An Analysis of the Effects on SAS’ Financial Statement and Valuation, When Implementing IFRS 16: With Perspective to the Medical and Logistics Industry

Khoi Tuan Nguyen & Sebastian Pforr Korsgård Nielsen

Student thesis: Master thesis


The objective of this thesis is to examine whether the new accounting standard on leases, IFRS 16, will affect a firm’s financial statement. The objective is to conduct a valuation of SAS Group A/S and examines how IFRS 16 affects the firm’s financial reports and valuation. Furthermore, a ‘lighter’ valuation is conducted on firms from medical industry and logistic industry to put the objective into perspective.
To address the objective, IFRS 16 is identified, with mainly focus on accounting treatment, and compared to its predecessor, IAS 17. A ‘classic’ valuation is conducted on SAS to determine its current stock price. The strategic analysis depicts that SAS is situated in a dynamic industry which is affected by many external factors. Furthermore, the aviation industry is highly competitive, but SAS has a marginal competitive advantage due to its reputation.
SAS’ financial statement indicates that the firm has 21 bn. SEK worth of operational leasing contracts excluded from the balance sheet. Reformulation of SAS’ financial statement under the International Accounting Standard, IAS 17, illustrates that the firm’s historical performance has fluctuated, experiencing both negative and positive NOPAT and ROIC.
The valuation of SAS’ is conducted by using the DCF model, which estimates the stock price to be 14,78 SEK. The same process has been applied for Novo Nordisk A/S (medical industry) where the estimation is 303,93 DKK per share, and DSV A/S (logistic industry) with a 374,21 DKK per share.
Following the valuations, implementation of IFRS 16 is simulated, which improves SAS’ stock price to 84,55 SEK, whereas Novo and DSV improve to 313,28 DKK and 405,69 DKK respectively. The effects of IFRS 16 prove to be specific to the industry. However, this is not due to the fact that the firm is characterized by a certain industry, but because the assets leased by the firm are characterized by a certain industry. We postulate that the simulated effects are not practically possible, but theoretically possible as we already before this thesis expected a larger impact on the aviation industry.

EducationsMSc in Finance and Accounting, (Graduate Programme) Final Thesis
Publication date2017
Number of pages170