Gschäftsbericht 2018

Galenica financial statements 2018| 91 Finance Notes to the consolidated financial statements of the Galenica Group Future amendments to IFRS The IASB has issued various new and amended standards and interpretations with effective dates in the financial year 2019 or later. Galenica has not early adopted any of the following standards or amendments to standards or interpretations that are potentially relevant for Galenica. Galenica intends to apply the new or amended standards for the first time in the finan- cial year beginning on or after the date shown below: – IFRS 16 – Leases (1 January 2019)
 – IFRIC 23 – Uncertainty over Income Tax Treatments (1 January 2019) – Annual Improvements 2015–2017 Cycle (1 January 2019) – Amendments to IAS 19 – Plan Amendment, Curtailment or Settlement (1 January 2019) Galenica is currently assessing the impact of these new and amended standards. Based on a preliminary analysis, Galenica does not expect a material impact on the consolidated financial statements with the exception of IFRS 16. IFRS 16 replaces IAS 17 and provides a single lease accounting model, requiring lessees to recognise assets and liabilities for all leases, and lessors to confirm the continuation of classifying leases as operating or finance. Galenica is not a lessor and is impacted by the standard only for the lessee accounting. Galenica entered into a large number of lease contracts which include variable sales-based components and fixed rental fees. The majority of today’s operating leases in the Retail business sector will become on-balance sheet lease liabilities with corresponding right-of-use assets. At inception of a contract, Galenica assesses whether it is or contains a lease. Galenica recognises a right-of-use asset and a corresponding lease liability with respect to all lease agreements, except for short-term leases, defined as leases with a lease term of 12 month or less and the variable sales-based components of a lease contract, which are recognised when incurred as expense in profit or loss. The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted by using the incremental borrowing rate and subsequently measured by reducing the carrying amount to reflect lease payments made and any lease modifications. The right-of-use assets comprise the initial measurement of the corresponding lease liability, and adjusted for lease pay- ments made at or before the commencement date. They are subsequently measured at cost less accumulated depreciation and impairment losses, and adjusted for any remeasurement of the lease liability. Depreciation and interest expense are recognised separately from operating costs in profit or loss, which will mainly impact Galenica’s EBITDA and, to a lesser extent, EBIT. Galenica will apply the standard from its mandatory adoption date of 1 January 2019 using the modified retrospective method and will not restate comparative figures for the year prior to first adoption. During 2018, Galenica continued its assessment of potential impact on the balance sheet as of the transition date and expects to recognise right-of-use assets of approximately CHF 235 million and lease liabilities of approximately CHF 240 million on 1 January 2019. The total amount of undiscounted minimum lease payments under non-cancellable operating leases is disclosed in note 29.