2019 UEM Edgenta Annual Report

154 155 UEM EDGENTA AT A GLANCE MESSAGE FROM OUR LEADERSHIP STRATEGIC FOCUS OPERATIONAL REVIEW SUSTAINABILITY EFFORTS CORPORATE GOVERNANCE INTRODUCTION FINANCIAL REVIEW ADDITIONAL INFORMATION Notes to the Financial Statements For the year ended 31 December 2019 Notes to the Financial Statements For the year ended 31 December 2019 UEM Edgenta Berhad Annual Report 2019 2. SIGNIFICANT ACCOUNTING POLICIES (CONT’D.) 2.2 Changes in accounting policies (cont’d.) Effective for annual periods beginning on or after Amendments to MFRS 9: Prepayment Features with Negative Compensation 1 January 2019 MFRS 16: Leases 1 January 2019 Amendments to MFRS 128: Long-term Interests in Associates and Joint Ventures 1 January 2019 Annual improvements to MFRS Standards 2015-2017 Cycle 1 January 2019 Amendments to MFRS 119: Plan Amendment, Curtailment or Settlement 1 January 2019 IC Interpretation 23: Uncertainty over Income Tax Treatments 1 January 2019 The adoption of the above standards and interpretation did not have any effect on the nancial statements of the Group and of the Company, except as disclosed below. MFRS 16 Leases The Group applied MFRS 16 Leases for the first time. MFRS 16 supersedes MFRS 117 Leases, IFRIC 4 Determining whether an Arrangement contains a Lease, SIC-15 Operating Leases-Incentives and SIC-27 Evaluating the Substance of Transactions Involving the Legal Form of a Lease. The standard sets out the principles for the recognition, measurement, presentation and disclosure of leases and requires lessees to recognise most leases on the statements of financial position. Lessor accounting under MFRS 16 is substantially unchanged from MFRS 117. Lessors will continue to classify leases as either operating or finance leases using similar principles as in MFRS 117. Therefore, MFRS 16 does not have an impact for leases where the Group is the lessor. The Group adopted MFRS 16 using the modified retrospective method of adoption with the date of initial application of 1 January 2019. Under this method, the standard is applied retrospectively with the cumulative effect of initially applying the standard recognised at the date of initial application. The Group elected to use the transition practical expedient to not reassess whether a contract is, or contains a lease at 1 January 2019. Instead, the Group applied the standard only to contracts that were previously identified as leases applying MFRS 117 and IFRIC 4 at the date of initial application. 2. SIGNIFICANT ACCOUNTING POLICIES (CONT’D.) 2.2 Changes in accounting policies (cont’d.) MFRS 16 Leases (cont’d.) The effect of adoption MFRS 16 is as follows: Statement of financial position - 1 January 2019 As previously reported RM’000 Effects of MFRS 16 RM’000 After adjustments RM’000 Group Non-current assets Property, plant and equipment (a) 185,033 (3,080) 181,953 Prepaid land lease payments (a) 2,976 (2,976) - Right-of-use assets (b) - 38,080 38,080 188,009 32,024 220,033 Non-current liability Borrowings (a) 2,026 (2,026) - Lease liabilities (a) - 25,803 25,803 2,026 23,777 25,803 Current liability Borrowings (a) 1,101 (1,101) - Lease liabilities (a) - 9,348 9,348 1,101 8,247 9,348 Total liabilities 3,127 32,024 35,151 Company Non-current assets Property, plant and equipment (a) 19,088 (3,065) 16,023 Right-of-use assets (b) - 31,751 31,751 19,088 28,686 47,774 Non-current liability Lease liabilities (a) - 7,211 7,211 Current liability Lease liabilities (a) - 21,475 21,475 - 28,686 28,686 The Group has lease contracts for various items of leasehold land, office premises, and motor vehicles. Before the adoption of MFRS 16, the Group classified each of its leases (as lessee) at the inception date as either a finance lease or an operating lease. Refer to Note 2.4(q) for the accounting policy prior to 1 January 2019.