The Company has adopted IFRS 16 retrospectively from 1 July 2019, but has not restated comparatives for the 2019 reporting period, as permitted under the specific transitional provisions in the standard. The reclassifications and the adjustments arising from the new leasing rules are therefore recognised in the opening balance sheet on 1 July 2019. The new accounting policies are disclosed within Note 35 of the Group accounts.
(a) Adjustments recognised on adoption of IFRS 16
On adoption of IFRS 16, the Company recognised lease liabilities in relation to leases which had previously been classified as 'operating leases' under the principles of IAS 17 Leases. These liabilities were measured at the present value of the remaining lease payments, discounted using the lessee's incremental borrowing rate as of 1 July 2019. The weighted average lessee's incremental borrowing rate applied to the lease liabilities on 1 July 2019 was 2.9%.
|Operating lease commitments disclosed as at 30 June 2019||1.3|
|Impact of discounting using incremental borrowing rate (IBR) on transition||(0.2)|
|Lease liability recognised as at 30 June 2019||1.1|
|Current lease liabilities||0.2|
|Non-current lease liabilities||0.9|
The recognised right of use assets relate to the following types of assets:
|Total right of use assets||1.0||1.1|
The change in accounting policy affected the following items in the balance sheet on 1 July 2019:
- right of use assets – increase £1.1 million.
- lease liability – increase £1.1 million.
The net impact on retained earnings on 1 July 2019 was £nil.
The adoption of IFRS 16 has resulted in EBITDA being £0.2 million higher in the current period compared to IAS 17. There has been £nil impact on EBIT.