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Notes
to the Group annual financial statements
continued
For the year ended 31 May 2017
BLUE LABEL
INTEGRATED ANNUAL REPORT 2017
10. Accounting framework
continued
10.3 Standards, amendments and interpretations not yet effective continued
Contemporaneous documentation is still required but is different to that currently prepared under IAS 39.
The standard is effective for accounting periods beginning on or after 1 January 2018. Early adoption is permitted.
The Group is currently considering the impact on the consolidated financial statements. The impact on the financial
statements has not yet been fully determined but it is expected to result in a change in the measurement of revenue
to adjust for the effects of the time value of money.
IFRS 16 –
Leases
IFRS 16, ‘Leases’ states that lessees should be required to recognise assets and liabilities arising from all leases (with
limited exceptions) on the statement of financial position. Lessor accounting has not substantially changed in the new
standard.
The model reflects that, at the start of a lease, the lessee obtains the right to use an asset for a period of time and
has an obligation to pay for that right. In response to concerns expressed about the cost and complexity to apply the
requirements to large volumes of small assets, the IASB decided not to require a lessee to recognise assets and
liabilities for short-term leases (less than 12 months), and leases for which the underlying asset is of low value (such
as laptops and office furniture).
A lessee measures lease liabilities at the present value of future lease payments. A lessee measures lease assets,
initially at the same amount as lease liabilities, and also includes costs directly related to entering into the lease. Lease
assets are amortised in a similar way to other assets such as property, plant and equipment. This approach will result
in a more faithful representation of a lessee’s assets and liabilities and, together with enhanced disclosures, will
provide greater transparency of a lessee’s financial leverage and capital employed.
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’.
The standard is effective for accounting periods beginning on or after 1 January 2019. Early adoption is permitted.
The Group is currently considering the impact on the consolidated financial statements. The impact will be significant
as the Group currently leases its premises. This will result in an increase in lease liabilities and right of use assets in the
statement of financial position with a corresponding reduction in operating lease expenses and an increase in
depreciation and finance costs in the income statement.
Amendments to IFRS 2 –
Share-based payments
This amendment clarifies the measurement basis for cash-settled, share-based payments and the accounting for
modifications that change an award from cash-settled to equity-settled. It also introduces an exception to the
principles in IFRS 2 that will require an award to be treated as if it was wholly equity-settled, where an employer is
obliged to withhold an amount for the employee’s tax obligation associated with a share-based payment and pay that
amount to the tax authority.
This standard is effective for accounting periods beginning on or after 1 January 2018. The Group is currently
considering the impact on the consolidated financial statements.
Amendments to IFRS 10 –
Consolidated financial statements
and IAS 28
– Investments in associates and joint
ventures on sale or contribution of assets
The IASB has issued this amendment to eliminate the inconsistency between IFRS 10 and IAS 28. If the non-monetary
assets sold or contributed to an associate or joint venture constitute a ‘business’, then the full gain or loss will be
recognised by the investor. A partial gain or loss is recognised when a transaction involves assets that do not
constitute a business, even if these assets are housed in a subsidiary.
No effective date has been set. The Group is currently considering the impact on the consolidated financial
statements.