NWG Annual Report 2019 - EN NWG Annual Report 2019 - EN | Page 70

NWG // FINANCIAL INFORMATION //
THE GROUP
Note 1 - Accounting policies
Basis of preparation
The consolidated financial statements
have been prepared in accordance with
the International Financial Reporting
Standards (IFRS) issued by the
International Accounting Standards
Board (IASB) as adopted by the EU.
Recommendation RFR 1 Supplementary
Accounting Rules for Corporate Groups
of the Swedish Financial Reporting Board
has also been applied, which means that
certain additional disclosures are provided
in the consolidated financial statements.
The accounting policies presented in the
following description have been applied
consistently in the entire Group for all
periods presented in the consolidated
financial statements. The financial state-
ments are prepared in Swedish kronor,
which is the reporting currency of New
Wave Group.
Preparing financial statements in
accordance with IFRS requires that
management make certain assessments,
estimates and assumptions. Critical esti-
mates and assessments are in all essential
based on historical experience and
expected future events. Estimates, assess-
ments and assumptions are reviewed on a
regular basis. Changes are reported in the
period in which the change is implemented
and in future periods if these are affected.
Information on areas where applied esti-
mates and assessments contain an element
of uncertainty is provided in note 2.
Fixed assets, non-current liabi-
lities and provisions consist essentially
of amounts that are expected to be reco-
vered or paid later than twelve months
from the balance sheet date. Current
assets and current liabilities essentially
consist of amounts that are expected to be
recovered or paid within twelve months of
the balance sheet date.
New and amended
accounting policies
New accounting policies for
2019
As of January 1, 2019, New Wave Group
applies IFRS 16 Leases which have
replaced IAS 17 Leases.
070 // ANNUAL REPORT
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 lease liability as per January 1 2019
The standard represents a new framework
for recognizing leases with additional
disclosure requirements. The Group is
only a lessee and not a lessor and the
impact of implementing the standard is
therefore only related to lessee accounting.
Implementing the new lease accounting
for lessees has resulted in increased assets
and interest-bearing liabilities in the
consolidated balance sheet. The impact
on the Group’s consolidated income
statement is that lease costs, prior year
recorded as external costs, are divided as
amortization of lease liability and interest
cost. The Group’s consolidated income
statement is also affected by increased
depreciation related to right-of-use
assets. The lease liability is measured at
the present value of outstanding lease
payments. The Group has applied the
simplified transition method and has not
recalculated the comparative figures. The
simplification rule, that the right-of-use
asset shall correspond to the leasing
liability, has been applied as per trans-
ition date January 1, 2019. As a result
thereof, no transition effect is recorded
in the equity of the Group. The Group has
chosen to use the practical expedients and
excluded lease agreements with a lease
term of less than 12 months (short-term
lease agreements) and leasing agreements
for assets that have a low value. The Group
has also chosen to apply the simplification
rule for the definition of lease agreements
and include non-leasing components as
part of the right-of-use asset and the lease
liability.
641.0
As per transition date January 1, 2019, the
Group recognized right-of-use assets and
as well as a leasing liabilities amounting
to SEK 641 million. The right-of-use
assets have been recorded as tangible
assets in the Group’s consolidated balance
sheet and the lease liabilities as long- and
short-term interest-bearing liabilities in
the Group’s consolidated balance sheet.
For a reconciliation from the commit-
ments for operational leasing agreements
as per December 31, 2018, according to
IAS 17, to the opening balance for the
right-of-use asset and leasing liability
as at January 1, 2019 see the above
table. In connection with the transition,
it was assessed as reasonably certain
that extension options for a number of
agreements would be exercised.
The lease liability was discounted at
the Group’s incremental borrowing rate
as at January 1, 2019. The average incre-
mental borrowing rate was 2.7 % as at
January 1, 2019. For disclosure of the
impact on 2019 year figures see note 30.
Complete accounting policies for leases
are presented below in the section Leases.
Several other amendments of current
accounting standards and interpreta-
tions apply for the first time in 2019, but
do not have an impact on the consolidated
financial statements of the Group. The
Group has not early adopted any stan-
dards, interpretations or amendments
that have been issued but are not yet
effective.