Accounting principles

Amounts stated in millions of SEK (SEK M) unless specified otherwise.

BE Group AB (publ), company registration number 556578-4724, is a Swedish limited liability company. The registered office is in Malmö, Sweden.

Consolidated accounting principles

Compliance with legislation and standards

The consolidated accounts have been prepared in accordance with the International Financial Reporting Standards (IFRS) published by the International Accounting Standards Board (IASB) and the interpretations issued by the IFRS Interpretations Committee (IFRIC) as approved by the Commission of the European Communities for application in the European Union. The Group also applies the Swedish Financial Reporting Board’s recommendation RFR 1 Supplementary accounting rules for groups.

The Parent Company applies the same accounting principles as the Group except in the cases stated in the section “Parent Company accounting principles.”

Significant accounting principles applied

Other than the exceptions explained in detail, the accounting principles set out below have been applied consistently to all periods presented in BE Group’s financial statements. The accounting principles applied in the consolidated accounts have also been applied consistently by the individual companies within the Group.

Changes in accounting principles

Changes to accounting principles necessitated by new or amended IFRS-rules

The new standards and interpretations applicable as from January 1, 2023, have had no material effect on the financial statements.

New IFRS-rules that have not yet begun to be applied

A number of new standards and interpretations enters into effect after December 31, 2023 and have not been applied in advance in the preparation of these financial statements. None of the IFRS or IFRIC interpretations that have not yet entered into effect are expected to have any material impact on the Group.

Conditions applied to Parent Company and consolidated financial statements

Functional currency and reporting currency

The functional currency of the Parent Company is SEK and this is also the reporting currency of the Parent Company and the Group. Consequently, the financial accounts are presented in SEK. All amounts are rounded off to the nearest million unless otherwise stated.

Valuation principles

Assets and liabilities are mainly reported at amortized cost, for example accounts receivable, accounts payable and intrest-bearing liabilities. The Group also has derivatives which are reported at fair value.

Assessments and estimates

Preparation of the financial statements in accordance with IFRS requires management making assessments, estimations and assumptions that affect the application of the accounting principles and the figures reported for assets, liabilities, revenues and expenses. The estimates and assumptions are based on historical experience and other factors that seem reasonable under current conditions. The results of these estimates and assumptions are then used to assess the carrying amount of assets and liabilities not otherwise evident from other sources. The actual outcome may deviate from these estimations and assessments. The estimations and assessments are reviewed regularly. Changes in estimations are reported in the period in which they are made if they only affect that period, or in the period in which they are made and future periods if they affect both the period concerned and future periods.

Management’s assessments in connection with application of IFRS that have significant effect on the financial statements and estimates that may cause material adjustments to the financial statements of subsequent years are described in greater detail in Note 32, Significant estimates and assessments.

Basis for consolidation

Subsidiaries

Subsidiaries are all companies over which the Group has controlling influence. The Group has controlling influence over a subsidiary when it is exposed to or has the right to variable returns from its holdings in the company and can influence the return through its controlling influence in the company. Subsidiaries are included in the consolidated accounts from and including the day when the controlling influence is transferred to the Group and until the day when the controlling influence ceases.

The acquisition method is used for reporting of the Group’s business combinations. The acquisition cost is the purchase consideration paid for a subsidiary and consists of the fair value of the transferred assets, liabilities and contingent liabilities that the Group incurs to former owners of the acquired company. Identifiable acquired assets, assumed liabilities and contingent liabilities in a business combination are initially measured at fair value on the acquisition date. Acquisition-related costs are expensed when incurred.

Joint venture

In consolidated profit/loss for the period, “Participations in earnings of joint venture” is reported as the Group’s share of a company’s earnings adjusted for any impairment, amortization or reversals of acquired surpluses or deficits. These shares in earnings less any dividends received from joint ventures comprise the main change in the carrying amount of interests in joint ventures. Any discrepancy at the point of acquisition between the cost of the holding and the owning company’s share of the identifiable assets and liabilities of the joint venture is reported in accordance with the same principles that apply for acquisitions of subsidiaries.

Foreign currency

Transactions in foreign currencies

Transactions in foreign currencies are translated into the functional currency corresponding to the exchange rate in force on the transaction date. The functional currency is the currency of the primary economic environment in which the Group’s companies carry out their business. Monetary assets and liabilities in foreign currencies are translated at the exchange rate in effect on the balance sheet date. Exchange differences arising from translation are recognized against profit/loss for the period. Non-monetary assets and liabilities recognized at their historical costs are translated at the exchange rate applicable at the time of the transaction. Exchange differences referring to operating assets and liabilities are recognized in the operating result, while exchange rate movements referring to financial assets and liabilities are recognized in net financial income.

Foreign businesses’ financial statements

Assets and liabilities in foreign operations, including goodwill and other Group surplus and deficit values, are translated from the foreign operations’ functional currency to the Group’s reporting currency. Translation is applied at the exchange rate in effect on the balance sheet date. Income and expenses in a foreign operation are translated at an average exchange rate approximating the currency exchange rates applicable on the relevant transaction dates.

Intangible assets

Goodwill

Consolidated goodwill consists of acquired goodwill and goodwill arising in connection with investments in subsidiaries. Goodwill represents the difference between the cost of the business combination and the fair value of acquired assets, assumed liabilities and contingent liabilities. After the acquisition, goodwill is reported at cost less any impairment losses. Goodwill is distributed to cash generating units and is tested at least once annually to determine possible impairment needs; see Note 12 Goodwill.

Software-as-a-Service (SaaS) arrangement

The Software-as-a-Service (SaaS) arrangement is a service agreement that gives the Group the right to access the cloud provider’s software during the term of the agreement. In connection with such arrangements, the Group will not receive any intangible asset in the form of software at the start of the contract. A right to future access to the supplier’s software does not, at the start of the contract, confer on the customer the right to obtain the future economic benefits arising from the software itself, nor to limit the access of others to obtaining financial benefits.

If the Group has the opportunity to transfer the software from the cloud service provider to its own servers at any time during the contractual period, thereby taking control and controlling the software, the arrangement is deemed to contain an intangible asset that the Group controls. There may be a number of other costs as part of the arrangement, such as the development of modules that link or integrate the SaaS software with existing software/systems that are controlled by the Group. The Group assesses such expenses to determine whether they are to be expensed or meet the criteria for being recognized as an asset in the consolidated statement of financial position.

The Group recognizes expenses incurred in connection with SaaS arrangements as administrative expenses during the term of the contract or as administrative expenses when the service is received, depending on how connected these services are to the software service itself and whether they are distinct from the cloud service or not.

Amortization principles for other intangible assets

Amortization is recognized in profit/loss for the period on a straight-line basis over the estimated useful life of the asset. Intangible assets which can be amortized are amortized from the date on which they are available for use. The useful lives of assets are reassessed on an ongoing basis, although at least once per year.

The estimated useful lives are:

	Useful life
	Group	Parent Company
Software and licenses	3–10 years	3–10 years
Customer relationships	6–10 years	–
Other intangible assets	3–10 years	–

Tangible assets

Tangible assets are recognized in the Group at cost less accumulated depreciation and any impairment. The cost includes the purchase price plus expenses directly attributable to the asset in order to put it in place and make it appropriate for use in accordance with the purpose of the acquisition. Examples of directly related expenses included in the cost of an asset are expenses for shipping, handling, installation, legal title, consultant services and legal services.

Additional expenditures are only added to the cost if it is probable that the future economic benefits associated with the asset will flow to the Company and the cost can be measured reliably. All other subsequent expenses are expensed in the period they arise.

Depreciation principles for tangible assets

Depreciation is recognized on a straight-line basis over the estimated useful life of the asset. The useful lives and residual values of assets are re-assessed at least on an annual basis.

	Useful life
	Group	Parent Company
Buildings	15–50 years	–
Plant and machinery	3–15 years	–
Equipment, tools, fixtures and fittings	3–10 years	3–10 years

Impairment of non-financial assets

Intangible assets that have an indefinite useful life (goodwill) or intangible assets that are not ready for use are not amortized but are tested annually for possible impairment or for indication of impairment, if any. Assets amortized are assessed with respect to a decline in value whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment is made in the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of the asset’s fair value less selling expenses and its value in use.

In impairment testing, assets are grouped at the lowest levels where there are essentially independent cash flows (cash generating units). For assets (other than goodwill) previously impaired, an assessment is made on each balance sheet day to determine whether reversals should be made.

Inventories

Inventories are measured at the lower of cost and net sales value. The cost of inventories includes expenses incurred to acquire inventory assets and transport them to their current site and condition. The cost figure is based on weighted average prices. The cost of manufactured goods and work in progress includes a reasonable share of indirect expenses based on normal capacity. Net sales value is the estimated selling price in current operations less the estimated expenses to make the asset ready for sale and to effect a sale. Net sale value is estimated based on estimates of the current market price.

Financial instruments

Financial instruments that are reported in the balance sheet include accounts receivable, cash and equivalents, payables to credit institutions and accounts payable. A financial asset or financial liability is recognized in the balance sheet when the company becomes party to the instrument’s contractual terms. A financial asset is derecognized when the contractual rights are realized, mature or are no longer under the company’s control. A financial liability is derecognized in the balance sheet when contractual obligations are met or otherwise extinguished. Purchases and sales of financial assets are recognized using trade date accounting, which is the trade date the company enters into a contractual obligation to buy or sell the asset. A financial asset and a financial liability are offset and the net amount recognized in the balance sheet only when the company has a legally enforceable right to set off the amounts and intends either to settle on a net basis or to realize the asset and settle the liability simultaneously. At initial recognition, financial instruments are classified based on the purpose for which the instrument was acquired, which affects subsequent measurement. The measurement categories BE Group uses are as follows.

Classification and measurement of financial instruments

Amortized cost – financial assets

The Group only classifies its financial assets as assets recognized at amortized cost when the following requirements are met:

• the asset is included in a business model where the goal is to collect contractual cash flows, and
• contractual terms give rise to cash flows at specific times that only consist of principal and interest on the outstanding principal.

Cash and equivalents and accounts receivable are recognized at amortized cost.

Accounts receivable

Accounts receivable are amounts attributable to customers for goods sold in the operating activities. Accounts receivable generally fall due for payment within 30-60 days and all accounts receivable have therefore been classified as current assets. Accounts receivable are initially recognized at fair value. The Group holds accounts receivable for the purpose of collecting contractual cash flows and therefore measures them at subsequent recognition times at amortized cost with application of the effective interest method. The Group’s method for the calculation of impairment losses/provisions for accounts receivable is described below. Accounts receivable in BE Group Sverige AB and BE Group Oy Ab are pledged as a basis for the Groups borrowing through factoring.

Amortized cost – financial liabilities

All of the Group’s financial liabilities are measured at amortized cost after the initial recognition. Liabilities measured at amortized cost are comprised of interest-bearing liabilities, accounts payable and other liabilities. Financial liabilities are classified as current liabilities if they fall due for payment within 12 months of the reporting date; otherwise they are classified as non-current liabilities.

Derivatives

Derivatives are recognized at fair value as current receivables or current liabilities depending on whether the derivative has a positive or negative value. The Group does not apply hedge accounting.

Impairment of financial assets

The Group evaluates the anticipated future credit losses related to investments in debt instruments recognized at amortized cost. At each reporting date, the Group recognizes a provision for anticipated credit losses. The measurement of the anticipated credit losses reflects an objective and probability-weighted amount that is determined by evaluating an interval of possible outcomes; the time value of money and reasonable and verifiable information that is available without unnecessary costs or efforts on the balance sheet date for earlier events, current conditions and forecasts of future financial conditions.

The Group applies the simplified method for the calculation of anticipated credit losses on accounts receivable. This method means that anticipated losses during the entire term of the receivable are used as the starting point for accounts receivable. See Note 31 for more information on the impairment model.

Revenues

The Group generates revenues from the sale of goods. There is normally a performance commitment in the form of goods in contracts with customers for finished products. Revenue is recognized at the time when control over the asset has been transferred to the customer. To assess when control is transferred, the transfer of risks and benefits is the indicator assigned the greatest importance in the Group for determining when control has been transferred to the customer. The time at which control over the goods is transferred to the customer thereby depends mostly on what freight terms are stated in the customer contract.

The Group takes into account variable compensation in the form of volume discounts when the transaction price is determined. The revenue from the sale of goods is recognized based on the price in the contract less estimated volume discounts. Historical data is used to estimate the discounts’ anticipated value and the revenue is only recognized to the extent that it is very likely that a material reversal will not arise. A liability (which is included in the item Accrued expenses and deferred income) is recognized for anticipated volume discounts in relation to the sales up to the balance sheet date. A receivable is recognized when the goods have been delivered as the compensation at this time is certain since only the passing of time is required before payment is made. No financing component is deemed to exist at the time of sale as the credit period is normally 30-60 days.