54
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.
Group companies
The results and financial position of foreign subsidiaries (none of which has the currency of a hyperinflationary economy) that
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Assets and liabilities are translated at the closing day rate.
Income and expenses are translated at average exchange rates.
All exchange differences are charged directly to other comprehensive income and are recognized as a separate part of
equity. When a foreign subsidiary is sold, any exchange differences are recognized in profit or loss as part of the gain or
loss on the sale.
Goodwill and fair value adjustments arising in the acquisition of foreign operations are treated as assets and liabilities of the
entity and translated at the closing day rate.
Exchange rates
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Currency Average rate Closing rate
EUR 9.65 9.83
DKK 1.30 1.32
GBP 11.04 11.06
MXN 0.45 0.42
USD 8.53 8.18
Segment reporting
An operating segment is the part of the Group that conducts business operations from which it may generate revenue and
incur expenses for which discrete financial information is available. The operating results of an operating segment are followed
up by the Group’s chief operating decision-maker in order to evaluate its performance and allocate resources to the operating
segment. The Group’s operations are divided up into operating segments based on which parts of the operations the Group’s
chief operating decision-maker monitors, that is, according to the management approach. AAK’s business operations are
organized in such a way that the Group’s highest executive decision-maker, that is the CEO, monitors earnings, returns and
cash flows generated by the Group’s various products. Each operating segment has a manager who is responsible for day-today
operations and who regularly reports to the CEO on the outcome of the operating segment’s performance and its resource
requirements. Where the CEO monitors profit/loss and determines resource allocations based on the product that the Group
produces and sells, these constitute the Group’s operating segments.
The Group’s operations are organically divided into business segments based on product. The marketing organization also
reflects this structure. Segment reporting is submitted in accordance with IFRS 8 for the Group only. For each segment, the
results, assets and liabilities directly attributable to or items that can reliably be attributed to the segment are included in that
segment. Assets and liabilities not attributed to segments include tax assets and tax liabilities, financial investments and financial
liabilities, as well as cash and cash equivalents and interest-bearing receivables.
Revenue recognition
Revenue comprises the fair value of goods sold excluding VAT and discounts after eliminating intra-group sales. Sales are
recognized on delivery of the goods, after customer acceptance and after the receivable can reasonably be deemed safe.
Interest income is recognized allocated over the maturity of the security using the effective interest method. Insurance
compensation is recognized as revenue when the amount can be measured in a reliable way and it is probable that the
revenue will flow to the Group.
Employee benefits
a) Pension liabilities
A defined contribution plan is a pension plan under which the Group pays fixed contributions into a separate legal entity. The
Group has no legal or constructive obligations to pay further contributions if this legal entity does not hold sufficient assets to pay
all employee benefits relating to employee service in the current or prior periods. The fees paid in exchange for the employee
performing services for the company are recognized as expenses in the period in which the services are performed.
A defined benefit pension plan is a pension plan that is not a defined contribution plan. The characteristic feature of a defined
benefit plan is that it defines an amount of pension benefit that an employee will receive on retirement, usually dependent on one
or more factors such as age, years of service and remuneration.
The liability recognized in the balance sheet in respect of defined benefit pension plans is the present value of the defined
benefit obligation at the end of the reporting period less the fair value of plan assets. The defined benefit obligation is calculated
annually by independent actuaries using the projected unit credit method. The present value of the defined benefit obligation is
determined by discounting the estimated future cash flows using interest rates of high-quality mortgage bonds that are denominated
in the same currency in which the benefits will be paid, and that have terms of maturity approximating the terms in the
related pension commitment.