Page 208 - Annual Report 2020

20 Leases

The Group applied IFRS 16/AASB 16 ‘Leases’ (IFRS 16) from 1 July 2019. The Group elected to apply the modified retrospective transition
approach, with no restatement of comparative periods. The comparative information relating to leases presented throughout the Financial
Statements is in accordance with IAS 17/AASB 117 ‘Leases’ (IAS 17). Refer to note 38 ‘New and amended accounting standards and
interpretations’ for information on the transition effects of IFRS 16 and policy choices made on implementation. Movements in the Group’s
lease liabilities during the year are as follows:

2020
US$M
At the beginning of the financial year (1) 715
IFRS 16 transition 2,301
Additions 436
Remeasurements of index-linked freight contracts 733
Lease payments (761)
Foreign exchange movement (43)
Amortisation of discounting 90
Transfers and other movements (28)
At the end of the financial year 3,443
Comprising:
Current liabilities 853
Non-current liabilities 2,590
(1) Relates to existing finance leases at 1 July 2019.
A significant proportion by value of the Group’s lease contracts relate to plant facilities, office buildings and vessels. Lease terms for plant
facilities and office buildings typically run for over 10 years and vessels for four to 10 years. Other leases include port facilities, various
equipment and vehicles. The lease contracts contain a wide range of different terms and conditions including extension and termination
options and variable lease payments.
The Group’s lease obligations are included in the Group’s Interest bearing liabilities and, with the exception of vessel lease contracts that are
priced with reference to a freight index, form part of the Group’s net debt.
The maturity profile of lease liabilities based on the undiscounted contractual amounts is as follows:
2020 2019
Lease liability (1) US$M US$M
Due for payment:
In one year or less or on demand 927 110
In more than one year but not more than two years 630 110
In more than two years but not more than five years 1,335 307
In more than five years 1,043 501
Total 3,935 1,028
Carrying amount 3,443 715
(1) Lease liability as at 30 June 2019 represents finance lease liabilities under IAS 17.
At 30 June 2020, commitments for leases not yet commenced based on undiscounted contractual amounts were US$1,458 million; and
commitments relating to short-term leases were US$103 million.
The Group’s aggregate amounts of minimum lease payments under non-cancellable operating leases at 30 June 2019 under IAS 17 were
as follows (reported under note 32 ‘Commitments’ in FY2019):

2019
Commitments under operating leases US$M
Due not later than one year 440
Due later than one year and not later than five years 876
Due later than five years 589
Total 1,905

Movements in the Group’s right-of-use assets during the year are as follows:

Land and Plant and
buildings equipment Total
2020 US$M US$M US$M
Net book value
At the beginning of the financial year (1) − 492 492
Assets recognised on adoption of IFRS 16 754 1,400 2,154
Additions 104 332 436
Remeasurements of index-linked freight contracts − 733 733
Depreciation expensed during the period (113) (543) (656)
Depreciation classified as exploration − (34) (34)
Impairments, net of reversals (2) (22) (24)
Transfers and other movements (54) − (54)
At the end of the financial year 689 2,358 3,047
– Cost 804 3,349 4,153
– Accumulated depreciation and impairments (115) (991) (1,106)
(1) Relates to assets previously held under finance leases under IAS 17.

206 BHP Annual Report 2020