AAK Annual Report 2018

Notes Amounts stated in SEK million unless specified otherwise. 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 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 International 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 “Supplementary accounting rules for groups of companies”. 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 “Accounting for legal entities”. The annual and consolidated financial statements have been prepared on a historical cost basis, with the exception of currency, fixed income and commodity derivative instru- ments, 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 crit- ical 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 amended standards applied by the Group A number of new standards and interpretations enter into force for financial years that start after January 1, 2018. None Consumer Commodities. The head office is located at Skrivaregatan 9, 215 32 Malmö, Sweden. These consolidated financial statements for 2018 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 consoli- dated financial statements for publication on April 10, 2019 of these will not have any significant effect on the Group’s financial statements. IFRS 9 Financial instruments IFRS 9 “Financial instruments” concerns the classification, valuation and reporting of financial assets and liabilities. The full version of IFRS 9 was published in July 2014. It replaces the parts of IAS 39 that concern the classification and valua- tion of financial instruments. The standard must be applied for the financial year beginning January 1, 2018. IFRS 9 retains a mixed valuation approach which means that there are three valuation categories for financial assets, amortized cost, fair value through other comprehensive income and fair value through profit or loss. How an instru- ment is classified depends on the company’s business model and the nature of the cash flows attributable to the instrument. The new rules for classification and valuation did not affect AAK’s financial position at the transition time as the regula- tions did not entail any change in valuation of the financial instruments in AAK’s balance sheet at this time. Other liabili- ties and financial assets classified as Loan and Receivables under IAS 39 are classified as Measured at amortized cost under IFRS 9. Financial assets previously classified as Held for sale are classified as Measured at fair value through profit or loss. AAK does not have any financial assets classified as Available for sale under IAS 39. IFRS 9 also introduced 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 simpli- fied approach, i.e. the reserve corresponds to the expected loss over the entire life of the account receivables. At the transition, the size of the reserve did not have any material effect on the Group’s balance sheet, please see note 3 for further information. 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 had under IAS 39 are deemed to qualify for hedge accounting under IFRS 9 and did 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 has changed, the hedge docu- mentation has been updated, please see note 3 for further information about hedge accounting. IFRS allows an entity to irrevocably designate and measure a contract to buy or sell a non-financial item that can be settled net in cash or another financial instrument, or by exchanging financial instruments, at fair value through profit or loss. Under IFRS 9 AAK applies the fair value option for sales and purchase contracts for own use, i.e. contracts that are not derivatives under IFRS 9. The Group has not recalculated the comparison figures for the 2017 financial year in accordance with the transitional rules of the standard. Accounting policies applicable to the financial year prior to January 1, 2018 can be found on page 56-57 in AAK Annual Report 2017. 64 1 2 Note General information Note Summary of significant accounting policies