Integrated Reports Senwesbel Consolidated Financial Statements 2018 - Page 65

ACCOUNTING POLICY 1. BASIS OF PRESENTATION Items included in the financial statements are measured using the currency of the primary economic environment in which the business operates (functional currency). The financial statements are presented in rand, which is the company’s and group’s functional and presentation currency. 1.1 STATEMENT OF COMPLIANCE The financial statements of Senwesbel Ltd and its subsidiary, Senwes Ltd, and Senwes’ joint ventures and associate (group) have been prepared in accordance and in compliance with the requirements of International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB), and Interpretations issued by the International Financial Reporting Interpretation Com- mittee (IFRIC) and with those requirements of the South African Companies Act, no. 71 of 2008 (as amended), applicable to companies reporting under IFRS. 1.2 CHANGE IN ACCOUNTING POLICY AND DISCLOSURES The accounting policy adopted in the preparation of the consolidated financial statements is consistent with the policy followed in the preparation of the group’s annual financial statements for the previous financial year, except for the adoption of new standards and inter- pretations effective as of 1 May 2017 as set out below: • Annual improvements to IFRS: - IAS 7 Disclosure initiative - Additional disclosure required about liabilities arising from financing activities for cash flow purposes (could be reconciliation of financial liabilities of which cash flows are classified under financing activities for purposes of the cash flow statement that clearly shows cash and non-cash movements); - IAS 12 Recognition of Deferred Tax Assets for Unrealised Losses (Amendment) - In assessing whether taxable temporary differences will be available to utilise deductible temporary differences against, ring-fencing in tax laws need to be considered. Clarifies how to deter- mine the extent to which taxable profits will be available against which a loss may be utilised for purposes of recognising a deferred tax asset (future taxable profit excluding the loss effect carried forward and recovery of value of assets clarified); - IFRS 12 Disclosure of interests in other entities - Clarification of the scope of the disclosure requirements in IFRS 12. 1.3 NEW STANDARDS, INTERPRETATIONS AND AMENDMENTS Standards already issued, but not yet effective upon the issuing of the group’s financial statements, are listed below. This list contains standards and interpretations issued, which are expected to be applicable at a future date. The intention of the group is to adopt these standards, if applicable, when they become effective. • IFRS 9 Financial Instruments, including hedging – New principle-based standard that currently addresses recognition and measurement of financial assets and liabilities, hedge accounting and impairment methodology - Effective date 1 January 2018; • Applying IFRS 9 Financial Instruments with IFRS 4 Insurance Contracts (Amendment) - Temporary exemption to certain insurers not to apply IFRS 9 but rather IAS 39 - Effective date 1 January 2018; • Amendments to IFRS 9 Prepayment features with negative compensation - Amendment relates to the classification of an instrument that permits the issuer (borrower) to prepay the instrument at an amount less than the unpaid capital and interest (for example, to prepay at fair value). These instruments may be measured at amortised cost or fair value through other comprehensive income in terms of IFRS 9 - Effective when addopting IFRS 9; • HEPS Circular 2/2015 issued by SAICA - Main changes relate to the impact of IFRS 9 treatment on HEPS - Effective date 1 January 2018; • IFRS 15 Revenue from Contracts with Customers - This standard provides that revenue be recognised to depict the transfer of promised goods or services in terms of any contract with a customer. The standard provides a number of steps to be followed in the revenue recognition process, with the effect that the focus of the revenue recognition shifts from the timing of transfer of risks and rewards to the timing of transfer of the goods or services. The standard has specific provisions dealing with commodity financing to determine whether this is accounted for as a sale or a financing transaction - Effective date 1 January 2018; • Clarifications to IFRS 15 Revenue from Contracts with Customers - Amendments affecting separate identifiability of goods or services, agent/principal considerations, royalty/licensing arrangements; • IFRS 16 Leases - A single on-balance sheet model that will require lessees to account for all leases, subject to some exemptions, as a financing lease. Lessees would recognise a liability to pay rentals with a corresponding asset for both types of leases - Effective date 1 January 2019; Senwesbel Limited Reg no: 1996/017629/06 SENWESBEL ANNUAL FINANCIAL STATEMENTS 2018 64