F3. Joint ventures and associated companies

AP Accounting principles

Joint arrangements

Essity classifies its joint arrangements as joint ventures or joint operations, which are presented in Note F4 Joint operations.

Joint ventures

Joint ventures are defined as companies in which Essity together with other parties has shared control over operations. A joint venture entitles the joint owners to the net assets of the investment. Joint ventures are recognized in accordance with the equity method, meaning that a net item including the goodwill will be recognized for each joint venture in the balance sheet. A share in profits is recognized in the income statement as a component of “Share of profits of associated companies and joint ventures.” Share of profits is calculated on the basis of Essity’s share of equity in the respective joint venture. Joint arrangements recognized in accordance with the equity method are initially measured at cost. Measurement of acquired assets and liabilities is carried out in the same way as for Group companies.

Associated companies

Associated companies are companies in which the Group exercises a significant influence without the partly owned company being a Group company or a joint arrangement. Normally, this means that the Group owns between 20% and 50% of the votes. Accounting for associated companies is carried out according to the equity method and they are initially measured at cost. Valuation of acquired assets and liabilities is performed in the same manner as for Group companies and the carrying amount for associated companies includes any goodwill and other Group adjustments.

The Group’s share of profit after tax arising in the associate after the acquisition is recognized in the consolidated income statement in the line “Share of profits of associated companies and joint ventures.” Share of profits is calculated on the basis of Essity’s share of equity in the respective associate.

Carrying amounts of joint ventures and associated companies

SEKm

2019

2018

2017

1)

Net increase for the period includes the Group’s share of the profit after tax of joint ventures and associated companies, as well as items recognized directly in equity (both after deductions for any non-controlling interests). In addition, an adjustment is included for dividends received during the period, which amounted to SEK 8m (7; 5) for joint ventures and SEK 0m (79; 171) for associated companies.

Joint ventures

 

 

 

Value, January 1

171

144

130

Net increase in joint ventures1)

8

19

9

Translation differences

2

8

5

Value, December 31

181

171

144

 

 

 

 

Associated companies

 

 

 

Value, January 1

606

918

966

Company acquisitions

3

3

Company divestments

–3

Net change in associated companies1)

43

–21

–28

Impairment of associated companies

–278

Reclassification between associated companies and Group companies

–6

–8

Translation differences

32

–4

–15

Value, December 31

684

606

918

BS TF3:1 Value, December 31, joint ventures and associated companies

865

777

1,062

Joint ventures and associates

Asaleo Care Ltd

Asaleo Care Ltd manufactures and markets Consumer Tissue, Professional Hygiene and Personal Care products. Essity has licensed its Tork and TENA brands to Asaleo Care for sale in Australia, New Zealand and Fiji.

Essity’s share of Asaleo Care amounted to 36.2%. In 2018, the company recognized an impairment loss of AUD 148.5m relating to assets in the Tissue business in Australia and the Personal Care business in New Zealand. During 2019, the company divested Consumer Tissue operations in Australia. Essity has recognized these transactions as items affecting comparability, see Note B3.

Bunzl & Biach

Bunzl & Biach GmbH, Vienna, is Essity’s single largest joint venture that operates in the recovered paper market and supplies raw materials to Essity’s business.

TF3:1 Material joint ventures and associated companies, 100% of operations

 

Joint ventures

 

Associated companies

 

 

 

 

 

Bunzl & Biach

 

Asaleo Care Ltd

 

Total

SEKm

2019

2018

2017

 

2019

20181)

20172)

 

2019

2018

2017

1)

Amounts pertaining to 2018 have been restated in line with Asaleo’s separate recognition of the divested Consumer Tissue operations in Australia.

2)

Amounts pertaining to the 2017 income statement have been restated in line with Asaleo’s separate recognition of the divested Consumer Tissue operations in Australia.

Condensed income statement

 

 

 

 

 

 

 

 

 

 

 

Net sales

1,424

1,471

1,123

 

2,795

2,645

2,715

 

4,219

4,116

3,838

Depreciation/amortization

–13

–13

–11

 

–102

–169

–188

 

–115

–182

–199

Operating profit/loss

30

47

28

 

346

126

584

 

376

173

612

Interest income

 

3

3

2

 

3

3

2

Interest expenses

 

–80

–98

–76

 

–80

–98

–76

Other financial items

1

1

 

–4

–3

–2

 

–4

–2

–1

Tax expense

–9

–14

–7

 

–73

–23

–148

 

–82

–37

–155

Profit for the period, continuing operations

21

34

22

 

192

5

360

 

213

39

382

Profit/loss for the period, discontinued operations

 

–9

–710

14

 

–9

–710

14

Profit/loss for the period

21

34

22

 

183

–705

374

 

204

–671

396

Other comprehensive income for the period

 

–13

63

–61

 

–13

63

–61

Comprehensive income for the period

21

34

22

 

170

–642

313

 

191

–608

335

 

 

 

 

 

 

 

 

 

 

 

 

Condensed balance sheet

 

 

 

 

 

 

 

 

 

 

 

Non-current assets

163

147

120

 

2,041

1,728

3,402

 

2,204

1,875

3,522

Cash and cash equivalents

31

12

19

 

216

426

194

 

247

438

213

Other current assets

167

238

174

 

969

885

1,250

 

1,136

1,123

1,424

Assets held for sale

 

1,131

 

1,131

Total assets

361

397

313

 

3,226

4,170

4,846

 

3,587

4,567

5,159

 

 

 

 

 

 

 

 

 

 

 

 

Non-current financial liabilities

69

118

92

 

1,114

2,061

1,975

 

1,183

2,179

2,067

Other non-current liabilities

69

67

47

 

171

131

257

 

240

198

304

Current financial liabilities

 

9

4

8

 

9

4

8

Other current liabilities

31

34

30

 

705

639

703

 

736

673

733

Liabilities directly linked to assets held for sale

 

294

 

294

Total liabilities

169

219

169

 

1,999

3,129

2,943

 

2,168

3,348

3,112

Net assets

192

178

144

 

1,227

1,041

1,903

 

1,419

1,219

2,047

Group share of net assets

94

87

71

 

444

376

685

 

538

463

756

Surplus value

74

71

62

 

191

187

185

 

265

258

247

Carrying amount of the companies

168

158

133

 

635

563

870

 

803

721

1,003

Carrying amount of other joint ventures

13

13

11

 

 

13

13

11

Carrying amount of other associated companies

 

49

43

48

 

49

43

48

BS TF3:2 Carrying amount of joint ventures and associated companies

181

171

144

 

684

606

918

 

865

777

1,062

Market value, December 31

 

 

 

 

3,745

3,144

5,232

 

 

 

 

TF3:2 Carrying amounts of joint ventures and associated companies

Company name

Corp. Reg. No.

Domicile

Share of equity at Decem­ber 31, 2019,
%

Share of equity at Decem­ber 31, 2018,
%

Share of equity at Decem­ber , 2017,
%

Carrying amount
Decem­ber , 2019,
SEKm

Carrying amount
Decem­ber , 2018,
SEKm

Carrying amount
Decem­ber , 2017,
SEKm

Joint ventures

 

 

 

 

 

 

 

 

Bunzl & Biach GmbH

FN79555v

Vienna, Austria

49

49

49

168

158

133

Other

 

 

 

 

 

13

13

11

 

 

 

 

 

 

 

 

 

Associated companies

 

 

 

 

 

 

 

 

Asaleo Care Ltd

61 154 461 300

Melbourne, Australia

36

36

36

635

563

870

Other

 

 

 

 

 

49

43

48

BS TF3:1 Carrying amount, December 31

 

 

 

865

777

1,062