GHL System Berhad Annual Report 2019

A N N U A L R E P O R T 2 0 1 9 171 NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER 2019 CONT’D 36. FINANCIAL REPORTING UPDATES IFRIC Agenda Decision - An assessment of the lease term (IFRS 16) The IFRS Interpretations Committee (‘IFRIC’) issued a final agenda decision on 26 November 2019 regarding ‘Lease term and useful life of leasehold improvements (IFRS 16 and IAS 16)’. The submission to the IFRIC raised a question pertaining the determination of the lease term of a cancellable lease or a renewable lease based on the requirements of IFRS 16.B34. Based on the final agenda decision, the IFRIC concluded that the determination of the enforceable period of a lease and the lease term itself shall include broad economic circumstances beyond purely commercial terms. The Group anticipates an increase in lease liabilities and corresponding right-of-use assets arising from the reassessment of the lease term of existing leasing arrangements due to this final agenda decision. The Group is in the process of implementing the requirements of this final agenda decision and the impact upon adoption is expected to be recognised during the financial year ending 31 December 2020. 37. SIGNIFICANT EVENT SUBSEQUENT TO THE END OF THE REPORTING PERIOD The World Health Organisation declared the 2019 Novel Coronavirus infection (‘COVID-19’) a pandemic on 11 March 2020. This was followed by the Government of Malaysia issuing a Federal Government Gazette on 18 March 2020, imposing a Movement Control Order (‘MCO’) effective from 18 March 2020 to 31 March 2020 arising from COVID-19. The MCO was subsequently extended until 12 May 2020, followed by a Conditional MCO until 9 June 2020. Since these developments occurred subsequent to the end of the reporting period, the COVID-19 pandemic is treated as a non-adjusting event in accordance with MFRS 110 Events after the Reporting Period . Consequently, the financial statements for the financial year ended 31 December 2019 do not reflect the effects arising from this non-adjusting event. The Group is in the process of assessing the financial reporting impact of COVID-19 pandemic since ongoing developments remain uncertain and cannot be reasonably predicted as at the date of authorisation of the financial statements. The Group anticipates that the potential financial reporting impact of COVID-19 would be recognised in the financial statements of the Group during the financial year ending 31 December 2020. 38. COMPARATIVES FIGURES Certain comparative figures have been amended to conform to the current year’s presentation.