AAK (UK) Limited Tax Statement

We regard our tax strategy to be compliant with Paragraph 19 (2) Schedule 19 Finance Act 2016 in terms of content and meeting our responsibility to publish our strategy.

This tax strategy is published by AAK(UK) Limited on behalf of all the UK based companies in the group:

• AAK (UK) Limited
• Book and Claim Limited
• AarhusKarlshamn Hull Limited
• Chambers and Fargus Limited
• Karlshamns UK Holdings plc
• Karlshamns International plc

As a large UK group, which is part of a larger international group listed on the Stockholm Stock Exchange, we recognise the importance of meeting our responsibilities for paying tax and being open and compliant in these responsibilities.

We are committed to a tax strategy that involves paying the correct amount of tax at the right time and maintaining an open dialogue with HMRC. We do not undertake what may be regarded as aggressive tax planning.

The key performance measures of the group are EBIT, cash flow (excluding tax payments) and return on capital employed based on the EBIT figure. The use of these measures by the group as a whole offers no incentive for member companies to compete on tax rates or use aggressive tax planning schemes.

Our overall tax strategy is to:

• Comply with all legislative requirements in relation to tax
• Submit all tax returns and make all tax payments by the due dates
• Pay the correct amount of tax based on the profits earned by the business and not to seek ways to artificially reduce those profits
• Continue to maintain an open, honest and proactive relationship with HMRC
• Have in place risk management and control procedures in relation to tax.

Risk management and governance arrangements

The UK group currently holds a low risk rating with HMRC and we aim to maintain this rating in the future.

We recognise that managing tax compliance is becoming increasingly complex and to enable us to meet our obligations, we have put in place the following arrangements:

• A rolling programme of internal and external audit checks to identify areas of risk and to put in place procedures to minimise such risks.
• The use of external advisers for managing some of the group’s tax compliance procedures.
• The use of advisers with the relevant expertise where specialist advice is required.
• The worldwide group employs a tax manager who is responsible for monitoring effective tax rates. The UK group is expected to pay tax at a rate equal to the standard UK rate and is required to explain any deviations from this rate.
• There is constant dialogue between the group tax manager and the UK group finance staff to ensure that the UK group is complying with its tax filing obligations and managing its tax risk.
• The AAK (UK) Limited Finance Director is responsible for overseeing the tax affairs of the UK group and reporting back to the Board.

Tax planning

Tax is not a key business measure for each company in the group. The group endeavours to comply with tax regulations in each country and accordingly pay the correct amount of tax in each country.

Investment decisions for the group are made by considering the payback before tax. Once an investment decision has been made, if appropriate, the relevant company will then take advice on the tax effect of the transaction with the aim of getting their tax calculation correct and being able to justify any claims that are made.

Attitude towards risk

The UK companies and the international group wish to maintain a low risk profile in the countries in which they operate. We have no desire to undertake any transactions which would put this position in jeopardy.

The Board sees compliance with tax legislation and openness with HMRC as key to managing our tax risk.

We have relationships with professional advisers that allow us to seek expert advice on specialist areas of tax or where we undertake any transactions which are outside the norm. Our approach is to ensure we are compliant, have good internal procedures in place, understand our responsibilities with regards to tax and to pay the correct amount of tax on time.

Relationship with HM Revenue & Customs (HMRC)

HMRC has appointed a Customer Compliance Manager (CCM) to liaise with the UK group. We aim to be honest and open with our CCM and to be proactive in making them aware of any significant investments or changes within the UK group. We seek to be in a position where any potentially contentious issues have been discussed and agreed before the relevant tax filing is submitted. If there were any problems with our tax submissions, we would be keen to identify these and reach a resolution with HMRC as quickly as possible.

To help maintain a good relationship with HMRC we ensure that our tax returns are submitted and tax paid on time and that our staff make themselves available for meetings with our CCM as requested.

We employ the services of professional tax advisers to act as our agents, and in a number of cases they liaise with HMRC on our behalf.