Translation differences arising from the elimination of the acquisition price of foreign subsidiaries and from the translation differences in equity items since the acquisition date as well as the effective portion of hedging instruments that hedge the currency exposures on net investments are recognized in the statement of other comprehensive income. When a subsidiary is disposed or sold wholly or partially, translation differences arising from the net investment and related hedges are recognized in the income statement as part of the gain or loss on sale.
New reporting structure and the presentation of income statement
The Group has changed the presentation format for the Income statement based on function of expenses as of January 1, 2020 to align with internal reporting. The comparative income statement information for the year 2019 has been restated and accordingly is unaudited. Previously the Group presented its Income statement based on the nature of expenses. The Group made also certain minor reclassifications of the income statement items in connection with adoption of the functional presentation. Certain items previously reported within Net sales were classified to other income statement lines, such as operative exchange gains and losses as well as operative foreign exchange derivative results. In addition, certain accounting policy alignments were made between Net sales and Other operating income relating to the past acquisitions and the income from the sale of emission and other environmental rights previously presented in Other operating expenses was reclassified to Other operating income. As a result of these reclassifications, Net sales for the year 2019 decreased by EUR 1.0 million and Other operating income for the year 2019 increased by EUR 8.6 million. The reclassifications have no impact on Group’s operating result or net result for the year 2019. In the 2020 financial statements certain income statement line items were renamed, such as net profit to net result and profit before tax to result before tax.
Ahlstrom-Munksjö implemented a new business and reporting structure as of January 1, 2020. The new business areas are Filtration & Performance Solutions, Advanced Solutions, Industrial Solutions, Food Packaging & Technical Solutions and Decor Solutions which form Group’s operating segments. In these financial statements, the comparative segment information for the year 2019 has been restated accordingly and is unaudited. More information is disclosed in note 4. In addition, the Group has reallocated goodwill to affected cash-generating units, see note 12 for more information.
Expenses by function
Cost of goods sold includes costs of producing inventories that have been sold to third parties, delivery expenses, impairment of inventories, repair and maintenance, operative exchange gains/losses including the impact of the foreign exchange derivatives and general overhead expenses of Group’s Production and supply function which are expensed as incurred.
Sales and marketing expenses include costs of selling products, customer service, marketing and promotional expenses.
R&D expenses include the expenses of Ahlstrom-Munksjö’s R&D facilities and expenses related to innovation and product development resources.
Administrative expenses include expenses of General Management, Finance, Corporate Strategy and Development, Legal, Communications and Investor Relations, Human Resources and Information Systems functions.
Tender offer for all Ahlstrom-Munksjö shares
On September 24, 2020, a consortium consisting of Ahlström Capital, funds managed or advised by Bain Capital as well as Viknum and Belgrano Inversiones made a public recommended cash tender offer for all shares in Ahlstrom-Munksjö.
On September 30, 2020, the Board of Directors of Ahlstrom-Munksjö resolved on a dividend in the amount of EUR 0.13 per each outstanding share. In accordance with the announcement of the tender offer, the offer price per share was reduced on a euro-for-euro basis as a result. Following the adjustment of the offer price, the price offered for each share in the tender offer was EUR 17.97, subject to any further adjustments.
On October 16, 2020, the Board of Directors of Ahlstrom-Munksjö, represented by a quorum of non-conflicted members, issued a statement regarding the tender offer, unanimously recommending that the shareholders of Ahlstrom-Munksjö to accept the tender offer.
On October 22, 2020, at 9:30 a.m. (Finnish time) the offer period for the tender offer commenced, and it was announced to expire on December 30, 2020, at 4:00 p.m. (Finnish time).
On December 8, 2020, the offeror decided to extend the offer period to expire on January 14, 2021, at 4:00 p.m. (Finnish time), unless the offer period was extended further or any extended offer period was discontinued in accordance with the terms and conditions of the tender offer.
On December 17, 2020, the Board of Directors of Ahlstrom-Munksjö resolved on a dividend in the amount of EUR 0.13 per each outstanding share. In accordance with the announcement of the tender offer, the offer price per share was further reduced on a euro-for-euro basis as a result. Following the adjustment of the offer price, the price offered was EUR 17.84, subject to any further adjustments.
For information about final result and completion of the public tender offer see note 24.
Impact of Covid-19
Due to continuing uncertainty around the Covid-19 pandemic, Ahlstrom-Munksjö has continued to assess the impact on its business, results of operations, financial position and cash flows. For Ahlstrom-Munksjö the financial implications of the pandemic have been relatively limited so far. Ahlstrom-Munksjö’s 45 plants and converting sites in 14 countries have remained operational during 2020, except for a few temporary shutdowns caused by government lockdowns or employee absences related to quarantine or infections. Production has not been interrupted to any significant extent due to raw material supply issues.
Within Ahlstrom-Munksjö’s broad range of advanced fiber-based solutions, the impact of the pandemic on customer activity has varied. The pandemic has also created an exceptional situation globally and a strong demand for healthcare goods in general, and particularly for protective medical products made from Ahlstrom-Munksjö’s fabrics. Additional credit risk assessment has been implemented for customer receivables to evaluate the potential implications of the Covid-19 pandemic. Based on the assessment, the Group has not identified any significant increase in the amount of bad debt, and there has currently not been any significant change in payment delays related to Ahlstrom-Munksjö’s customer receivables.
The pandemic has increased the risk of financiers becoming more cautious and reducing banks’ willingness to provide financing. This may have an impact on refinancing and increase financing costs. Ahlstrom-Munksjö’s liquidity continues to be good, and during the second quarter, the company has signed additional financing facilities to further strengthen its liquidity position. There are no major short-term refinancing needs. The company also proactively increased its financial flexibility by renegotiating its other financial covenant, net debt to EBITDA. Please see more information in notes 17 and 19.
Given the ongoing and dynamic nature of the circumstances surrounding the Covid-19 pandemic, it is difficult to predict how significant the impact of Covid-19, including any responses to it, will be on the global economy and the business of the Group or for how long any disruptions are likely to continue. This has increased uncertainty and management judgement related to cash flow projections. Ahlstrom-Munksjö assesses continuously indications for impairment and carrying amounts of the assets and liabilities.
Adopted IFRS standards, amendments and improvements
Ahlstrom-Munksjö has applied the following standards and amendments for the first time for their annual reporting period commencing January 1, 2020:
•Amendments to References to Conceptual Framework in IFRS Standards
•Definition of a Business - Amendments to IFRS 3 Business Combinations
