F3. Joint ventures and associates

AP ACCOUNTING PRINCIPLES

Joint arrangements

SCA classifies its joint arrangements as joint ventures or joint operations, which are presented in further detail in Note F4.

Joint ventures

Joint ventures are defined as companies in which SCA together with other parties through an agreement, 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 part of “Share of profits of associates and joint ventures”. Share in profits is calculated on the basis of SCA’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 subsidiaries. SCA’s single largest joint venture is Bunzl & Biach G.m.b.H., Vienna, which supplies the hygiene business with raw materials.

Associates

Associates are companies in which the Group exercises a significant influence without the partly owned company being a subsidiary or a joint arrangement. Normally, this means that the Group owns between 20% and 50% of the votes. Accounting for associates 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 subsidiaries and the carrying amount for associates includes any goodwill and other Group adjustments.

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

Carrying amounts of joint ventures and associates

SEKm

2016

2015

2014

1)

Net increase for the period includes the Group’s share of the profit after tax of joint ventures and associates, as well as items recognized directly in equity (both after deductions for any non-controlling interests), in addition to an adjustment for dividends received during the period, which amounted to SEK 2m (11; 10) for joint ventures, and SEK 147m (125; 16) for associates.

Joint ventures

 

 

 

Value, January 1

114

122

837

Investments

129

Net increase in joint ventures 1)

10

4

–165

Reclassification between joint ventures and associates

–8

–719

Translation differences

6

–4

40

Value, December 31

130

114

122

 

 

 

 

Associates

 

 

 

Value, January 1

964

966

183

Investments

68

Company divestments

–43

Net increase in associates 1)

5

41

101

Impairment of associates

–62

Reclassification between associates and subsidiaries

–7

–72

Reclassifications due to changes in the acquisition balance sheet

–11

Reclassification between joint ventures and associates

8

719

Translation differences

67

–50

46

Value, December 31

993

964

966

BS TF3:1 Value, December 31, joint ventures and associates

1,123

1,078

1,088

Joint ventures and associates

Asaleo Care Ltd

As of 2014, Asaleo Care Ltd in Australia is recognized as an associate in accordance with the equity method, following the flotation of the company on the Australian Securities Exchange (ASX). In connection with the flotation, SCA’s participation decreased to 32.5% from earlier 50%. In 2015, the company implemented a program to repurchase shares from the market, in which SCA did not participate. This caused SCA’s participation in Asaleo Care to increase to 34.7% during the fourth quarter 2015. This program continued in 2016, resulting in SCA’s share in the company increasing to 35.9%. Asaleo Care manufactures and markets consumer tissue and AfH tissue, baby diapers, feminine care products and incontinence products. SCA has licensed its Tork and TENA brands to Asaleo Care for sale in Australia, New Zealand and Fiji.

Bunzl & Biach

Bunzl & Biach is a joint venture that operates in the recovered paper market and supplies raw materials to SCA’s hygiene business.

TF3:1 Joint ventures and associates, 100% of operations

 

Joint ventures

 

Associates

 

 

 

 

 

Bunzl & Biach

 

Asaleo Care Ltd

 

Total

SEKm

2016

2015

2014

 

2016

2015

2014

 

2016

2015

2014

Condensed income statement

 

 

 

 

 

 

 

 

 

 

 

Net sales

955

852

776

 

3,851

3,946

3,890

 

4,806

4,798

4,666

Depreciation/amortization

–11

–11

–9

 

–185

–169

–154

 

–196

–180

–163

Operating profit

22

31

20

 

597

736

375

 

619

767

395

Interest income

 

2

3

 

2

3

Interest expenses

 

–67

–64

–153

 

–67

–64

–153

Other financial items

1

3

1

 

–2

–3

–208

 

–1

–207

Tax expense

–8

–6

 

–155

–193

5

 

–155

–201

–1

Profit for the period

23

26

16

 

375

479

18

 

398

505

34

Other comprehensive income for the period

–1

 

31

–49

106

 

31

–50

106

Comprehensive income for the period

23

25

16

 

406

430

124

 

429

455

140

 

 

 

 

 

 

 

 

 

 

 

 

Condensed balance sheet

 

 

 

 

 

 

 

 

 

 

 

Non-current assets

118

106

53

 

3,600

3,343

3,555

 

3,718

3,449

3,608

Cash and cash equivalents

15

10

55

 

199

214

226

 

214

224

281

Other current assets

120

93

98

 

1,269

1,159

1,161

 

1,389

1,252

1,259

Total assets

253

209

206

 

5,068

4,716

4,942

 

5,321

4,925

5,148

 

 

 

 

 

 

 

 

 

 

 

 

Non-current financial liabilities

60

50

48

 

2,121

1,792

1,723

 

2,181

1,842

1,771

Other non-current liabilities

46

47

46

 

252

181

78

 

298

228

124

Current financial liabilities

 

28

24

5

 

28

24

5

Other current liabilities

25

16

18

 

652

668

658

 

677

684

676

Total liabilities

131

113

112

 

3,053

2,665

2,464

 

3,184

2,778

2,576

Net assets

122

96

94

 

2,015

2,051

2,478

 

2,137

2,147

2,572

Group share of net assets

60

47

46

 

725

711

806

 

785

758

852

Fair value adjustment

58

56

66

 

178

119

43

 

236

175

109

Carrying amount of the companies

118

103

112

 

903

830

849

 

1,021

933

961

Carrying amount of other joint ventures

 

 

 

 

 

 

 

 

12

11

10

Carrying amount of other associates

 

 

 

 

 

 

 

 

90

134

117

BS TF3:2 Carrying amount of joint ventures and associates

 

 

 

 

 

 

 

 

1,123

1,078

1,088

Market value, December 31

 

 

 

 

5,296

5,495

6,402

 

 

 

 

TF3:2 Carrying amounts of joint ventures and associates

Company name

Corp. Reg. No.

Domicile

Share of equity at December 31, 2016, %

Share of equity at December 31, 2015, %

Share of equity at December 31, 2014, %

Carrying amount December 31, 2016, SEK m

Carrying amount December 31, 2015, SEK m

Carrying amount December 31, 2014, SEK m

Joint ventures

 

 

 

 

 

 

 

 

Bunzl & Biach GmbH

FN79555v

Vienna, Austria

49

49

49

118

103

112

Other

 

 

 

 

 

12

11

10

 

 

 

 

 

 

 

 

 

Associates

 

 

 

 

 

 

 

 

Asaleo Care Ltd

61 154 461 300

Melbourne, Australia

36

35

33

903

830

849

Other

 

 

 

 

 

90

134

117

BS TF3:1 Carrying amount, December 31

 

 

 

1,123

1,078

1,088