LENMED AIR 2019.pdf

LENMED ANNUAL INTEGRATED REPORT 2019 iv) EBITDA is expected to increase by R28,5 million. This increase will be partly offset by an interest expense on lease liabilities resulting in an before-tax loss of R6,7 million in financial year 2020. Retained earnings for financial year 2019 will reduce by R7,4 million before-tax. v) Operating lease cash flows are currently included within operating cash flows in the consolidated statement of cash flows; under IFRS 16 these will be recorded as cash flows from financing activities reflecting the repayment of lease liabilities (borrowings) and related interest. Standard Annual Periods IFRS 10 Consolidated Financial Statements 1 January 2019 — Deferred – The directors have considered the impact of the standard above and believe the impact to be immaterial. IAS 28 Investment in Associates and Joint Ventures 1 January 2019 – The directors have considered the impact of the standard above and believe their impact to be immaterial. IAS 23 Borrowing Costs 1 January 2019 – The directors have considered the impact of the standard above and believe their impact to be immaterial. IFRIC 23 Uncertainty of income tax – The directors have considered the impact of the standard above and believe their impact to be immaterial. 2. Critical accounting estimates and judgements Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below. KEY SOURCES OF ESTIMATION 2.1 Deferred tax A deferred tax asset is recognised on unused tax losses adjusted for the current year to the extent that it is probable that future taxable profit will be available against which the unused tax losses can be utilised. The Group considered the following criteria in assessing the probability that taxable profit will be available against which the unused tax losses can be utilised: Whether the entity has sufficient taxable temporary differences relating to the same taxation authority and the same taxable entity which will result in taxable amounts against which the unused tax losses can be utilised; Whether it is probable that the entity will have taxable profits before the unused tax losses expire; and Whether the unused tax losses result from identifiable causes which are unlikely to recur. To the extent that it is not probable that taxable profits will be available against which the unused tax losses or unused tax credits can be utilised, the deferred tax asset is not recognised. To determine the probability that taxable profit will be available against which the unused tax losses can be utilised, the Group has reviewed its forecasts for the foreseeable future and compared that to its total tax losses. 2.2 Financial instruments Impairment of financial assets The Group recognises lifetime Expected Credit Loss (ECL) for trade and other receivables. The expected credit losses on these financial assets are estimated using a provision matrix based on the Group’s historical credit loss experience, adjusted for factors that are specific to the debtors, general economic conditions and an assessment of both the current as well as the forecast at the reporting date, including time value of money where appropriate. The Group regularly monitors the effectiveness of the criteria used to identify whether there has been a significant increase in credit risk and revises them as appropriate to ensure that the criteria are capable of identifying significant increase in credit risk before the amount becomes past due. 97