Fraser & Neave Holdings Bhd Annual Report 2019

A N N U A L R E P O R T 2 0 1 9 06 Financial Statements 147 NOTES TO THE FINANCIAL STATEMENTS 1. BASIS OF PREPARATION (CONTINUED) (A) STATEMENT OF COMPLIANCE (CONTINUED) The Group and the Company plan to apply the abovementioned accounting standards, interpretations and amendments: • from the annual period beginning on 1 October 2019 for those accounting standard, interpretation and amendments that are effective for annual periods beginning on or after 1 January 2019. • from the annual period beginning on 1 October 2020 for those amendments that are effective for annual periods beginning on or after 1 January 2020. The Group and the Company do not plan to apply MFRS 17, Insurance Contracts that is effective for annual periods beginning on 1 January 2021 as it is not applicable to the Group and the Company. The initial application of the accounting standards, interpretations and amendments are not expected to have any material financial impacts to the current period and prior period financial statements of the Group and the Company except as mentioned below: MFRS 16, Leases MFRS 16 replaces the guidance in MFRS 117, Leases , IC Interpretation 4, Determining whether an Arrangement contains a Lease , IC Interpretation 115, Operating Leases – Incentives and IC Interpretation 127, Evaluating the Substance of Transactions Involving the Legal Form of a Lease. The Group has established a structured implementation programme which includes establishing a project team, training programme, review of lease agreements, undertaking impact assessment and changes to system and process to ensure readiness and smooth implementation of MFRS 16. MFRS 16 introduces a single, on-balance sheet lease accounting model for lessees. A lessee recognises a right-of-use asset representing its right to use the underlying asset and a lease liability representing its obligations to make lease payments. There are recognition exemptions for short-term leases and leases of low-value items. Lessor accounting remains similar to the current standard which continues to be classified as finance or operating lease. With the adoption of MFRS 16, the right-of-use assets and lease liabilities as at 1 October 2019 is expected to be approximately 1% of total assets and 3% of total liabilities respectively. No significant impact is expected on the Group’s finance leases. The estimated impact on adoption of MFRS 16 is based on assessment performed to-date. The actual impact of adopting the standard may change until the Group presents its audited financial statements for the financial year ending 30 September 2020. (B) BASIS OF MEASUREMENT The financial statements have been prepared on the historical cost basis except as disclosed in the accounting policies below. (C) FUNCTIONAL AND PRESENTATION CURRENCY These financial statements are presented in Ringgit Malaysia (“RM”), which is the Company’s functional currency. All financial information is presented in RM and has been rounded to the nearest thousand, unless otherwise stated. (D) USE OF ESTIMATES AND JUDGEMENTS The preparation of the financial statements in conformity with MFRSs requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and in any future periods affected. There are no significant areas of estimation uncertainty and critical judgements in applying accounting policies that have significant effect on the amounts recognised in the financial statements other than those disclosed in the following notes: (i) Note 4 – valuation of investment properties (ii) Note 6 – goodwill and brand (iii) Note 15(D) – share-based payments (iv) Note 17 – employee benefits (v) Note 19 – contract liabilities