Basis for preparation
Securitas' consolidated financial statements are prepared in accordance with International Financial Reporting Standards (IFRS) as endorsed by the European Union (EU), the Swedish Annual Accounts Act and the Swedish Financial Reporting Board's standard RFR 1 Supplementary Accounting Rules for Groups. The consolidated financial statements have been prepared in accordance with the historical cost convention method except where a fair value measurement is required according to IFRS. Examples of assets and liabilities measured at fair value are financial assets or financial liabilities (including derivatives) at fair value through profit or loss and plan assets related to defined benefit pension plans.
Estimates and judgments
The preparation of financial reports requires the Board of Directors and Group Management to make estimates and judgments. Estimates and judgments will impact both the statement of income and the balance sheet as well as disclosures such as contingent liabilities. Actual outcome may differ from these judgments under different assumptions or conditions.
Adoption and impact of new and revised IFRS for 2016
None of the published standards and interpretations that are mandatory for the Group's financial year 2016 has had any impact on the Group's financial statements.
Introduction and effect of new and revised IFRS that are not yet effective and have not been early adopted by Securitas
None of the published standards and interpretations that are mandatory for the Group's financial year 2017 is assessed to have any impact on the Group's financial statements.
The future standards that mainly may impact the Group’s financial statements for the financial year 2018 or later are IFRS 9 Financial instruments, IFRS 15 Revenue from Contracts with Customers and IFRS 16 Leases.
IFRS 9 Financial instruments is endorsed by the EU and comes into force on January 1, 2018. The current assessment is that the transition to IFRS 9 will have no material impact on Securitas’ financial statements. One effect from the transition to IFRS 9 is that Securitas will apply an expected loss model for impairment testing of financial assets instead of the current incurred loss model. This is however expected to have no material impact on the financial statements.
IFRS 15 Revenue from Contracts with Customers is also endorsed by the EU and comes into force on January 1, 2018. The current assessment is that Securitas’ application of IFRS 15 will be based on a full retrospective application, with or without the use of any transitional practical expedients.Securitas provides services designed to protect people, workplaces and assets. These services constitute one deliverable to our customers in terms of performance obligations. The current analysis of the impact from adopting IFRS 15 does not show that there will be any major adjustments when it comes to identifying performance obligations or to the allocation of the transaction price on performance obligations, nor for the pattern of revenue recognition when performance obligations are satisfied. Thus the revenue recognition under IFRS 15 is not expected to be materially impacted compared to revenue recognition under current standards.
IFRS 16 Leases has not yet been endorsed by the EU. It is expected to come into force on January 1, 2019. One effect that is expected on Securitas from IFRS 16 is that total assets and total liabilities will increase. This is due to the fact that the majority of the Group’s leasing agreements (including rental agreements) will be accounted for gross in the balance sheet as non-current assets and interest-bearing liabilities. Further, the
Group’s operating income is expected to improve while financial expenses are expected to increase. This is due to the fact that costs for operating leases, which currently are in full accounted for in operating income according to IAS 17, will be replaced by leasing expenses that are split on depreciation and financial expenses. Refer to note 11 for further information on the Group´s current leasing agreements.
Click here for accounting principles in the Annual Report 2016