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Hyprop Investments Limited
Group annual financial statements 2016
1.
Accounting policies and presentation of financial statements
continued
1.25 Standards issued but not yet effective
continued
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). Early
adoption is permitted.
On 24 July 2014, the IASB issued the final
IFRS 9
Financial Instruments
standard, which
replaces earlier versions of IFRS 9 and
completes the IASB’s project to replace
IAS 39
Financial Instruments: Recognition
and Measurement
.
Measurement and classification:
While the changes
to the measurement bases may seem to have a
muted effect, as the group already measures
financial instruments at amortised cost and at fair
value though profit or 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). Early
adoption is permitted only if
the entity also adopts IFRS 15.
The transitional requirements
are different for lessees and
lessors.
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.
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 anticipates an impact as
a result of the 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. However, we do
anticipate changes to record the related liabilities.