Notes for P&L

All amounts in SEKm unless otherwise stated

Note 2 Summary of important accounting policies

Basis of the consolidated accounts
The financial reports for the group have been prepared in accordance with EU-approved IFRS Accounting Standards issued by the IASB (International Accounting Standards Board) and interpretation statements from the IFRS Interpretations Committee. In addition, the recommendations issued by the Swedish Financial Reporting Council RFR 1, Supplementary accounting rules for groups, apply, which specify the additions to IFRS disclosures that are required according to the provisions of the Annual Accounts Act. The annual report for the parent company has been prepared in accordance with the Annual Accounts Act, the Swedish Financial Reporting Board's recommendation RFR 2 (Accounting for legal entities) and statements from the Swedish Financial Reporting Board. The parent company's accounting complies with the group's principles, with the exception of what appears below under the section "Differences between the group's and the parent company's accounting principles".

Significant accounting principles
The group provides information on material accounting principles. Material accounting principles mean that the underlying transaction is material and that the information in the accounting principle is essential for the understanding of the transaction, for example if the group has made a principle choice or if the accounting principle is company-specifically adapted. In cases where the group only applies an accounting principle as described in IFRS, information about the principle has not been provided provided that the principle is not required to gain an understanding of the reported transactions or events. In addition to essential accounting principles presented in this note, essential principles are also presented in direct connection with the note to which the accounting principle refers.

Design of the annual report
The financial reports are stated in millions of kronor (MSEK) unless otherwise stated. AddLife AB's functional currency is Swedish kronor, which is also the reporting currency for the group. Assets and liabilities are reported at historical acquisition values, except for currency derivatives and conditional additional purchase price which are valued at fair value.

Assets are divided into current assets and fixed assets. An asset is considered a current asset if it is expected to be realized within twelve months from the balance sheet date or within the company's operating cycle. Operating cycle refers to the time from the start of production until the company receives payment for delivered services or goods. The group's operating cycle is estimated to be less than one year. If an asset does not meet the requirement for a current asset, it is classified as a fixed asset.

Liabilities are divided into short-term liabilities and long-term liabilities. As short-term liabilities, liabilities that are either to be paid within twelve months from the balance sheet date or, however only with regard to operating-related liabilities, are expected to be paid within the business cycle. When account is thus taken of the business cycle, no non-interest-bearing liabilities, such as trade payables and accrued personnel costs, are reported as long-term.

Transactions in foreign currency have been converted to functional currency at the exchange rate on the day of the transaction. Financial assets and liabilities denominated in foreign currency are valued at the exchange rate on the balance sheet date. Exchange rate differences that arise are reported in the period's results, except for the part that constitutes an effective hedge of net investments, where reporting is against other comprehensive income. Exchange rate gains and losses on operating receivables and operating liabilities are reported in the operating profit, while exchange rate gains and losses on financial receivables and liabilities are reported as financial items. Exchange rate gains and exchange rate losses are reported net.

Deviations between the group's and the parent company's accounting principles
The parent company's and the group's accounting principles agree except for the following points. The parent company applies the voluntary exception in RFR 2 regarding the application of IFRS 16 and IFRS 9. In accordance with RFR 2, any defined benefit pension plans in the parent company are reported as defined contribution plans.

New or amended accounting standards applicable in 2023
The group applies the change in IAS 1 Presentation of financial reports which aims to present material accounting principles in accordance with the description under the heading Material accounting principles above. The other new or amended standards have had no material impact on AddLife's financial statements.

New or amended accounting standards applied after 2023
The group is covered by the OECD's model rules for Pillar II. Legislation on Pillar II has been adopted in Sweden, where AddLife AB is based, and will enter into force on 1 January 2024. As the legislation on Pillar II had not entered into force on the balance sheet date, the Group has no related current tax exposure. The Group applies the exemption for reporting and providing information on deferred tax assets and liabilities related to income taxes from Pillar II, which is specified in the amendments to IAS 12 issued in May 2023.

The Group is currently evaluating its exposure to the Pillar II legislation when it comes into force.

Due to the complexity of the application of the legislation and the calculation of GloBE revenues, the quantitative impact of the adopted legislation is not yet possible to estimate with reasonable certainty. Therefore, even for those companies with a reported effective tax rate above 15%, there may still be Pillar II tax consequences. The company is currently working with tax specialists to help implement the legislation.