AAK Annual Report 2017

52 NOTE 1 – GENERAL INFORMATION AAK AB (publ.), corporate identity number 556669-2850, is a Swedish registered limited liability company domiciled in Malmö, Sweden. The shares of the Parent are listed on NASDAQ OMX Stockholm, in the Large Cap list and under Consumer Commodities. The head office is located at Skrivaregatan 9, 215 32 Malmö, Sweden. These consolidated financial statements for 2017 are for the Group consisting of the Parent and all subsidiaries. The Group also has ownership interests in associates and joint ventures. The Board of Directors approved these consolidated financial state- ments for publication on April 23, 2018 NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The principal accounting policies applied in the preparation of these consolidated financial accounts are set out below. Basis of presentation of the annual report and consolidated financial statements The Group’s consolidated financial statements have been prepared in accordance with the International Financial Reporting Standards (IFRS) as adopted by the International Accounting Standard Board (IASB) and the interpretations issued by the Inter- national Financial Reporting Interpretations Committee (IFRIC) as adopted within the EU, the Swedish Annual Accounts Act, and the Swedish Financial Reporting Board’s recommendation RFR 1 “ 6XSSOHPHQWDU\ DFFRXQWLQJ UXOHV IRU JURXSV RI FRPSDQLHV´ The Parent company has prepared its financial statements in accordance with the Swedish Annual Accounts Act and the Swedish Financial Reporting Board’s recommendation RFR 2 “ $FFRXQWLQJ IRU OHJDO HQWLWLHV´ The annual and consolidated financial statements have been prepared on a historical cost basis, with the exception of currency, fixed-income and commodity derivative instruments, which are measured at fair value through profit or loss. Preparing these financial statements requires that the Board of Directors and the Company management use certain critical accounting estimates and assumptions. These estimates and assumptions can materially affect the income statement, balance sheet and other information contained herein, including contingent liabilities; see Note 4. Actual outcome can vary from these estimates under different assumptions or circumstances. New and changed standards applied by the Group None of the new standards and changes in and interpretations of existing standards that have been published and are obligatory for the consolidated financial statements for financial years starting on January 1, 2017 or later have had any material impact on the consolidated financial statements. New standards and interpretations that have not yet been applied by the Group A number of new standards and interpretations enter into force for financial years that start after January 1, 2017 and were not applied when preparing these financial statements. None of these are expected to have any significant effect on the Group’s ILQDQFLDO VWDWHPHQWV H[FHSW WKRVH VKRZQ EHORZ IFRS 9 Financial instruments IFRS 9 “ )LQDQFLDO LQVWUXPHQWV´ FRQFHUQV WKH FODVVLILFDWLRQ YDOXDWLRQ DQG UHSRUWLQJ RI ILQDQFLDO DVVHWV DQG OLDELOLWLHV 7KH IXOO YHU - sion of IFRS 9 was published in July 2014. It replaces the parts of IAS 39 that concern the classification and valuation of financial instruments. The standard must be applied for the financial year beginning January 1, 2018. Earlier application is permitted. IFRS 9 retains a mixed valuation approach which means that there will be three valuation categories for financial assets, DPRUWL]HG FRVW IDLU YDOXH WKURXJK RWKHU FRPSUHKHQVLYH LQFRPH DQG IDLU YDOXH WKURXJK WKH LQFRPH VWDWHPHQW +RZ DQ LQVWUXPHQW should be classified depends on the company’s business model and the nature of the cash flows attributable to the instrument. Analyses show that the new rules for classification and valuation will not affect AAK’s financial position at the transition time as the regulations will not entail any change in valuation of the financial instruments in AAK’s balance sheet at this time. IFRS 9 also introduces a new model for calculating credit loss reserves based on expected credit losses. AAK is affected by the new impairment model for the calculation of the credit loss reserve for accounts receivable, with the result that there is a calculated loss for all accounts receivables, including those that are not yet due. AAK applies the simplified approach, i.e. the reserve will correspond to the expected loss over the entire life of the account receivables. At the transition, the size of the reserve will not have any material effect on the Group’s balance sheet. IFRS 9 reduces the requirements for application of hedge accounting by replacing the 80–125 criterion with requirements for an economic relationship between hedging instruments and hedged items and for the hedging quota to be the same as that used in risk management. The hedge relationships that AAK has under IAS 39 are deemed to qualify for hedge accounting under IFRS 9 and will not produce any material effect as at the transition time, based on the hedge relationships that run past this time. As the criteria for applying hedge accounting change, the hedge documentation will also need to be updated. A project is in progress to analyse which additional information may be required to meet the disclosure requirements in the revised IFRS 7. AAK applies IFRS 9 for the financial year starting on January 1, 2018. The Group will not recalculate comparison figures for the 2017 financial year in accordance with the transitional rules for the standard. Notes Amounts stated in SEK million unless specified otherwise.