Pr e viously the Gr oup r ec ognised oper a ting le ase e xpenses on a s tr aigh t line basis o v er the t erm o f the le ase and r ec ognised as se ts and liabilities only t o the e xt en t tha t ther e w as a timing dif f er enc e be tw een ac tual le ase pa ymen ts and the e xpense r ec ognised T he impac t on the Gr oup s pr o ft and los s s t a t emen t wil l no t be ma t erial In addition the Gr oup wil l no longer r ec ognise pr o visions f or oper a ting le ases tha t it as ses ses t o be oner ous Ins t e ad the Gr oup wil l include the pa ymen ts due under the le ase in its le ase liabilit y T he Gr oup wil l apply the modifed r e tr ospec tiv e appr oach and wil l r ec or d an y impac t o f frs t time applica tion o f the s t andar d in r e t ained e arnings a t 1 April 2019 with no r es t a t emen t o f c ompar a tiv es On tr ansition the ma jorit y o f le ases wil l be r ec ognised using the modifed r e tr ospec tiv e B op tion wher eb y the righ t o f use as se ts r ela ting t o pr oper t y equipmen t and v ehicles wil l be me asur ed a t the s ame amoun t as the liabilit y a t 1 April 2019 being the pr esen t v alue o f the r emaining futur e minimum le ase pa ymen ts a t the da t e o f initial applica tion ad jus t ed f or le ase pa ymen ts made in adv anc e or due T he Gr oup has applied the pr ac tical e xpedien t wher eb y AA SB 16 has been applied t o c on tr ac ts tha t w er e pr e viously iden tifed as le ases when applying AA SB 17 and IFRIC4 T he Gr oup ac quir ed so f tw ar e t o tr ack and r epor t its le ase c on tr ac ts in ac c or danc e with the ne w s t andar d B ased on the in f orma tion curr en tly a v ailable the Gr oup es tima t es tha t it wil l r ec ognise additional as se ts and le ase liabilities in the r ange o f 200 mil lion t o 250 mil lion as a t 1 April 2019 F utur e le ase pa ymen ts ar e disc oun t ed using incr emen t al borr o wing r a t es calcula t ed using al lin in t er es t r a t e yield curv e da t a f or c orpor a t e en tities with a similar cr edit pr o fle t o the Gr oup no ting dif f er en t r a t es f or the fv e ma jor cur r encies A UD USD GBP C AD EUR o v er v arious le ase t erms T he Gr oup mak es no dis tinc tion be tw een the v arious clas ses o f as se ts pr oper t y equipmen t and v ehicles as its ac c es s t o capit al funding is no t dependan t on the ca t egory o f le ased as se t being fnanc ed T he Gr oup does no t e xpec t the adop tion o f AA SB 16 t o impac t its abilit y t o c omply with the r e vised ma ximum le v er age thr eshold loan c o v enan ts No signifcan t impac t is e xpec t ed f or the Gr oup s fnanc e le ases i L e ases in which the Gr oup is a les sor No signifcan t impac t is e xpec t ed f or le ases in which the Gr oup is a les sor 7C DETERMINA TION OF F AIR V AL UE T he f ol lo wing summarises the ma jor me thods and as sump tions used in es tima ting the f air v alues f or me asur emen t and disclosur e purposes F air v alue hier ar ch y In de t ermining f air v alue me asur emen t f or disclosur e pur poses the Gr oup uses the f ol lo wing f air v alue me asur emen t hier ar ch y tha t r e fec ts the signifcanc e o f the inputs used in making the me asur emen ts L e v el 1 Quo t ed mark e t pric e unad jus t ed in an ac tiv e mark e t f or an iden tical ins trumen t L e v el 2 V alua tion t echniques based on observ able inputs either dir ec tly ie as pric es or indir ec tly ie deriv ed fr om pric es L e v el 3 V alua tion t echniques using signifcan t unob serv able inputs T his ca t egory includes al l ins trumen ts wher e the v alua tion t echnique includes inputs no t based on observ able da t a and the unobserv able inputs ha v e a signifcan t e f f ec t on the ins trumen t s v alua tion Deriv a tiv es F orw ar d e x change c on tr ac ts ar e mark ed t o mark e t using publicly a v ailable f orw ar d r a t es In t er es t r a t e c on tr ac ts ar e mark ed t o mark e t using disc oun t ed es tima t ed futur e cash fo ws based on the t erms and ma turit y o f e ach c on tr ac t and using mark e t in t er es t r a t es f or a similar ins trumen t a t the me asur emen t da t e W her e disc oun t ed cash fo w t echniques ar e used es ti ma t ed futur e cash fo ws ar e based on managemen t s bes t es tima t es and the disc oun t r a t e is a mark e t r ela t ed r a t e f or a similar ins trumen t a t the balanc e shee t da t e W her e o ther pricing models ar e used inputs ar e based on mark e t r ela t ed da t a a t the balanc e shee t da t e L oans and borr o wings F air v alue is calcula t ed based on disc oun t ed e xpec t ed futur e principal and in t er es t cash fo ws disc oun t ed a t the mark e t r a t e o f in t er es t a t the me asur emen t da t e T r ade and o ther r ec eiv ables pa y ables F or r ec eiv ables pa y ables with a r emaining lif e o f les s than one y e ar the no tional amoun t is deemed t o r e fec t the f air v alue Al l o ther r ec eiv ables pa y ables ar e disc oun t ed t o de t ermine the f air v alue Financ e le ases T he f air v alue is es tima t ed as the pr esen t v alue o f futur e cash fo ws disc oun t ed a t mark e t in t er es t r a t es f or homog enous le ase agr eemen ts T he es tima t ed f air v alue r e fec ts changes in in t er es t r a t es Shar e based pa ymen t tr ans ac tions T he f air v alue o f shar e based a w ar ds t o emplo y ees is me as ur ed using Binomial T r ee Earnings per Shar e and EBITD A hur d les and servic e c ondition and Mon t e C arlo Simula tion T o t al Shar eholder R e turn hur d le v alua tion me thodologies Me asur emen t inputs include the C ompan y s shar e pric e on me asur emen t da t e e xpec t ed v ola tilit y ther eo f e xpec t ed lif e o f the a w ar ds the C ompan y s e xpec t ed dividend yield and the risk fr ee in t er es t r a t e Servic e and nonmark e t per f ormanc e c onditions a tt ached t o the tr ans ac tions ar e no t t ak en in t o ac c oun t in de t ermining f air v alue R e f er t o no t e 8a f or de t ails 78 ALS LIMITED AND IT S SUBSIDIARIES A NNU AL F INANCIAL R EPOR T F OR THE Y EAR E NDED 31 M AR CH 2019 F INANCIAL REPOR T F INANCIAL S T A TEMENT S N O TES T O THE FINANCIAL S T A TEMENT S Other in f orma tion