Yinson Annual Report 2018

4. STANDARDS, AMENDMENTS TO PUBLISHED STANDARDS AND INTERPRETATIONS TO EXISTING STANDARDS THAT ARE APPLICABLE TO THE GROUP AND THE COMPANY BUT NOT YET EFFECTIVE (CONTINUED) (a) Financial year beginning on/after 1 February 2018 (continued) (vii) MFRS 15 “Revenue from Contracts with Customers” replaces MFRS 118 “Revenue” and MFRS 111 “Construction Contracts” and related interpretations The core principle in MFRS 15 is that an entity recognises revenue to depict the transfer of promised goods or services to the customer in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Revenue is recognised when a customer obtains control of goods or services, i.e. when the customer has the ability to direct the use of and obtain the benefits from the goods or services. A new five-step process is applied before revenue can be recognised: - Identify contracts with customers; - Identify the separate performance obligations; - Determine the transaction price of the contract; - Allocate the transaction price to each of the separate performance obligations; and - Recognise the revenue as each performance obligation is satisfied. Key provisions of the new standard are as follows: - Any bundled goods or services that are distinct must be separately recognised, and any discounts or rebates on the contract price must generally be allocated to the separate elements. - If the consideration varies (such as for incentives, rebates, performance fees, royalties, success of an outcome etc), minimum amounts of revenue must be recognised if they are not at significant risk of reversal. - The point at which revenue is able to be recognisedmay shift: some revenue which is currently recognised at a point in time at the end of a contract may have to be recognised over the contract term and vice versa. - There are new specific rules on licenses, warranties, non-refundable upfront fees, and consignment arrangements, to name a few. - As with any new standard, there are also increased disclosures. The Group and the Company have performed initial assessment on the impact of this standard on the Group’s and Company’s revenue. The Group has identified that the application of this new standard has impact on the following areas: ‘Accounting for contract modifications and bidding costs incurred in securing a contract’ and ‘Identification of separate performance obligations for the purpose of allocating the transaction price for its non-leasing revenue streams’. Given that a significant portion of the Group’s revenue source is governed under MFRS 117 “Leases”, the Group does not expect significant impact of this standard on the Group’s revenue. Similarly, no significant impact is expected on the Company’s revenue. The Group intends to adopt the standard using the modified retrospective approach which means that the cumulative impact of the adoption will be recognised in retained earnings as of 1 February 2018 and that comparatives will not be restated. Notes to the Financial Statements (Cont’d) For the financial year ended 31 January 2018 128 Yinson Holdings Berhad Annual Report 2018 Accountability