Annual Report 2012.pdf - Karo Bio

Accounting and valuation principles
Accounting and valuation principles
THE GROUP
Statement of compliance
The consolidated financial statements have been prepared in
accordance with the Swedish Annual Accounts Act, RFR 1 Supplementary
Accounting Regulations for Groups, International
Financial Reporting Standards (IFRS) and statements concerning
interpretation published by IFRIC as adopted by the European
Union. The statements have been prepared on a historical cost
basis, except for financial assets available for sale and financial
assets at fair value through profit and loss.
CHANGES IN ACCOUNTING PRINCIPLES AND INFORMATION
New accounting standards applied by the group
None of the IFRS or IFRIC interpretations, mandatory for the
first time in the financial year beginning January 1, 2012 have had
a significant impact on the Group.
New standards, amendments and interpretations to existing
standards that have not been adopted proactively by the group
A number of new standards, interpretations and amendments
to existing standards will be effective for fiscal years beginning
after January 1, 2013 and have not been applied in preparing
the consolidated financial statements. Included amongst are the
standards below which are not expected to have any significant
impact on the Group’s financial statements.
IAS 1 ”Presentation of Financial Statements” has introduced
changes to other comprehensive income. The most significant
change in the revised IAS 1 is the requirement that the items
recognized in ”other comprehensive income” be presented in two
groups.
The distribution is based on if the entries may be reclassified
to the income statement (reclassification adjustments) or not.
The amendment does not address the question of which records
should be included in ”other comprehensive income”.
IFRS 9 ”Financial instruments” deals with the classification,
valuation and reporting of financial liabilities and assets. IFRS
9 replaces those parts of IAS 39, which are related to the classification
and valuation of financial instruments. IFRS 9 requires
that financial assets are classified into two different categories:
valuation at fair value or valuation at amortized cost.
Classification is determined at initial reporting based on the
company’s business model and characteristics of the contractual
cash flows. For financial liabilities there are no large changes
compared with IAS 39. The biggest change relates to liabilities
that are designated at fair value. For these, a portion of fair value
changes that is attributable to their own credit risk is recognized
in other comprehensive income instead of the result as long as
it does not causes inconsistency in the accounting. The Group
intends to apply the new standard by the financial year beginning
January 1, 2015 and has not yet evaluated the effects. The standard
has yet not been adopted by the EU at the time of this report.
IFRS 10 ”Consolidated Financial Statements” is based on existing
principles as it identifies control as the decisive factor for determining
whether a company is fully consolidated. This standard
provides additional guidance to assist in the determination of
control when this is difficult to assess. The Group will apply IFRS
10 for the financial year beginning January 1, 2014 and has not yet
evaluated the full impact on the financial statements.
IFRS 12 ”Disclosures of interests in other entities” includes
disclosure requirements of subsidiaries, joint arrangements, associates
and non-consolidated ”structured entities”. The Group
will apply IFRS 12 for the financial year beginning January 1,
2014 and has yet not evaluated the full impact on the financial
statements.
The aim of IFRS 13 ”Fair value measurement” is that valuation
at fair value should be more consistent and less complex
by providing a standard that gives a precise definition and a
common source of IFRS at fair value valuations and associated
information. The requirements do not increase the application
scope of when fair value should be applied but provides guidance
on how it should be applied where other IFRSs already require
or permit valuation at fair value.
Basis of preparation
The consolidated financial statements have been prepared on
a historical cost basis, except for certain financial instruments
that are measured at fair value. Amounts are expressed in KSEK
(thousands of Swedish kronor) unless otherwise indicated. MSEK
is an abbreviation for millions of Swedish kronor. Amounts or
figures in parentheses indicate comparative figures for 2011 and
2010, respectively.
Critical accounting estimates and judgments
The preparation of financial statements requires the use of certain
critical accounting estimates. It also requires management to
exercise its judgment in the process of applying the company’s
accounting principles. Estimates and judgments are continually
evaluated and are based on historical experience and other factors,
including expectations of future events that are believed to be
reasonable under the circumstances.
The areas involving a higher degree of judgment or complexity,
or areas where assumptions and estimates are significant to the
financial statements, relate to the valuation of tax losses carried
forward, the valuation of stock options issued to employees and
the decision regarding expensing or capitalizing development
costs. For further information, see accounting and valuation
principles below and notes 9 and 27.
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