Calculating the effect of AASB16 in 'Comparable EBIT'
Quote:
Originally Posted by
winner69
So this Comparable EBIT to be $53m
profit up 19% on sales growth of 2.4%
IMPRESSIVE STUFF
Calculation of Comparable EBIT for FY2021 (AR2021 p35)
Statutory EBIT |
$72.398m |
add Canadian credit book revaluation |
$2.986m |
less Government grants received |
($14.593m) |
less Impact of AASB16 leases |
($4.197m) |
equals Comparable EBIT |
$56.594m |
Question: How is the impact of AASB16 lease adjustments calculated?
Answer.
1/ Go to cashflow statement statement (AR2021 p57) to get an estimate of rent payments made on the day to day running of this business.
Leasing Interest Paid (Operating activity) |
($6.653m) |
Principal Portion of Lease payments (Financing Activity) |
($40.997m) |
It is slightly awkward to estimate the excluding GST value on what used to be reported on as 'rent' for MHJ, because the GST rate varies according to which territory the MHJ stores are in (New Zealand 15%, Australia 10%, Canada: a composite federal and state system that varies between 5% and 15%). However, I consider that 12.5% is a reasonable estimate of the average.
Generally GST is not charged on interest payments. But the 'Leasing Interest paid' is an accounting construct for reporting purposes, built around what would have been in the pre -AASB16 days called rent. So I think I can best estimate the pre AASB16 payment of rent as follows:
[ ($6.653m + $40.997m) ]/ 1/125 = $42.356m
2/ Find depreciation of the 'Right of Use Asset', a category of depreciation that did not exist before AASB16 (Refer AR2021 p62)
Depreciation of Right of Use Asset |
($35.357m) |
Consequential Covid-19 rent concessions |
($3.902m) |
Adding together these two opposing effects of AASB16 the net result is:
[ ($35.357m+$3.902m) - $42.356m ] = ($3.097m)
OK that figure is a little bit different to the figure quoted in the annual report. I put that down to not being able to pinpoint the overall GST rate accurately ( I don't think MHJ disclose sufficient information to allow me to do this). But I feel my method is right nonetheless.
SNOOPY