PRG Holdings Berhad Annual Report 2019

PRG HOLDINGS BERHAD 110 NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER 2019 cont’d 5. ADOPTION OF NEW MFRSs AND AMENDMENTS TO MFRSs (continued) 5.1 New MFRSs adopted during the financial year (continued) MFRS 16 Leases (continued) (b) Lease liabilities are measured as follows: Group RM’000 Operating lease commitments at 31 December 2018 as disclosed under MFRS 117 29,134 Operating leases not yet commenced at 31 December 2018 (20,720) 8,414 Weighted average incremental borrowing rate as at 1 January 2019 3.7% Discounted operating lease commitments as at 1 January 2019 6,004 Finance lease liabilities recognised as at 31 December 2018 839 Extension options reasonably certain to be exercised 204 Lease liabilities recognised at 1 January 2019 7,047 5.2 New MFRSs that have been issued, but only effective for annual periods beginning on or after 1 January 2020 The following are Standards of the MFRS Framework that have been issued by the MASB but have not been early adopted by the Group and the Company: Title Effective Date Amendments to References to the Conceptual Framework in MFRS Standards 1 January 2020 Amendments to MFRS 3 Definition of a Business 1 January 2020 Amendments to MFRS 101 and MFRS 108 Definition of Material 1 January 2020 Amendments to MFRS 9, MFRS 139 and MFRS 7 Interest Rate Benchmark Reform 1 January 2020 MFRS 17 Insurance Contracts 1 January 2021 Amendments to MFRS 101 Classification of Liabilities as Current or Non-current 1 January 2022 Amendments to MFRS 10 and MFRS 128 Sale or Contribution of Assets between an Investor and its Associate or Joint Venture Deferred The Group does not expect the adoption of the above Standards to have a significant impact on the financial statements. Financial reporting updates IFRIC Agenda Decision - An assessment of the lease term (IFRS 16) The IFRS Interpretations Committee (“IFRIC”) issued a final agenda decision on 26 November 2019 regarding “Lease term and useful life of leasehold improvements (IFRS 16 and IAS 16)”. The submission to the IFRIC raised a question pertaining the determination of the lease term of a cancellable lease or a renewable lease based on the requirements of IFRS 16.B34. Based on the final agenda decision, the IFRIC concluded that the determination of the enforceable period of a lease and the lease term itself shall include broad economic circumstances beyond purely commercial terms.