LENMED AIR 2019.pdf

Accounting policies 1. Basis of preparation These consolidated annual financial statements are prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB), comply with SAICA Financial Reporting Guides as issued by the Accounting Practices Committee, Financial Reporting Announcements issued by the Financial Reporting Standards Council and the Companies Act of South Africa. These policies have been consistently applied to all years presented, unless otherwise stated. They have been prepared on the historical cost basis. The principal accounting policies incorporated are listed below. The preparation of financial statements in conformity with IFRS requires management to make judgements, estimates and assumptions that may affect the application of policies and reported amounts of assets, liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgements about carrying values of assets and liabilities that are not readily apparent from other sources. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision only affects that period, or in the period of the revision and future periods if the revision affects both current and future periods. Judgements made by management in the application of IFRS that have a significant effect on the financial statements, and significant estimates made in the preparation of these consolidated annual financial statements are disclosed in note 2. The financial statements are presented in South African Rand (ZAR), the functional currency of the Group and all amounts are rounded to the nearest million, except where otherwise indicated. Foreign currency exchange rates used in the preparation of converting into Rands are set out below: 28 February 2019 28 February 2018 BW Pula US Dollar BW Pula US Dollar Closing rate R1.34 R14.08 R1.21 R11.75 Average rate R1.30 R13.87 R1.23 R13.08 Adoption of new and revised accounting standards The Group has adopted the following accounting standards in the preparation of the consolidated financial statements which have been effective from 1 January 2018 (refer to note 29): + IFRS 15 Revenue from contracts from customers + IFRS 9 Financial Instruments 1.1 Standards in issue, not yet effective At the date of authorisation of these financial statements, the following standards and interpretations were in issue, but not yet effective. Standard Annual Periods IFRS 3 Business combinations 1 January 2019 - The directors have considered the impact of the standard above and believe the impact to be immaterial. IAS 1 Presentation of Financial Statements 1 January 2020 - The directors have considered the impact of the standard above and believe the impact to be immaterial. IAS 12 Income taxes 1 January 2019 - The directors have considered the impact of the standard above and believe the impact to be immaterial. IFRS 16 Leases 1 January 2019 - The Group has assessed the impact of the changes that will arise under IFRS 16 which are described below: i) Right-of-use assets will be recorded for assets that are leased by the Group; currently no lease assets are included on the Group’s consolidated statement of financial position for operating leases. ii) Liabilities will be recorded for future lease payments in the Group’s consolidated statement of financial position for the ‘reasonably certain’ period of the lease, which may include future lease periods for which the Group has extension options. Currently liabilities are not recorded for future operating lease payments, which are disclosed as commitments. iii) Lease expenses will be for depreciation of right-of-use assets and interest on lease liabilities. Interest will typically be higher in the early stages of a lease and reduce over the term. Currently operating lease rentals are expensed on a straight-line basis over the lease term within operating expenses. CONSOLIDATED ANNUAL FINANCIAL STATEMENTS 96