BIMB Integrated Annual Report 2019

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) 2.1 Basis of preparation (continued) (b) Changes in significant accounting policies MFRS 16, Leases (continued) The associated lease liabilities are measured at the present value of the remaining lease payments, discounted using the same incremental borrowing rate as of 1 January 2019.The weighted average incremental borrowing rate applied to the lease liabilities on 1 January 2019 for the Group was at 5.7% - 6.4%. Each lease payment is allocated between the lease liability and finance cost. The finance cost is charged to profit or loss over the lease period so as to produce a constant periodic rate of profit on the remaining balance of the liability for each period. Payments associated with short-term leases and leases of low-value assets are recognised on a straight-line basis as an expense in profit or loss. Short-term leases are leases with a lease term of 12 months or less. The following table summarises the effects of adoption of MFRS 16 as at 1 January 2019: As Effects upon previously adoption of report MFRS 16 As restated Group RM’000 RM’000 RM’000 Deferred tax assets 94,115 21,258 115,373 Right-of-use assets – 257,388 257,388 Property and equipment 415,775 (19,941) 395,834 Lease liabilities – 326,196 326,196 Retained earnings 2,081,542 (67,491) 2,014,051 The following is a reconciliation of total operating lease commitments at 31 December 2018 (as disclosed in the financial statements to 31 December 2018) to the lease liabilities recognised at 1 January 2019: Group RM’000 Operating lease commitments disclosed at 31 December 2018 385,256 Lease-type obligations (service agreements) 142,152 Discounted using incremental borrowing rate (201,212) Total lease liabilities recognised under MFRS 16 at 1 January 2019 326,196 The recognised right-of-use assets relate to the following type of assets: Properties 255,813 Equipment 1,575 Right-of-use assets at 1 January 2019 257,388 NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2019 (CONTINUED) 184 Integrated Annual Report 2019 Group Overview Sustaining The Group Management Discussion & Analysis Group Governance