Statement of compliance with IFRS December 2014

Standards, interpretations and amendments to existing standards

Standards, interpretations and amendments to existing standards that are effective in 2014

Following relevant new standards, revisions and amendments to existing standards were issued by the IASB, which are effective for the accounting period beginning on or after January 1, 2014 and have been adopted by the Company:

Standard number	Title	Effective date
IAS 32	Financial Instruments: Presentation – Amendment	January 1, 2014
IAS 36	Impairment of Assets – Amendment	January 1, 2014
IAS 39	Financial Instruments: Recognition and Measurement – Amendment	January 1, 2014
IFRS 10, IFRS 12 and IAS 27	Consolidated Financial Statements, Disclosure of Interests in Other Entities and Separate Financial Statements – Amendment	January 1, 2014
IFRIC 21	Levies – New	January 1, 2014

At the date of authorisation of these financial statements, the following new standards, interpretations and amendments to existing standards have been published but are not yet effective, and have not been adopted early by the Company.

Standard number	Title	Effective date
IAS 19	Employee Benefits – Amendments	July 1, 2014
IAS 16 and IAS 38	Property, Plant and Equipment and Intangible Assets – Amendments	January 1, 2016
IAS 16 and IAS 41	Property, Plant and Equipment and Investment Property – Amendments	January 1, 2016
IAS 27	Separate Financial Statements – Amendments	January 1, 2016
IFRS 11	Joint Arrangements – Amendments	January 1, 2016
IFRS 14	Regulatory Deferral Accounts – New	January 1, 2016
IFRS 15	Revenue from Contracts with Customers – New	January 1, 2017
IFRS 9	Financial Instruments – Amendments	January 1, 2018
	Annual Improvements 2010 – 2012
IFRS 2	Share-based Payment – Amendments	July 1, 2014
IFRS 3	Business Combinations – Amendments	July 1, 2014
IFRS 8	Operating Segments – Amendments	July 1, 2014
IFRS 13	Fair Value Measurement – Amendments	July 1, 2014
IAS 16	Property, Plant and Equipment – Amendments	July 1, 2014
IAS 24	Related Party Disclosures – Amendments	July 1, 2014
IAS 38	Intangible Assets – Amendments	July 1, 2014
	Annual Improvements 2011 – 2013
IFRS 1	First-time Adoption of IFRS – Amendments	July 1, 2014
IFRS 3	Business Combinations – Amendments	July 1, 2014
IFRS 13	Fair Value Measurement – Amendments	July 1, 2014
IAS 40	Investment Property – Amendments	July 1, 2014

Standard number	Title	Effective date
	Annual Improvements 2012 – 2014
IAS 19	Employee Benefits – Amendments	January 1, 2016
IAS 34	Interim Financial Reporting – Amendments	January 1, 2016
IFRS 5	Non-current Assets Held for Sale and Discontinued Operations – Amendments	January 1, 2016
IFRS 7	Financial Instruments: Disclosures – Amendments	January 1, 2016

Management anticipates that all of the relevant pronouncements will be adopted in the Company's accounting policies for the first period beginning after the effective date of the pronouncement. Information on the relevant new standards, amendments and interpretations that are not yet effective have been provided below. The Company's management has yet to assess the impact of these new and revised standards on the Company's financial statements, unless specifically stated.

IAS 19 Employee Benefits – Amendments (effective for accounting period beginning on or after July 1, 2014)

The amendments clarify the requirements that relate to how contributions from employees or third parties that are linked to service should be attributed to periods of service. In addition, it permits a practical expedient if the amount of the contributions is independent of the number of years of service, in that the contributions, can, but are not required, to be recognised as a reduction in the service cost in the period in which the related service is rendered.

IAS 16 Property, Plant and Equipment and IAS 38 Intangible Assets – Amendments (effective for accounting period beginning on or after January 1, 2016)

The amendments to IAS 16 ‘Property, Plant and Equipment and IAS 38 ‘Intangible Assets’:

·         clarify that a depreciation method that is based on revenue that is generated by an activity that includes the use of an asset is not appropriate for property, plant and equipment;

·         introduce a rebuttable presumption that an amortisation method that is based on the revenue generated by an activity that includes the use of an intangible asset is inappropriate, which can only be overcome in limited circumstances where the intangible asset is expressed as a measure of revenue, or when it can be demonstrated that revenue and the consumption of the economic benefits of the intangible asset are highly correlated; and

·         add guidance that expected future reductions in the selling price of an item that was produced using an asset could indicate the expectation of technological or commercial obsolescence of the asset, which, in turn, might reflect a reduction of the future economic benefits embodied in the asset.

IAS 16 Property, Plant and Equipment and IAS 41 Agriculture – Amendments (effective for accounting period beginning on or after January 1, 2016)

The amendments to IAS 16 ‘Property, Plant and Equipment’ and IAS 41 ‘Agriculture’ define a bearer plant and require biological assets that meet the definition of a bearer plant to be accounted for as property, plant and equipment in accordance with IAS 16, instead of IAS 41. In terms of the amendments, bearer plants can be measured using either the cost model or the revaluation model set out in IAS 16.

On the initial application of the amendments, entities are permitted to use the fair value of items of bearer plant as their deemed cost as at the beginning of the earliest period presented. Any difference between the previous carrying amount and fair value should be recognised in opening retained earnings at the beginning of the earliest period presented resulting in retrospective application.

The produce growing on bearer plants continues to be accounted for in accordance with IAS 41. For government grants related to bearer plants, IAS 20 ‘Accounting for Government Grants and Disclosure of Government Assistance’ will apply.

IAS 27 Separate Financial Statements – Amendments (effective for accounting period beginning on or after January 1, 2016)

The amendments will allow entities to use the equity method to account for investments in subsidiaries, joint ventures and associates in their separate financial statements. Entities already applying IFRS and electing to change to the equity method in its separate financial statements will have to apply that change retrospectively. For first-time adopters of IFRS electing to use the equity method in its separate financial statements, they will be required to apply this method from the date of transition to IFRS.

IFRS 11 Joint Arrangements – Amendments (effective for accounting period beginning on or after January 1, 2016)

The amendments to IFRS 11 provide guidance on how to account for the acquisition of an interest in a joint operation in which the activities constitute a business as defined in IFRS 3 ‘Business Combinations’. Specifically, the amendments state that the relevant principles on accounting for business combinations in IFRS 3 and other standards (e.g. IAS 36 ‘Impairment of Assets’ regarding impairment testing of a cash-generating unit to which goodwill on acquisition of a joint operation has been allocated) should be applied. The same requirements should be applied to the formation of a joint operation if and only if an existing business is contributed to the joint operation by one of the parties that participate in the joint operation.

A joint operator is also required to disclose the relevant information required by IFRS 3 and other standards for business combinations.

IFRS 14 Regulatory Deferral Accounts – New (effective for first annual IFRS financial statements for accounting period beginning on or after January 1, 2016)

IFRS 14 specifies the accounting for regulatory deferral account balances that arise from rate-regulated activities. The Standard is available only to first-time adopters of IFRSs who recognised regulatory deferral account balances under their previous GAAP. The Standard permits eligible first-time adopters of IFRSs to continue their previous GAAP rate-regulated accounting policies, with limited changes, and requires separate presentation of regulatory deferral account balances in the statement of financial position and statement of profit or loss and other comprehensive income. Disclosures are also required to identify the nature of, and risks associated with, the form of rate regulation that has given rise to the recognition of regulatory deferral account balances.

Since the Company is an existing IFRS preparer, this Standard would not apply.

IFRS 15 Revenue from Contracts with Customers - New (effective for accounting period beginning on or after January 1, 2017)

IFRS 15 establishes a single comprehensive five-step model for entities to use in accounting for revenue arising from contracts with customers. It will supersede the following revenue Standards and Interpretations upon its effective date:

·         IAS 18 Revenue;

·         IAS 11 Construction Contracts;

·         IFRIC 13 Customer Loyalty Programmes;

·         IFRIC 15 Agreements for the Construction of Real Estate;

·         IFRIC 18 Transfers of Assets from Customers; and

·         SIC 31 Revenue-Barter Transactions Involving Advertising Services.

The five steps in the model are as follows:

·         Identify the contract with the customer;

·         Identify the performance obligations in the contract;

·         Determine the transaction price;

·         Allocate the transaction price to the performance obligations in the contracts; and

·         Recognise revenue when (or as) the entity satisfies a performance obligation.

Guidance is also provided on topics such as the point in which revenue is recognised, accounting for variable consideration, costs of fulfilling and obtaining a contract and various related matters. New disclosures about revenue are also introduced.

IFRS 9 Financial Instruments – Amendments (effective for accounting period beginning on or after January 1, 2018)

In July 2014, the IASB issued the final version of IFRS 9 ‘Financial Instruments’ which reflects all phases of the financial instruments project and replaces IAS 39 ‘Financial Instruments: Recognition and Measurement’ and all previous versions of IFRS 9. The standard introduces new requirements for classification and measurement, impairment, and hedge accounting.

Classification and measurement

Financial assets are classified by reference to the business model within which they are held and their contractual cash flow characteristics. The 2014 version of IFRS 9 introduces a 'fair value through other comprehensive income' category for certain debt instruments. Financial liabilities are classified in a similar manner to under IAS 39, however there are differences in the requirements applying to the measurement of an entity's own credit risk.

Impairment

The 2014 version of IFRS 9 introduces an 'expected credit loss' model for the measurement of the impairment of financial assets, so it is no longer necessary for a credit event to have occurred before a credit loss is recognised.

Hedge accounting

Introduces a new hedge accounting model that is designed to be more closely aligned with how entities undertake risk management activities when hedging financial and non-financial risk exposures

Derecognition

The requirements for derecognition of financial assets and liabilities are carried forward from IAS 39.

IFRS 9 is effective for accounting period beginning on or after January 1, 2018, with early application permitted. Retrospective application is required, but comparative information is not compulsory. Early application of previous versions of IFRS 9 (2009, 2010 and 2013) is permitted if the date of initial application is before February 1, 2015.

Management has yet to assess the impact of this revised standard on the Company’s financial statements.

Annual Improvements 2010 – 2012

IFRS 2 Share-based Payment – Amendments (effective for accounting period beginning on or after July 1, 2014)

The amendments (i) change the definitions of ‘vesting condition’ and ‘market condition’ and (ii) add definitions for ‘performance condition’ and ‘service condition’ which were previously included within the definition of ‘vesting condition’.

IFRS 3 Business Combinations – Amendments (effective for accounting period beginning on or after July 1, 2014)

The amendments clarify that contingent consideration that is classified as an asset or a liability should be measured at fair value at each reporting date, irrespective of whether the contingent consideration is a financial instrument within the scope of IAS 39 ‘Financial Instruments: Recognition and Measurement’ or IFRS 9 ‘Financial Instruments’ or a non-financial asset or liability. Changes in fair value (other than measurement period adjustments) should be recognised in profit and loss.

Consequential amendments were also made to IFRS 9 ‘Financial Instruments’, IAS 39 ‘Financial Instruments: Recognition and Measurement’ and IAS 37 ‘Provisions, Contingent Liabilities and Contingent Assets’.

IFRS 8 Operating Segments – Amendments (effective for accounting period beginning on or after July 1, 2014)

The amendments require an entity to disclose the judgements made by management in applying the aggregation criteria to operating segments, including a description of the operating segments aggregated and the economic indicators assessed in determining whether the operating segments have ‘similar economic characteristics’.

The amendment also clarifies that a reconciliation of the total of the reportable segments’ assets to the entity’s assets should only be provided if the segment assets are regularly provided to the chief operating decision-maker.

IFRS 13 Fair Value Measurement – Amendments (effective for accounting period beginning on or after July 1, 2014)

The amendments clarify that the issuance of IFRS 13 and consequential amendments to IAS 39 ‘Financial Instruments: Recognition and Measurement’ and IFRS 9 ‘Financial Instruments’ did not remove the ability to measure short-term receivables and payables with no stated interest rate at their invoice amounts without discounting, if the effect of not discounting is immaterial.

IAS 16 Property, Plant and Equipment – Amendments (effective for accounting period beginning on or after July 1, 2014)

The amendments remove perceived inconsistencies in the accounting for accumulated depreciation when an item of property, plant and equipment is revalued. The amended requirements clarify that the gross carrying amount is adjusted in a manner consistent with the revaluation of the carrying amount of the asset and that accumulated depreciation is the difference between the gross carrying amount and the carrying amount after taking into account accumulated impairment losses.

An entity is required to apply these amendments to all revaluations recognised in the annual period in which the amendments are first applied and in the immediately preceding annual period. An entity is permitted, but not required, to restate any earlier periods presented.

IAS 24 Related Party Disclosures – Amendments (effective for accounting period beginning on or after July 1, 2014)

The amendments clarify that a management entity providing key management personnel services to a reporting entity is a related party of the reporting entity. Consequently, the reporting entity must disclose as related party transactions the amounts incurred for the service paid or payable to the management entity for the provision of key management personnel services. However, disclosure of the components of such compensation is not required.

IAS 38 Intangible Assets – Amendments (effective for accounting period beginning on or after July 1, 2014)

The amendments remove perceived inconsistencies in the accounting for accumulated amortisation when an item of intangible asset is revalued. The amended requirements clarify that the gross carrying amount is adjusted in a manner consistent with the revaluation of the carrying amount of the asset and that accumulated amortisation is the difference between the gross carrying amount and the carrying amount after taking into account accumulated impairment losses.

An entity is required to apply these amendments to all revaluations recognised in the annual period in which the amendments are first applied and in the immediately preceding annual period. An entity is permitted, but not required, to restate any earlier periods presented.

Annual Improvements 2011 – 2013

IFRS 1 First-time adoption of IFRS – Amendments (effective for accounting period beginning on or after July 1, 2014)

The amendments clarify that a first-time adopter is allowed, but not required, to apply a new IFRS that is not yet mandatory if that IFRS permits early application. If an entity chooses to early apply a new IFRS, it must apply that new IFRS retrospectively throughout all periods presented unless IFRS 1 provides an exemption or an exception that permits or requires otherwise. Consequently, any transitional requirements of that new IFRS do not apply to a first-time adopter that chooses to apply that new IFRS early.

IFRS 3 Business Combinations – Amendments (effective for accounting period beginning on or after July 1, 2014)

The amendment clarifies that IFRS 3 does not apply to the accounting for the formation of all types of joint arrangement in the financial statements of the joint arrangement itself.

IFRS 13 Fair Value Measurement – Amendments (effective for accounting period beginning on or after July 1, 2014)

The amendment clarifies that the scope of the portfolio exception for measuring the fair value of a group of financial assets and financial liabilities on a net basis was amended to clarify that it includes all contracts that are within the scope of, an accounted for in accordance with, IAS 39 ‘Financial Instruments: Recognition and Measurement’ or IFRS 9 ‘Financial Instruments’, even if those contracts do not meet the definitions of financial assets or financial liabilities within IAS 32 ‘Financial Instruments: Presentation’.

IAS 40 Investment Property – Amendments (effective for accounting period beginning on or after July 1, 2014)

The amendment clarifies that IAS 40 and IFRS 3 ‘Business Combinations’ are not mutually exclusive and application of both standards may be required. Consequently, an entity acquiring investment property must determine whether (a) the property meets the definition of investment property in IAS 40 and (b) the transaction meets the definition of a business combination under IFRS 3 ‘Business Combinations’.

The amendment applies prospectively for acquisitions of investment property in periods commencing on or after July 1, 2014. An entity is only permitted to adopt the amendments early and/or restate prior periods if the information to do so is available.

Annual Improvements 2012 – 2014

IAS 19 Employee Benefits – Amendments (effective for accounting period beginning on or after January 1, 2016)

The amendment clarifies that the high quality corporate bonds used in estimating the discount rate for post-employment benefits should be denominated in the same currency as the benefits to be paid.

IAS 34 Interim Financial Reporting – Amendments (effective for accounting period beginning on or after January 1, 2016)

The amendment clarifies the meaning of ‘elsewhere in the interim report’ and requires a cross-reference.

IFRS 5 Non-current Assets Held for Sale and Discontinued Operations – Amendments (effective for accounting period beginning on or after January 1, 2016)

The amendment adds specific guidance in IFRS 5 for cases in which an entity reclassifies an asset from held for sale to held for distribution or vice versa and cases in which held-for-distribution accounting is discontinued.

IFRS 7 Financial Instruments: Disclosures – Amendments (effective for accounting period beginning on or after January 1, 2016)

The amendment adds additional guidance to clarify whether a servicing contract is continuing involvement in a transferred asset for the purpose of determining the disclosures required. It also clarifies the applicability of the amendments to IFRS 7 on offsetting disclosures to condensed interim financial statements.