Note 2 New IFRSs 2019

IFRS 16 Leases – Group

IFRS 16 Leases replaced IAS 17 Leases as of 1 January 2019. IFRS 16 basically requires Peab as a lessee to report all leasing contracts as assets and liabilities on the balance sheet, representing the right to use the leased asset respectively the obligation to pay leasing fees. Regarding leasing contracts, depreciation of the leasing asset and interest rate expenses on the leasing liability are recognized in the income statement. Affected leases primarily cover rent for offices and other premises, leaseholds, land rentals and vehicles. IFRS 16 Leases is also applied in segment reporting.

When changing over to the new standard Peab elected the modified retroactive method with the alternative to let the right of use asset be measured at the amount of the lease liability at the changeover with adjustments for any prepaid or accrued leasing fees. The elected changeover method does not require recalculating comparable periods.

Contracts with leasing periods 12 months or less from the changeover date are classified as current leases and therefore were not included in the recognized right of use assets or liabilities.

Financial leases that were previously reported according to IAS 17 Leases have been reclassified according to IFRS 16 and recognized at the amounts they were reported on the day immediately prior to application of the new standard on December 31, 2018.

An incremental borrowing rate has been determined per country, right of use period and type of asset as of January 1, 2019. The weighed average incremental borrowing rate used when calculating the lease liability was 3.1 percent.

The difference between additional recognized leasing liabilities on January 1, 2019, SEK 850 million, and the amount of future non-cancellable leasing payments presented in the note information in the annual accounts for 2018, SEK 746 million, stem primarily from the additional effects of leaseholds and land rentals of SEK 342 million and the excluded effects of current leases, low value leases and discounting of SEK -238 million.

Effects of the changeover to IFRS 16 are given below.

 

Report on Group balance sheet in summary, 2018-12-31 respectively 2019-01-01

Group, MSEK Reported balance sheet 2018-12-31 Adjustment IFRS 16
2019-01-01		 Adjusted balance sheet 2019-01-01
Koncernen, Mkr Rapporterad balansräkning 2018-12-31 Justering IFRS 16
2019-01-01		 Justerad balansräkning 2019-01-01
Assets Tillgångar
Intangible assets Immateriella anläggningstillgångar 2,250 2,250
Tangible assets Materiella anläggningstillgångar 5,741 618 6,359
Investment property Förvaltningsfastigheter 589 53 642
Interest-bearing long-term receivables Räntebärande långfristiga fordringar 1,445 1,445
Other financial fixed assets Övriga finansiella tillgångar 1,292 1,292
Total fixed assets Summa anläggningstillgångar 11,317 671 11,988
Project and development properties Projekt- och exploateringsfastigheter 9,685 206 9,891
Inventories Varulager 441 441
Interest-bearing current receivables Räntebärande kortfristiga fordringar 640 640
Other current receivables Övriga kortfristiga fordringar 13,857 -27 13,830
Liquid funds Likvida medel 1,376 1,376
Total current assets Summa omsättningstillgångar 25,999 179 26,178
Total assets Summa tillgångar 37,316 850 38,166
Equity and liabilities Eget kapital och skulder
Equity Eget kapital 11,348 – 11,348
Liabilities Skulder
Interest-bearing long-term liabilities Räntebärande långfristiga skulder 5,194 702 5,896
Deferred tax liabilities Uppskjuten skatteskuld 123 123
Other long-term liabilities Övriga långfristiga skulder 977 977
Total long-term liabilities Summa långfristiga skulder 6,294 702 6,996
Interest-bearing current liabilities Räntebärande kortfristiga skulder 1,818 148 1,966
Other current liabilities Övriga kortfristiga skulder 17,856 17,856
Total current liabilities Summa kortfristiga skulder 19,674 148 19,822
Total liabilities Summa skulder 25,968 850 26,818
Total equity and liabilities Summa eget kapital och skulder 37,316 850 38,166

Recognition of additional leases according to IFRS 16

Group, MSEK Jan-Dec 2019
Koncernen, Mkr Jan-dec 2019
Production costs Kostnader för produktion 19
Sales and administrative expenses Försäljnings- och administrationskostnader 4
Operating profit Rörelseresultat 23
Financial expenses Finansiella kostnader -27
Pre-tax profit Resultat före skatt -4
Tax Skatt 1
Profit for the year Årets resultat -3
Group, MSEK 2019-01-01 2019-12-31
Koncernen, Mkr 2019-01-01 2019-12-31
Fixed assets Materiella anläggningstillgångar 671 627
Deferred tax recoverables Uppskjutna skattefordringar – 1
Current assets Omsättningstillgångar 179 133
Total assets Summa tillgångar 850 761
Equity Eget kapital – -3
Interest-bearing long-term liabilities Långfristiga räntebärande skulder 702 613
Interest-bearing current liabilities Kortfristiga räntebärande skulder 148 151
Total equity and liabilities Summa skulder och eget kapital 850 761

IFRS 16 Leases – parent company

The parent company does not apply IFRS 16 Leases in accordance with the exception in the Swedish Financial Reporting Board’s RFR 2. As a lessee all leasing fees are recognized as a cost linearly over the leasing period and therefore liabilities and right of use assets are not reported on the balance sheet. The parent company only utilizes leases to a very little extent.