ACCOUNTING
POLICY
1. BASIS OF PRESENTATION
The financial statements are prepared on the historical cost basis, except for derivative financial instruments, financial assets and
commodity inventory measured at fair value. The carrying values of designated hedged assets and liabilities are adjusted to reflect
changes in the fair values resulting from the hedged risks. The financial statements are presented in South African rand terms and
all values are rounded to the nearest million (R’m), except where stated otherwise.
1.1 STATEMENT OF COMPLIANCE
The financial statements of Senwesbel Limited and all its subsidiaries, joint ventures and associate (the group) have been
prepared in accordance and in compliance with the requirements of International Financial Reporting Standards (IFRS) as
issued by the International Accounting Standards Board (IASB), and Interpretations issued by the International Financial
Reporting Interpretation Committee (IFRIC) and with those requirements of the South African Companies Act, no 71 of 2008
(as amended), applicable to companies reporting under IFRS.
1.2 CHANGE IN ACCOUNTING POLICY AND DISCLOSURES
The accounting policy adopted in the preparation of the consolidated financial statements is consistent with the policy
followed in the preparation of the group’s annual financial statements for the previous financial year, except for the adoption
of new standards and interpretations effective as of 1 May 2018 as set out below:
l New standards adopted during this financial year:
IFRS 16 Leases
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 sets out
the principles for the recognition, measurement, presentation and disclosure of leases and requires lessees to recognise most
leases on the balance sheet.
Lessor accounting under IFRS 16 is substantially unchanged from IAS 17. Lessors will continue to classify leases as either
operating or finance leases using similar principles as in IAS 17. Therefore, IFRS 16 did not have an impact for leases where the
group is the lessor.
The group adopted IFRS 16 using the modified retrospective method of adoption with the date of initial application of 1 May
2019. Under this method, the standard is applied retrospectively with the cumulative effect of initially applying the standard
recognised at the date of initial application. The group elected to use the transition practical expedient to not reassess whether
a contract is, or contains a lease at 1 May 2019. Instead, the group applied the standard only to contracts that were previously
identified as leases applying IAS 17 and IFRIC 4 at the date of initial application.
Refer to note 4 in the notes to the financial statements for a summary of the impact of the adoption on the financial
statements of the group.
Upon adoption of IFRS 16, the group applied a single recognition and measurement approach for all leases except for
short-term leases and leases of low-value assets. Refer to accounting policy 2.6 Leases for the accounting policy being applied
from 1 May 2019. The standard provides specific transition requirements and practical expedients, which have been applied
by the group.
Leases previously classified as finance leases
The group did not change the initial carrying amounts of recognised assets and liabilities at the date of initial application for
leases previously classified as finance leases (i.e., the right-of-use assets and lease liabilities equal the lease assets and liabilities
recognised under IAS 17). The requirements of IFRS 16 were applied to these leases from 1 May 2019.
Leases previously accounted for as operating leases
The group recognised right-of-use assets and lease liabilities for those leases previously classified as operating leases, except
for short-term leases and leases of low-value assets. The right-of-use assets were recognised based on the amount equal to
the lease liabilities, adjusted for any related prepaid and accrued lease payments previously recognised. Lease liabilities were
recognised based on the present value of the remaining lease payments, discounted using the incremental borrowing rate at
the date of initial application. The group also applied the available practical expedients wherein it:
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SENWESBEL ANNUAL FINANCIAL STATEMENTS 2020 Senwesbel Limited Reg no: 1996/017629/06