Impact of Adoption of IFRS 16 (Tables)

6 Months Ended

Jun. 30, 2019

The Group recognised right-of-use assets on the balance sheet representing the right to use of the underlying assets from the lease contracts. Current and non-current lease liabilities were also recognised for the present value of the lease payments due under the lease contracts. Deferred tax adjustments are due to temporary timing differences arising from the recognition of right-of-use assets and lease liabilities. Shareholder’s equity has been restated to reflect the cumulative impact of IFRS 16 on retained earnings and currency translation adjustment as a result of IFRS 16 restatement of foreign subsidiaries.


	As at 31 December 2018									As at 30 June 2018
€ million	As previously reported			Restatement			Restated			As previously reported			Restatement			Restated
Balance sheet
Property, plant and equipment		10,347			1,741			12,088			10,050			1,861			11,911
Deferred tax assets		1,117			35			1,152			1,000			34			1,034
Other non-current assets		648			(118	)		530			619			(117	)		502
Trade and other current receivables		6,485			(3	)		6,482			6,821			(3	)		6,818
Total assets		59,456			1,655			61,111			63,182			1,775			64,957
Current financial liabilities		3,235			378			3,613			10,670			410			11,080
Non-current financial liabilities		21,650			1,475			23,125			18,951			1,568			20,519
Deferred tax liability		1,923			(23	)		1,900			1,966			(24	)		1,942
Total liabilities		47,164			1,830			48,994			50,881			1,954			52,835
Other reserves		(15,286	)		68			(15,218	)		(16,768	)		58			(16,710	)
Retained profit		26,265			(243	)		26,022			27,737			(237	)		27,500
Total equity		12,292			(175	)		12,117			12,301			(179	)		12,122
Total liabilities and equity		59,456			1,655			61,111			63,182			1,775			64,957

Schedule of Income Statement and Statement of Comprehensive Income

Operating profit has been restated to remove operating lease payments previously recognised and to recognise depreciation expense on the right-of-use assets that are now recognised on the balance sheet. Interest expense on lease liabilities has been recognised within finance costs. Adjustments to taxation are due to the change in profit before taxation. Currency translation gains/losses have also been restated to reflect the foreign exchange impact of IFRS 16 on subsidiaries that do not have a euro functional currency.


€ million	First Half 2018
€ million	As previously reported			Adjustments for IFRS 16			Restated
Income statement
Operating profit		4,474			55			4,529
Finance costs		(272	)		(65	)		(337	)
Profit before taxation		4,339			(10	)		4,329
Taxation		(1,102	)		2			(1,100	)
Net profit		3,237			(8	)		3,229
Attributable to: Shareholder’s equity		3,039			(8	)		3,031
Statement of comprehensive income
Net profit		3,237			(8	)		3,229
Currency retranslation gains/(losses)		(767	)		12			(755	)
Total comprehensive income		2,644			4			2,648
Attributable to: Shareholder’s equity		2,459			4			2,463

Schedule of Cash Flow Statement

There is no impact on overall cash flows on the Group from the adoption of IFRS 16. However, cash outflows for lease payments have been reclassified from cash flows from operating activities to cash flows used in financing activities.


€ million	First Half 2018
€ million	As previously reported			Adjustments for IFRS 16			Restated
Cash flow statement
Net profit		3,237			(8	)		3,229
Taxation		1,102			(2	)		1,100
Net finance costs		223			65			288
Operating profit		4,474			55			4,529
Depreciation, amortisation and impairment		983			245			1,228
Elimination of (profits)/losses on disposals		32			(16	)		16
Net cash flow from operating activities		2,406			284			2,690
Interest paid		(191	)		(48	)		(239	)
Change in financial liabilities		4,486			(236	)		4,250
Net cash flow (used in)/from financing activities		(395	)		(284	)		(679	)

Schedule Impact on Earnings Per Share

Basic and diluted earnings per share have been restated to reflect the restated net profit attributable to shareholders’ equity as per the income statement.


	First Half 2018
	As previously reported		Restated
Combined EPS – Basic
Net profit attributable to shareholders’ equity (€ million)		3,039		3,031
Average number of combined share units (millions of units)		2,727.3		2,727.3
Combined EPS – basic (€)		1.11		1.11
Combined EPS – Diluted
Net profit attributable to shareholders’ equity (€ million)		3,039		3,031
Adjusted average number of combined share units (millions of units)		2,737.3		2,737.3
Combined EPS – diluted (€)		1.11		1.11

Schedule of Segment Information

Segment information for the Group’s divisions and geographical areas has been restated. Operating profit, underlying operating profit, operating margin and underlying operating margin have been restated to reflect the impact of IFRS 16 adoption on the income statement for the six months to 30 June 2018 as follows:


First Half 2018	Beauty & Personal Care		Home Care		Foods & Refreshment		Total
Operating profit (€ million)
2018 as previously reported		2,037		638		1,799		4,474
Adjustments for IFRS 16		19		13		23		55
2018 after restatement		2,056		651		1,822		4,529
Underlying operating profit (€ million)
2018 as previously reported		2,201		633		2,078		4,912
Adjustments for IFRS 16		19		13		23		55
2018 after restatement		2,220		646		2,101		4,967
Operating margin (%)
2018 as previously reported		20.2		12.6		16.0		17.0
2018 after restatement		20.4		12.9		16.2		17.2
Underlying operating margin (%)
2018 as previously reported		21.8		12.5		18.5		18.6
2018 after restatement		22.0		12.8		18.7		18.8


First Half 2018	Asia / AMET / RUB		The Americas		Europe		Total
Operating profit (€ million)
2018 as previously reported		2,248		1,156		1,070		4,474
Adjustments for IFRS 16		27		17		11		55
2018 after restatement		2,275		1,173		1,081		4,529
Underlying operating profit (€ million)
2018 as previously reported		2,317		1,333		1,262		4,912
Adjustments for IFRS 16		27		17		11		55
2018 after restatement		2,344		1,350		1,273		4,967
Operating margin (%)
2018 as previously reported		19.2		14.3		16.4		17.0
2018 after restatement		19.4		14.5		16.5		17.2
Underlying operating margin (%)
2018 as previously reported		19.7		16.5		19.3		18.6
2018 after restatement		20.0		16.7		19.5		18.8