101 / 203
PPS
INTEGRATED REPORT 2018
100
The principal accounting policies applied are set out below.
1. BASIS OF PRESENTATION
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 34.
All monetary information and figures presented in these financial statements are stated in
thousands of Rand (R’000), unless otherwise indicated.
The Group has adopted the following new standards and amendments to standards, including any consequential
amendments to other standards, with a date of initial application of 1 January 2018:
• Amendments to IFRS 9, ‘Financial instruments’
• Amendments to IFRS 4, ‘Insurance contracts’
• IFRS 15, ‘Revenue from contracts with customers’
• Amendments to IFRS 15, ‘Revenue from contracts with customers’
• Amendments to IAS 40, ‘Investment property’
• IFRIC 22, ‘Foreign currency transactions and advance consideration’
• Annual improvements 2014-2016
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 Company:
• IFRS 16 – Leases: This standard replaces the current guidance in IAS 17 and is a far reaching change in
accounting by lessees in particular. Under IAS 17, lessees were required to make a distinction between a
finance lease (on balance sheet) and an operating lease (off balance sheet). IFRS 16 now requires lessees
to recognise a lease liability reflecting future lease payments and a ‘right-of-use asset’ for virtually all
lease contracts. The IASB has included an optional exemption for certain short-term leases and leases
of low-value assets; however, this exemption can only be applied by lessees.
For lessors, the accounting stays almost the same. However, as the IASB has updated the guidance on
the definition of a lease (as well as the guidance on the combination and separation of contracts), lessors
will also be affected by the new standard.
Under IFRS 16, a contract is, or contains, a lease if the contract conveys the right to control the use of an
identified asset for a period of time in exchange for consideration.
The new Standard will not result in a material impact on the Group’s financial statements.
• IFRS 17, ‘Insurance contracts’ (Annual periods beginning on or after 1 January 2021): Whereas the current
standard, IFRS 4, allows insurers to use their local GAAP, IFRS 17 defines clear and consistent rules that
will significantly increase the comparability of financial statements.
Under IFRS 17, for insurance contracts with direct participation features, the variable fee approach applies.
The variable fee approach is a variation on the general model. When applying the variable fee approach,
the entity’s share of the fair value changes of the underlying items is included in the contractual service
margin. As a consequence, the fair value changes are not recognised in profit or loss in the period in
which they occur but over the remaining life of the contract.
GROUP ACCOUNTING
POLICIES