Page 72 - Loomis Annual Report 2017

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Notes – Group
Loomis Annual Report 2017
Notes
NOTE 1 General information
Loomis AB (Parent Company Corporate Identity Number 556620-8095) and its subsidiary companies (referred to col- lectively as the Group) offer comprehensive solutions for cash handling in the US, large parts of Europe and in Argentina and Chile, as well as cross-border transportation of cash and pre- cious metals and storage of valuables.
The Parent Company is a limited liability company with its registered of ce in Stockholm. The address of the head of ce is Drottninggatan 82, 111 36 Stockholm. The Parent Company is a holding company with the primary purpose of holding and administrating shares in a number of subsidiaries, whilst man- aging and administrating the Group as a whole.
These consolidated nancial statements are subject to adop- tion by the Annual General Meeting on May 3, 2018.
Summary of important accounting principles
The primary accounting principles applied in the preparation of this annual report are stated below. These principles have been applied consistently for all the years presented, unless stated otherwise. The same principles are, in general, applied in both the Parent Company and the Group. In certain cases, the Parent Company applies different principles than the Group. These are stated in Note 36.
Basis of preparation of reports
The Group applies the International Financial Reporting Stan- dards, IFRS (formerly IAS), as adopted by the European Union (EU), the Swedish Financial Reporting Board’s 1 Supplementary accounting rules for groups, and the Swedish Annual Accounts Act. The consolidated nancial statements have been prepared in accordance with the cost method, with the exception of avail- able-for-sale nancial assets and nancial assets or nancial liabilities valued at fair value through pro t or loss (including derivatives). For information on critical estimates and assess- ments, refer to Note 4.
New and revised standards adopted by the Group
New and amended accounting principles, as well as improve- ments that went into force in 2017, have not had any material impact on the Group’s nancial statements for the nancial year. The IFRS Interpretations Committee has issued a number of new interpretations and amendments. These amendments and inter- pretations have not had any signi cant impact on the Group’s nancial statements in 2017.
Standards, amendments and interpretations of existing standards that have not yet entered into force and that have not been adopted early by the Group
IFRS 15 is the new standard for revenue recognition. IFRS 15 replaces IAS 18 Revenue and IAS 11 Construction Contracts. IFRS 15 is based on the principle that revenue is recognized when the customer obtain control of the sold good or service that has been sold - a principle that replaces the earlier princi- ple that revenue is recognized when the risks and bene ts have been transferred to the purchaser. The standard goes into effect on January 1, 2018 and will be applied for the Group from that date. An entity may choose between a fully retrospective or pro- spective application with additional disclosures. Loomis will adopt the prospective application. In 2017, in order to estimate the quantitative impact of the new rules on the nancial state- ments, the Group evaluated the effect of the new standard and identi ed the following areas as likely to be affected:
Sale of SafePoint: When a SafePoint unit is sold, Loomis has
unit. Sales of SafePoint units only take place in exceptional cases. Usually the SafePoint unit is part of Loomis’ total ser- vice delivery to the customer. In the future, revenue generated in the event a SafePoint unit is sold will be recognized over the duration of the customer contract. This is because it is primarily the type of nancing that has changed and not Loo- mis’ service delivery to the customer. In 2017, SafePoint units were sold for a value of SEK 31 million.
Variable remuneration: Loomis’ contracts involve various types of variable remuneration. Some of these items have
in past periods been recognized as an expense, but in the future, they will be recognized as a reduction in revenue according to the new standard. In 2017, there were expensed items of SEK 27 million which according to IFRS 15 would have been recognized as a revenue reduction.
Contract assets: In certain cases under IFRS 15 expenses relating to obtaining contracts are recognized in the balance sheet and expensed over the duration of the contract. In 2017, there were expenses of this type of SEK 4 million.
Shareholders’ equity: The consolidated shareholders’ equity as of December 31, 2017 was SEK 7,037 million. Implemen- tation of IFRS 15 will reduce shareholders’ equity by SEK 15 million and the adjusted opening balance as of January 1, 2018 will amount to SEK 7,022 million..
The new revenue standard, IFRS 15, will not have any signi cant effect on either the statement of income or balance sheet total. Nor will it have any signi cant effect on the Group’s key ratios.
The most important revenue streams that will be affected by IFRS 15 are presented below:
Disaggregation and revenue allocation
The Group receives revenue from sales of goods and services over time and at certain point in time for the following main prod- uct lines: Cash in Transit (CIT), Cash Management Services (CMS) and International. When SafePoint equipment is used as part of
a service delivery to a customer, this is sometimes referred to as “sales of SafePoint.” The service, however, consists of providing cash in transit services, cash management services and a storage service to the customer. Revenue from these contracts are divided between CIT (60 percent) and CMS (40 percent).
SafePoint-solution
When providing services Loomis sometimes uses equipment called SafePoint. When selling this solution the service normally consists of providing the customer with transport services, cash management services and a storage service.The customer deposits the cash in the SafePoint unit and deposit the funds
on the customer’s bank account. The cash is collected, trans- ported, processed, veri ed to previously deposited amounts and stored in Loomis’ vault.
The SafePoint equipment is part of Loomis’ SafePoint service delivery. The SafePoint equipment at the customer’s premises
is owned by Loomis and can be replaced with a new SafePoint equipment by Loomis if this is deemed necessary. The con- tract is therefore not related to a speci c asset. Loomis’ perfor- mance obligation involves performing services every day for the duration of the contract, for which Loomis is paid on a monthly basis. This requires Loomis to perform a variety of tasks every day. From both Loomis’ and the customer’s perspective the Safe Point equipment is included as part of the service that is deliv- ered. This is not a separate service and the SafePoint equip- ment is considered as any other equipment used when provid- ing CIT or CMS services. For this reason, the transaction price is stand-alone, no allocation needed. Revenue is recognized throughout the duration of the contract and invoiced on
a monthly basis..
NOTE 2
historically reported this revenue at the time of the sale of the