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Note 31 – Effects at transition to International Financial Reporting Standards (IFRS)

This is the first annual report prepared in accordance with IFRS. The accounting policies found in Note 2 were applied when the consolidated financial statements for the Azelio Group were prepared on 31 December 2019, and applied to the comparable information presented as per 31 December 2018 and to the preparation of the opening statement of financial position (opening IFRS balance sheet) on 1 January 2018 (the date on which the Group made the transition to IFRS).

When the opening IFRS balance sheet dated 1 January 2018 and the balance sheets dated 31 December 2018 were prepared according to IFRS, the amounts reported in previous annual reports and interim reports in accordance with BFNAR 2012:1 Annual Report and Consolidated Accounts (K3) were adjusted. An explanation for how the transition from previously applied accounting policies to IFRS impacted the Group’s earnings and financial position is shown in the tables below and the accompanying notes.

Choices made in the transition to accounting in accordance with IFRS

The transition to IFRS is reported in accordance with the standard IFRS 1 First-time Adoption of International Financial Reporting Standards. The general requirement is that all applicable IFRSs and IASs that have entered force and been adopted by the EU as of 31 December 2019 must be applied retroactively. However, IFRS 1 contains transitional provisions that provide entities with a certain degree of choice.

The exemptions permitted by IFRS from full retrospective application of all standards that Azelio elected to apply to the transition from the former accounting policies to IFRS are stated below.

Exemptions for accumulated translation differences

IFRS 1 allows for accumulated translation differences recognised in equity to be set at zero at the date of the transition to IFRS. This provides transition relief compared with determining the accumulated translation differences in accordance with IAS 21 The Effects of Changes in Foreign Exchange Rates, from the date on which the subsidiary or associated company was formed or acquired. Azelio has chosen to set at zero all accumulated translation differences in the translation reserve and to reclassify these to retained earnings at the date of the transition to IFRS as of 1 January 2018.

Reconciliation between previously applied accounting policies and IFRS

According to IFRS 1, the Group is to present a reconciliation between equity and total comprehensive income recognised according to previously applied accounting policies, and equity and total comprehensive income recognised according to IFRS. The tables below outline the reconciliation between previously applied accounting policies and IFRS for the respective periods for equity and total comprehensive income.

Reconciliation of consolidated equity as of 1 January 2018 and 31 December 2018

 1 January 201831 December 2018
Amounts in kSEKIn accordance with previous accounting policiesEffect of transition to IFRSIn accordance with IFRSIn accordance with previous accounting policiesEffect of transition to IFRSIn accordance with IFRS
ASSETS      
Non-current assets      
Intangible assets      
Capitalised development expenditure237,600 237,600291,224 291,224
Investment in progress, intangible non-current assets0 01,353 1,353
Total intangible assets237,6000237,600292,5770292,577
Property, plant and equipment      
Leasehold improvements1,218 1,218987 987
Equipment, tools, fixtures and fittings9,670 9,6706,798 6,798
Total property, plant and equipment10,888010,8887,78507,785
Total non-current assets248,4880248,488300,3610300,361
Right-of-use assets016,69816,698013,01913,019
Current assets      
Inventories      
Raw materials and consumables11,091 11,0918,809 8,809
Finished goods and goods for resale3,529 3,529618 618
Advance payments to suppliers1,606-1,6060179-1790
Total inventories16,225-1,60614,6209,606-1799,427
Current receivables      
Trade receivables1,208 1,20869 69
Current tax assets715 715919 919
Other receivables1,0611,6062,667336179515
Prepaid expenses and accrued income1,077-3427353,157-4142,743
Cash and bank balances18,020 18,020331,196 331,196
Total current receivables22,0811,26423,344335,677-235335,442
Total current assets38,306-34237,964345,283-414344,869
TOTAL ASSETS286,79416,356303,150645,64412,605658,249

Reconciliation of consolidated equity as of 1 January 2018 and 31 December 2018

 1 January 201831 December 2018
Amounts in kSEKIn accordance with previous accounting policiesEffect of transition to IFRSIn accordance with IFRSIn accordance with previous accounting policiesEffect of transition to IFRSIn accordance with IFRS
EQUITY AND LIABILITIES      
Equity attributable to parent company shareholders      
Share capital9,753 9,75321,174 21,174
Other paid-in capital890,605 890,6051,291,971 1,291,971
Reserves-2502500-341250-91
Retained earnings (incl.net profit for the year)-662,962-250-663,212-750,928-409-751,337
Total equity attributable to Parent Company shareholders237,1460237,146561,876-159561,717
LIABILITIES      
Non-current liabilities      
Other non-current liabilities22,990 22,99022,850 22,850
Lease liabilities012,61812,61809,6909,690
Total non-current liabilities22,99012,61835,60822,8509,69032,541
Current liabilities      
Advances from customers218 2180 0
Trade payables5,309 5,30934,332 34,332
Lease liabilities03,7383,73803,0743,074
Provisions71 710 0
Other current liabilities10,190 10,1908,828 8,828
Accrued expenses and deferred income10,871 10,87117,757 17,757
Total current liabilities26,6583,73830,39660,9183,07463,991
Total liabilities49,64816,35666,00483,76812,76496,532
TOTAL EQUITY AND LIABILITIES286,79416,356303,150645,64412,605658,249

Reconciliation of consolidated total comprehensive income for 2018

Amounts in kSEKNotesIn accordance with previous accounting policiesEffect of transition to IFRSIn accordance with IFRS
Revenue 1,942 1,942
Own work capitalised 66,392 66,392
Other operating income 2,007 2,007
Total 70,341070,341
Raw materials and consumables -7,758 -7,758
Other external expenses -65,8214,130-61,690
Employee benefit expenses -72,961 -72,961
Depreciation/amortisation and impairment of property, plant and equipment and intangible non-current assets -15,546-3,921-19,467
Other operating expenses -215 -215
Total -162,300209-162,090
Operating profit/loss -91,959209-91,749
Financial income 403 403
Finance costs -289-369-658
Net financial items 114-369-255
Profit/loss before tax -91,845-159-92,004
Income tax 0 0
Profit/loss for the year -91,845-159-92,004
Other comprehensive income:    
Items that may be transferred to profit or loss for the year    
Exchange-rate differences on foreign operations 0-91-91
Other comprehensive income for the year 0-91-91
Total comprehensive income for the year -91,845-250-92,095