This report examines the impact of IFRS 16 Leases on Woolworths' financial reporting. It discusses how the new lease standard, effective from January 1, 2019, necessitates recognizing all leases on the balance sheet, affecting various financial aspects. The report details the changes in expense recognition, the treatment of lease liabilities as principal and interest loans, and the impact on key financial metrics such as net debt, gearing, EBITDA, EBIT, and PBT. It also addresses the potential impact on debt covenants, share-based payments, and thin capitalization calculations. Furthermore, the report recommends that Woolworths abolish the distinction between operating and finance leases, recognize ROU assets and associated liabilities, measure them at present value, and treat lease liabilities as financial liabilities. It emphasizes the need to record existing lease commitments on the balance sheet and apply depreciation to ROU assets. This analysis provides insights into the administrative burden and complex elements of lease agreements that Woolworths must manage under IFRS 16.