3 rd Quarter of Net sales for the third quarter of amounted to MSEK 188 (198), a decrease by 5 percent compared with the corresponding quarter of the previous year. Operating profit for the quarter amounted to MSEK 1 (12). Operating margin was 1 percent (6). Result for the period during the quarter amounted to MSEK -3 (10), which corresponds to earnings per share of MSEK -0.02 (0.05). Cash flow from operating activities during the quarter amounted to MSEK 37 (26). Net sales for the period amounted to MSEK 587 (627), a decrease by 6 percent compared with the corresponding period of the previous year. Operating profit for the period amounted to MSEK 4 (30). Operating margin was 1 percent (5). Result for the period amounted to MSEK -3 (25), which corresponds to earnings per share of MSEK -0.02 (0.13). Cash flow from operating activities during the period amounted to MSEK 17 (48). MSEK Q 3 Q 3 Changes % Q 1-3 Q 1-3 Changes % Full year Last 12 months Net sales 188 198-5% 587 627-6% 814 774 Gross profit 70 82-15% 226 242-7% 318 302 Gross profit (%) 37% 41% - 39% 39% - 39% 39% Operating profit/loss 1 12-92% 4 30-87% -1-27 Operating profit/loss (%) 1% 6% - 1% 5% - 0% -3% Result for the period -3 10-130% -3 25-112% -6-34 Result per share -0,02 0,05-130% -0,02 0,13-112% -0,03-0,17 Equity/assets ratio (%) 77% 81% - 77% 81% - 79% 77% Cash flow from operating activities 37 26 42% 17 48-65% 65 34 Average no. of empolyees 244 268-9% 243 270-10% 265 257 1
A WORD FROM THE CEO Saab is still holding up During the year, the result has been positively affected by a major one-off recall campaign involving Saab cars in the USA. During the third quarter, we saw sales from this transaction gradually coming down. The transaction has contributed well to the result, but also given us the opportunity to get in closer contact with the Saab owners. The result is a better relationship for future business with the Saab owner. Our efforts in the Orio Parts business has continued during the third quarter, however it has not developed in the pace we expected. We are now taking up all the gathered experiences and adjust our actions based on these. Within the third-party logistics business area, Orio is now becoming increasingly well-known, with several customer contracts signed. We can see an increased number of inquiries from prospective customers as Orio is now becoming more known as a player within third party logistics (3PL) rather than just a supplier of spare parts for the automotive business. We continue to have a good focus and learn from the experiences we have recently won ahead of the upcoming ventures during 2018. Market trends and results Net sales for the third quarter of amounted to MSEK 188, which is a decrease by 5 percent compared to the corresponding quarter of the previous year. Gross profit decreased during the third quarter of by 15 percent compared to the corresponding quarter of the previous year and amounted to MSEK 70. Gross margin during the quarter was 37 percent, compared with 41 percent during the corresponding quarter of. For the third quarter of, Orio reports an operating profit of MSEK 1 (12), and a net result of MSEK -3 (10). During the quarter, cash flow from operating activities was MSEK 37 (26), and equity ratio at 30 September was 77 percent (81). The business and our strategy The group s strategy is to expand product and service range within spare parts as well as within logistics, in parallel with broadening the customer base. Orio now offers, aside from the complete Saab Original assortment, a wide range of parts for 26 of the most common car makes in Sweden. From the outset of Orio s existing structural capital, we have recently taken several important development steps to execute on the strategy and strengthen our competitiveness. Examples of these are the establishment of the two parts distribution centres in Europe, structural changes in the USA, the launch of a broader product range, the expansion of the dealership network and smarter customer solutions in digital platforms. We will continue our development work. Stockholm, 18 October Jonas Tegström, CEO 2
Financial development Net sales MSEK MSEK 300 250 200 150 100 50 1 200 1 000 800 600 400 200 Q 1 Q 2 Q 3 Quarter Q 4 Q 1 Q 2 Q 3 R12 July September The Group's net sales for the third quarter of amounted to MSEK 188 (198), which is a decrease by 5 percent compared with the corresponding quarter of the previous year. The Group s net sales are exposed to effects from exchange rate changes for foreign currencies, primarily the American Dollar and the British Pound, in relation to the Swedish Krona. At unchanged foreign currency exchange rates, compared with the corresponding quarter last year, the Group would have reported net sales of MSEK 189, which would have been a reduction by 5 percent. The Group's net sales for the period January - September amounted to MSEK 587 (627), which is a decrease by 6 percent compared with the corresponding period of the previous year. At unchanged foreign currency exchange rates, compared with the corresponding period last year, the Group would have reported net sales of MSEK 578, which would have been a reduction by 8 percent. 3
Gross profit MSEK 150 125 100 75 50 25 MSEK 600 500 400 300 200 100 July September The Group s gross profit for the third quarter of amounted to MSEK 70 (82), a decrease by 15 percent compared with the corresponding quarter of the previous year. Gross margin for the quarter was 37 percent (41). The Group s gross profit for the period amounted to MSEK 226 (242), a decrease by 7 percent compared with the corresponding period of the previous year. Gross margin for the period was 39 percent (39). Operating profit/loss MSEK 20 15 10 5 Q 1 Q 2 Q 3 Quarter Q 4 Q 1 Q 2 Q 3 R12-5 - 10-15 - 20-25 - 30-35 Q 1 Q 2 Q 3 Q 4 Q 1 Q 2 Q 3 Quarter July September The Group's operating profit for the third quarter of amounted to MSEK 1 (12). The operating profit includes items comparability in the amount of MSEK -7 (-).The operating margin for the quarter was 1 percent (6). The Group's operating profit for the period amounted to MSEK 4 (30), which includes items affecting comparability in the amount of MSEK - 14 (-). The operating margin for the period was 1 percent (5). 4
Result for period July September The Group s financial items for the third quarter of amounted to MSEK -2 (2). The Group s income tax expense for the third quarter of amounted to MSEK -2 (-4). The Group s result for the for the third quarter of amounted to -3 (10), corresponding to earnings per share of MSEK -0.02 (0.05). The Group s financial items for the period amounted to MSEK -3 (3). The Group s income tax expense for the period amounted to MSEK -4 (-8). The Group s result for the for the period amounted to -3 (25), corresponding to earnings per share of MSEK -0.02 (0.13). Cash flow and investments The Group s cash flow from operating activities for the period January September amounted to MSEK 17 (48). The Group s cash flow from investing activities for the period January September amounted to MSEK -10 (-5). The Group s cash flow from financing activities for the period January September amounted to MSEK -125 (-15), which comprised of dividend paid to the shareholder. The Group s cash flow for the period amounted to MSEK -118 (28). Financial Position The Group s liquid assets on September 30, amounted to MSEK 155 (-12-31: 277). The equity ratio in the Group on September 30, was 77 percent (-12-31: 79). Personnel The average number of employees in the Group during the period January September amounted to 243 (270). 5
Segment information NORDIC COUNTRIES MSEK Q 3 Q 3 Changes % Q 1-3 Q 1-3 Changes % Full year Last 12 months Nettoomsättning 49 55-11% 149 179-17% 233 203 Bruttoresultat 27 30-10% 85 98-13% 129 116 Bruttomarginal (%) 55% 55% 57% 55% 55% 57% Net sales for the market segment Nordic countries decreased by 11 percent in the third quarter of compared with the corresponding quarter of the previous year and amounted to MSEK 49 (55). Adjusted for currency exchange rate effects net sales decreased by 11 percent. The gross profit for the third quarter of decreased by 10 percent compared with the corresponding quarter of the previous year and amounted to MSEK 27 (30). The gross margin was 55 percent (55). AMERICA MSEK Q 3 Q 3 Changes % Q 1-3 Q 1-3 Changes % Full year Last 12 months Nettoomsättning 67 55 22% 213 165 29% 215 263 Bruttoresultat 20 20 0% 65 51 27% 67 81 Bruttomarginal (%) 30% 36% 31% 31% 31% 31% Net sales for the market segment America for the third quarter of increased by 22 percent compared with the corresponding quarter of the previous year and amounted to MSEK 67 (55). Adjusted for currency exchange rate effects, net sales increased by 24 percent. The gross profit for the third quarter of was unchanged compared with the corresponding quarter of the previous year and amounted to MSEK 20 (20). The gross margin was 30 percent (36). The improvement in net sales compared to the previous year is mainly a result of a one-off business campaign in the USA, which has taken place during the period. GREAT BRITAIN MSEK Q 3 Q 3 Changes % Q 1-3 Q 1-3 Changes % Full year Last 12 months Nettoomsättning 18 28-36% 60 81-26% 106 85 Bruttoresultat 5 7-29% 16 21-24% 27 22 Bruttomarginal (%) 28% 25% 27% 26% 25% 26% Net sales for the market segment Great Britain decreased by 36 percent in the third quarter of compared with the corresponding quarter of the previous year and amounted to MSEK 18 (28). Adjusted for currency exchange effects, net sales decreased by 32 percent. 6
The gross profit for the third quarter of decreased by 29 percent compared with the corresponding quarter of the previous year and amounted to MSEK 5 (7). The gross margin was 28 percent (25). OTHER MARKETS MSEK Q 3 Q 3 Changes % Q 1-3 Q 1-3 Changes % Full year Last 12 months Nettoomsättning 54 60-10% 165 202-18% 260 223 Bruttoresultat 18 25-28% 60 72-17% 95 83 Bruttomarginal (%) 33% 42% 36% 36% 37% 37% Net sales for the market segment Other markets decreased by 10 percent in the third quarter of compared with the corresponding quarter of the previous year and amounted to MSEK 54 (60). Adjusted for currency exchange rate effects net sales decreased by 12 percent. The gross profit for the third quarter of decreased by 28 percent compared with the corresponding quarter of the previous year and amounted to MSEK 18 (25). The gross margin was 33 percent (42). Parent company The Parent company s net sales for the period amounted to MSEK 391 (484). The gross result for the period amounted to MSEK 154 (177) and the gross margin was 39 percent (37). The Parent company s operating profit for the period amounted to MSEK 4 (36), and the profit margin was 1 percent (7). The Parent company s profit for the period amounted to MSEK 9 (31) and cash flow for the period was MSEK -96 (14). At 30 September, liquid assets in the Parent company were MSEK 100 (- 12-31: 198) and the equity ratio was 83 percent (-12-31:84). The Parent company has a commercial credit and security element of MSEK 50. The credit was unused at 30 September. The average number of employees in the Parent during the period January September was 196 (215). Other significant information Events during the quarter There were no significant events during the quarter. Events after the end of the quarter There have been no significant events taking place after the end of the quarter. 7
Significant Risks and Factors of Uncertainty Detailed information about the Group's risks, uncertainties and other factors can be read in Orio's annual report for. There have not been any significant changes in the Group's risks, uncertainties and other factors during the period. Financial objectives and outlook The group's objective is to create growth of an average of 6 percent per year. Transactions with related parties Transactions with related parties are stated in Note 32 of Orio's annual report for. No significant changes have occurred in relationships or transactions with related parties compared with those described in the annual report for. Upcoming financial information Year-end report January December : 15 February 2018 Annual report : Week 13, 2018 If you have any questions regarding Orio's interim report, please contact: Jonas Tegström, CEO, Tel. +46 (0)155-24 40 09, or Mikael Brate, CFO, tel +46 (0) 155-24 41 20 8
The Board of Directors and the CEO hereby confirm that this interim report provides a true and fair overview of the Parent Company s and the Group s operations, their financial position and performance, and describes material risks and uncertainties facing the Parent Company and other companies in the Group. Stockholm, 18 October Charlotte Hansson Chairman Gunnar Drotz Member Catrina Ingelstam Member Jan Jakobsen Employee representative Monica Lingegård Member Anders Osberg Member Ingemar Sandberg Employee representative Erik Tranaeus Member Jonas Tegström CEO 9
Auditor s review report of interim financial information prepared in accordance with IAS 34 and Ch. 9 of the Swedish Annual Accounts Act. Introduction We have reviewed the interim report of as of 30 September and the ninemonth period then ended. The Board of Directors and the CEO are responsible for the preparation and presentation of this interim report in accordance with IAS 34 and the Annual Accounts Act. Our responsibility is to express a conclusion on this interim report based on our review. Scope of review We conducted our review in accordance with the International Standard on Review Engagements (ISRE) 2410 Review of Interim Financial Information Performed by the Independent Auditor of the Entity. A review of interim financial information consists of making inquiries, primarily to persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review has a different focus and is substantially less in scope than an audit conducted in accordance with International Standards on Auditing and other generally accepted auditing practices. The procedures performed in a review do not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Therefore, the conclusion expressed on the basis of a review does not give the same level of assurance as a conclusion expressed on the basis of an audit. Conclusion Based on our review, nothing has come to our attention that causes us to believe that the interim report is not prepared, in all material respects, for the Group in accordance with IAS 34 and the Annual Accounts Act, and for the Parent Company in accordance with the Annual Accounts Act. Stockholm, 18 October PricewaterhouseCoopers AB Martin Johansson Certified accountant 10
Group s statement of comprehensive income MSEK Q 3 Q 3 Q 1-3 Q 1-3 Full year Last 12 months Net sales 188 198 587 627 814 774 Cost of goods sold -118-116 -361-385 -496-472 Gross profit 70 82 226 242 318 302 Sales costs -48-57 -162-176 -239-225 Administration costs -13-14 -44-41 -57-60 Other operating income and expenses -8 1-16 5-23 -44 Operating profit/loss 1 12 4 30-1 -27 Financial items -2 2-3 3 5-1 Result after financial items -1 14 1 33 4-28 Income tax expense -2-4 -4-8 -10-6 Result for the period -3 10-3 25-6 -34 Other comprehensive income Items that may be reclassified subsequently to profit or loss Cash flow hedges -1-1 4-2 -3 3 Deferred taxes referred to cash flow hedges - - -1 - - -1 Currency exchange rate difference for the year -1 - -3-1 -4-6 Comprehensive income for the period -5 9-3 22-13 -38 Result for the year relates to: Parent company shareholders -5 9-3 22-13 -38 Total result related to Parent shareholders -5 9-3 22-13 -38 Result per share based on net profit attributable to parent company shareholders during the year: -0,02 0,05-0,02 0,13-0,03-0,17 11
Group s balance sheet MSEK Note -09-30 -09-30 -12-31 ASSETS Intangible non-current assets 26 42 22 Tangible non-current assets 59 68 67 Deferred tax receivables 56 58 58 Other non-current receivables 2 1 1 Total non-current assets 143 169 148 Inventories 198 218 218 Accounts receivable 76 88 76 Current tax receivables 18 17 16 Derivatives 2 2 1 0 Other current receivables 7 14 11 Prepaid expense and accrued income 9 13 11 Cash and bank 155 260 277 Total current assets 465 611 609 TOTAL ASSETS 608 780 757 EQUITY AND LIABILITIES Equity 470 632 597 Deferred Tax Liabilities 5 6 5 Provisions 19 25 27 Non-current liabilities 8 12 9 Accounts payable 39 40 50 Current tax liabilities 2 3 1 1 Derivatives 0 3 5 Other current liabilities 6 13 9 Accrued expence and prepaid income 58 48 54 TOTAL EQUITY AND LIABILITIES 608 780 757 12
Group s report on changes in equity MSEK Share capital Additional paid in capital Reserves Total equity attributable to the shareholder Retaind of parent earnings company Balance at 01-01- 0,2-10,4 614,4 625,0 Result for the period - - - 24,6 24,6 Other comprehensive income - - -2,5 - -2,5 Total comprehensive income - - -2,5 24,6 22,1 Dividend to shareholder - - - -15,0-15,0 Balance at 30-09- 0,2-7,9 624,0 632,1 Balance at 01-01- 0,2-10,4 614,4 625,0 Result for the period -5,7-5,7 Other comprehensive income - - -6,8 - -6,8 Total comprehensive income - - -6,8-5,7-12,5 Dividend to shareholder - - - -15,0-15,0 Balance at 31-12- 0,2-3,6 593,7 597,5 Balance at 01-01- 0,2-3,6 593,7 597,5 Result for the period - - - -2,6-2,6 Other comprehensive income - - -0,0 - -0,0 Total comprehensive income - - -0,0-2,6-2,6 Dividend to shareholder - - - -125,0-125,0 Balance at 30-09- 0,2-3,6 466,1 469,9 13
Group s statement on cash flows MSEK Q 3 Q 3 Q 1-3 Q 1-3 OPERATING ACTIVITIES Full year Result after financial items 0 14 2 33 4 Non-cash items, etc. 9 9 25 3 29 Change in provisions 0-1 -9-10 -11 Income tax paid 0 2-4 -6-6 Cash flow from operating activities before change in working capital 9 24 14 20 16 Change in inventories 14 15 23 53 54 Change in current receivables 30 4-6 -3 7 Change in current liabilities -16-17 -14-22 -12 Cash flow from operating activities 37 26 17 48 65 INVESTING ACTIVITIES Acquisitions of intangible non-current assets -3-2 -9-4 -7 Investments in tangible non-current assets -0-0 -1-1 -1 Change in other non-current receivables and investmen -0 - -0 - - Cash flow from investment activities -3-2 -10-5 -8 FINANCING ACTIVITIES Dividend to shareholder - - -125-15 -15 Cash flow from financing activities - - -125-15 -15 CASH FLOW FOR THE PERIOD 34 24-118 28 42 Liquid assets at beginning of the period 124 235 277 230 230 Currency exchange effect in liquid assets -3 1-4 2 5 Liquid assets at end of period 155 260 155 260 277 14
Group key ratios MSEK Q 3 Q 3 Q 1-3 Q 1-3 Full year Last 12 months Gross profit (%) 37% 41% 39% 39% 39% 39% Operating profit/loss (%) 1% 6% 1% 5% 0% -3% EBITDA (MSEK) 5 16 17 42 15-10 Equity 470 632 470 632 597 470 Return on equity (%) - - - - -1% -6% Return on average capital employed (%) - - - - 1% -4% Equity/assets ratio (%) 77% 81% 77% 81% 79% 77% Cash flow from operating activities 37 26 17 48 65 34 Rate of inventory turnover (times) - - - - 2,04 2,27 Definitions Gross margin (%) Operating margin (%) EBITDA Return on equity (%) Average adjusted equity Return on average capital employed (%) Capital employed Equity/assets ratio (%) Cash flow from operating activities Inventory turnover rate (times) Gross profit/loss as a percentage of net sales Operating profit/loss as a percentage of net sales Operating profit/loss before financial income and expense, taxes, write-offs and any write-downs of tangible and intangible fixed assets Profit/loss after tax as a percentage of average adjusted equity Average reported shareholders' equity plus untaxed reserves after deduction for deferred tax at the current rate of tax. Profit/loss after financial items plus financial expenses as a percentage of the average capital employed Total assets less non-interest bearing liabilities and noninterest bearing provisions, including deferred tax liabilities Adjusted equity as a percentage of total assets Result after financial items, adjusted for non cash flow items, changes in provisions, income taxes paid, and changes in working capital Cost of sold inventory divided by average inventory 15
Reconciliation of Group key ratios Return on equity (%) MSEK Kv3 Kv 3 Kv 1-3 Kv 1-3 Helår Senaste 12 månaderna Profit/loss after tax -3 10-3 25-6 -34 Opening equity 474 623 597 625 625 632 Closing equity 470 632 470 632 597 470 Agerage equity 472 628 534 629 611 551 Return on equity - - - - -1% -6% Return on capital employed (%) MSEK Kv3 Kv 3 Kv 1-3 Kv 1-3 Helår Senaste 12 månaderna Profit/loss after financial items -1 14 1 33 4-28 Financial items -3 0-4 -1-1 -4 Opening total assets 629 787 757 802 802 780 Opening provisions 25 30 32 40 40 31 Opening accounts payable and other payables 121 122 119 125 125 105 Closing total assets 608 780 608 780 757 608 Closing provisions 24 31 24 31 32 24 Closing accounts payable and other payables 106 105 106 105 119 106 Average capital employed 480 640 542 641 621 561 Return on capital employed - - 1% -4% Equity/assets ratio (%) MSEK Kv3 Kv 3 Kv 1-3 Kv 1-3 Helår Senaste 12 månaderna Equity 470 632 470 632 597 470 Total assets 608 780 608 780 757 608 Equity/assets ration (%) 77% 81% 77% 81% 79% 77% Inventory turnover rate, times MSEK Kv3 Kv 3 Kv 1-3 Kv 1-3 Helår Senaste 12 månaderna Cost of goods sold -118 116-361 385 496 472 Opening inventory 211 241 218 269 269 218 Closing inventory 198 218 198 218 218 198 Average inventory 205 230 208 244 244 208 Inventory turnover rate - - 2,04 2,27 16
Parent company s income statement MSEK Q 3 Q 3 Q 1-3 Q 1-3 Full year Last 12 months Net sales 127 160 391 484 631 538 Costs of goods sold -80-96 -237-307 -393-323 Gross profit 47 64 154 177 238 215 Sales costs -29-35 -98-109 -146-135 Administration costs -13-14 -44-41 -57-60 Other operating income and expenses -2 5-8 9 14-3 Operating profit/loss 3 20 4 36 49 17 Financial items -6 3 6 3-58 -55 Result after financial items -3 23 10 39-9 -38 Change in untaxed reserves - - - - 2 2 Income tax expense -0-4 -1-8 -11-4 Result for the period -3 19 9 31-18 -40 Comprehensive result for the period -3 19 9 31-18 -40 There are no other items that must be reported in comprehensive income. This means that the profit for the year coincides with this year's total results. 17
Parent company s balance sheet MSEK -09-30 -09-30 -12-31 ASSETS Intangible non-current assets 24 18 19 Tangible non-current assets 13 58 57 Participation in group companies 22 3 22 Deferred tax receivables 49 52 51 Other non-current receivables 1 1 1 Total non-current assets 109 132 150 Inventories 171 179 184 Accounts receivable 39 40 36 Receivables from group companies 121 178 111 Current tax receivables 16 14 10 Other current receivables 1 4 2 Prepaid expense and accrued income 8 7 7 Cash and bank 100 187 198 Total current assets 456 609 548 TOTAL ASSETS 565 741 698 EQUITY AND LIABILITIES Equity 450 616 566 Untaxed reserves 22 24 22 Provisions 16 23 21 Accounts payable 32 32 41 Liabilities to group companies 3 2 1 Other current liabilities 4 6 4 Accrued expence and prepaid income 38 38 43 TOTAL EQUITY AND LIABILITIES 565 741 698 18
Parent company s report on changes in equity MSEK Share capital* Additional paid in capital Reserves Retaind earnings Total equity Balance at 01-01- 0,2 0,0 392,5 207,0 599,7 Result for the period - - - 31,2 31,2 Dividend to shareholder - - - -15,0-15,0 Balance at 30-09- 0,2 0,0 392,5 223,2 615,9 Balance at 01-01- 0,2 0,0 392,5 207,0 599,7 Result for the period - - - -18,3-18,3 Dividend to shareholder - - - -15,0-15,0 Balance at 31-12- 0,2 0,0 392,5 173,7 566,4 Balance at 01-01- 0,2 0,0 392,5 173,7 566,4 Result for the period - - - 8,5 8,5 Dividend to shareholder - - - -125,0-125,0 Balance at 30-09- 0,2 0,0 392,5 57,2 449,9 * Number of shares is 200. 19
Parent company s cash flow statement MSEK OPERATING ACTIVIITES Q 3 Q 3 Q 1-3 Q 1-3 Full year Result after financial items -2 23 10 39-9 Non-cash items, etc 13 3 26 8 66 Change in provisions 0-1 -6-7 -8 Income tax paid 0-4 -6-12 -11 Cash flow from operating activities before change in working capital 11 21 24 28 38 Change in inventories 14 20 12 35 29 Change in current receivables 20-4 14-17 -20 Change in current liabilities -4-17 -11-9 1 Cash flow from operating activities 41 20 39 37 48 INVESTING ACTIVITIES Acquisition of shares in subsidiaries - - - -3-3 Investments in intangible non-current assets -3-2 -9-5 -7 Investments in tangible non-current assets -0 - -1-0 -0 Cash flow from investing activities -3-2 -10-8 -10 FINANCING ACTIVITIES Dividend to shareholder - - -125-15 -15 Cash flow from financing activities - - -125-15 -15 CASH FLOW FOR THE PERIOD 38 18-96 14 23 Liquid assets at beginning of the period 63 168 198 171 171 Currency exchange effect in liquid assets -1 1-2 2 4 Liquid assets at end of period 100 187 100 187 198 20
Notes and accounting principles Note 1 Accounting principles This interim report has been prepared in accordance with the Annual Accounts Act and IAS 34 Interim reporting. The Group s consolidated accounts have been prepared in accordance with the Annual Accounts Act, RFR 2 Supplementary accounting standards for Groups, and International Financial Reporting Standards (IFRS) as adopted by the EU. The Parent company s accounts have been prepared in accordance with RFR 2, Accounting for legal entities and the Annual Accounts Act. The interim report for the parent company has been prepared in accordance with the Annual Accounts Act, Chapter 9, Interim report. The accounting principles applied are the same as applied in the preparation of the latest Annual report, if not otherwise stated below. These have been published on the Company s web site, www.orio.com. New IFRS standards effective from 1 January have not had any significant impact on the Group s financial reports. Orio has evaluated the impacts from the accounting standard IFRS 9, Financial instruments and IFRS 15 Revenue from Contracts with Customers, both of which will be applied from 1 January 2018, and the assessment is that the Group s financial reports will not be significantly affected, other than by increased disclosure requirements. Note 2 Valuation at fair value The Group s financial instruments are recognized at cost, except for derivative financial instruments, which are recognized at fair value. The Group uses various methods to determine the fair value financial instruments depending on the degree of observable market data in the valuation and the activity in the market. The methods are divided in three different levels: Level 1: Unadjusted, quoted price of identical assets and liabilities on an active market Level 2: Adjusted, quoted price or valuation model with valuation parameters derived from an active market Level 3: Valuation model where a majority of valuation parameters are nonobservable and based on internal assumptions. The table below shows the Group's financial instruments valued at fair value on 30 September and 31 December. Financial assets at fair value through profit or loss comprise short term investments which in the Group s and the Parent company s balance sheet are recognized in liquid assets. 21
MSEK -09-30 -12-31 -09-30 -12-31 -09-30 -12-31 Assets Level 1 Level 2 Level 3 Derivative instruments - - 2,0 0,1 - - Financial assets 20,9 99,2 - - - - Total assets 20,9 99,2 2,0 0,1 - - Liabilities Derivative instruments - - 0,3 5,2 - - Total liabilities - - 0,3 5,2 - - 22