BPCE - 2019 Universal Registration Document

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FINANCIAL REPORT

IFRS CONSOLIDATED FINANCIAL STATEMENTS OF BPCE SA GROUP AS AT DECEMBER 31, 2019

Schedule of lease receivables

12/31/2019

12/31/2018

in millions of euros

FINANCE LEASES Non-discounted lease payments (amount of gross investments)

12,489 2,755 6,443 3,291 2,673 5,970 2,475 1,371 11,118

13,494 2,636 6,621 4,237 2,469 6,071 3,641 1,314 12,180

< 1 year 1-5 years > 5 years < 1 year 1-5 years > 5 years

Discounted lease payments (amount of net investments)

Financial income not received

Operating leases

311

423

< 1 year 1-5 years > 5 years

64

58

154

217 146

94

12.2.2

LEASES AS LESSEE

Accounting principles IFRS 16 applies to contracts that, irrespective of their legal form, meet the definition of a lease as laid down by the standard. The standard requires the identification of an asset and that the lessee controls the right to use this asset for a period of time. Control is established if the lessee holds the following two rights throughout the period of use: the right to obtain almost all of the economic benefits • arising from use of the asset; the right to decide how the asset is used. • The existence of an identified asset requires that the lessor has no substantive rights to substitute alternative assets, with this requirement being assessed according to facts and circumstances in place at the start of the contract. If the lessor can freely substitute the leased asset, the contract becomes a non-lease contract whose purpose is to provide capacity rather than an asset. The asset can be comprised of a portion of a larger asset, such as a floor within a building. However, a portion of an asset that is not physically distinct within a grouping without a pre-determined location is not an identified asset. With certain exceptions, lessees are required under IFRS 16 to record leases in the balance sheet as a right-of-use asset under “Property, plant and equipment” or “Investment property”, and as lease liabilities under “Other liabilities”. On the date of initial recognition, no deferred tax is reported if the value of the asset is equal to the value of the liability. Deferred tax is recorded for subsequent net temporary differences arising from changes in amounts recognized as right-of-use assets and lease liabilities. At the commencement date, the lessee measures the lease liability at the present value of the lease payments that are not paid at that date. These payments include fixed lease payments and in-substance fixed lease payments, variable lease payments based on an index or a rate calculated using the latest index or rate in force, any residual value guarantees and, where appropriate, any amount to be paid to the lessor under options that are reasonably certain to be exercised.

Lease payments used to determine the lease liability exclude variable payments that are not based on an index or a rate, taxes such as VAT, whether recoverable or not, and the housing tax. Right-of-use is recognized as an asset on the commencement date of the lease for an amount equal to the lease liability on that date, adjusted for any payments made to the lessor at or before that date and not taken into account for the measurement of the lease liability, less any lease incentives received. If appropriate, this amount is adjusted for initial direct costs incurred by the lessee and an estimate of costs to be incurred in dismantling or restoring the asset if required by the terms and conditions of the lease, as long as the outflow of cash is probable and can be determined in a reliable manner. The right-of-use asset is amortized on a straight-line basis and the lease liability is calculated on an actuarial basis over the term of the lease using the lessees’ incremental borrowing rate mid-way through the contract. The amount of lease liabilities is subsequently readjusted to take into account variations in the indices or rates to which the leases are indexed. As this adjustment reflects the right of use, it has no impact on the income statement. For entities that are part of the financial solidarity mechanism that centralize their funding with the Group Treasury, the rate is calculated at Group level and adjusted, as applicable, to the currency applicable to the lessee. The lease term is the non-cancellable period for which a lessee has the right to use an underlying asset, together with the periods covered by an option to extend the lease if the lessee is reasonably certain to exercise that option; and the periods covered by an option to terminate the lease if the lessee is reasonably certain not to exercise that option. For French “3/6/9” commercial leases, the term used is usually 9 years. The reasonable certainty of whether the options relating to the lease term will be exercised is assessed by considering Group entities’ real estate management strategy.

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UNIVERSAL REGISTRATION DOCUMENT 2019 | GROUPE BPCE

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