Annual Report 2019

118 CHINA MERCHANTS PORT HOLDINGS COMPANY LIMITED Notes to the Consolidated Financial Statements For the year ended 31 December 2019 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 2.1 Basis of preparation (continued) (i) New and amendments to HKFRSs that are mandatorily effective for the current year (continued) HKFRS 16 (continued) As a lessee (continued) When recognising the lease liabilities for leases previously classified as operating leases, the Group has applied incremental borrowing rates of the relevant group entities at the date of initial application. The weighted average incremental borrowing rate applied is 5.26%. At 1 January 2019 HK$’million Operating lease commitments as at 31 December 2018 1,993 Less: Short-term leases (11) Total future finance costs (998) Lease liabilities discounted at relevant incremental borrowing rates 984 Add: Lease liabilities resulting from lease modifications of existing leases (Note) 27 Extension options reasonably certain to be exercised 5 Lease liabilities relating to operating leases recognised upon application of HKFRS 16 1,016 Add: Obligations under finance leases recognised at 31 December 2018 (included in creditors and accruals and other non-current liabilities) 82 Lease liabilities as at 1 January 2019 1,098 Analysed as: Current 135 Non-current 963 1,098 Note: The Group renewed the leases of leasehold land and buildings commencing after the date of initial application. They are accounted for as lease modifications of the existing contracts upon application of HKFRS 16.