CITIC Limited Half-Year Report 2019

42 CITIC Limited Half-Year Report 2019 For the six months ended 30 June 2019 2 Basis of preparation and changes in significant accounting policies (continued) (b) Changes in significant accounting policies (continued) HKFRS 16 Leases (continued) 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. Low-value assets comprise IT-equipment and small items of office furniture. The Group has adopted HKFRS 16 from 1 January 2019, but has not restated comparatives for the 2018 reporting period, as permitted under the specific transitional provisions in the standard. The reclassifications and the adjustments arising from the new leasing standard are therefore recognised in the opening balance sheet on 1 January 2019, including a decrease of retained earnings of HK$162 million. ROU assets of the Group were measured on a retrospective basis or at the amount equal to the lease liabilities, adjusted by the amount of any prepaid or accrued lease payments relating to that lease recognised in the balance sheet as at 31 December 2018. On adoption of HKFRS 16, the Group recognised lease liabilities in relation to leases which had previously been classified as “operating leases” under the principles of HKAS 17 Leases. These liabilities were measured at the present value of the remaining lease payments, discounted using the lessee’s incremental borrowing rate as of 1 January 2019. Measurement of lease liabilities HK$ million Operating lease commitments disclosed as at 31 December 2018 28,607 Discounted using the lessee’s incremental borrowing rate of at the date of initial application (note) 27,211 Add: finance lease liabilities recognised as at 31 December 2018 259 Less: short-term leases recognised on a straight-line basis as expense (199) Less: low-value leases recognised on a straight-line basis as expense – Less: contracts reassessed as service agreements (474) Add: adjustments as a result of a different treatment of extension and termination options 1,080 Others (285) Lease liability recognised as at 1 January 2019 27,592 Notes to the Consolidated Financial Statements