PPS Integrated Report 2021 Group Accounting Policies | 138 Group Accounting Policies The principal accounting policies applied are set out below. 1. BASIS OF PREPARATION These financial statements are prepared in accordance with International Financial Reporting Standards (“IFRS”). The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in note 37. All monetary information and figures presented in these financial statements are stated in millions of Rand (R’m), unless otherwise indicated. The following amendments to standards have application of 1 January 2021: ~ Amendments to IFRS 9, 'Financial Instruments, IAS 39 ‘Financial Instruments: Recognition and Measurement’, IFRS 7 ‘Financial Instruments: Disclosures’, IFRS 4 ‘Insurance Contracts’ and IFRS 16 ‘Leases’: Interest rate benchmark (IBOR) reform (Phase 2)’; and ~ IFRS 16 ‘Leases’: ‘COVID-19-Related Rent Concessions Amendment. These do not have a material impact on the Group’s overall results and financial position. Standards, amendments and interpretations to existing standards that are not yet effective and have not been early adopted by the Group, none of which will have a material impact on the Group’s financial statements (except for IFRS 17): ~Amendment to IAS 1 ‘Presentation of Financial Statements’ on Classification of Liabilities as Current or Non-current (effective for annual periods beginning on or after 1 January 2022): The amendment clarifies that liabilities are classified as either current or non-current, depending on the rights that exist at the end of the reporting period. Classification is unaffected by expectations of the entity or events after the reporting date. ~Amendment to IFRS 3, ‘Business combinations’ (effective for annual periods on or after 1 January 2022): The International Accounting Standards Board (‘IASB’) has updated IFRS 3 to refer to the 2018 Conceptual Framework for Financial Reporting, in order to determine what constitutes an asset or a liability in a business combination. In addition, the IASB added a new exception in IFRS 3 for liabilities and contingent liabilities. The exception specifies that, for some types of liabilities and contingent liabilities, an entity applying IFRS 3 should instead refer to IAS 37, ‘Provisions, Contingent Liabilities and Contingent Assets’, or IFRIC 21, ‘Levies’, rather than the 2018 Conceptual Framework. The IASB has also clarified that the acquirer should not recognise contingent assets, as defined in IAS 37, at the acquisition date. ~Amendments to IAS 16 ‘Property, Plant and Equipment’ on Proceeds before Intended Use (effective for annual periods on or after 1 January 2022): The amendment to IAS 16 prohibits an entity from deducting from the cost of an item of PPE any proceeds received from selling items produced while the entity is preparing the asset for its intended use (for example, the proceeds from selling samples produced when testing a machine to see if it is functioning properly). The proceeds from selling such items, together with the costs of producing them, are recognised in profit or loss. ~Amendments to IAS 37 ‘Provisions, Contingent Liabilities and Contingent Assets’ on Onerous Contracts – Cost of Fulfilling a Contract (effective for annual periods on or after 1 January 2022): The amendment clarifies which costs an entity includes in assessing whether a contract will be loss-making. This assessment is made by considering unavoidable costs, which are the lower of the net cost of exiting the contract and the costs to fulfil the contract. The amendment clarifies the meaning of “costs to fulfil a contract”. Under the amendment, costs to fulfil a contract include incremental costs and the allocation of other costs that relate directly to fulfilling the contract.
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