Notes to Consolidated Financial Statements continued Thousands of Georgian Lari 3. Summary of Significant Accounting Policies continued Standards issued but not yet effective continued Lessees will be also required to remeasure the lease liability upon the occurrence of certain events (e.g., a change in the lease term, a change in future lease payments resulting from a change in an index or rate used to determine those payments). The lessee will generally recognise the amount of the remeasurement of the lease liability as an adjustment to the right-of-use asset. Lessor accounting under IFRS 16 is substantially unchanged from today’s accounting under IAS 17. Lessors will continue to classify all leases using the same classification principle as in IAS 17 and distinguish between two types of leases: operating and finance leases. IFRS 16 also requires lessees and lessors to make more extensive disclosures than under IAS 17. Transition to IFRS 16 The Group will apply the standard from its mandatory adoption date of 1 January 2019. The Group plans to apply the standard using a modified retrospective approach and will not restate comparative amounts for the year prior to first adoption. The Standard will be applied to contracts that were previously identified as leases in accordance with IAS 17 and IFRIC 4. The Group will apply the recognition exemptions on lease contracts for which the lease term ends within 12 months as of the date of initial application, and lease contracts for which the underlying asset is of low value. A lease liability will be measured at the present value of the remaining lease payments, discounted using the lessee’s incremental borrowing rate at the date of initial application. Right-of-use assets will be measured on transition at an amount equal to the lease liability, adjusted by the amount of any prepaid amounts recognised immediately before the date of initial application. The Group has completed an initial assessment of the potential impact of transition to IFRS 16 on its consolidated financial statements. Based on the data as at 1 January 2019, the Group estimates that the adoption of the new standard will result in an increase in the Group’s liabilities by GEL 75,517 and recognition of right-of-use assets of GEL 89,869, of which GEL 14,352 is expected to be reclassified from prepayments to right-of-use assets. Annual improvements 2015-2017 cycle IAS 12, Income Taxes The amendment to IAS 12 clarifies that the income tax consequences (if any) of dividends as defined in IFRS 9 (i.e. distributions of profits to holders of equity instruments in proportion to their holdings) must be recognised: •at the same time as the liability to pay those dividends is recognised; and •in profit or loss, other comprehensive income, or the statement of changes in equity according to where the entity originally recognised the past transactions or events that generated the distributable profits from which the dividends are being paid. The amendment to IAS 12 is effective for periods beginning on or after 1 January 2019, although earlier application is permitted. Entities must apply the amendment to income tax consequences of dividends recognised on or after the beginning of the earliest comparative period presented. The Group is currently assessing the impact. 206 Annual Report 2018Bank of Georgia Group PLC