51 IFRS 15 replaces IAS 18 Revenue and IAS 11 Construction Contracts and the associated SIC and IFRIC. IFRS 15 enters into force on January 1, 2018. The standard has not yet been adopted by the EU. Premature application is permitted. The Group has not yet evaluated the full effect of the introduction of the standard, but will carry out an analysis of this in 2017. A preliminary assessment is that the change in standard will not have a material impact on the Group’s financial reports. IFRS 16 Leases In January 2016, IASB published a new leasing standard that will replace IAS 17 Leases and the associated interpretations IFRIC 4, SIC-15 and SIC-27. The standard requires that assets and liabilities attributable to all leases, with some exceptions, be recognized in the balance sheet. This recognition is based on the view that the lessee has a right to use an asset during a specific period of time and also has an obligation to pay for this right. The recognition for the lessor will be essentially unchanged. The standard is applicable for a financial year beginning January 1, 2019 or later. Premature application is permitted. The EU has not yet adopted the standard. The Group has not yet evaluated the effects of IFRS 16. No other of the IFRS or IFRIC interpretations that have not yet entered into force are expected to have any significant impact on the Group. Consolidated financial statements Subsidiaries The consolidated financial statements cover AAK AB and all its subsidiaries. Subsidiaries are all companies over which the Group has a controlling influence. The Group controls a company when it is exposed to or is entitled to variable return from its holding in the company and is able to affect the return by exerting influence in the company. Subsidiaries are included in the consolidated financial statements as from the date on which the controlling influence is transferred to the Group. They are excluded from the consolidated financial statements as from the date on which the controlling influence ceases. Purchase method The acquisition of subsidiaries is recognized using the purchase method of accounting. The cost of acquisition is measured as the fair value of the assets provided as consideration, liabilities incurred and shares issued by the Group. Transaction costs relating to acquisitions are expensed as they are incurred. Identifiable assets acquired and liabilities and obligations assumed in an acquisition are measured initially at fair value at the acquisition date. For each acquisition, the Group determines whether all non-controlling interests in the acquired companies are to be recognized at fair value or according to the proportional share of the acquired company’s net assets. The excess of the purchase price, any non-controlling interests and the fair value of previous shareholdings at the acquisition date over the fair value of the Group’s interest in identifiable net assets is recognized as goodwill. If this amount is less than the fair value for the acquired subsidiary’s assets, the difference is recognized directly in the statement of comprehensive income. All intra-group transactions, balances and unrealized gains on transactions are eliminated, unless the transaction provides evidence of impairment of the asset transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group. Transactions with holders of non-controlling interests The Group handles transactions with holders of non-controlling interests in the same ways as transactions with the Group’s shareholders. In the event of acquisitions from holders of non-controlling interests, the company recognizes the difference between the purchase price paid and the actual acquired portion of the carrying amount of the subsidiary’s net assets in equity. Gains and losses on disposals to holders of non-controlling interests are also recognized in equity. When the Group no longer holds a controlling or significant influence, each shareholding is remeasured at fair value and the change in the carrying amount is recognized in the income statement. Fair value is used as the primary carrying amount and IRUPVWKHEDVLVIRURQJRLQJUHFRJQLWLRQRIWKHUHPDLQLQJRZQHUVKLSLQWHUHVWDVDQDVVRFLDWHFRPSDQ\MRLQWYHQWXUHRUILQDQFLDO DVVHW$OODPRXQWVUHODWLQJWRGLYHVWHGXQLWVSUHYLRXVO\UHFRJQLHGXQGHU³2WKHUFRPSUHKHQVLYHLQFRPH´DUHUHFRJQLHGDV though the Group had directly disposed of the respective assets or liabilities. This can result in amounts previously recognized in ³2WKHUFRPSUHKHQVLYHLQFRPH´EHLQJUHFODVVLILHGDVHDUQLQJV If the equity interest in an associate is reduced but significant influence still remains, where relevant only a proportional share RIWKHDPRXQWVSUHYLRXVO\UHFRJQLHGLQ³2WKHUFRPSUHKHQVLYHLQFRPH´LVUHFRJQLHGDVHDUQLQJV Associated companies Associates are those companies where the Group has significant influence, but not a controlling influence over operational and financial management, usually through an ownership interest of between 20 percent and 50 percent of the voting rights. As of the date at which the significant influence is acquired, investments in associated companies are recognized in the consolidated financial statements using the equity method. The equity method means that the value of the shares in the associated companies recognized for the Group corresponds to the Group’s interest in the equity of the associates plus Group-related goodwill and any residual values of Group-related surplus or shortfall in value. The consolidated income statement reports the Group’s share of SURILWRIDVVRFLDWHGFRPSDQLHVDGMXVWHGIRUDQ\DPRUWLDWLRQLPSDLUPHQWRUGLVVROXWLRQRIDFTXLUHGVXUSOXVRUVKRUWIDOOYDOXHVDV other financial revenue. Dividends received from associated companies reduce the carrying amount of the investment. The equity method is used until significant influence ceases. Foreign currency translation of foreign subsidiaries’ financial statements Functional and presentation currency Items included in the financial statements of each of the Group’s subsidiaries are measured using the currency of the primary economic environment in which they operate (functional currency). The consolidated financial statements are presented in Swedish krona which is the Parent’s functional and presentation currency. Exchange rate differences that arise in translation of Group companies are recognized as a separate item in comprehensive income. Transactions and balance sheet items Foreign currency transactions are translated into the functional currency using the exchange rates prevailing on the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies at the closing rate are recognized as of the end of the reporting period in the income statement.
AAK Annual Report 2016
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