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Adjusted Business Area structure and IFRS 16 – restated financials

April 12, 2019 | Press release

Sweco is today releasing historical restated financial information considering the adjusted Business Area structure. Moreover, the financial statements for all periods of 2018 are restated pursuant to IFRS 16, the new standard for accounting of leases. Both the adjusted Business Area structure and IFRS 16 are applicable as of January 1, 2019. The purpose of this release is to facilitate comparability with historical periods.

Sweco has provided information on the implementation of IFRS 16 Leases, including the estimated impact on financial statements for the full year 2018, in the Year-end report for 2018 published on 13 February 2019 and in the 2018 Annual report published on 21 March 2019.

Adjusted Business Area Structure

As of January 1, 2019, Sweco operates with eight Business Areas (BAs). The modified BA structure reflects Sweco’s strategy to focus on eight core markets in Northern Europe. In the modified structure, Sweco UK and Sweco Belgium become separate Business Areas. Central Europe is renamed Germany & Central Europe, to emphasize the strategic focus on Germany. Moreover, Bulgaria is moved from Sweco Western Europe to Sweco Germany & Central Europe, and Sweco Western Europe thereby does not exist any longer.

Adoption of IFRS 16 Leases

As of 1 January 2019, Sweco applies IFRS 16 Leases, the new standard for accounting of leases. With IFRS 16, essentially all leases are recognized on the balance sheet, as there will be no difference in treatment between financial leases and operational leases as in the previous standard IAS 17.

In IFRS 16, the right to a lease is recognized as an asset in the balance sheet (Right-of-use Asset), while the corresponding obligation to pay for this right is recognized as a liability (Lease Liability). The leases are expensed in the income statement through a depreciation of the Right-of-use asset impacting EBIT and a financial expense on the Lease Liability impacting profit before tax. Sweco’s leases predominantly include office rents, but also to some extent company cars and office equipment. Sweco has chosen the full retrospective transition method and has accordingly accounted for all lease contracts as if IFRS 16 had always been applied. Further, Sweco has chosen to use the practical expedient to not include leases of low value and leases shorter than 12 months.

In order to facilitate analysis, this document provides restated income statements and balance sheets for interim periods of 2018. Sweco will not restate financial statements prior to 2018.  

On Business area level, Sweco will not apply IFRS 16. The segment reporting for 2019 will thus be unchanged compared to 2018. More information about Sweco’s application of IFRS 16 can be found in the Annual report for 2018 on page 56-57. Details on the changes are specified in the text below and in the restated figures that are presented in the attached tables.

Impact on key financial metrics

The adoption of IFRS 16 has significant impact on presentation of financial statements, as both assets and liabilities will increase significantly, and other expenses will decrease whereas deprecations and interest expenses will increase accordingly.

Sweco has chosen to maintain its key financial metrics close to previous definitions, producing minor differences to previously presented values. The objective is to facilitate comparability with previous periods and provide transparency on Sweco’s operational performance and the group’s financial strength, apart from accounting effects of IFRS 16. By this approach, Sweco’s targets on profitability (EBITA margin of 12%) and financial strength (Net Debt/EBITDA < 2.0x) also remain unchanged.

Sweco’s key financial metrics, defined as Alternative Performance Measures (APMs) according to IFRS, are in summary the following:

EBITA is the group’s key metric of operational performance on group and BA level. Sweco’s EBITA measure is defined as Earnings before interest, taxes and acquisition-related items, where all leases are treated as operational leases, whereby the total cost of the lease is affecting EBITA. The treatment as operational lease is done pursuant to IAS 17 (the standard for leases applied until 31 December 2018).

Net debt/EBITDA is Sweco’s key metric for financial strength. The definition continues to materially be in line with the covenant definitions in Sweco’s bank financing agreements:

•        Net debt: Net debt is defined as net financial debt (almost exclusively comprising of interest-bearing bank debt), less cash and cash equivalents and short-term investments. Lease liabilities are excluded from Net Debt.

•        EBITDA: In the same way as for EBITA, EBITDA is calculated assuming all leases to be operational pursuant to IAS 17.

Reconciliation between Sweco’s key financial metrics and IFRS measures is provided in the attached restated financial information.

Presentation of restated historic financials

The restated information has been compiled and presented in accordance with Sweco’s accounting policies as described in Sweco’s annual report for 2018, except for the implementation of the new IFRS 16 standard.

Segment information restated for new Business Areas

The restated segment information presented in the table ‘Restatement of Quarterly review per business area’ attached hereto encompasses Net sales, EBITA, EBITA margin and Full-time employees restated according to the new BA structure valid as of 1 January 2019. The information has been restated for the last eight quarters.

Restatement of 2018 consolidated financials

The consolidated income statements and balance sheets for every quarter in 2018, including the opening balance on 1 January 2018, have been restated for IFRS 16. In order to facilitate the analysis of the financial development, Sweco has adjusted the presentation of consolidated income statement and balance sheet by adding new line items.

In the income statement, as presented in the interim reports, the Financial net has been divided into three parts in order to facilitate the analysis of lease liabilities and other interest-bearing liabilities:

•        Net financial items: Comprising interest expenses on credit facilities and other costs related to credit facilities less interest income on cash and cash equivalents and short-term investments.

•        Interest cost of leasing: Consists of the interest cost of leases according to IFRS 16.

•        Other financial items: Result and distributions from participations in associated companies and other securities, result from sale of participations in associated companies and other securities, foreign exchange gains and losses on financial assets and liabilities, and other interest income and interest expenses.

The restated information has not been subject to review or audit by the company’s auditors.


The enclosed appendix includes the following tables:

•        Full-year impact of IFRS 16 on Consolidated Income statement and Comprehensive Income statement 2018

•        Restatement of Consolidated Income statement and Comprehensive Income statement

•        IFRS 16 impact on Balance sheet per 31 December 2018

•        Restatement of Balance sheet

•        Key ratios and Reconciliation to EBIT

•        Restated Net debt

•        Restatement of Quarterly review per business area


The tables are also available in Excel-format on Sweco’s website at www.swecogroup.com.

Attached information

Anna Elisabeth Olsson

Head of Press and Public Affairs