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Transition to the new IFRS 15 Revenues from Agreements with Customers standard does not have a material impact on the result and financial position of Cramo Group

Cramo Plc  Stock Exchange Release  10 November 2017 at 9.00 am (EET)

Transition to the new IFRS 15 Revenues from Agreements with Customers standard does not have a material impact on the result and financial position of Cramo Group

IFRS 15 Revenues from Contracts with Customers standard (applicable for financial years beginning on or after January 1 2018) replaces the current IAS 18 and IAS 11 revenue recognition standards and related interpretations. IFRS 15 standard applies a five-step model to determine when to recognise revenue, and at what amount. Revenue is recognised when (or as) a company transfers control of goods or services to a customer either over time or at a point in time. Cramo Group has  measured the impacts of IFRS 15 standard on the Group's financial result and financial position and has prepared the necessary changes to the revenue recognition practices. In the following, the effects of IFRS 15 standard on different revenue types are described as well as the transition options to be applied by the Group.

Cramo Group’s revenue consist of rental revenues from rental of equipment, machines and modular space recognised as income under IAS 17 Leases standard, and rental-related services and sale of equipment recognised under IFRS 15 standard. In year 2016 rental revenues comprised 74 % of the Group’s total revenues (2015: 74%) and services comprised 26 % (2015: 26 %). Transition to IFRS 15 standard does not have any material impact on the Group's result and financial position. The standard increases amount of notes to the Group’s financial statements.

Allocating total transaction price of customer agreements to relative stand-alone selling prices of service and lease components of the agreement will in some cases lead to adjustments in allocation between relative stand-alone selling prices of service revenue and lease revenue. Additionally, IFRS 15 standard has in some cases impact on timing of revenue recognition of a service component. These changes will lead to a slightly earlier revenue recognition of rental-related sales.

Contract assets and liabilities related to customer agreements will be presented as a net on a contract basis in accordance with IFRS 15 standard. This will decrease the amount of receivables and advances received in the Group balance sheet by approximately EUR 2 million. The estimated impact is based on the amount of contract receivables and advances received during the past twelve months.  

The Group will apply the cumulative effect approach transition option of the IFRS 15 standard, according to which outstanding customer agreements on 1 January 2018 will be restated to IFRS 15 standard and cumulative effects are recorded against retained earnings. The cumulative effects of the transition are expected to be immaterial. Financial statements for the financial year 2018 will be prepared in accordance with IFRS 15 standard, and the comparative information in the financial statements and half year interim report are presented in accordance with IAS 18 / IAS 11 standards.

IFRS 16  Leases standard will be applied to lease accounting from 1 January 2019. In terms of revenue recognition, transition to IFRS 16 standard does not have any material impact on the Group’s result and financial position.

CRAMO PLC

Leif Gustafsson
President and CEO

Further information:

Mr Aku Rumpunen, CFO, tel: +358 10 661 10, +358 40 556 3546

 
Distribution:
Nasdaq Helsinki Ltd.
Main media
www.cramogroup.com
 

Cramo is Europe’s second largest rental services company specialising in construction machinery and equipment rental and rental-related services as well as the rental of modular space. Cramo operates in about 300 depots in fourteen countries. With a group staff around 2,600, Cramo's consolidated sales in 2016 was EUR 712 million. Cramo shares are listed on Nasdaq Helsinki Ltd.

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