Annual report 2019

92

expedients that lease payments on short-term leases and leases of low value assets are recognized as expense on a straight- line basis over the lease term. IFRS 16 is applied to or grandfathered to the lease contracts defined in 2018 according to IAS 17. The right-of-use asset is set equal to the lease liabilities at transition dated. The main estimates made by management are related to the applied discount rate and the term of the lease. The lease liabilities were discounted at the incremental borrowing rates as at 1 January 2019. The weighted average discount rate is 1.8%. Reconciliation of the IFRS 16 opening balance of the lease liabilities as at 1 January 2019 is based on the lease obligations as at 31 December 2018:

Fair value hierarchy Assets and liabilities for which fair value is measured or disclosed in the financial statements are categorized within the fair value hierarchy as follows:  Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities;  Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).  Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs). CONSOLIDATED STATEMENT OF CASH FLOWS The consolidated statement of cash flows is drawn up using the indirect method. Cash is defined as cash and cash equivalents including bank overdrafts as presented in the explanatory notes to the cash and cash equivalents. Cash flows are presented separately in the statement of cash flows as cash flows from operating activities, investing activities and financing activities. The cash flows in the statement of cash flows also included the cash flows, if any, related to disposal groups. FIRST-TIME APPLICATION OF IFRS 16 LEASES The Group applied IFRS 16 with effect from 1 January 2019. With respect to IFRS 16 the Group applied the retrospective approach and has used the transition option meaning that the cumulative effects of initially applying IFRS 16 are recognized in the Consolidated Statement of Financial Position as at 1 January 2019. Comparative figures for 2018 have therefore not been restated. The reconciliation of the financial statement line items at 1 January 2019 from IAS 17 to IFRS 16 is set out below.

TOTAL

(in millions of EUR)

87 10

Off-Balance lease obligations as at 31 December 2018 Estimated extensions of leases, exceeding legal obligations

Effects of discounting the lease liability Leases less than 12 months and other effects

- 9 - 7

81

On balance lease liabilities as of 1 January 2019

The Group assesses whether a contract is, or contains a lease. For all leases present as at 1 January 2019 an opening balance sheet adjustment has been made as at 1 January 2019 to reflect the impact of adoption as at this date. The right-of-use assets and lease liability as at 1 January 2019 amounted to EUR 81.0 million (31 December 2019: respectively EUR 103.9 million and EUR 108.3 million). In 2019 the depreciation charges of EUR 27.3 million and interest charges of EUR 1.8 million were recognized in the Consolidated Statement of Profit or Loss. Over 2019 EBITDA increased by EUR 23.8 million and the net Group result decreased by EUR 1.2 million.

ANNUAL REPORT 2019 – BOSKALIS FINANCIAL STATEMENTS 2019 9 -- BOSKALIS FINANCIAL STATEMENTS 2019

As of the transaction date for leases with similar characteristics a single discount rate is applied. The Group also applies the