NVFH 2020 Integrated Annual Report

NVest Financial Holdings Limited and its subsidiaries | (Registration number 2008/015990/06)
Annual Financial Statements for the year ended 29 February 2020
Notes to the Consolidated
Financial Statements
The group has applied the practical expedient available in IFRS 16 which provides that for contracts which exist at the initial
application date, an entity is not required to reassess whether they contain a lease. This means that the practical expedient
allows an entity to apply IFRS 16 to contracts identified by IAS 17 and IFRIC 4 as containing leases; and to not apply IFRS 16 to
contracts that were not previously identified by IAS 17 and IFRIC 4 as containing leases.
IFRS 16 has been adopted by applying the modified retrospective approach, whereby the comparative figures are not restated.
Instead, cumulative adjustments to retained earnings have been recognised in retained earnings as at 01 March 2019.
Leases where company is lessee
Leases previously classified as operating leases
The group undertook the following at the date of initial application for leases which were previously recognised as operating
leases:
• recognised a lease liability, measured at the present value of the remaining lease payments, discounted at the group’s
incremental borrowing rate at the date of initial application
• recognised right-of-use assets measured on a lease by lease basis, at either the carrying amount (as if IFRS 16 applied from
commencement date but discounted at the incremental borrowing rate at the date of initial application) or at an amount
equal to the lease liability adjusted for accruals or prepayments relating to that lease prior to the date of initial application.
The group applied IAS 36 to consider if these right-of-use assets are impaired as at the date of initial application.
The group applied the following practical expedients when applying IFRS 16 to leases previously classified as operating leases
in terms of IAS 17. Where necessary, they have been applied on a lease by lease basis:
• leases which were expiring within 12 months of 01 March 2019 were treated as short term leases, with remaining lease
payments recognised as an expense on a straight-line basis or another systematic basis which is more representative of the
pattern of benefits consumed;
• initial direct costs were excluded from the measurement of right-of-use assets at the date of initial application.
• hindsight was applied where appropriate. This was specifically the case for determining the lease term for leases which
contained extension or termination options.
Impact on financial statements
On transition to IFRS 16, the group recognised an additional R1 260 737 of right-of-use assets and R1 564 734 of lease liabilities,
while the company recognised an additional R16 492 552 of right-of-use assets and R21 784 032 of lease liabilities. The difference
for both group and company was recognised in retained earnings and deferred taxation.
When measuring lease liabilities, company discounted lease payments using its incremental borrowing rate at 01 March 2019.
The weighted average rate applied is 10.25% per annum.
Group
01 March 2019
Company
01 March 2019
Operating lease commitment at 28 February 2019 as previously disclosed 2,277,247 36,762,038
Discounted using the incremental borrowing rate at 1 March 2019 (712,513) (14,978,006)
Lease liabilities recognised at 01 March 2019 1,564,734 21,784,032
3. New Standards and Interpretations
3.1 Standards and interpretations effective and adopted in the current year
In the current year, the group has adopted the following standards and interpretations that are effective for the current
financial year and that are relevant to its operations:
94
NVest Financial Holdings Limited | INTEGRATED ANNUAL REPORT 2020