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ANNUAL
REPORT
2018

2.8. Impact on consolidated financial statements

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The impact of the application of IFRS 16 entailing the recognition of additional financial liabilities and corresponding right-of-use assets was estimated on the basis of agreements in effect as at 1 January 2019. Based on the analysis carried out, following the application of IFRS 16, as at 1 January 2019 assets will increase by PLN 316.2 million and liabilities will increase by PLN 316.2 million. Finance lease components were also reclassified from property, plant and equipment and intangible assets (perpetual usufruct of land) to the Right-of-use assets (the amount recognized as an intangible asset adjusted the value of the right to use land subject to perpetual usufruct).

The estimated impact of recognition of additional financial liabilities and related right-of-use assets:

Impact on the statement of
financial position
31.12.2018 Reclassification
as at 1 January 2019
Impact of IFRS 16 01.01.2019
ASSETS
NON-CURRENT ASSETS
Property, plant and equipment 7,303.0 (51.8) 7,251.2
Intangible assets 130.8 (75.1) 55.7
Right-of-use asset 126.9 316.2 443.1
LIABILITIES
NON-CURRENT LIABILITIES
Leasing liabilities 19.0 256.9 275.9
CURRENT LIABILITIES
Leasing liabilities 21.3 59.3 80.6

Application of IFRS 16 will affect the structure of costs presented in the consolidated statement of profit or loss and other comprehensive income. A portion of the costs previously presented as manufacturing cost of products, materials and goods sold will now be presented as financial costs (interest part), which will contribute to a higher operating profit and EBITDA; there will also be differences in the presented values, mainly as a result of a different time distribution of depreciation as compared to the actual payments of lease fees. In the longer term, the fluctuations in the structure and amount of depreciation and interest will equalize.

The main difference between the future fees under IAS 17 presented as at 31 December 2018 in Note 10.2 and the lease liabilities recognized upon the first application of IFRS 16 resulted from the application of a discount and exclusion of short-term agreements from the valuation of lease liabilities under IFRS 16.

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