AAK Annual Report 2020

Risk management and sensitivity analysis All business operations involve risks – a controlled approach to risk-taking is a prerequisite for maintaining good profitability. Risks may depend on events in the operating environment and may affect a certain sector or market. A risk may also be purely company-specific or country-specific. At AAK, effective risk management is a continual process which is conducted within the framework of operational management and forms a natural part of the day-to-day monitoring of operations. For more detailed information, please refer to the section on Risks and risk management on pages 36–39 and to Note 3, Financial Risk Management. External risks The AAK Group is exposed to the fierce competition which characterizes the industry related to fluctuations in raw material prices which affect capital tied up. Operational risks The raw materials used in operations are agricultural products, and availability may therefore vary due to climatic and other external factors. Financial risks The Group’s management of financial risks is described in Note 3, Financial Risk Management. Corporate Governance Report The Corporate Governance Report on pages 114–121 is part of the Directors’ Report. For information on the composition and work, etc., of the Board of Directors, see the Corporate Governance Report on pages 115–117. Sustainability Report Under Chapter 6, Section 11, of the Swedish Annual Accounts Act, AAK has decided to prepare its Sustain- ability Report separately from the Annual Report. The Sustainability Report was submitted to the auditor with the Annual Report. Parent The Company is the holding company of the AAK Group, and its activities consist mainly of joint Group functions connected to the development and man- agement of the Group. The Parent employs personnel with skills and competencies to execute Group-wide financing, accounting, information, marketing, product development, human resources, M&A and IT. The Parent is also responsible for Group strategy and risk management and provides legal and tax-related services to Group companies. The Parent’s invoicing in 2020 amounted to SEK 134 million (159). The profit after financial items amounted to negative SEK 39 million (positive 1,474). Inter- est-bearing liabilities minus cash and cash equivalents and interest-bearing assets totalled SEK 2,456 million (2,173 as of December 31, 2019). Investments in intan- gible and tangible assets amounted to SEK 3 million (5). The average number of employees at December 31, 2020 was 37 (37). Background to and motivation of the proposed appropriation of profits The Board of Directors has proposed that the 2021 Annual General Meeting approves an appropriation of profits under which the shareholders will receive a dividend of SEK 2.30 per share. The proposed dividend therefore totals SEK 587 million. The objective is for the dividend in the long term to correspond to 30–50 percent of consolidated profits after tax, while always considering AAK’s long-term financing requirements. The Parent has no financial instruments valued under Chap. 4, Section 14 a, of the Swedish Annual Accounts Act (1995:1554). The Board of Directors hereby makes the following statement regarding the proposed dividend, in accordance with Chap. 18, Section 4, of the Swedish Companies Act (2005:551). Retained profits from the previous year total SEK 6,136 million and the result for the 2020 financial year is negative SEK 39 million (positive 1,581 for the Group). Provided that the 2021 Annual General Meeting approves the Board’s proposed appropriation of profits, a total of SEK 5,509 million will be carried forward. The Company’s restricted equity will be fully covered after distribution of the dividend. In the Board’s judgment, the Company and the Group will retain sufficient equity after distribution of the proposed dividend in relation to the nature, scope and risks associated with its business operations. In making this assessment, the Board has taken account of the historical development of the Company and the Group, budgeted performance and the economic situation. In the view of the Board, the Company and the Group are in a position and have the capacity, in both the short and long terms, to meet all their obligations. AAK Annual Report 2020 46