Datasonic Group Berhad Annual Report 2020

DATASONIC GROUP BERHAD I ANNUAL REPORT 2020 (Registration No. 200801008472 (809759-X)) 199 Notes to the Financial Statements for the financial year ended 31 March 2020 (Cont’d) 52. SIGNIFICANT EVENTS OCCURRING AFTER THE REPORTING PERIOD The Company made an announcement on 3 June 2019 in regard to the acceptance of the Letter of Award from Kementerian Dalam Negeri (“KDN”) for the maintenance services of card personalisation centres at the National Registration Department (“Contract”) for a period of two (2) years commencing from 1 June 2019 to 31 May 2021 for a contract sum of RM28,785,686.27 (inclusive of 6% SST) or RM14,392,843.14 per year, with an option to extend the Contract for another one (1) year. On 10 June 2020 the Company announced that DTSB received and accepted the Letter of Additional Spare Parts Scope (“LOASPS”) dated 4 June 2020 from KDN in respect of the Contract mentioned in the foregoing paragraph. Under the LOASPS, the contract sum increased from RM28,785,686.27 to RM36,084,172.36 (inclusive of 6% SST) with an additional contract value of RM7,298,486.09. 53. INITIAL APPLICATION OF MFRS 16 The Group and the Company have adopted MFRS 16 using the modified retrospective approach under which the cumulative effect of initial application is recognised as an adjustment to the retained profits as at 1 April 2019 (date of initial application) without restating any comparative information. The Group and the Company have applied MFRS 16 only to contracts that were previously identified as leases under MFRS 117 ‘Leases’ and IC Interpretation 4 ‘Determining Whether an Arrangement Contains a Lease’. Therefore, MFRS 16 has been applied only to contracts entered into or changed on or after 1 April 2019. Lessee Accounting At 1April 2019, for leases that were classified as operating leases under MFRS 117, the Group and the Company measured the lease liabilities at the present value of the remaining lease payments, discounted using the Group and the Company’s weighted average incremental borrowing rate. The right-of-use assets were measured at the amount equal to the lease liability, adjusted by the amount of any prepaid or accrued lease payments relating to that lease. The Group and the Company have used the following practical expedients in applyingMFRS 16 for the first time:- • Applied a single discount rate to a portfolio of leases with reasonably similar characteristics; • Applied for the exemption not to recognise operating leases with a remaining lease term of less than 12 months as at 1 April 2019; • Excluded initial direct costs for the measurement of the right-of-use asset at the date of initial application; and • Used hindsight in determining the lease term where the lease contract contains options to extend or terminate the lease. For leases that were classified as finance leases, the Group and the Company have recognised the carrying amount of the leased asset and lease liability immediately before 1 April 2019 as the carrying amount of the right-of-use asset and the lease liability as at the date of initial application.