Page 128 - Capricorn IAR 2020

GLOSSARY OF TERMS ANNUAL FINANCIAL GLOSSARY OF TERMS STATEMENTS
NOTES TO THE CONSOLIDATED AND SEPARATE ANNUAL FINANCIAL STATEMENTS
for the year ended 30 June 2020
1. BASIS OF PRESENTATION
The consolidated annual financial statements of Capricorn Group (“the Group” or “the company”) for the year ended 30 June 2020 have been prepared in accordance with International Financial Reporting Standards (“IFRS”), interpretations issued by the International Accounting Standards Board (“IASB”) and the IFRS Interpretations Committee (“IFRS IC”) effective at the time of preparing these statements and in the manner required by the Companies Act of Namibia and the Namibian Stock Exchange. The consolidated annual financial statements have been prepared under the historical cost convention, as modified by the revaluation of financial assets at fair value through profit and loss, financial assets at fair value through other comprehensive income and financial liabilities held at fair value through profit or loss and all derivative contracts.
The preparation of consolidated annual financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise their judgement in the process of applying the Group’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the consolidated annual financial statements, are disclosed in note 4.
The comparative information presented in the statement of comprehensive, statement of cash flows and the related corresponding notes have been represented to exclude the discontinued operation, which is disclosed separately in note 44.
1.1 Going concern
The Group’s forecasts and projections, taking account of reasonably possible changes in trading performance, show that the Group should be able to operate within the level of its current financing. The Group continues to adopt the going concern basis in preparing its consolidated annual financial statements.
1.2 Functional and presentation currency
Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic environment in which the entity operates (“the functional currency”). The consolidated annual financial statements are presented in Namibian dollar, which is the functional and presentation currency of the company and the presentation currency of the Group.
1.3 Standards and interpretations issued
1.3.1 Standards and interpretations issued affecting amounts reported and disclosures in the current year
Title of standard
IFRS 16 Leases
Nature of change
This standard replaces the current guidance in IAS 17 and is a far-reaching change in accounting by lessees in particular.
Under IAS 17, leases were required to make a distinction between a finance lease (on balance sheet) and an operating lease (off balance sheet). IFRS 16 now requires lessees to recognise a lease liability reflecting future lease payments and
a “right-of-use asset” for virtually all lease contracts. The IASB has included an optional exemption for certain short-term leases and leases of low-value assets; however, this exemption can only be applied by lessees.
For lessors, the accounting stays almost the same. However, as the IASB has updated the guidance on the definition of a lease (as well as the guidance on the combination and separation of contracts), lessors will also be affected by the new standard.
At the very least, the new accounting model for lessees is expected to impact negotiations between lessors and lessees. Under IFRS 16, a contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for
a period of time in exchange for consideration.
IFRS 16 supersedes IAS 17 – ‘Leases’, IFRIC 4 – ‘Determining’ whether an Arrangement contains a Lease, SIC 15 – ‘Operating Leases – Incentives’ and SIC 27 – ‘Evaluating the Substance of Transactions Involving the Legal Form of a Lease’.
Impact
The Group elected to apply IFRS 16 retrospectively without restating comparative periods. Comparative figures will be presented in terms of IAS 17.
The disclosures relating to the impact of the adoption of IFRS 16 are described in more detail in section 1.3.1 (a).
Mandatory application date/ Date of adoption by Group
Mandatory for financial years commencing on or after 1 January 2019.
Adoption by the Group: 1 July 2019.
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