LENMED AIR 2019.pdf

29. Change in accounting policy IAS 16 Property, plant and equipment - Land and buildings The Group changed its accounting policy for the determination of the carrying amount of land and buildings from the revaluation method to the cost method. Due to the significant fluctuations in the valuation of land and buildings as well as their specialised nature the change to the cost method will result in the financial statements providing more reliable and relevant information. The change in accounting policy has been accounted for retrospectively and the comparative statements for 2018 have been restated. Land and buildings and depreciation have been restated for all periods described below: 28 February 2019 28 February 2018 1 March 2017 Decrease in depreciation 1 169 1 169 - (Increase) in deferred tax expense (327) (327) - Increase in profit for the year 842 842 - (Decrease) in land and buildings carrying amount (301 242) (303 580) (304 749) (Increase) in deferred tax 74 913 75 567 75 894 (Decrease) in revaluation reserve - - (230 448) Adjustment against retained earnings at the beginning of the year - - 1 593 IFRS 9 Financial instruments IFRS 9 addresses the accounting principles for the financial reporting of financial assets and financial liabilities, including classification, measurement, impairment, derecognition, and hedge accounting. IFRS 9 replaces the earlier versions of IFRS 9 and completes the IASB’s project to replace IAS 39 Financial Instruments: Recognition and Measurement. The standard is mandatory for accounting periods beginning on or after 1 January 2018 and has, therefore, been adopted by the Group for the year ended 28 February 2019. The Group has applied the standard retrospectively as at 1 March 2018 with no restatement of comparative information for prior years. IFRS 9 replaces the ‘incurred loss’ model of IAS 39 with a forward looking ‘expected credit loss’ model to measure impairment losses on financial assets. The majority of the Group’s financial assets are trade receivables, for which IFRS 9 requires the simplified approach to be applied, measuring the impairment loss allowance based on lifetime expected credit loss. Further to this, as a practical expedient, the Group has applied a provision matrix assessing historical credit losses per aged bucket of trade debtors and overlaid this with Lenmed’s assessment of general economic conditions to estimate expected future losses. There is an opening movement to retained earnings R10.83 million and an adjustment of R16.4 million to current year earnings to align to the new standard. This has had the effect of increasing the doubtful debt provision from R56.1 million to R82.4 million. IFRS 15 Revenue from Contracts with Customers The core principle of the new standard is to recognise revenue to depict the transfer of goods or services to customers in amounts that reflect the consideration (that is, payment) to which the company expects to be entitled in exchange for those goods or services. The new standard also results in enhanced disclosures about revenue, provides guidance for transactions that were not previously addressed comprehensively (for example, service revenue and contract modifications) and improves guidance for multiple-element arrangements. The company performed an impact assessment and concluded that IFRS 15 Revenue does not impact materially on the Group revenue. The presentation and disclosure requirements in IFRS 15 have been updated. Notes to the consolidated annual financial statements continued CONSOLIDATED ANNUAL FINANCIAL STATEMENTS 116