Standards and Interpretations issued and not yet effective

Pronouncements issued but not yet effective

Standards, Interpretations and amendments thereto issued but not yet effective up to the date of issuance of the Group’s financial statements are listed below. Only those that the Group reasonably expects to be applicable at a future date have been discussed. The Group intends to adopt these standards, interpretations or amendments when they become effective.

IFRS 3 Business Combinations

The IASB amended the definition of a business to assist preparers in determining whether an acquired set of activities and assets is a business or not. This amendment:

• narrows the definitions of a business and of outputs;
• confirms that a business must include inputs and processes, clarifying that:

1. the inputs and processes together must significantly contribute to creating outputs; and
2. the process must be substantive

• removes the assessment of whether market participants are capable of replacing any missing elements;
• adds guidance in the assessment of whether an acquired process is substantive;
• introduces an optional fair value concentration test; and
• Provides illustrative examples.

The adoption of this amendment is applicable to financial years beginning on or after 1 January 2020. These amendments are expected to impact the Group in any business combinations the Group will undertake after the effective date.

Interest rate benchmark reform (Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16)

Interest rate benchmarks, such as interbank offered rates, play an important role in the global market, indexing products ranging from mortgages to derivatives. The reliability of some existing benchmarks have been undermined and recommendations have been made for their reform, causing major uncertainties. The uncertainties could cause companies to need to discontinue their hedge accounting or designate new hedging relationships. The IASB has amended specific hedge accounting requirements in IFRS 9 and IAS 39 to provide exceptions during this period of uncertainty as discontinuation of hedge accounting solely due to these uncertainties would not provide useful information to the users of the financial statements.

The reform is in process and therefore uncertainties exist.

The Company has applied these amendments to its hedges, which are accounted for in accordance with IAS 39, and has therefore:

1. Assumed that the interest rate benchmark on which the hedged cash flows are based is not altered as a result of the reform and the forecast transaction remains highly probable.
2. Assumed that the interest rate benchmark on which the hedged items are based is not altered as a result of the reform in our prospective effectiveness tests.
3. Not performed the retrospective effectiveness test on the hedge relationships directly affected by the reform.
4. Only applied the separately identifiable requirement assessment at the inception of the hedging relationships.

The adoption of this amendment is applicable to financial years beginning on or after 1 January 2021.

• Amendment: Subsidiary as a first-time adopter²

a subsidiary is permitted to measure cumulative translation differences at transition date using the amounts reported by its parent, based on the parent’s transition date.

• Amendments: provide relief from the potential effects on hedge accounting due to the uncertainties caused by interest rate benchmark reform (the phasing out of interest-rate benchmarks such as the interbank offered rates (IBOR)).
• Amendments include exceptions to be applied to all hedging relationships that are directly affected by the interest rate benchmark reform.
• The amendments:

1. Modify some specific hedge accounting requirements;
2. Require companies to provide additional information about hedging relationships directly affected by the uncertainties.

• Amendments provide temporary relief to address financial reporting effects when an interbank offered rate (IBOR) is replaced with an alternative nearly risk-free interest rate (RFR) (‘IBOR reform’) including:

1. Contractual and cash flow changes - to be treated as changes due to a floating rate of interest.
2. Changes to hedge designations and documentation - do not result in the discontinuation of the hedge relationship.
3. The ‘separately identifiable’ requirement - not required when a RFR instrument is designated as a hedge of a risk component.
4. Additional disclosures required.

1 January 2021

(Restatement of prior periods not required & only permitted if possible without the use of hindsight)

• Amendment (lessee only) IFRS 16 and Covid-19: to make it easier to account for Covid-19-related rent concessions e.g. rent holidays and temporary rent reductions

1. exempts lessees from having to consider individual lease contracts to determine whether rent concessions occurring as a direct consequence of the Covid-19 pandemic are lease modifications;
2. allows lessees to account for such rent concessions as if they were not lease modifications;
3. Applies to Covid-19-related rent concessions that reduce lease payments due on or before 30 June 2021.

The amendment does not affect lessors.

• Amendment (lessee only): IFRS 16 and Covid-19 -Extension of practical expedient 

- Relief will now extend to 30 June 2022

• Amendment to Illustrative Example 13⁴: Lease incentives

-Removes the lessor’s reimbursement of leasehold improvements from the example to resolve any potential confusion regarding the treatment of lease incentives.

1 June 2020

(can be applied immediately in financial statements - interim or annual - not yet authorised for issue)

Extension of rental concession relief:

1 April 2021

No effective date as it is an illustrative example

New standard establishing the principles for the recognition, measurement, presentation and disclosure of insurance contracts. The single accounting model makes use of current estimates.

The amendments are aimed at helping companies implement the Standard and making it easier to explain their financial performance, are designed to:

1. reduce costs by simplifying some requirements;
2. make financial performance easier to explain; and
3. ease transition by deferring the effective date to 2023 and by providing additional relief to reduce the effort required when applying IFRS 17 for the first time.

1 January 2023

(earlier application is permitted if IFRS 9 and IFRS 15 have been applied)

• Amendment: Classification of Liabilities as Current or Non-current:

1. Classification to be based on whether the right to defer settlement by at least twelve months exists at the end of the reporting period.
2. Classification is unaffected by expectation of settlement.
3. Settlement refers to transfer of cash equity instruments, other assets or services.
4. Clarifies that only if an embedded derivative in a convertible liability is itself an equity instrument would the terms of a liability not impact its classification.

• Amendment: Disclosure of Accounting Policies:

1. Accounting policies to be disclosed where the information is material, by nature or amount.
2. Explains when accounting policy information is considered material.
3. Clarifies that when an entity chooses to disclose an immaterial accounting policy, it must not obscure or affect other material or required disclosures.

1 January 2023

1 January 2023

• Amendment: Deferred Tax related to Assets and Liabilities arising from a Single Transaction

1. Narrows the scope of the exemption for recognition of taxable/deductible temporary differences that arise on certain transactions. The transaction should not give rise to equal taxable and deductible temporary differences.
2. Clarifies that deferred tax must be recognised on initial recognition of IFRS 16 leases and similar types of transactions that give rise to the recognition of an asset and a liability, such as decommissioning, restoration and similar liabilities with corresponding amounts recognised as part of the related asset.

1 January 2023

(Earlier application is permitted.)

• Amendment: Onerous Contracts — Cost of Fulfilling a Contract

- Specify that the ‘cost of fulfilling’ a contract comprises the ‘costs that relate directly to the contract’. Costs that relate directly to a contract can either be incremental costs of fulfilling that contract (examples would be direct labour, materials) or an allocation of other costs that relate directly to fulfilling contracts (an example would be the allocation of the depreciation charge for an item of property, plant and equipment used in fulfilling the contract).

• Amendments: Prepayment Features with Negative Compensation

1. Prepayable financial assets with negative compensation may now be classified at amortised cost.
2. Financial liabilities measured at amortised cost that are modified but are not derecognised must account for a profit or loss at the date of the modification.

• Clarification: Income Tax Consequences of Payments on Instruments Classified as Equity ⁷

- An entity must account for all income tax consequences (current and deferred tax) of dividend payments consistently with the original transaction.

• Clarification: Borrowing Costs Eligible for Capitalisation⁸ 

- If specific borrowings remain outstanding after the related asset is ready for use, those borrowings become part of the general borrowings.

• When accounting for uncertainties over income tax treatments the following should be considered:
  - Whether tax treatments should be considered collectively or independently;
  - Assume that a taxation authority will examine amounts reported to it with full knowledge of relevant information when doing so;
  - Whether it is probable that the tax authority will accept each tax treatment when determining tax effect;
  - The judgements and estimates must be reassessed if facts and circumstances change.

Changes in accounting policy and disclosures
New and amended standards and interpretations
The Group applied for the first time certain standards and amendments, which are effective for annual periods beginning on or after 1 January 2019.
The nature and the impact of each new standard and amendment is described below:

IFRS 16 Leases

IFRS 16 Leases replaces IAS 17 Leases along with three Interpretations (IFRIC 4 Determining whether an Arrangement contains a Lease, SIC 15 Operating Leases-Incentives and SIC 27 Evaluating the Substance of Transactions Involving the Legal Form of a Lease).

The adoption of this new Standard has resulted in the Group recognising a right-of-use asset and related lease liability in connection with all former operating leases except for those identified as low-value or having a remaining lease term of less than 12 months from the date of initial application

For those leases previously classified as finance leases, the right-of-use asset and lease liability are measured at the date of initial application at the same amounts as under IAS 17 immediately before the date of initial application.

The new Standard has been applied using the modified retrospective approach, with the cumulative effect of adopting IFRS 16 being recognised in equity as an adjustment to the opening balance of retained earnings for the current period. Prior periods have not been restated.

In applying IFRS 16 for the first time, the group has used the following practical expedients permitted by the standard:

• applying a single discount rate to a portfolio of leases with reasonably similar characteristics
• relying on previous assessments on whether leases are onerous as an alternative to performing an impairment review – there were no onerous contracts as at 1 January 2019
• accounting for operating leases with a remaining lease term of less than 12 months as at 1 January 2019 as short-term leases
• excluding initial direct costs for the measurement of the right-of-use asset at the date of initial application, and
• using hindsight in determining the lease term where the contract contains options to extend or terminate the lease.