Offentliggorelse

INGKA HOLDING B.V.
Annual report for financial year 2016
This report was approved at the Shareholder's Annual

General Meeting held on Tuesday 29 November 2016.
Ingka Holding B.V. Annual report for financial year 2016
Table of contents
REPORT FROM THE BOARD OF MANAGING DIRECTORS ................................................... 3
Financial Statements
CONSOLIDATED BALANCE SHEET before profit appropriation ......................................... 11
CONSOLIDATED INCOME STATEMENT ......................................................................... 12
CONSOLIDATED STATEMENT OF CASH FLOWS ............................................................. 13
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS .................................................... 14
COMPANY BALANCE SHEET before profit appropriation .................................................. 47
COMPANY INCOME STATEMENT.................................................................................. 48
NOTES TO COMPANY FINANCIAL STATEMENTS ............................................................ 49
Other information
NET INCOME APPROPRIATION ................................................................................... 56
SUBSEQUENT EVENTS .............................................................................................. 56
INDEPENDENT AUDITOR’S REPORT............................................................................. 57
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REPORT FROM THE BOARD OF MANAGING DIRECTORS

(in millions of EUR, unless otherwise indicated)
Corporate information
Ingka Holding B.V. (‘the Company’), Bargelaan 20, 2333 CT Leiden, is the ultimate parent
company of the IKEA Group of companies (‘IKEA Group’). IKEA Group’s financial year covering
the 12 month period ending August 31 2016 is referred to as ‘2016’ and the comparable year is
referred to as ‘2015’.
The IKEA vision is to provide a better everyday life for the many people. As per financial year-
end 2016, the operation of the IKEA Group is based on three main areas: Retail, Customer
Fulfilment and IKEA Centres. Retail owns and operates 340 stores in 28 countries. Customer
Fulfilment owns and operates the distribution centers and supports the retail business with
distribution services, retail logistics and other services such as home delivery and installation
services. IKEA Centres owns, develops and operates shopping centres in connection with IKEA
Retail stores.
At August 31, 2016 IKEA Group sold its product development, supply chain and production
companies (‘the Transaction’) to the Inter IKEA Group of companies with its ultimate parent Inter
IKEA Holding B.V. (‘Inter IKEA Group’).
Key figures:
2016 2015
Revenue (in EUR million) 35,074 32,658
Personnel (average number) 166,985 156,233
Total number of stores 340 328
Countries with IKEA stores owned by the Company 28 28
Review of the year
Our performance
For 2016, IKEA Group’s total sales of goods amounted to EUR 34.2 billion. Total sales of goods
translated into Euro increased by 7.1% and adjusted for currency impact, sales increased by
7.9%. Sales in comparable stores grew by 4.8% compared to 2015.
Together with the rental income of 0.9 billion from IKEA Centres, our total revenue amounted to
EUR 35.1 billion — an increase of 7.4% compared to 2015. Rental income increased with 18.0%
compared to 2015.
The year 2016 was a good year with 783 million visits to our stores, 2.1 billion visits to IKEA.com
and 425 million visits to our shopping centres. In all of our meetings with the customers, we want
to provide good quality products and inspiration for creating beautiful homes. Last year’s focus
on the theme “It starts with the Food”, covering kitchen, cooking, dining, eating, and the food-
business, was a strong success and appreciated by the customers.
On a journey to become the world’s leading multichannel home furnishing retailer, we are
increasing our focus on integrating physical and digital commerce to enable customers to shop
and interact with us in ways that suit their needs. In 2016 we offered e-commerce in 14 out of
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28 countries and related sales grew by 29% to EUR 1.4 billion. We plan to roll out e-commerce
to all our markets in the coming years.
The gross margin increased with 1.9% points to 46.1% with positive purchase price developments
throughout the year and a one-off effect from the Transaction contributing to the higher gross
margin.
Operating expenses as a percentage of revenues increased by 1.4% points to 33.2%. The

acquisitions of IKEA Centres in the course of 2015 and increased expenses on business
development contributed to this higher cost percentage in 2016.
Our financial net result of EUR 0.9 billion includes a gain on the Transaction of EUR 0.7 billion.
The net financial result excluding the Transaction of 0.2 billion was below 2015, due to a very
positive result on currency instruments in the comparable year. We did not incur any significant
credit losses on our securities portfolio, which increased by EUR 6.6 billion to EUR 21.9 billion
during 2016.
Corporate taxes incurred in 2016 amounted to EUR 1.2 billion which means an effective tax rate
of 21.6% (2015: 18.9%).
This resulted in a net profit of EUR 4.2 billion, an increase of 19.6% compared to 2015. Excluding
the Transaction the net profit remains stable at EUR 3.5 billion.
Total assets increased during the year to EUR 54.0 billion from EUR 50.0 billion while we further
increased our solvency to 38.9 billion of equity at year-end. Based on available liquidity,
significant increase of external financing is not expected in the coming years.
Our markets
In 2016, our sales grew in 27 out of 28 markets with China remaining one of the fastest growing
countries for IKEA Group together with Canada, Poland and Australia. The five largest retail
markets based on sales value were Germany, USA, France, the UK and Sweden.
We opened 12 new stores, and 19 pick up and order points during 2016 and further developed
the multichannel distribution network to increase accessibility for our customers. In addition, we
continued working on opening our first stores in India and Serbia.
Our investments
During 2016, the IKEA Group made capital expenditures of EUR 3.2 billion in stores,
distribution, shopping centres, factories and renewable energy.
Sale of product development, supply chain and production companies

In May 2015, IKEA Group signed a letter of intent to sell its product development, supply chain
and production companies, being IKEA of Sweden AB, IKEA Supply AG and IKEA Industry Holding
B.V. and other connected companies to Inter IKEA Group. As part of the Transaction, IKEA Group
improved its franchisee position in its markets including e-commerce. This Transaction was
completed on 31 August 2016 and the transfer of ownership was made through sale of shares.
IKEA Group and Inter IKEA Group are two independent groups of companies with separate
management and owners operating under a franchise system established in the 1980s. IKEA
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Group is the largest franchisee with around 90 percent of the total IKEA franchisee sales. IKEA
Group operates and owns 340 stores in 28 countries. Inter IKEA Group is franchisor and owner
of the IKEA brand and concept.
Historically, the product development and supply chain companies were owned and operated by
IKEA Group under a non-exclusive assignment from Inter IKEA Group.
Early 2015, Inter IKEA Group informed IKEA Group of its intention to operate the product
development and supply chain activities within the Inter IKEA Group. This led to discussions
between the parties to sell the relevant IKEA Group companies.
In May 2016, IKEA Group signed a Share Purchase Agreement to sell the companies executing
the assignments for product development and supply chain and in addition its production
companies. IKEA Group’s production companies were included in the Transaction as production is
closely linked to the supply chain and product development.
As a result of the Transaction, some 26,000 co-workers became part of the Inter IKEA Group.
The co-workers will continue to be employed by their current companies. The estimated
consideration in cash for the Transaction is EUR 5.2 billion. The gain on the Transaction of EUR 0.7
billion is reported as financial income in the consolidated income statement 2016.
Following the Transaction, the IKEA Franchise system provides a stronger platform for long-term
growth where IKEA Group will take an even stronger focus on the customer and on development
of multichannel retailing and distribution.
People and planet positive

Corporate social responsibility is strongly anchored within the strategy of IKEA Group and forms
an integrated part of our business. Sustainability is one of the strategic cornerstones in the IKEA
Group direction – Growing IKEA Together 2020+. Our sustainability strategy, People & Planet
Positive, sets out how we are working to make a positive difference for people and the
environment.
The strategy focuses on three areas where we can have the most positive impact:
• Inspire and enable millions of customers to live a more sustainable life at home.
• Strive for resource and energy independence.
• Take a lead in creating a better life for the people and communities impacted by our
business.
We report on how we progress towards our goals annually in the IKEA Group Sustainability Report,
publicly available on IKEA.com.
Reflecting the many people

The IKEA Group works actively with diversity at all levels of our business including when
identifying and selecting members to boards of managing and supervisory directors. We want our
values and strategy to be reflected in the composition of the boards – from our inclusion and
diversity approach to the combined experience and expertise of its members. In 2016, three out
of nine board members were female and we comply with the requirements as stated in Article 276
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of Book 2 of the Netherlands Civil Code. In total, almost half of all our managers are women and
around 40% of our top 200 managers are women.
Research and development

During the financial year IKEA Group performed certain research and development activities and
investments in material and production technology, product development, distribution, sales and
digital development. Following the Transaction, research and development activities within IKEA
Group will be focused on multichannel retailing including development of the meeting with the
customer, distribution and digital technology.
Risk management
A solid approach to risk management

At IKEA Group, a structured and consistent approach to managing risks is key to achieving our
objectives. The goal of risk management and compliance within IKEA Group is to protect our
people, assets and the IKEA brand today and in the future. To do so, we enable risk-aware,
opportunity-focused and compliance-conscious decision-making. We have developed a
comprehensive risk management framework, which includes a risk management process currently
being introduced to the IKEA Group units.
Our company risk management approach provides senior management with insight into our key
business risks and risk management practices in the organisation. The IKEA Group risks are
periodically reviewed and consolidated into a Group risk register that is validated by the Risk
Management Committee (a committee of Group Management), discussed with the Audit
Committee of the Supervisory Board, and presented to the Supervisory Board. Representatives
of the business sitting in this Risk Management Committee decide every year on areas to focus
on (Goods Handling and Information Security in 2016). Business leaders are responsible for the
design and the implementation of the risk treatment plans.
Besides the risk management approach being designed to anticipate risks, reduce their likelihood
and mitigate their impact should they materialize, we use additional means of risk reduction, like
an internal control & compliance framework, crisis management and insurance.
 IKEA Group relies on strong values and a culture that promotes the responsibility of
everyone to do the right thing. This is summarised in our Code of Conduct. In addition,
special efforts have been put in 2016 on compliance by defining and rolling out internal
control principles and designing an internal control process. Efficient internal control
activities in domains such as food safety, sustainability, property and accounting are key
success factors to risk mitigation. These efforts will continue in 2017.
 We rely on a robust and well-deployed crisis management approach, also called Emergency
Response Handling. This ensures that risk impacts are minimised at unit, country and
Group level in all instances of crisis.
 IKEA Group has several global insurance programs aiming to reduce the financial impact
of claims, damages or third-party compensation. The insurance covers are constantly
reviewed in line with IKEA Group’s need for risk transfers.
Improvements to the risk management approach

Recognising the increased needs to support a growing business and the higher expectations of
external stakeholders, a roadmap for risk management/compliance/internal audit (RCA) has been
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developed in 2016. The purpose is to secure the implementation of risk management and
compliance initiatives before 2020 to reach the wished maturity level of RCA capabilities. The
initiatives listed in this roadmap have been agreed with and are supported by business
stakeholders. They will progressively strengthen our existing risk management and compliance
practices.
In line with our strategic objectives and in respect of our values, IKEA Group pursues opportunities
which inherently include some risks. We commit to take those risks in a responsible and compliant
way. We have launched a key initiative in 2016 to further develop our risk appetite approach i.e.
our acceptance of risks. The purpose is to improve clarity and alignment in terms of
acceptance/tolerance to risks in all organisational units.
Some risk appetite statements are expressed in our Code of Conduct (for example, it stipulates
zero tolerance for corruption). Policies, standards, rules as well as manuals and standard
operating procedures further support the mitigation of risks.
In 2017, the relaunch of an Internal Audit function at Group level (under the joint responsibility
of the Audit Committee and the Chief Risk Officer) will also contribute to better risk management,
as the internal audit plan will be aligned with the IKEA Group risks.
Main risks potentially impacting IKEA Group

A large number of strategic, operational, legal and financial risks may, to some extent, negatively
impact the achievement of the long-term objectives of IKEA Group. However, most of them will
not have any material impact on those goals given the size and resilience of our company. The
main risks that we face are described below. Measures are taken to reduce their likelihood and
their impact to an acceptable level in line with our risk appetite.
Information security
Breach of confidentiality could harm customers or co-workers or give unfair advantages to our
competitors. IKEA Group continuously invests into implementing relevant industry standards and
to comply with regulations and legislations to lower the risk of damages to our stakeholders. In
case the risk materialises, we expect costs of internal damages, potential costs of compensation
and possible fines. We have a low appetite for this risk, therefore we support both Information
Management and Information Security initiatives aiming at implementing an updated governance
and securing sensitive information. It covers the aspects of confidentiality, integrity, and
availability, as well as relevance of information.
Legal and regulatory environment

A changing legislative and regulatory environment in the different countries where we operate
can increase the cost of doing business and the complexity of our operations. Changes may also
create risks of non-compliance. IKEA Group co-workers with relevant specialist competence
permanently monitor the legal and regulatory environment in order to ensure compliance, to
identify business opportunities offered by these changes and to optimise their impact on our ways
of doing business. In addition, IKEA Group strives towards continuous improvement through
frameworks and governance. We have a very low risk appetite and continuously strive for full
compliance to applicable laws and regulations, while fully recognising that we operate in a
changing environment.
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Supply chain volatility

Disruption in the supply chain due to geopolitical events, terrorist acts or natural catastrophes
could harm product availability in the stores for our customers given our reliance on relatively
few suppliers. This is an operational risk that IKEA Group has handled for many years and for
which we had a medium risk appetite Supply routines deal with safety stocks, back-up suppliers
and other ways to mitigate the issues caused by supply chain volatility. Following the Transaction,
we work closely with Inter IKEA Group to manage this risk.
Product and food safety

All our products should be always safe to prevent any injury or illness caused to customers or
users of our products. In 2016, IKEA Group had clear processes and procedures in place to
guarantee product quality and compliance with product requirements in all our markets, as we
have a very low risk appetite for such events. We permanently strive for compliance with laws
and regulations applicable to the products in our range. Despite these procedures and although
we have risk mitigation actions in place, IKEA Group may face product safety issues, which may
have financial costs due to liability claims and to potential disruptions to the supply chain. It could
lead to reputational damage and negative customer and media reactions, locally or on global
level. This may have a material adverse effect on the reputation of the IKEA brand, on IKEA Group
operations and financial position. Following the Transaction, we work closely with Inter IKEA
Group to manage this risk.
Safety & Security

In a similar pattern as for product safety, failing to guarantee a safe environment and a secure
shopping experience for our customers could harm the IKEA brand, for example in case of accident
related to the handling of our goods in the stores. IKEA Group invests in and maintains a high-
level of co-worker training, safety and security measures and insurance to prevent or mitigate
such a risk as we have a very low risk appetite for this.
Brand reputation
More generally, any unfavourable media coverage, accurate or not, may have a negative impact
on brand reputation, at a local, national or international level. This may be allegations of different
nature, from diverse sources and through a variety of media including social media. We work and
operate in this environment of high media attention and volatile public opinion. We have a low
risk appetite for anything that can have a negative impact on the IKEA brand in the long term.
Therefore, we take all the necessary steps to ensure full compliance with laws and regulations,
to be positively perceived and positioned in the hearts and minds of our customers and key
stakeholders through a proactive public relations policy. Crisis management routines handle the
necessary reactive activities in case of negative media reports.
Geopolitical risks
IKEA Group is present as a retailer, in 28 countries and is sourcing products, from a large number
of other countries. Therefore unexpected geopolitical events or changes in the economic outlook
of such countries could have an impact on the turnover or the profitability of the company.
Regulatory changes could as wel affect our ability to do business in some countries. We aim to
anticipate all such changes to mitigate those risks and keep their impact to a minimum.
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Financial risks
Currency volatility, credit risks and tax risks exists at IKEA Group. We have a low risk appetite in
this area, and we believe these risks are well monitored and handled. Refer to note 21 of the
financial statements for more information on financial risk management.
Organisational changes
Due to the Transaction with Inter IKEA Group on August 31, 2016, there is a short term risk of
disruption in ways of working as a significant change in the organisation will enable us to achieve
the opportunities of this new set-up. This risk is kept to a minimum by monitoring of all relevant
risks by each stakeholder in the Transaction, under the coordination of a Project Management
Office. IKEA Group has a shared responsibility with the Inter IKEA Group to contribute to
optimisation of the overall value chain in certain areas. IKEA Group has a low risk appetite for
inefficiencies in the value chain and works closely in certain areas with Inter IKEA Group in order
to keep fulfilling our mission to create a better everyday life for the many people.
Outlook for financial year 2017

We project continued growth through existing stores, e-commerce, shopping centres and
expansion in 2017. With the customer and co-worker in focus, we will accelerate our journey to
become the world’s leading multichannel home furnishing retailer through investments in our co-
workers, digital technology and in our stores, distribution network and shopping centres.
For 2017, we plan for capital expenditures for an amount of EUR 4.1 billion. This includes
investments in stores, distribution and shopping centres as well as wind farms, solar power
sources and forestry. The principles to secure long-term sustainable growth; earning our money
before we spend it, being innovative, cost-conscious and customer focused will remain
unchanged.
BOARD OF MANAGING DIRECTORS
Leiden, November 29, 2016
P. Agnefjäll (Chairman)
A. Davidson
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CONSOLIDATED BALANCE SHEET before profit appropriation

August 31
ASSETS
(in millions of EUR) 2016 2015
Fixed assets
Tangible fixed assets (4) 23,033 22,840
Intangible fixed assets (5) 1,144 1,215
Financial fixed assets (6) 811 1,300
Total fixed assets 24,988 25,355
Current assets
Inventories (7) 1,713 5,498
Receivables (8) 4,115 2,500
Securities (9) 21,878 15,278
Cash and short-term deposits (10) 1,273 1,381
Total current assets 28,979 24,657
TOTAL ASSETS 53,967 50,012
(See accompanying notes)
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CONSOLIDATED BALANCE SHEET before profit appropriation

August 31
GROUP EQUITY AND LIABILITIES
Group equity
Capital Stock 1 1
Additional paid-in capital 51 51
Revaluation reserves 364 464
Other legal reserves 424 386
Other reserves 33,821 30,435
Result for the year 4,200 3,512
Total shareholder’s equity (11) 38,861 34,849
Minority interest 46 47
Total Group equity 38,907 34,896
Provisions (12) 1,908 1,971
Non-current liabilities (14) 1,385 2,061
Current liabilities (15) 11,767 11,084
GROUP EQUITY AND LIABILITIES 53,967 50,012
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CONSOLIDATED INCOME STATEMENT

Year ended August 31
Sale of goods 34,191 31,910

Rental income 883 748
Revenue (16) 35,074 32,658
Cost of sales (17) (18,918) (18,221)

Gross profit 16,156 14,437
Other income 370 411

Selling expenses (7,347) (6,699)
General and administrative expenses (4,617) (3,998)
Other expenses (63) (102)
Total operating expenses (17) (11,657) (10,388)
Operating income 4,499 4,049
Total financial income and expense (18) 869 299
Income before income taxes and 5,368 4,348

minority interests
Income taxes (19) (1,158) (822)
Income before minority interests 4,210 3,526
Minority interests (10) (14)
Net income 4,200 3,512
CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND

EXPENSE
2016 2015

Translation differences foreign activities (15) 8
Addition to hedging reserve (15) 38
Remeasurements IAS 19 (83) 52
Realisation through income statement (75) (41)
Total recognised income and expense 4,012 3,569
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CONSOLIDATED STATEMENT OF CASH FLOWS


Cash flow from operating activities
Operating income 4,499 4,049
Adjustments for:
Depreciation and amortisation 1,536 1,332
Impairments of fixed assets (43) 16
Movements in provisions 140 (320)
Revaluations of financial instruments (118) (158)
Gains and losses on disposal of fixed assets 12 16
Movements in minority interest (11) (8)
Adjustments in working capital:
Decrease/(Increase) in inventories (166) (565)
Decrease/(Increase) in debtors 157 (33)
Decrease/(Increase) in other receivables 8 (169)
(Decrease)/ Increase in current liabilities 230 491
Net cash provided by operations 6,244 4,651
Interest received 285 339
Interest paid (355) (355)
Other financial items received/(paid) 12 (39)
Taxation paid (1,193) (499)
Net cash provided by operating activities 4,993 4,097
Cash flow from investing activities
Additions tangible fixed assets (2,767) (1,987)
Disposals tangible fixed assets 110 156
Additions intangible fixed assets (48) (109)
Disposals intangible fixed assets 6 -
Additions financial fixed assets (16) (12)
Disposals financial fixed assets 92 147
Proceeds from repayment of loans receivable 288 -
Issue of loans receivable (325) (446)
Acquisition of subsidiary (51) (947)
Divestment of subsidiaries (note 23) 4,335 -
Net cash provided by (used in) 1,624 (3,198)
investing activities
Cash flow from financing activities
Proceeds from short and long term loans payable 308 565
Repayment of short and long term loans payable (671) (1,546)
Dividends paid - (666)
Net cash used in financing activities (363) (1,647)
Exchange gain/(loss) 238 521
Increase/(decrease) cash and cash equivalents 6,492 (227)
Cash and cash equivalents at beginning 16,659 16,886

Cash and cash equivalents at end 23,151 16,659
Net movement in cash and cash equivalents 6,492 (227)
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(all amounts in EUR million)
1. CORPORATE INFORMATION
Ingka Holding B.V. (‘the Company’), Bargelaan 20, 2333 CT Leiden, is the ultimate parent
company of the IKEA Group of companies (‘IKEA Group’). The Company was incorporated on July
14, 1982 and is a wholly-owned subsidiary of Stichting Ingka Foundation, registered in
Amsterdam, the Netherlands. IKEA Group’s financial year covering the 12 month period ending
August 31 2016 is referred to as ‘2016’ and the comparable year is referred to as ‘2015’.
The vision of IKEA Group is to provide a better everyday life for the many people. As per financial
year-end 2016, the operation of the IKEA Group is based on three areas: Retail, Customer
Fulfilment and IKEA Centres. Customer Fulfilment supports the retail business with distribution
services, retail logistics and other services such as home delivery and installation services. IKEA
Centres develops and operates shopping centres in connection with IKEA Retail stores.
Ingka Holding B.V. has, through its subsidiaries, franchise agreements with Inter IKEA Systems
B.V., the company owning the IKEA brand and concept. Inter IKEA Systems B.V. is part of the
Inter IKEA Group of companies with its ultimate parent Inter IKEA Holding B.V. (‘Inter IKEA
Group’).
At August 31, 2016 IKEA Group sold its product development, supply chain and production
companies (‘the Transaction’) to Inter IKEA Group.
2. BASIS OF PREPARATION
Both the company financial statements and the consolidated financial statements have been
prepared in accordance with Part 9 of Book 2 of the Netherlands Civil Code. The financial
statements were prepared on November 30, 2016.
The consolidated financial statements of the Company are presented in euro (EUR) and are
prepared on a historical cost basis, except for the valuation of certain financial instruments that,
subsequent to initial recognition at cost, are remeasured to fair value, in accordance with Dutch
generally accepted accounting principles (Dutch GAAP).
The management of the Group makes various judgements and estimates, when applying the
accounting policies and rules for preparing the financial statements. The principal judgements
and estimates, including underlying assumptions relate to the useful life of fixed assets,
provisions, impairments and recoverability of deferred tax assets.
3. SIGNIFICANT ACCOUNTING POLICIES
Basis of consolidation
The consolidated financial statements include the financial data of the Company and its group
companies at August 31 of the year under review. Group companies are legal entities and companies
over which the Company exercises control. In connection with this, financial instruments containing
potential voting rights that can be exercised immediately are also taken into account.
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The consolidated financial statements include the accounts of the Company and its participating
interests over which management control is exercised. Group companies are fully consolidated as
from the date on which control is obtained and until the date that control no longer exists. The items
in the consolidated financial statements are determined in accordance with consistent accounting
policies. All significant intercompany balances, transactions and profits are eliminated.
Minority interests represent the portion of profit or loss and net assets not held by the Group and
are stated separately in the consolidated financial statements.
Joint ventures
Joint ventures are activities in which the Group has a joint controlling influence over the
operational and financial management through collaborative agreement with one or more parties.
In the consolidated accounts, joint ventures are accounted for on a net asset value basis.
Mergers, acquisitions and divestments

Acquisitions are accounted for using the purchase method. This means that any assets and
liabilities acquired are carried at fair value as at the acquisition date. The difference between cost
and the Company’s share of the fair value of the identifiable assets and liabilities acquired at the
time of the transaction of a participating interest is recognised as goodwill. In the event of a
common control transaction it is accounted for using the pooling of interest method. In the event
of a sale, the difference between the consideration and the carrying amount is recorded in
financial income and expense. The value of the consideration is subject to judgemental factors,
including potential provisions and indemnifications included in the sale and purchase agreement.
Translation of foreign currencies

The consolidated financial statements are prepared in euro, the functional and presentation
currency of the Company. Each entity in the Group determines its own functional currency and
items included in the financial statements of each entity are measured using that functional
currency.
Transactions denominated in foreign currencies are initially carried at the functional exchange
rates ruling at the date of transaction. Monetary balance sheet items denominated in foreign
currencies are translated at the functional exchange rates ruling at the balance sheet date. Non-
monetary balance sheet items that are measured at historical cost in a foreign currency are
translated at the functional exchange rates ruling at the date of transaction. Non-monetary
balance sheet items that are measured at current value are translated at the functional exchange
rates ruling at the date of valuation.
Exchange differences arising on the settlement or translation of monetary items denominated in

foreign currencies are taken to the income statement, with the exception of exchange differences
resulting from net investments in foreign activities, or from loans taken out to finance or
effectively hedge net investments in foreign activities. These exchange differences are taken
directly to the foreign currency translation reserve.
Exchange differences arising on the translation of non-monetary balance sheet items

denominated in foreign currencies that are carried at current value are taken directly to the
revaluation reserve, provided the changes in value of the non-monetary items are likewise taken
directly to reserves. Goodwill and fair value adjustments to the carrying amounts of assets and
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liabilities arising on the acquisition of a foreign activity are treated as assets and liabilities of the
foreign activity and translated at the rate of exchange ruling at the balance sheet date.
The assets and liabilities of foreign activities are translated into the Group’s presentation currency
at the rate of exchange ruling at the balance sheet date and the income and expenses of these
foreign activities are translated at the average rate of exchange for the year. Resulting exchange
differences are taken directly to the foreign currency translation reserve. On the disposal of a
foreign activity, the cumulative exchange differences, taken directly to the reserves, are taken to
the income statement as part of the gain or loss on the sale. In case of a partial disposal of a
foreign activity with no change in control, the proportionate cumulative exchange difference will
not be reclassified to the income statement.
Offsetting
Assets and liabilities are only offset in the financial statements, if and to the extent that:
 an enforceable legal right exists to offset the assets and liabilities and settle them
simultaneously; and
 the positive intention is to settle the assets and liabilities on a net basis or simultaneously.
Tangible fixed assets

Tangible fixed assets (both assets in use by the Company and investment properties) are carried
at the cost of acquisition or production (less any investment grants) net of accumulated
depreciation and accumulated impairment losses. Costs of major maintenance are recognised
under cost when incurred and if the recognition criteria are met. The carrying amount of the
components to be replaced will be regarded as a disposal and taken directly to the income
statement. All other repair and maintenance costs are taken directly to the income statement.
Depreciation is calculated on a straight-line basis over their expected useful economic lives, taking
into account their residual value. Changes in the expected depreciation method, useful life and/or
residual value over time are treated as changes in accounting estimates.
The costs of dismantling, removing and restoring after the use of an asset are recognised as part
of the carrying amount of the asset, with a provision being formed for an equal amount at the
same time.
Retired tangible fixed assets are carried at the lower of cost and their fair value less costs. If the
expected fair value less costs is significantly higher than the carrying amount, with the assets
being held for sale, an incidental revaluation is carried out and taken to the revaluation reserve.
The revaluation is recognised as a separate item in the income statement account when the
increase in value is realised.
A tangible fixed asset is derecognised upon sale or when no further economic benefits are
expected from its continued use or sale.
Intangible fixed assets

An intangible fixed asset is recognised in the balance sheet if:
 it is probable that the future economic benefits that are attributable to the asset will accrue
to the company; and
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 the cost of the asset can be reliably measured.
Costs relating to intangible fixed assets not meeting the criteria for capitalisation (for example,
cost of research, internally developed brands, logos, trademark rights and client databases) are
taken directly to the income statement account.
Intangible fixed assets are carried at the lower of cost of acquisition or production net of
accumulated amortisation and their recoverable amount (being the higher of value in use and fair
value less costs to sell). Intangible fixed assets, except for land lease rights, are amortised on a
straight-line basis over their expected useful economic lives, subject to a maximum of 20 years.
The land lease rights are amortised over the contractually agreed period. If the estimated useful
life exceeds 20 years, an impairment test is performed at each financial year-end.
Development costs
Development costs are capitalised if they satisfy the technical, commercial and financial feasibility
criteria set for them. Currently development costs do not meet the criteria specified.
Research and development expenditures primarily relate to product development costs and are
presented as general and administrative expenses in the income statement.
Goodwill
Goodwill represents the difference between the cost of a business combination and the fair value
at the transaction date of the acquired equity value of the company. Goodwill is capitalised and
amortised over its expected useful life.
Land lease rights

Land lease rights recognised as an intangible fixed asset relates to an ownership of a temporary
right to lease land, which has been paid in advance.
Impairment of fixed assets

The Group assesses, at each reporting date, whether there is an indication that an asset may be
impaired. If any indication exists, the Group estimates the asset’s recoverable amount.
An asset’s recoverable amount is the higher of an asset’s or cash-generating unit’s (CGU) fair
value less costs to sell and its value in use. When the carrying amount of an asset or CGU exceeds
its recoverable amount, the asset is considered impaired and is written down to its recoverable
amount. The impairment loss is recognised in the income statement under other expenses.
In assessing the value in use, the estimated future cash flows are discounted to their present
value using a market based pre-tax discount rate. In determining fair value less cost to sell,
recent market transactions are taken into account. If no such transactions can be identified, an
appropriate valuation model is used.
An assessment is made at each reporting date to determine whether there is an indication that
previously recognised impairment losses no longer exist or have decreased. If such indication
exists, the Group estimates the asset’s or CGU’s recoverable amount. A previously recognised
impairment loss is reversed only if there has been a change in the assumptions used to determine
the asset’s recoverable amount since the last impairment loss was recognised. The reversal is
limited so that the carrying amount of the asset does not exceed its recoverable amount, nor the
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carrying amount that would have been determined, net of depreciation, if no impairment loss had
been recognised in prior years. Such reversal is recognised in the income statement.
Financial fixed assets

All financial assets are recognised initially at fair value plus transaction costs, except in the case
of financial assets recorded at fair value through the income statement.
The Company has the following subcategories for financial fixed assets:
1. Investment in participating interests

Participating interests over which financial and operating policies the Company exercises
significant influence are valued using the equity method. Under this method, participating
interests are carried at the Company’s share of their net asset value plus its share in the results
of the participating interests from the acquisition date, determined in accordance with the
accounting policies disclosed in these financial statements. The Company’s share in the results of
the participating interests is recognised in the income statement. If and to the extent the
distribution of profits is subject to restrictions, these are included in a legal reserve.
2. Other financial fixed assets
a) Long-term loan receivable

Loans granted and other receivables are financial assets with fixed or determinable payments
that are not quoted in an active market. After initial recognition, these loans and receivables are
carried at amortised cost based on the effective interest rate method.
Gains and losses are taken to the income statement, when the receivables are transferred to a
third party or impaired.
b) Investments in equity instruments

Investments in listed equity instruments are carried at fair value. Gains and losses arising from
the change in fair value are recorded in the income statement.
Investments in unlisted equity instruments, not forming part of a trading portfolio, are carried at
cost. Gains and losses are taken to the income statement, when the investments are transferred
to a third party or impaired. Dividends received are taken to the income statement.
Fair value
The fair value of the financial instruments is determined using available market information or
estimation methods. Under these estimating methods, the fair value is estimated:
 on the basis of the fair value of its components or a similar instrument if the fair value of
its components or similar instruments can be reliably measured; or
 by using generally accepted valuation models and techniques.
Amortised cost
Amortised cost is calculated using the effective interest rate method less any reductions for
impairment or uncollectibility. The calculation takes into account any discounts as well as
transaction cost at the transaction date.
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Impairment of financial fixed assets

For all categories of financial assets carried at amortised cost, the Company assesses at each
balance sheet date whether that asset or group of financial assets is impaired. Only if there is an
objective evidence of impairment the impairment loss will be recorded in the income statement.
Inventories
Inventories mainly comprise finished products and are carried at the lower of cost (first-in, first-
out basis) or net realisable value, net of a provision for obsolescence. Net realisable value is based
on estimated selling price, less further costs expected to be incurred for completion and disposal.
Receivables
Receivables are short-term in nature, initially measured at fair value and subsequently at
amortised costs (except for derivatives) less allowance for uncollectible amounts. The recognition
and measurement of derivatives are discussed in the section ‘Derivatives and hedge accounting’.
Securities
Following initial measurement, securities are carried at fair value without deduction of any
transaction costs on sale. Gains and losses arising from changes in the fair value are taken to the
income statement.
Cash at bank and in hand

Cash and cash equivalents are carried at their face value.
Provisions
A provision is formed for liabilities if it is probable that they will have to be settled and the amount
of the liability can be reliably estimated. The amount of the provision is determined based on a
best estimate of the amounts required to settle the liabilities and losses concerned at the balance
sheet date. Provisions are carried at non-discounted value, with the exception of:
 the provision for pensions which is carried at discounted value; and
 provisions for other employee benefits carried at discounted value if the effect of the time
value is material.
If expenses required to settle a provision are probable to be reimbursed by a third party, the
reimbursement is recognised as a separate asset.
Pensions and other post-employment benefits

The Company operates a number of pension plans, which have been established in accordance
with the regulations and practices of the individual countries. The plans include both defined
contribution plans and defined benefit plans. The Company applies IAS 19 to all post-employment
benefits.
Defined contribution plans

The contributions related to defined contribution plans are charged to the income statement in
the period to which these contributions relate.
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Defined benefit plans

The net obligations of defined benefit plans are determined as the difference between the benefit
obligations and the plan assets. Defined benefit plan pension commitments are calculated in
accordance with the projected unit credit method of actuarial cost allocation. Under this method,
the present value of pension commitments is determined on the basis of the number of active
years of service up to the balance sheet date and the estimated employee salary at the time of
the expected retirement date, and is discounted using the market rate of interest on high-quality
corporate bonds with lifetimes that corresponds to the Group’s pension obligations. The net
obligation comprises the discounted present value of the total earned future salaries less the fair
value of any plan assets.
Remeasurements, comprising of actuarial gains and losses, the effect of the asset ceiling,
excluding any changes recorded as net interest and the return on plan assets (excluding net
interest), are recognised immediately in the balance sheet and equity (retained earnings).
Remeasurements are not reclassified to the income statement in subsequent periods.
Past service costs are recognised in the income statement on the earlier of:
 The date of the plan amendment or curtailment; and
 The date that the Group recognises restructuring-related costs.
Net interest is calculated by applying the discount rate to the net defined benefit liability or asset.
The Group recognises the following changes in the net defined benefit obligation under ‘general
and administrative expenses’ in the consolidated income statement:
 Service costs comprising current service costs, past-service costs, gains and losses on
curtailments and non-routine settlements.
 Net interest expense or income.
Income taxes
Deferred tax liabilities and deferred tax assets are carried on the basis of the tax consequences
of the realisation or settlement of assets, provisions, liabilities or accruals and deferred income
as planned by the Company at the balance sheet date. Deferred tax liabilities and deferred tax
assets are carried at non-discounted value.
A deferred tax liability is recognised for all taxable temporary differences. A deferred tax asset is
recognised for all deductible temporary differences and carry-forward losses, to the extent that it
is probable that future taxable profit will be available for set-off.
Deferred and other tax assets and liabilities are netted off if the general conditions for netting off
are met.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the
period when the asset is realised or the liability is settled, based on tax rates (and tax legislation)
that have been enacted or subsequently enacted at the balance sheet date.
Financial liabilities
Financial liabilities are recognised initially at fair value and in the case of loans and borrowings,
carried at amortised cost, this includes directly attributable transaction costs.
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Financial liabilities are carried at original measured amount less principal payments and
amortisation. Gains or losses are recognised in the income statement when the liabilities are
derecognised, as well as through the amortisation process.
Leasing
Assessing whether an agreement contains a lease is based on the substance at the inception date
of the agreement. The agreement is regarded as a lease if the fulfilment of the agreement
depends on the use of a specific asset and the lease contains the right of use of a specific asset.
The Group as lessee

Under finance leases (with the risks and rewards of ownership of the lease transferred
substantially to the lessee), at the inception of the lease, the lease property and related liability
are carried at the lower of the fair value of the lease property at the inception of the lease and
the present value of the minimum lease payments. The lease is initially recognised including the
initial direct costs incurred by the lessee. Lease payments are apportioned between the interest
expense and repayment of the remaining balance of the liability, with the remaining balance of
the net liability bearing a constant rate of interest.
Capitalised lease property is depreciated over the shorter of the term of the lease and the useful
economic life of the property, if there is no reasonable certainty as to whether ownership of the
property is transferred to the lessee at the end of the term of the lease.
Under operating leases, the lease payments are charged to the income statement on a straight-
line basis over the term of the lease.
The Group as lessor

Under operating leases, the lease income is taken on a straight line basis to the income statement
over the term of the lease. Initial direct costs are amortised over the term of the lease against
the lease income.
Derivatives and hedge accounting

Derivatives are initially recognised at fair value on the date on which a derivative contract is
entered into and are subsequently remeasured to their fair value, taking into account the credit
risk arising from default of the counterparty (Credit Valuation Adjustment, CVA). Fair values are
obtained from quoted market prices in active markets, including recent market transactions, and
valuation techniques (such as discounted cash flow models and option pricing models), as
appropriate. All derivatives are carried as assets when their fair value is positive and as liabilities
when their fair value is negative. The method of recognising the resulting fair value gain or loss
depends on whether the derivative is designated as a hedging instrument.
The commercial flows of the Company are subject to currency risk. As part of its treasury
activities, the Company designates certain derivatives as hedges of highly probable future cash
flows attributable to a forecast transaction in foreign currencies. Hedge accounting is used for
derivatives designated in this way provided certain criteria are met.
The Company documents at the inception of the transaction the relationship between hedging
instruments and hedged items as well as its risk management objective and strategy for
undertaking hedge transactions together with methods selected to assess hedge effectiveness.
IKEA Group also documents its assessment, both at hedge inception and on an ongoing basis, of
Page 21
whether the derivatives that are used in hedging transactions are highly effective in offsetting
changes in future cash flows (the hedged items).
The effective portion of changes in the fair value of derivatives that are designated and qualify as
cash flow hedges are recognised in equity. The gain or loss relating to the ineffective portion is
recognised immediately in the income statement. Amounts accumulated in equity are recycled to
the income statement in the periods in which the hedged item will affect net profit. When a
hedging instrument expires or is sold, or when a hedge no longer meets the criteria for hedge
accounting, any cumulative gain or loss existing in equity at that time remains in equity and is
recognised when the forecast transaction is ultimately recognised in the income statement. When
a forecast transaction is no longer expected to occur, the cumulative gain or loss that was reported
in equity is immediately transferred to the income statement.
Embedded derivatives
The Company separates an embedded derivative from the host contract if the following conditions
are met:
• There is no close relationship between the economic characteristics and risks of the embedded
derivative and those of the host contract;
• A separate instrument having the same characteristics as the embedded derivative would be
classified as a derivative; and
• The compound instrument is not measured at fair value with changes in fair value recognised
through the income statement.
Separable embedded derivatives are recognised at fair value in the balance sheet upon inception
of the contract. Changes in fair value are recorded in the income statement.
Income
Revenue represents the proceeds from the supply of goods and services, net of discounts, as well
as rental income.
The Company generates and recognises net sales to retail customers at the point of sale in its
stores and upon delivery to home shopping customers.
Interest
Interest income is recognised pro rata in the income statement, provided the income can be
measured and the income is probable to be received.
Expenses
Expenses, including interest, are determined with due observance of the aforementioned
accounting policies and allocated to the year to which they relate. Foreseeable and other
obligations as well as potential losses arising before the financial year-end are recognised if known
before the financial statements are prepared and provided all other conditions for forming
provisions are met.
Income taxes
Current income taxes are calculated on the income presented in the financial statements adjusted
to taxable income in accordance with local tax legislation.
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Cash flow statement

Cash and cash equivalents are defined as cash on hand, demand deposits and short-term, highly
liquid investments readily convertible to known amounts of cash and subject to insignificant risk
of changes in value.
The above definition has been used for the Statement of Cash Flows, which has been prepared
using the indirect method.
Cash flows in foreign currencies are translated at the average rate of exchange for the year.
Currency translation differences are presented separately in the statement of cash flows.
Government grants
Government grants are recognised where there is reasonable assurance that the grant will be
received and all attached conditions will be complied with. When the grant relates to an expense
item, it is recognised as income over the period necessary to match the grant on a systematic
basis to the costs that it is intended to compensate. If the grant relates to an asset, it reduces
the carrying amount and is recognised as income over the useful life of the asset as reduced
depreciation charge.
Page 23
4. TANGIBLE FIXED ASSETS
2016 2015
Land and buildings 18,430 17,963

Building improvements 1,741 1,713
Machinery and equipment 1,319 1,855
Construction in progress 1,543 1,309
Total 23,033 22,840
Land Building Machinery Construc-

and improve- and tion in
buildings ments equipment progress Total
Cost
Opening balance 23,428 3,476 5,204 1,309 33,417
Translation adjustment 19 20 (36) (4) (1)
Additions 544 78 392 1,761 2,775
Acquisitions 405 - - - 405
Disposals (87) (21) (179) (11) (298)
Divestments (note 23) (803) (56) (1,739) (177) (2,775)
Impairment 26 2 14 - 42
Transfers 921 164 242 (1,327) -
Other (31) 29 11 (8) 1
Closing balance 24,422 3,692 3,909 1,543 33,566
Accumulated depreciation
Opening balance 5,465 1,763 3,349 - 10,577
Translation adjustment (14) 1 (26) - (39)
Additions 799 231 460 - 1,490
Disposals (9) (19) (148) - (176)
Divestments (note 23) (257) (27) (1,053) - (1,337)
Impairment 7 1 1 - 9
Other 1 1 7 - 9
Closing balance 5,992 1,951 2,590 - 10,533
Net book value 18,430 1,741 1,319 1,543 23,033
Estimated useful life (years) 25 10 3-15
Tangible fixed assets carried at costs do not include capitalised interest charges.
Of the depreciation EUR 915 million (2015: EUR 811 million) is included in the selling expenses;
EUR 575 million (2015: EUR 484 million) is included in the general and administrative expenses
in the income statement.
The Company received investment grants in different jurisdictions. The investment grants
received during 2016 were not material.
During 2016 impairments on tangible fixed assets to recoverable amounts have been recorded
for an amount of EUR 3 million (2015: EUR 54 million). Reversals of previous years’ impairments
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for an amount of EUR 36 million (2015: EUR 49 million) have been recognised, resulting in a net
gain of EUR 33 million (2015: EUR 5 million loss) recognised in other expenses.
The impairment loss recorded relates to 1 Cash Generating Unit (‘CGU’) within the following line
of business:
Description CGUs Valuation approach Amount
Investment property 1 Market value 3
The impairments are mainly triggered by anticipated lower future rental income.
The impairment reversals recorded relates to 4 CGUs within the following line of business:
Description CGUs Valuation approach Amount
Retail 4 Market value 36
The impairment reversals are driven by improved business performance in combination with the
low interest rate environment in most countries.
Page 25
Investment properties
Included below are investment properties valued at cost or lower market value, which are rented
out to third party tenants.
2016 2015
Land and buildings 4,421 4,439

Building improvements 638 614
Machinery and equipment 24 7
Construction in progress 470 335
Total 5,553 5,395
Land Building Machinery Construc-

and improve- and tion in
buildings ments equipment progress Total
Cost
Opening balance 4,888 747 14 335 5,984
Translation adjustment 1 (1) - 1 1
Additions 67 27 16 413 523
Disposals (57) (2) (2) (6) (67)
Impairments (3) - - - (3)
Transfers 203 66 5 (274) -
Other (12) 12 11 1 12
Closing balance 5,087 849 44 470 6,450
Accumulated depreciation
Opening balance 449 133 7 - 589
Translation adjustment 7 2 - - 9
Additions 207 74 13 - 294
Disposals (1) (1) (1) - (3)
Other 4 3 1 - 8
Closing balance 666 211 20 - 897
Net book value 4,421 638 24 470 5,553
Estimated useful life (years) 25 10 3-15
The estimated useful lives of these commercial properties are comparable to the estimated useful
lives of the operational tangible fixed assets.
Rental income related to investment property amounted to EUR 883 million (2015: EUR 748
million). The operational cost (excluding depreciation) amounted to EUR 463 million in 2016
(2015: EUR 428 million).
The estimated market value of the investment property amounted to EUR 9.1 billion (2015:
EUR 8.4 billion).
Page 26
Operating leases – Group as lessor
The Group has entered into operating leases relating to investment property. The future minimum
lease receipts on these non-cancellable leases can be broken down as follows:
2016 2015
Within one year 710 608

After one year but no more than five years 2,164 1,706
More than five years 2,099 1,480
4,973 3,794
5. INTANGIBLE FIXED ASSETS
2016 2015
Land lease rights 945 995

Goodwill 174 193
Other 25 27
Total 1,144 1,215
Land
lease
rights Goodwill Other Total
Cost
Opening balance 1,074 250 84 1,408
Translation adjustment (31) - 1 (30)
Additions 39 7 2 48
Acquisitions - 3 - 3
Disposals (6) - - (6)
Divestments (note 23) (30) (27) (2) (59)
Other 23 - - 23
Closing balance 1,069 233 85 1,387
Accumulated amortisation
Opening balance 79 57 57 193
Translation adjustment (2) 0 1 (1)
Additions 28 14 4 46
Divestments (note 23) (4) (12) (2) (18)
Other 23 - - 23
Closing balance 124 59 60 243
Net book value 945 174 25 1,144
Estimated useful life (years) 30-50 5-20 5-20
The useful life of goodwill ranges from 5-20 years in accordance with the timeline of anticipated
future economic benefits arising in the investment. The estimated useful life of land lease rights
ranges from 30-50 years in accordance with the contractually agreed period.
Other intangible fixed assets mainly consist of capitalised franchise fees and intangible assets for
capitalised renewable energy incentives.
Page 27
The amortisation of intangible fixed assets is included under other expense in the income
statement.
During 2016, no impairments on intangible fixed assets (goodwill) to recoverable amounts have
been recorded (2015: EUR 11 million).
6. FINANCIAL FIXED ASSETS
2016 2015
Long term loans receivable 224 323

Deferred tax asset 412 476
Investment in participating interests 101 98
Other investments 74 403
Total 811 1,300
Long term Deferred Investm. Other

loans tax in part. invest-
receivable asset interests ments Total
Cost
Opening balance 592 476 98 403 1,569
(incl. due in one year)
Translation adjustment 1 (2) - - (1)
Additions 1,832 170 - 16 2,018
Disposals (12) (32) (10) (343) (397)
Divestments (refer to note 23) (190) (75) - (265)
Utilised - (98) - - (98)
Released - (27) - - (27)
Share in result of Part. Interests - - 13 (3) 10
Repayments (288) - - - (288)
Amounts due within one year (1,711) - - - (1,711)
Other - - - 1 1
Net book value 224 412 101 74 811
Sale of other investment

As per May 2016 some of our other investments were sold. The consideration received in cash
amounted to EUR 370 million and we realised a gain on the sale of EUR 23 million.
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Annual maturities of receivables scheduled for repayment during the next years are as follows:
Financial Year Amount
2017 1,711
2018 64
2019 1
2020 101
2021 2
Thereafter 56
Total 1,935
The other investments mainly include positions related to other non-core related investments. No
impairments have been recognised during the year on these investments to reflect the expected
recoverable value.
Refer to note 19 for details on the deferred tax assets.
7. INVENTORIES
2016 2015
Raw materials - 154

Work in progress - 55
Finished goods 1,713 5,289
Total 1,713 5,498
The provision for obsolescence amounts to EUR 59 million at August 31, 2016
(2015: EUR 215 million). The decrease in inventory value mainly relates to the Transaction.
8. RECEIVABLES
2016 2015
Trade debtors, less allowance 558 802

Current portion of long-term loans receivable 1,711 269
Income tax receivable 191 71
Other receivables 1,091 553
Prepaid expenses and accrued income 564 805
Total 4,115 2,500
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The other receivables can be broken down as follows:
2016 2015
VAT receivable 201 368

Receivable on suppliers 43 62
Deposits 7 10
Other receivables 114 113
Transaction receivable 726 -
Total 1,091 553
Prepaid expenses and accrued income can be broken down as follows:
2016 2015
Interest 2 14
Derivatives 330 496
Insurance premiums 22 22
Other prepaid and accrued income 210 273
Total 564 805
Derivatives include the unrealised gains on derivative financial instruments related to the
management of interest rate and currency risk. The prepaid expenses and accrued income balance
and the accrued liabilities and deferred income balance at August 31, 2016 include a net amount
receivable of EUR 16 million related to the fair value of derivatives, which are part of the macro cash
flow hedge program. This program hedges the foreign exchange risk of the expected purchase and
sales transactions, i.e. the commercial flows, of the group for the next financial year. For more
information on financial risk management refer to note 21.
9. SECURITIES
The Company is actively managing its excess cash liquidity through investments in securities. As at
August 31, 2016, the securities amount to EUR 21,878 million (2015: EUR 15,278 million). This item
mainly consists of investments in listed interest-earning securities with investment grade.
The maximum exposure per counterparty is limited to a maximum of EUR 200 million (EUR 50
million for BBB+, EUR 25 million for BBB or BBB-). This limitation does not apply to government
securities or their 100% owned agencies.
The credit risk profile of the securities portfolio is as follows (in %):
2016 2015
AAA to AA 64 67
AA- to A- 15 20
BBB+ to BBB- 20 13
Non-Investment Grade 1 -
100 100
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The securities portfolio is diversified over the following issuer categories (in %):
2016 2015
Sovereign 62 60
Government Sponsored 16 16
Financial Corporation 11 13
Asset backed securities 4 2
Corporate 7 9
100 100
Changes in value of listed securities included in the income statement amount to EUR 38 million
loss (2015: EUR 150 million loss). This amount is included in the financial income and expenses
under revaluation gain/ (loss). Changes in value of listed securities are not included in the
revaluation reserve.
The duration of the interest earning securities at August 31, 2016 was 832 days (2015: 876
days).
Bonds for the amount of EUR 4,159 million at August 31, 2016 (2015: EUR 4,184 million) are
used as collateral for short-term borrowings.
10. CASH AND SHORT-TERM DEPOSITS
The total balance, amounting to EUR 1,273 million as at August 31, 2016 (2015: EUR 1,381 million),
is available without restrictions to the Company except for EUR 460 million (2015: EUR 393 million)
of short-term deposits that have a set maturity date for a maximum duration of 3 months.
11. SHAREHOLDER’S EQUITY
For details on shareholder’s equity, refer to note 3 in the Company financial statements.
12. PROVISIONS
2016 2015
Provision for deferred taxation 774 760

Provision for pension commitments 681 809
Other 453 402
Total 1,908 1,971
For details on the provision for deferred taxation refer to note 19. For details on the provision for
pensions commitments refer to note 13.
Page 31
The movement in the other provisions is as follows:
2016 2015
Opening balance 402 447

Currency translation - (5)
Additions 231 92
Utilised (66) (58)
Released (64) (74)
Acquisitions 7 -
Divestment (refer to note 23) (57) -
Total 453 402
Other includes tax, warranty, return and other provisions. Of the total balance an amount of
EUR 78 million (2015: EUR 93 million) is due within one year.
13. PENSION AND OTHER POST-EMPLOYMENT BENEFITS
The Company has a number of defined benefit pension plans, predominantly in Sweden, the
Netherlands, Germany, France and Switzerland.
The nature of the benefits provided by the Company are based on final salary pension plans (62%),
contribution based plans with guarantee (33%) and other (5%).
There are minimum funding requirements for the pension plans in Belgium, the Netherlands and
Switzerland as set out by local legislation.
Net expense
The following table shows the pension and other post-employment benefit expenses recognised
in the income statement.
2016 2015
Company service cost 97 74

Net interest cost 27 19
Defined benefit plans 124 93
Defined contribution plans 146 139
Total expense 270 232
Liability for defined benefit obligations

2016 2015
Defined benefit obligation – funded plans 965 852

Defined benefit obligation – unfunded plans 462 642
Less: Fair value of plan assets (746) (709)
Deficit 681 785
Restriction due to asset ceiling - 24
Net Defined Benefit Liability 681 809
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The movements in the liability for the net defined benefit obligations are as follows:
2016 2015

Net expense for the year 124 93
Remeasurement (gain)/loss 112 (80)
Employer contributions (49) (46)
Benefits paid directly by the Company (11) (11)
Reimbursement rights - -
Currency translation (5) 4
Divestment (refer to note 23) (299) -
Closing balance 681 809
The fair value of the reimbursement rights amounts to EUR 5 million at August 31, 2016 (2015:
EUR 4 million).
Assets and liabilities

The following table shows the changes in benefit obligations and plan assets of the employee
benefit plans.
2016 2015
Defined Fair Defined Fair

benefit value benefit value
obligation plan obligation plan
assets assets
Opening balance 1,494 709 1,442 601
Company service cost 97 - 74 -
Net interest 32 14 35 13
Benefits paid (38) (38) (40) (40)
Plan participant contributions 13 13 9 9
Employer contributions (1) 59 (4) 53
Return on plan assets - 36 - 47
Changes due to employee transfers (7) (7) - -
Changes in demographic assumptions (13) - 18 -
Changes in financial assumptions 175 - (67) -
Experience adjustments 17 - (3) -
Currency translation (7) (4) 30 26
Divestments (refer to note 23) (335) (36) - -
Closing balance 1,427 746 1,494 709
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The present value of the defined benefit obligation is detailed as below:
2016 2015
Final salary pension plans 888 998

Contribution based plans with a guarantee 466 434
Other 73 62
Closing balance 1,427 1,494
Allocation of plan assets

The major categories of plan assets of the fair value of the total plan assets are, as follows
2016 2015
Quoted Unquoted Quoted Unquoted

Cash and cash equivalents 35 - 32 -
Equity instruments 254 - 235 -
Government bonds 82 - 78 -
Corporate bonds 239 - 229 -
Real estate 35 - 39 -
Insurance contracts 33 46 11 64
Other 22 - 21 -
Total 700 46 645 64
The plan assets do not include investments in shares, issued debt or property owned by the
Company.
Assumptions
The principal assumptions used in determining the defined benefit obligations are shown below:
2016 2015
Discount rate 1.3% 2.2%

Future salary increases 2.8% 3.0%
The average duration of the defined benefit plan obligation at August 31, 2016 is 20.8 years
(2015: 19.8 years).
The Company expects to contribute EUR 49.7 million to its defined benefit pension plans in 2017.
Sensitivity analysis
Discount rate Salary increases

0.50% -0.50% 0.50% -0.50%
Impact on defined benefit obligation (138) 153 12 (63)
Page 34
14. NON-CURRENT LIABILITIES
The non-current liabilities consist of long-term debt. The majority of the long-term debt includes
finance facilities related to the Company’s investments in land and buildings. Property mortgages
amount to EUR 3,167 million (2015: EUR 2,864 million).
The interest rates on these local currency facilities range between negative 0.4% (2015: negative
0.4%) and 13.6% (2015: 13.6%) with a weighted average of 3.85% (2015: 3.7%) in 2016. Of
the total loan portfolio EUR 664 million (2015: EUR 1,027 million) has a fixed interest rate and
EUR 1,229 million (2015: EUR 1,461 million) has a floating interest rate.
The average interest duration of the long-term debt is 1.26 years (2015: 1.95 years).
2016 2015
Opening balance (including short term portion) 2,487 1,879

Translation adjustment (25) 73
Additions 359 534
Acquisitions 46 1,104
Divestments (8) -
Repayments (622) (1,103)
Amount due within one year (852) (426)
Closing balance 1,385 2,061
Annual maturities of debt scheduled for repayment during the next years are as follows:
Financial Year Amount
2017 852
2018 290
2019 259
2020 292
2021 120
Thereafter 424
Total 2,237
Pledged assets amount to EUR 3,276 million (2015: EUR 2,980 million) and mainly consist of
property pledged as collateral for external liabilities.
Page 35
15. CURRENT LIABILITIES
2016 2015
Current portion of long-term debt 852 426

Short-term borrowings 4,274 4,454
Accounts payable 2,922 2,305
Income tax payable 156 274
Other liabilities 1,197 1,162
Accrued liabilities and deferred income 2,366 2,463
Total 11,767 11,084
Short-term borrowings at different finance institutions bear market interest rates according to local
conditions for currencies involved.
Other liabilities can be broken down as follows:
2016 2015
VAT payable 376 453

Wage tax payable 40 63
Other taxes payable 173 173
Deposits received 131 125
Other liabilities 477 348
Total 1,197 1,162
Accrued liabilities and deferred income can be broken down as follows:
2016 2015
Accrued wages 351 374

Accrued franchise fee 249 242
Accrued interest expense 12 20
Derivatives 608 560
Other accruals and deferred income 1,146 1,267
Total 2,366 2,463
16. SEGMENT INFORMATION
Revenue
2016 2015
Europe 25,613 23,636

North America 6,103 5,628
Asia and Pacific 3,358 3,394
Total 35,074 32,658
Page 36
2016 2015
Retail 32,379 30,146

Wholesale 1,736 1,647
Investment property 831 711
Production 128 154
Total 35,074 32,658
Employees
The geographical distribution of the employees (based on average numbers) is as follows:
2016 2015
The Netherlands 5,607 5,189

Europe (excluding the Netherlands) 120,661 114,136
North America 21,036 19,831
Asia and Pacific 19,681 17,077
Total 166,985 156,233
17. COST OF SALES AND OPERATING EXPENSES
Cost of sales, amounting to EUR 18,918 million as at August 31, 2016 (2015: EUR 18,221 million),
consists mainly of material cost.
Other income of EUR 370 million (2015: EUR 411 million) includes recharges to tenants (EUR 24
million), gain on sale of fixed assets (EUR 15 million), energy income (EUR 79 million), income
related to gift vouchers not expected to be redeemed (EUR 11 million), service fees (EUR 69 million)
and others.
Selling expenses of EUR 7,347 million (2015: EUR 6,699 million) represent retail core-business
related cost, including marketing cost and the relevant portion of staff cost, operational cost, and
depreciation.
General and administrative expenses of EUR 4,617 million (2015: EUR 3,998 million) are related to
non-retail activities and include staff cost, operational cost and depreciation.
Other expenses of EUR 63 million (2015: EUR 102 million) include reversal of impairment charges
on tangible fixed assets (EUR 36 million) and impairment charges on tangible fixed assets (EUR 3
million), loss on sale of fixed assets (EUR 12 million), amortisation of intangible fixed assets (EUR
47 million) and others.
Personnel expenses
2016 2015
Salaries and wages 4,232 3,796

Social charges 878 780
Pension expense 270 232
Total 5,380 4,808
Page 37
18. FINANCIAL INCOME AND EXPENSE
The financial income and expense can be broken down as follows:
2016 2015
Interest income 285 339

Interest expense (355) (355)
Revaluation gain/(loss) (108) (196)
Currency gain/(loss) 302 540
Share in profit associates 10 (35)
Result on sale of subsidiaries 731 -
Other financial income/(expense) 4 6
Total 869 299
Interest income includes accrued interest for the financial year relating to financial assets. Interest
expense relates to accrued interest for financial liabilities and net accruals on derivatives used to
hedge internal funding (refer to note 21 – interest rate risk). Revaluation gains and losses represent
the fair value development of securities and derivatives. Currency gains and losses show the result
of managing the currency rate risk on commercial flows and other currency translation in the Group
(refer to note 21 – exchange rate risk). The ineffective portion of the macro cash flow hedge program
is included in currency gains and losses. Share in profit of associates represents the share in the
result of investments in participating interests (refer to note 6 – financial fixed assets).
Result on sale of subsidiaries includes the result on the Transaction of EUR 714 million (refer to note
23 - discontinued operations).
19. INCOME TAXES
Deferred income tax assets are mainly related to timing differences, primarily in connection with the
valuation of pension provisions and depreciation. Deferred tax assets arising from tax loss carry-
forwards are only recognised if recovery is reasonably certain. Of this amount, EUR 151 million
(2015: EUR 143 million) is expected to be used for set-off within one year.
The Group has unrecognised tax loss carry forwards available related to losses incurred in several
countries approximating EUR 698 million (2015: EUR 1,027 million). No deferred tax asset has
been recognised for these tax loss carry forwards due to uncertainty with respect to availability
of taxable profits in the future within the limitations imposed in enacted tax legislation in order
to utilise the tax losses.
Page 38
The movements in deferred tax assets are set out below:
2016 2015

Currency translation (2) 3
Acquisitions - 51
Additions 170 136
Utilised (98) (126)
Released (27) (49)
Disposals (32) -
Divestment (75) -
Deferred taxation is provided, using the liability method, for all timing differences between tax and
financial reporting, principally regarding depreciation costs. Provisions are substantially long-term in
nature.
The movements in deferred tax liabilities are set out below:
2016 2015

Currency translation 1 2
Acquisitions 4 288
Additions 230 28
Utilised (123) (93)
Released (1) (27)
Divestment (97) -
Of the movements in deferred tax, EUR 24 million impacted equity directly as per August 31, 2016
(2015: EUR 22 million) relating to actuarial remeasurements relating to the defined benefit pension
obligation.
The major components of current income tax expense are as follows:
2016 2015
Current income tax:

Current income tax charge 1,055 888
Previous year’s adjustments 19 (11)
Deferred tax:
Origination and change in temporary differences 84 (55)
Total tax expense 1,158 822
Capital gain tax on the Transaction amounting to EUR 57 million is recorded as income tax
expense.
Page 39
The reconciliation between the effective tax rate and the tax rate applicable to the consolidated
financial statements is as follows (in %):
2016 2015
Applicable tax rate 25.0 25.0

Different tax rates outside the Netherlands 1.9 0.6
Non-deductible expenses 1.7 1.8
Deduction for risk capital (2.7) (3.9)
Tax-exempt income (6.7) (6.4)
Utilisation of previously unrecognised tax losses (0.6) (0.2)
Unrecoverable losses 1.2 1.5
Other 1.8 0.5
Effective tax rate 21.6 18.9
20. COMMITMENTS AND CONTINGENCIES
As part of the Transaction a contingent consideration has been agreed for the benefit or loss of
IKEA Group. The contingent consideration is connected to the result on currency hedging activities
for the period September 1 2016, up until August 31,2017. No additional receivable or payable
has been accounted for at year-end 2016 as the contingent consideration cannot reliably be
estimated.
As part of the Transaction, IKEA Group has provided certain indemnifications and warranties to the
buyer in relation to the sold entities, including, but not limited to, corporate information, accounts,
guarantees, assets, intellectual property, information technology, contracts and other agreements,
employees, legal compliance, environment matters, litigation, insurance, products and taxes. The
majority of indemnifications and warranties are capped to an aggregate maximum amount of EUR
1.0 billion. A provision is taken in the balance sheet for these items if the criteria are met as described
in the relevant accounting policy around provisions.
In addition to the purchase consideration paid for the acquisition of 51% share in Inter Ikea
Centre Group in 2015, there is a contingent consideration in place. The contingent consideration
is connected to the rental income in 2018 on certain acquired properties. No additional payable
has been accounted for as it is not expected that the contingent consideration will materialise.
As per year-end, the Company and its subsidiaries have agreements to provide services in future
years relating to distribution, storage and handling of inventory in distribution centres with third
parties. Remuneration is variable and will be determined on a cost-plus basis for most of the
agreements.
The commitments can be detailed as follows:
Guarantees
Issued guarantees towards external parties amounted to EUR 60 million at August 31, 2016
(2015: EUR 86 million).
Page 40
Construction commitments
Commitments for the construction of tangible fixed assets, including investment property, amounted
to EUR 736 million at August 31, 2016 (2015: EUR 1,143 million).
Purchase commitments
The Group has entered into purchase agreements without significant commitments, at August 31,
2016 (2015: EUR 8.1 billion). The significant decrease is due to the Transaction.
Legal proceedings
The Company is from time to time involved in legal proceedings in the ordinary course of business.
Management believes that no pending litigation to which the Company is a party will have a material
adverse effect to the financial position or the results from operations.
Operating leases – Group as lessee
The Company and its subsidiaries have entered into lease and rental agreements for various periods.
Future minimum rental payable under non-cancellable operating leases as at August 31 is as follows:
2016 2015
Within one year 70 61

After one year but no more than five years 151 133
More than five years 377 365
Total 598 559
Total lease payments of EUR 75 million (2015: EUR 69 million) are recorded in the income statement.
21. FINANCIAL RISK MANAGEMENT
General
The use of financial instruments is closely related to the commercial flows and the cash flows of
the business. Treasury operations are centralised and executed according to the Policy, Standard
& Rules for Investment and Treasury as set by the Board.
Interest rate risk

The Company has the policy to limit interest rate risk exposure on assets held by Treasury
companies. These companies manage interest rate risk by limiting interest duration to a maximum
of three years on financial assets and liabilities
The assets mainly consist of a securities portfolio, which has a fixed interest rate profile as result
of which the Company runs a fair value risk due to changing market rates of interest. Group
Treasury is actively monitoring the interest rate risk regarding the securities portfolio and enters
into interest rate derivatives with the objective to limit interest duration. No hedge accounting is
applied to the securities portfolio and the related interest rate derivatives.
Treasury companies receive fixed interest rates on internal funding provided to Group entities.
The fair value risk which is considered in those internal funding positions is swapped with external
Page 41
banks. No hedge accounting is applied to those derivatives and positions. Fair value movements
of those derivatives are reported through the income statement.
Sensitivity analysis Interest rate

2016
+1% (1%)
Impact on Total financial income (204) 210
The sensitivity analysis relates to the securities portfolio and derivatives for which no hedge
accounting is applied as described above.
Credit risk
The Company manages its credit risks on individual counterparties. Counterparty limits are based
on credit ratings and total aggregated exposure to counterparties. This aggregated exposure
includes the position held in securities. The Company’s policy determines that bank accounts are
held with investment grade rated financial institutions. Credit risk on all derivative positions is
covered using collateral margining process according to CSA agreements in place with all external
counterparties.
Liquidity and cash flow risk

The Company manages its liquidity and cash flow risk by liquidity planning with the objective to
maintain readily available liquid assets equal to a percentage of the Group’s revenues.
Equity price risk

In addition to interest bearing securities, the Company holds a portfolio of listed equities, for an
amount of EUR 201 million at 31 August 2016 (2015: nil). The Company is exposed to equity
price risk, which is the risk that the fair value of equities decreases as a result of changes in the
levels of equity indices and the value of individual stocks.
Exchange rate risk

The Company is exposed to foreign exchange rate risks arising from purchase and sales
transactions as well as holding net positions denominated in foreign currency. The exchange rate
risk of the Company is actively managed by using derivative contracts.
At August 31, 2016, the total fair value of the derivatives used to manage exchange rate risk is
EUR 113 million negative (2015: EUR 90 million positive). The fair value of these derivatives are
part of the derivatives position in note 8 and 15. The remainder of the total fair value in the two
notes relates to interest rate derivatives.
The EUR 113 million can be broken down in the following portfolios:
2016 2015
Commercial flows 2017 (13) -

Commercial flows 2016 - 15
Internal funding (102) 60
Investment portfolio hedge (14) 15
Currency diversification 16 -
Total (113) 90
Page 42
Sensitivity analysis currency risk
2016
+1% (1%)
Impact on Total financial income and expense

(derivative) (in EUR million) 55 (56)
The +1% and (1%) indicate the weakening and strengthening of the euro versus other currencies.
The sensitivity analysis relates to all currency derivatives for which no hedge accounting is
applied.
Commercial Flows
Purchase and sales transactions are denominated in many different currencies. Management
evaluates the net future forecasted currency exposure and manages the risk by the use of
currency derivatives.
At August 31, 2016, IKEA Group had derivatives in place for 2017 with an underlying value of
EUR 234 million (2015: EUR 3.1 billion) to reduce currency risk on commercial flows in the next
year of on total EUR 234 million (2015: EUR 3.3 billion). The decrease in derivatives as well as
the volume of commercial flows are connected to the Transaction.
In 2016, the hedging reserve as per year-end 2015 of EUR 77 million (gain) has been released
into the income statement. During 2016, EUR 67 million (gain) has been added to the hedging
reserve for hedging of commercial flows in 2017.
A profit of EUR 3 million is included in the income statement under financial income for the ineffective
portion of this hedge program, the loss is partly offset by a loss of EUR 9 million on currency options
not part of the hedge accounting calculation and therefore considered as fully ineffective
As a result of the Transaction at year-end, the currency risk on the majority of the commercial
flows and the relating hedging activities have been transferred to Inter IKEA Group. As a
consequence, the relating hedging reserve of EUR 67 million (gain) has been released into the
income statement as part of the result on sale of subsidiaries.
As IKEA Group will purchase the majority of goods in local currency following the Transaction,
there is no need for hedging these flows going forward. For currency risk on the remaining
commercial flows not sourced in local currency in 2017, hedges are in place but no hedge
accounting is applied (loss 2016: EUR 17 million).
Internal Funding and Investment portfolio

The exchange rate risk associated with internal funding and securities (investment portfolio) in
foreign currency is managed by use of currency derivatives. For existing internal funding and
securities in foreign currency, currency derivatives are in place with an underlying amount of
negative EUR 8.1 billion (2015: negative EUR 7.5 billion).
Page 43
The derivatives mainly relate to the following currencies and underlying positions (in EUR million):
Currency Derivative Internal Funding Investment Portfolio

USD (3,219) 1,539 1,427
PLN (694) 694 -
RUB (560) 538 -
JPY (660) 660 -
CNY (727) 727 -
SEK (382) 390 -
Currency Diversification
At year-end 2016 the currency diversification portfolio consists in forward FX contracts in several
currencies for a total amount of EUR 2,857 million (2015: EUR 0 million).
22. RELATED PARTIES
Any sales to and purchases from related parties are entered into at arm’s length prices.
23. DISCONTINUED OPERATIONS
In May 2015, IKEA Group signed a letter of intent to sell its product development, supply chain
and production companies, being IKEA of Sweden AB, IKEA Supply AG and IKEA Industry Holding
B.V. and other connected companies to Inter IKEA Group.
Historically, the product development and supply chain companies were owned and operated by
IKEA Group under a non-exclusive assignment from Inter IKEA Group.
Early 2015, Inter IKEA Group informed IKEA Group of its intention to operate the product
development and supply chain activities within the Inter IKEA Group. This led to discussions
between the parties to sell the relevant IKEA Group companies.
On May 23, 2016, IKEA Group signed a Share Purchase Agreement to sell the companies
executing the assignments for product development and supply chain and in addition its
production companies. IKEA Group’s production companies were included in the Transaction as
production is closely linked to the supply chain and product development. The Transaction was
completed on 31 August 2016 and the transfer of ownership was made through sale of shares.
The estimated consideration is EUR 5,211 million of which an amount of EUR 4,547 million was
received in cash on August 31, 2016. In addition, IKEA Group received significant strategic
benefits, improving the franchisee position of IKEA Group in its markets including e-commerce.
The sold product development and supply chain companies were historically operating under a
non-exclusive assignment from Inter IKEA Group, which impacted the value of these companies
in the Transaction.
Page 44
The companies sold were part of the Wholesale and Production segment. The total revenues of
the companies sold amount to EUR 21,593 million of which EUR 19,625 million relates to
Wholesale and EUR 1,968 million to Production.
The gain on sale of the companies sold is as follows:

2016
Pre-tax gain 714

Income tax 63
Net gain 651
The gain on sale includes EUR 61 million gain on recycling of hedging reserves and currency
translation reserves through the income statement.
In the consolidated income statement the companies sold are included as follows:
2016
Revenues (from sales outside IKEA Group) 1,844

Revenues (from sales to IKEA Group) 19,749
Revenues (total) 21,593
Expenses (20,392)
Operating income 1,201
Financial income and expense (6)
Profit before tax 1,195
Income tax (202)
Net income relating to companies sold 993
In the consolidated cash flow statement the group of companies sold are included as follows:
2016
Operating cash flows 1,025

Investing cash flows (233)
Financing cash flows (581)
Net movement in cash 211
Carrying amounts of the assets and liabilities of the group of companies sold per 31 August 2016:
2016
Assets 9,026
Liabilities 4,468
Net assets 4,558
Page 45
BOARD OF MANAGING BOARD OF SUPERVISORY

DIRECTORS DIRECTORS
P. Agnefjäll (Chairman) L-J. Jarnheimer (Chairman)
A. Davidson T. Bertilsson
L. Delgado
L. Fønss Schrøder
S. Bergfors
J. Kamprad
G. Lindahl
Page 46
COMPANY BALANCE SHEET before profit appropriation

August 31
ASSETS
Fixed assets
Investments in consolidated subsidiaries (2) 38,836 34,814
Total fixed assets 38,836 34,814
Current assets
Other receivables from consolidated subsidiaries 29 36
Other receivables 22 20
Total current assets 51 56
TOTAL ASSETS 38,887 34,870
SHAREHOLDER’S EQUITY
AND LIABILITIES
Shareholder’s equity (3)

Capital stock 1 1
Additional paid-in capital 51 51
Revaluation reserves 364 464
Other legal reserves 424 386
Other reserves 33,821 30,435
Result for the year 4,200 3,512
Total shareholder’s equity 38,861 34,849
Current liabilities
Other payables to consolidated subsidiaries 22 18
Other payables and accrued liabilities 4 3
Total current liabilities 26 21
TOTAL SHAREHOLDER’S EQUITY

AND LIABILITIES 38,887 34,870
Page 47
COMPANY INCOME STATEMENT

Share in net income from consolidated subsidiaries 4,209 3,520

Other results, net of income taxes (9) (8)
Page 48
NOTES TO COMPANY FINANCIAL STATEMENTS

August 31
(all amounts in EUR million)
1. ACCOUNTING POLICIES
The accounting policies are the same as for the consolidated financial statements. In addition,
investments in consolidated subsidiaries are accounted for using the equity method.
The Company presents a condensed Company Income Statement, using the facility of Article 402
of Part 9, Book 2, of the Dutch Civil Code.
2. FINANCIAL FIXED ASSETS - Investments in consolidated subsidiaries
Changes in investments in consolidated subsidiaries are as follows:
2016 2015
Opening balance 34,814 31,538

Foreign currency translation adjustment (15) 8
Capital contributions 1,102 3,724
Share in net income for the year 4,209 3,520
Dividends received (1,101) (4,404)
Change in unrealised result derivatives (15) 38
Revaluation other investments held by subsidiaries - 374
IAS19 remeasurement (83) 52
Realisation through income statement (75) (34)
Other - (2)
Total 38,836 34,814
In accordance with Article 403, Book 2 of the Civil Code of the Netherlands, the Company has
guaranteed the liabilities of certain Dutch majority-owned subsidiaries. Separate financial
statements of these subsidiaries are therefore not filed at the Trade Register of the Chamber of
Commerce. At August 31, 2016, 403-statements has been issued for the following companies:
- Ingka Holding Europe B.V.
- IKEA Services B.V.
- Ingka Holding Scandinavia B.V.
- Ingka Holding Overseas B.V.
- Ingka Pro Holding B.V.
Page 49
3. SHAREHOLDER’S EQUITY
The issued and outstanding share capital of the Company is comprised of 726,000 ordinary
shares, each with a par value of EUR 1.
Changes in shareholder’s equity for the year ended August 31, 2016 are as follows:
Additional Reva- Other Trans-

Share paid in luation legal lation Retained Result for Total Total
capital capital reserves reserves reserves earnings the year 2016 2015
Opening balance 1 51 464 386 (370) 30,805 3,512 34,849 31,566

Net income - - - - - - 4,200 4,200 3,512
Foreign translation - - - - (15) - - (15) 8
Dividend paid - - - - - - - - (666)
Hedging reserve - - (15) - - - - (15) 38
Pension reserve - - - - - (83) - (83) 52
Acquisitions - - - - - - - - 380
Realisation in
- - (81) - 6 - - (75) (41)
income statement
Transfer - - (4) 38 (13) 3,491 (3,512) - -
Closing balance 1 51 364 424 (392) 34,213 4,200 38,861 34,849
The (other) legal reserves at August 31, 2016 are not available for dividend distributions and
represents retained earnings set aside by law in certain countries. The foreign currency translation
reserve is used to record exchange differences arising from the translation of the reporting of
foreign activities.
4. AUDIT FEES
The audit fees invoiced by Ernst & Young Accountants LLP as Dutch auditor to legal entities within
the group in financial year 2016 in connection with the audits of the statutory financial statements
of these entities amount to EUR 1.4 million (2015: EUR 1.4 million). Audit related fees invoiced
by the auditors to these Dutch legal entities in financial year 2016 amount to EUR 0.3 million
(2015: EUR 0.7 million). Non-audit fees invoiced by the auditors to these Dutch legal entities in
financial year 2016 amount to EUR 0.3 million (2015: EUR 0.2 million) and no tax fees were
invoiced by the auditors (2015: nil).
5. INCOME TAXES
Since October 1, 2004, the Company is part of a fiscal unit with respect to Dutch income tax. This
implies that the Company is individually liable for Dutch income Tax of the fiscal unit as a whole.
Income taxes are accounted for as if each entity in the fiscal unity would been taxable for its own
results.
6. COMMITMENTS AND CONTINGENCIES
As part of the Transaction, IKEA Group has provided certain indemnifications and warranties to the
buyer in relation to the sold entities, including, but not limited to, corporate information, accounts,
guarantees, assets, intellectual property, information technology, contracts and other agreements,
employees, legal compliance, environment matters, litigation, insurance, products and taxes. The
majority of indemnifications and warranties are capped to an aggregate maximum amount of EUR 1
Page 50
billion. A provision is taken in the balance sheet for these items if the criteria are met as described
in the relevant accounting policy around provisions.
7. EMPLOYEES
The Company has 2 employees as at August 31, 2016 (August 31, 2015: 2).
8. REMUNERATION BOARD OF DIRECTORS
The remuneration of the current and former members of the Company’s board of managing
directors includes base salary, long-term incentive plans, employer’s pension commitments and
any other periodic contributions as provided by the Company and/or its consolidated subsidiaries.
The total compensation to the members of the board of managing directors amounts to
EUR 5.4 million for 2016 (2015: EUR 5.2 million). The remuneration of the members of the
Company’s board of supervisory directors amounts to EUR 0.9 million for 2016 (2015: EUR 1.1
million).
The Company incurred an amount of EUR 0.1 million (2015: EUR 0.2 million) in recurring and
non-recurring employer taxes related the remuneration of the board of directors for the 2016.
9. INVESTMENTS
Set forth below are all significant investments of the Company at August 31, 2016. Investments
are wholly owned unless otherwise indicated.
Australia IKEA Pty Ltd.

Melbourne
Austria IKEA Möbelvertrieb OHG

Vienna
Belgium IKEA Belgium N.V.

Brussels
IKEA Service Centre N.V.
Brussels
Canada IKEA Canada Limited Partnership

Toronto
China IKEA Beijing Co. Ltd.

Beijing
IKEA Shanghai Co. Ltd.
Shanghai
IKEA Shenzhen Co. Ltd.
Shenzhen
IKEA Chengdu Co. Ltd.
Chengdu
IKEA Guangzhou Co. Ltd.
Guangzhou
IKEA IMS Wholesale (Shanghai) Co. Ltd.
Shanghai
IKEA Centres Beijing Co. Ltd.
Beijing
Page 51
IKEA (China) Investments Co. Ltd.

Shanghai
Croatia IKEA Hrvatska d.o.o. Za Trgovinu

Zagreb
Czech Republic IKEA Ceská Republika s.r.o.

Prague
Denmark IKEA A/S

Copenhagen
Finland IKEA Oy
Helsinki
France Meubles IKEA France SAS

Paris
Germany IKEA Deutschland GmbH & Co KG.

Munich
IKEA Verwaltungs GmbH
Munich
Hungary IKEA Furnishing Kft.

Budapest
India IKEA India Pvt Ltd.

New Dehli
Ireland IKEA Ireland Ltd

Dublin
Fami Ltd.
Dublin
Italy IKEA Italia Retail S.R.L.

Milan
Japan IKEA Japan KK

Tokyo
The Netherlands IKEA B.V.

Amsterdam
IKEA Capital B.V.
Leiden
IKEA Services B.V.
Leiden
Norway IKEA AS
Oslo
Poland IKEA Retail Spółka z o.o

Warsaw
IKEA Centres Polska S.A.
Janki
Portugal IKEA Portugal - Móveis e Decoração LDA
Page 52
Lisbon
Romania IKEA Romania S.R.L.

Bucharest
Russia OOO IKEA Torg

Moscow
OOO IKEA MOS
Moscow
OOO IKEA DOM
Moscow
Slovakia IKEA Bratislava Spol. S.r.o.

Bratislava
South Korea IKEA Korea Ltd

Seoul
Spain IKEA Ibérica S.A.

Madrid
IKEA Norte S.L.
Barakaldo
Sweden IKEA Svenska Försäljnings AB

Helsingborg
IKEA Indirect Material & Services AB
Älmhult
IKEA Services AB
Helsingborg
IKEA Retail Services AB
Helsingborg
IKEA IT AB
Helsingborg
Switzerland IKEA AG
Zürich
Ikano Insurance Holding AG (49%)
Züg
CAPTAR AG
Spreitenbach
United Kingdom IKEA Ltd

London
US IKEA Property, Inc.

Wilmington
IKEA New York LLC
Wilmington
IKEA US West, Inc.
Wilmington
IKEA US East LLC
Wilmington
Page 53
The following affiliated companies, which are included in the consolidated group financial statements
of Ingka Holding B.V. are in accordance with § 264b German Commercial Code (“HGB”) relieved of
drawing up, auditing and disclosing their financial statements, notes and management reports in line
with the regulations on the second paragraph within the third book of the German Commercial Code:
- IKEA Holding Deutschland GmbH & Co. KG
- IKEA Deutschland GmbH & Co. KG
- IKEA Distribution Services GmbH & Co. KG
- IKEA Centres Grundbesitz GmbH & Cie KG
Page 54
BOARD OF MANAGING BOARD OF SUPERVISORY

DIRECTORS DIRECTORS
P. Agnefjäll (Chairman) L-J. Jarnheimer (Chairman)
A. Davidson T. Bertilsson
L. Delgado
L. Fønss Schrøder
S. Bergfors
J. Kamprad
G. Lindahl
Page 55
OTHER INFORMATION
NET INCOME APPROPRIATION
According to Article 12 of the Company’s statutes, the annual meeting of shareholders will decide
on the appropriation of the net income for the year including a transfer to specific reserves as
deemed necessary.
Proposed profit appropriation
Dividend 840 -
Additions to reserves 3,360 3,512
Total 4,200 3,512
SUBSEQUENT EVENTS
Retail Parks
On September 9, 2016 a letter of intent was signed to sell certain investment property operations.
The sale is expected to be executed as per February 2017.
As per year-end 2016, the net assets of the group companies to be sold amount to EUR 0.4 billion
(assets of EUR 0.7 billion and liabilities of EUR 0.3 billion), revenues from companies outside of
the IKEA Group amount to EUR 0.08 billion and total income before taxation amounts to EUR 0.01
billion.
The consideration for the sale of the activities is to be concluded upon.
Independent auditor’s report
The financial statements have been audited and the independent auditor's report is included on the
next two pages.
Page 56
INDEPENDENT AUDITOR’S REPORT
To: the board of managing directors and shareholder of Ingka Holding B.V.
Report on the financial statements
We have audited the accompanying financial statements for the year ended 31 August 2016 of
Ingka Holding B.V., Amsterdam, which comprise the consolidated and company balance sheet as
at 31 August 2016, the consolidated and company income statement for the year then ended
and the notes, comprising a summary of the accounting policies and other explanatory
information.
Management's responsibility
Management is responsible for the preparation and fair presentation of these financial
statements and for the preparation of the report from the board of managing directors, both in
accordance with Part 9 of Book 2 of the Dutch Civil Code. Furthermore management is
responsible for such internal control as it determines is necessary to enable the preparation of
the financial statements that are free from material misstatement, whether due to fraud or
error.
Auditor's responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We
conducted our audit in accordance with Dutch law, including the Dutch Standards on Auditing.
This requires that we comply with ethical requirements and plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free from material
misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and
disclosures in the financial statements. The procedures selected depend on the auditor's
judgment, including the assessment of the risks of material misstatement of the financial
statements, whether due to fraud or error.
In making those risk assessments, the auditor considers internal control relevant to the entity’s
preparation and fair presentation of the financial statements in order to design audit procedures
that are appropriate in the circumstances, but not for the purpose of expressing an opinion on
the effectiveness of the entity's internal control. An audit also includes evaluating the
appropriateness of accounting policies used and the reasonableness of accounting estimates
made by management, as well as evaluating the overall presentation of the financial
statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
basis for our audit opinion.
Opinion with respect to the financial statements

In our opinion, the financial statements give a true and fair view of the financial position of
Ingka Holding B.V. as at 31 August 2016 and of its result for the year then ended in accordance
with Part 9 of Book 2 of the Dutch Civil Code.
Page 57
Report on other legal and regulatory requirements
Pursuant to the legal requirement under Section 2:393 sub 5 at e and f of the Dutch Civil Code,
we have no deficiencies to report as a result of our examination whether the report from the
board of managing directors, to the extent we can assess, has been prepared in accordance
with Part 9 of Book 2 of this Code, and whether the information as required under Section
2:392 sub 1 at b-h has been annexed. Further we report that the report from the board of
managing directors, to the extent we can assess, is consistent with the financial statements as
required by Section 2:391 sub 4 of the Dutch Civil Code.
Amsterdam, 29 November 2016
Ernst & Young Accountants LLP
Signed by O.E.D. Jonker
Page 58

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INGKA HOLDING B.V.

Annual report for financial year 2016

This report was approved at the Shareholder's Annual

REPORT FROM THE BOARD OF MANAGING DIRECTORS ................................................... 3

CONSOLIDATED BALANCE SHEET before profit appropriation ......................................... 11

CONSOLIDATED INCOME STATEMENT ......................................................................... 12

CONSOLIDATED STATEMENT OF CASH FLOWS ............................................................. 13

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS .................................................... 14

COMPANY BALANCE SHEET before profit appropriation .................................................. 47

COMPANY INCOME STATEMENT.................................................................................. 48

NOTES TO COMPANY FINANCIAL STATEMENTS ............................................................ 49

NET INCOME APPROPRIATION ................................................................................... 56

SUBSEQUENT EVENTS .............................................................................................. 56

INDEPENDENT AUDITOR’S REPORT............................................................................. 57

REPORT FROM THE BOARD OF MANAGING DIRECTORS

Review of the year

Operating expenses as a percentage of revenues increased by 1.4% points to 33.2%. The

Sale of product development, supply chain and production companies

People and planet positive

Reflecting the many people

Research and development

A solid approach to risk management

Improvements to the risk management approach

Main risks potentially impacting IKEA Group

Legal and regulatory environment

Supply chain volatility

Product and food safety

Safety & Security

Outlook for financial year 2017

BOARD OF MANAGING DIRECTORS

Leiden, November 29, 2016

CONSOLIDATED BALANCE SHEET before profit appropriation

(in millions of EUR) 2016 2015

TOTAL ASSETS 53,967 50,012

(See accompanying notes)

CONSOLIDATED BALANCE SHEET before profit appropriation

GROUP EQUITY AND LIABILITIES

(in millions of EUR) 2016 2015

Provisions (12) 1,908 1,971

Non-current liabilities (14) 1,385 2,061

Current liabilities (15) 11,767 11,084

GROUP EQUITY AND LIABILITIES 53,967 50,012

(See accompanying notes)

CONSOLIDATED INCOME STATEMENT

(in millions of EUR) 2016 2015

Sale of goods 34,191 31,910

Cost of sales (17) (18,918) (18,221)

Other income 370 411

Operating income 4,499 4,049

Total financial income and expense (18) 869 299

Income before income taxes and 5,368 4,348

Income taxes (19) (1,158) (822)

Income before minority interests 4,210 3,526

Minority interests (10) (14)

Net income 4,200 3,512

CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND

Net income 4,200 3,512

CONSOLIDATED STATEMENT OF CASH FLOWS

(in millions of EUR) 2016 2015

Increase/(decrease) cash and cash equivalents 6,492 (227)

Cash and cash equivalents at beginning 16,659 16,886

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

3. SIGNIFICANT ACCOUNTING POLICIES