Note 37 – Obligations
Operating leases
Duni leases a number of offices and warehouses as well as passenger cars, primarily for the sales organization. In addition, certain machinery is leased in the production operations. The leases are non-terminable operating leases. Leases have varying terms, index clauses and rights of extension. The terms are market terms as regards prices and lengths of the agreements.
The nominal value of future minimum lease payments, with respect to non-terminable leases, is broken down as follows:
| Group | Parent Company | |||
| SEK m | 2018 | 2017 | 2018 | 2017 |
| Payable within one year | 62 | 56 | 15 | 13 |
| Payable later than one but within five years | 117 | 106 | 17 | 6 |
| Payable later than five years | 53 | 47 | – | – |
| Total | 232 | 210 | 32 | 18 |
| Of which leases signed during the year | 39 | 33 | 3 | 8 |
The total expenses for operating leases during the year amounted to SEK 97 m (2017: SEK 77 m) in the Group and SEK 25 m (2017: 25 m) in the Parent Company.
Finance leases
The nominal value of future minimum lease payments, with respect to non-terminable leases, is broken down as follows:
| Group | Parent Company | |||
| SEK m | 2018 | 2017 | 2018 | 2017 |
| Payable within one year | 2 | 1 | – | – |
| Payable later than one but within five years | 0 | 2 | – | – |
| Payable later than five years | – | 0 | – | – |
| Total | 2 | 4 | 0 | 0 |
| Present value of future lease payments | 2 | 4 | 0 | 0 |
IFRS 16 Leases will be applied starting on January 1, 2019 and stipulates that Duni recognize assets and liabilities in the balance sheet for all leases where it is the lessee. The income statement will be impacted by the depreciation of the asset and interest expenses for the liability instead of an operating lease expense. Duni has identified and assessed the leases subject to the new standard. Duni has chosen to use the simplified transition method for transition to IFRS 16 where comparative figures are not restated. Duni will recognize the accumulated effect of initial IFRS 16 application as an adjustment to the opening balance on the initial application date and the transition will not have any impact on shareholders’ equity. The lease liability is measured at the present value of the remaining lease payments, and the right-of-use asset for all identified leases subject to the new standard equals the amount of the lease liability. The expenses for these leases will be recognized in the income statement as depreciation and interest expenses, which will impact income metrics such as EBITDA, EBIT and net financial items. Duni has chosen to apply the practical exemptions for short-term leases (leases of 12 months or less) and leases of low-value assets (the underlying asset’s value is less than USD 5 k) and not recognize an asset and liability for them. Instead, these leases are recognized as recurring expenses in the income statement. Duni has chosen to divide its leases into portfolios and use the same discount rate on lease portfolios with similar characteristics.
For further disclosure, please see Note 2.1.1
Breakdown of transition to IFRS 16
| SEK m | Group |
| Obligations for operating leases at December 31, 2018 | 232 |
| Discounting of the Group’s weighted average incremental borrowing rate: 2.8%* | -8 |
| Plus: Obligations for finance leases at December 31, 2018 | 2 |
| Minus: Short-term leases and leases of low-value assets are recognized as expenses on a straight-line basis | -12 |
| Lease liability recognized at January 1, 2019 | 214 |
* at initial effective date (01/01/2019)
Transition effects, total assets
| SEK m | Group |
| Closing balance Dec. 31, 2018 | 6 027 |
| Restatement | 214 |
| Opening balance Jan. 1, 2019 | 6 241 |