect of trade and other receivables.
The group establishes an allowance for impairment that represents its estimate of expected losses in respect of trade receivables. The main components of this allowance are a specific loss component that relates to individually significant exposures and a collective loss component established for groups of similar assets in respect of losses that have been incurred but not yet identified. The collective loss allowance is determined based on historical data of payment statistics for similar financial assets, adjusted for forward-looking information through an assessment of both the current and projected direction of economic conditions at the reporting date.
At year-end the aging of the trade receivables is constituted as follows:
| (in thousands of \u20ac) | Gross | % of total | Impairment | % Impaired |
|---|---|---|---|---|
| Not due | 334,132 | 69.3% | 2,590 | 0.8% |
| Between 0 and 2 months | 98,192 | 20.4% | 10,725 | 10.9% |
| Between 2 and 12 months | 38,990 | 8.1% | 14,713 | 37.7% |
| More than 12 months | 10,885 | 2.3% | 10,885 | 100.0% |
| \u00a0 | 482,200 | 100.0% | 38,912 | 8.1% |
| (in thousands of \u20ac) | Gross | % of total | Impairment | % Impaired |
|---|---|---|---|---|
| Not due | 302,458 | 76.1% | 1,549 | 0.5% |
| Between 0 and 2 months | 74,397 | 18.7% | 4,593 | 6.2% |
| Between 2 and 12 months | 11,852 | 3.0% | 6,973 | 58.8% |
| More than 12 months | 8,668 | 2.2% | 8,668 | 100.0% |
| \u00a0 | 397,375 | 100.0% | 21,783 | 5.5% |
The loss allowances for trade receivables as of December 31 reconcile to the opening loss allowances as follows:
| (in thousands of \u20ac) | 31-12-2022 | 31-12-2021 |
|---|---|---|
| Balance at 1 January | 21,783 | 15,763 |
| Business combination | 12,235 | 4,190 |
| Provisions made in the year | 6,513 | 2,451 |
| Decrease on impairment losses | -579 | -838 |
| Exchange rate differences | -1,040 | 217 |
| Balance at December 31 | 38,912 | 21,783 |
The group\u2019s exposure to credit risk is insignificant as the group deals with highly rated banks for its cash deposits.
The group\u2019s policy is to provide financial guarantees only in favor of wholly owned subsidiaries. At balance sheet date, no other material guarantees were outstanding.
Liquidity risk is the risk that the group will not be able to meet its financial obligations as they fall due. The group\u2019s approach to managing liquidity is to ensure that it will have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses.
The group ensures that it has sufficient cash on hand and unused credit facilities to meet expected operational expenses for the respective planning horizon, including the servicing of financial obligations.
The following are the contractual maturities of financial liabilities, including estimated interest payments and excluding the impact of any netting agreements at year-end:
| (in thousands of \u20ac) | Carrying amount | Undiscounted contractual Cash flows | Less than 1 Year | 1 to 5 Years | More than 5 Years |
|---|---|---|---|---|---|
| Loans and borrowings | 1,303,717 | 1,465,226 | 260,431 | 1,204,795 | 0 |
| Lease obligation (IFRS16) | 101,558 | 102,806 | 20,639 | 52,412 | 29,755 |
| Derivatives | 377 | 377 | 377 | 0 | 0 |
| Trade and other payables | 869,574 | 869,574 | 869,574 | 0 | 0 |
| Bank Overdrafts | 30,412 | 30,412 | 30,412 | 0 | 0 |
| \u00a0 | 2,305,637 | 2,468,394 | 1,181,432 | 1,257,207 | 29,755 |
Loans and borrowings are primarily to be repaid in 2026.
| (in thousands of \u20ac) | Carrying amount | Undiscounted contractual Cash flows | Less than 1 Year | 1 to 5 Years | More than 5 Years |
|---|---|---|---|---|---|
| Loans and borrowings | 902,634 | 996,252 | 116,317 | 879,935 | 0 |
| Lease obligation (IFRS16) | 69,278 | 69,278 | 15,200 | 37,831 | 16,247 |
| Derivatives | 155 | 155 | 155 | 0 | 0 |
| Trade and other payables | 550,576 | 550,576 | 550,576 | 0 | 0 |
| Bank Overdrafts | 40,524 | 40,524 | 40,524 | 0 | 0 |
| \u00a0 | 1,563,167 | 1,656,785 | 722,772 | 917,766 | 16,247 |
Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices will affect the group\u2019s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimizing the return. The group buys and sells derivatives in order to manage its market risks.
The group is exposed to currency risk on sales, purchases and borrowings that are denominated in various currencies. The main currencies are Euro (\u20ac), Pound Sterling (GBP), US Dollars (USD) and Canadian Dollars (CAD).
At any point in time, the group hedges a significant part of its foreign currency exposure in respect of sales and purchases orders via natural hedges within its operational portfolio. The group uses mainly forward exchange contracts to hedge its remaining currency risk, all with a maturity of less than one year from the reporting date. When necessary, forward exchange contracts are rolled over at maturity. The group has not applied hedge accounting.
Interest on borrowings is denominated in currencies that predominantly match the cash flows generated by the underlying operations of the group, primarily Euro (\u20ac), US Dollars (USD), Pound Sterling (GBP) and Canadian Dollar (CAD). This provides an economic hedge without derivatives being entered into and therefore the group has not applied hedge accounting.
The group\u2019s investments in foreign non-euro subsidiaries are considered to be long-term operations of the group and are therefore not hedged. Currency translation differences on these long-term operations are reported in the translation reserve in equity.
The exposure to foreign currency risk in current assets and current liabilities is mainly related to balances denominated in USD, GBP and CAD, for which the notional amounts (stated in \u20ac) amount to:
| (in thousands of \u20ac) | 31-12-2022 | 31-12-2022 | 31-12-2022 | 31-12-2021 | 31-12-2021 | 31-12-2021 |
|---|---|---|---|---|---|---|
| \u00a0 | USD | GBP | CAD | USD | GBP | CAD |
| Trade receivables | 197,296 | 927 | 10,955 | 138,345 | 1,759 | 49,139 |
| Cash and cash equivalents | 65,637 | 4,270 | -33 | 16,722 | 2,296 | 7,120 |
| Trade payables | -152,045 | -2,721 | -5,497 | -68,068 | -4,418 | -31,346 |
| Gross balance sheet exposure | 110,888 | 2,476 | 5,426 | 86,999 | -363 | 24,913 |
A 10% strengthening of the Euro against the USD, GBP and CAD at year-end would have increased (decreased) equity and the income statement by the amounts shown below. This analysis assumes that all other variables, in particular interest rates, remain constant.
| (in thousands of \u20ac) | 31-12-2022 | 31-12-2021 | ||
|---|---|---|---|---|
| \u00a0 | Profit or loss | Equity | Profit or loss | Equity |
| USD | -10,081 | -10,081 | -7,909 | -7,909 |
| CAD | -493 | -493 | -2,265 | -2,265 |
| GBP | -225 | -225 | 33 | 33 |
A 10% weakening of the Euro against the USD, GBP and CAD at year-end would have had the equal but opposite effect in Euro to the amounts shown above, on the basis that all other variables remain constant.
The group adopts a policy of carefully managing its interest rate risk. On a regular basis, the Board of Directors assesses the group's interest rates versus external benchmarks, ensuring that management will affect financial transactions resulting in fixed borrowing interest rates in case limits are exceeded. As of the reporting date, the external bank borrowings are on a floating interest rate basis.
The group\u2019s main interest rate risk arises from a long-term borrowing with a variable rates (EURIBOR and SONIA), which exposes the group to cash flow interest rate risk. The cash flow risk is mitigated through the usage of an interest rate cap.\u00a0
At the reporting date the interest rate profile of the group\u2019s interest-bearing financial instruments expressed in their carrying amounts was:
| (in thousands of \u20ac) | 31-12-2022 | 31-12-2021 |
|---|---|---|
| Variable rate instruments | \u00a0 | \u00a0 |
| Financial assets | 268,160 | 141,293 |
| Financial liabilities | -1,435,687 | -1,012,436 |
| \u00a0 | -1,167,526 | -871,143 |
An increase (decrease) of 100 basis points in interest rates at the reporting date would have decreased (increased) equity and the income statement (not considering income tax impact) by the annual amounts shown below. This analysis assumes that all other variables, in particular foreign currency rates and the potential mitigating effect of the interest rate cap, remain constant.
| (in thousands of \u20ac) | Profit or loss - 2022 | Equity - 2022 | ||
|---|---|---|---|---|
| \u00a0 | 100 bp | 100 bp | 100 bp | 100 bp |
| \u00a0 | Increase | Decrease | Increase | Decrease |
| Variable rate instruments | -14,357 | 14,357 | -14,357 | 14,357 |
| Cash flow sensitivity (net) | -14,357 | 14,357 | -14,357 | 14,357 |
| (in thousands of \u20ac) | Profit or loss - 2021 | Equity - 2021 | ||
|---|---|---|---|---|
| \u00a0 | 100 bp | 100 bp | 100 bp | 100 bp |
| \u00a0 | Increase | Decrease | Increase | Decrease |
| Variable rate instruments | -10,124 | 10,124 | -10,124 | 10,124 |
| Cash flow sensitivity (net) | -10,124 | 10,124 | -10,124 | 10,124 |
Operational risk is the risk of direct or indirect loss arising from a wide variety of causes associated with the group's processes, personnel, technology and infrastructure and from external factors other than credit, market and liquidity risks such as those arising from legal and regulatory requirements and generally accepted standards of corporate behavior. Operational risks arise from all of the group's operations. The group's objective is to manage operational risks so as to balance the avoidance of financial losses and damage to the group's reputation with overall cost effectiveness and to avoid control procedures that restrict initiative and creativity.
On a selective basis, the group has outstanding foreign exchange swap contracts to manage the exposure to foreign currency risk on outstanding foreign currency receivables/payables, as well as an interest rate swap relating to its variable rate interest risk.
In May 2022, the group entered into an interest rate cap agreement (\u201cinterest rate cap\u201d) to limit its interest rate risk exposure (see note 22.1.1). The interest rate cap modifies the Company\u2019s exposure to interest rate risk by converting a portion of the Company\u2019s floating-rate debt to a fixed-rate basis, thereby reducing the impact of interest rate changes on interest expense. The upfront fee paid for the interest rate cap for an amount of \u20ac4.6 million was recorded under other financial assets. Subsequently, in the consolidated statement of profit or loss for the year ended December 31, 2022, the group recognized the change in fair value of the interest rate cap within financial income and expenses. During the year ended December 31, 2022, the group recognized a fair value gain of \u20ac5.0 million in the consolidated statement of profit or loss, within financial income.
In connection with business combinations, the group has outstanding liabilities for contingent consideration and for put options on non-controlling interests. The group\u2019s financial instruments per category are shown below including the fair value and hierarchy information.
The interest rate cap qualifies for the level 2 category in the fair value hierarchy due to the fact that it is not traded in an active market and the fair value is\u00a0determined using valuation techniques (option pricing model) which maximize the use of observable market data. Since\u00a0all significant inputs required to fair value the instrument are observable, the instrument is classified as level 2. All derivatives related to forward exchange contracts are classified as Level 2. Contingent consideration qualifying as earnout and put options on non-controlling interests are classified as Level 3. For the calculation basis of fair values, see also note 2.17 \u2013 Determination of fair values.
The carrying amount of the other financial assets and liabilities approximates their fair value.
| (in thousands of \u20ac) | Note | Fair value through P&L | Amortized cost | Total book value | Level 1 | Level 2 | Level 3 | TOTAL |
|---|---|---|---|---|---|---|---|---|
| Assets | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Non current assets | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Other Financial receivables | 4 | \u00a0 | 832 | 832 | \u00a0 | 832 | \u00a0 | 832 |
| Derivatives | 4 | 9,556 | \u00a0 | 9,556 | \u00a0 | 9,556 | \u00a0 | 9,556 |
| Other investments | 4 | 698 | 809 | 1,506 | \u00a0 | 1,506 | \u00a0 | 1,506 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Current assets | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Trade receivables | 19 | \u00a0 | 443,288 | 443,288 | \u00a0 | 443,288 | \u00a0 | 443,288 |
| Other receivables | 19 | \u00a0 | 95,093 | 95,093 | \u00a0 | 95,093 | \u00a0 | 95,093 |
| Other financial receivables | \u00a0 | \u00a0 | 81 | 81 | \u00a0 | 81 | \u00a0 | 81 |
| Derivatives | 4 | 199 | \u00a0 | 199 | \u00a0 | 199 | \u00a0 | 199 |
| Cash & Cash equivalents | 20 | \u00a0 | 268,160 | 268,160 | \u00a0 | 268,160 | \u00a0 | 268,160 |
| Total financial assets | \u00a0 | 10,453 | 808,263 | 818,716 | 0 | 818,716 | 0 | 818,716 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Liabilities | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Non Current Liabilities | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Interest bearing | 22 | \u00a0 | 1,259,562 | 1,259,562 | \u00a0 | 1,259,562 | \u00a0 | 1,259,562 |
| Other Financial liabilities | \u00a0 | 73,420 | 24,844 | 98,264 | \u00a0 | 24,844 | 73,420 | 98,264 |
| Current liabilities | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Interest bearing | 22 | \u00a0 | 145,713 | 145,713 | \u00a0 | 145,713 | \u00a0 | 145,713 |
| Bank overdraft | 20 | \u00a0 | 30,412 | 30,412 | \u00a0 | 30,412 | \u00a0 | 30,412 |
| Trade payables | 24 | \u00a0 | 462,728 | 462,728 | \u00a0 | 462,728 | \u00a0 | 462,728 |
| Other current liabilities excl derivatives | 24 | 50,657 | 257,924 | 308,582 | \u00a0 | 257,924 | 50,657 | 308,582 |
| Derivatives | 24 | 377 | \u00a0 | 377 | \u00a0 | 377 | \u00a0 | 377 |
| Total financial liabilities | \u00a0 | 124,454 | 2,181,183 | 2,305,637 | 0 | 2,181,560 | 124,077 | 2,305,637 |
| (in thousands of \u20ac) | Note | Fair value through P&L | Amortized cost | Total book value | Level 1 | Level 2 | Level 3 | TOTAL |
|---|---|---|---|---|---|---|---|---|
| Assets | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Non current assets | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Other Financial receivables | 4 | \u00a0 | 1113 | 1,113 | \u00a0 | 1,113 | \u00a0 | 1,113 |
| Other investments | 4 | \u00a0 | 422 | 422 | \u00a0 | 422 | \u00a0 | 422 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Current assets | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Trade receivables | 19 | \u00a0 | 375,591 | 375,591 | \u00a0 | 375,591 | \u00a0 | 375,591 |
| Other receivables | 19 | \u00a0 | 53,359 | 53,359 | \u00a0 | 53,359 | \u00a0 | 53,359 |
| Other financial receivables | \u00a0 | \u00a0 | 1,479 | 1,479 | \u00a0 | 1,479 | \u00a0 | 1,479 |
| Derivatives | 4 | 44 | \u00a0 | 44 | \u00a0 | 44 | \u00a0 | 44 |
| Cash & Cash equivalents | 20 | \u00a0 | 141,293 | 141,293 | \u00a0 | 141,293 | \u00a0 | 141,293 |
| Total financial assets | \u00a0 | 44 | 573,257 | 573,301 | 0 | 573,301 | 0 | 573,301 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Liabilities | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Non Current Liabilities | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Interest bearing | 22 | \u00a0 | 894,108 | 894,108 | \u00a0 | 894,108 | \u00a0 | 894,108 |
| Other Financial liabilities | \u00a0 | 1,371 | 8,284 | 9,655 | \u00a0 | 8,284 | 1,371 | 9,655 |
| Current liabilities | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Interest bearing | 22 | \u00a0 | 77,804 | 77,804 | \u00a0 | 77,804 | \u00a0 | 77,804 |
| Bank overdraft | 20 | \u00a0 | 40,524 | 40,524 | \u00a0 | 40,524 | \u00a0 | 40,524 |
| Trade payables | 24 | \u00a0 | 368,657 | 368,657 | \u00a0 | 368,657 | \u00a0 | 368,657 |
| Other current liabilities excl derivatives | 24 | 37,286 | 134,976 | 172,262 | \u00a0 | 134,976 | 37,286 | 172,262 |
| Derivatives | 24 | 155 | \u00a0 | 155 | \u00a0 | 155 | \u00a0 | 155 |
| Total financial liabilities | \u00a0 | 38,813 | 1,524,352 | 1,563,165 | 0 | 1,524,507 | 38,658 | 1,563,165 |
| (in thousands of \u20ac) | 2022 | 2021 |
|---|---|---|
| Financial income | \u00a0 | \u00a0 |
| Interest income | 621 | 618 |
| Gains on changes in fair value of derivatives | 5,132 | 0 |
| Other financial income | 256 | 113 |
| \u00a0 | 6,008 | 731 |
| Financial expenses | \u00a0 | \u00a0 |
| Interest expense on bank loans and overdrafts | -34,795 | -46,948 |
| Interest lease commitments | -3,423 | -2,951 |
| Fair value adjustment on financial liabilities | -17,585 | -7,282 |
| Transaction costs for bank loans | -1,444 | -3,336 |
| Accelerated amortization of transaction costs due to IPO | 0 | -19,616 |
| Losses on changes in FV of derivative instruments | -754 | 0 |
| Monetary loss on hyperinflation | -6,957 | 0 |
| Foreign exchange losses | -2,093 | -1,238 |
| Other financial expenses | -12,771 | -6,907 |
| \u00a0 | -79,823 | -88,278 |
The (non-cash) gain on changes in fair value of derivatives primarily relates to the interest rate cap that was entered into in May 2022. The fair value of the interest rate cap increased since then, driven by increasing market interest rates during 2022.
The fair value adjustment on financial liabilities relates to acquisition-related earnout liabilities and put options on non-controlling interests.
Transaction costs for bank loans of \u20ac1.4 million (2021: \u20ac3.3 million) includes the (non-cash) impact of expensing capitalized transaction costs (see note 22). At date of IPO in September 2021, the Company restructured its debt, whereas the remaining capitalized costs of \u20ac19.6 million that related to the previous and repaid financial liabilities were amortized entirely in 2021 (for the majority non-cash).
The monetary loss on hyperinflation relates to the translation of foreign exchange impact regarding Azelis' subsidiaries in Turkey. The majority of the loss (\u20ac6.5 million) relates to translation of its balance sheets, funded by equity mainly, with low exposure to cash and debt in local currencies. The translation-impact on the income statement is limited (\u20ac0.5 million) as operational activities are merely settled in hard currencies (USD, EUR).
The foreign exchange losses include unrealized translation of intercompany loans, mainly relating to non-EUR nominated loans to subsidiaries.
Other financial expenses primarily relate to factoring fees and other bank fees.
| (in thousands of \u20ac) | 31-12-2022 | 31-12-2021 |
|---|---|---|
| Trade receivables | 443,288 | 375,591 |
| Other receivables | 95,093 | 53,359 |
| \u00a0 | 538,381 | 428,950 |
See note 4.1.1 for ageing and allowance of these receivables. Other receivables relate mainly to prepayments.
| (in thousands of \u20ac) | 31-12-2022 | 31-12-2021 |
|---|---|---|
| Bank balances and cash on hand | 268,160 | 141,293 |
| Bank overdrafts (-) | -30,412 | -40,524 |
| Cash and cash equivalents (net) in the cash flow statement | 237,749 | 100,769 |
Interest rates payable for bank overdrafts used have a variable interest rate based on Euribor plus a margin. The cash and cash equivalents are at free disposal of the group.
The group\u2019s debt finance consists mainly of the following financial instruments:
| (in thousands of \u20ac) | Interest rate (base) | Interest rate (margin) | Duration | Notional amount | Carrying amount |
|---|---|---|---|---|---|
| First lien \u20ac | 1.74% | 1.75% | 2021-2026 | 900,000 | 894,667 |
| First lien GBP | 1.60% | 2.00% | 2021-2026 | 145,209 | 144,349 |
| Revolving Credit Facility | 1.10% | 1.50% | 2021-2027 | 100,000 | 100,000 |
| Schuldschein | 2.63% | 1.9%-2.1% | 2025-2027 | 21,500 | 21,409 |
| Other bank loans | 2,69% - 10,73% | \u00a0 | 2018-2026 | 131,668 | 131,668 |
| Accrued interest | \u00a0 | \u00a0 | \u00a0 | 11,624 | 11,624 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | 1,310,001 | 1,303,717 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Non-current borrowings and loans | \u00a0 | \u00a0 | \u00a0 | 1,184,678 | 1,178,394 |
| Current borrowings and loans | \u00a0 | \u00a0 | \u00a0 | 125,323 | 125,323 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | 1,310,001 | 1,303,717 |
| (in thousands of \u20ac) | Interest rate (base) | Interest rate (margin) | Duration | Notional amount | Carrying amount |
|---|---|---|---|---|---|
| First lien \u20ac | 0.00% | 2.25% | 2021-2026 | 640,000 | 635,533 |
| First lien GBP | 0.17% | 2.50% | 2021-2026 | 153,270 | 152,201 |
| Revolving Credit Facility | 0.00% | 2.00% | 2021-2026 | 40,000 | 40,000 |
| Other bank loans | 0,58% - 5,62% | \u00a0 | 2018-2026 | 69,249 | 69,249 |
| Accrued interest | \u00a0 | \u00a0 | \u00a0 | 5,652 | 5,652 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | 908,171 | 902,634 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Non-current borrowings and loans | \u00a0 | \u00a0 | \u00a0 | 845,567 | 840,030 |
| Current borrowings and loans | \u00a0 | \u00a0 | \u00a0 | 62,604 | 62,604 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | 908,171 | 902,634 |
| (in thousands of \u20ac) | 2022 | 2021 |
|---|---|---|
| As of January 1 | 902,634 | 1,210,817 |
| Cash flows from loans and borrowings | 343,846 | -400,295 |
| Transaction costs paid | -2,191 | -8,338 |
| Changes arising from business combinations | 66,054 | 78,607 |
| Accelerated amortization of transaction costs due to IPO | - | 19,616 |
| Capitalized transactions cost amortized | 1,444 | 3,358 |
| Changes in interest accruals | 5,972 | -19,100 |
| Currency translation differences | -14,043 | 17,971 |
| As of December 31 | 1,303,717 | 902,634 |
A total of \u20ac6.3 million (net book value) of transaction costs have been capitalized and are amortized over the lending period.
Within the context of the IPO on Euronext Brussels, and partly with the proceeds of the IPO, the group has repaid its existing bank borrowings in September 2021. At the same time the group has attracted new bank borrowings from a new lender's syndicate in the form of a Term Loan Facility (\u20ac640 million and GBP 128.8 million) and a Revolving Credit Facility (\u20ac260 million). In April 2022, the group has drawn an Incremental Facility of \u20ac260 million on its \u20ac\u00a0Term Loan Facility by converting \u20ac260 million drawn on the RCF to the Term Loan, totaling to \u20ac900 million. At the same time, the Revolving Credit Facility was extended from \u20ac260 million to \u20ac350 million with simultaneous extension of length until 2027.
Floating interest rates are based on EURIBOR for borrowings drawn in \u20ac\u00a0and SONIA for borrowings drawn in GBP (both capped at a floor of 0%), and a margin based on the group's total Net Leverage. The margin is capped at 2.25% and 2% for the \u20ac\u00a0Term Loan Facility, 2.50% for the GBP Term Loan Facility and 2.00% for the Revolving Credit Facility. In addition, the applicable margins going forward will be subject to +/-10 basis point adjustment depending on the satisfaction of certain ESG criteria.
In accordance with its policy on managing the risk related to interest rates (refer to the Risk management section in the Annual Report 2021) and taking into account the global interest rate developments in the first half year of 2022, Azelis has entered into two interest rate cap agreements for a total loan amount of \u20ac700 million, providing the group with an interest rate cap of 3% on EURIBOR.
In December 2022 the group obtained a bond type semi-private financing of \u20ac150.5 million, a so-called Schuldscheindarlehen. The maturity dates range from 2024 until 2029. Interest charges are partly fixed (4.74% plus margin 2.1%) and partly floating (6m Euribor plus margin 1.9%-2.5%). The financial covenants and related leverage ratio of the Schuldschein are aligned with Azelis' Multicurrency Term and Revolving Facilities Agreement that was entered into during September 2021. The Schuldschein can be repaid in advance under certain conditions. At the reporting date the amount of \u20ac129 million was unused.
| (in thousands of \u20ac) | 2022 | 2021 |
|---|---|---|
| As of January 1 | 69,278 | 58,058 |
| New contracts | 39,331 | 21,507 |
| Remeasurements | 12,610 | 2,352 |
| Cash out | -22,795 | -14,846 |
| Currency translation differences | 3,134 | 2,207 |
| As of December 31 | 101,558 | 69,278 |
For disclosure on the group's right-of-use assets, refer to note 16.2 Right of use assets.
In addition to cash balances, as of December 31, 2022, the group maintained the following lines of credit:
\u20ac180.4 million (2021: \u20ac95.3 million) uncommitted local credit facility, that concerns local credit lines given by local banks and can be revoked as any standard bank credit line. Interest would be payable at the maximum rate of EURIBOR plus 5.00%. As of December 31, 2022, \u20ac162.0 million (2021: \u20ac69.3 million) was utilized.
\u20ac350 million Revolving Credit Facility, of which \u20ac100 million has been utilized (2021: \u20ac260 million facility of which \u20ac40 million utilized). Therefore, as of December 31, 2022, \u20ac250 million (2021: \u20ac220 million) committed facility was unused. Interest would be payable at the maximum rate of EURIBOR plus 2.00%.
The financing arrangements since September 2021 of Azelis Group NV and its subsidiaries contain a financial maintenance covenant, being the total Net Leverage Ratio, which needs to be less than 4.75 : 1.00 (decreasing to 4.50 : 1.00 in 2024) and is tested twice annually.
As of December 31, 2022, the total Net Leverage Ratio is 2.2 : 1.0 (2021: 2.7 : 1.0), therefore the group complied with the financial covenants. The group monitors the compliance with the covenants on the basis of the monthly reporting process and the continuous cash flow forecasts.
| (in thousands of \u20ac) | 31-12-2022 | 31-12-2021 |
|---|---|---|
| Trade payables | 462,728 | 368,657 |
| Other taxes | 11,805 | 6,618 |
| Employee and social security payables | 87,505 | 71,227 |
| Derivatives | 377 | 155 |
| Other payables | 209,272 | 94,417 |
| Total current payables | 771,686 | 541,074 |
| \u00a0 | \u00a0 | \u00a0 |
| Other payables | 98,264 | 9,655 |
| Other non-current liabilities | 98,264 | 9,655 |
The other current and non-current payables mainly consist of put options over non-controlling interests totaling \u20ac115.1 million (2021: \u20ac31.2 million), and earnouts and deferred payments in connection with acquisitions.
", "dimensions": { "concept": "ifrs-full:DisclosureOfFinancialInstrumentsExplanatory", "language": "en", "entity": "scheme:699400M9RRMTV264FM70", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-425": { "value": " 4.1 Credit risk Credit risk is the risk of financial loss to the group if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the group\u2019s receivables from customers. As of December 31, the main credit risk can be summarized as follows: (in thousands of \u20ac) 31-12-2022 31-12-2021 Trade and other receivables 538,381 428,950 Cash and cash equivalents 268,160 141,293 Other financial assets 12,038 2,877 \u00a0818,578 573,121 4.1.1 Trade and other receivables The group applies the IFRS 9 simplified approach (refer to Note 2.7.2). The group's exposure to credit risk is influenced mainly by the individual characteristics of each customer. The demographics of the group\u2019s customer base, including the default risk of the industry and country in which customers operate, has less of an influence on credit risk. The group has no significant concentration of credit risk. The group has a credit policy under which each new customer is analyzed individually for creditworthiness before the group\u2019s standard payment and delivery terms and conditions are offered. The group\u2019s review includes external ratings, when available, and in some cases bank references. Purchase limits are established for each customer. Customers that fail to meet the group\u2019s benchmark creditworthiness may transact with the group only on a prepayment basis. The group\u2019s credit policy includes suspension of further deliveries, if customers fail to pay their debts on time. Moreover, the group engages in non-recourse factoring for the majority of its revenue in the EMEA region, which is used as an efficiency program in its credit collection processes. No other credit insurance programs are deemed to be necessary. A significant portion of the group\u2019s customers have been transacting with the group companies for many years and losses have occurred infrequently. The group does not require collateral in respect of trade and other receivables. The group establishes an allowance for impairment that represents its estimate of expected losses in respect of trade receivables. The main components of this allowance are a specific loss component that relates to individually significant exposures and a collective loss component established for groups of similar assets in respect of losses that have been incurred but not yet identified. The collective loss allowance is determined based on historical data of payment statistics for similar financial assets, adjusted for forward-looking information through an assessment of both the current and projected direction of economic conditions at the reporting date. At year-end the aging of the trade receivables is constituted as follows: 31-12-2022 (in thousands of \u20ac) Gross % of total Impairment % Impaired Not due 334,132 69.3% 2,590 0.8% Between 0 and 2 months 98,192 20.4% 10,725 10.9% Between 2 and 12 months 38,990 8.1% 14,713 37.7% More than 12 months 10,885 2.3% 10,885 100.0% \u00a0482,200 100.0% 38,912 8.1% 31-12-2021 (in thousands of \u20ac) Gross % of total Impairment % Impaired Not due 302,458 76.1% 1,549 0.5% Between 0 and 2 months 74,397 18.7% 4,593 6.2% Between 2 and 12 months 11,852 3.0% 6,973 58.8% More than 12 months 8,668 2.2% 8,668 100.0% \u00a0397,375 100.0% 21,783 5.5% The loss allowances for trade receivables as of December 31 reconcile to the opening loss allowances as follows: (in thousands of \u20ac) 31-12-2022 31-12-2021 Balance at 1 January 21,783 15,763 Business combination 12,235 4,190 Provisions made in the year 6,513 2,451 Decrease on impairment losses -579 -838 Exchange rate differences -1,040 217 Balance at December 31 38,912 21,783 4.1.2 Cash The group\u2019s exposure to credit risk is insignificant as the group deals with highly rated banks for its cash deposits. 4.1.3 Guarantees The group\u2019s policy is to provide financial guarantees only in favor of wholly owned subsidiaries. At balance sheet date, no other material guarantees were outstanding. ", "dimensions": { "concept": "ifrs-full:DisclosureOfCreditRiskExplanatory", "language": "en", "entity": "scheme:699400M9RRMTV264FM70", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-426": { "value": " 4.1.1 Trade and other receivables The group applies the IFRS 9 simplified approach (refer to Note 2.7.2). The group's exposure to credit risk is influenced mainly by the individual characteristics of each customer. The demographics of the group\u2019s customer base, including the default risk of the industry and country in which customers operate, has less of an influence on credit risk. The group has no significant concentration of credit risk. The group has a credit policy under which each new customer is analyzed individually for creditworthiness before the group\u2019s standard payment and delivery terms and conditions are offered. The group\u2019s review includes external ratings, when available, and in some cases bank references. Purchase limits are established for each customer. Customers that fail to meet the group\u2019s benchmark creditworthiness may transact with the group only on a prepayment basis. The group\u2019s credit policy includes suspension of further deliveries, if customers fail to pay their debts on time. Moreover, the group engages in non-recourse factoring for the majority of its revenue in the EMEA region, which is used as an efficiency program in its credit collection processes. No other credit insurance programs are deemed to be necessary. A significant portion of the group\u2019s customers have been transacting with the group companies for many years and losses have occurred infrequently. The group does not require collateral in respect of trade and other receivables. The group establishes an allowance for impairment that represents its estimate of expected losses in respect of trade receivables. The main components of this allowance are a specific loss component that relates to individually significant exposures and a collective loss component established for groups of similar assets in respect of losses that have been incurred but not yet identified. The collective loss allowance is determined based on historical data of payment statistics for similar financial assets, adjusted for forward-looking information through an assessment of both the current and projected direction of economic conditions at the reporting date. At year-end the aging of the trade receivables is constituted as follows: 31-12-2022 (in thousands of \u20ac) Gross % of total Impairment % Impaired Not due 334,132 69.3% 2,590 0.8% Between 0 and 2 months 98,192 20.4% 10,725 10.9% Between 2 and 12 months 38,990 8.1% 14,713 37.7% More than 12 months 10,885 2.3% 10,885 100.0% \u00a0482,200 100.0% 38,912 8.1% 31-12-2021 (in thousands of \u20ac) Gross % of total Impairment % Impaired Not due 302,458 76.1% 1,549 0.5% Between 0 and 2 months 74,397 18.7% 4,593 6.2% Between 2 and 12 months 11,852 3.0% 6,973 58.8% More than 12 months 8,668 2.2% 8,668 100.0% \u00a0397,375 100.0% 21,783 5.5% The loss allowances for trade receivables as of December 31 reconcile to the opening loss allowances as follows: (in thousands of \u20ac) 31-12-2022 31-12-2021 Balance at 1 January 21,783 15,763 Business combination 12,235 4,190 Provisions made in the year 6,513 2,451 Decrease on impairment losses -579 -838 Exchange rate differences -1,040 217 Balance at December 31 38,912 21,783 ", "dimensions": { "concept": "ifrs-full:DisclosureOfAllowanceForCreditLossesExplanatory", "language": "en", "entity": "scheme:699400M9RRMTV264FM70", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-427": { "value": " 4.1.1 Trade and other receivables The group applies the IFRS 9 simplified approach (refer to Note 2.7.2). The group's exposure to credit risk is influenced mainly by the individual characteristics of each customer. The demographics of the group\u2019s customer base, including the default risk of the industry and country in which customers operate, has less of an influence on credit risk. The group has no significant concentration of credit risk. The group has a credit policy under which each new customer is analyzed individually for creditworthiness before the group\u2019s standard payment and delivery terms and conditions are offered. The group\u2019s review includes external ratings, when available, and in some cases bank references. Purchase limits are established for each customer. Customers that fail to meet the group\u2019s benchmark creditworthiness may transact with the group only on a prepayment basis. The group\u2019s credit policy includes suspension of further deliveries, if customers fail to pay their debts on time. Moreover, the group engages in non-recourse factoring for the majority of its revenue in the EMEA region, which is used as an efficiency program in its credit collection processes. No other credit insurance programs are deemed to be necessary. A significant portion of the group\u2019s customers have been transacting with the group companies for many years and losses have occurred infrequently. The group does not require collateral in respect of trade and other receivables. The group establishes an allowance for impairment that represents its estimate of expected losses in respect of trade receivables. The main components of this allowance are a specific loss component that relates to individually significant exposures and a collective loss component established for groups of similar assets in respect of losses that have been incurred but not yet identified. The collective loss allowance is determined based on historical data of payment statistics for similar financial assets, adjusted for forward-looking information through an assessment of both the current and projected direction of economic conditions at the reporting date. At year-end the aging of the trade receivables is constituted as follows: 31-12-2022 (in thousands of \u20ac) Gross % of total Impairment % Impaired Not due 334,132 69.3% 2,590 0.8% Between 0 and 2 months 98,192 20.4% 10,725 10.9% Between 2 and 12 months 38,990 8.1% 14,713 37.7% More than 12 months 10,885 2.3% 10,885 100.0% \u00a0482,200 100.0% 38,912 8.1% 31-12-2021 (in thousands of \u20ac) Gross % of total Impairment % Impaired Not due 302,458 76.1% 1,549 0.5% Between 0 and 2 months 74,397 18.7% 4,593 6.2% Between 2 and 12 months 11,852 3.0% 6,973 58.8% More than 12 months 8,668 2.2% 8,668 100.0% \u00a0397,375 100.0% 21,783 5.5% The loss allowances for trade receivables as of December 31 reconcile to the opening loss allowances as follows: (in thousands of \u20ac) 31-12-2022 31-12-2021 Balance at 1 January 21,783 15,763 Business combination 12,235 4,190 Provisions made in the year 6,513 2,451 Decrease on impairment losses -579 -838 Exchange rate differences -1,040 217 Balance at December 31 38,912 21,783 19 Trade and other receivables (in thousands of \u20ac) 31-12-2022 31-12-2021 Trade receivables 443,288 375,591 Other receivables 95,093 53,359 \u00a0538,381 428,950 See note 4.1.1 for ageing and allowance of these receivables. Other receivables relate mainly to prepayments. ", "dimensions": { "concept": "ifrs-full:DisclosureOfTradeAndOtherReceivablesExplanatory", "language": "en", "entity": "scheme:699400M9RRMTV264FM70", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-428": { "value": " 4.1.1 Trade and other receivables The group applies the IFRS 9 simplified approach (refer to Note 2.7.2). The group's exposure to credit risk is influenced mainly by the individual characteristics of each customer. The demographics of the group\u2019s customer base, including the default risk of the industry and country in which customers operate, has less of an influence on credit risk. The group has no significant concentration of credit risk. The group has a credit policy under which each new customer is analyzed individually for creditworthiness before the group\u2019s standard payment and delivery terms and conditions are offered. The group\u2019s review includes external ratings, when available, and in some cases bank references. Purchase limits are established for each customer. Customers that fail to meet the group\u2019s benchmark creditworthiness may transact with the group only on a prepayment basis. The group\u2019s credit policy includes suspension of further deliveries, if customers fail to pay their debts on time. Moreover, the group engages in non-recourse factoring for the majority of its revenue in the EMEA region, which is used as an efficiency program in its credit collection processes. No other credit insurance programs are deemed to be necessary. A significant portion of the group\u2019s customers have been transacting with the group companies for many years and losses have occurred infrequently. The group does not require collateral in respect of trade and other receivables. The group establishes an allowance for impairment that represents its estimate of expected losses in respect of trade receivables. The main components of this allowance are a specific loss component that relates to individually significant exposures and a collective loss component established for groups of similar assets in respect of losses that have been incurred but not yet identified. The collective loss allowance is determined based on historical data of payment statistics for similar financial assets, adjusted for forward-looking information through an assessment of both the current and projected direction of economic conditions at the reporting date. At year-end the aging of the trade receivables is constituted as follows: 31-12-2022 (in thousands of \u20ac) Gross % of total Impairment % Impaired Not due 334,132 69.3% 2,590 0.8% Between 0 and 2 months 98,192 20.4% 10,725 10.9% Between 2 and 12 months 38,990 8.1% 14,713 37.7% More than 12 months 10,885 2.3% 10,885 100.0% \u00a0482,200 100.0% 38,912 8.1% 31-12-2021 (in thousands of \u20ac) Gross % of total Impairment % Impaired Not due 302,458 76.1% 1,549 0.5% Between 0 and 2 months 74,397 18.7% 4,593 6.2% Between 2 and 12 months 11,852 3.0% 6,973 58.8% More than 12 months 8,668 2.2% 8,668 100.0% \u00a0397,375 100.0% 21,783 5.5% The loss allowances for trade receivables as of December 31 reconcile to the opening loss allowances as follows: (in thousands of \u20ac) 31-12-2022 31-12-2021 Balance at 1 January 21,783 15,763 Business combination 12,235 4,190 Provisions made in the year 6,513 2,451 Decrease on impairment losses -579 -838 Exchange rate differences -1,040 217 Balance at December 31 38,912 21,783 15.1 Allocation of assets for impairment testing A cash-generating unit (CGU) is the smallest identifiable group of assets that generates cash inflows that are largely independent of the cash inflows from other assets or groups of assets. For the purpose of impairment testing, goodwill is allocated to the following groups of CGUs: (in thousands of \u20ac) 31-12-2022 31-12-2021 EMEA 733,032 616,570 AMERICAS 1,119,304 919,385 ASIA PACIFIC 321,919 267,311 Total Goodwill 2,174,256 1,803,266 All goodwill acquired in the business combinations has been allocated to a regional CGU at the end of the reporting period. The goodwill is allocated on regional level as it is the group's regions that are expected to benefit of the business combinations, and as goodwill is also monitored internally on the regional level. The group's expectation is that synergies will be realized in the region of acquisition. Trademarks with a book value of \u20ac317.4 million (2021: \u20ac317.4 million) have an indefinite life. These do not generate cash inflows independently and qualify as corporate assets. As their carrying amount cannot be allocated to the regional CGUs on a reasonable and consistent basis, the corporate assets are allocated to the group as a whole and the impairment test is performed in two stages. 15.2 Impairment assessment The impairment tests have been performed by discounting future pre-tax cash flows from continuing operations of the unit. The recoverable amounts of the regional CGU's as of\u00a0December 31, 2022 have been determined based on a value in use calculation using cash flow projections from a five year detailed business plan which is approved by senior management and serves as a basis to determine the future free cash flows and the Adjusted EBITA\u2019s. The business plan is based on the market growth assumptions and on some general economic indicators (inflation, GDP, etc.). It also properly reflects the future strategy of the regional CGU's. For cash flows beyond the business plan period, an extrapolation was made based on steady terminal growth rates. The key assumptions used in the impairment tests are the pre-tax WACC, terminal growth rate and Adjusted EBITA margin. The pre-tax WACC is estimated per regional CGU, is consistent with external sources of information, and varies mainly due to differences in risk free rates that increased during 2022. The risk-free rates per regional CGU are based on the weighted average of the rate of return on local sovereign bonds. The terminal growth rates are based on industry benchmarks by region and are consistent with the group's past experience and based on external sources of information. Adjusted EBITA margin reflects the group's past experience and future expectation of regional business development. The key assumptions used for the second stage impairment test, on the level of the group as a whole including corporate asset, are identical to those used for the regional CGU impairment tests. The values attributed to pre-tax WACC and the growth rates are as follows: Cash Generating Unit 2022 2023-2027 assumptions \u00a0Pre-tax WACC Growth rate for terminal value EBITA% EMEA 14.55% 3.2% 11.6% AMERICAS 12.99% 2.6% 13.7% ASIA PACIFIC 12.81% 5.2% 8.2% Cash Generating Unit 2021 2022-2026 assumptions \u00a0Pre-tax WACC Growth rate for terminal value EBITA% EMEA 10.67% 3.0% 10.4% AMERICAS 8.56% 2.5% 12.4% ASIA PACIFIC 11.08% 5.0% 7.7% The increase versus 2021 of the pre-tax WACC is primarily driven by increased market risk-free rates, that have been increasing during 2022 across the globe. The impairment tests on the recoverable amount of regional CGU's show sufficient headroom on the carrying amount of the Goodwill. In the second stage impairment test, the recoverable amount of the regional CGU's considered as a whole exceeds the carrying amount of the regional CGU's including the carrying amount of the corporate assets. Sensitivity to changes in assumptions In order to test the resilience of the headroom against changes in key assumptions, Azelis has selected reasonably expectable changes in the assumptions as follows: A WACC increase by 2% A decrease of the growth rate in the terminal value by 2% A decrease of Adjusted EBITA margin by 0.5% Versus previous years, also a sensitivity test of Adjusted EBITA has been added, as Adjusted EBITA (rather than Sales) is the major indicator for the outcome of Azelis' impairment test. Azelis' cost base is predominantly variable in nature, enabling to react rapidly on (downward) exposure of revenue, limiting the possible impact on Adjusted EBITA. A sensitivity of 0.5% in Adjusted EBITA margin would result in a decrease of almost 5% in Adjusted EBITA (in EUR). In each of the above independent scenario's and for each regional CGU, the sensitivity test shows sufficient headroom on the carrying amount of the Goodwill. 16 Tangible assets 16.1 Property, plant and equipment \u00a0Land and buildings Plant and equipment Other Total As of December 31, 2020 \u00a0\u00a0\u00a0\u00a0Cost 19,612 7,787 12,963 40,362 Accumulated depreciation and impairment -1,767 -2,089 -4,201 -8,057 \u00a017,845 5,698 8,762 32,304 Changes in 2021 \u00a0\u00a0\u00a0\u00a0Business combination 11,412 6,276 974 18,661 Additions 192 1,379 5,751 7,321 Depreciation -839 -1,003 -2,849 -4,692 Disposals -29 -115 -306 -450 Reclassifications -45 -3,413 2,254 -1,204 Translation differences 430 390 248 1,067 Changes in the Period 11,121 3,513 6,070 20,704 \u00a0\u00a0\u00a0\u00a0\u00a0As of December 31, 2021 \u00a0\u00a0\u00a0\u00a0Cost 31,572 12,303 21,883 65,757 Accumulated depreciation and impairment -2,606 -3,092 -7,050 -12,750 \u00a028,966 9,211 14,832 53,008 Changes in 2022 \u00a0\u00a0\u00a0\u00a0Business combination 2,060 480 2,420 4,961 Additions 394 1,930 7,350 9,674 Depreciation -1,538 -1,784 -4,131 -7,453 Disposals -1,508 -22 -334 -1,865 Reclassifications -107 387 -1,225 -946 Hyperinflation - 8 186 195 Translation differences 80 108 122 310 Changes in the Period -619 1,105 4,389 4,876 \u00a0\u00a0\u00a0\u00a0\u00a0As of December 31, 2022 \u00a0\u00a0\u00a0\u00a0Cost 32,491 15,193 30,403 78,086 Accumulated depreciation and impairment -4,144 -4,877 -11,182 -20,203 \u00a028,347 10,316 19,221 57,884 The reclassifications relate mainly to internal project costs which are recognized at year-end as intangibles. The category 'Other' mainly relates to leasehold improvements, comprising also an insignificant amount of assets under construction. Security At 31st December 2022, the group has not pledged any land and buildings, plant and equipment as security for the bank loans (2021: zero). Other restrictions are mainly related to leasehold improvements and leased machinery. 16.2 Right of use assets The Right of Use assets are included since 1 January 2019, following the implementation of IFRS 16 as per that date, and relate to rental agreements for offices, warehouses and cars. \u00a0Land and buildings Other Total At 31 December 2020 \u00a0\u00a0\u00a0Cost 63,227 17,956 81,183 Accumulated depreciation and impairment -17,175 -8,351 -25,526 \u00a046,052 9,605 55,657 Changes in 2021 \u00a0\u00a0\u00a0Business combination 9,097 155 9,252 Additions 8,814 3,105 11,920 Depreciation -10,424 -4,785 -15,208 Disposals -32 -46 -78 Remeasurements 1,358 586 1,944 Translation differences 2,117 -20 2,097 Changes in the Period 10,930 -1,005 9,925 \u00a0\u00a0\u00a0\u00a0At 31 December 2021 \u00a0\u00a0\u00a0Cost 84,580 21,736 106,316 Accumulated depreciation and impairment -27,599 -13,136 -40,734 \u00a056,981 8,600 65,582 Changes in 2022 \u00a0\u00a0\u00a0Business combination 10,916 432 11,348 Additions 23,862 4,055 27,917 Depreciation -15,230 -5,080 -20,310 Disposals -824 -103 -927 Remeasurements 11,605 1,006 12,611 Hyperinflation 190 608 798 Translation differences 56 -92 -36 Changes in the Period 30,574 826 31,400 \u00a0\u00a0\u00a0\u00a0At 31 December 2022 \u00a0\u00a0\u00a0Cost 130,385 27,642 158,027 Accumulated depreciation and impairment -42,829 -18,215 -61,045 \u00a087,555 9,426 96,982 Remeasurements mainly relate to the prolongation of the lease period of existing contracts. The group has lease contracts that have not yet commenced as of December 31, 2022, with the future lease payments of around \u20ac27.0 million. Usage of inventories is recorded in the \"costs for goods and consumables\" in the consolidated income statement. In 2022 an impairment on inventory of \u20ac17.2 million (2021: \u20ac9.6 million) is included in the \"costs for goods and consumables\". ", "dimensions": { "concept": "ifrs-full:DisclosureOfImpairmentOfAssetsExplanatory", "language": "en", "entity": "scheme:699400M9RRMTV264FM70", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-429": { "value": " 4.2 Liquidity risk Liquidity risk is the risk that the group will not be able to meet its financial obligations as they fall due. The group\u2019s approach to managing liquidity is to ensure that it will have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses. The group ensures that it has sufficient cash on hand and unused credit facilities to meet expected operational expenses for the respective planning horizon, including the servicing of financial obligations. Maturities of financial liabilities The following are the contractual maturities of financial liabilities, including estimated interest payments and excluding the impact of any netting agreements at year-end: 31-12-2022 (in thousands of \u20ac) Carrying amount Undiscounted contractual Cash flows Less than 1 Year 1 to 5 Years More than 5 Years Loans and borrowings 1,303,717 1,465,226 260,431 1,204,795 0 Lease obligation (IFRS16) 101,558 102,806 20,639 52,412 29,755 Derivatives 377 377 377 0 0 Trade and other payables 869,574 869,574 869,574 0 0 Bank Overdrafts 30,412 30,412 30,412 0 0 \u00a02,305,637 2,468,394 1,181,432 1,257,207 29,755 Loans and borrowings are primarily to be repaid in 2026. 31-12-2021 (in thousands of \u20ac) Carrying amount Undiscounted contractual Cash flows Less than 1 Year 1 to 5 Years More than 5 Years Loans and borrowings 902,634 996,252 116,317 879,935 0 Lease obligation (IFRS16) 69,278 69,278 15,200 37,831 16,247 Derivatives 155 155 155 0 0 Trade and other payables 550,576 550,576 550,576 0 0 Bank Overdrafts 40,524 40,524 40,524 0 0 \u00a01,563,167 1,656,785 722,772 917,766 16,247 ", "dimensions": { "concept": "ifrs-full:DisclosureOfLiquidityRiskExplanatory", "language": "en", "entity": "scheme:699400M9RRMTV264FM70", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-430": { "value": "The following are the contractual maturities of financial liabilities, including estimated interest payments and excluding the impact of any netting agreements at year-end: 31-12-2022 (in thousands of \u20ac) Carrying amount Undiscounted contractual Cash flows Less than 1 Year 1 to 5 Years More than 5 Years Loans and borrowings 1,303,717 1,465,226 260,431 1,204,795 0 Lease obligation (IFRS16) 101,558 102,806 20,639 52,412 29,755 Derivatives 377 377 377 0 0 Trade and other payables 869,574 869,574 869,574 0 0 Bank Overdrafts 30,412 30,412 30,412 0 0 \u00a02,305,637 2,468,394 1,181,432 1,257,207 29,755 31-12-2021 (in thousands of \u20ac) Carrying amount Undiscounted contractual Cash flows Less than 1 Year 1 to 5 Years More than 5 Years Loans and borrowings 902,634 996,252 116,317 879,935 0 Lease obligation (IFRS16) 69,278 69,278 15,200 37,831 16,247 Derivatives 155 155 155 0 0 Trade and other payables 550,576 550,576 550,576 0 0 Bank Overdrafts 40,524 40,524 40,524 0 0 \u00a01,563,167 1,656,785 722,772 917,766 16,247 16.2 Right of use assets The Right of Use assets are included since 1 January 2019, following the implementation of IFRS 16 as per that date, and relate to rental agreements for offices, warehouses and cars. \u00a0Land and buildings Other Total At 31 December 2020 \u00a0\u00a0\u00a0Cost 63,227 17,956 81,183 Accumulated depreciation and impairment -17,175 -8,351 -25,526 \u00a046,052 9,605 55,657 Changes in 2021 \u00a0\u00a0\u00a0Business combination 9,097 155 9,252 Additions 8,814 3,105 11,920 Depreciation -10,424 -4,785 -15,208 Disposals -32 -46 -78 Remeasurements 1,358 586 1,944 Translation differences 2,117 -20 2,097 Changes in the Period 10,930 -1,005 9,925 \u00a0\u00a0\u00a0\u00a0At 31 December 2021 \u00a0\u00a0\u00a0Cost 84,580 21,736 106,316 Accumulated depreciation and impairment -27,599 -13,136 -40,734 \u00a056,981 8,600 65,582 Changes in 2022 \u00a0\u00a0\u00a0Business combination 10,916 432 11,348 Additions 23,862 4,055 27,917 Depreciation -15,230 -5,080 -20,310 Disposals -824 -103 -927 Remeasurements 11,605 1,006 12,611 Hyperinflation 190 608 798 Translation differences 56 -92 -36 Changes in the Period 30,574 826 31,400 \u00a0\u00a0\u00a0\u00a0At 31 December 2022 \u00a0\u00a0\u00a0Cost 130,385 27,642 158,027 Accumulated depreciation and impairment -42,829 -18,215 -61,045 \u00a087,555 9,426 96,982 Remeasurements mainly relate to the prolongation of the lease period of existing contracts. The group has lease contracts that have not yet commenced as of December 31, 2022, with the future lease payments of around \u20ac27.0 million. 22.1.2 Lease liabilities (in thousands of \u20ac) 2022 2021 As of January 1 69,278 58,058 New contracts 39,331 21,507 Remeasurements 12,610 2,352 Cash out -22,795 -14,846 Currency translation differences 3,134 2,207 As of December 31 101,558 69,278 For disclosure on the group's right-of-use assets, refer to note 16.2 Right of use assets. ", "dimensions": { "concept": "ifrs-full:DisclosureOfLeasesExplanatory", "language": "en", "entity": "scheme:699400M9RRMTV264FM70", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-433": { "value": "4.3 Market risk Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices will affect the group\u2019s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimizing the return. The group buys and sells derivatives in order to manage its market risks. 4.3.1 Currency risk The group is exposed to currency risk on sales, purchases and borrowings that are denominated in various currencies. The main currencies are Euro (\u20ac), Pound Sterling (GBP), US Dollars (USD) and Canadian Dollars (CAD). At any point in time, the group hedges a significant part of its foreign currency exposure in respect of sales and purchases orders via natural hedges within its operational portfolio. The group uses mainly forward exchange contracts to hedge its remaining currency risk, all with a maturity of less than one year from the reporting date. When necessary, forward exchange contracts are rolled over at maturity. The group has not applied hedge accounting. Interest on borrowings is denominated in currencies that predominantly match the cash flows generated by the underlying operations of the group, primarily Euro (\u20ac), US Dollars (USD), Pound Sterling (GBP) and Canadian Dollar (CAD). This provides an economic hedge without derivatives being entered into and therefore the group has not applied hedge accounting. The group\u2019s investments in foreign non-euro subsidiaries are considered to be long-term operations of the group and are therefore not hedged. Currency translation differences on these long-term operations are reported in the translation reserve in equity. Exposure to currency risk The exposure to foreign currency risk in current assets and current liabilities is mainly related to balances denominated in USD, GBP and CAD, for which the notional amounts (stated in \u20ac) amount to: (in thousands of \u20ac) 31-12-2022 31-12-2022 31-12-2022 31-12-2021 31-12-2021 31-12-2021 \u00a0USD GBP CAD USD GBP CAD Trade receivables 197,296 927 10,955 138,345 1,759 49,139 Cash and cash equivalents 65,637 4,270 -33 16,722 2,296 7,120 Trade payables -152,045 -2,721 -5,497 -68,068 -4,418 -31,346 Gross balance sheet exposure 110,888 2,476 5,426 86,999 -363 24,913 Sensitivity analysis of currency risk A 10% strengthening of the Euro against the USD, GBP and CAD at year-end would have increased (decreased) equity and the income statement by the amounts shown below. This analysis assumes that all other variables, in particular interest rates, remain constant. (in thousands of \u20ac) 31-12-2022 31-12-2021 \u00a0Profit or loss Equity Profit or loss Equity USD -10,081 -10,081 -7,909 -7,909 CAD -493 -493 -2,265 -2,265 GBP -225 -225 33 33 A 10% weakening of the Euro against the USD, GBP and CAD at year-end would have had the equal but opposite effect in Euro to the amounts shown above, on the basis that all other variables remain constant. 4.3.2 Interest rate risk The group adopts a policy of carefully managing its interest rate risk. On a regular basis, the Board of Directors assesses the group's interest rates versus external benchmarks, ensuring that management will affect financial transactions resulting in fixed borrowing interest rates in case limits are exceeded. As of the reporting date, the external bank borrowings are on a floating interest rate basis. The group\u2019s main interest rate risk arises from a long-term borrowing with a variable rates (EURIBOR and SONIA), which exposes the group to cash flow interest rate risk. The cash flow risk is mitigated through the usage of an interest rate cap.\u00a0Interest profile At the reporting date the interest rate profile of the group\u2019s interest-bearing financial instruments expressed in their carrying amounts was: (in thousands of \u20ac) 31-12-2022 31-12-2021 Variable rate instruments \u00a0\u00a0Financial assets 268,160 141,293 Financial liabilities -1,435,687 -1,012,436 \u00a0-1,167,526 -871,143 Cash flow sensitivity analysis for variable rate instruments An increase (decrease) of 100 basis points in interest rates at the reporting date would have decreased (increased) equity and the income statement (not considering income tax impact) by the annual amounts shown below. This analysis assumes that all other variables, in particular foreign currency rates and the potential mitigating effect of the interest rate cap, remain constant. (in thousands of \u20ac) Profit or loss - 2022 Equity - 2022 \u00a0100 bp 100 bp 100 bp 100 bp \u00a0Increase Decrease Increase Decrease Variable rate instruments -14,357 14,357 -14,357 14,357 Cash flow sensitivity (net) -14,357 14,357 -14,357 14,357 (in thousands of \u20ac) Profit or loss - 2021 Equity - 2021 \u00a0100 bp 100 bp 100 bp 100 bp \u00a0Increase Decrease Increase Decrease Variable rate instruments -10,124 10,124 -10,124 10,124 Cash flow sensitivity (net) -10,124 10,124 -10,124 10,124 ", "dimensions": { "concept": "ifrs-full:DisclosureOfMarketRiskExplanatory", "language": "en", "entity": "scheme:699400M9RRMTV264FM70", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-434": { "value": "The group\u2019s main interest rate risk arises from a long-term borrowing with a variable rates (EURIBOR and SONIA), which exposes the group to cash flow interest rate risk. The cash flow risk is mitigated through the usage of an interest rate cap.\u00a0", "dimensions": { "concept": "ifrs-full:DisclosureOfFinancialInstrumentsDesignatedAtFairValueThroughProfitOrLossExplanatory", "language": "en", "entity": "scheme:699400M9RRMTV264FM70", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-435": { "value": "The group\u2019s main interest rate risk arises from a long-term borrowing with a variable rates (EURIBOR and SONIA), which exposes the group to cash flow interest rate risk. The cash flow risk is mitigated through the usage of an interest rate cap.\u00a0In May 2022, the group entered into an interest rate cap agreement (\u201cinterest rate cap\u201d) to limit its interest rate risk exposure (see note 22.1.1). The interest rate cap modifies the Company\u2019s exposure to interest rate risk by converting a portion of the Company\u2019s floating-rate debt to a fixed-rate basis, thereby reducing the impact of interest rate changes on interest expense. The upfront fee paid for the interest rate cap for an amount of \u20ac4.6 million was recorded under other financial assets. Subsequently, in the consolidated statement of profit or loss for the year ended December 31, 2022, the group recognized the change in fair value of the interest rate cap within financial income and expenses. During the year ended December 31, 2022, the group recognized a fair value gain of \u20ac5.0 million in the consolidated statement of profit or loss, within financial income. ", "dimensions": { "concept": "ifrs-full:DisclosureOfDerivativeFinancialInstrumentsExplanatory", "language": "en", "entity": "scheme:699400M9RRMTV264FM70", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-436": { "value": "On a selective basis, the group has outstanding foreign exchange swap contracts to manage the exposure to foreign currency risk on outstanding foreign currency receivables/payables, as well as an interest rate swap relating to its variable rate interest risk.
In May 2022, the group entered into an interest rate cap agreement (\u201cinterest rate cap\u201d) to limit its interest rate risk exposure (see note 22.1.1). The interest rate cap modifies the Company\u2019s exposure to interest rate risk by converting a portion of the Company\u2019s floating-rate debt to a fixed-rate basis, thereby reducing the impact of interest rate changes on interest expense. The upfront fee paid for the interest rate cap for an amount of \u20ac4.6 million was recorded under other financial assets. Subsequently, in the consolidated statement of profit or loss for the year ended December 31, 2022, the group recognized the change in fair value of the interest rate cap within financial income and expenses. During the year ended December 31, 2022, the group recognized a fair value gain of \u20ac5.0 million in the consolidated statement of profit or loss, within financial income.
In connection with business combinations, the group has outstanding liabilities for contingent consideration and for put options on non-controlling interests. The group\u2019s financial instruments per category are shown below including the fair value and hierarchy information.
The interest rate cap qualifies for the level 2 category in the fair value hierarchy due to the fact that it is not traded in an active market and the fair value is\u00a0determined using valuation techniques (option pricing model) which maximize the use of observable market data. Since\u00a0all significant inputs required to fair value the instrument are observable, the instrument is classified as level 2. All derivatives related to forward exchange contracts are classified as Level 2. Contingent consideration qualifying as earnout and put options on non-controlling interests are classified as Level 3. For the calculation basis of fair values, see also note 2.17 \u2013 Determination of fair values.
The carrying amount of the other financial assets and liabilities approximates their fair value.
| (in thousands of \u20ac) | Note | Fair value through P&L | Amortized cost | Total book value | Level 1 | Level 2 | Level 3 | TOTAL |
|---|---|---|---|---|---|---|---|---|
| Assets | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Non current assets | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Other Financial receivables | 4 | \u00a0 | 832 | 832 | \u00a0 | 832 | \u00a0 | 832 |
| Derivatives | 4 | 9,556 | \u00a0 | 9,556 | \u00a0 | 9,556 | \u00a0 | 9,556 |
| Other investments | 4 | 698 | 809 | 1,506 | \u00a0 | 1,506 | \u00a0 | 1,506 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Current assets | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Trade receivables | 19 | \u00a0 | 443,288 | 443,288 | \u00a0 | 443,288 | \u00a0 | 443,288 |
| Other receivables | 19 | \u00a0 | 95,093 | 95,093 | \u00a0 | 95,093 | \u00a0 | 95,093 |
| Other financial receivables | \u00a0 | \u00a0 | 81 | 81 | \u00a0 | 81 | \u00a0 | 81 |
| Derivatives | 4 | 199 | \u00a0 | 199 | \u00a0 | 199 | \u00a0 | 199 |
| Cash & Cash equivalents | 20 | \u00a0 | 268,160 | 268,160 | \u00a0 | 268,160 | \u00a0 | 268,160 |
| Total financial assets | \u00a0 | 10,453 | 808,263 | 818,716 | 0 | 818,716 | 0 | 818,716 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Liabilities | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Non Current Liabilities | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Interest bearing | 22 | \u00a0 | 1,259,562 | 1,259,562 | \u00a0 | 1,259,562 | \u00a0 | 1,259,562 |
| Other Financial liabilities | \u00a0 | 73,420 | 24,844 | 98,264 | \u00a0 | 24,844 | 73,420 | 98,264 |
| Current liabilities | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Interest bearing | 22 | \u00a0 | 145,713 | 145,713 | \u00a0 | 145,713 | \u00a0 | 145,713 |
| Bank overdraft | 20 | \u00a0 | 30,412 | 30,412 | \u00a0 | 30,412 | \u00a0 | 30,412 |
| Trade payables | 24 | \u00a0 | 462,728 | 462,728 | \u00a0 | 462,728 | \u00a0 | 462,728 |
| Other current liabilities excl derivatives | 24 | 50,657 | 257,924 | 308,582 | \u00a0 | 257,924 | 50,657 | 308,582 |
| Derivatives | 24 | 377 | \u00a0 | 377 | \u00a0 | 377 | \u00a0 | 377 |
| Total financial liabilities | \u00a0 | 124,454 | 2,181,183 | 2,305,637 | 0 | 2,181,560 | 124,077 | 2,305,637 |
| (in thousands of \u20ac) | Note | Fair value through P&L | Amortized cost | Total book value | Level 1 | Level 2 | Level 3 | TOTAL |
|---|---|---|---|---|---|---|---|---|
| Assets | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Non current assets | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Other Financial receivables | 4 | \u00a0 | 1113 | 1,113 | \u00a0 | 1,113 | \u00a0 | 1,113 |
| Other investments | 4 | \u00a0 | 422 | 422 | \u00a0 | 422 | \u00a0 | 422 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Current assets | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Trade receivables | 19 | \u00a0 | 375,591 | 375,591 | \u00a0 | 375,591 | \u00a0 | 375,591 |
| Other receivables | 19 | \u00a0 | 53,359 | 53,359 | \u00a0 | 53,359 | \u00a0 | 53,359 |
| Other financial receivables | \u00a0 | \u00a0 | 1,479 | 1,479 | \u00a0 | 1,479 | \u00a0 | 1,479 |
| Derivatives | 4 | 44 | \u00a0 | 44 | \u00a0 | 44 | \u00a0 | 44 |
| Cash & Cash equivalents | 20 | \u00a0 | 141,293 | 141,293 | \u00a0 | 141,293 | \u00a0 | 141,293 |
| Total financial assets | \u00a0 | 44 | 573,257 | 573,301 | 0 | 573,301 | 0 | 573,301 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Liabilities | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Non Current Liabilities | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Interest bearing | 22 | \u00a0 | 894,108 | 894,108 | \u00a0 | 894,108 | \u00a0 | 894,108 |
| Other Financial liabilities | \u00a0 | 1,371 | 8,284 | 9,655 | \u00a0 | 8,284 | 1,371 | 9,655 |
| Current liabilities | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Interest bearing | 22 | \u00a0 | 77,804 | 77,804 | \u00a0 | 77,804 | \u00a0 | 77,804 |
| Bank overdraft | 20 | \u00a0 | 40,524 | 40,524 | \u00a0 | 40,524 | \u00a0 | 40,524 |
| Trade payables | 24 | \u00a0 | 368,657 | 368,657 | \u00a0 | 368,657 | \u00a0 | 368,657 |
| Other current liabilities excl derivatives | 24 | 37,286 | 134,976 | 172,262 | \u00a0 | 134,976 | 37,286 | 172,262 |
| Derivatives | 24 | 155 | \u00a0 | 155 | \u00a0 | 155 | \u00a0 | 155 |
| Total financial liabilities | \u00a0 | 38,813 | 1,524,352 | 1,563,165 | 0 | 1,524,507 | 38,658 | 1,563,165 |
On a selective basis, the group has outstanding foreign exchange swap contracts to manage the exposure to foreign currency risk on outstanding foreign currency receivables/payables, as well as an interest rate swap relating to its variable rate interest risk.
In May 2022, the group entered into an interest rate cap agreement (\u201cinterest rate cap\u201d) to limit its interest rate risk exposure (see note 22.1.1). The interest rate cap modifies the Company\u2019s exposure to interest rate risk by converting a portion of the Company\u2019s floating-rate debt to a fixed-rate basis, thereby reducing the impact of interest rate changes on interest expense. The upfront fee paid for the interest rate cap for an amount of \u20ac4.6 million was recorded under other financial assets. Subsequently, in the consolidated statement of profit or loss for the year ended December 31, 2022, the group recognized the change in fair value of the interest rate cap within financial income and expenses. During the year ended December 31, 2022, the group recognized a fair value gain of \u20ac5.0 million in the consolidated statement of profit or loss, within financial income.
In connection with business combinations, the group has outstanding liabilities for contingent consideration and for put options on non-controlling interests. The group\u2019s financial instruments per category are shown below including the fair value and hierarchy information.
The interest rate cap qualifies for the level 2 category in the fair value hierarchy due to the fact that it is not traded in an active market and the fair value is\u00a0determined using valuation techniques (option pricing model) which maximize the use of observable market data. Since\u00a0all significant inputs required to fair value the instrument are observable, the instrument is classified as level 2. All derivatives related to forward exchange contracts are classified as Level 2. Contingent consideration qualifying as earnout and put options on non-controlling interests are classified as Level 3. For the calculation basis of fair values, see also note 2.17 \u2013 Determination of fair values.
The carrying amount of the other financial assets and liabilities approximates their fair value.
| (in thousands of \u20ac) | Note | Fair value through P&L | Amortized cost | Total book value | Level 1 | Level 2 | Level 3 | TOTAL |
|---|---|---|---|---|---|---|---|---|
| Assets | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Non current assets | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Other Financial receivables | 4 | \u00a0 | 832 | 832 | \u00a0 | 832 | \u00a0 | 832 |
| Derivatives | 4 | 9,556 | \u00a0 | 9,556 | \u00a0 | 9,556 | \u00a0 | 9,556 |
| Other investments | 4 | 698 | 809 | 1,506 | \u00a0 | 1,506 | \u00a0 | 1,506 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Current assets | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Trade receivables | 19 | \u00a0 | 443,288 | 443,288 | \u00a0 | 443,288 | \u00a0 | 443,288 |
| Other receivables | 19 | \u00a0 | 95,093 | 95,093 | \u00a0 | 95,093 | \u00a0 | 95,093 |
| Other financial receivables | \u00a0 | \u00a0 | 81 | 81 | \u00a0 | 81 | \u00a0 | 81 |
| Derivatives | 4 | 199 | \u00a0 | 199 | \u00a0 | 199 | \u00a0 | 199 |
| Cash & Cash equivalents | 20 | \u00a0 | 268,160 | 268,160 | \u00a0 | 268,160 | \u00a0 | 268,160 |
| Total financial assets | \u00a0 | 10,453 | 808,263 | 818,716 | 0 | 818,716 | 0 | 818,716 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Liabilities | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Non Current Liabilities | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Interest bearing | 22 | \u00a0 | 1,259,562 | 1,259,562 | \u00a0 | 1,259,562 | \u00a0 | 1,259,562 |
| Other Financial liabilities | \u00a0 | 73,420 | 24,844 | 98,264 | \u00a0 | 24,844 | 73,420 | 98,264 |
| Current liabilities | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Interest bearing | 22 | \u00a0 | 145,713 | 145,713 | \u00a0 | 145,713 | \u00a0 | 145,713 |
| Bank overdraft | 20 | \u00a0 | 30,412 | 30,412 | \u00a0 | 30,412 | \u00a0 | 30,412 |
| Trade payables | 24 | \u00a0 | 462,728 | 462,728 | \u00a0 | 462,728 | \u00a0 | 462,728 |
| Other current liabilities excl derivatives | 24 | 50,657 | 257,924 | 308,582 | \u00a0 | 257,924 | 50,657 | 308,582 |
| Derivatives | 24 | 377 | \u00a0 | 377 | \u00a0 | 377 | \u00a0 | 377 |
| Total financial liabilities | \u00a0 | 124,454 | 2,181,183 | 2,305,637 | 0 | 2,181,560 | 124,077 | 2,305,637 |
| (in thousands of \u20ac) | Note | Fair value through P&L | Amortized cost | Total book value | Level 1 | Level 2 | Level 3 | TOTAL |
|---|---|---|---|---|---|---|---|---|
| Assets | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Non current assets | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Other Financial receivables | 4 | \u00a0 | 1113 | 1,113 | \u00a0 | 1,113 | \u00a0 | 1,113 |
| Other investments | 4 | \u00a0 | 422 | 422 | \u00a0 | 422 | \u00a0 | 422 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Current assets | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Trade receivables | 19 | \u00a0 | 375,591 | 375,591 | \u00a0 | 375,591 | \u00a0 | 375,591 |
| Other receivables | 19 | \u00a0 | 53,359 | 53,359 | \u00a0 | 53,359 | \u00a0 | 53,359 |
| Other financial receivables | \u00a0 | \u00a0 | 1,479 | 1,479 | \u00a0 | 1,479 | \u00a0 | 1,479 |
| Derivatives | 4 | 44 | \u00a0 | 44 | \u00a0 | 44 | \u00a0 | 44 |
| Cash & Cash equivalents | 20 | \u00a0 | 141,293 | 141,293 | \u00a0 | 141,293 | \u00a0 | 141,293 |
| Total financial assets | \u00a0 | 44 | 573,257 | 573,301 | 0 | 573,301 | 0 | 573,301 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Liabilities | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Non Current Liabilities | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Interest bearing | 22 | \u00a0 | 894,108 | 894,108 | \u00a0 | 894,108 | \u00a0 | 894,108 |
| Other Financial liabilities | \u00a0 | 1,371 | 8,284 | 9,655 | \u00a0 | 8,284 | 1,371 | 9,655 |
| Current liabilities | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Interest bearing | 22 | \u00a0 | 77,804 | 77,804 | \u00a0 | 77,804 | \u00a0 | 77,804 |
| Bank overdraft | 20 | \u00a0 | 40,524 | 40,524 | \u00a0 | 40,524 | \u00a0 | 40,524 |
| Trade payables | 24 | \u00a0 | 368,657 | 368,657 | \u00a0 | 368,657 | \u00a0 | 368,657 |
| Other current liabilities excl derivatives | 24 | 37,286 | 134,976 | 172,262 | \u00a0 | 134,976 | 37,286 | 172,262 |
| Derivatives | 24 | 155 | \u00a0 | 155 | \u00a0 | 155 | \u00a0 | 155 |
| Total financial liabilities | \u00a0 | 38,813 | 1,524,352 | 1,563,165 | 0 | 1,524,507 | 38,658 | 1,563,165 |
| (in thousands of \u20ac) | 2022 | 2021 |
|---|---|---|
| Financial income | \u00a0 | \u00a0 |
| Interest income | 621 | 618 |
| Gains on changes in fair value of derivatives | 5,132 | 0 |
| Other financial income | 256 | 113 |
| \u00a0 | 6,008 | 731 |
| Financial expenses | \u00a0 | \u00a0 |
| Interest expense on bank loans and overdrafts | -34,795 | -46,948 |
| Interest lease commitments | -3,423 | -2,951 |
| Fair value adjustment on financial liabilities | -17,585 | -7,282 |
| Transaction costs for bank loans | -1,444 | -3,336 |
| Accelerated amortization of transaction costs due to IPO | 0 | -19,616 |
| Losses on changes in FV of derivative instruments | -754 | 0 |
| Monetary loss on hyperinflation | -6,957 | 0 |
| Foreign exchange losses | -2,093 | -1,238 |
| Other financial expenses | -12,771 | -6,907 |
| \u00a0 | -79,823 | -88,278 |
The (non-cash) gain on changes in fair value of derivatives primarily relates to the interest rate cap that was entered into in May 2022. The fair value of the interest rate cap increased since then, driven by increasing market interest rates during 2022.
The fair value adjustment on financial liabilities relates to acquisition-related earnout liabilities and put options on non-controlling interests.
Transaction costs for bank loans of \u20ac1.4 million (2021: \u20ac3.3 million) includes the (non-cash) impact of expensing capitalized transaction costs (see note 22). At date of IPO in September 2021, the Company restructured its debt, whereas the remaining capitalized costs of \u20ac19.6 million that related to the previous and repaid financial liabilities were amortized entirely in 2021 (for the majority non-cash).
The monetary loss on hyperinflation relates to the translation of foreign exchange impact regarding Azelis' subsidiaries in Turkey. The majority of the loss (\u20ac6.5 million) relates to translation of its balance sheets, funded by equity mainly, with low exposure to cash and debt in local currencies. The translation-impact on the income statement is limited (\u20ac0.5 million) as operational activities are merely settled in hard currencies (USD, EUR).
The foreign exchange losses include unrealized translation of intercompany loans, mainly relating to non-EUR nominated loans to subsidiaries.
Other financial expenses primarily relate to factoring fees and other bank fees.
| (in thousands of \u20ac) | 31-12-2022 | 31-12-2021 |
|---|---|---|
| Trade payables | 462,728 | 368,657 |
| Other taxes | 11,805 | 6,618 |
| Employee and social security payables | 87,505 | 71,227 |
| Derivatives | 377 | 155 |
| Other payables | 209,272 | 94,417 |
| Total current payables | 771,686 | 541,074 |
| \u00a0 | \u00a0 | \u00a0 |
| Other payables | 98,264 | 9,655 |
| Other non-current liabilities | 98,264 | 9,655 |
The other current and non-current payables mainly consist of put options over non-controlling interests totaling \u20ac115.1 million (2021: \u20ac31.2 million), and earnouts and deferred payments in connection with acquisitions.
", "dimensions": { "concept": "ifrs-full:DisclosureOfFinancialInstrumentsAtFairValueThroughProfitOrLossExplanatory", "language": "en", "entity": "scheme:699400M9RRMTV264FM70", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-440": { "value": "In connection with business combinations, the group has outstanding liabilities for contingent consideration and for put options on non-controlling interests. The group\u2019s financial instruments per category are shown below including the fair value and hierarchy information.
The group completed the below acquisitions during the financial year 2022:
On 31 January 2022, Azelis acquired 90% of the shares of Umongo, a market-leading lubricants and metalworking fluids distributor active in South Africa, providing technical support and innovative solutions through its application laboratory. The transaction reinforces Azelis\u2019 lateral value chain by expanding its product offering for the lubricants and metalworking fluid end markets and strengthens the group\u2019s foothold in industrial specialty chemicals in South Africa and the rest of the region. As Azelis gained control, Umongo is consolidated for 100%, and the minority interest has been recognized separately in the financial statements.
On 28 February 2022, Azelis acquired 51% of the shares of Catalite Co., Ltd. (\u201cCatalite\u201d), a well-established distributor of specialty chemicals in the Personal Care and Home Care market segments, as well as industrial formulators, intermediates and coatings, in Thailand. With an attractive portfolio of products from several key principals, Catalite serves a large, growing customer base from its site in Bangkok, providing the group a solid platform to accelerate its growth in the domestic market, and the wider Asia Pacific region. As Azelis gained control, Catalite is consolidated for 100%, and the minority interest has been recognized separately in the financial statements.
On 12 March 2022, Azelis acquired 100% of the shares of Whitfield Chemical Group Limited, the ultimate parent company of WhitChem, a well-regarded distributor focused on CASE (coatings, adhesives, sealants and elastomers) and AM&A (advanced materials & additives) in the UK. WhitChem\u2019s long-standing relationships with blue-chip principals and product portfolio strengthen Azelis\u2019 lateral value chain in the UK, whilst their wide customer base and strong local technical sales team further expands the group\u2019s product offering and customer reach.
On 16 May 2022, Azelis acquired 100% of the shares of Tun\u00e7kaya, a prominent distributor of food ingredients and additives in Turkey, as well as a range of blended products for various segments of the food market, supported by longstanding relationships with principals. Tun\u00e7kaya\u2019s portfolio of products complements the group\u2019s lateral value chain for the domestic market, thereby further expanding its expertise and product offering to customers.
On 31 May 2022, Azelis acquired the distribution assets of the Indian companies Chemo India and Unipharm Laboratories. Both companies are renowned local distributors of specialty chemicals and ingredients for the CASE (coatings, adhesives, sealants, elastomers), L&MWF (lubricants & metalworking fluids) and pharmaceutical market segments in India. The acquisition strengthens the group\u2019s industrial chemicals portfolio and its footprint in the pharmaceutical market, further reinforcing Azelis\u2019 lateral value chain for these market segments. The transaction represents a solid fit with the group\u2019s growth ambitions in India, as well as its wider strategic vision for the Asia Pacific region.
On 1 July 2022, Azelis completed the acquisition of 63% of the shares of ROCSA Colombia S.A. (\"ROCSA\"), one of the leading specialty chemical distributors in Colombia, with a rapidly growing presence in Peru and Central America. It is active in the life sciences market, primarily in Food & Nutrition, Personal Care, and Home Care & Industrial Cleaning, as well as in industrial chemicals, with a strong presence in CASE (coatings, adhesives, sealants, elastomers) and Plastic Additives. The agreements made in the Shareholders Agreement combined with a call option make it virtually certain that the 37% will be purchased by Azelis, hence no non-controlling interest was recognized. A financial liability has been accrued for the purchase of the remaining 37% of the shares.
On 5 September 2022, Azelis acquired 100% of the shares of Chemical Solutions Sdn Bhd (\u201cChemSol\u201d), one of the leading distributors of raw materials in the Personal Care, Cosmetics and Household markets in Malaysia. The acquisition strengthens Azelis\u2019 presence in the domestic market, further reinforcing the group\u2019s in-depth coverage of the Asia Pacific region. The addition of ChemSol\u2019s extensive and well-known product portfolio, specifically in actives and functional ingredients, significantly expands Azelis\u2019 lateral value chain for the local Personal Care market. With this acquisition, Azelis is ideally placed to benefit from the growing Personal Care market in Malaysia, especially in the attractive Halal cosmetic industry.
On 7 September 2022, Azelis completed the acquisition of 70% shares of Ashapura Aromas Private Limited (\u201cAshapura\u201d), a leading distributor of ingredients in the flavors & fragrances market in India. This acquisition provides Azelis with a strong F&F platform in Asia Pacific, creating a global F&F network, following its 2021 acquisitions of Vigon in the US and Quimdis in France, serving the Americas and EMEA regions respectively. Ashapura\u2019s extensive product portfolio strategically complements the group\u2019s lateral value chain (LVC) in the fast-growing F&F market segment, strengthening the offering and technical expertise Azelis provides to customers. As Azelis gained control, Ashapura is consolidated for 100%, and the minority interest has been recognized separately in the financial statements.
On 3 October 2022, Azelis acquired the specialty lubricant (L&MWF) distribution assets of Ak-ta\u015f\u00a0in Turkey. The transaction includes the oil additive business of Ak-ta\u015f as well as the base oil distribution business of Whitechem, a subsidiary of Ak-ta\u015f. Ak-ta\u015f and WhiteChem partner with blue-chip principals and have long-standing relationships with customers in Turkey and the surrounding region. The acquisition further strengthens Azelis\u2019 lateral value chain (LVC) in the L&MWF market segment, following the acquisition of Umongo in South-Africa earlier this year. It is a further reflection of Azelis\u2019 commitment to sustainability, expanding key relationships with principals with a strong agenda in renewable and sustainable base oils. With an application laboratory dedicated to L&MWF, Azelis\u2019 technical specialists aim to consistently drive innovation and sustainability within the segment, as well as the wider market.
On 14 October 2022, Azelis acquired 100% of the shares of Chemical Partners and Chempart Polymers\u2019 entities in Lebanon and Belgium. The company is an independent distributor of specialty chemicals with a strong foothold in the industrial chemicals market, particularly in CASE\u00a0and R&PA, in Africa and the Middle East. Chemical Partners represents a strategic acquisition to strengthen Azelis\u2019 lateral value chain in industrial chemicals following the acquisition of Umongo earlier this year, providing the group with a strong portfolio of products and expertise spanning the key end markets in industrial chemicals in the region (CASE, R&PA and L&MWF). This would also complement Azelis\u2019 existing lateral value chain in life sciences in the region, optimizing the group\u2019s portfolio to reach more customers and principals and serve them more efficiently. In addition, the acquisition expands Azelis\u2019 geographical footprint, with Chemical Partners present in over 30 countries across the Middle East and Africa, including the Levant and Sub-Saharan Africa, providing further opportunity for growth.
On 27 October 2022, Azelis acquired 100% of the shares of Eurotrading S.p.A (\u201cEurotrading\u201d), one of the leading distributors of specialty chemicals to the personal care market in Italy. The acquisition reinforces Azelis\u2019 leading footprint in the thriving Italian market for personal care, as well as in the broader life sciences segment. Eurotrading\u2019s extensive product portfolio in actives, emollients and emulsifiers further enhances the group\u2019s lateral value chain and solidifies its market leadership in the local personal care industry.
On 10 November 2022, Azelis acquired 50.0005% of the shares of Da\u011falt\u0131 Kau\u00e7uk San. (\"Da\u011falt\u0131\"), a specialty chemicals distributor active in the Turkish rubber and plastics additives (R&PA) market. The acquisition of Da\u011falt\u0131 strengthens Azelis\u2019 R&PA footprint in Turkey. Da\u011falt\u0131\u2019s extensive product portfolio strategically complements the group\u2019s lateral value chain in industrial chemicals, enhancing the offerings and technical expertise Azelis provides to customers. The agreements made in the Shareholders Agreement combined with a call option make it virtually certain that the 49.9995% will be purchased by Azelis, hence no non-controlling interest was recognized. A financial liability has been accrued for the purchase of the remaining 49.9995% of the shares.
These aforementioned acquisitions together generate over \u20ac620 million of revenues on an annual basis. In 2022, these acquisitions together have added \u20ac341.1 million of revenue and a positive \u20ac25.0 million of net profit to the group's net result.
| (in thousands of \u20ac) | 2022 | 2021 |
|---|---|---|
| Assets acquired and liabilities assumed | \u00a0 | \u00a0 |
| Distribution rights | 195,252 | 175,571 |
| Other intangible assets | 2,179 | 3,384 |
| Property, plant and equipment | 4,863 | 18,665 |
| Right-of-use assets | 11,340 | 9,253 |
| Deferred tax assets | 7,082 | 3,598 |
| Other long-term receivables | 16,562 | 466 |
| Other non-current financial assets | 814 | - |
| Inventories | 99,543 | 85,052 |
| Trade and other receivables | 143,176 | 116,726 |
| Cash and cash equivalents | 39,583 | 42,006 |
| Other current financial assets | 3,775 | - |
| Loans and borrowings non current | -19,481 | -7,306 |
| Lease liabilities non current | -9,340 | -7,356 |
| Deferred tax liabilities | -42,542 | -22,291 |
| Other non-current payables | - | -409 |
| Trade and other payables | -95,131 | -70,267 |
| Bank overdrafts | -32 | - |
| Loans and borrowings current | -48,286 | -71,301 |
| Lease liabilities current | -2,000 | -1,897 |
| Provisions | -136 | -1,282 |
| Employee benefit obligations | -1,253 | -2,213 |
| Total fair value identified assets acquired and liabilities assumed | 305,970 | 270,422 |
| Non-controlling interests | -29,404 | -18,307 |
| Estimated earnout liabilities | 5,732 | 1,329 |
| Deferred payments | 114,892 | 34,972 |
| Consideration paid in cash | 512,845 | 597,282 |
| Total consideration | 633,469 | 633,584 |
| Goodwill | 356,903 | 381,469 |
The fair values of the acquired identifiable assets and liabilities and the value of the consideration paid are accounted for on a provisional basis. Based on currently available information, Azelis does not foresee significant adjustments to these provisional amounts. The purchase price allocations will be finalized at a later stage and may result in adjustments to provisional values as a result of completing the initial accounting from the acquisition date. The fair values of the acquired net assets, based on a provisional assessment, are summarized in the table above. No indemnification assets or contingent liabilities had to be recognized in the business combinations.
The acquisitions of distribution assets, without acquiring any shares, qualify as business combinations in conformity with IFRS 3, as the acquired assets constitute a business.
The considerations are primarily paid for in cash and, depending on the acquisition, also consist of deferred payments and/or accruals for estimated earnout. For 2022 acquisitions, deferred payments and initial earnout liabilities, recognized as part of the consideration paid, total \u20ac120.6 million (2021: \u20ac36.3 million). Earnout payments are all contingent on the profitability of the acquired company at a future point in time, and have been estimated based on the business plan of the acquired company.
In connection with the acquisitions in 2022 of Umongo in South Africa, Catalite in Thailand and Ashapura in India, put options were granted for the remaining 10%, 49%, and 30% respectively. Their fair value is calculated based on specific contractual specifications consisting mostly of a combination of a multiple on a performance measure and the balance of certain net working capital items upon exercise of the option. Put options are not part of the consideration paid and are accounted for separately of the business combination.
Total goodwill of Azelis has increased by \u20ac371.0 million in 2022, of which \u20ac356.9 million is attributable to the abovementioned acquisitions in 2022. The remainder is mainly attributable to currency translation and reflected in other comprehensive income, and adjustments for hyperinflation.
Acquisitions are accounted for using the acquisition method. Goodwill represents the excess of acquisition cost over the fair values of identified acquired assets and liabilities, and mainly represents the business knowledge and the qualified staff. Goodwill is not deductible for tax purposes. The trademark and the distribution rights have been valued based upon the expected return being generated through strategic mandates. The trade and other receivables include an amount of \u20ac11.3 million for expected credit loss provisions. Certain transactions relating to key employees\u2019 compensation plans are considered as separate transactions and are not included in the business combination accounting in accordance with IFRS 3.
If the above acquisitions would have occurred at the start of 2022, management estimates that, for 2022, the consolidated revenue would have been \u20ac4,402.4 million and the consolidated net result for the year would have been \u20ac249.8 million.
During 2022, the group incurred acquisition-related expenses of \u20ac6.9 million (2021: \u20ac8.9 million) in total, in connection with the costs of external advisors, due diligence and fees paid to the institutions involved. These expenses are recognized in the consolidated income statement as part of external services, and are considered as part of adjustments to determine Adjusted EBITA of the period.
The other current and non-current payables mainly consist of put options over non-controlling interests totaling \u20ac115.1 million (2021: \u20ac31.2 million), and earnouts and deferred payments in connection with acquisitions.
", "dimensions": { "concept": "ifrs-full:DisclosureOfBusinessCombinationsExplanatory", "language": "en", "entity": "scheme:699400M9RRMTV264FM70", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-441": { "value": "The Board of Directors\u2019 policy is to maintain a good capital base so as to maintain investor, creditor and market confidence and to sustain future profitable development of the business. The Board monitors the return on capital, and seeks to maintain a balance between the returns on equity versus the levels of borrowings as well as the advantages and security afforded by a sound capital position.
The group defines its capital as its equity and its net interest borrowing loans:
| (in thousands of \u20ac) | 31-12-2022 | 31-12-2021 |
|---|---|---|
| Equity | 2,439,675 | 2,251,345 |
| Other interest-bearing loans | 1,435,687 | 1,012,436 |
| Less: Cash & Cash equivalents | -268,160 | -141,293 |
| Total Capital | 3,607,201 | 3,122,488 |
The group is not exposed to external capital requirements other than covenant requirements from the syndicated external debt (refer to note 22).
", "dimensions": { "concept": "ifrs-full:DisclosureOfObjectivesPoliciesAndProcessesForManagingCapitalExplanatory", "language": "en", "entity": "scheme:699400M9RRMTV264FM70", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-443": { "value": "The group\u2019s reportable segments are based on the regions in which it operates: EMEA, Americas and Asia-Pacific. This reflects the organization of the group, providing its specialty chemicals distribution services in all these regions.
Operating expenses of non-operating companies are reported in the segment group Holding. Adjusted EBITA of group Holding represents\u00a0costs related to corporate activities and central support services, mainly at the group\u2019s service center and the headquarter in Belgium.
Transactions between companies within an operating segment have been eliminated. Revenue therefore represents external sales. Transactions between operating segments are based on arm\u2019s length principle.
The performance of the operating segments is assessed based on a measure of \"Adjusted EBITA\". The group currently uses Adjusted EBITA in its business operations to, among others, develop budgets, measure its performance against those budgets and evaluate the performance of its operations.
Gross profit is defined as income less cost of goods and consumables (as disclosed in Note 10), before outbound distribution cost.
Total assets per segment are not being measured and/or reported to the key decision makers on a regular basis, whereas Net Working Capital is used as a major performance indicator of the operating segments1.
Results of the operating segments are reflected in the below table:
| (in thousands of \u20ac) | EMEA | Americas | Asia-Pacific | Group holding & other | Total |
|---|---|---|---|---|---|
| Revenue | 1,811,643 | 1,549,913 | 747,546 | 0 | 4,109,102 |
| Gross profit | 432,907 | 385,200 | 142,601 | 34 | 960,742 |
| Adjusted EBITA | 215,376 | 211,867 | 58,112 | -28,477 | 456,878 |
| Operating profit | \u00a0 | \u00a0 | \u00a0 | \u00a0 | 388,426 |
| Net Working Capital | 182,205 | 237,811 | 194,516 | -6,247 | 608,285 |
| (in thousands of \u20ac) | EMEA | Americas | Asia-Pacific | Group holding & other | Total |
|---|---|---|---|---|---|
| Revenue | 1,232,253 | 1,164,233 | 430,809 | 0 | 2,827,295 |
| Gross profit | 292,820 | 270,947 | 86,220 | 154 | 650,143 |
| Adjusted EBITA | 125,298 | 137,643 | 29,633 | -24,652 | 267,922 |
| Operating profit | \u00a0 | \u00a0 | \u00a0 | \u00a0 | 207,814 |
| Net Working Capital | 146,945 | 188,487 | 142,754 | -3,779 | 474,407 |
'Group holding & other' mainly includes the operating expenses for the group holding activities and limited gross profit that remain unallocated to EMEA, Americas or Asia-Pacific.
The group does not have material intercompany revenue across its segments. The group has a diverse customer base in all of its reportable segments and has no individual material customers. The group's non-financial non-current assets are broken down over its country of domicile and regions as follows:
| (in thousands of \u20ac) | 31-12-2022 | 31-12-2021 | ||
|---|---|---|---|---|
| Belgium | 18,610 | 0.5% | 19,851 | 0.7% |
| Rest of EMEA | 1,433,660 | 41.0% | 1,197,514 | 40.9% |
| EMEA | 1,452,270 | 41.5% | 1,217,364 | 41.6% |
| Americas | 1,536,305 | 43.9% | 1,302,878 | 44.5% |
| Asia Pacific | 511,267 | 14.6% | 406,048 | 13.9% |
| \u00a0 | 3,499,842 | 100.0% | 2,926,291 | 100.0% |
| (in thousands of \u20ac) | 2022 | 2021 |
|---|---|---|
| Revenue from sales, net of discounts | 4,098,131 | 2,819,606 |
| Revenue from commercial services | 1,106 | 355 |
| \u00a0 | 4,099,237 | 2,819,961 |
| Commissions received | 9,866 | 7,335 |
| \u00a0 | 4,109,102 | 2,827,295 |
The group's revenues are broken down over product group as follows:
| (in thousands of \u20ac) | 2022 | 2021 | ||
|---|---|---|---|---|
| Life Sciences | 2,474,632 | 60.2% | 1,758,913 | 62.2% |
| Industrial Chemicals | 1,634,470 | 39.8% | 1,068,382 | 37.8% |
| \u00a0 | 4,109,102 | 100.0% | 2,827,295 | 100.0% |
The group's revenues are broken down over its country of domicile and regions as follows:
| (in thousands of \u20ac) | 2022 | 2021 | ||
|---|---|---|---|---|
| Belgium | 83,717 | 2.0% | 58,202 | 2.1% |
| Rest of EMEA | 1,727,926 | 42.1% | 1,174,051 | 41.5% |
| EMEA Total | 1,811,643 | 44.1% | 1,232,253 | 43.6% |
| Americas | 1,549,913 | 37.7% | 1,164,233 | 41.2% |
| Asia Pacific | 747,546 | 18.2% | 430,809 | 15.2% |
| \u00a0 | 4,109,102 | 100.0% | 2,827,295 | 100.0% |
| (in thousands of \u20ac) | 2022 | 2021 |
|---|---|---|
| Recharge of expenses to customers | 8,681 | 5,105 |
| Other income | 7,114 | 3,366 |
| \u00a0 | 15,795 | 8,470 |
| (in thousands of \u20ac) | 2022 | 2021 |
|---|---|---|
| Purchase of goods including change in inventory | 3,092,704 | 2,138,140 |
| Freight and additional charges on purchases | 71,451 | 47,483 |
| \u00a0 | 3,164,155 | 2,185,622 |
Wages and salaries include managers\u2019 fees and current service costs from employee benefits.
| (in thousands of \u20ac) | 2022 | 2021 |
|---|---|---|
| Wages and salaries and other personnel related expenses | 254,897 | 208,488 |
| Social charges | 30,055 | 23,727 |
| \u00a0 | 284,952 | 232,215 |
The average number of employees (FTE) located in the regions is set out below:
| \u00a0 | 31-12-2022 | 31-12-2021 |
|---|---|---|
| EMEA | 1,735 | 1,486 |
| Americas | 966 | 805 |
| Asia Pacific | 969 | 744 |
| Holdings | 155 | 142 |
| \u00a0 | 3,825 | 3,177 |
The number of employees reported for EMEA includes the holding employees.
The group is subject to the following defined benefit obligations:
| (in thousands of \u20ac) | 2022 | 2021 |
|---|---|---|
| German companies | 639 | 743 |
| Belgian companies | 1,572 | 6,190 |
| French companies | 1,971 | 2,045 |
| Italian companies | 5,046 | 1,823 |
| Other companies | 1,077 | 155 |
| Total present value of unfunded obligations | 10,305 | 10,956 |
| Present value of funded obligations (Azelis UK) | 5,398 | 9,560 |
| Total present value of obligations | 15,703 | 20,516 |
| Fair value of plan assets | -12,625 | -14,347 |
| Amounts not recognized as asset due to asset ceiling | 2,496 | 0 |
| Recognized liability for defined benefit obligations | 5,574 | 6,169 |
| Liability for long-service leave and other employees' benefits | 2,951 | 2,653 |
| Total employee benefits recognised in the balance sheet | 8,525 | 8,822 |
The group recognized net obligation is based on the difference between the present values of the defined benefit obligations and the plan assets.
Both defined benefit plans and defined contribution plans are in place. Charges for defined contribution schemes amount to \u20ac3.3 million (2021: \u20ac2.5 million). Expenses for all plans are included in 'Wages, salaries and other personnel related expenses'.
There are four pension plans in place in Belgium which are all legally structured as defined contribution plans.
Because of the Belgian legislation applicable to 2nd pillar pension plans (so-called \"Law Vandenbroucke\"), all Belgian defined contribution plans have to be considered under IFRS as defined benefit plans. In the context of defined contribution plans, Law Vandenbroucke states the following:
The employer must continue to guarantee a minimum return of 3.75% on employee contributions and 3.25% on employer contributions made until December 31, 2015;
As from 2016 the employer must guarantee a minimum return ranging between 1.75% and 3.75% for all contributions, depending on the development of the average interest on OLO 10 years over a period of 24 months. The current guaranteed minimum return is 1.75%.
Because of this minimum guaranteed return for defined contribution plans in Belgium, the employer is exposed to a financial risk (there is a legal obligation to pay further contributions if the fund does not hold sufficient assets to pay all employee benefits relating to employee service in the current and prior periods). These plans should therefore be classified and accounted for as defined benefit plans under IAS 19.
Actuarial calculations have been made as of December 31, 2022 and these were recognized in the balance sheet. For information, some key figures related to the plans are given below:
Employer\u2019s contributions in the financial year: \u20ac0.6 million (2021: \u20ac0.7 million)
Amount of the plan assets as of December 31, 2022: \u20ac5.6 million (2021: \u20ac5.8 million)
In the UK, the defined benefit pension plan is financed through the accumulation of plan assets held separately from those of the group in an independently administered fund.
Actuarial calculations have been made per 31st December 2022 and these were recognized in the balance sheet. The duration of Scheme obligations at 31 December 2022 is 20 years; plan assets are primarily invested in equity instruments. For information, some key figures related to the plans are given below:
Employer\u2019s contributions in the financial year: \u20ac0.6 million (2021: \u20ac0.6 million)
Amount of the plan assets as of December 31, 2021: \u20ac7.7 million (2021: \u20ac8.6 million).
The actuarial calculations of the present value of defined benefit obligations were based on the following main assumptions:
| \u00a0 | 2022 | 2021 |
|---|---|---|
| Discount rate | 2,82% - 7,26% | 0,8% - 2,1% |
| Inflation | 3,1% - 3,1% | 2,5% - 5,0% |
| Future pension increases | 0% - 6% | 2,5% - 3,0% |
| Future salary increases | 0% - 6% | 0%- 2,5% |
In the event that the discount rate was to be raised or lowered by 0.5% in the context of a sensitivity analysis, the obligation ensuring from the defined benefit plan would amount to \u20ac1.2 million or \u20ac1.3 million, respectively.
The benefits paid are mainly related to Belgium, France, Italy and UK. The 2023 benefits to be paid are expected to be in line with the 2022 benefits.
The following table shows the changes in the present value of the defined benefit obligations:
| (in thousands of \u20ac) | 2022 | 2021 |
|---|---|---|
| Liability for defined benefit obligations at the beginning of period | 20,516 | 19,653 |
| Current service costs and interest | 1,039 | 971 |
| Benefits paid | -1,811 | -1,035 |
| Remeasurement arising from changes in demographic assumptions | -91 | -1 |
| Remeasurement arising from changes in financial assumptions | -5,447 | -754 |
| Remeasurement arising from experience | 310 | -167 |
| Business combination | 979 | 1,208 |
| Exchange rate differences | -374 | 640 |
| Liability for defined benefit obligations at 31 December | 15,122 | 20,516 |
The following table shows the changes in the plan assets.
| (in thousands of \u20ac) | 2022 | 2021 |
|---|---|---|
| Fair value of plan assets at the beginning of the period | 14,347 | 12,839 |
| Contributions paid into the plan | 1,252 | 1,341 |
| Benefits paid by the plan | -1,062 | -745 |
| Expected return on plan assets | 54 | 436 |
| Return on assets excluding amounts in net interests | -2,174 | 22 |
| Exchange rate differences | -374 | 454 |
| Fair value of plan assets at 31 December | 12,044 | 14,347 |
At year-end, the plan assets consisted mainly of equity instruments.
The net periodic cost for defined benefit obligations recognized in the income statement is shown in the following table:
| (in thousands of \u20ac) | 2022 | 2021 |
|---|---|---|
| Current service costs | -883 | -854 |
| Interest on obligation | -191 | -155 |
| Interest on assets | -674 | 436 |
| \u00a0 | -1,748 | -573 |
The changes in actuarial gains and losses from defined benefit obligations and plan assets recognized in other comprehensive income are shown in the following table:
| (in thousands of \u20ac) | 2022 | 2021 |
|---|---|---|
| Return on assets, excluding amounts in net interests | -2,202 | 412 |
| Actuarial gains and losses on benefit obligations | 5,390 | 701 |
| Effect of changes in asset ceiling | -2,596 | 0 |
| Exchange rate differences | -22 | 0 |
| \u00a0 | 570 | 1,113 |
In 2022, Azelis has launched a long-term incentive plan for certain directors, employees and self-employed managers of the group. Under this LTIP, Azelis has granted share awards to certain directors, employees and self-employed managers of the group. The grant of share awards is subject to a three-year performance period (starting January 1st) and takes into account the following metrics and weightings: 50% relative total shareholders' return (market condition), 35% Adjusted EBITA (non-market condition) and 15% sustainability-linked criteria (non-market condition). The awards are subject to a vesting period of three years starting from the grant date and are dependent on the Remuneration and Nomination Committee determining whether performance targets have been met. Based on performance delivered, the number of performance shares awarded will vest and become unconditionally owned by the participant.
The movement in number of performance shares outstanding and the related weighted average fair value per share are as follows:
| \u00a0 | 2022 | |
|---|---|---|
| (in number of shares and \u20ac) | Number of shares | Weighted average fair value |
| Outstanding as of 1 January | 0 | N/A |
| Granted during the year | 138,546 | 19.24 |
| Forfeited during the year | 6,062 | 19.24 |
| Outstanding as of 31 December | 132,484 | \u00a0 |
The fair value of the performance shares was measured on the basis of Azelis' share price at grant date, and has been discounted with the sum of the expected dividend yield for the performance period. The expected dividend yield has been determined based on target pay-out ratio and consensus figures for net profit, divided by market capitalization. The market condition of total shareholders return was embedded in the fair value based on a Monte Carlo simulation incorporating a number of assumptions (volatility, expected dividend yield and the correlation coefficients between the share price returns of the peer companies).
In 2022, the vesting of performance shares resulted in an expense of \u20ac0.8 million which is recognized in the consolidated income statement as part of employee benefits expenses.
| (in thousands of \u20ac) | 2022 | 2021 |
|---|---|---|
| Distribution | 87,797 | 62,486 |
| Utilities, communication, insurance and administrative expenses | 40,984 | 26,570 |
| Commercial expenses | 10,093 | 4,269 |
| Professional service fees | 29,975 | 28,265 |
| Lease expenses | 1,954 | 2,785 |
| Other expenses | 31,828 | 26,356 |
| \u00a0 | 202,631 | 150,731 |
The professional services & other expenses of 2022 include adjustments of \u20ac9.0 million (2021: \u20ac19.0 million) mainly regarding M&A activities (2021: \u20ac10.6 million). The professional services & other expenses in 2021 also include expenses with regard to the Company's IPO on Euronext Brussels (\u20ac8.4 million).
Audit fees included under professional service fees in the above table:
| (in thousands of \u20ac) | 2022 | 2021 |
|---|---|---|
| Audit fees | \u00a0 | \u00a0 |
| Total fees for the audit of the annual accounts | 1,930 | 1,373 |
| Total fees for audit by non-PWC companies | 559 | 336 |
| Non-audit fees paid to group auditor network | \u00a0 | \u00a0 |
| Total fees for other attestation | 82 | 2,399 |
| Total fees for other non-audit services (incl. tax) | 7 | 34 |
| \u00a0 | 2,578 | 4,143 |
The fees for other attestation in 2021 are primarily related to the Company's IPO.
| \u00a0 | Goodwill | Trade- marks | Distribution rights | Concessions and licenses | Develop-ment cost | Customer lists | Other | Intangibles in progress | Total |
|---|---|---|---|---|---|---|---|---|---|
| As of December 31, 2020 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Cost | 1,345,937 | 317,378 | 546,136 | 6,194 | 6,195 | 3,971 | 6,630 | 3,250 | 2,235,691 |
| Accumulated amortization and impairment | - | - | -58,539 | -3,781 | -211 | -489 | -2,269 | -3,106 | -68,395 |
| \u00a0 | 1,345,937 | 317,378 | 487,597 | 2,413 | 5,984 | 3,482 | 4,361 | 144 | 2,167,296 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Changes in 2021 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Business combination | 381,469 | - | 175,571 | 3,048 | - | - | 336 | - | 560,424 |
| Additions | - | - | 1,140 | 72 | 1,833 | 436 | 7,240 | 649 | 11,370 |
| Amortization | - | - | -33,949 | -355 | -1,698 | -472 | -3,007 | - | -39,480 |
| Disposals | -3 | - | -3 | 18 | - | - | -6 | - | 6 |
| Reclassifications | -56 | - | 131 | -1,824 | -2,578 | 3 | 4,543 | 1,307 | 1,527 |
| Translation differences | 75,919 | - | 29,822 | 164 | 0 | 239 | 200 | 38 | 106,382 |
| Changes in the Period | 457,330 | - | 172,712 | 1,122 | -2,443 | 206 | 9,307 | 1,994 | 640,228 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| As of December 31, 2021 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Cost | 1,803,267 | 317,378 | 752,800 | 7,654 | 5,450 | 4,648 | 18,949 | 5,245 | 2,915,394 |
| Accumulated amortization and impairment | - | - | -92,491 | -4,118 | -1,909 | -961 | -5,282 | -3,106 | -107,870 |
| \u00a0 | 1,803,267 | 317,378 | 660,309 | 3,535 | 3,541 | 3,688 | 13,668 | 2,139 | 2,807,524 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Changes in 2022 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Business combination | 360,276 | - | 201,794 | 316 | 345 | - | 1,519 | - | 564,250 |
| Additions | - | - | 1,644 | 56 | 2,044 | 1,028 | 4,604 | 1,690 | 11,067 |
| Amortization | -0 | - | -45,061 | -584 | -1,995 | -703 | -8,507 | - | -56,850 |
| Disposals | -3 | - | -160 | 7 | -0 | - | -261 | -16 | -433 |
| Reclassifications | -5 | - | 253 | -35 | -100 | 13 | 1,635 | -1,571 | 191 |
| Hyperinflation | 15,208 | - | 4,734 | 6 | - | - | 8 | - | 19,956 |
| Translation differences | -4,487 | - | 3,450 | 155 | -0 | -20 | -83 | 23 | -962 |
| Changes in the Period | 370,989 | - | 166,655 | -79 | 293 | 319 | -1,085 | 126 | 537,218 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| As of December 31, 2022 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Cost | 2,174,256 | 317,378 | 964,516 | 8,159 | 7,738 | 5,670 | 26,372 | 5,371 | 3,509,462 |
| Accumulated amortization and impairment | -0 | - | -137,552 | -4,702 | -3,904 | -1,663 | -13,789 | -3,106 | -164,720 |
| \u00a0 | 2,174,256 | 317,378 | 826,964 | 3,456 | 3,834 | 4,007 | 12,583 | 2,265 | 3,344,742 |
The trademark relates to the Azelis name. Azelis uses its name globally, and its trade name is considered to be a key asset of its distribution activities given its status of major distributor in the specialty chemicals sector. The name both supports the group to onboard principals and customers, and for acquisition targets that want to become part of the group as they know that their business will grow being part of it. The Azelis trademark is estimated to have an indefinite economic life for amortization purposes; therefore, effectively no amortization expenses are being booked through Azelis' income statement. The total value of \u20ac317.4 million as of December 31, 2022 originates entirely from the EQT/PSP acquisition in November 2018 and remained unchanged since that date.
The translation differences of \u20ac1.0 million loss (2021: \u20ac106.4 million gain) are recognized in other comprehensive income and accumulated in the translation reserve within equity. Reference is made to note 21.5.
A cash-generating unit (CGU) is the smallest identifiable group of assets that generates cash inflows that are largely independent of the cash inflows from other assets or groups of assets. For the purpose of impairment testing, goodwill is allocated to the following groups of CGUs:
| (in thousands of \u20ac) | 31-12-2022 | 31-12-2021 |
|---|---|---|
| EMEA | 733,032 | 616,570 |
| AMERICAS | 1,119,304 | 919,385 |
| ASIA PACIFIC | 321,919 | 267,311 |
| Total Goodwill | 2,174,256 | 1,803,266 |
All goodwill acquired in the business combinations has been allocated to a regional CGU at the end of the reporting period. The goodwill is allocated on regional level as it is the group's regions that are expected to benefit of the business combinations, and as goodwill is also monitored internally on the regional level. The group's expectation is that synergies will be realized in the region of acquisition.
Trademarks with a book value of \u20ac317.4 million (2021: \u20ac317.4 million) have an indefinite life. These do not generate cash inflows independently and qualify as corporate assets. As their carrying amount cannot be allocated to the regional CGUs on a reasonable and consistent basis, the corporate assets are allocated to the group as a whole and the impairment test is performed in two stages.
The impairment tests have been performed by discounting future pre-tax cash flows from continuing operations of the unit. The recoverable amounts of the regional CGU's as of\u00a0December 31, 2022 have been determined based on a value in use calculation using cash flow projections from a five year detailed business plan which is approved by senior management and serves as a basis to determine the future free cash flows and the Adjusted EBITA\u2019s. The business plan is based on the market growth assumptions and on some general economic indicators (inflation, GDP, etc.). It also properly reflects the future strategy of the regional CGU's. For cash flows beyond the business plan period, an extrapolation was made based on steady terminal growth rates.
The key assumptions used in the impairment tests are the pre-tax WACC, terminal growth rate and Adjusted EBITA margin. The pre-tax WACC is estimated per regional CGU, is consistent with external sources of information, and varies mainly due to differences in risk free rates that increased during 2022. The risk-free rates per regional CGU are based on the weighted average of the rate of return on local sovereign bonds. The terminal growth rates are based on industry benchmarks by region and are consistent with the group's past experience and based on external sources of information. Adjusted EBITA margin reflects the group's past experience and future expectation of regional business development.
The key assumptions used for the second stage impairment test, on the level of the group as a whole including corporate asset, are identical to those used for the regional CGU impairment tests.
The values attributed to pre-tax WACC and the growth rates are as follows:
| Cash Generating Unit | 2022 | 2023-2027 assumptions | |
|---|---|---|---|
| \u00a0 | Pre-tax WACC | Growth rate for terminal value | EBITA% |
| EMEA | 14.55% | 3.2% | 11.6% |
| AMERICAS | 12.99% | 2.6% | 13.7% |
| ASIA PACIFIC | 12.81% | 5.2% | 8.2% |
| Cash Generating Unit | 2021 | 2022-2026 assumptions | |
|---|---|---|---|
| \u00a0 | Pre-tax WACC | Growth rate for terminal value | EBITA% |
| EMEA | 10.67% | 3.0% | 10.4% |
| AMERICAS | 8.56% | 2.5% | 12.4% |
| ASIA PACIFIC | 11.08% | 5.0% | 7.7% |
The increase versus 2021 of the pre-tax WACC is primarily driven by increased market risk-free rates, that have been increasing during 2022 across the globe.
The impairment tests on the recoverable amount of regional CGU's show sufficient headroom on the carrying amount of the Goodwill. In the second stage impairment test, the recoverable amount of the regional CGU's considered as a whole exceeds the carrying amount of the regional CGU's including the carrying amount of the corporate assets.
In order to test the resilience of the headroom against changes in key assumptions, Azelis has selected reasonably expectable changes in the assumptions as follows:
A WACC increase by 2%
A decrease of the growth rate in the terminal value by 2%
A decrease of Adjusted EBITA margin by 0.5%
Versus previous years, also a sensitivity test of Adjusted EBITA has been added, as Adjusted EBITA (rather than Sales) is the major indicator for the outcome of Azelis' impairment test. Azelis' cost base is predominantly variable in nature, enabling to react rapidly on (downward) exposure of revenue, limiting the possible impact on Adjusted EBITA. A sensitivity of 0.5% in Adjusted EBITA margin would result in a decrease of almost 5% in Adjusted EBITA (in EUR).
In each of the above independent scenario's and for each regional CGU, the sensitivity test shows sufficient headroom on the carrying amount of the Goodwill.
| \u00a0 | Land and buildings | Plant and equipment | Other | Total |
|---|---|---|---|---|
| As of December 31, 2020 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Cost | 19,612 | 7,787 | 12,963 | 40,362 |
| Accumulated depreciation and impairment | -1,767 | -2,089 | -4,201 | -8,057 |
| \u00a0 | 17,845 | 5,698 | 8,762 | 32,304 |
| Changes in 2021 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Business combination | 11,412 | 6,276 | 974 | 18,661 |
| Additions | 192 | 1,379 | 5,751 | 7,321 |
| Depreciation | -839 | -1,003 | -2,849 | -4,692 |
| Disposals | -29 | -115 | -306 | -450 |
| Reclassifications | -45 | -3,413 | 2,254 | -1,204 |
| Translation differences | 430 | 390 | 248 | 1,067 |
| Changes in the Period | 11,121 | 3,513 | 6,070 | 20,704 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| As of December 31, 2021 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Cost | 31,572 | 12,303 | 21,883 | 65,757 |
| Accumulated depreciation and impairment | -2,606 | -3,092 | -7,050 | -12,750 |
| \u00a0 | 28,966 | 9,211 | 14,832 | 53,008 |
| Changes in 2022 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Business combination | 2,060 | 480 | 2,420 | 4,961 |
| Additions | 394 | 1,930 | 7,350 | 9,674 |
| Depreciation | -1,538 | -1,784 | -4,131 | -7,453 |
| Disposals | -1,508 | -22 | -334 | -1,865 |
| Reclassifications | -107 | 387 | -1,225 | -946 |
| Hyperinflation | - | 8 | 186 | 195 |
| Translation differences | 80 | 108 | 122 | 310 |
| Changes in the Period | -619 | 1,105 | 4,389 | 4,876 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| As of December 31, 2022 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Cost | 32,491 | 15,193 | 30,403 | 78,086 |
| Accumulated depreciation and impairment | -4,144 | -4,877 | -11,182 | -20,203 |
| \u00a0 | 28,347 | 10,316 | 19,221 | 57,884 |
The reclassifications relate mainly to internal project costs which are recognized at year-end as intangibles.
The category 'Other' mainly relates to leasehold improvements, comprising also an insignificant amount of assets under construction.
At 31st December 2022, the group has not pledged any land and buildings, plant and equipment as security for the bank loans (2021: zero). Other restrictions are mainly related to leasehold improvements and leased machinery.
The Right of Use assets are included since 1 January 2019, following the implementation of IFRS 16 as per that date, and relate to rental agreements for offices, warehouses and cars.
| \u00a0 | Land and buildings | Other | Total |
|---|---|---|---|
| At 31 December 2020 | \u00a0 | \u00a0 | \u00a0 |
| Cost | 63,227 | 17,956 | 81,183 |
| Accumulated depreciation and impairment | -17,175 | -8,351 | -25,526 |
| \u00a0 | 46,052 | 9,605 | 55,657 |
| Changes in 2021 | \u00a0 | \u00a0 | \u00a0 |
| Business combination | 9,097 | 155 | 9,252 |
| Additions | 8,814 | 3,105 | 11,920 |
| Depreciation | -10,424 | -4,785 | -15,208 |
| Disposals | -32 | -46 | -78 |
| Remeasurements | 1,358 | 586 | 1,944 |
| Translation differences | 2,117 | -20 | 2,097 |
| Changes in the Period | 10,930 | -1,005 | 9,925 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| At 31 December 2021 | \u00a0 | \u00a0 | \u00a0 |
| Cost | 84,580 | 21,736 | 106,316 |
| Accumulated depreciation and impairment | -27,599 | -13,136 | -40,734 |
| \u00a0 | 56,981 | 8,600 | 65,582 |
| Changes in 2022 | \u00a0 | \u00a0 | \u00a0 |
| Business combination | 10,916 | 432 | 11,348 |
| Additions | 23,862 | 4,055 | 27,917 |
| Depreciation | -15,230 | -5,080 | -20,310 |
| Disposals | -824 | -103 | -927 |
| Remeasurements | 11,605 | 1,006 | 12,611 |
| Hyperinflation | 190 | 608 | 798 |
| Translation differences | 56 | -92 | -36 |
| Changes in the Period | 30,574 | 826 | 31,400 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| At 31 December 2022 | \u00a0 | \u00a0 | \u00a0 |
| Cost | 130,385 | 27,642 | 158,027 |
| Accumulated depreciation and impairment | -42,829 | -18,215 | -61,045 |
| \u00a0 | 87,555 | 9,426 | 96,982 |
Remeasurements mainly relate to the prolongation of the lease period of existing contracts.
The group has lease contracts that have not yet commenced as of December 31, 2022, with the future lease payments of around \u20ac27.0 million.
| (in thousands of \u20ac) | 2022 | 2021 |
|---|---|---|
| Recharge of expenses to customers | 8,681 | 5,105 |
| Other income | 7,114 | 3,366 |
| \u00a0 | 15,795 | 8,470 |
| (in thousands of \u20ac) | 2022 | 2021 |
|---|---|---|
| Distribution | 87,797 | 62,486 |
| Utilities, communication, insurance and administrative expenses | 40,984 | 26,570 |
| Commercial expenses | 10,093 | 4,269 |
| Professional service fees | 29,975 | 28,265 |
| Lease expenses | 1,954 | 2,785 |
| Other expenses | 31,828 | 26,356 |
| \u00a0 | 202,631 | 150,731 |
The professional services & other expenses of 2022 include adjustments of \u20ac9.0 million (2021: \u20ac19.0 million) mainly regarding M&A activities (2021: \u20ac10.6 million). The professional services & other expenses in 2021 also include expenses with regard to the Company's IPO on Euronext Brussels (\u20ac8.4 million).
Audit fees included under professional service fees in the above table:
| (in thousands of \u20ac) | 2022 | 2021 |
|---|---|---|
| Audit fees | \u00a0 | \u00a0 |
| Total fees for the audit of the annual accounts | 1,930 | 1,373 |
| Total fees for audit by non-PWC companies | 559 | 336 |
| Non-audit fees paid to group auditor network | \u00a0 | \u00a0 |
| Total fees for other attestation | 82 | 2,399 |
| Total fees for other non-audit services (incl. tax) | 7 | 34 |
| \u00a0 | 2,578 | 4,143 |
The fees for other attestation in 2021 are primarily related to the Company's IPO.
", "dimensions": { "concept": "ifrs-full:DisclosureOfOtherOperatingIncomeExpenseExplanatory", "language": "en", "entity": "scheme:699400M9RRMTV264FM70", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-455": { "value": "10 Costs for goods and consumables (in thousands of \u20ac) 2022 2021 Purchase of goods including change in inventory 3,092,704 2,138,140 Freight and additional charges on purchases 71,451 47,483 \u00a03,164,155 2,185,622 ", "dimensions": { "concept": "ifrs-full:DisclosureOfCostOfSalesExplanatory", "language": "en", "entity": "scheme:699400M9RRMTV264FM70", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-456": { "value": "| (in thousands of \u20ac) | 2022 | 2021 |
|---|---|---|
| Purchase of goods including change in inventory | 3,092,704 | 2,138,140 |
| Freight and additional charges on purchases | 71,451 | 47,483 |
| \u00a0 | 3,164,155 | 2,185,622 |
Wages and salaries include managers\u2019 fees and current service costs from employee benefits.
| (in thousands of \u20ac) | 2022 | 2021 |
|---|---|---|
| Wages and salaries and other personnel related expenses | 254,897 | 208,488 |
| Social charges | 30,055 | 23,727 |
| \u00a0 | 284,952 | 232,215 |
The average number of employees (FTE) located in the regions is set out below:
| \u00a0 | 31-12-2022 | 31-12-2021 |
|---|---|---|
| EMEA | 1,735 | 1,486 |
| Americas | 966 | 805 |
| Asia Pacific | 969 | 744 |
| Holdings | 155 | 142 |
| \u00a0 | 3,825 | 3,177 |
The number of employees reported for EMEA includes the holding employees.
The group is subject to the following defined benefit obligations:
| (in thousands of \u20ac) | 2022 | 2021 |
|---|---|---|
| German companies | 639 | 743 |
| Belgian companies | 1,572 | 6,190 |
| French companies | 1,971 | 2,045 |
| Italian companies | 5,046 | 1,823 |
| Other companies | 1,077 | 155 |
| Total present value of unfunded obligations | 10,305 | 10,956 |
| Present value of funded obligations (Azelis UK) | 5,398 | 9,560 |
| Total present value of obligations | 15,703 | 20,516 |
| Fair value of plan assets | -12,625 | -14,347 |
| Amounts not recognized as asset due to asset ceiling | 2,496 | 0 |
| Recognized liability for defined benefit obligations | 5,574 | 6,169 |
| Liability for long-service leave and other employees' benefits | 2,951 | 2,653 |
| Total employee benefits recognised in the balance sheet | 8,525 | 8,822 |
The group recognized net obligation is based on the difference between the present values of the defined benefit obligations and the plan assets.
Both defined benefit plans and defined contribution plans are in place. Charges for defined contribution schemes amount to \u20ac3.3 million (2021: \u20ac2.5 million). Expenses for all plans are included in 'Wages, salaries and other personnel related expenses'.
There are four pension plans in place in Belgium which are all legally structured as defined contribution plans.
Because of the Belgian legislation applicable to 2nd pillar pension plans (so-called \"Law Vandenbroucke\"), all Belgian defined contribution plans have to be considered under IFRS as defined benefit plans. In the context of defined contribution plans, Law Vandenbroucke states the following:
The employer must continue to guarantee a minimum return of 3.75% on employee contributions and 3.25% on employer contributions made until December 31, 2015;
As from 2016 the employer must guarantee a minimum return ranging between 1.75% and 3.75% for all contributions, depending on the development of the average interest on OLO 10 years over a period of 24 months. The current guaranteed minimum return is 1.75%.
Because of this minimum guaranteed return for defined contribution plans in Belgium, the employer is exposed to a financial risk (there is a legal obligation to pay further contributions if the fund does not hold sufficient assets to pay all employee benefits relating to employee service in the current and prior periods). These plans should therefore be classified and accounted for as defined benefit plans under IAS 19.
Actuarial calculations have been made as of December 31, 2022 and these were recognized in the balance sheet. For information, some key figures related to the plans are given below:
Employer\u2019s contributions in the financial year: \u20ac0.6 million (2021: \u20ac0.7 million)
Amount of the plan assets as of December 31, 2022: \u20ac5.6 million (2021: \u20ac5.8 million)
In the UK, the defined benefit pension plan is financed through the accumulation of plan assets held separately from those of the group in an independently administered fund.
Actuarial calculations have been made per 31st December 2022 and these were recognized in the balance sheet. The duration of Scheme obligations at 31 December 2022 is 20 years; plan assets are primarily invested in equity instruments. For information, some key figures related to the plans are given below:
Employer\u2019s contributions in the financial year: \u20ac0.6 million (2021: \u20ac0.6 million)
Amount of the plan assets as of December 31, 2021: \u20ac7.7 million (2021: \u20ac8.6 million).
The actuarial calculations of the present value of defined benefit obligations were based on the following main assumptions:
| \u00a0 | 2022 | 2021 |
|---|---|---|
| Discount rate | 2,82% - 7,26% | 0,8% - 2,1% |
| Inflation | 3,1% - 3,1% | 2,5% - 5,0% |
| Future pension increases | 0% - 6% | 2,5% - 3,0% |
| Future salary increases | 0% - 6% | 0%- 2,5% |
In the event that the discount rate was to be raised or lowered by 0.5% in the context of a sensitivity analysis, the obligation ensuring from the defined benefit plan would amount to \u20ac1.2 million or \u20ac1.3 million, respectively.
The benefits paid are mainly related to Belgium, France, Italy and UK. The 2023 benefits to be paid are expected to be in line with the 2022 benefits.
The following table shows the changes in the present value of the defined benefit obligations:
| (in thousands of \u20ac) | 2022 | 2021 |
|---|---|---|
| Liability for defined benefit obligations at the beginning of period | 20,516 | 19,653 |
| Current service costs and interest | 1,039 | 971 |
| Benefits paid | -1,811 | -1,035 |
| Remeasurement arising from changes in demographic assumptions | -91 | -1 |
| Remeasurement arising from changes in financial assumptions | -5,447 | -754 |
| Remeasurement arising from experience | 310 | -167 |
| Business combination | 979 | 1,208 |
| Exchange rate differences | -374 | 640 |
| Liability for defined benefit obligations at 31 December | 15,122 | 20,516 |
The following table shows the changes in the plan assets.
| (in thousands of \u20ac) | 2022 | 2021 |
|---|---|---|
| Fair value of plan assets at the beginning of the period | 14,347 | 12,839 |
| Contributions paid into the plan | 1,252 | 1,341 |
| Benefits paid by the plan | -1,062 | -745 |
| Expected return on plan assets | 54 | 436 |
| Return on assets excluding amounts in net interests | -2,174 | 22 |
| Exchange rate differences | -374 | 454 |
| Fair value of plan assets at 31 December | 12,044 | 14,347 |
At year-end, the plan assets consisted mainly of equity instruments.
The net periodic cost for defined benefit obligations recognized in the income statement is shown in the following table:
| (in thousands of \u20ac) | 2022 | 2021 |
|---|---|---|
| Current service costs | -883 | -854 |
| Interest on obligation | -191 | -155 |
| Interest on assets | -674 | 436 |
| \u00a0 | -1,748 | -573 |
The changes in actuarial gains and losses from defined benefit obligations and plan assets recognized in other comprehensive income are shown in the following table:
| (in thousands of \u20ac) | 2022 | 2021 |
|---|---|---|
| Return on assets, excluding amounts in net interests | -2,202 | 412 |
| Actuarial gains and losses on benefit obligations | 5,390 | 701 |
| Effect of changes in asset ceiling | -2,596 | 0 |
| Exchange rate differences | -22 | 0 |
| \u00a0 | 570 | 1,113 |
In 2022, Azelis has launched a long-term incentive plan for certain directors, employees and self-employed managers of the group. Under this LTIP, Azelis has granted share awards to certain directors, employees and self-employed managers of the group. The grant of share awards is subject to a three-year performance period (starting January 1st) and takes into account the following metrics and weightings: 50% relative total shareholders' return (market condition), 35% Adjusted EBITA (non-market condition) and 15% sustainability-linked criteria (non-market condition). The awards are subject to a vesting period of three years starting from the grant date and are dependent on the Remuneration and Nomination Committee determining whether performance targets have been met. Based on performance delivered, the number of performance shares awarded will vest and become unconditionally owned by the participant.
The movement in number of performance shares outstanding and the related weighted average fair value per share are as follows:
| \u00a0 | 2022 | |
|---|---|---|
| (in number of shares and \u20ac) | Number of shares | Weighted average fair value |
| Outstanding as of 1 January | 0 | N/A |
| Granted during the year | 138,546 | 19.24 |
| Forfeited during the year | 6,062 | 19.24 |
| Outstanding as of 31 December | 132,484 | \u00a0 |
The fair value of the performance shares was measured on the basis of Azelis' share price at grant date, and has been discounted with the sum of the expected dividend yield for the performance period. The expected dividend yield has been determined based on target pay-out ratio and consensus figures for net profit, divided by market capitalization. The market condition of total shareholders return was embedded in the fair value based on a Monte Carlo simulation incorporating a number of assumptions (volatility, expected dividend yield and the correlation coefficients between the share price returns of the peer companies).
In 2022, the vesting of performance shares resulted in an expense of \u20ac0.8 million which is recognized in the consolidated income statement as part of employee benefits expenses.
| (in thousands of \u20ac) | 2022 | 2021 |
|---|---|---|
| Distribution | 87,797 | 62,486 |
| Utilities, communication, insurance and administrative expenses | 40,984 | 26,570 |
| Commercial expenses | 10,093 | 4,269 |
| Professional service fees | 29,975 | 28,265 |
| Lease expenses | 1,954 | 2,785 |
| Other expenses | 31,828 | 26,356 |
| \u00a0 | 202,631 | 150,731 |
The professional services & other expenses of 2022 include adjustments of \u20ac9.0 million (2021: \u20ac19.0 million) mainly regarding M&A activities (2021: \u20ac10.6 million). The professional services & other expenses in 2021 also include expenses with regard to the Company's IPO on Euronext Brussels (\u20ac8.4 million).
Audit fees included under professional service fees in the above table:
| (in thousands of \u20ac) | 2022 | 2021 |
|---|---|---|
| Audit fees | \u00a0 | \u00a0 |
| Total fees for the audit of the annual accounts | 1,930 | 1,373 |
| Total fees for audit by non-PWC companies | 559 | 336 |
| Non-audit fees paid to group auditor network | \u00a0 | \u00a0 |
| Total fees for other attestation | 82 | 2,399 |
| Total fees for other non-audit services (incl. tax) | 7 | 34 |
| \u00a0 | 2,578 | 4,143 |
The fees for other attestation in 2021 are primarily related to the Company's IPO.
| (in thousands of \u20ac) | 2022 | 2021 |
|---|---|---|
| Financial income | \u00a0 | \u00a0 |
| Interest income | 621 | 618 |
| Gains on changes in fair value of derivatives | 5,132 | 0 |
| Other financial income | 256 | 113 |
| \u00a0 | 6,008 | 731 |
| Financial expenses | \u00a0 | \u00a0 |
| Interest expense on bank loans and overdrafts | -34,795 | -46,948 |
| Interest lease commitments | -3,423 | -2,951 |
| Fair value adjustment on financial liabilities | -17,585 | -7,282 |
| Transaction costs for bank loans | -1,444 | -3,336 |
| Accelerated amortization of transaction costs due to IPO | 0 | -19,616 |
| Losses on changes in FV of derivative instruments | -754 | 0 |
| Monetary loss on hyperinflation | -6,957 | 0 |
| Foreign exchange losses | -2,093 | -1,238 |
| Other financial expenses | -12,771 | -6,907 |
| \u00a0 | -79,823 | -88,278 |
The (non-cash) gain on changes in fair value of derivatives primarily relates to the interest rate cap that was entered into in May 2022. The fair value of the interest rate cap increased since then, driven by increasing market interest rates during 2022.
The fair value adjustment on financial liabilities relates to acquisition-related earnout liabilities and put options on non-controlling interests.
Transaction costs for bank loans of \u20ac1.4 million (2021: \u20ac3.3 million) includes the (non-cash) impact of expensing capitalized transaction costs (see note 22). At date of IPO in September 2021, the Company restructured its debt, whereas the remaining capitalized costs of \u20ac19.6 million that related to the previous and repaid financial liabilities were amortized entirely in 2021 (for the majority non-cash).
The monetary loss on hyperinflation relates to the translation of foreign exchange impact regarding Azelis' subsidiaries in Turkey. The majority of the loss (\u20ac6.5 million) relates to translation of its balance sheets, funded by equity mainly, with low exposure to cash and debt in local currencies. The translation-impact on the income statement is limited (\u20ac0.5 million) as operational activities are merely settled in hard currencies (USD, EUR).
The foreign exchange losses include unrealized translation of intercompany loans, mainly relating to non-EUR nominated loans to subsidiaries.
Other financial expenses primarily relate to factoring fees and other bank fees.
The income tax expenses consist of:
| (in thousands of \u20ac) | 2022 | 2021 |
|---|---|---|
| Current period tax expense (-) / income | -86,264 | -51,963 |
| Adjustments to prior years income tax expense (-) / income | -868 | 225 |
| Provisions for tax risks | -203 | -314 |
| \u00a0 | -87,335 | -52,052 |
| Deferred tax income / loss (-) | -8,456 | 2,079 |
| Total income tax income / expense (-) | -95,791 | -49,973 |
Income tax expense consists primarily of income taxes for the current period and prior period of group companies.
The differences between the taxable income related to the Belgian tax rate and the effective tax rate are reconciled as follows:
| (in thousands of \u20ac) | 2022 | 2021 |
|---|---|---|
| Profit/loss (-) before tax | 314,670 | 120,199 |
| \u00a0 | \u00a0 | \u00a0 |
| Income tax using the domestic corporation tax rate | -82,356 | -30,050 |
| Impact of tax in different jurisdictions with difference to domestic rate | -221 | 5,590 |
| Tax effect of expenses not deductible for tax purposes | -14,659 | -2,629 |
| Tax effect of income not subject to tax | 5,062 | 403 |
| Recognition of previously unrecognized tax losses | 1,366 | -1,264 |
| Tax losses for which no deferred income tax asset was recognized | -3,608 | -18,340 |
| Adjustments on applicable tax rate | 666 | 593 |
| Deferred tax asset on stand-alone carry forward losses | -13 | -639 |
| Adjustments to prior year income tax expense (income) | -1,656 | 0 |
| Other | -372 | -3,636 |
| Total income tax income / expense (-) in income statement | -95,791 | -49,973 |
The effective tax rate 2022 has been affected negatively by the following:
Fair value adjustment on financial liabilities of \u20ac17.6 million (2021: \u20ac7.3 million) regarding acquisition-related earnout liabilities and put options on non-controlling interest. Per Azelis' accounting policies (Note 2.7.1), subsequent changes are accounted for in the income statement. On the basis of the further improved performance of the related acquisitions, a fair value adjustment of \u20ac17.6 million is included in the consolidated income statement, for which no tax benefit can and may be recognized.
As of 30 June 2022, hyperinflationary accounting for Turkey has been applied, for which a monetary loss of \u20ac7.0 million is included in the net financial expenses, which is not tax deductible.
The tax expense 2021 included a non-cash and one-off amount of \u20ac18.3 million, almost only due to the impact of moving the group's holding-location (including the funding) from Luxembourg to Belgium in view of the IPO, for which no deferred income tax asset could be recognized due to the partial unwinding of the previous Luxembourg holding-structure, refer to Note 14.3.
The tax included in other comprehensive income is related to:
| (in thousands of \u20ac) | 2022 | 2021 |
|---|---|---|
| Relating to actuarial gains and losses on pensions obligations | -71 | -259 |
| \u00a0 | -71 | -259 |
Deferred tax assets and liabilities are attributable to the following:
| (in thousands of \u20ac) | 1 January | Business combinations | Income statement | OCI | Other | Translation differences | December 31 |
|---|---|---|---|---|---|---|---|
| Property, plant and equipment | -3,470 | 50 | 750 | 0 | 146 | -115 | -2,640 |
| Intangible assets | -144,330 | -39,421 | -6,466 | 0 | 691 | -671 | -190,198 |
| Inventories | 5,725 | 2,938 | 537 | 0 | 360 | 28 | 9,589 |
| Trade receivables | 2,076 | 937 | 789 | 0 | 22 | 10 | 3,835 |
| Loans and borrowings | 114 | 0 | -166 | 0 | 1,868 | -24 | 1,792 |
| Employee benefits | 3,252 | -13 | 293 | -187 | -1,954 | 102 | 1,492 |
| Provisions, derivatives and other items | 109 | -268 | 1,172 | 0 | -304 | 4 | 714 |
| Untaxed reserves | 10,812 | 0 | -2,475 | 0 | -691 | 698 | 8,344 |
| Tax value of loss carry-forwards | 877 | -962 | -2,891 | 0 | -249 | 146 | -3,078 |
| \u00a0 | -124,834 | -36,740 | -8,456 | -187 | -111 | 178 | -170,150 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Deferred Tax liability | -135,315 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | -190,755 |
| Deferred Tax assets | 10,482 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | 20,605 |
| \u00a0 | -124,834 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | -170,150 |
Based upon the level of historical taxable income and projections for future taxable income over the periods in which the deferred tax assets are deductible for the group companies, management believes it is probable that the group will realize the benefits of these deductible differences.
| (in thousands of \u20ac) | 1 January | Business combinations | Income statement | OCI | Other | Translation differences | December 31 |
|---|---|---|---|---|---|---|---|
| Property, plant and equipment | 216 | -1,611 | -2,096 | 0 | 69 | -47 | -3,470 |
| Intangible assets | -115,711 | -18,115 | -909 | 0 | -4,093 | -5,502 | -144,330 |
| Inventories | 2,809 | 2,642 | 320 | 0 | -261 | 216 | 5,725 |
| Trade receivables | 1,095 | 424 | 707 | 0 | -208 | 58 | 2,076 |
| Loans and borrowings | -1 | 0 | 1 | 0 | 113 | 2 | 114 |
| Employee benefits | 1,512 | 43 | 1,726 | -258 | 157 | 72 | 3,252 |
| Provisions, derivatives and other items | 650 | -2,264 | 1,286 | 0 | 489 | -53 | 109 |
| Untaxed reserves | 4,348 | 0 | 1,508 | 0 | 4,206 | 749 | 10,812 |
| Tax value of loss carry-forwards | 1,508 | 170 | -463 | 0 | -343 | 6 | 877 |
| \u00a0 | -103,574 | -18,711 | 2,079 | -258 | 129 | -4,499 | -124,834 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Deferred Tax liability | -109,993 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | -135,315 |
| Deferred Tax assets | 6,419 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | 10,482 |
| \u00a0 | -103,574 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | -124,834 |
Deferred tax assets and liabilities are expected to be recovered or settled over time as follows:
| (in thousands of \u20ac) | Deferred tax assets | Deferred tax liabilities |
|---|---|---|
| To be recovered after more than 12 months | 9,938 | 176,320 |
| To be recovered within 12 months | 10,667 | 14,434 |
| \u00a0 | 20,605 | 190,755 |
The following deferred tax assets related to compensable losses of group companies acquired have not been recognized:
| (in thousands of \u20ac) | 2022 | 2021 | ||
|---|---|---|---|---|
| Gross | Tax | Gross | Tax | |
| Tax losses | 156,017 | 39,004 | 289,102 | 72,275 |
Unrecognized carry forward losses of \u20ac140.2 million (2021: \u20ac171.2 million) can be used unlimited in time and \u20ac15.8 million (2021: \u20ac117.8 million for period 2022-2037) need to be used during the period 2023-2037.
No deferred tax assets have been recognized on these carry forward losses, due to the fact that they do not meet the recognition criteria to recognize a deferred tax asset.
The group may have unrecognized tax liabilities in respect of taxable temporary differences relating to non-distributed reserves of one of its subsidiaries that would be taxed when distributed. No deferred tax liability has been recognized because the group controls whether the liability will be incurred and management is satisfied that the liability will not be incurred in the foreseeable future.
", "dimensions": { "concept": "ifrs-full:DisclosureOfExpensesExplanatory", "language": "en", "entity": "scheme:699400M9RRMTV264FM70", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-458": { "value": "11 Employee benefits 11.1 Expenses Wages and salaries include managers\u2019 fees and current service costs from employee benefits. (in thousands of \u20ac) 2022 2021 Wages and salaries and other personnel related expenses 254,897 208,488 Social charges 30,055 23,727 \u00a0284,952 232,215 The average number of employees (FTE) located in the regions is set out below: \u00a031-12-2022 31-12-2021 EMEA 1,735 1,486 Americas 966 805 Asia Pacific 969 744 Holdings 155 142 \u00a03,825 3,177 The number of employees reported for EMEA includes the holding employees. 11.2 Defined obligation benefit schemes The group is subject to the following defined benefit obligations: (in thousands of \u20ac) 2022 2021 German companies 639 743 Belgian companies 1,572 6,190 French companies 1,971 2,045 Italian companies 5,046 1,823 Other companies 1,077 155 Total present value of unfunded obligations 10,305 10,956 Present value of funded obligations (Azelis UK) 5,398 9,560 Total present value of obligations 15,703 20,516 Fair value of plan assets -12,625 -14,347 Amounts not recognized as asset due to asset ceiling 2,496 0 Recognized liability for defined benefit obligations 5,574 6,169 Liability for long-service leave and other employees' benefits 2,951 2,653 Total employee benefits recognised in the balance sheet 8,525 8,822 The group recognized net obligation is based on the difference between the present values of the defined benefit obligations and the plan assets. Both defined benefit plans and defined contribution plans are in place. Charges for defined contribution schemes amount to \u20ac3.3 million (2021: \u20ac2.5 million). Expenses for all plans are included in 'Wages, salaries and other personnel related expenses'. Belgium pension plans There are four pension plans in place in Belgium which are all legally structured as defined contribution plans. Because of the Belgian legislation applicable to 2nd pillar pension plans (so-called \"Law Vandenbroucke\"), all Belgian defined contribution plans have to be considered under IFRS as defined benefit plans. In the context of defined contribution plans, Law Vandenbroucke states the following: The employer must continue to guarantee a minimum return of 3.75% on employee contributions and 3.25% on employer contributions made until December 31, 2015; As from 2016 the employer must guarantee a minimum return ranging between 1.75% and 3.75% for all contributions, depending on the development of the average interest on OLO 10 years over a period of 24 months. The current guaranteed minimum return is 1.75%. Because of this minimum guaranteed return for defined contribution plans in Belgium, the employer is exposed to a financial risk (there is a legal obligation to pay further contributions if the fund does not hold sufficient assets to pay all employee benefits relating to employee service in the current and prior periods). These plans should therefore be classified and accounted for as defined benefit plans under IAS 19. Actuarial calculations have been made as of December 31, 2022 and these were recognized in the balance sheet. For information, some key figures related to the plans are given below: Employer\u2019s contributions in the financial year: \u20ac0.6 million (2021: \u20ac0.7 million) Amount of the plan assets as of December 31, 2022: \u20ac5.6 million (2021: \u20ac5.8 million) United Kingdom In the UK, the defined benefit pension plan is financed through the accumulation of plan assets held separately from those of the group in an independently administered fund. Actuarial calculations have been made per 31st December 2022 and these were recognized in the balance sheet. The duration of Scheme obligations at 31 December 2022 is 20 years; plan assets are primarily invested in equity instruments. For information, some key figures related to the plans are given below: Employer\u2019s contributions in the financial year: \u20ac0.6 million (2021: \u20ac0.6 million) Amount of the plan assets as of December 31, 2021: \u20ac7.7 million (2021: \u20ac8.6 million). Actuarial assumptions The actuarial calculations of the present value of defined benefit obligations were based on the following main assumptions: \u00a02022 2021 Discount rate 2,82% - 7,26% 0,8% - 2,1% Inflation 3,1% - 3,1% 2,5% - 5,0% Future pension increases 0% - 6% 2,5% - 3,0% Future salary increases 0% - 6% 0%- 2,5% In the event that the discount rate was to be raised or lowered by 0.5% in the context of a sensitivity analysis, the obligation ensuring from the defined benefit plan would amount to \u20ac1.2 million or \u20ac1.3 million, respectively. The benefits paid are mainly related to Belgium, France, Italy and UK. The 2023 benefits to be paid are expected to be in line with the 2022 benefits. The following table shows the changes in the present value of the defined benefit obligations: (in thousands of \u20ac) 2022 2021 Liability for defined benefit obligations at the beginning of period 20,516 19,653 Current service costs and interest 1,039 971 Benefits paid -1,811 -1,035 Remeasurement arising from changes in demographic assumptions -91 -1 Remeasurement arising from changes in financial assumptions -5,447 -754 Remeasurement arising from experience 310 -167 Business combination 979 1,208 Exchange rate differences -374 640 Liability for defined benefit obligations at 31 December 15,122 20,516 The following table shows the changes in the plan assets. (in thousands of \u20ac) 2022 2021 Fair value of plan assets at the beginning of the period 14,347 12,839 Contributions paid into the plan 1,252 1,341 Benefits paid by the plan -1,062 -745 Expected return on plan assets 54 436 Return on assets excluding amounts in net interests -2,174 22 Exchange rate differences -374 454 Fair value of plan assets at 31 December 12,044 14,347 At year-end, the plan assets consisted mainly of equity instruments. The net periodic cost for defined benefit obligations recognized in the income statement is shown in the following table: (in thousands of \u20ac) 2022 2021 Current service costs -883 -854 Interest on obligation -191 -155 Interest on assets -674 436 \u00a0-1,748 -573 The changes in actuarial gains and losses from defined benefit obligations and plan assets recognized in other comprehensive income are shown in the following table: (in thousands of \u20ac) 2022 2021 Return on assets, excluding amounts in net interests -2,202 412 Actuarial gains and losses on benefit obligations 5,390 701 Effect of changes in asset ceiling -2,596 0 Exchange rate differences -22 0 \u00a0570 1,113 11.3 Share-based payment In 2022, Azelis has launched a long-term incentive plan for certain directors, employees and self-employed managers of the group. Under this LTIP, Azelis has granted share awards to certain directors, employees and self-employed managers of the group. The grant of share awards is subject to a three-year performance period (starting January 1st) and takes into account the following metrics and weightings: 50% relative total shareholders' return (market condition), 35% Adjusted EBITA (non-market condition) and 15% sustainability-linked criteria (non-market condition). The awards are subject to a vesting period of three years starting from the grant date and are dependent on the Remuneration and Nomination Committee determining whether performance targets have been met. Based on performance delivered, the number of performance shares awarded will vest and become unconditionally owned by the participant. The movement in number of performance shares outstanding and the related weighted average fair value per share are as follows: \u00a02022 (in number of shares and \u20ac) Number of shares Weighted average fair value Outstanding as of 1 January 0 N/A Granted during the year 138,546 19.24 Forfeited during the year 6,062 19.24 Outstanding as of 31 December 132,484 \u00a0The fair value of the performance shares was measured on the basis of Azelis' share price at grant date, and has been discounted with the sum of the expected dividend yield for the performance period. The expected dividend yield has been determined based on target pay-out ratio and consensus figures for net profit, divided by market capitalization. The market condition of total shareholders return was embedded in the fair value based on a Monte Carlo simulation incorporating a number of assumptions (volatility, expected dividend yield and the correlation coefficients between the share price returns of the peer companies). In 2022, the vesting of performance shares resulted in an expense of \u20ac0.8 million which is recognized in the consolidated income statement as part of employee benefits expenses. 24 Trade and other payables and other non-current liabilities (in thousands of \u20ac) 31-12-2022 31-12-2021 Trade payables 462,728 368,657 Other taxes 11,805 6,618 Employee and social security payables 87,505 71,227 Derivatives 377 155 Other payables 209,272 94,417 Total current payables 771,686 541,074 \u00a0\u00a0\u00a0Other payables 98,264 9,655 Other non-current liabilities 98,264 9,655 The other current and non-current payables mainly consist of put options over non-controlling interests totaling \u20ac115.1 million (2021: \u20ac31.2 million), and earnouts and deferred payments in connection with acquisitions. ", "dimensions": { "concept": "ifrs-full:DisclosureOfEmployeeBenefitsExplanatory", "language": "en", "entity": "scheme:699400M9RRMTV264FM70", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-461": { "value": "The average number of employees (FTE) located in the regions is set out below: \u00a031-12-2022 31-12-2021 EMEA 1,735 1,486 Americas 966 805 Asia Pacific 969 744 Holdings 155 142 \u00a03,825 3,177 The number of employees reported for EMEA includes the holding employees. ", "dimensions": { "concept": "ifrs-full:DisclosureOfInformationAboutEmployeesExplanatory", "language": "en", "entity": "scheme:699400M9RRMTV264FM70", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-464": { "value": " 11.2 Defined obligation benefit schemes The group is subject to the following defined benefit obligations: (in thousands of \u20ac) 2022 2021 German companies 639 743 Belgian companies 1,572 6,190 French companies 1,971 2,045 Italian companies 5,046 1,823 Other companies 1,077 155 Total present value of unfunded obligations 10,305 10,956 Present value of funded obligations (Azelis UK) 5,398 9,560 Total present value of obligations 15,703 20,516 Fair value of plan assets -12,625 -14,347 Amounts not recognized as asset due to asset ceiling 2,496 0 Recognized liability for defined benefit obligations 5,574 6,169 Liability for long-service leave and other employees' benefits 2,951 2,653 Total employee benefits recognised in the balance sheet 8,525 8,822 The group recognized net obligation is based on the difference between the present values of the defined benefit obligations and the plan assets. Both defined benefit plans and defined contribution plans are in place. Charges for defined contribution schemes amount to \u20ac3.3 million (2021: \u20ac2.5 million). Expenses for all plans are included in 'Wages, salaries and other personnel related expenses'. Belgium pension plans There are four pension plans in place in Belgium which are all legally structured as defined contribution plans. Because of the Belgian legislation applicable to 2nd pillar pension plans (so-called \"Law Vandenbroucke\"), all Belgian defined contribution plans have to be considered under IFRS as defined benefit plans. In the context of defined contribution plans, Law Vandenbroucke states the following: The employer must continue to guarantee a minimum return of 3.75% on employee contributions and 3.25% on employer contributions made until December 31, 2015; As from 2016 the employer must guarantee a minimum return ranging between 1.75% and 3.75% for all contributions, depending on the development of the average interest on OLO 10 years over a period of 24 months. The current guaranteed minimum return is 1.75%. Because of this minimum guaranteed return for defined contribution plans in Belgium, the employer is exposed to a financial risk (there is a legal obligation to pay further contributions if the fund does not hold sufficient assets to pay all employee benefits relating to employee service in the current and prior periods). These plans should therefore be classified and accounted for as defined benefit plans under IAS 19. Actuarial calculations have been made as of December 31, 2022 and these were recognized in the balance sheet. For information, some key figures related to the plans are given below: Employer\u2019s contributions in the financial year: \u20ac0.6 million (2021: \u20ac0.7 million) Amount of the plan assets as of December 31, 2022: \u20ac5.6 million (2021: \u20ac5.8 million) United Kingdom In the UK, the defined benefit pension plan is financed through the accumulation of plan assets held separately from those of the group in an independently administered fund. Actuarial calculations have been made per 31st December 2022 and these were recognized in the balance sheet. The duration of Scheme obligations at 31 December 2022 is 20 years; plan assets are primarily invested in equity instruments. For information, some key figures related to the plans are given below: Employer\u2019s contributions in the financial year: \u20ac0.6 million (2021: \u20ac0.6 million) Amount of the plan assets as of December 31, 2021: \u20ac7.7 million (2021: \u20ac8.6 million). Actuarial assumptions The actuarial calculations of the present value of defined benefit obligations were based on the following main assumptions: \u00a02022 2021 Discount rate 2,82% - 7,26% 0,8% - 2,1% Inflation 3,1% - 3,1% 2,5% - 5,0% Future pension increases 0% - 6% 2,5% - 3,0% Future salary increases 0% - 6% 0%- 2,5% In the event that the discount rate was to be raised or lowered by 0.5% in the context of a sensitivity analysis, the obligation ensuring from the defined benefit plan would amount to \u20ac1.2 million or \u20ac1.3 million, respectively. The benefits paid are mainly related to Belgium, France, Italy and UK. The 2023 benefits to be paid are expected to be in line with the 2022 benefits. The following table shows the changes in the present value of the defined benefit obligations: (in thousands of \u20ac) 2022 2021 Liability for defined benefit obligations at the beginning of period 20,516 19,653 Current service costs and interest 1,039 971 Benefits paid -1,811 -1,035 Remeasurement arising from changes in demographic assumptions -91 -1 Remeasurement arising from changes in financial assumptions -5,447 -754 Remeasurement arising from experience 310 -167 Business combination 979 1,208 Exchange rate differences -374 640 Liability for defined benefit obligations at 31 December 15,122 20,516 The following table shows the changes in the plan assets. (in thousands of \u20ac) 2022 2021 Fair value of plan assets at the beginning of the period 14,347 12,839 Contributions paid into the plan 1,252 1,341 Benefits paid by the plan -1,062 -745 Expected return on plan assets 54 436 Return on assets excluding amounts in net interests -2,174 22 Exchange rate differences -374 454 Fair value of plan assets at 31 December 12,044 14,347 At year-end, the plan assets consisted mainly of equity instruments. The net periodic cost for defined benefit obligations recognized in the income statement is shown in the following table: (in thousands of \u20ac) 2022 2021 Current service costs -883 -854 Interest on obligation -191 -155 Interest on assets -674 436 \u00a0-1,748 -573 The changes in actuarial gains and losses from defined benefit obligations and plan assets recognized in other comprehensive income are shown in the following table: (in thousands of \u20ac) 2022 2021 Return on assets, excluding amounts in net interests -2,202 412 Actuarial gains and losses on benefit obligations 5,390 701 Effect of changes in asset ceiling -2,596 0 Exchange rate differences -22 0 \u00a0570 1,113 23 Provisions (in thousands of \u20ac) Tax Claims Other provisions Total As of January 1 2021 2,745 2,115 4,860 Business combination 446 836 1,282 Provisions made 253 1,246 1,499 Provisions used -13 -109 -122 Provisions released -962 -574 -1,536 Translation differences 113 11 124 As of December 31, 2021 2,582 3,525 6,107 \u00a0\u00a0\u00a0\u00a0Non-current 1,982 2,145 4,127 Current 601 1,380 1,981 Total 2,583 3,525 6,108 \u00a0\u00a0\u00a0\u00a02022 \u00a0\u00a0\u00a0Business combination 0 136 136 Provisions made during the period 1,140 3,190 4,330 Provisions used during the period 0 -355 -355 Provisions released during the period -671 -1,299 -1,971 Reclassification 0 0 0 Translation differences -55 -53 -108 As of December 31, 2022 2,996 5,144 8,141 \u00a0\u00a0\u00a0\u00a0Non-current 2,433 2,163 4,597 Current 563 2,981 3,544 Total 2,996 5,144 8,141 The provisions relate to tax risks, administrative fines, labor and commercial matters including claims and litigations, concerning the past and current activities of the group companies. 24 Trade and other payables and other non-current liabilities (in thousands of \u20ac) 31-12-2022 31-12-2021 Trade payables 462,728 368,657 Other taxes 11,805 6,618 Employee and social security payables 87,505 71,227 Derivatives 377 155 Other payables 209,272 94,417 Total current payables 771,686 541,074 \u00a0\u00a0\u00a0Other payables 98,264 9,655 Other non-current liabilities 98,264 9,655 The other current and non-current payables mainly consist of put options over non-controlling interests totaling \u20ac115.1 million (2021: \u20ac31.2 million), and earnouts and deferred payments in connection with acquisitions. ", "dimensions": { "concept": "ifrs-full:DisclosureOfProvisionsExplanatory", "language": "en", "entity": "scheme:699400M9RRMTV264FM70", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-466": { "value": "| (in thousands of \u20ac) | 2022 | 2021 |
|---|---|---|
| Distribution | 87,797 | 62,486 |
| Utilities, communication, insurance and administrative expenses | 40,984 | 26,570 |
| Commercial expenses | 10,093 | 4,269 |
| Professional service fees | 29,975 | 28,265 |
| Lease expenses | 1,954 | 2,785 |
| Other expenses | 31,828 | 26,356 |
| \u00a0 | 202,631 | 150,731 |
The professional services & other expenses of 2022 include adjustments of \u20ac9.0 million (2021: \u20ac19.0 million) mainly regarding M&A activities (2021: \u20ac10.6 million). The professional services & other expenses in 2021 also include expenses with regard to the Company's IPO on Euronext Brussels (\u20ac8.4 million).
Audit fees included under professional service fees in the above table:
| (in thousands of \u20ac) | 2022 | 2021 |
|---|---|---|
| Audit fees | \u00a0 | \u00a0 |
| Total fees for the audit of the annual accounts | 1,930 | 1,373 |
| Total fees for audit by non-PWC companies | 559 | 336 |
| Non-audit fees paid to group auditor network | \u00a0 | \u00a0 |
| Total fees for other attestation | 82 | 2,399 |
| Total fees for other non-audit services (incl. tax) | 7 | 34 |
| \u00a0 | 2,578 | 4,143 |
The fees for other attestation in 2021 are primarily related to the Company's IPO.
", "dimensions": { "concept": "ifrs-full:DisclosureOfOtherOperatingExpenseExplanatory", "language": "en", "entity": "scheme:699400M9RRMTV264FM70", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-468": { "value": "| (in thousands of \u20ac) | 2022 | 2021 |
|---|---|---|
| Distribution | 87,797 | 62,486 |
| Utilities, communication, insurance and administrative expenses | 40,984 | 26,570 |
| Commercial expenses | 10,093 | 4,269 |
| Professional service fees | 29,975 | 28,265 |
| Lease expenses | 1,954 | 2,785 |
| Other expenses | 31,828 | 26,356 |
| \u00a0 | 202,631 | 150,731 |
The professional services & other expenses of 2022 include adjustments of \u20ac9.0 million (2021: \u20ac19.0 million) mainly regarding M&A activities (2021: \u20ac10.6 million). The professional services & other expenses in 2021 also include expenses with regard to the Company's IPO on Euronext Brussels (\u20ac8.4 million).
Audit fees included under professional service fees in the above table:
| (in thousands of \u20ac) | 2022 | 2021 |
|---|---|---|
| Audit fees | \u00a0 | \u00a0 |
| Total fees for the audit of the annual accounts | 1,930 | 1,373 |
| Total fees for audit by non-PWC companies | 559 | 336 |
| Non-audit fees paid to group auditor network | \u00a0 | \u00a0 |
| Total fees for other attestation | 82 | 2,399 |
| Total fees for other non-audit services (incl. tax) | 7 | 34 |
| \u00a0 | 2,578 | 4,143 |
The fees for other attestation in 2021 are primarily related to the Company's IPO.
", "dimensions": { "concept": "ifrs-full:DisclosureOfGeneralAndAdministrativeExpenseExplanatory", "language": "en", "entity": "scheme:699400M9RRMTV264FM70", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-471": { "value": "Audit fees included under professional service fees in the above table: (in thousands of \u20ac) 2022 2021 Audit fees \u00a0\u00a0Total fees for the audit of the annual accounts 1,930 1,373 Total fees for audit by non-PWC companies 559 336 Non-audit fees paid to group auditor network \u00a0\u00a0Total fees for other attestation 82 2,399 Total fees for other non-audit services (incl. tax) 7 34 \u00a02,578 4,143 The fees for other attestation in 2021 are primarily related to the Company's IPO. ", "dimensions": { "concept": "ifrs-full:DisclosureOfAuditorsRemunerationExplanatory", "language": "en", "entity": "scheme:699400M9RRMTV264FM70", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-474": { "value": "13 Net financial expenses (in thousands of \u20ac) 2022 2021 Financial income \u00a0\u00a0Interest income 621 618 Gains on changes in fair value of derivatives 5,132 0 Other financial income 256 113 \u00a06,008 731 Financial expenses \u00a0\u00a0Interest expense on bank loans and overdrafts -34,795 -46,948 Interest lease commitments -3,423 -2,951 Fair value adjustment on financial liabilities -17,585 -7,282 Transaction costs for bank loans -1,444 -3,336 Accelerated amortization of transaction costs due to IPO 0 -19,616 Losses on changes in FV of derivative instruments -754 0 Monetary loss on hyperinflation -6,957 0 Foreign exchange losses -2,093 -1,238 Other financial expenses -12,771 -6,907 \u00a0-79,823 -88,278 The (non-cash) gain on changes in fair value of derivatives primarily relates to the interest rate cap that was entered into in May 2022. The fair value of the interest rate cap increased since then, driven by increasing market interest rates during 2022. The fair value adjustment on financial liabilities relates to acquisition-related earnout liabilities and put options on non-controlling interests. Transaction costs for bank loans of \u20ac1.4 million (2021: \u20ac3.3 million) includes the (non-cash) impact of expensing capitalized transaction costs (see note 22). At date of IPO in September 2021, the Company restructured its debt, whereas the remaining capitalized costs of \u20ac19.6 million that related to the previous and repaid financial liabilities were amortized entirely in 2021 (for the majority non-cash). The monetary loss on hyperinflation relates to the translation of foreign exchange impact regarding Azelis' subsidiaries in Turkey. The majority of the loss (\u20ac6.5 million) relates to translation of its balance sheets, funded by equity mainly, with low exposure to cash and debt in local currencies. The translation-impact on the income statement is limited (\u20ac0.5 million) as operational activities are merely settled in hard currencies (USD, EUR). The foreign exchange losses include unrealized translation of intercompany loans, mainly relating to non-EUR nominated loans to subsidiaries. Other financial expenses primarily relate to factoring fees and other bank fees. ", "dimensions": { "concept": "ifrs-full:DisclosureOfFinanceIncomeExpenseExplanatory", "language": "en", "entity": "scheme:699400M9RRMTV264FM70", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-478": { "value": "13 Net financial expenses (in thousands of \u20ac) 2022 2021 Financial income \u00a0\u00a0Interest income 621 618 Gains on changes in fair value of derivatives 5,132 0 Other financial income 256 113 \u00a06,008 731 Financial expenses \u00a0\u00a0Interest expense on bank loans and overdrafts -34,795 -46,948 Interest lease commitments -3,423 -2,951 Fair value adjustment on financial liabilities -17,585 -7,282 Transaction costs for bank loans -1,444 -3,336 Accelerated amortization of transaction costs due to IPO 0 -19,616 Losses on changes in FV of derivative instruments -754 0 Monetary loss on hyperinflation -6,957 0 Foreign exchange losses -2,093 -1,238 Other financial expenses -12,771 -6,907 \u00a0-79,823 -88,278 The (non-cash) gain on changes in fair value of derivatives primarily relates to the interest rate cap that was entered into in May 2022. The fair value of the interest rate cap increased since then, driven by increasing market interest rates during 2022. The fair value adjustment on financial liabilities relates to acquisition-related earnout liabilities and put options on non-controlling interests. Transaction costs for bank loans of \u20ac1.4 million (2021: \u20ac3.3 million) includes the (non-cash) impact of expensing capitalized transaction costs (see note 22). At date of IPO in September 2021, the Company restructured its debt, whereas the remaining capitalized costs of \u20ac19.6 million that related to the previous and repaid financial liabilities were amortized entirely in 2021 (for the majority non-cash). The monetary loss on hyperinflation relates to the translation of foreign exchange impact regarding Azelis' subsidiaries in Turkey. The majority of the loss (\u20ac6.5 million) relates to translation of its balance sheets, funded by equity mainly, with low exposure to cash and debt in local currencies. The translation-impact on the income statement is limited (\u20ac0.5 million) as operational activities are merely settled in hard currencies (USD, EUR). The foreign exchange losses include unrealized translation of intercompany loans, mainly relating to non-EUR nominated loans to subsidiaries. Other financial expenses primarily relate to factoring fees and other bank fees. ", "dimensions": { "concept": "ifrs-full:DisclosureOfInterestIncomeExpenseExplanatory", "language": "en", "entity": "scheme:699400M9RRMTV264FM70", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-480": { "value": "13 Net financial expenses (in thousands of \u20ac) 2022 2021 Financial income \u00a0\u00a0Interest income 621 618 Gains on changes in fair value of derivatives 5,132 0 Other financial income 256 113 \u00a06,008 731 Financial expenses \u00a0\u00a0Interest expense on bank loans and overdrafts -34,795 -46,948 Interest lease commitments -3,423 -2,951 Fair value adjustment on financial liabilities -17,585 -7,282 Transaction costs for bank loans -1,444 -3,336 Accelerated amortization of transaction costs due to IPO 0 -19,616 Losses on changes in FV of derivative instruments -754 0 Monetary loss on hyperinflation -6,957 0 Foreign exchange losses -2,093 -1,238 Other financial expenses -12,771 -6,907 \u00a0-79,823 -88,278 The (non-cash) gain on changes in fair value of derivatives primarily relates to the interest rate cap that was entered into in May 2022. The fair value of the interest rate cap increased since then, driven by increasing market interest rates during 2022. The fair value adjustment on financial liabilities relates to acquisition-related earnout liabilities and put options on non-controlling interests. Transaction costs for bank loans of \u20ac1.4 million (2021: \u20ac3.3 million) includes the (non-cash) impact of expensing capitalized transaction costs (see note 22). At date of IPO in September 2021, the Company restructured its debt, whereas the remaining capitalized costs of \u20ac19.6 million that related to the previous and repaid financial liabilities were amortized entirely in 2021 (for the majority non-cash). The monetary loss on hyperinflation relates to the translation of foreign exchange impact regarding Azelis' subsidiaries in Turkey. The majority of the loss (\u20ac6.5 million) relates to translation of its balance sheets, funded by equity mainly, with low exposure to cash and debt in local currencies. The translation-impact on the income statement is limited (\u20ac0.5 million) as operational activities are merely settled in hard currencies (USD, EUR). The foreign exchange losses include unrealized translation of intercompany loans, mainly relating to non-EUR nominated loans to subsidiaries. Other financial expenses primarily relate to factoring fees and other bank fees. ", "dimensions": { "concept": "ifrs-full:DisclosureOfInterestExpenseExplanatory", "language": "en", "entity": "scheme:699400M9RRMTV264FM70", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-481": { "value": "13 Net financial expenses (in thousands of \u20ac) 2022 2021 Financial income \u00a0\u00a0Interest income 621 618 Gains on changes in fair value of derivatives 5,132 0 Other financial income 256 113 \u00a06,008 731 Financial expenses \u00a0\u00a0Interest expense on bank loans and overdrafts -34,795 -46,948 Interest lease commitments -3,423 -2,951 Fair value adjustment on financial liabilities -17,585 -7,282 Transaction costs for bank loans -1,444 -3,336 Accelerated amortization of transaction costs due to IPO 0 -19,616 Losses on changes in FV of derivative instruments -754 0 Monetary loss on hyperinflation -6,957 0 Foreign exchange losses -2,093 -1,238 Other financial expenses -12,771 -6,907 \u00a0-79,823 -88,278 The (non-cash) gain on changes in fair value of derivatives primarily relates to the interest rate cap that was entered into in May 2022. The fair value of the interest rate cap increased since then, driven by increasing market interest rates during 2022. The fair value adjustment on financial liabilities relates to acquisition-related earnout liabilities and put options on non-controlling interests. Transaction costs for bank loans of \u20ac1.4 million (2021: \u20ac3.3 million) includes the (non-cash) impact of expensing capitalized transaction costs (see note 22). At date of IPO in September 2021, the Company restructured its debt, whereas the remaining capitalized costs of \u20ac19.6 million that related to the previous and repaid financial liabilities were amortized entirely in 2021 (for the majority non-cash). The monetary loss on hyperinflation relates to the translation of foreign exchange impact regarding Azelis' subsidiaries in Turkey. The majority of the loss (\u20ac6.5 million) relates to translation of its balance sheets, funded by equity mainly, with low exposure to cash and debt in local currencies. The translation-impact on the income statement is limited (\u20ac0.5 million) as operational activities are merely settled in hard currencies (USD, EUR). The foreign exchange losses include unrealized translation of intercompany loans, mainly relating to non-EUR nominated loans to subsidiaries. Other financial expenses primarily relate to factoring fees and other bank fees. ", "dimensions": { "concept": "ifrs-full:DisclosureOfInterestIncomeExplanatory", "language": "en", "entity": "scheme:699400M9RRMTV264FM70", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-482": { "value": " 14 Income taxes 14.1 Income tax expense Income tax expenses in consolidated income statement The income tax expenses consist of: (in thousands of \u20ac) 2022 2021 Current period tax expense (-) / income -86,264 -51,963 Adjustments to prior years income tax expense (-) / income -868 225 Provisions for tax risks -203 -314 \u00a0-87,335 -52,052 Deferred tax income / loss (-) -8,456 2,079 Total income tax income / expense (-) -95,791 -49,973 Income tax expense consists primarily of income taxes for the current period and prior period of group companies. The differences between the taxable income related to the Belgian tax rate and the effective tax rate are reconciled as follows: (in thousands of \u20ac) 2022 2021 Profit/loss (-) before tax 314,670 120,199 \u00a0\u00a0\u00a0Income tax using the domestic corporation tax rate -82,356 -30,050 Impact of tax in different jurisdictions with difference to domestic rate -221 5,590 Tax effect of expenses not deductible for tax purposes -14,659 -2,629 Tax effect of income not subject to tax 5,062 403 Recognition of previously unrecognized tax losses 1,366 -1,264 Tax losses for which no deferred income tax asset was recognized -3,608 -18,340 Adjustments on applicable tax rate 666 593 Deferred tax asset on stand-alone carry forward losses -13 -639 Adjustments to prior year income tax expense (income) -1,656 0 Other -372 -3,636 Total income tax income / expense (-) in income statement -95,791 -49,973 The effective tax rate 2022 has been affected negatively by the following: Fair value adjustment on financial liabilities of \u20ac17.6 million (2021: \u20ac7.3 million) regarding acquisition-related earnout liabilities and put options on non-controlling interest. Per Azelis' accounting policies (Note 2.7.1), subsequent changes are accounted for in the income statement. On the basis of the further improved performance of the related acquisitions, a fair value adjustment of \u20ac17.6 million is included in the consolidated income statement, for which no tax benefit can and may be recognized. As of 30 June 2022, hyperinflationary accounting for Turkey has been applied, for which a monetary loss of \u20ac7.0 million is included in the net financial expenses, which is not tax deductible. The tax expense 2021 included a non-cash and one-off amount of \u20ac18.3 million, almost only due to the impact of moving the group's holding-location (including the funding) from Luxembourg to Belgium in view of the IPO, for which no deferred income tax asset could be recognized due to the partial unwinding of the previous Luxembourg holding-structure, refer to Note 14.3. Income tax expenses in Consolidated Statement of Other Comprehensive Income The tax included in other comprehensive income is related to: (in thousands of \u20ac) 2022 2021 Relating to actuarial gains and losses on pensions obligations -71 -259 \u00a0-71 -259 14.2 Deferred taxes Deferred tax assets and liabilities are attributable to the following: 2022 (in thousands of \u20ac) 1 January Business combinations Income statement OCI Other Translation differences December 31 Property, plant and equipment -3,470 50 750 0 146 -115 -2,640 Intangible assets -144,330 -39,421 -6,466 0 691 -671 -190,198 Inventories 5,725 2,938 537 0 360 28 9,589 Trade receivables 2,076 937 789 0 22 10 3,835 Loans and borrowings 114 0 -166 0 1,868 -24 1,792 Employee benefits 3,252 -13 293 -187 -1,954 102 1,492 Provisions, derivatives and other items 109 -268 1,172 0 -304 4 714 Untaxed reserves 10,812 0 -2,475 0 -691 698 8,344 Tax value of loss carry-forwards 877 -962 -2,891 0 -249 146 -3,078 \u00a0-124,834 -36,740 -8,456 -187 -111 178 -170,150 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Deferred Tax liability -135,315 \u00a0\u00a0\u00a0\u00a0\u00a0-190,755 Deferred Tax assets 10,482 \u00a0\u00a0\u00a0\u00a0\u00a020,605 \u00a0-124,834 \u00a0\u00a0\u00a0\u00a0\u00a0-170,150 Based upon the level of historical taxable income and projections for future taxable income over the periods in which the deferred tax assets are deductible for the group companies, management believes it is probable that the group will realize the benefits of these deductible differences. 2021 (in thousands of \u20ac) 1 January Business combinations Income statement OCI Other Translation differences December 31 Property, plant and equipment 216 -1,611 -2,096 0 69 -47 -3,470 Intangible assets -115,711 -18,115 -909 0 -4,093 -5,502 -144,330 Inventories 2,809 2,642 320 0 -261 216 5,725 Trade receivables 1,095 424 707 0 -208 58 2,076 Loans and borrowings -1 0 1 0 113 2 114 Employee benefits 1,512 43 1,726 -258 157 72 3,252 Provisions, derivatives and other items 650 -2,264 1,286 0 489 -53 109 Untaxed reserves 4,348 0 1,508 0 4,206 749 10,812 Tax value of loss carry-forwards 1,508 170 -463 0 -343 6 877 \u00a0-103,574 -18,711 2,079 -258 129 -4,499 -124,834 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Deferred Tax liability -109,993 \u00a0\u00a0\u00a0\u00a0\u00a0-135,315 Deferred Tax assets 6,419 \u00a0\u00a0\u00a0\u00a0\u00a010,482 \u00a0-103,574 \u00a0\u00a0\u00a0\u00a0\u00a0-124,834 Deferred tax assets and liabilities are expected to be recovered or settled over time as follows: (in thousands of \u20ac) Deferred tax assets Deferred tax liabilities To be recovered after more than 12 months 9,938 176,320 To be recovered within 12 months 10,667 14,434 \u00a020,605 190,755 14.3 Unrecognized deferred income tax assets The following deferred tax assets related to compensable losses of group companies acquired have not been recognized: (in thousands of \u20ac) 2022 2021 Gross Tax Gross Tax Tax losses 156,017 39,004 289,102 72,275 Unrecognized carry forward losses of \u20ac140.2 million (2021: \u20ac171.2 million) can be used unlimited in time and \u20ac15.8 million (2021: \u20ac117.8 million for period 2022-2037) need to be used during the period 2023-2037. No deferred tax assets have been recognized on these carry forward losses, due to the fact that they do not meet the recognition criteria to recognize a deferred tax asset. The group may have unrecognized tax liabilities in respect of taxable temporary differences relating to non-distributed reserves of one of its subsidiaries that would be taxed when distributed. No deferred tax liability has been recognized because the group controls whether the liability will be incurred and management is satisfied that the liability will not be incurred in the foreseeable future. ", "dimensions": { "concept": "ifrs-full:DisclosureOfIncomeTaxExplanatory", "language": "en", "entity": "scheme:699400M9RRMTV264FM70", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-484": { "value": " 14 Income taxes 14.1 Income tax expense Income tax expenses in consolidated income statement The income tax expenses consist of: (in thousands of \u20ac) 2022 2021 Current period tax expense (-) / income -86,264 -51,963 Adjustments to prior years income tax expense (-) / income -868 225 Provisions for tax risks -203 -314 \u00a0-87,335 -52,052 Deferred tax income / loss (-) -8,456 2,079 Total income tax income / expense (-) -95,791 -49,973 Income tax expense consists primarily of income taxes for the current period and prior period of group companies. The differences between the taxable income related to the Belgian tax rate and the effective tax rate are reconciled as follows: (in thousands of \u20ac) 2022 2021 Profit/loss (-) before tax 314,670 120,199 \u00a0\u00a0\u00a0Income tax using the domestic corporation tax rate -82,356 -30,050 Impact of tax in different jurisdictions with difference to domestic rate -221 5,590 Tax effect of expenses not deductible for tax purposes -14,659 -2,629 Tax effect of income not subject to tax 5,062 403 Recognition of previously unrecognized tax losses 1,366 -1,264 Tax losses for which no deferred income tax asset was recognized -3,608 -18,340 Adjustments on applicable tax rate 666 593 Deferred tax asset on stand-alone carry forward losses -13 -639 Adjustments to prior year income tax expense (income) -1,656 0 Other -372 -3,636 Total income tax income / expense (-) in income statement -95,791 -49,973 The effective tax rate 2022 has been affected negatively by the following: Fair value adjustment on financial liabilities of \u20ac17.6 million (2021: \u20ac7.3 million) regarding acquisition-related earnout liabilities and put options on non-controlling interest. Per Azelis' accounting policies (Note 2.7.1), subsequent changes are accounted for in the income statement. On the basis of the further improved performance of the related acquisitions, a fair value adjustment of \u20ac17.6 million is included in the consolidated income statement, for which no tax benefit can and may be recognized. As of 30 June 2022, hyperinflationary accounting for Turkey has been applied, for which a monetary loss of \u20ac7.0 million is included in the net financial expenses, which is not tax deductible. The tax expense 2021 included a non-cash and one-off amount of \u20ac18.3 million, almost only due to the impact of moving the group's holding-location (including the funding) from Luxembourg to Belgium in view of the IPO, for which no deferred income tax asset could be recognized due to the partial unwinding of the previous Luxembourg holding-structure, refer to Note 14.3. Income tax expenses in Consolidated Statement of Other Comprehensive Income The tax included in other comprehensive income is related to: (in thousands of \u20ac) 2022 2021 Relating to actuarial gains and losses on pensions obligations -71 -259 \u00a0-71 -259 14.2 Deferred taxes Deferred tax assets and liabilities are attributable to the following: 2022 (in thousands of \u20ac) 1 January Business combinations Income statement OCI Other Translation differences December 31 Property, plant and equipment -3,470 50 750 0 146 -115 -2,640 Intangible assets -144,330 -39,421 -6,466 0 691 -671 -190,198 Inventories 5,725 2,938 537 0 360 28 9,589 Trade receivables 2,076 937 789 0 22 10 3,835 Loans and borrowings 114 0 -166 0 1,868 -24 1,792 Employee benefits 3,252 -13 293 -187 -1,954 102 1,492 Provisions, derivatives and other items 109 -268 1,172 0 -304 4 714 Untaxed reserves 10,812 0 -2,475 0 -691 698 8,344 Tax value of loss carry-forwards 877 -962 -2,891 0 -249 146 -3,078 \u00a0-124,834 -36,740 -8,456 -187 -111 178 -170,150 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Deferred Tax liability -135,315 \u00a0\u00a0\u00a0\u00a0\u00a0-190,755 Deferred Tax assets 10,482 \u00a0\u00a0\u00a0\u00a0\u00a020,605 \u00a0-124,834 \u00a0\u00a0\u00a0\u00a0\u00a0-170,150 Based upon the level of historical taxable income and projections for future taxable income over the periods in which the deferred tax assets are deductible for the group companies, management believes it is probable that the group will realize the benefits of these deductible differences. 2021 (in thousands of \u20ac) 1 January Business combinations Income statement OCI Other Translation differences December 31 Property, plant and equipment 216 -1,611 -2,096 0 69 -47 -3,470 Intangible assets -115,711 -18,115 -909 0 -4,093 -5,502 -144,330 Inventories 2,809 2,642 320 0 -261 216 5,725 Trade receivables 1,095 424 707 0 -208 58 2,076 Loans and borrowings -1 0 1 0 113 2 114 Employee benefits 1,512 43 1,726 -258 157 72 3,252 Provisions, derivatives and other items 650 -2,264 1,286 0 489 -53 109 Untaxed reserves 4,348 0 1,508 0 4,206 749 10,812 Tax value of loss carry-forwards 1,508 170 -463 0 -343 6 877 \u00a0-103,574 -18,711 2,079 -258 129 -4,499 -124,834 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Deferred Tax liability -109,993 \u00a0\u00a0\u00a0\u00a0\u00a0-135,315 Deferred Tax assets 6,419 \u00a0\u00a0\u00a0\u00a0\u00a010,482 \u00a0-103,574 \u00a0\u00a0\u00a0\u00a0\u00a0-124,834 Deferred tax assets and liabilities are expected to be recovered or settled over time as follows: (in thousands of \u20ac) Deferred tax assets Deferred tax liabilities To be recovered after more than 12 months 9,938 176,320 To be recovered within 12 months 10,667 14,434 \u00a020,605 190,755 14.3 Unrecognized deferred income tax assets The following deferred tax assets related to compensable losses of group companies acquired have not been recognized: (in thousands of \u20ac) 2022 2021 Gross Tax Gross Tax Tax losses 156,017 39,004 289,102 72,275 Unrecognized carry forward losses of \u20ac140.2 million (2021: \u20ac171.2 million) can be used unlimited in time and \u20ac15.8 million (2021: \u20ac117.8 million for period 2022-2037) need to be used during the period 2023-2037. No deferred tax assets have been recognized on these carry forward losses, due to the fact that they do not meet the recognition criteria to recognize a deferred tax asset. The group may have unrecognized tax liabilities in respect of taxable temporary differences relating to non-distributed reserves of one of its subsidiaries that would be taxed when distributed. No deferred tax liability has been recognized because the group controls whether the liability will be incurred and management is satisfied that the liability will not be incurred in the foreseeable future. ", "dimensions": { "concept": "ifrs-full:DisclosureOfDeferredTaxesExplanatory", "language": "en", "entity": "scheme:699400M9RRMTV264FM70", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-486": { "value": "15 Intangible assets \u00a0Goodwill Trade- marks Distribution rights Concessions and licenses Develop-ment cost Customer lists Other Intangibles in progress Total As of December 31, 2020 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Cost 1,345,937 317,378 546,136 6,194 6,195 3,971 6,630 3,250 2,235,691 Accumulated amortization and impairment - - -58,539 -3,781 -211 -489 -2,269 -3,106 -68,395 \u00a01,345,937 317,378 487,597 2,413 5,984 3,482 4,361 144 2,167,296 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Changes in 2021 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Business combination 381,469 - 175,571 3,048 - - 336 - 560,424 Additions - - 1,140 72 1,833 436 7,240 649 11,370 Amortization - - -33,949 -355 -1,698 -472 -3,007 - -39,480 Disposals -3 - -3 18 - - -6 - 6 Reclassifications -56 - 131 -1,824 -2,578 3 4,543 1,307 1,527 Translation differences 75,919 - 29,822 164 0 239 200 38 106,382 Changes in the Period 457,330 - 172,712 1,122 -2,443 206 9,307 1,994 640,228 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0As of December 31, 2021 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Cost 1,803,267 317,378 752,800 7,654 5,450 4,648 18,949 5,245 2,915,394 Accumulated amortization and impairment - - -92,491 -4,118 -1,909 -961 -5,282 -3,106 -107,870 \u00a01,803,267 317,378 660,309 3,535 3,541 3,688 13,668 2,139 2,807,524 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Changes in 2022 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Business combination 360,276 - 201,794 316 345 - 1,519 - 564,250 Additions - - 1,644 56 2,044 1,028 4,604 1,690 11,067 Amortization -0 - -45,061 -584 -1,995 -703 -8,507 - -56,850 Disposals -3 - -160 7 -0 - -261 -16 -433 Reclassifications -5 - 253 -35 -100 13 1,635 -1,571 191 Hyperinflation 15,208 - 4,734 6 - - 8 - 19,956 Translation differences -4,487 - 3,450 155 -0 -20 -83 23 -962 Changes in the Period 370,989 - 166,655 -79 293 319 -1,085 126 537,218 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0As of December 31, 2022 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Cost 2,174,256 317,378 964,516 8,159 7,738 5,670 26,372 5,371 3,509,462 Accumulated amortization and impairment -0 - -137,552 -4,702 -3,904 -1,663 -13,789 -3,106 -164,720 \u00a02,174,256 317,378 826,964 3,456 3,834 4,007 12,583 2,265 3,344,742 The trademark relates to the Azelis name. Azelis uses its name globally, and its trade name is considered to be a key asset of its distribution activities given its status of major distributor in the specialty chemicals sector. The name both supports the group to onboard principals and customers, and for acquisition targets that want to become part of the group as they know that their business will grow being part of it. The Azelis trademark is estimated to have an indefinite economic life for amortization purposes; therefore, effectively no amortization expenses are being booked through Azelis' income statement. The total value of \u20ac317.4 million as of December 31, 2022 originates entirely from the EQT/PSP acquisition in November 2018 and remained unchanged since that date. The translation differences of \u20ac1.0 million loss (2021: \u20ac106.4 million gain) are recognized in other comprehensive income and accumulated in the translation reserve within equity. Reference is made to note 21.5. 15.1 Allocation of assets for impairment testing A cash-generating unit (CGU) is the smallest identifiable group of assets that generates cash inflows that are largely independent of the cash inflows from other assets or groups of assets. For the purpose of impairment testing, goodwill is allocated to the following groups of CGUs: (in thousands of \u20ac) 31-12-2022 31-12-2021 EMEA 733,032 616,570 AMERICAS 1,119,304 919,385 ASIA PACIFIC 321,919 267,311 Total Goodwill 2,174,256 1,803,266 All goodwill acquired in the business combinations has been allocated to a regional CGU at the end of the reporting period. The goodwill is allocated on regional level as it is the group's regions that are expected to benefit of the business combinations, and as goodwill is also monitored internally on the regional level. The group's expectation is that synergies will be realized in the region of acquisition. Trademarks with a book value of \u20ac317.4 million (2021: \u20ac317.4 million) have an indefinite life. These do not generate cash inflows independently and qualify as corporate assets. As their carrying amount cannot be allocated to the regional CGUs on a reasonable and consistent basis, the corporate assets are allocated to the group as a whole and the impairment test is performed in two stages. 15.2 Impairment assessment The impairment tests have been performed by discounting future pre-tax cash flows from continuing operations of the unit. The recoverable amounts of the regional CGU's as of\u00a0December 31, 2022 have been determined based on a value in use calculation using cash flow projections from a five year detailed business plan which is approved by senior management and serves as a basis to determine the future free cash flows and the Adjusted EBITA\u2019s. The business plan is based on the market growth assumptions and on some general economic indicators (inflation, GDP, etc.). It also properly reflects the future strategy of the regional CGU's. For cash flows beyond the business plan period, an extrapolation was made based on steady terminal growth rates. The key assumptions used in the impairment tests are the pre-tax WACC, terminal growth rate and Adjusted EBITA margin. The pre-tax WACC is estimated per regional CGU, is consistent with external sources of information, and varies mainly due to differences in risk free rates that increased during 2022. The risk-free rates per regional CGU are based on the weighted average of the rate of return on local sovereign bonds. The terminal growth rates are based on industry benchmarks by region and are consistent with the group's past experience and based on external sources of information. Adjusted EBITA margin reflects the group's past experience and future expectation of regional business development. The key assumptions used for the second stage impairment test, on the level of the group as a whole including corporate asset, are identical to those used for the regional CGU impairment tests. The values attributed to pre-tax WACC and the growth rates are as follows: Cash Generating Unit 2022 2023-2027 assumptions \u00a0Pre-tax WACC Growth rate for terminal value EBITA% EMEA 14.55% 3.2% 11.6% AMERICAS 12.99% 2.6% 13.7% ASIA PACIFIC 12.81% 5.2% 8.2% Cash Generating Unit 2021 2022-2026 assumptions \u00a0Pre-tax WACC Growth rate for terminal value EBITA% EMEA 10.67% 3.0% 10.4% AMERICAS 8.56% 2.5% 12.4% ASIA PACIFIC 11.08% 5.0% 7.7% The increase versus 2021 of the pre-tax WACC is primarily driven by increased market risk-free rates, that have been increasing during 2022 across the globe. The impairment tests on the recoverable amount of regional CGU's show sufficient headroom on the carrying amount of the Goodwill. In the second stage impairment test, the recoverable amount of the regional CGU's considered as a whole exceeds the carrying amount of the regional CGU's including the carrying amount of the corporate assets. Sensitivity to changes in assumptions In order to test the resilience of the headroom against changes in key assumptions, Azelis has selected reasonably expectable changes in the assumptions as follows: A WACC increase by 2% A decrease of the growth rate in the terminal value by 2% A decrease of Adjusted EBITA margin by 0.5% Versus previous years, also a sensitivity test of Adjusted EBITA has been added, as Adjusted EBITA (rather than Sales) is the major indicator for the outcome of Azelis' impairment test. Azelis' cost base is predominantly variable in nature, enabling to react rapidly on (downward) exposure of revenue, limiting the possible impact on Adjusted EBITA. A sensitivity of 0.5% in Adjusted EBITA margin would result in a decrease of almost 5% in Adjusted EBITA (in EUR). In each of the above independent scenario's and for each regional CGU, the sensitivity test shows sufficient headroom on the carrying amount of the Goodwill. ", "dimensions": { "concept": "ifrs-full:DisclosureOfIntangibleAssetsAndGoodwillExplanatory", "language": "en", "entity": "scheme:699400M9RRMTV264FM70", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-487": { "value": "15 Intangible assets \u00a0Goodwill Trade- marks Distribution rights Concessions and licenses Develop-ment cost Customer lists Other Intangibles in progress Total As of December 31, 2020 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Cost 1,345,937 317,378 546,136 6,194 6,195 3,971 6,630 3,250 2,235,691 Accumulated amortization and impairment - - -58,539 -3,781 -211 -489 -2,269 -3,106 -68,395 \u00a01,345,937 317,378 487,597 2,413 5,984 3,482 4,361 144 2,167,296 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Changes in 2021 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Business combination 381,469 - 175,571 3,048 - - 336 - 560,424 Additions - - 1,140 72 1,833 436 7,240 649 11,370 Amortization - - -33,949 -355 -1,698 -472 -3,007 - -39,480 Disposals -3 - -3 18 - - -6 - 6 Reclassifications -56 - 131 -1,824 -2,578 3 4,543 1,307 1,527 Translation differences 75,919 - 29,822 164 0 239 200 38 106,382 Changes in the Period 457,330 - 172,712 1,122 -2,443 206 9,307 1,994 640,228 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0As of December 31, 2021 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Cost 1,803,267 317,378 752,800 7,654 5,450 4,648 18,949 5,245 2,915,394 Accumulated amortization and impairment - - -92,491 -4,118 -1,909 -961 -5,282 -3,106 -107,870 \u00a01,803,267 317,378 660,309 3,535 3,541 3,688 13,668 2,139 2,807,524 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Changes in 2022 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Business combination 360,276 - 201,794 316 345 - 1,519 - 564,250 Additions - - 1,644 56 2,044 1,028 4,604 1,690 11,067 Amortization -0 - -45,061 -584 -1,995 -703 -8,507 - -56,850 Disposals -3 - -160 7 -0 - -261 -16 -433 Reclassifications -5 - 253 -35 -100 13 1,635 -1,571 191 Hyperinflation 15,208 - 4,734 6 - - 8 - 19,956 Translation differences -4,487 - 3,450 155 -0 -20 -83 23 -962 Changes in the Period 370,989 - 166,655 -79 293 319 -1,085 126 537,218 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0As of December 31, 2022 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Cost 2,174,256 317,378 964,516 8,159 7,738 5,670 26,372 5,371 3,509,462 Accumulated amortization and impairment -0 - -137,552 -4,702 -3,904 -1,663 -13,789 -3,106 -164,720 \u00a02,174,256 317,378 826,964 3,456 3,834 4,007 12,583 2,265 3,344,742 The trademark relates to the Azelis name. Azelis uses its name globally, and its trade name is considered to be a key asset of its distribution activities given its status of major distributor in the specialty chemicals sector. The name both supports the group to onboard principals and customers, and for acquisition targets that want to become part of the group as they know that their business will grow being part of it. The Azelis trademark is estimated to have an indefinite economic life for amortization purposes; therefore, effectively no amortization expenses are being booked through Azelis' income statement. The total value of \u20ac317.4 million as of December 31, 2022 originates entirely from the EQT/PSP acquisition in November 2018 and remained unchanged since that date. The translation differences of \u20ac1.0 million loss (2021: \u20ac106.4 million gain) are recognized in other comprehensive income and accumulated in the translation reserve within equity. Reference is made to note 21.5. 15.1 Allocation of assets for impairment testing A cash-generating unit (CGU) is the smallest identifiable group of assets that generates cash inflows that are largely independent of the cash inflows from other assets or groups of assets. For the purpose of impairment testing, goodwill is allocated to the following groups of CGUs: (in thousands of \u20ac) 31-12-2022 31-12-2021 EMEA 733,032 616,570 AMERICAS 1,119,304 919,385 ASIA PACIFIC 321,919 267,311 Total Goodwill 2,174,256 1,803,266 All goodwill acquired in the business combinations has been allocated to a regional CGU at the end of the reporting period. The goodwill is allocated on regional level as it is the group's regions that are expected to benefit of the business combinations, and as goodwill is also monitored internally on the regional level. The group's expectation is that synergies will be realized in the region of acquisition. Trademarks with a book value of \u20ac317.4 million (2021: \u20ac317.4 million) have an indefinite life. These do not generate cash inflows independently and qualify as corporate assets. As their carrying amount cannot be allocated to the regional CGUs on a reasonable and consistent basis, the corporate assets are allocated to the group as a whole and the impairment test is performed in two stages. 15.2 Impairment assessment The impairment tests have been performed by discounting future pre-tax cash flows from continuing operations of the unit. The recoverable amounts of the regional CGU's as of\u00a0December 31, 2022 have been determined based on a value in use calculation using cash flow projections from a five year detailed business plan which is approved by senior management and serves as a basis to determine the future free cash flows and the Adjusted EBITA\u2019s. The business plan is based on the market growth assumptions and on some general economic indicators (inflation, GDP, etc.). It also properly reflects the future strategy of the regional CGU's. For cash flows beyond the business plan period, an extrapolation was made based on steady terminal growth rates. The key assumptions used in the impairment tests are the pre-tax WACC, terminal growth rate and Adjusted EBITA margin. The pre-tax WACC is estimated per regional CGU, is consistent with external sources of information, and varies mainly due to differences in risk free rates that increased during 2022. The risk-free rates per regional CGU are based on the weighted average of the rate of return on local sovereign bonds. The terminal growth rates are based on industry benchmarks by region and are consistent with the group's past experience and based on external sources of information. Adjusted EBITA margin reflects the group's past experience and future expectation of regional business development. The key assumptions used for the second stage impairment test, on the level of the group as a whole including corporate asset, are identical to those used for the regional CGU impairment tests. The values attributed to pre-tax WACC and the growth rates are as follows: Cash Generating Unit 2022 2023-2027 assumptions \u00a0Pre-tax WACC Growth rate for terminal value EBITA% EMEA 14.55% 3.2% 11.6% AMERICAS 12.99% 2.6% 13.7% ASIA PACIFIC 12.81% 5.2% 8.2% Cash Generating Unit 2021 2022-2026 assumptions \u00a0Pre-tax WACC Growth rate for terminal value EBITA% EMEA 10.67% 3.0% 10.4% AMERICAS 8.56% 2.5% 12.4% ASIA PACIFIC 11.08% 5.0% 7.7% The increase versus 2021 of the pre-tax WACC is primarily driven by increased market risk-free rates, that have been increasing during 2022 across the globe. The impairment tests on the recoverable amount of regional CGU's show sufficient headroom on the carrying amount of the Goodwill. In the second stage impairment test, the recoverable amount of the regional CGU's considered as a whole exceeds the carrying amount of the regional CGU's including the carrying amount of the corporate assets. Sensitivity to changes in assumptions In order to test the resilience of the headroom against changes in key assumptions, Azelis has selected reasonably expectable changes in the assumptions as follows: A WACC increase by 2% A decrease of the growth rate in the terminal value by 2% A decrease of Adjusted EBITA margin by 0.5% Versus previous years, also a sensitivity test of Adjusted EBITA has been added, as Adjusted EBITA (rather than Sales) is the major indicator for the outcome of Azelis' impairment test. Azelis' cost base is predominantly variable in nature, enabling to react rapidly on (downward) exposure of revenue, limiting the possible impact on Adjusted EBITA. A sensitivity of 0.5% in Adjusted EBITA margin would result in a decrease of almost 5% in Adjusted EBITA (in EUR). In each of the above independent scenario's and for each regional CGU, the sensitivity test shows sufficient headroom on the carrying amount of the Goodwill. ", "dimensions": { "concept": "ifrs-full:DisclosureOfGoodwillExplanatory", "language": "en", "entity": "scheme:699400M9RRMTV264FM70", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-497": { "value": "At 31st December 2022, the group has not pledged any land and buildings, plant and equipment as security for the bank loans (2021: zero). Other restrictions are mainly related to leasehold improvements and leased machinery. ", "dimensions": { "concept": "ifrs-full:DisclosureOfCollateralExplanatory", "language": "en", "entity": "scheme:699400M9RRMTV264FM70", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-499": { "value": " 17 Investments in associates Azelis holds a 50% investment in Chemlog S.A.S. (refer to note 26.4). Chemlog's aggregated figures are presented as follows: (in thousands of \u20ac) Assets Liabilities Equity Revenue Net result for the period 31 December 2022 863 393 470 1,738 131 31 December 2021 863 393 470 1,617 131 ", "dimensions": { "concept": "ifrs-full:DisclosureOfInvestmentsAccountedForUsingEquityMethodExplanatory", "language": "en", "entity": "scheme:699400M9RRMTV264FM70", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-500": { "value": "Azelis holds a 50% investment in Chemlog S.A.S. (refer to note 26.4). Chemlog's aggregated figures are presented as follows:
| (in thousands of \u20ac) | Assets | Liabilities | Equity | Revenue | Net result for the period |
|---|---|---|---|---|---|
| 31 December 2022 | 863 | 393 | 470 | 1,738 | 131 |
| 31 December 2021 | 863 | 393 | 470 | 1,617 | 131 |
Non-controlling interests reflects the share of equity ownership in the group's subsidiaries that is not owned by the group, even though those subsidiaries are consolidated in the group's consolidated financial statements. Ashapura Aromas Private Limited, MKVN Chemicals Co. Ltd, Asia Primera Kimika Inc., Phil-Asiatic Supply & Services Inc. and Catalite Co. Ltd are the main contributors for the non-controlling interests, refer also to note 26.4.
The following table lists the group\u2019s subsidiaries:
| Name | Country of incorporation | Type | % of interest 2022 | % of interest 2021 |
|---|---|---|---|---|
| Consolidated companies | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Azelis Group NV (formerly Akita Midco 1 NV) | Belgium | Non-operating | Parent company | Parent company |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Direct Investments | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Azelis Finance NV (formerly Akita Midco 2 NV) | Belgium | Non-operating | 100 | 100 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Indirect Investments | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Orkila Alg\u00e9rie spa | Algeria | Operating | 100 | 100 |
| Azelis Australia Pty Ltd | Australia | Operating | 100 | 100 |
| Chemcolour Industries Australia Pty Ltd | Australia | Operating | 100 | 100 |
| TimTechChem Australia Pty Ltd | Australia | Operating | 100 | 100 |
| EB1 Pty Limited | Australia | Operating | 100 | 100 |
| CW Pacific Specialties Pty Limited | Australia | Operating | 100 | 100 |
| Elle Bee Exports Pty Limited | Australia | Operating | 100 | 100 |
| CW Pacific Pty Ltd | Australia | Operating | 100 | 100 |
| Azelis Austria GmbH | Austria | Operating | 100 | 100 |
| Azelis Benelux N.V. | Belgium | Operating | 100 | 100 |
| Azelis Corporate Services N.V. | Belgium | Non-operating | 100 | 100 |
| Azelis EMEA Hub NV | Belgium | Operating | 100 | 100 |
| Chemical Partners Europe NV | Belgium | Operating | 100 | 0 |
| Chemical Partners Africa NV | Belgium | Operating | 100 | 0 |
| Azelis Bulgaria EAD | Bulgaria | Operating | 100 | 100 |
| Azelis Canada Inc. | Canada | Operating | 100 | 100 |
| Azelis China Ltd | China | Operating | 100 | 100 |
| Azelis (Shanghai) Co. Ltd. | China | Operating | 100 | 100 |
| Azelis (Shanghai) International Trading Co., Ltd | China | Operating | 100 | 100 |
| Azelis Hong Kong Ltd | China | Operating | 100 | 100 |
| Beijing CosBond Trading Co. Ltd | China | Operating | 100 | 100 |
| CosBond China Ltd | China | Operating | 100 | 100 |
| CosBond (Shanghai) International Trading Co. Ltd | China | Operating | 100 | 100 |
| Ingredients Plus (Hong Kong) Limited. | China | Operating | 100 | 100 |
| Ingredients Plus (Shanghai) Co., Ltd. | China | Operating | 100 | 100 |
| Ingredients Plus (Guangzhou) Co., Limited | China | Operating | 100 | 100 |
| WWRC (China) Holdings Ltd | China | Operating | 100 | 100 |
| WWRC Hong Kong Co. Ltd | China | Operating | 100 | 100 |
| WWRC Guangdong Co. Ltd | China | Operating | 100 | 100 |
| WWRC Tianjin Co. Ltd | China | Operating | 100 | 100 |
| WWRC Chengdu Co. Ltd | China | Operating | 100 | 100 |
| WWRC Shanghai Co. Ltd | China | Operating | 100 | 100 |
| Friendship Chemical company Ltd | China | Operating | 100 | 100 |
| Rocsa Colombia S.A. | Colombia | Operating | 63 | 0 |
| CI Inproquim Exports SAS | Colombia | Operating | 63 | 0 |
| Rocsa DCR SA | Costa Rica | Operating | 63 | 0 |
| Azelis Croatia D.O.O. | Croatia | Operating | 100 | 100 |
| Azelis Czech Republic S.R.O. | Czech Republic | Operating | 100 | 100 |
| Azelis Denmark A/S | Denmark | Operating | 100 | 100 |
| Rocsa RD SA | Dominican Republic | Operating | 63 | 0 |
| Orkila Egypt Chemicals SAE | Egypt | Operating | 99 | 99 |
| Orchem for Import and Export LLC | Egypt | Operating | 49 | 49 |
| Azelis Finland OY | Finland | Operating | 100 | 100 |
| Azelis France S.A.S | France | Operating | 100 | 100 |
| Azelis France Holding S.A.S | France | Operating | 100 | 100 |
| Quimdis SAS | France | Operating | 100 | 100 |
| Naturchim SARL | France | Operating | Dissolved | 100 |
| Jerafrance SAS | France | Operating | Dissolved | 100 |
| Azelis Deutschland GmbH | Germany | Operating | 100 | 100 |
| Azelis Deutschland Holding GmbH | Germany | Operating | 100 | 100 |
| Azelis Deutschland Immobilien GmbH | Germany | Operating | 100 | 100 |
| Azelis Deutschland Kosmetik GmbH | Germany | Operating | 90 | 90 |
| Quimdis GmbH | Germany | Operating | In liquidation | 100 |
| Azelis Chemicals Ghana Ltd | Ghana | Operating | 100 | 100 |
| Azelis Greece Single Member SA | Greece | Operating | 100 | 100 |
| Rocsa GT SA | Guatemala | Operating | 63 | 0 |
| Azelis Hungary Kft. | Hungary | Operating | 100 | 100 |
| Azelis India Private Ltd | India | Operating | 100 | 100 |
| Ashapura Aromas Private Limited | India | Operating | 70 | 0 |
| PT Azelis Indonesia Distribusi | Indonesia | Operating | 100 | 67 |
| Azelis Ireland Ltd. | Ireland | Operating | 100 | 100 |
| Azelis Israel Distribution Ltd | Israel | Operating | 100 | 100 |
| Azelis Italia Logistica S.r.L | Italy | Operating | 100 | 100 |
| Azelis Italia S.r.L | Italy | Operating | 100 | 100 |
| Deafarma S.r.l. | Italy | Operating | 100 | 100 |
| Came Chemical Mineral and Engineering S.r.l. | Italy | Operating | 100 | 100 |
| Eurotrading SpA | Italy | Operating | 100 | 0 |
| Azelis C\u00f4te d'Ivoire S.A. | Ivory Coast | Operating | 100 | 100 |
| Azelis Japan K.K. | Japan | Operating | 100 | 100 |
| Orkila Jordan LLC | Jordan | Operating | 50 | 50 |
| Azelis Kenya Ltd | Kenya | Operating | 100 | 100 |
| Azelis Korea Co. Ltd | Korea | Operating | 100 | 100 |
| Coseal Co., Ltd. | Korea | Operating | 100 | 100 |
| Orkila Holding SAL | Lebanon | Operating | 100 | 100 |
| Azelis Lebanon SAL | Lebanon | Operating | 100 | 100 |
| Azelis International (Offshore) SAL | Lebanon | Operating | 100 | 100 |
| Chempart Polymers SAL Offshore | Lebanon | Operating | 100 | 0 |
| Chemical Partners Middle East SAL | Lebanon | Operating | 100 | 0 |
| Akita Topco S.\u00e0 r.l. | Luxembourg | Non-operating | 100 | 100 |
| Azelis S.A. | Luxembourg | Non-operating | 100 | 100 |
| Azelis Malaysia Sdn Bhd | Malaysia | Operating | 100 | 100 |
| Chemical Solutions Sdn Bhd | Malaysia | Operating | 100 | 0 |
| Azelis Mexico SA de CV | Mexico | Operating | 100 | 100 |
| Azelis Morocco Sarl | Morocco | Operating | 100 | 100 |
| Orkila Invest SA | Morocco | Operating | 100 | 100 |
| Azelis Nigeria Specialty Chemicals Ltd | Nigeria | Operating | 100 | 100 |
| Azelis Norway AS | Norway | Operating | 100 | 100 |
| Azelis New Zealand Ltd | New Zealand | Operating | 100 | 100 |
| Element Trading SAC | Peru | Operating | 63 | 0 |
| Asia Primera Kimika Inc. | Philippines | Operating | 51 | 51 |
| Phil-Asiatic Supply & Services Inc. | Philippines | Operating | 51 | 51 |
| Azelis Poland SP Z.o.o | Poland | Operating | 100 | 100 |
| Azelis Romania SRL | Romania | Operating | 100 | 100 |
| Azelis Rus LLC | Russia | Operating | 100 | 100 |
| Azelis Senegal SA | Senegal | Operating | 100 | 100 |
| Azelis d.o.o Beograd | Serbia | Operating | 100 | 100 |
| Azelis Singapore Pte. Ltd | Singapore | Operating | 100 | 100 |
| Bellekimia Singapore Pte. Ltd. | Singapore | Non-operating | 51 | 51 |
| Azelis Slovakia S.R.O. | Slovakia | Operating | 100 | 100 |
| Orkila South Africa (Pty) Ltd | South Africa | Operating | 100 | 100 |
| Umongo Petroleum (Pty) Ltd | South Africa | Operating | 90 | 0 |
| Orbichem Petrochemicals (Pty) Ltd | South Africa | Operating | 90 | 0 |
| Azelis Espa\u00f1a S.A. | Spain | Operating | 100 | 100 |
| Azelis Iberia Holding SL. | Spain | Operating | 100 | 100 |
| Azelis Espana Holding SL | Spain | Operating | 100 | 100 |
| Azelis Sweden AB | Sweden | Operating | 100 | 100 |
| Azelis Switzerland AG | Switzerland | Operating | 100 | 100 |
| Azelis Thailand Ltd | Thailand | Operating | 100 | 100 |
| Catalite Co. Ltd | Thailand | Operating | 51 | 0 |
| Azelis Netherlands B.V. | The Netherlands | Operating | 100 | 100 |
| Azelis Tunisie Sarl | Tunesia | Operating | 100 | 100 |
| Azelis TR Kimya End. Ur.Ith.Ihr.Tic ve San A.S. | Turkey | Operating | 100 | 100 |
| Tun\u00e7kaya Kimyevi Ticaret Ve Sanayi Anonim \u015eirketi | Turkey | Operating | 100 | 0 |
| Da\u011falt\u0131 Kau\u00e7uk ve K\u0130myev\u0130 Maddeler Sanay\u0130 T\u0130caret Anon\u0130m \u015e\u0130rket\u0130 | Turkey | Operating | 100 | 0 |
| Azelis Ukraine LLC | Ukraine | Operating | 100 | 100 |
| Orkila FZE | United Arabic Emirates | Operating | 100 | 100 |
| Azelis UK Holdings Ltd. | United Kingdom | Operating | 100 | 100 |
| Azelis UK Life Sciences Ltd. | United Kingdom | Operating | 100 | 100 |
| Azelis UK Ltd. | United Kingdom | Operating | 100 | 100 |
| Azelis UK Finance Holding Ltd | United Kingdom | Operating | 100 | 100 |
| Azelis UK Finance Ltd | United Kingdom | Operating | 100 | 100 |
| Whitfield Chemical Group Ltd | United Kingdom | Operating | 100 | 0 |
| Whitfield Chemical Holdings Ltd | United Kingdom | Operating | 100 | 0 |
| WhitChem Ltd | United Kingdom | Operating | 100 | 0 |
| WhitChem Distribution Ltd | United Kingdom | Operating | 100 | 0 |
| ADAPCO LLC | United States | Operating | 100 | 100 |
| Azelis Americas LLC | United States | Operating | 100 | 100 |
| Azelis US Holding Inc. | United States | Operating | 100 | 100 |
| Dewolf Chemical LLC | United States | Operating | 100 | 100 |
| Glenn LLC | United States | Operating | 100 | 100 |
| P.T. Hutchins Company LLC | United States | Operating | 100 | 100 |
| Marcor Development LLC | United States | Operating | 100 | 100 |
| Monson Companies LLC | United States | Operating | 100 | 100 |
| Precision Control Technology LLC | United States | Operating | 100 | 100 |
| Azelis Americas Case LLC | United States | Operating | 100 | 100 |
| Red River Specialties LLC | United States | Operating | 100 | 100 |
| C.L. Zimmerman Co. of Delaware LLC | United States | Operating | 100 | 100 |
| Ross Organic Specialty Sales Inc. | United States | Operating | 100 | 100 |
| Vigon International LLC | United States | Operating | 100 | 100 |
| Azelis Vietnam Company Ltd | Vietnam | Operating | 100 | 100 |
| MKVN Chemicals Co, Ltd | Vietnam | Operating | 51 | 51 |
| Viet Chemicals Trading and Service Company Limited | Vietnam | Operating | 51 | 51 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Companies accounted for using the equity method | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Indirect Investments | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Chemlog S.A.S. | France | N/A | 50 | 50 |
As per Belgian regulations and articles of incorporation of the Company, Azelis has to allocate to legal reserve a minimum of 5% of the standalone net profit, if any and until such reserve reaches 10% of the share capital, distribution of the legal reserve is restricted. As of December 31, 2022, the legal reserve amounts to zero (2021: zero).
Given the limited legal life of Azelis Group NV in 2021, and taking into account the capital reorganization under common control during that year, the comparative earnings per share are presented based on the total number of shares of Azelis Group NV as if the shares issued for the contribution in kind of Akita Topco S.\u00e0 r.l. and the IPO were outstanding for the full year 2021.
The basic earnings per share and diluted earnings per share are calculated as:
| \u00a0 | 31-12-2022 | 31-12-2021 |
|---|---|---|
| Net group profit/loss (-) attributable to shareholders (in thousands of \u20ac) | 213,193 | 67,756 |
| Average number of shares (in thousand shares) | 233,750 | 233,846 |
| Basic earnings per share | 0.91 | 0.29 |
| Dilution adjusted average number of shares (in thousand shares) | 233,915 | 233,846 |
| Diluted earnings per share | 0.91 | 0.29 |
The average number of shares are calculated as:
| (in thousands) | 31-12-2022 | 31-12-2021 |
|---|---|---|
| Ordinary shares issued (entitled to dividend) | 233,846 | 233,846 |
| Weighted effect of treasury shares | -96 | 0 |
| Weighted effect of new ordinary shares issued | 0 | 0 |
| Average number of shares for basic EPS | 233,750 | 233,846 |
| Weighted effect of share-based payment | 166 | 0 |
| Average number of shares for diluted EPS | 233,915 | 233,846 |
There were no changes in the share capital during 2022.
During 2021, the following share transactions have occurred:
On 10th June, Azelis Group NV was established by issuance of 61,500 shares, for a share capital of \u20ac61,500;
On 21st September the 61,500 shares, created on 10th June, were cancelled by a capital decrease and the share capital of \u20ac61,500 was repaid to the founding shareholder;
On 21st September, all preference and ordinary shares in Akita Topco S.\u00e0 r.l. were contributed to Azelis Group NV in exchange for 195,539,251 shares issued by Azelis Group NV, each at a fractional value of \u20ac26, resulting in a capital increase by \u20ac5,084,020,526;
On 21st September, shares in Azelis Finance NV were contributed in exchange for the issuance of 4,460,749 shares by Azelis Group NV, each at a fractional value of \u20ac26, resulting in a capital increase by \u20ac115,979,474;
On 21st September, in connection with the group's IPO and listing on Euronext Brussels, 33,846,153 shares were issued, each at a fractional value of \u20ac26, resulting in a capital increase by \u20ac879,999,978 million
On 21st September, the capital of Azelis Group NV was reduced by \u20ac400 million, without destruction or repayment of shares, for the purpose of creating distributable reserves
The subscribed share capital has been fully paid. As of December 31, 2022, a total of 233,846,153 shares (2021: 233,846,153 shares) has been issued without nominal value, representing a total share capital of \u20ac5.68 billion.
Share premium reflects the additional paid-in capital exceeding the par value of the issued shares. Subject to the group's capital reorganization under common control and the IPO on Euronext Brussels in September 2021, the shares issued in the capital increases (contribution in kind of Akita Topco S.\u00e0 r.l. and IPO) were all issued at fractional value of \u20ac26 per share. As a result, the group currently has zero share premium.
Other reserves is part of the Reserves in the consolidated statement of financial position. It includes the equity effect of the capital reorganization under common control in 2021, mainly due to the cancellation of the share capital and share premium of Azelis Holding S.\u00e0 r.l., written put options on non-controlling interests, transactions with treasury shares and other adjustments to equity.
During 2022, the group has recognized put options related to the minority stakes in Catalite, Umongo and Ashapura for a total amount of \u20ac70.5 million.
In 2022, the group has purchased 133,400 treasury shares on Euronext Brussels for a total amount of \u20ac3.0\u00a0million to fund its long-term incentive plan.
Translation reserve is part of the Reserves in the consolidated statement of financial position.
Exchange differences arising on translation of the foreign controlled entities are recognized in other comprehensive income and accumulated in the translation reserve within equity. The cumulative amount is reclassified to profit or loss when the net investment is disposed of.
The majority of the intangible assets on Azelis' statement of financial position relate to the EQT/PSP Acquisition in November 2018. The respective amounts have been allocated to Azelis' three operating segments, and per IFRS also on the basis of the underlying foreign currencies in Azelis' respective jurisdictions (of which a major part relates to Azelis' activities in the United States). Exchange differences arising on translation of the intangible assets are recognized in other comprehensive income and accumulated in the translation reserve within equity.
Retained earnings includes the unappropriated result of previous years.
Reserves available for distribution is part of the Reserves in the consolidated statement of financial position.
In September 2021, and in connection with Azelis' IPO, the group reduced its share capital by \u20ac400 million against reserves available for distribution, in order to create funds for distribution to the shareholders. No capital contributions were repaid to the shareholders in the context of this capital reduction.
On March 1, 2023, a dividend of \u20ac67.8 million, implying \u20ac0.29 dividend per share1, was proposed by the Board of Directors. The dividend will be paid out to the shareholders upon approval by the shareholder's meeting on June 8, 2023.
The dividend relating to 2021 of \u20ac0.03 per share or \u20ac7.0 million was calculated pro rata such that dividend would only be paid in respect to the portion of the financial year for which the group's shares are listed on Euronext Brussels. This dividend was approved by the shareholder's meeting on 9 June 2022 and paid in full during the year 2022.
Non-controlling interests reflects the share of equity ownership in the group's subsidiaries that is not owned by the group, even though those subsidiaries are consolidated in the group's consolidated financial statements. Ashapura Aromas Private Limited, MKVN Chemicals Co. Ltd, Asia Primera Kimika Inc., Phil-Asiatic Supply & Services Inc. and Catalite Co. Ltd are the main contributors for the non-controlling interests, refer also to note 26.4.
", "dimensions": { "concept": "ifrs-full:DisclosureOfReservesAndOtherEquityInterestExplanatory", "language": "en", "entity": "scheme:699400M9RRMTV264FM70", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-511": { "value": " 21.1 Earnings per share Given the limited legal life of Azelis Group NV in 2021, and taking into account the capital reorganization under common control during that year, the comparative earnings per share are presented based on the total number of shares of Azelis Group NV as if the shares issued for the contribution in kind of Akita Topco S.\u00e0 r.l. and the IPO were outstanding for the full year 2021. The basic earnings per share and diluted earnings per share are calculated as: \u00a031-12-2022 31-12-2021 Net group profit/loss (-) attributable to shareholders (in thousands of \u20ac) 213,193 67,756 Average number of shares (in thousand shares) 233,750 233,846 Basic earnings per share 0.91 0.29 Dilution adjusted average number of shares (in thousand shares) 233,915 233,846 Diluted earnings per share 0.91 0.29 The average number of shares are calculated as: (in thousands) 31-12-2022 31-12-2021 Ordinary shares issued (entitled to dividend) 233,846 233,846 Weighted effect of treasury shares -96 0 Weighted effect of new ordinary shares issued 0 0 Average number of shares for basic EPS 233,750 233,846 Weighted effect of share-based payment 166 0 Average number of shares for diluted EPS 233,915 233,846 ", "dimensions": { "concept": "ifrs-full:DisclosureOfEarningsPerShareExplanatory", "language": "en", "entity": "scheme:699400M9RRMTV264FM70", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-512": { "value": " 21.2 Share capital There were no changes in the share capital during 2022. During 2021, the following share transactions have occurred: On 10th June, Azelis Group NV was established by issuance of 61,500 shares, for a share capital of \u20ac61,500; On 21st September the 61,500 shares, created on 10th June, were cancelled by a capital decrease and the share capital of \u20ac61,500 was repaid to the founding shareholder; On 21st September, all preference and ordinary shares in Akita Topco S.\u00e0 r.l. were contributed to Azelis Group NV in exchange for 195,539,251 shares issued by Azelis Group NV, each at a fractional value of \u20ac26, resulting in a capital increase by \u20ac5,084,020,526; On 21st September, shares in Azelis Finance NV were contributed in exchange for the issuance of 4,460,749 shares by Azelis Group NV, each at a fractional value of \u20ac26, resulting in a capital increase by \u20ac115,979,474; On 21st September, in connection with the group's IPO and listing on Euronext Brussels, 33,846,153 shares were issued, each at a fractional value of \u20ac26, resulting in a capital increase by \u20ac879,999,978 million On 21st September, the capital of Azelis Group NV was reduced by \u20ac400 million, without destruction or repayment of shares, for the purpose of creating distributable reserves The subscribed share capital has been fully paid. As of December 31, 2022, a total of 233,846,153 shares (2021: 233,846,153 shares) has been issued without nominal value, representing a total share capital of \u20ac5.68 billion. 21.3 Share premium Share premium reflects the additional paid-in capital exceeding the par value of the issued shares. Subject to the group's capital reorganization under common control and the IPO on Euronext Brussels in September 2021, the shares issued in the capital increases (contribution in kind of Akita Topco S.\u00e0 r.l. and IPO) were all issued at fractional value of \u20ac26 per share. As a result, the group currently has zero share premium. ", "dimensions": { "concept": "ifrs-full:DisclosureOfIssuedCapitalExplanatory", "language": "en", "entity": "scheme:699400M9RRMTV264FM70", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-516": { "value": " 21.7 Reserves available for distribution Reserves available for distribution is part of the Reserves in the consolidated statement of financial position. In September 2021, and in connection with Azelis' IPO, the group reduced its share capital by \u20ac400 million against reserves available for distribution, in order to create funds for distribution to the shareholders. No capital contributions were repaid to the shareholders in the context of this capital reduction. On March 1, 2023, a dividend of \u20ac67.8 million, implying \u20ac0.29 dividend per share1, was proposed by the Board of Directors. The dividend will be paid out to the shareholders upon approval by the shareholder's meeting on June 8, 2023. The dividend relating to 2021 of \u20ac0.03 per share or \u20ac7.0 million was calculated pro rata such that dividend would only be paid in respect to the portion of the financial year for which the group's shares are listed on Euronext Brussels. This dividend was approved by the shareholder's meeting on 9 June 2022 and paid in full during the year 2022. Based on 2022 net profit attributable to equity shareholders of \u20ac213.2 million and 233.8 million shares outstanding as of December 31, 2022. ", "dimensions": { "concept": "ifrs-full:DisclosureOfDividendsExplanatory", "language": "en", "entity": "scheme:699400M9RRMTV264FM70", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-342": { "value": "67800000", "decimals": -5, "dimensions": { "concept": "ifrs-full:DividendsProposedOrDeclaredBeforeFinancialStatementsAuthorisedForIssueButNotRecognisedAsDistributionToOwners", "entity": "scheme:699400M9RRMTV264FM70", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00", "unit": "iso4217:EUR" } }, "ixv-343": { "value": "0.29", "decimals": 2, "dimensions": { "concept": "ifrs-full:DividendsProposedOrDeclaredBeforeFinancialStatementsAuthorisedForIssueButNotRecognisedAsDistributionToOwnersPerShare", "entity": "scheme:699400M9RRMTV264FM70", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00", "unit": "iso4217:EUR/xbrli:shares" } }, "ixv-344": { "value": "0.03", "decimals": 2, "dimensions": { "concept": "ifrs-full:DividendsRecognisedAsDistributionsToOwnersPerShare", "entity": "scheme:699400M9RRMTV264FM70", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00", "unit": "iso4217:EUR/xbrli:shares" } }, "ixv-517": { "value": "Non-controlling interests reflects the share of equity ownership in the group's subsidiaries that is not owned by the group, even though those subsidiaries are consolidated in the group's consolidated financial statements. Ashapura Aromas Private Limited, MKVN Chemicals Co. Ltd, Asia Primera Kimika Inc., Phil-Asiatic Supply & Services Inc. and Catalite Co. Ltd are the main contributors for the non-controlling interests, refer also to note 26.4.
", "dimensions": { "concept": "ifrs-full:DisclosureOfNoncontrollingInterestsExplanatory", "language": "en", "entity": "scheme:699400M9RRMTV264FM70", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-519": { "value": "The group\u2019s debt finance consists mainly of the following financial instruments:
| (in thousands of \u20ac) | Interest rate (base) | Interest rate (margin) | Duration | Notional amount | Carrying amount |
|---|---|---|---|---|---|
| First lien \u20ac | 1.74% | 1.75% | 2021-2026 | 900,000 | 894,667 |
| First lien GBP | 1.60% | 2.00% | 2021-2026 | 145,209 | 144,349 |
| Revolving Credit Facility | 1.10% | 1.50% | 2021-2027 | 100,000 | 100,000 |
| Schuldschein | 2.63% | 1.9%-2.1% | 2025-2027 | 21,500 | 21,409 |
| Other bank loans | 2,69% - 10,73% | \u00a0 | 2018-2026 | 131,668 | 131,668 |
| Accrued interest | \u00a0 | \u00a0 | \u00a0 | 11,624 | 11,624 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | 1,310,001 | 1,303,717 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Non-current borrowings and loans | \u00a0 | \u00a0 | \u00a0 | 1,184,678 | 1,178,394 |
| Current borrowings and loans | \u00a0 | \u00a0 | \u00a0 | 125,323 | 125,323 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | 1,310,001 | 1,303,717 |
| (in thousands of \u20ac) | Interest rate (base) | Interest rate (margin) | Duration | Notional amount | Carrying amount |
|---|---|---|---|---|---|
| First lien \u20ac | 0.00% | 2.25% | 2021-2026 | 640,000 | 635,533 |
| First lien GBP | 0.17% | 2.50% | 2021-2026 | 153,270 | 152,201 |
| Revolving Credit Facility | 0.00% | 2.00% | 2021-2026 | 40,000 | 40,000 |
| Other bank loans | 0,58% - 5,62% | \u00a0 | 2018-2026 | 69,249 | 69,249 |
| Accrued interest | \u00a0 | \u00a0 | \u00a0 | 5,652 | 5,652 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | 908,171 | 902,634 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Non-current borrowings and loans | \u00a0 | \u00a0 | \u00a0 | 845,567 | 840,030 |
| Current borrowings and loans | \u00a0 | \u00a0 | \u00a0 | 62,604 | 62,604 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | 908,171 | 902,634 |
| (in thousands of \u20ac) | 2022 | 2021 |
|---|---|---|
| As of January 1 | 902,634 | 1,210,817 |
| Cash flows from loans and borrowings | 343,846 | -400,295 |
| Transaction costs paid | -2,191 | -8,338 |
| Changes arising from business combinations | 66,054 | 78,607 |
| Accelerated amortization of transaction costs due to IPO | - | 19,616 |
| Capitalized transactions cost amortized | 1,444 | 3,358 |
| Changes in interest accruals | 5,972 | -19,100 |
| Currency translation differences | -14,043 | 17,971 |
| As of December 31 | 1,303,717 | 902,634 |
A total of \u20ac6.3 million (net book value) of transaction costs have been capitalized and are amortized over the lending period.
Within the context of the IPO on Euronext Brussels, and partly with the proceeds of the IPO, the group has repaid its existing bank borrowings in September 2021. At the same time the group has attracted new bank borrowings from a new lender's syndicate in the form of a Term Loan Facility (\u20ac640 million and GBP 128.8 million) and a Revolving Credit Facility (\u20ac260 million). In April 2022, the group has drawn an Incremental Facility of \u20ac260 million on its \u20ac\u00a0Term Loan Facility by converting \u20ac260 million drawn on the RCF to the Term Loan, totaling to \u20ac900 million. At the same time, the Revolving Credit Facility was extended from \u20ac260 million to \u20ac350 million with simultaneous extension of length until 2027.
Floating interest rates are based on EURIBOR for borrowings drawn in \u20ac\u00a0and SONIA for borrowings drawn in GBP (both capped at a floor of 0%), and a margin based on the group's total Net Leverage. The margin is capped at 2.25% and 2% for the \u20ac\u00a0Term Loan Facility, 2.50% for the GBP Term Loan Facility and 2.00% for the Revolving Credit Facility. In addition, the applicable margins going forward will be subject to +/-10 basis point adjustment depending on the satisfaction of certain ESG criteria.
In accordance with its policy on managing the risk related to interest rates (refer to the Risk management section in the Annual Report 2021) and taking into account the global interest rate developments in the first half year of 2022, Azelis has entered into two interest rate cap agreements for a total loan amount of \u20ac700 million, providing the group with an interest rate cap of 3% on EURIBOR.
In December 2022 the group obtained a bond type semi-private financing of \u20ac150.5 million, a so-called Schuldscheindarlehen. The maturity dates range from 2024 until 2029. Interest charges are partly fixed (4.74% plus margin 2.1%) and partly floating (6m Euribor plus margin 1.9%-2.5%). The financial covenants and related leverage ratio of the Schuldschein are aligned with Azelis' Multicurrency Term and Revolving Facilities Agreement that was entered into during September 2021. The Schuldschein can be repaid in advance under certain conditions. At the reporting date the amount of \u20ac129 million was unused.
| (in thousands of \u20ac) | 2022 | 2021 |
|---|---|---|
| As of January 1 | 69,278 | 58,058 |
| New contracts | 39,331 | 21,507 |
| Remeasurements | 12,610 | 2,352 |
| Cash out | -22,795 | -14,846 |
| Currency translation differences | 3,134 | 2,207 |
| As of December 31 | 101,558 | 69,278 |
For disclosure on the group's right-of-use assets, refer to note 16.2 Right of use assets.
In addition to cash balances, as of December 31, 2022, the group maintained the following lines of credit:
\u20ac180.4 million (2021: \u20ac95.3 million) uncommitted local credit facility, that concerns local credit lines given by local banks and can be revoked as any standard bank credit line. Interest would be payable at the maximum rate of EURIBOR plus 5.00%. As of December 31, 2022, \u20ac162.0 million (2021: \u20ac69.3 million) was utilized.
\u20ac350 million Revolving Credit Facility, of which \u20ac100 million has been utilized (2021: \u20ac260 million facility of which \u20ac40 million utilized). Therefore, as of December 31, 2022, \u20ac250 million (2021: \u20ac220 million) committed facility was unused. Interest would be payable at the maximum rate of EURIBOR plus 2.00%.
The financing arrangements since September 2021 of Azelis Group NV and its subsidiaries contain a financial maintenance covenant, being the total Net Leverage Ratio, which needs to be less than 4.75 : 1.00 (decreasing to 4.50 : 1.00 in 2024) and is tested twice annually.
As of December 31, 2022, the total Net Leverage Ratio is 2.2 : 1.0 (2021: 2.7 : 1.0), therefore the group complied with the financial covenants. The group monitors the compliance with the covenants on the basis of the monthly reporting process and the continuous cash flow forecasts.
", "dimensions": { "concept": "ifrs-full:DisclosureOfBorrowingsExplanatory", "language": "en", "entity": "scheme:699400M9RRMTV264FM70", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-521": { "value": "| (in thousands of \u20ac) | 2022 | 2021 |
|---|---|---|
| As of January 1 | 902,634 | 1,210,817 |
| Cash flows from loans and borrowings | 343,846 | -400,295 |
| Transaction costs paid | -2,191 | -8,338 |
| Changes arising from business combinations | 66,054 | 78,607 |
| Accelerated amortization of transaction costs due to IPO | - | 19,616 |
| Capitalized transactions cost amortized | 1,444 | 3,358 |
| Changes in interest accruals | 5,972 | -19,100 |
| Currency translation differences | -14,043 | 17,971 |
| As of December 31 | 1,303,717 | 902,634 |
A total of \u20ac6.3 million (net book value) of transaction costs have been capitalized and are amortized over the lending period.
Within the context of the IPO on Euronext Brussels, and partly with the proceeds of the IPO, the group has repaid its existing bank borrowings in September 2021. At the same time the group has attracted new bank borrowings from a new lender's syndicate in the form of a Term Loan Facility (\u20ac640 million and GBP 128.8 million) and a Revolving Credit Facility (\u20ac260 million). In April 2022, the group has drawn an Incremental Facility of \u20ac260 million on its \u20ac\u00a0Term Loan Facility by converting \u20ac260 million drawn on the RCF to the Term Loan, totaling to \u20ac900 million. At the same time, the Revolving Credit Facility was extended from \u20ac260 million to \u20ac350 million with simultaneous extension of length until 2027.
Floating interest rates are based on EURIBOR for borrowings drawn in \u20ac\u00a0and SONIA for borrowings drawn in GBP (both capped at a floor of 0%), and a margin based on the group's total Net Leverage. The margin is capped at 2.25% and 2% for the \u20ac\u00a0Term Loan Facility, 2.50% for the GBP Term Loan Facility and 2.00% for the Revolving Credit Facility. In addition, the applicable margins going forward will be subject to +/-10 basis point adjustment depending on the satisfaction of certain ESG criteria.
In accordance with its policy on managing the risk related to interest rates (refer to the Risk management section in the Annual Report 2021) and taking into account the global interest rate developments in the first half year of 2022, Azelis has entered into two interest rate cap agreements for a total loan amount of \u20ac700 million, providing the group with an interest rate cap of 3% on EURIBOR.
In December 2022 the group obtained a bond type semi-private financing of \u20ac150.5 million, a so-called Schuldscheindarlehen. The maturity dates range from 2024 until 2029. Interest charges are partly fixed (4.74% plus margin 2.1%) and partly floating (6m Euribor plus margin 1.9%-2.5%). The financial covenants and related leverage ratio of the Schuldschein are aligned with Azelis' Multicurrency Term and Revolving Facilities Agreement that was entered into during September 2021. The Schuldschein can be repaid in advance under certain conditions. At the reporting date the amount of \u20ac129 million was unused.
", "dimensions": { "concept": "ifrs-full:DisclosureOfBorrowingCostsExplanatory", "language": "en", "entity": "scheme:699400M9RRMTV264FM70", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-524": { "value": " 23 Provisions (in thousands of \u20ac) Tax Claims Other provisions Total As of January 1 2021 2,745 2,115 4,860 Business combination 446 836 1,282 Provisions made 253 1,246 1,499 Provisions used -13 -109 -122 Provisions released -962 -574 -1,536 Translation differences 113 11 124 As of December 31, 2021 2,582 3,525 6,107 \u00a0\u00a0\u00a0\u00a0Non-current 1,982 2,145 4,127 Current 601 1,380 1,981 Total 2,583 3,525 6,108 \u00a0\u00a0\u00a0\u00a02022 \u00a0\u00a0\u00a0Business combination 0 136 136 Provisions made during the period 1,140 3,190 4,330 Provisions used during the period 0 -355 -355 Provisions released during the period -671 -1,299 -1,971 Reclassification 0 0 0 Translation differences -55 -53 -108 As of December 31, 2022 2,996 5,144 8,141 \u00a0\u00a0\u00a0\u00a0Non-current 2,433 2,163 4,597 Current 563 2,981 3,544 Total 2,996 5,144 8,141 The provisions relate to tax risks, administrative fines, labor and commercial matters including claims and litigations, concerning the past and current activities of the group companies. ", "dimensions": { "concept": "ifrs-full:DisclosureOfOtherProvisionsContingentLiabilitiesAndContingentAssetsExplanatory", "language": "en", "entity": "scheme:699400M9RRMTV264FM70", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-525": { "value": " 24 Trade and other payables and other non-current liabilities (in thousands of \u20ac) 31-12-2022 31-12-2021 Trade payables 462,728 368,657 Other taxes 11,805 6,618 Employee and social security payables 87,505 71,227 Derivatives 377 155 Other payables 209,272 94,417 Total current payables 771,686 541,074 \u00a0\u00a0\u00a0Other payables 98,264 9,655 Other non-current liabilities 98,264 9,655 The other current and non-current payables mainly consist of put options over non-controlling interests totaling \u20ac115.1 million (2021: \u20ac31.2 million), and earnouts and deferred payments in connection with acquisitions. ", "dimensions": { "concept": "ifrs-full:DisclosureOfTradeAndOtherPayablesExplanatory", "language": "en", "entity": "scheme:699400M9RRMTV264FM70", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-528": { "value": " 24 Trade and other payables and other non-current liabilities (in thousands of \u20ac) 31-12-2022 31-12-2021 Trade payables 462,728 368,657 Other taxes 11,805 6,618 Employee and social security payables 87,505 71,227 Derivatives 377 155 Other payables 209,272 94,417 Total current payables 771,686 541,074 \u00a0\u00a0\u00a0Other payables 98,264 9,655 Other non-current liabilities 98,264 9,655 The other current and non-current payables mainly consist of put options over non-controlling interests totaling \u20ac115.1 million (2021: \u20ac31.2 million), and earnouts and deferred payments in connection with acquisitions. ", "dimensions": { "concept": "ifrs-full:DisclosureOfTaxReceivablesAndPayablesExplanatory", "language": "en", "entity": "scheme:699400M9RRMTV264FM70", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-533": { "value": "25 Capital commitments and contingencies As of December 31, 2022, the group has issued unsecured corporate guarantees toward third parties for a total aggregate amount of \u20ac77.3 million (2021: \u20ac26.5 million). The group has been constantly gearing up its structure for future growth. In order to support this growth, the structure of the group has been regularly improved by means of integrating acquired businesses, restructuring of legal entities and the continuous process of adapting the legal structure to economic reality, creation of a shared service center and creation of headquarters. These continued structural improvements were made to the best efforts and considering to the maximum extent possible all legal and local tax matters. There are no tax and other contingencies as of December 31, 2022 (for 2021: none). The group monitors closely the possible risks and potential implications. ", "dimensions": { "concept": "ifrs-full:DisclosureOfCommitmentsAndContingentLiabilitiesExplanatory", "language": "en", "entity": "scheme:699400M9RRMTV264FM70", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-534": { "value": "25 Capital commitments and contingencies As of December 31, 2022, the group has issued unsecured corporate guarantees toward third parties for a total aggregate amount of \u20ac77.3 million (2021: \u20ac26.5 million). The group has been constantly gearing up its structure for future growth. In order to support this growth, the structure of the group has been regularly improved by means of integrating acquired businesses, restructuring of legal entities and the continuous process of adapting the legal structure to economic reality, creation of a shared service center and creation of headquarters. These continued structural improvements were made to the best efforts and considering to the maximum extent possible all legal and local tax matters. There are no tax and other contingencies as of December 31, 2022 (for 2021: none). The group monitors closely the possible risks and potential implications. ", "dimensions": { "concept": "ifrs-full:DisclosureOfCommitmentsExplanatory", "language": "en", "entity": "scheme:699400M9RRMTV264FM70", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-537": { "value": " 26.3 Key personnel remuneration (in thousands of \u20ac) 31-12-2022 31-12-2021 Board members (non-executive) 327 281 Other members of key management personnel \u00a0\u00a0Fixed remuneration 3,198 2,894 Variable remuneration 2,804 4,256 \u00a06,329 7,431 Post-employment benefits: Details of the transactions between the group and its pension plans are disclosed in Note 11. ", "dimensions": { "concept": "ifrs-full:DisclosureOfInformationAboutKeyManagementPersonnelExplanatory", "language": "en", "entity": "scheme:699400M9RRMTV264FM70", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "ixv-540": { "value": "The following table lists the group\u2019s subsidiaries:
| Name | Country of incorporation | Type | % of interest 2022 | % of interest 2021 |
|---|---|---|---|---|
| Consolidated companies | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Azelis Group NV (formerly Akita Midco 1 NV) | Belgium | Non-operating | Parent company | Parent company |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Direct Investments | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Azelis Finance NV (formerly Akita Midco 2 NV) | Belgium | Non-operating | 100 | 100 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Indirect Investments | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Orkila Alg\u00e9rie spa | Algeria | Operating | 100 | 100 |
| Azelis Australia Pty Ltd | Australia | Operating | 100 | 100 |
| Chemcolour Industries Australia Pty Ltd | Australia | Operating | 100 | 100 |
| TimTechChem Australia Pty Ltd | Australia | Operating | 100 | 100 |
| EB1 Pty Limited | Australia | Operating | 100 | 100 |
| CW Pacific Specialties Pty Limited | Australia | Operating | 100 | 100 |
| Elle Bee Exports Pty Limited | Australia | Operating | 100 | 100 |
| CW Pacific Pty Ltd | Australia | Operating | 100 | 100 |
| Azelis Austria GmbH | Austria | Operating | 100 | 100 |
| Azelis Benelux N.V. | Belgium | Operating | 100 | 100 |
| Azelis Corporate Services N.V. | Belgium | Non-operating | 100 | 100 |
| Azelis EMEA Hub NV | Belgium | Operating | 100 | 100 |
| Chemical Partners Europe NV | Belgium | Operating | 100 | 0 |
| Chemical Partners Africa NV | Belgium | Operating | 100 | 0 |
| Azelis Bulgaria EAD | Bulgaria | Operating | 100 | 100 |
| Azelis Canada Inc. | Canada | Operating | 100 | 100 |
| Azelis China Ltd | China | Operating | 100 | 100 |
| Azelis (Shanghai) Co. Ltd. | China | Operating | 100 | 100 |
| Azelis (Shanghai) International Trading Co., Ltd | China | Operating | 100 | 100 |
| Azelis Hong Kong Ltd | China | Operating | 100 | 100 |
| Beijing CosBond Trading Co. Ltd | China | Operating | 100 | 100 |
| CosBond China Ltd | China | Operating | 100 | 100 |
| CosBond (Shanghai) International Trading Co. Ltd | China | Operating | 100 | 100 |
| Ingredients Plus (Hong Kong) Limited. | China | Operating | 100 | 100 |
| Ingredients Plus (Shanghai) Co., Ltd. | China | Operating | 100 | 100 |
| Ingredients Plus (Guangzhou) Co., Limited | China | Operating | 100 | 100 |
| WWRC (China) Holdings Ltd | China | Operating | 100 | 100 |
| WWRC Hong Kong Co. Ltd | China | Operating | 100 | 100 |
| WWRC Guangdong Co. Ltd | China | Operating | 100 | 100 |
| WWRC Tianjin Co. Ltd | China | Operating | 100 | 100 |
| WWRC Chengdu Co. Ltd | China | Operating | 100 | 100 |
| WWRC Shanghai Co. Ltd | China | Operating | 100 | 100 |
| Friendship Chemical company Ltd | China | Operating | 100 | 100 |
| Rocsa Colombia S.A. | Colombia | Operating | 63 | 0 |
| CI Inproquim Exports SAS | Colombia | Operating | 63 | 0 |
| Rocsa DCR SA | Costa Rica | Operating | 63 | 0 |
| Azelis Croatia D.O.O. | Croatia | Operating | 100 | 100 |
| Azelis Czech Republic S.R.O. | Czech Republic | Operating | 100 | 100 |
| Azelis Denmark A/S | Denmark | Operating | 100 | 100 |
| Rocsa RD SA | Dominican Republic | Operating | 63 | 0 |
| Orkila Egypt Chemicals SAE | Egypt | Operating | 99 | 99 |
| Orchem for Import and Export LLC | Egypt | Operating | 49 | 49 |
| Azelis Finland OY | Finland | Operating | 100 | 100 |
| Azelis France S.A.S | France | Operating | 100 | 100 |
| Azelis France Holding S.A.S | France | Operating | 100 | 100 |
| Quimdis SAS | France | Operating | 100 | 100 |
| Naturchim SARL | France | Operating | Dissolved | 100 |
| Jerafrance SAS | France | Operating | Dissolved | 100 |
| Azelis Deutschland GmbH | Germany | Operating | 100 | 100 |
| Azelis Deutschland Holding GmbH | Germany | Operating | 100 | 100 |
| Azelis Deutschland Immobilien GmbH | Germany | Operating | 100 | 100 |
| Azelis Deutschland Kosmetik GmbH | Germany | Operating | 90 | 90 |
| Quimdis GmbH | Germany | Operating | In liquidation | 100 |
| Azelis Chemicals Ghana Ltd | Ghana | Operating | 100 | 100 |
| Azelis Greece Single Member SA | Greece | Operating | 100 | 100 |
| Rocsa GT SA | Guatemala | Operating | 63 | 0 |
| Azelis Hungary Kft. | Hungary | Operating | 100 | 100 |
| Azelis India Private Ltd | India | Operating | 100 | 100 |
| Ashapura Aromas Private Limited | India | Operating | 70 | 0 |
| PT Azelis Indonesia Distribusi | Indonesia | Operating | 100 | 67 |
| Azelis Ireland Ltd. | Ireland | Operating | 100 | 100 |
| Azelis Israel Distribution Ltd | Israel | Operating | 100 | 100 |
| Azelis Italia Logistica S.r.L | Italy | Operating | 100 | 100 |
| Azelis Italia S.r.L | Italy | Operating | 100 | 100 |
| Deafarma S.r.l. | Italy | Operating | 100 | 100 |
| Came Chemical Mineral and Engineering S.r.l. | Italy | Operating | 100 | 100 |
| Eurotrading SpA | Italy | Operating | 100 | 0 |
| Azelis C\u00f4te d'Ivoire S.A. | Ivory Coast | Operating | 100 | 100 |
| Azelis Japan K.K. | Japan | Operating | 100 | 100 |
| Orkila Jordan LLC | Jordan | Operating | 50 | 50 |
| Azelis Kenya Ltd | Kenya | Operating | 100 | 100 |
| Azelis Korea Co. Ltd | Korea | Operating | 100 | 100 |
| Coseal Co., Ltd. | Korea | Operating | 100 | 100 |
| Orkila Holding SAL | Lebanon | Operating | 100 | 100 |
| Azelis Lebanon SAL | Lebanon | Operating | 100 | 100 |
| Azelis International (Offshore) SAL | Lebanon | Operating | 100 | 100 |
| Chempart Polymers SAL Offshore | Lebanon | Operating | 100 | 0 |
| Chemical Partners Middle East SAL | Lebanon | Operating | 100 | 0 |
| Akita Topco S.\u00e0 r.l. | Luxembourg | Non-operating | 100 | 100 |
| Azelis S.A. | Luxembourg | Non-operating | 100 | 100 |
| Azelis Malaysia Sdn Bhd | Malaysia | Operating | 100 | 100 |
| Chemical Solutions Sdn Bhd | Malaysia | Operating | 100 | 0 |
| Azelis Mexico SA de CV | Mexico | Operating | 100 | 100 |
| Azelis Morocco Sarl | Morocco | Operating | 100 | 100 |
| Orkila Invest SA | Morocco | Operating | 100 | 100 |
| Azelis Nigeria Specialty Chemicals Ltd | Nigeria | Operating | 100 | 100 |
| Azelis Norway AS | Norway | Operating | 100 | 100 |
| Azelis New Zealand Ltd | New Zealand | Operating | 100 | 100 |
| Element Trading SAC | Peru | Operating | 63 | 0 |
| Asia Primera Kimika Inc. | Philippines | Operating | 51 | 51 |
| Phil-Asiatic Supply & Services Inc. | Philippines | Operating | 51 | 51 |
| Azelis Poland SP Z.o.o | Poland | Operating | 100 | 100 |
| Azelis Romania SRL | Romania | Operating | 100 | 100 |
| Azelis Rus LLC | Russia | Operating | 100 | 100 |
| Azelis Senegal SA | Senegal | Operating | 100 | 100 |
| Azelis d.o.o Beograd | Serbia | Operating | 100 | 100 |
| Azelis Singapore Pte. Ltd | Singapore | Operating | 100 | 100 |
| Bellekimia Singapore Pte. Ltd. | Singapore | Non-operating | 51 | 51 |
| Azelis Slovakia S.R.O. | Slovakia | Operating | 100 | 100 |
| Orkila South Africa (Pty) Ltd | South Africa | Operating | 100 | 100 |
| Umongo Petroleum (Pty) Ltd | South Africa | Operating | 90 | 0 |
| Orbichem Petrochemicals (Pty) Ltd | South Africa | Operating | 90 | 0 |
| Azelis Espa\u00f1a S.A. | Spain | Operating | 100 | 100 |
| Azelis Iberia Holding SL. | Spain | Operating | 100 | 100 |
| Azelis Espana Holding SL | Spain | Operating | 100 | 100 |
| Azelis Sweden AB | Sweden | Operating | 100 | 100 |
| Azelis Switzerland AG | Switzerland | Operating | 100 | 100 |
| Azelis Thailand Ltd | Thailand | Operating | 100 | 100 |
| Catalite Co. Ltd | Thailand | Operating | 51 | 0 |
| Azelis Netherlands B.V. | The Netherlands | Operating | 100 | 100 |
| Azelis Tunisie Sarl | Tunesia | Operating | 100 | 100 |
| Azelis TR Kimya End. Ur.Ith.Ihr.Tic ve San A.S. | Turkey | Operating | 100 | 100 |
| Tun\u00e7kaya Kimyevi Ticaret Ve Sanayi Anonim \u015eirketi | Turkey | Operating | 100 | 0 |
| Da\u011falt\u0131 Kau\u00e7uk ve K\u0130myev\u0130 Maddeler Sanay\u0130 T\u0130caret Anon\u0130m \u015e\u0130rket\u0130 | Turkey | Operating | 100 | 0 |
| Azelis Ukraine LLC | Ukraine | Operating | 100 | 100 |
| Orkila FZE | United Arabic Emirates | Operating | 100 | 100 |
| Azelis UK Holdings Ltd. | United Kingdom | Operating | 100 | 100 |
| Azelis UK Life Sciences Ltd. | United Kingdom | Operating | 100 | 100 |
| Azelis UK Ltd. | United Kingdom | Operating | 100 | 100 |
| Azelis UK Finance Holding Ltd | United Kingdom | Operating | 100 | 100 |
| Azelis UK Finance Ltd | United Kingdom | Operating | 100 | 100 |
| Whitfield Chemical Group Ltd | United Kingdom | Operating | 100 | 0 |
| Whitfield Chemical Holdings Ltd | United Kingdom | Operating | 100 | 0 |
| WhitChem Ltd | United Kingdom | Operating | 100 | 0 |
| WhitChem Distribution Ltd | United Kingdom | Operating | 100 | 0 |
| ADAPCO LLC | United States | Operating | 100 | 100 |
| Azelis Americas LLC | United States | Operating | 100 | 100 |
| Azelis US Holding Inc. | United States | Operating | 100 | 100 |
| Dewolf Chemical LLC | United States | Operating | 100 | 100 |
| Glenn LLC | United States | Operating | 100 | 100 |
| P.T. Hutchins Company LLC | United States | Operating | 100 | 100 |
| Marcor Development LLC | United States | Operating | 100 | 100 |
| Monson Companies LLC | United States | Operating | 100 | 100 |
| Precision Control Technology LLC | United States | Operating | 100 | 100 |
| Azelis Americas Case LLC | United States | Operating | 100 | 100 |
| Red River Specialties LLC | United States | Operating | 100 | 100 |
| C.L. Zimmerman Co. of Delaware LLC | United States | Operating | 100 | 100 |
| Ross Organic Specialty Sales Inc. | United States | Operating | 100 | 100 |
| Vigon International LLC | United States | Operating | 100 | 100 |
| Azelis Vietnam Company Ltd | Vietnam | Operating | 100 | 100 |
| MKVN Chemicals Co, Ltd | Vietnam | Operating | 51 | 51 |
| Viet Chemicals Trading and Service Company Limited | Vietnam | Operating | 51 | 51 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Companies accounted for using the equity method | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Indirect Investments | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Chemlog S.A.S. | France | N/A | 50 | 50 |
The following table lists the group\u2019s subsidiaries:
| Name | Country of incorporation | Type | % of interest 2022 | % of interest 2021 |
|---|---|---|---|---|
| Consolidated companies | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Azelis Group NV (formerly Akita Midco 1 NV) | Belgium | Non-operating | Parent company | Parent company |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Direct Investments | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Azelis Finance NV (formerly Akita Midco 2 NV) | Belgium | Non-operating | 100 | 100 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Indirect Investments | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Orkila Alg\u00e9rie spa | Algeria | Operating | 100 | 100 |
| Azelis Australia Pty Ltd | Australia | Operating | 100 | 100 |
| Chemcolour Industries Australia Pty Ltd | Australia | Operating | 100 | 100 |
| TimTechChem Australia Pty Ltd | Australia | Operating | 100 | 100 |
| EB1 Pty Limited | Australia | Operating | 100 | 100 |
| CW Pacific Specialties Pty Limited | Australia | Operating | 100 | 100 |
| Elle Bee Exports Pty Limited | Australia | Operating | 100 | 100 |
| CW Pacific Pty Ltd | Australia | Operating | 100 | 100 |
| Azelis Austria GmbH | Austria | Operating | 100 | 100 |
| Azelis Benelux N.V. | Belgium | Operating | 100 | 100 |
| Azelis Corporate Services N.V. | Belgium | Non-operating | 100 | 100 |
| Azelis EMEA Hub NV | Belgium | Operating | 100 | 100 |
| Chemical Partners Europe NV | Belgium | Operating | 100 | 0 |
| Chemical Partners Africa NV | Belgium | Operating | 100 | 0 |
| Azelis Bulgaria EAD | Bulgaria | Operating | 100 | 100 |
| Azelis Canada Inc. | Canada | Operating | 100 | 100 |
| Azelis China Ltd | China | Operating | 100 | 100 |
| Azelis (Shanghai) Co. Ltd. | China | Operating | 100 | 100 |
| Azelis (Shanghai) International Trading Co., Ltd | China | Operating | 100 | 100 |
| Azelis Hong Kong Ltd | China | Operating | 100 | 100 |
| Beijing CosBond Trading Co. Ltd | China | Operating | 100 | 100 |
| CosBond China Ltd | China | Operating | 100 | 100 |
| CosBond (Shanghai) International Trading Co. Ltd | China | Operating | 100 | 100 |
| Ingredients Plus (Hong Kong) Limited. | China | Operating | 100 | 100 |
| Ingredients Plus (Shanghai) Co., Ltd. | China | Operating | 100 | 100 |
| Ingredients Plus (Guangzhou) Co., Limited | China | Operating | 100 | 100 |
| WWRC (China) Holdings Ltd | China | Operating | 100 | 100 |
| WWRC Hong Kong Co. Ltd | China | Operating | 100 | 100 |
| WWRC Guangdong Co. Ltd | China | Operating | 100 | 100 |
| WWRC Tianjin Co. Ltd | China | Operating | 100 | 100 |
| WWRC Chengdu Co. Ltd | China | Operating | 100 | 100 |
| WWRC Shanghai Co. Ltd | China | Operating | 100 | 100 |
| Friendship Chemical company Ltd | China | Operating | 100 | 100 |
| Rocsa Colombia S.A. | Colombia | Operating | 63 | 0 |
| CI Inproquim Exports SAS | Colombia | Operating | 63 | 0 |
| Rocsa DCR SA | Costa Rica | Operating | 63 | 0 |
| Azelis Croatia D.O.O. | Croatia | Operating | 100 | 100 |
| Azelis Czech Republic S.R.O. | Czech Republic | Operating | 100 | 100 |
| Azelis Denmark A/S | Denmark | Operating | 100 | 100 |
| Rocsa RD SA | Dominican Republic | Operating | 63 | 0 |
| Orkila Egypt Chemicals SAE | Egypt | Operating | 99 | 99 |
| Orchem for Import and Export LLC | Egypt | Operating | 49 | 49 |
| Azelis Finland OY | Finland | Operating | 100 | 100 |
| Azelis France S.A.S | France | Operating | 100 | 100 |
| Azelis France Holding S.A.S | France | Operating | 100 | 100 |
| Quimdis SAS | France | Operating | 100 | 100 |
| Naturchim SARL | France | Operating | Dissolved | 100 |
| Jerafrance SAS | France | Operating | Dissolved | 100 |
| Azelis Deutschland GmbH | Germany | Operating | 100 | 100 |
| Azelis Deutschland Holding GmbH | Germany | Operating | 100 | 100 |
| Azelis Deutschland Immobilien GmbH | Germany | Operating | 100 | 100 |
| Azelis Deutschland Kosmetik GmbH | Germany | Operating | 90 | 90 |
| Quimdis GmbH | Germany | Operating | In liquidation | 100 |
| Azelis Chemicals Ghana Ltd | Ghana | Operating | 100 | 100 |
| Azelis Greece Single Member SA | Greece | Operating | 100 | 100 |
| Rocsa GT SA | Guatemala | Operating | 63 | 0 |
| Azelis Hungary Kft. | Hungary | Operating | 100 | 100 |
| Azelis India Private Ltd | India | Operating | 100 | 100 |
| Ashapura Aromas Private Limited | India | Operating | 70 | 0 |
| PT Azelis Indonesia Distribusi | Indonesia | Operating | 100 | 67 |
| Azelis Ireland Ltd. | Ireland | Operating | 100 | 100 |
| Azelis Israel Distribution Ltd | Israel | Operating | 100 | 100 |
| Azelis Italia Logistica S.r.L | Italy | Operating | 100 | 100 |
| Azelis Italia S.r.L | Italy | Operating | 100 | 100 |
| Deafarma S.r.l. | Italy | Operating | 100 | 100 |
| Came Chemical Mineral and Engineering S.r.l. | Italy | Operating | 100 | 100 |
| Eurotrading SpA | Italy | Operating | 100 | 0 |
| Azelis C\u00f4te d'Ivoire S.A. | Ivory Coast | Operating | 100 | 100 |
| Azelis Japan K.K. | Japan | Operating | 100 | 100 |
| Orkila Jordan LLC | Jordan | Operating | 50 | 50 |
| Azelis Kenya Ltd | Kenya | Operating | 100 | 100 |
| Azelis Korea Co. Ltd | Korea | Operating | 100 | 100 |
| Coseal Co., Ltd. | Korea | Operating | 100 | 100 |
| Orkila Holding SAL | Lebanon | Operating | 100 | 100 |
| Azelis Lebanon SAL | Lebanon | Operating | 100 | 100 |
| Azelis International (Offshore) SAL | Lebanon | Operating | 100 | 100 |
| Chempart Polymers SAL Offshore | Lebanon | Operating | 100 | 0 |
| Chemical Partners Middle East SAL | Lebanon | Operating | 100 | 0 |
| Akita Topco S.\u00e0 r.l. | Luxembourg | Non-operating | 100 | 100 |
| Azelis S.A. | Luxembourg | Non-operating | 100 | 100 |
| Azelis Malaysia Sdn Bhd | Malaysia | Operating | 100 | 100 |
| Chemical Solutions Sdn Bhd | Malaysia | Operating | 100 | 0 |
| Azelis Mexico SA de CV | Mexico | Operating | 100 | 100 |
| Azelis Morocco Sarl | Morocco | Operating | 100 | 100 |
| Orkila Invest SA | Morocco | Operating | 100 | 100 |
| Azelis Nigeria Specialty Chemicals Ltd | Nigeria | Operating | 100 | 100 |
| Azelis Norway AS | Norway | Operating | 100 | 100 |
| Azelis New Zealand Ltd | New Zealand | Operating | 100 | 100 |
| Element Trading SAC | Peru | Operating | 63 | 0 |
| Asia Primera Kimika Inc. | Philippines | Operating | 51 | 51 |
| Phil-Asiatic Supply & Services Inc. | Philippines | Operating | 51 | 51 |
| Azelis Poland SP Z.o.o | Poland | Operating | 100 | 100 |
| Azelis Romania SRL | Romania | Operating | 100 | 100 |
| Azelis Rus LLC | Russia | Operating | 100 | 100 |
| Azelis Senegal SA | Senegal | Operating | 100 | 100 |
| Azelis d.o.o Beograd | Serbia | Operating | 100 | 100 |
| Azelis Singapore Pte. Ltd | Singapore | Operating | 100 | 100 |
| Bellekimia Singapore Pte. Ltd. | Singapore | Non-operating | 51 | 51 |
| Azelis Slovakia S.R.O. | Slovakia | Operating | 100 | 100 |
| Orkila South Africa (Pty) Ltd | South Africa | Operating | 100 | 100 |
| Umongo Petroleum (Pty) Ltd | South Africa | Operating | 90 | 0 |
| Orbichem Petrochemicals (Pty) Ltd | South Africa | Operating | 90 | 0 |
| Azelis Espa\u00f1a S.A. | Spain | Operating | 100 | 100 |
| Azelis Iberia Holding SL. | Spain | Operating | 100 | 100 |
| Azelis Espana Holding SL | Spain | Operating | 100 | 100 |
| Azelis Sweden AB | Sweden | Operating | 100 | 100 |
| Azelis Switzerland AG | Switzerland | Operating | 100 | 100 |
| Azelis Thailand Ltd | Thailand | Operating | 100 | 100 |
| Catalite Co. Ltd | Thailand | Operating | 51 | 0 |
| Azelis Netherlands B.V. | The Netherlands | Operating | 100 | 100 |
| Azelis Tunisie Sarl | Tunesia | Operating | 100 | 100 |
| Azelis TR Kimya End. Ur.Ith.Ihr.Tic ve San A.S. | Turkey | Operating | 100 | 100 |
| Tun\u00e7kaya Kimyevi Ticaret Ve Sanayi Anonim \u015eirketi | Turkey | Operating | 100 | 0 |
| Da\u011falt\u0131 Kau\u00e7uk ve K\u0130myev\u0130 Maddeler Sanay\u0130 T\u0130caret Anon\u0130m \u015e\u0130rket\u0130 | Turkey | Operating | 100 | 0 |
| Azelis Ukraine LLC | Ukraine | Operating | 100 | 100 |
| Orkila FZE | United Arabic Emirates | Operating | 100 | 100 |
| Azelis UK Holdings Ltd. | United Kingdom | Operating | 100 | 100 |
| Azelis UK Life Sciences Ltd. | United Kingdom | Operating | 100 | 100 |
| Azelis UK Ltd. | United Kingdom | Operating | 100 | 100 |
| Azelis UK Finance Holding Ltd | United Kingdom | Operating | 100 | 100 |
| Azelis UK Finance Ltd | United Kingdom | Operating | 100 | 100 |
| Whitfield Chemical Group Ltd | United Kingdom | Operating | 100 | 0 |
| Whitfield Chemical Holdings Ltd | United Kingdom | Operating | 100 | 0 |
| WhitChem Ltd | United Kingdom | Operating | 100 | 0 |
| WhitChem Distribution Ltd | United Kingdom | Operating | 100 | 0 |
| ADAPCO LLC | United States | Operating | 100 | 100 |
| Azelis Americas LLC | United States | Operating | 100 | 100 |
| Azelis US Holding Inc. | United States | Operating | 100 | 100 |
| Dewolf Chemical LLC | United States | Operating | 100 | 100 |
| Glenn LLC | United States | Operating | 100 | 100 |
| P.T. Hutchins Company LLC | United States | Operating | 100 | 100 |
| Marcor Development LLC | United States | Operating | 100 | 100 |
| Monson Companies LLC | United States | Operating | 100 | 100 |
| Precision Control Technology LLC | United States | Operating | 100 | 100 |
| Azelis Americas Case LLC | United States | Operating | 100 | 100 |
| Red River Specialties LLC | United States | Operating | 100 | 100 |
| C.L. Zimmerman Co. of Delaware LLC | United States | Operating | 100 | 100 |
| Ross Organic Specialty Sales Inc. | United States | Operating | 100 | 100 |
| Vigon International LLC | United States | Operating | 100 | 100 |
| Azelis Vietnam Company Ltd | Vietnam | Operating | 100 | 100 |
| MKVN Chemicals Co, Ltd | Vietnam | Operating | 51 | 51 |
| Viet Chemicals Trading and Service Company Limited | Vietnam | Operating | 51 | 51 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Companies accounted for using the equity method | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Indirect Investments | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Chemlog S.A.S. | France | N/A | 50 | 50 |