New Wave Group AB Annual_report_2018_EN_HQ | Page 71

NWG // FINANCIAL INFORMATION //
12 months (short-term lease agre-
ements) and leasing agreements for
assets that have a low value. The Group
has chosen to use these practical expe-
dients, and has also chosen to apply the
simplification rule for the definition of
leasing agreements and include non-
leasing components as part of the right
of use assets and the leasing liability.
With regard to extension options for the
Group's leasing agreements, individual
assessments have been made for each
agreement based on the probability of
whether any extension options will be
utilized or not.
New Wave Group has chosen to apply
the simplified transition method and will
not recalculate the comparative figures.
The simplification rule, that the right of
use asset shall correspond to the leasing
liability as per transition date January 1
2019, has been applied at the transition.
As a result thereof, no transition effect is
recorded in the equity of the Group.
During the past year, all of the Group's
leasing agreements have been reviewed
as a result of the new rules in IFRS 16.
The standard will primarily affect the
accounting of the Group's operating
leases, which for the most part consist
of lease agreements for office premises,
warehouses and cars. As per transition
date January 1 2019, the Group recog-
nizes a right of use asset and as well as a
leasing liability amounting to SEK 641
million, reducing the equity ratio of the
Group with four percentage points as
of the same date. Accounting pursuant
to IFRS 16 will also affect the Group’s
EBITDA positively going forward, since
leasing fees will be recorded as depreci-
ation and interest expenses.
THE GROUP
Reconciliation from IAS 17 to IFRS 16
SEK million
Commitments for operational leasing agreements as per December 31 2018 764.4
Addition: adjustments related to options to extend or terminate agreements 61.6
Reduction: short-term lease agreements and leasing agreements for low-value
assets which are expensed on a straight-line basis
Reduction: adjustments related to price changes attributable to variable fees
-13.1
-7.1
Reduction: adjustments related to agreements for which the commencement
date have not been passed at transition to IFRS 16 -85.3
Discount effect -79.6
Opening balance for right of use asset and leasing liability as per January 1 2019
641.0
Consolidated financial
statements and principles
of consolidation
The consolidated financial statements
comprise the Parent Company New
Wave Group AB and all companies in
which New Wave Group AB directly or
indirectly holds more than 50 percent
of the voting rights or otherwise exer-
cises a controlling influence. In assessing
whether a controlling influence exists,
potential shares entitling the holder
to vote that can be used or converted
without delay are taken into account.
Pricing between Group companies
is set on a commercial basis and thus
constitute market prices. Internal profits
and losses arising from sales between
Group companies have been fully
eliminated.
Acquisitions and goodwill
All acquisitions are recorded using the
purchase method. The acquisition value
is defined as the sum of the fair values of
the assets received, liabilities incurred or
assumed and equity instruments issued
by New Wave Group to acquire the
operation.
The acquisition value of shares in
Group companies is eliminated against
equity in each subsidiary at the time of
acquisition. If the transferred conside-
ration for the shares exceeds the fair value
of the acquired company’s net assets,
consolidated goodwill is recognised.
Under this method, only the portion of
equity in the Group company that has
been generated after the acquisition date
is included in equity attributable to the
shareholders of the Parent company.
If the portion of the fair value of the
acquired net assets exceeds the cost of the
acquisition, the difference is recognised
in the income statement as an acquisition
ANNUAL REPORT // 071