b'Strategic report Governance Financial statementsLease incentives (eg rent-free periods) are recognised as part of the measurement of the right-of-use assets and lease liabilities whereas under IAS 17 they resulted in the recognition of a lease incentive, amortised as a reduction of rental expenses on a straight-line basis.Under IFRS 16, right-of-use assets are tested for impairment in accordance with IAS 36.For short-term leases (lease term of 12 months or less) and leases of low-value assets (which includes portable electronic devices, small items of office furniture and fixed telephones), the Group has opted to recognise a lease expense on a straight-line basis as permitted by IFRS 16. This expense is included within other administrative expenses in profit or loss.The Group has used the following practical expedients when applying the cumulative catch-up approach to leases previously classified as operating leases applying IAS 17:The Group has applied a single discount rate to a portfolio of leases with reasonably similar characteristics.The Group has adjusted the right-of-use assets at the date of initial application by the amount of provision for onerous leases recognised underIAS 37 in the consolidated balance sheet immediately before the date of initial application, as an alternative to performing an impairmentreview.The Group has elected not to recognise right-of-use assets and lease liabilities to leases for which the lease term ends within 12 months of the date of initial application.The Group has excluded initial direct costs from the measurement of the right-of-use assets at the date of initial application.The Group has used hindsight when determining the lease term when the contract contains options to extend or terminate the lease.The financial impact of the adoption of IFRS 16 is set out in note 22 to these consolidated financial statements.New standards, interpretations and amendments not yet effectiveAt the date of approving these financial statements, the following standards and interpretations, which have not been applied in these consolidated financial statements, were in issue but not yet effective:Amendments to IFRS 3 Business Combinationseffective for annual reporting periods beginning on or after 1 January 2020.IFRS 10 Consolidated Financial Statements and Amendments to IAS 28 Investments in Associates and Joint Venturesdeferred indefinitely.IFRS 17 Insurance Contractseffective for annual reporting periods beginning on or after 1 January 2021.Amendments to IAS 1 Presentation of Financial Statementseffective for annual reporting periods beginning on or after 1 January 2022.Amendments to IAS 8 Accounting Policies, Changes in Accounting Estimates and Errorseffective for annual reporting periods beginning on or after 1 January 2020.Amendments to References to the Conceptual Framework in IFRS Standardseffective for annual reporting periods beginning on or after 1 January 2020.There are no other IFRSs or IFRIC interpretations that are not yet effective that would be expected to have a material impact on the Group.Revenue recognitionRevenue is measured at the fair value of the consideration received or receivable and represents amounts receivable for services provided in the normal course of business, net of VAT. All revenue from services is generated within the United Kingdom. Revenue is recognised when the Group satisfies its performance obligations, in line with IFRS 15. Revenue from services comprises:Fund management feesFund management fees are generally earned as a fixed percentage of funds under management and are recognised as the related services are provided, as performance obligations are met. Cash receipts in relation to revenues earned are generally received shortly after the start of the relevant invoicing period.Initial management feesInitial management fees are generally earned as a fixed percentage of the amounts invested by the Group in recognition of the work involved in each investment round, are one-off payments made by the investee company and are recognised when the performance obligation of providing those services is satisfied at a point in time, being upon completion of the investment. Cash receipts in relation to revenues earned are generally received shortly after completion of the relevant investment.Portfolio directors feesPortfolio directors fees are earned either as a percentage of the amounts invested by the Group, or as a fixed amount. These are usually annual fees, typically charged quarterly in advance to the investee company. They are distinct and separable to annual fund management fees and initial management fees. Amounts invoiced are recorded as deferred income, included in current liabilities and then amortised in the consolidated statement of comprehensive income over the contractual period for which the related services are provided, as performance obligations are met. Cash receipts in relation to revenues earned are generally received shortly after the start of the relevant invoicing period.Mercia Asset Management PLC 81Annual Report and Accounts 2020'