Page 43 - SABN AR 2021

explicitly chargeable to the counterparty under the contract. The Company has no existing onerous contracts to which this change would apply.
- IFRS 9, Financial Instruments: Fees in the 10% test for the derecognition of financial liabilities
In determining whether the changes made in the original terms of a financial liability constitute derecognition or modification, only the fees that occurred between the lender and the borrower should be considered in calculating the new present value. There are no fees applicable to the shareholder loan reflected in the statement of financial position and the Company has no other debt instruments to which this change would apply.
There are no other standards that are not yet effective and which are expected to have a material impact on the Company in the current and future reporting periods and on foreseeable future transactions.
1.1 Significant judgements and sources of estimation uncertainty
The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the annual financial statements include:
Property, plant and equipment (Note 2)
The SABN reviews the estimated useful life of property, plant and equipment annually to ensure the assets are fairly valued. The Company engages the Production Department and property consultants with the best knowledge and industry-related experience in estimating the remaining useful life of property, plant and equipment. The buildings of the SABN and the Pretoria North Depot are depreciated to their residual value of R34 800 000 and R14 300 000 respectively. All other specialised and industry-specific assets are utilised fully and are not expected to have a material realisable value, if any, at the end of their useful life. The residual values of these items are deemed to be zero.
Post-employment benefits (Note 10)
The present value of the SABN’s liability is determined by independent actuaries. The actuarial valuation method used is the projected unit credit method prescribed by IAS 19. Future benefits are projected using specified actuarial assumptions and the liability for in-service members is accrued over their expected working lifetime. The employee benefits are consistent with the prior year.
Provisions and staff accruals (Note 12)
The provisions accrued for at 31 March 2021 are based on management’s best estimate of the expected payment based on the information available.
Leases (Note 14)
The following are areas of significant judgement that were applied under IFRS 16:
Significant judgement was applied to determine whether the contract contains a lease and thereafter to determine the type of lease.
Management assessed the ‘Framework agreement between the SABN and the SARB for the manufacture and supply of banknotes’ and determined that it does not contain a lease. In terms of the ‘Manage service agreement between the SABN and the SARB for the acceptance of delivery, storage, safeguarding and dispatch of banknotes’, management exercised its judgement in classifying the property rental portion of this contract to contain an operating lease and not a finance lease because the present value of the lease payments does not amount to substantially all the fair value of the underlying assets. The non-lease portion of this contract relates to the recovery of costs from the SARB for services rendered by the SABN and is not directly related to the use of the underlying asset which is used for storage.
South African Bank Note Company (RF) Proprietary Limited
Annual Report 2021
43