1. |
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. |
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1.1 |
Statement of compliance |
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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. |
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1.2 |
Changes in accounting policies |
1.2.1 |
The following new standards and amendments to IFRS became effective during the year: |
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Standard |
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Description |
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Effective for financial periods commencing |
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Anticipated impact |
IFRS 10, IFRS 12 and IAS 28 |
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Investment Entities:
Applying the Consolidation Exception (amendments) |
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January 2016 |
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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 amendment has not had a material impact on the results or disclosures of the group. |
IFRS 11 |
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Accounting for
Acquisitions of Interests in Joint Operations (amendments) |
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January 2016 |
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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 a joint operation must not be remeasured if the joint operation retains joint control.
The amendment has not had a material impact on the results or disclosures of the group. |
IAS 1 |
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Disclosure Initiative (amendments) |
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January 2016 |
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The amendments clarify:
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the materiality requirements in IAS 1; |
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the specific line items in the statement(s) of profit or loss and OCI and the statement of financial position may be disaggregated; |
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that entities have flexibility as to the order in which they present the notes to the financial statements; and |
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that the share of OCI of associates and joint ventures accounted for using the equity method must be presented in aggregate as a single line item, and classified between those items that will or will not be subsequently reclassified to profit or loss. |
Furthermore, the amendments clarify the requirements that apply when additional sub-totals are presented in the statement of financial position and the statement(s) of profit or loss and other comprehensive income.
The amendment has not had a material impact on the results or disclosures of the group. |
IAS 16 and IAS 38 |
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Clarification of Acceptable Methods of Depreciation and Amortisation (amendments) |
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January 2016 |
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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 ratio of 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 amendment has not had a material impact on the results or disclosures of the group. |
IAS 27 |
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Equity Method In Separate Financial Statements (amendments) |
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January 2016 |
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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:
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at cost; |
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in accordance with IFRS 9 (or IAS 39); or |
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using the equity method. |
The entity must apply the same accounting for each category of investments.
A consequential amendment was also made to IFRS 1 First-time Adoption of International Financial Reporting Standards. The amendment to IFRS 1 allows a first-time adopter accounting for investments in the separate financial statements using the equity method, to apply the IFRS 1 exemption for past business combinations to the acquisition of the Investment.
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 interpretation not yet effective |
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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: |
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Standard |
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Description |
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Effective for financial periods commencing |
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Anticipated impact |
IFRS 9 |
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Financial Instruments (amendments) |
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January 2018 |
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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 though 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 instrument-by-instrument basis to
present changes in the fair value of non-trading instruments in
other comprehensive income (OCI) (without subsequent reclassification to
profit or loss).
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 OCI (such as loans, debt securities
and trade receivables), lease receivables and most loan commitments and
financial guarantee contracts.
Entities are required to recognise either 12-month or lifetime
expected credit losses, depending on whether there has been a significant
increase in credit risk since initial recognition.
The measurement of expected credit losses would reflect a probability
weighted outcome, the time value of money and reasonable and supportable
information. |
IFRS 15 |
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Revenue from Contracts with Customers |
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January 2018 |
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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 five-step
model:
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identify the contact(s) with a customer; |
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identify the performance obligations in the
contract; |
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determine the transaction price; |
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allocate the transaction price to the performance
obligations in the contract; and |
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recognise revenue when (or as) the entity satisfies
a performance obligation. |
The standard requires entities to exercise judgement, taking into
consideration all of the relevant facts and circumstances when applying each
step of the model to contracts with their customers. It also specifies how
to account for the incremental costs of obtaining a contract and the costs
directly related to fulfilling a contract.
The group is in the process of determining the impact of the interpretation
on its results. |
IFRS 16 |
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Leases |
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January 2019 |
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IFRS 16 requires lessees to account for all
leases under a single on-balance sheet model in a similar way
to finance leases under IAS 17. The standard includes two recognition
exemptions for lessees:
1. |
leases of “low-value" assets (eg personal
computers); and |
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short-term leases (ie leases with a lease term of
12 months or less). |
At the commencement date of a lease, a lessee will recognise a liability
to make lease payments (ie the lease liability) and an asset representing
the right to use the underlying asset during the lease term (ie the
right-of-use asset).
Lessees will be required to separately recognise the interest expense on the
lease liability and the depreciation expense on the right-of-use
asset. Lessees will be required to remeasure the lease liability upon the
occurrence of certain events (eg a change in the lease term, a change in
future lease payments resulting from a change in an index or rate used to
determine those payments). The lessee will generally recognise the amount of
the remeasurement of the lease liability as an adjustment to the
right-of-use asset.
Lessor accounting is substantially unchanged from today’s accounting under
IAS 17. Lessors will continue to classify all leases using the same
classification principle as in IAS 17 and distinguish between two types of
leases: operating and finance leases.
The group is in the process of determining the impact of the interpretation
on its results. |
IAS 7 |
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Disclosure Initiative – amendments to IAS
7 |
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January 2017 |
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The amendments to IAS 7 Statement of Cash
Flows are part of the IASB’s Disclosure Initiative and require an entity
to provide disclosures that enable users of financial statements to evaluate
changes arising from cash flows and non-cash changes.
The group is in the process of determining the impact of the interpretation
on its results. |
IAS 12 |
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Recognition of Deferred Tax Assets for
Unrealised Losses – amendments to IAS 12 |
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January 2017 |
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The amendments clarify that an entity needs
to consider whether tax laws restrict the sources of taxable profits against
which it may make deductions on the reversal of that deductible temporary
difference. Furthermore, the amendments provide guidance on how an entity
should determine future taxable profits and explain the circumstances in
which taxable profit may include the recovery of some assets for more than
their carrying amount.
The group is in the process of determining the impact of the interpretation
on its results. |
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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. |