Page 42 - SABN AR 2021

Accounting policies
1. Basis of preparation
The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have been applied consistently to all the years presented, unless stated otherwise.
The financial statements have been prepared in accordance with IFRS and the requirements of the Companies Act 71 of 2008 of South Africa. The financial statements have been prepared using the historical cost convention.
The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the accounting policies of the South African Bank Note Company (RF) Propriety Limited (SABN/Company). The areas involving a higher degree of judgement or complexity and the areas where assumptions or estimates are significant to the annual financial statements are disclosed in Note 1.1.
The presentation currency is the South African rand. All amounts have been rounded off to the nearest thousand.
These accounting policies have been applied on a basis consistent with that of the prior financial year, except for the adoption of new standards that became effective during the financial year, where relevant.
New standards and interpretations
New and amended standards considered by the company for adoption
Certain new and amended standards and interpretations were published that are mandatory for the reporting period ending 31 March 2021. The Company’s assessment deemed the following standards not to be applicable and they therefore have no impact on the Company’s financials for the reporting period:
- IFRS 9, Financial Instruments: Interest rate benchmark reform Phase 2; and - IFRS 16, Leases: COVID-19-related rent concessions.
New standards and interpretations not yet adopted
New standards and interpretations were published that are not mandatory for the reporting period ending 31 March 2021 and were therefore not early adopted by the Company. The Company’s assessment of the potential impact of these standards and interpretations when effective and applicable is discussed below:
- IAS 1, Presentation of Financial Statements: Classification of liabilities as current or non-current
The classification of liabilities will be based on the contractual arrangements in place at the reporting date. This is unaffected by expectation of settlement. Therefore, this will only affect the presentation of liabilities on the statement of financial position, not the amount or timing of recognition. This will be the only impact for the Company.
- IAS 16, Property, Plant and Equipment: Proceeds before intended use
The standard now prohibits deducting from the cost of an item of property, plant and equipment any proceeds from selling items produced while bringing that asset to the location and the condition necessary for use as intended. Instead, the proceeds from selling such items and the costs of producing those items are recognised in profit and loss. This is in line with the Company’s historical accounting practice.
- IAS 37, Provisions, Contingent Liabilities and Contingent Assets: Costs of fulfilling a contract
In determining whether a contract is onerous, the costs of fulfilling a contract comprise the costs that relate directly to the contract or the allocation of costs that relate directly to fulfilling the contract. General and administrative costs do not relate directly to a contract and are therefore to be excluded unless they are
42 Annual Report 2021
South African Bank Note Company (RF) Proprietary Limited