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Basis of preparation |
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The financial statements of the group and company are prepared on the historical cost basis, except for financial instruments, which are measured at fair value. Details of the accounting policies used in the preparation of the financial statements are set out below that are consistent with those applied in the previous year except as stated under the heading “Changes in accounting policies” below. | ||||
1.1 | Statement of compliance | |||
The financial statements of the group and company have been prepared in accordance with International Financial Reporting Standards (IFRS) and interpretations of those standards, as adopted by the International Accounting Standards Board (IASB), the South African Companies Act, 71 of 2008, as amended, the JSE Listings Requirements, and the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee. | ||||
1.2 | Changes in accounting policies | |||
1.2.1 | The following new standards and amendments to IFRS became effective during the year: | |||
Standard | Description | Effective for financial periods commencing | Anticipated impact | |
IAS 19 | Employee Benefits | July 2014 | IAS 19 requires an entity to consider contributions from employees or third parties when accounting for defined benefit plans. IAS 19 requires such contributions that are linked to service to be attributed to periods of service as a negative benefit.
The amendments clarify that, if the amount of the contributions is independent of the number of years of service, an entity is permitted to recognise such contributions as a reduction in the service cost in the period in which the service is rendered, instead of allocating the contributions to the periods of service. The amendment has not had a material impact on the results or disclosures of the group. |
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IAS 32 | Offsetting Financial Assets and Financial Liabilities | January 2014 | The amendments to this standard clarify the meaning of “currently has a legally enforceable right to The amendments clarify that rights of The amendments clarify that only gross settlement mechanisms with features that eliminate or result in insignificant credit and liquidity risk and that process receivables and payables in a single settlement process or cycle would be in effect equivalent to net settlement and therefore meet the net settlement criterion. The amendments have not had a material impact on the results or disclosures of the group. |
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IAS 36 | Recoverable Amount Disclosures for |
January 2014 | The amendments to this standard clarify the disclosure requirements in respect of fair value less cost of disposal. The amendments remove the requirement to disclose the recoverable amount for each In addition, the IASB added two disclosure requirements:
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IFRIC 21 | Levies | January 2014 | The interpretation clarifies that an entity recognises a liability for a levy when the activity that triggers payment, as identified by the relevant legislation, occurs. It also clarifies that a levy liability is accrued progressively only if the activity that triggers payment occurs over a period of time, in accordance with the relevant legislation. For a levy that is triggered upon reaching a minimum threshold, the interpretation clarifies that no liability is recognised before the specified minimum threshold is reached. The interpretation does not address the accounting for the debit side of the transaction that arises from recognising a liability to pay a levy. Entitles look to other standards to decide whether the recognition of a liability to pay a levy would give rise to an asset or an expense under the relevant standards. The amendment has not had a material impact on the results or disclosures of the group. |
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IFRS 10, IFRS 12 and IAS 27 | Investment Entities – Amendments to IFRS 10, IFRS 12 and IAS 27 | January 2014 | “Investment entity” is defined in IFRS 10 Consolidated Financial Statements. An entity must meet all three elements of the definition and consider whether it has four typical characteristics, in order to qualify as an investment entity. An entity must consider all facts and circumstances, including its purpose and design, in making its assessment.
An investment entity accounts for its investments in subsidiaries at fair value through profit or loss in accordance with IFRS 9 (or IAS 39, as applicable), except for investments in subsidiaries that provide services that relate to the investment entity’s investment activities, which must be consolidated. An investment entity must measure its investment in another controlled investment entity at fair value. A The amendment has not had a material impact on the results or disclosures of the group. |
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1.3 | IFRS and IFRIC not yet effective | |||
The group has not applied the following IFRS and IFRIC new, revised and amended standards and interpretations which have been issued as they are not yet effective: | ||||
Standard | Description | Effective for financial periods commencing | Anticipated impact | |
IFRS 9 | Financial Instruments (Amendments) | January 2018 | IFRS 9, as issued in July 2014, reflects the completion of all the phases of the IASB’s work on the replacement of IAS 39 and applies to the classification and measurement of financial assets and financial liabilities, impairment as well as hedge accounting. Classification and measurement of financial instruments Financial assets All financial assets are measured at fair value on initial recognition, adjusted for transaction costs if the instrument is not accounted for at fair value through profit or loss (FVTPL). Debt instruments are subsequently measured at FVTPL, amortised cost or fair value through other comprehensive income (FVOCI), on the basis of their contractual cash flows and the business model under which debt instruments are held. There is a fair value option (FVO) that allows financial assets on initial recognition to be designated as FVTPL if that eliminates or significantly reduces an accounting mismatch. Equity instruments are generally measured at FVTPL. However, entities have an irrevocable option on an Financial liabilities For financial liabilities designated as FVTPL using the FVO, the amount of change in the fair value of such financial liabilities that is attributable to changes in credit risk must be presented in OCI. The remainder of the change in fair value is presented in profit or loss, unless presentation of the fair value change in respect of the liability’s credit risk in OCI would create or enlarge an accounting mismatch in profit or loss. All other classification and measurement requirements in IAS 39 have been carried forward into IFRS 9. Impairment of financial assets The expected credit loss model applies to debt instruments recorded at amortised cost or at fair value through other comprehensive income (such as loans, debt securities and trade receivables), lease receivables and most loan commitments and financial guarantee contracts. Entities are required to recognise either The measurement of expected credit losses would reflect a |
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IFRS 10, IFRS 12 and IAS 28 | Investment Entities: Applying the Consolidation Exception (Amendments) | January 2016 | The amendments to IFRS 10 clarify that the exemption (in IFRS 10.4) from presenting consolidated financial statements applies to a parent entity that is a subsidiary of an investment entity, when the investment entity measures all of its subsidiaries at fair value. Furthermore, the amendments to IFRS 10 clarify that only a subsidiary of an investment entity that is not an investment entity itself and that provides support services to the investment entity is consolidated. All other subsidiaries of an Investment entity are measured at fair value. The amendments to IAS 28 allow the investor, when applying the equity method, to retain the fair value measurement applied by the investment entity associate or joint venture to its interests in subsidiaries. The group is in the process of determining the impact of the standard on its results. |
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IFRS 10 and IAS 28 | Sale or Contribution of Assets between an Investor and its associate or Joint Venture (Amendments) | January 2016 | These amendments clarify that the gain or loss resulting from the sale or contribution of assets that constitute a business, as defined in IFRS 3 Business Combinations, between an investor and its associate or joint venture, is recognised in full. Any gain or loss resulting from the sale or contribution of assets that do not constitute a business, however, is recognised only to the extent of unrelated investors’ interests in associate or joint venture. The group is in the process of determining the impact of the standard on its results. |
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IFRS 11 | Accounting for Acquisitions of Interests in Joint Operations (Amendments) | January 2016 | These amendments require an entity acquiring an interest in a joint operation in which the activity of the joint operation constitutes a business to apply, to the extent of its share, all of the principles in IFRS 3, and other IFRS, that do not conflict with the requirements of IFRS 11. Furthermore, entities are required to disclose the information required in those IFRS in relation to business combinations. The amendments also apply to an entity on the formation of a joint operation if, and only if, an existing business is contributed by the entity to the joint operation on its formation. Furthermore, the amendments clarify that for the acquisition of an additional interest in a joint operation in which the activity of the joint operation constitutes a business, previously held interests in joint operation must not be remeasured if the joint operator retains joint control. The group is in the process of determining the impact of the standard on its results. |
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IFRS 15 | Revenue from Contracts with Customers | January 2018 | The core principle of this standard is that an entity must apply to measure and recognise revenue. The core principle is that an entity will recognise revenue at an amount that reflects the consideration to which the entity expects to be entitled in exchange for transferring goods or services to a customer.
The principles in IFRS 15 will be applied using a
The group is in the process of determining the impact of the standard on its results. |
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IAS 1 | Disclosure Initiative (Amendments) | January 2016 | The amendments clarify:
The group is in the process of determining the impact of the standard on its results. |
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IAS 16 and IAS 38 | Clarification of Acceptable Methods of Depreciation and Amortisation (Amendments) | January 2016 | The amendments clarify the principle in IAS 16 and IAS 38 that revenue reflects a pattern of economic benefits that are generated from operating a business (of which the asset is part) rather than the economic benefits that are consumed through use of the asset. As a result, the ratioof revenue generated to total revenue expected to be generated cannot be used to depreciate property, plant and equipment and may only be used in very limited circumstances to amortise intangible assets. The group is in the process of determining the impact of the standard on its results. |
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IAS 27 | Equity Method In Separate Financial Statements (Amendments) | January 2016 | The amendments allow an entity to use the equity method as described in IAS 28 to account for its investments in subsidiaries, joint ventures and associates in its separate financial statements. Therefore, an entity must account for these investments either:
A consequential amendment was also made to IFRS 1
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In addition to the above changes, a set of improvements to IFRS was issued by the IASB in December 2013. These improvements become effective for periods beginning on or after 1 July 2014. The annual improvements have not had a material impact on the results or disclosures of the group. In relation to the annual improvements that were issued in September 2014 (the 2012 – 2014 cycle), the group is currently In the process of determining the impact of these improvements. All other new standards and amendments issued not yet effective are not considered to have a material impact to the results or disclosures of the group. |