Econocom - 2019 Universal registration document

06 consolidated financial statements

notes to the consolidated financial statements

The main impact therefore relates to certain non-recourse sale & leaseback transactions for which the margin is spread over the term of the agreement. Econocom functioning as a lessee The leases that fall within the scope of IFRS ژ 16 apply mainly to premises and vehicle rentals. In accordance with IFRS ژ 16, all leases are now recognised on the assets side with the recognition of a right of use, and on the liabilities side with a liability corresponding to the discounted value of future payments. The rental term is determined on a lease-by-lease basis and corresponds to the firm period of the commitment, taking into account optional periods that are reasonably certain to be exercised, except for vehicles for which Econocom will retain the portfolio approach, through simplification, given that the contracts are somewhat similar irrespective of the country and that this simplification does give rise to material differences with regard to the recommended method set forth in IFRS ژ 16. For vehicles, the assumptions and measurement methods of this “portfolio” approach are as follows: a measurement is done at each period end, making it possible to update the lease liability and right of use; amortisations and financial expenses are then determined on a flat-rate basis based on an average term of use of the vehicles (amortisation) and on the rental payments actually paid for the difference. The accounting exemptions set out in the standard for the short-term contracts (term below or equal to 12 months)– and leases on low value assets, have been applied.

As with IAS ژ 17, the lease durations are analysed for each lease. The term takes account of the reasonably certain renewal and cancellation options. The discount rate applied on the date of transition is based on the Group’s incremental borrowing rate. Following the application of IFRS ژ 16, the Group has recorded deferred taxes for the net amount of deductible and taxable temporary differences. Presentation of the impacts 1.1.1.2. of the application of IFRS ژ 16 on the financial statements as lessee The Econocom group applies IFRS ژ 16 according to the simplified retrospective approach, which means the impacts are recorded in the opening statement of financial position at 1 ژ January 2019. Consequently, the 2018 financial statements have not been restated. Impacts on the consolidated income statement In the 2019 consolidated income statement, occupancy expenses are distributed between amortisations of the right of use in profit (loss) from continuing operations and financial expenses in financial income. At 31 ژ December 2019, the application of the standard impacted the income statement for: -€25.3 million under "Depreciation, • amortisation and provisions"; +€26.9 million under "External expenses"; • and -€1.6 million under "Other financial • income and expenses".

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2019 annual report