BASIS OF PREPARATION
The consolidated financial statements for the year ended 31 December 2017 have been prepared on a going concern basis in accordance with International Financial Reporting Standards (IFRS), as issued by the International Accounting Standards Board, the South African Institute of Chartered Accountants Financial Reporting Guides issued by the Accounting Practices Committee and Financial Reporting Pronouncements issued by the Financial Reporting Standards Council, as well as the requirements of the South African Companies Act and JSE Listings Requirements. The consolidated annual financial statements have been prepared under the historical cost convention, except for financial assets and financial liabilities (including derivative instruments) which are measured at fair value through profit or loss or through the mark to market reserve in equity.
STANDARDS, INTERPRETATIONS AND AMENDMENTS TO PUBLISHED STANDARDS EFFECTIVE FOR THE YEAR ENDED 31 DECEMBER 2017
During the financial year, the following new and revised accounting standards and amendments to standards became effective and had no significant impact on the Group’s financial statements:
|
Pronouncement |
Details of amendments |
Effective date |
|
IFRS 12 Disclosure of Interests in Other Entities (Amendment) |
Annual Improvements 2014-2016 Cycle Clarification of the scope of IFRS 12 with respect to interests in entities classified as held for sale in accordance with IFRS 5 Non-current Assets Held for Sale and Discontinued Operations. |
1 January 2017 |
|
IAS 7 Statement of Cash Flows (Amendment) |
Disclosure Initiative Amendments requiring entities to disclose information about changes in their financing liabilities. |
1 January 2017 |
|
IAS 12 Income Taxes (Amendment) |
Recognition of Deferred Tax Assets for Unrealised Losses Narrow-scope amendment to clarify the requirements on recognition of deferred tax assets for unrealised losses on debt instruments measured at fair value. |
1 January 2017 |
STANDARDS, INTERPRETATIONS AND AMENDMENTS TO PUBLISHED STANDARDS WHICH ARE NOT YET EFFECTIVE
Certain new standards, amendments and interpretations to existing standards have been published that apply to the Group’s accounting periods beginning on or after 1 January 2018 but have not been early adopted by the Group. The standards, amendments and interpretations that are applicable to the Group are:
|
Pronouncement |
Details of amendments and estimated impact |
Effective date1 |
|
IFRS 2 Share-based payment (Amendment)2 |
Classification and Measurement of Share-based Payment Transactions: A collection of three distinct narrow-scope amendments dealing with classification and measurement of share-based payments. The amendments address: The effects of vesting conditions on the measurement of a cash-settled share-based payment; The accounting requirements for a modification to the terms and conditions of a share-based payment that changes the classification of the transaction from cash-settled to equity-settled; and The classification of share-based payment transactions with net settlement features. |
1 January 2018 |
|
IFRS 3 Business Combinations (Amendment)2 |
Annual Improvements 2015-2017 Cycle Clarification that when an entity obtains control of a business that is a joint operation, it is required to remeasure previously held interests in that business. |
1 January 2019 |
|
IFRS 9 Financial Instruments (New standard) |
IFRS 9 arises from a three-part project to replace IAS 39 Financial Instruments: Recognition and Measurement. IFRS 9 addresses the classification, measurement and derecognition of financial assets and financial liabilities, introduces new rules for hedge accounting, and a new impairment model for financial assets. The Group performed an assessment of the impact of adoption of IFRS 9 calculated that it had no significant impact on its statement of financial position. The new standard also introduces expanded disclosure requirements and changes in presentation. These will change the nature and extent of the Group’s disclosures about its financial instruments which will be provided in the financial statements for the year ending 31 December 2018. |
1 January 2018 |
|
IFRS 9 Financial instruments (Amendment) |
Prepayment Features with Negative Compensation The narrow-scope amendment allows companies to measure particular prepayable financial assets with negative compensation at amortised cost or at fair value through other comprehensive income if a specified condition is met. |
1 January 2019 |
|
IFRS 11 Disclosure of Interest in Other Entities (Amendment)2 |
Annual Improvements 2015-2017 Cycle Clarification that when an entity obtains joint control of a business that is a joint operation, the entity does not remeasure previously held interests in that business. |
1 January 2019 |
|
IFRS 15 Revenue from Contracts with Customers (New standard) |
IFRS 15 will supersede the current revenue recognition guidance including IAS 18 Revenue, IAS 11 Construction Contracts and the related interpretation when it becomes effective. IFRS 15 establishes a single comprehensive five-step model to account for revenue arising from contracts with customers and is based on the core principle that revenue is recognised when control of a good or service transfers to a customer. The Group assessed the “new” recognition of its gold, PGM and chrome sales. There will not be any adjustment as of 1 January 2018 due to the transition to IFRS 15. |
1 January 2018 |
|
IFRS 16 Leases (New standard) |
IFRS 16 replaces the previous lead standard IAS 17 Leases and related interpretations. IFRS 16 has one model for lessees which will result in almost all leases being recognised on balance sheet as the distinction between operating and finance leases is removed. The only exceptions are short-term and low-value leases. At the commencement date of a lease, a lessee will recognise a liability to make lease payments (i.e. the lease liability) and an asset representing the right to use the underlying asset during the lease term (i.e. the right-of-use asset). Lessees also will be required to remeasure the lease liability upon the occurrence of certain events (e.g. a change in the lease term, a change in future lease payments resulting from a change in an index or rate used to determine those payments). The lessee will generally recognise the amount of the remeasurement of the lease liability as an adjustment to the right-of-use asset. In 2017, the Group assembled a project team to begin the process of assessing the impact of the leases standard. The project team has developed its project plan, established a steering committee, identified key stakeholders, high level education sessions have been completed and the process has begun to gather more information (through the use of interviews and questionnaires) with respect to the population of procurement contracts that will need to be assessed in light of the new requirements. In 2018, the Group plans to continue to assess the potential effect of IFRS 16 on its consolidated financial statements. An area of specific focus already identified relates to certain service contracts which may fall in the scope of IFRS 16. The Group does not intend to adopt IFRS 16 before the effective date. |
1 January 2019 |
|
IAS 12 Income Taxes (Amendment)2 |
Annual Improvements 2015-2017 Cycle Clarification that all income tax consequences of dividends should be recognised in profit or loss, regardless how the tax arises. |
1 January 2019 |
|
IAS 19 Employee Benefits (Amendment)2 |
Plan Amendment, Curtailment or Settlement The amendments require an entity to use the updated assumptions from a remeasurement net defined benefit liability or asset resulting from a plan amendment, curtailment or settlement to determine current service cost and net interest for the remainder of the reporting period after the change to the plan. |
1 January 2019 |
|
IAS 23 Borrowing Costs (Amendment) 2 |
Annual Improvements 2015-2017 Cycle The amendments clarify that if any specific borrowing remains outstanding after the related asset is ready for its intended use or sale, that borrowing becomes part of the funds that an entity borrows generally when calculating the capitalisation rate on general borrowings. |
1 January 2019 |
|
IAS 28 Investments in Associates and Joint Ventures (Amendment)2 |
Annual Improvements 2014-2016 Cycle Clarification that a venture capital organisation, or a mutual fund, unit trust and similar entities may elect, at initial recognition, to measure investments in an associate or joint venture at fair value through profit or loss separately for each associate or joint venture. |
1 January 2018 |
|
IAS 28 Investments in Associates and Joint Ventures (Amendment)2 |
Long-term interest in Associates and Joint Ventures Clarification provided that an entity should apply IFRS 9 to long-term interests in an associate or joint venture that form part of the net investment in the associate or joint venture but to which the equity method is not applied. |
1 January 2019 |
|
IFRIC 22 Foreign Currency Transactions and Advance Consideration2 |
This interpretation addresses the exchange rate to use in transactions that involve advance consideration paid or received in a foreign currency. |
1 January 2018 |
|
IFRIC 23 Uncertainty over Income Tax Treatments |
The interpretation specifies how an entity should reflect the effects of uncertainties in accounting for income taxes. |
1 January 2019 |
1 Effective date refers to annual period beginning on or after said date
2 No impact
SIGNIFICANT ACCOUNTING JUDGEMENTS AND ESTIMATES
Use of estimates: The preparation of the financial statements requires the Group’s management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. The determination of estimates requires the exercise of judgement based on various assumptions and other factors such as historical experience, current and expected economic conditions, and in some cases valuation techniques. Actual results could differ from those estimates.
The more significant areas requiring the use of management estimates and assumptions relate to Mineral Reserves (that are the basis of future cash flow estimates and unit-of-production depreciation and amortisation calculations, impairments, and reversal of impairments); revenue recognition; deferred tax; joint arrangements; write-downs of inventory to net realisable value; borrowings; environmental, reclamation and closure obligations; occupational healthcare obligation and contingent liabilities.
Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.
The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the financial period are discussed under the relevant note of the item affected.