Hyprop Investments Limited Integrated annual report 2017

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Notes to the consolidated
financial statements continued
for the year ended 30 June 2017
106 Hyprop Investments Limited
Integrated annual report and consolidated financial statements2017
1. Accounting policies and presentation of consolidated financial statements continued
1.25 Standards issued but not yet effective
At the date of approval of these consolidated financial statements, certain new accounting standards, amendments and interpretations to existing
standards have been published but are not yet effective, and have not been early adopted by the group.
Management anticipates that all of the pronouncements will be adopted in the group’s accounting policies for the first period beginning after the
effective date of the pronouncement. Information on new standards, amendments and interpretations that are expected to be relevant to the
consolidated financial statements or those for which the impact has not yet been assessed, is provided below. Certain other new standards and
interpretations have been issued but are not expected to have a material impact on the consolidated financial statements namely:
■■IFRS 2 Share-based payment (effective periods beginning on/after 1 January 2018)
■■IAS 40 Investment property (effective periods beginning on/after 1 January 2018)
■■IFRS 15 Revenue from contracts with customers (effective periods beginning on/after 1 January 2018)
■■IAS 7 Disclosure initiative (effective periods beginning on/after 1 January 2017)
■■IAS 12 Recognition of deferred tax assets for unrealised losses (effective periods beginning on/after 1 January 2017)
■■IFRIC 22 Foreign currency transactions and advance considerations (effective periods beginning on/after 1 January 2018)
■■IFRIC 23 Uncertainty over income tax treatments (effective periods beginning on/after 1 January 2019).
NEW OR AMENDED STANDARD
AND EFFECTIVE DATE SUMMARY OF THE REQUIREMENTS POSSIBLE IMPACT ON GROUP
IFRS 9 Financial instruments
(annual periods beginning on
or after 1 January 2018
retrospectively except for
hedge accounting)
On 24 July 2014, the IASB issued the final IFRS 9
Financial instruments, which replaces earlier versions
of IFRS 9 and completes the IASB’s project to replace
IAS 39 Financial instruments: recognition and
measurement.
The standard is effective for annual periods beginning
on or after 1 January 2018 with retrospective
application, early adoption is permitted.
Measurement and classification: While the changes
to the measurement bases may seem to have a
muted effect as the group already measures its
financial instruments at amortised cost and at fair
value though profit and loss (FVTPL), the criteria for
classification into these categories are significantly
different. This may result in changes in classification
between amortised cost and FVTPL. More specific
assessment of these impacts will follow closer to the
implementation date of the standard.
Impairment: In addition, the IFRS 9 impairment model
has been changed from an “incurred loss” model in
IAS 39 to an “expected credit loss” model, which is
expected to increase the provision for bad debts
recognised in the group as the forward looking
component may introduce additional losses.
Effective interest: Effective interest has also moved
from being calculated on gross balances outstanding
per IAS 39 to being calculated on the amortised cost
net of impairment adjustments per the expected
credit loss model. This is expected to reduce the
amount of interest accrued.
Hedge accounting: The incorporation of a hedge
accounting chapter in IFRS 9 is done with limited
changes to (a) increase the eligibility of both hedged
items and hedging instruments and (b) introducing a
principle-based approach to assessing hedge
effectiveness. It is not expected to have a significant
effect on the recognition and measurement of the
group’s hedges.
IFRS 16 Leases
(annual periods beginning on
or after 1 January 2019)
IFRS 16 was published in January 2016. It sets out the
principles for the recognition, measurement,
presentation and disclosure of leases for both parties
to a contract, ie the customer (lessee) and the
supplier (lessor). IFRS 16 replaces the previous leases
standard, IAS 17 Leases, and related interpretations.
IFRS 16 has one model for lessees which will result in
almost all leases being included on the statement of
financial position. No significant changes have been
included for lessors.
The standard is effective for annual periods beginning
on or after 1 January 2019, with early adoption
permitted only if the entity also adopts IFRS 15. The
transitional requirements are different for lessees and
lessors.
As lessor: This new standard is not expected to have
a significant impact on how the group (as lessor)
accounts for leases due to the carry forward of the
lessor accounting model from IAS 17. However, the
group/company anticipates an impact on the manner
of enhanced disclosures for lessors required by
IFRS 16, namely components of lease income and risk
management with respect to exposure to residual
asset risk.
As lessee: In the less common instance where the
group is a lessee, we do not anticipate significant
changes to the accounting for those leases as the
single leasehold property in the group is already
capitalised in terms of IAS 40.