Note 1 – Accounting principles
The quarterly report has been prepared according to the IFRS standards that have been adopted by EU as well as the interpretations of the valid standards adopted by EU, IFRICs. This report for the Group has been prepared according to IAS 34, Interim financial reporting as well as applicable regulations in the Annual Accounts Act. The parent company quarterly report has been prepared according to chapter 9 in the Annual Accounts Act, Quarterly reports and RFR 2, Accounting rules for legal entities. The quarterly report has been prepared for the Group and parent company according to the same accounting principles and conditions applied in the latest Annual Report, except for the amended accounting principles described below.
In addition to the financial reports and their accompanying notes further information according to IAS 34.16A can be found in other sections of the quarterly report.
The Group began to apply IFRS 16, Leases in 2019.
IFRS 16 Leases
IFRS 16, Leases replaced IAS 17, Leases as of 1 January 2019. IFRS 16 will basically require 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 costs on the leasing liability are recognized in the income statement. This will not have any material effect on profit before tax. Affected leases primarily cover rents for offices and other premises, leaseholds, land rentals and vehicles. IFRS 16, Leases is applied in segment reporting.
When changing over to the new standard Peab has 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.
Right-of-use leases shorter than 12 months or which end within 12 months from the changeover date are classified as current leases and therefore are not included in liabilities or right-of-use assets. In addition, Peab has elected not to recognize leases for which the underlying asset has a low value as a right-of-use asset respectively a lease liability.
Existing finance leases previously recognized according to IAS 17, Leases are reclassified according to IFRS 16 for the amount they were recognized at the day immediately before application of the new standard.
An incremental borrowing rate has been determined per country, right-of-use period and type of asset per 1 January 2019.
Effects of the changeover to IFRS 16 are given below. For further information concerning the changeover to IFRS 16 see the Annual Report 2018, note 45.
| Group, MSEK | Reported balance sheet 2018-12-31 | Adjustment 2019-01-01 | Adjusted balance sheet 2019-01-01 | |
| Koncernen, Mkr | Rapporterad balansräkning 2018-12-31 | Justering 2019-01-01 | Justerad balansräkning 2019-01-01 | |
| Assets | Tillgångar | |||
| Tangible assets | Materiella anläggningstillgångar | 5,741 | 618 | 6,359 |
| Investment property | Förvaltningsfastigheter | 589 | 53 | 642 |
| Project and development properties | Projekt- och exploateringsfastigheter | 9,685 | 206 | 9,891 |
| Other current receivables | Övriga kortfristiga fordringar | 13,857 | -27 | 13,830 |
| Other assets | Övriga tillgångar | 7,444 | – | 7,444 |
| Total assets | Summa tillgångar | 37,316 | 850 | 38,166 |
| Equity and liabilities | Eget kapital och skulder | |||
| Equity | Eget kapital | 11,348 | – | 11,348 |
| Interest-bearing liabilities | Räntebärande skulder | 7,012 | 850 | 7,862 |
| Other liabilities | Övriga skulder | 18,956 | – | 18,956 |
| Total equity and liabilities | Summa skulder och eget kapital | 37,316 | 850 | 38,166 |
Recognition of additional leases according to IFRS 16
| Group, MSEK | Jan-Mar 2019 | |
| Koncernen, Mkr | Jan-mar 2019 | |
| Production costs | Kostnader för produktion | 4 |
| Sales and administrative expenses | Försäljnings- och administrationskostnader | 1 |
| Operating profit | Rörelseresultat | 5 |
| Financial expenses | Finansiella kostnader | -6 |
| Pre-tax profit | Resultat före skatt | -1 |
| Tax | Skatt | 0 |
| Profit for the period | Periodens resultat | -1 |
| Group, MSEK | 2019-01-01 | 2019-03-31 | |
| Koncernen, Mkr | 2019-01-01 | 2019-03-31 | |
| Fixed assets | Anläggningstillgångar | 671 | 667 |
| Current assets | Omsättningstillgångar | 179 | 147 |
| Total assets | Summa tillgångar | 850 | 814 |
| Equity | Eget kapital | – | -1 |
| Interest-bearing long-term liabilities | Långfristiga räntebärande skulder | 702 | 662 |
| Interest-bearing current liabilities | Kortfristiga räntebärande skulder | 148 | 153 |
| Total equity and liabilities | Summa skulder och eget kapital | 850 | 814 |
Parent company
The new standard IFRS 16, Leases which is applied as of 1 January 2019 does not affect the parent company since the standard is exempt from application in corporations and leasing in the parent company is insignificant.