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ACCOUNTING POLICIES (Policies)
 12 Months Ended
Jun. 30, 2021
Accounting policies [abstract]  
Reporting entity
Reporting entity
The DRDGOLD
 
Group is
 
primarily involved
 
in the
 
retreatment of
 
surface gold.
 
The consolidated
 
financial statements
 
comprise
DRDGOLD Limited (the “
Company
”) and its subsidiaries
 
who are all wholly
 
owned subsidiaries and
 
solely operate in South
 
Africa
(collectively
 
the “
Group
” and
 
individually “
Group Companies
”).
 
The Company
 
is domiciled
 
in South
 
Africa
 
with a
 
registration
number of
 
1895/000926/06. The
 
registered address
 
of the
 
Company is
 
Constantia Office
 
Park, Cnr
 
14th Avenue
 
and Hendrik
Potgieter Road, Cycad House, Building 17, Ground Floor,
 
Weltevreden Park, 1709.
The DRDGOLD Group
 
is
50.1
% held by
 
Sibanye Gold Limited,
 
which in turn
 
is a wholly
 
owned subsidiary of
Sibanye Stillwater
Limited
 
(“
Sibanye-Stillwater
”).
Basis of accounting
Basis of accounting
The
 
consolidated
 
financial
 
statements
 
have
 
been
 
prepared
 
in
 
accordance
 
with
 
International
 
Financial
 
Reporting
 
Standards
(“
IFRS
”)
 
and
 
its
 
interpretations
 
issued
 
by
 
the
 
International
 
Accounting
 
Standards
 
Board
 
(“
IASB
”).
 
The
 
consolidated
 
financial
statements were approved by the board for issuance on October 28, 2021.
Functional and presentation currency
Functional and presentation currency
The functional and presentation currency of
 
DRDGOLD and its subsidiaries is
 
South African rand (“
Rand
”). The amounts in
 
these
consolidated financial statements
 
are rounded to
 
the nearest million
 
unless stated otherwise.
 
Significant exchange rates
 
during
the year are set out in the table below:
South African rand / US dollar
2021
2020
2019
Spot rate at year end
14.27
17.32
14.07
Average prevailing rate for the financial year
15.40
15.66
14.18
Basis of measurement
Basis of measurement
The consolidated financial statements are prepared on the historical cost basis, unless otherwise stated.
Basis of consolidation
Basis of consolidation
Subsidiaries
Subsidiaries are
 
entities controlled
 
by the
 
Group. The
 
Group controls
 
an entity
 
when it
 
is exposed
 
to, or
 
has rights
 
to, variable
returns from its
 
involvement with the
 
entity and has
 
the ability to
 
affect those returns through
 
its power over
 
the entity. The financial
statements of subsidiaries
 
are included in
 
the consolidated financial
 
statements from the
 
date that control
 
commences until the
date that control ceases.
Loss of control
When the Group loses control
 
over a subsidiary,
 
it derecognises the assets and
 
liabilities of the subsidiary,
 
and any related NCI
and
 
other components
 
of equity.
 
Any
 
resulting gain
 
or
 
loss is
 
recognized
 
in
 
profit
 
or
 
loss.
 
Any interest
 
retained in
 
the forme
 
r
subsidiary is measured at fair value when control is lost.
Transactions eliminated on consolidation
Intra-group
 
balances,
 
transactions
 
and
 
any
 
unrealised
 
gains
 
and
 
losses
 
or
 
income
 
and
 
expenses
 
arising
 
from
 
intra-group
transactions, are eliminated in preparing the consolidated financial statements.
Use of accounting assumptions, estimates and judgements
2
 
USE OF ACCOUNTING ASSUMPTIONS, ESTIMATES
 
AND JUDGEMENTS
The preparation of the consolidated
 
financial statements requires management to
 
make accounting assumptions, estimates and
judgements that affect the application of the Group's accounting policies and reported
 
amounts of assets and liabilities, income
and expenses.
Accounting
 
assumptions,
 
estimates
 
and
 
judgements
 
are
 
reviewed
 
on
 
an
 
ongoing
 
basis.
 
Revisions
 
to
 
reported
 
amounts
 
are
recognised in the
 
period in which
 
the revision is
 
made and in
 
any future periods
 
affected. Actual
 
results may differ
 
from these
estimates.
Information about
 
assumptions and
 
estimates in
 
applying accounting
 
policies that
 
have the
 
most significant
 
effect on the
 
amounts
recognised in the consolidated financial statements are included in the notes:
NOTE 9
 
PROPERTY,
 
PLANT AND EQUIPMENT
NOTE 11
 
PROVISION FOR ENVIRONMENTAL REHABILITATION
NOTE 18
 
INCOME TAX
NOTE 24
 
PAYMENTS
 
MADE UNDER PROTEST
NOTE 25
 
OTHER INVESTMENTS
Information about
 
significant judgements
 
in applying
 
accounting policies
 
that have
 
the most
 
significant effect
 
on the
 
amounts
recognised in the consolidated financial statements are included in the notes:
NOTE 24
 
PAYMENTS
 
MADE UNDER PROTEST
NOTE 25
 
OTHER INVESTMENTS
NOTE 26
 
CONTINGENCIES
New standards, amendments to standards and interpretations not yet adopted
New standards, amendments to standards and interpretations effective for the year ended June 30, 2021
During
 
the financial
 
period, the
 
following relevant
 
new and
 
revised
 
accounting standards,
 
amendments to
 
standards and
 
new
interpretation were adopted by the Group:
Definition of Material (Effective July 1, 2020)
The amendment
 
clarifies the definition
 
of material to
 
make it easier
 
to understand
 
and provides guidance
 
on how the
 
definition
should be applied. The
 
changes in the definition now
 
ensures that the definition
 
is consistent across all
 
IFRS standards and the
Conceptual Framework.
old definition (IAS
 
1): Omissions or
 
misstatements of items
 
are material if
 
they could, individually
 
or collectively,
 
influence the
economic decisions that users make on the basis of the financial statements;
new definition (IAS
 
1): Information is
 
material if omitting,
 
misstating or obscuring
 
it could reasonably
 
be expected to
 
influence
the decisions that
 
the primary users of
 
general-purpose financial statements make
 
on the basis of
 
those financial statements,
which provide financial information about a specific reporting entity.
The
 
definition of
 
material
 
omissions or
 
misstatements from
 
IAS
 
8
Accounting Policies,
 
Changes in
 
Accounting Estimates
and
Errors
 
has been removed.
 
The amendments to IAS 1 and IAS 8 did not have a significant impact on the Group.
Amendments to References to Conceptual Framework in IFRS (Effective July 1, 2020)
The IASB decided to revise the Conceptual Framework because certain important issues were not covered and certain guidance
was unclear or out of date. The revised Conceptual Framework, issued by the IASB in March 2018, includes:
new concepts on measurement including factors to be considered when selecting the measurement basis;
new concepts on presentation
 
and disclosure, including when
 
to classify income and
 
expenses in other comprehensive
 
income;
new guidance on when assets and liabilities are removed from financial statements;
updated definitions of an asset and liability;
updated recognition criteria for including assets and liabilities in financial statements;
clarified concepts of prudence, stewardship, measurement uncertainty and substance over form; and
the
 
IASB
 
also
 
updated
 
references
 
to
 
the
 
Conceptual
 
Framework
 
in
 
IFRS
 
by
 
issuing
 
Amendments
 
to
 
References
 
to
 
the
Conceptual Framework in IFRS.
The amendments to the References to the Conceptual Framework did not have a significant impact on the Group.
New standards, amendments to standards and interpretations not yet effective
At the date
 
of authorisation
 
of these consolidated
 
financial statements, the
 
following relevant
 
standards, amendments to
 
standards
and interpretations that may be
 
applicable to the business of
 
the Group were in issue
 
but not yet effective and
 
may therefore have
an impact on
 
future consolidated financial
 
statements. These new
 
standards, amendments to
 
standards and interpretations
 
will
be adopted at their effective dates.
 
These new standards, amendments to standards and
 
interpretations are not expected to have a significant
 
impact on the Group
unless stated otherwise.
Annual Improvements to IFRS Standards 2018-2020 (Effective July 1, 2022)
As
 
part
 
of
 
its process
 
to
 
make
 
non-urgent
 
but
 
necessary
 
amendments
 
to
 
IFRS
Standards,
 
the
 
IASB
 
International
 
Accounting
Standards Board has issued the
Annual Improvements to IFRS Standards 2018–2020.
Property, Plant and Equipment: Proceeds before Intended Use (Amendments to IAS 16) (Effective July 1, 2022)
The IASB has amended IAS
 
16
Property, Plant and Equipment
to provide guidance on
 
the accounting for such
 
sale proceeds and
the related production costs.
Under the amendments, proceeds from
 
selling items before the related
 
item of property,
 
plant and equipment (PPE) is
 
available
for use should
 
be recognised in
 
profit or loss,
 
together with the
 
costs of producing
 
those items. IAS
 
2
Inventories
 
should be applied
in identifying and measuring these production costs.
The amendments apply retrospectively,
 
but only to items of property,
 
plant and equipment made available for use on or after the
beginning of the
 
earliest period presented in
 
the financial statements
 
in which the amendments
 
are adopted.
 
Management has
begun performing evaluation of whether the amendment will have a significant impact on the
 
Group. More detail will be disclosed
in future financial statements.
Definition of Accounting Estimate
 
(Amendments to IAS 8) (Effective July 1, 2023)
The amendments introduce
 
a new definition for
 
accounting estimates: clarifying that
 
they are monetary
 
amounts in the financial
statements that are subject to measurement uncertainty.
The amendments also
 
clarify the relationship between
 
accounting policies and
 
accounting estimates by
 
specifying that a
 
company
develops an accounting estimate to achieve the objective set out by an accounting policy.
3
 
NEW STANDARDS,
 
AMENDMENTS TO STANDARDS
 
AND INTERPRETATIONS
continued
New standards, amendments to standards and interpretations not yet effective
(continued)
Deferred Tax
 
related to Assets and
 
Liabilities Arising from a single
 
transaction – Amendments to
 
IAS 12
Income Taxes
(Effective July 1, 2023)
IAS
 
12
Income
 
taxes
 
clarifies
 
how
 
companies
 
should
 
account
 
for
 
deferred
 
tax
 
on
 
certain
 
transactions
 
–
 
e.g.
 
leases
 
and
decommissioning provisions. The amendments
 
narrow the scope of
 
the initial recognition exemption
 
so that it does
 
not apply to
transactions that give rise to equal and offsetting temporary differences. As a result, companies will need to recognize a deferred
tax asset
 
and a
 
deferred tax
 
liability for
 
temporary differences
 
arising on
 
initial recognition
 
of a
 
lease and
 
a decommissioning
provision.
Classification of liabilities as current or non-current (Amendments to IAS 1) (Effective July 1, 2023)
To
promote consistency in application and clarify the requirements on determining if a liability is current or non-current, the IASB
has amended IAS 1 as follows:
 
Right to defer settlement must have substance
Under existing IAS 1 requirements, companies classify a liability as current when they do not have an
unconditional right
 
to defer
settlement of the liability for at least twelve months after the end of the reporting period.
As part of its amendments, the IASB
 
has removed the requirement for a
 
right to be unconditional and instead,
 
now requires that
a right to defer settlement must have substance and exist at the end of the reporting period.
Classification of debt may change
A company
 
classifies a
 
liability as
 
non-current if
 
it has
 
a right
 
to defer
 
settlement for
 
at least
 
twelve months
 
after the
 
reporting
period. The IASB
 
has now clarified that
 
a right to defer
 
exists only if
 
the company complies with
 
conditions specified in
 
the loan
agreement at the end of the reporting period, even if the lender does not test compliance until a later date.
Disclosure of Accounting Policy (Amendments to IAS 1 and IFRS Practice Statement 2) (Effective July 1, 2023)
The
 
Board
 
has
 
recently
 
issued
 
amendments
 
to
 
IAS
 
1
Presentation
 
of
 
Financial
 
Statements
 
and
 
an
 
update
 
to
 
IFRS
 
Practice
Statement 2
Making Materiality Judgements
 
to help companies provide useful accounting policy disclosures.
The key amendments to IAS 1 include:
●
 
requiring companies to disclose their material accounting policies rather than their significant accounting policies;
●
 
clarifying that accounting policies related to immaterial
 
transactions, other events or conditions are themselves immaterial and
as such need not be disclosed; and
●
 
clarifying that not all accounting policies that relate to material transactions, other events or conditions are themselves material
to a company’s financial statements.
The amendments are applied prospectively.
Management has commenced an evaluation
 
of the impact of
 
the amendment will have on
 
the Group. More detail will
 
be disclosed
in future financial statements.
Revenue
ACCOUNTING POLICIES
Revenue comprises
 
the sale
 
of gold
 
bullion and
 
silver bullion
 
(produced as
 
a by-product).
 
Revenue is
 
measured based
 
on the
consideration specified in a
 
contract with the
 
customer, which is based on the
 
London Bullion Market fixing
 
price on the date
 
when
the Group transfers control over the goods to the customer.
 
The Group recognises revenue at a point in time when Rand Refinery, acting as an agent for the sale of all gold produced by the
Group, delivers the Gold to the buyer and the sales price is fixed, as evidenced by the certificate of sale. It is at this
 
point that the
revenue can
 
be measured
 
reliably and
 
the recovery
 
of the
 
consideration is
 
probable. Rand
 
Refinery is
 
contractually obliged
 
to
make payment to
 
the Group within
 
two business days
 
after the sale
 
of the gold
 
and silver and
 
therefore no significant
 
financing
component exists.
Other Income
ACCOUNTING POLICIES
Other income is
 
recognised where it
 
is probable that
 
the economic benefits
 
associated with a
 
transaction will flow
 
to the Group
and it can be reliably measured.
Other income is generally income earned from transactions outside the course of the Group’s ordinary activities and may include
gains on disposal of property, plant and equipment and gains on financial instruments at fair value through profit or loss
Finance income and expense
ACCOUNTING POLICY
Finance income includes interest received, growth in cash and cash equivalents in environmental rehabilitation trust funds, growth
in the reimbursive
 
right for environmental rehabilitation
 
guarantees, dividends received and
 
the unwinding of
 
the Payments made
under protest
ACCOUNTING POLICY
Finance expenses
 
comprise interest
 
payable on
 
financial instruments
 
measured at
 
amortised cost
 
calculated using
 
the effective
interest method, unwinding of the provision for environmental rehabilitation, interest on lease liabilities, the discount recognised on
Payments made under protest and foreign exchange losses.
Property, plant and equipment
SIGNIFICANT ACCOUNTING ASSUMPTIONS AND ESTIMATES
Mineral reserves and resources estimates
The Group is required to determine and report
 
mineral reserves and resources in accordance with the
 
South African Code for the
Reporting
 
of
 
Exploration
 
Results,
 
Mineral
 
Resources
 
and
 
Mineral
 
Reserves
 
(SAMREC
 
Code).
 
In
 
order
 
to
 
calculate
 
mineral
reserves and
 
resources, estimates
 
and assumptions
 
are required
 
about a
 
range of
 
geological, technical
 
and economic
 
factors,
including but not
 
limited to quantities,
 
grades, production techniques,
 
recovery rates, production
 
costs, transport costs,
 
commodity
demand, commodity prices and exchange rates. Estimating the quantity
 
and/or grade of mineral reserves and resources
 
requires
the size, shape and
 
depth of reclamation sites
 
to be determined by
 
analysing geological data such
 
as the logging and
 
assaying
of
 
drill
 
samples.
 
This
 
process may
 
require complex
 
and
 
difficult
 
geological
 
judgements
 
and calculations
 
to
 
interpret
 
the data.
Because the assumptions used to estimate
 
mineral reserves and resources change from period
 
to period and because additional
geological
 
data is
 
generated
 
during
 
the course
 
of
 
operations, estimates
 
of mineral
 
reserves and
 
resources may
 
change from
period to
 
period. Mineral reserves
 
and resources estimates
 
prepared by management
 
are reviewed by
 
an independent mineral
resources expert.
Changes
 
in
 
reported
 
mineral
 
reserves
 
and
 
resources
 
may
 
affect
 
the
 
Group’s
 
life-of-mine
 
plan,
 
financial
 
results
 
and
 
financial
position in a number of ways including the following:
• asset carrying values may be affected due to changes in estimated future cash flows;
• depreciation
 
charged to
 
profit or
 
loss may
 
change where
 
such charges
 
are determined
 
by the
 
units-of-production method,
 
or
where the useful lives of assets change;
• decommissioning, site restoration and environmental provisions may change where changes in
 
estimated mineral reserves and
resources affect expectations about the timing or cost of these activities; and
• the carrying value of deferred tax assets and liabilities may change due to changes in estimates of the likely recovery of the tax
benefits and charges.
Depreciation
The calculation of
 
the units-of-production rate
 
of depreciation could
 
be affected if
 
actual production in
 
the future varies
 
significantly
from
 
current
 
forecast
 
production.
 
This
 
would
 
generally
 
arise
 
when
 
there
 
are
 
significant
 
changes
 
in
 
any
 
of
 
the
 
factors
 
or
assumptions used in estimating mineral reserves and resources. These factors could include:
 
• changes in mineral reserves and resources;
• the grade of mineral reserves and resources may vary from time to time;
• differences between actual commodity prices and commodity price assumptions;
• unforeseen operational issues at mine sites including planned extraction efficiencies; and
• changes in capital, operating, mining processing and reclamation costs, discount rates and foreign exchange rates.
Recognition and measurement
Property,
 
plant and equipment comprise
 
mine plant facilities and
 
equipment, mine property
 
and development (including mineral
rights) and
 
exploration assets.
 
These assets
 
(excluding exploration
 
assets) are
 
initially measured
 
at cost,
 
whereafter they
 
are
measured at cost
 
less accumulated depreciation
 
and accumulated impairment
 
losses. Exploration assets
 
are initially measured
at cost, whereafter they are measured at cost less accumulated impairment losses.
Cost includes expenditure
 
that is directly attributable
 
to the acquisition
 
or construction of the
 
asset, borrowing costs capitalised,
as well
 
as the
 
costs of
 
dismantling and
 
removing an
 
asset and
 
restoring the
 
site on
 
which it
 
is located.
 
Subsequent costs
 
are
included in
 
the asset’s
 
carrying amount
 
or recognised
 
as a
 
separate asset,
 
as appropriate,
 
only when
 
it is
 
probable that
 
future
economic benefits associated with the item
 
will flow to the Group and
 
the cost of the item can be
 
measured reliably.
 
Exploration
and evaluation
 
costs are capitalised
 
as exploration assets
 
on a project-by-project
 
basis, pending
 
determination of the
 
technical
feasibility and commercial viability of the project.
Exploration
 
assets
 
consists
 
of
 
costs
 
of
 
acquiring
 
rights,
 
activities
 
associated
 
with
 
converting
 
a
 
mineral
 
resource
 
to
 
a
 
mineral
reserve - the
 
process thereof includes
 
drilling, sampling and other
 
processes necessary to evaluate
 
the technical feasibility
 
and
commercial viability of a mineral
 
resource to prove whether a
 
mineral reserve exists. Exploration assets
 
also include geological,
geochemical and geophysical studies associated with prospective projects and tangible assets which comprise of property, plant
and equipment used
 
for exploratory activities. Costs
 
are capitalised to
 
the extent that
 
they are a directly
 
attributable exploration
expenditure and classified
 
as a separate class
 
of assets on a
 
project by project basis.
 
Once a mineral
 
reserve is determined or
the
 
project
 
ready
 
for
 
development,
 
the
 
asset
 
attributable
 
to
 
the
 
mineral
 
reserve
 
or
 
project
 
is
 
tested
 
for
 
impairment
 
and
 
then
reclassified to the appropriate class of assets. Depreciation commences when the assets are available for use.
Depreciation
Depreciation of
 
mine plant
 
facilities and
 
equipment, as
 
well as
 
mining property
 
and development
 
(including mineral
 
rights) are
calculated using the units of production method which
 
is based on the life-of-mine of each site.
 
The life-of-mine is primarily based
on
 
proved
 
and
 
probable
 
mineral
 
reserves.
 
It
 
reflects
 
the
 
estimated
 
quantities
 
of
 
economically
 
recoverable
 
gold
 
that
 
can
 
be
recovered from
 
reclamation sites
 
based on
 
the estimated
 
gold price.
 
Changes in
 
the life-of-mine
 
will impact
 
depreciation on
 
a
prospective
 
basis.
 
The
 
life-of-mine
 
is
 
prepared
 
using
 
a
 
methodology
 
that
 
takes
 
account
 
of
 
current
 
information
 
to
 
assess
 
the
economically recoverable gold from specific reclamation sites and includes the consideration of historical experience.
The
 
depreciation
 
method,
 
estimated
 
useful
 
lives
 
and
 
residual
 
values
 
are
 
reassessed
 
annually
 
and
 
adjusted
 
if
 
appropriate.
Changes to the useful lives may affect prospective depreciation rates. The current estimated
 
useful lives are based on the life-of-
mine of each
 
site, currently between
three
 
(2020:
four
; 2019:
three
) and 13
 
years(2020:
13
; 2019:
11
) years for
 
Ergo mining assets
and between
three
 
(2020:
four
; 2019:
five
) and 18 years (2020:
20
; 2019:
15
) years for FWGR mining assets.
ACCOUNTING POLICIES continued
Impairment
The carrying
 
amounts of
 
property,
 
plant and
 
equipment are
 
reviewed at
 
each reporting
 
date to
 
determine whether
 
there is
 
any
indication
 
of
 
impairment,
 
or
 
whenever
 
events
 
or
 
changes
 
in
 
circumstances
 
indicate
 
that
 
the
 
carrying
 
amount
 
may
 
not
 
be
recoverable. If any
 
such indication exists,
 
the asset’s recoverable
 
amount is estimated.
 
For the
 
purposes of assessing
 
impairment,
assets are grouped at the
 
lowest levels for which there
 
are separately identifiable cash flows
 
(CGUs). The key assets of
 
a surface
retreatment operation which constitutes a
 
CGU are a reclamation site, a
 
metallurgical plant and a tailings
 
storage facility.
 
These
key
 
assets
 
operate
 
interdependently
 
to
 
produce
 
gold.
 
The
 
Ergo
 
and
 
FWGR
 
operations
 
each
 
have
 
separately
 
managed
 
and
monitored reclamation sites, metallurgical plants and tailings storage facilities and are therefore separate CGUs.
The recoverable amount of an asset or CGU is the greater of its value in use and its fair value less costs to sell. The recoverable
amount was
 
determined by
 
estimating the
 
value in
 
use. The
 
estimated future
 
cash flows
 
are discounted
 
to their
 
present value
using a
 
pre-tax discount
 
rate that
 
reflects current
 
market assessments
 
of the
 
time value
 
of money
 
and the
 
risks specific
 
to the
asset. An impairment
 
loss is recognised
 
in profit or
 
loss if the
 
carrying amount of
 
an asset or
 
CGU exceeds its
 
recoverable amount.
Right of use assets and leases
ACCOUNTING JUDGEMENTS
At inception of a contract, the Group assesses whether a contract is, or contains, a lease. A contract is, or contains a lease if the
contract conveys the right to control the use of an identified asset for a
 
period of time in exchange for consideration. The contract
must
 
also
 
be
 
enforceable.
To
assess
 
whether
 
a
 
contract
 
conveys
 
the
 
right
 
to
 
control
 
the
 
use
 
of
 
an
 
identified
 
asset,
 
requires
judgement particularly on contracts with service contractors, which may contain embedded leases.
The Group assesses whether:
•
 
the contract involves the use of an identified asset;
•
 
the Group has the right to obtain substantially
 
all the economic benefits from use of the asset
 
throughout the period of use; and
•
 
the Group has the right to direct the use of the asset.
At
 
inception
 
or on
 
reassessment
 
of a
 
contract
 
that contains
 
a
 
lease component,
 
the
 
Group allocates
 
the consideration
 
in
 
the
contract to each lease component on the
 
basis of their relevant stand-alone prices. However,
 
for the lease of land and buildings
in which
 
it is
 
a lessee,
 
the Group
 
has elected
 
not to
 
separate non-lease
 
components and
 
account for
 
the lease
 
and non-lease
component as a single lease component.
Some property leases contain
 
options to renew under
 
the contract. Judgement is
 
applied in whether the
 
renewable option periods
must be included in the lease term i.e. it is reasonably certain that the options to renew will be exercised. In applying judgement,
the
 
Group
 
also
 
considers
 
whether
 
the
 
lease
 
term
 
is
 
commensurate
 
with
 
estimated
 
future
 
mine
 
plans
 
requirements
 
and
environmental rehabilitation obligations associated with the property post reclamation.
ACCOUNTING POLICIES
Right of use asset
The right of use asset is initially measured at cost, which comprises the initial amount of the lease liability and is adjusted by any
lease payments
 
made at
 
or before
 
the commencement
 
date, plus
 
any initial
 
direct costs
 
incurred
 
and an
 
estimate of
 
costs to
dismantle and
 
remove the
 
underlying asset
 
or to
 
restore the
 
underlying asset
 
or the
 
site on
 
which it
 
is located,
 
less any
 
lease
incentives received. The Group recognises a right of use asset and lease liability at the lease commencement date.
 
The right of
 
use asset is
 
subsequently depreciated using
 
the straightline method
 
from the commencement
 
date to the
 
earlier of
the end of the useful life of the right of use asset or the end of
 
the lease term. The right of use asset carrying value is allocated to
the CGU it belongs to
 
and the CGU is reviewed at
 
each reporting date to determine
 
whether there is any indication
 
of impairment.
The carrying value is reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability.
 
Lease liability
The lease liability
 
is initially measured
 
at the present
 
value of the
 
outstanding lease payments
 
at commencement date
 
over the
lease
 
term,
 
discounted
 
using
 
the
 
interest
 
rate
 
implicit
 
in
 
the
 
lease
 
or
 
if
 
that
 
rate
 
is
 
undeterminable,
 
the
 
Group’s
 
incremental
borrowing rate. The lease term includes the non-cancellable period
 
for which the lessee has the right to use an underlying
 
asset
including optional periods when the Group is reasonably certain to exercise an option to extend a lease.
 
Lease payments comprise fixed payments, variable lease payments that depend on an index or rate, initially
 
measured using the
index
 
or rate as at the commencement date, and the exercise price under a purchase option
 
that the Group is reasonably certain
to exercise.
The lease liability is measured using the effective interest rate method. The Group re-measures the lease liability when the lease
contract is modified and
 
this does not give
 
rise to modification accounting,
 
when the lease term
 
has been changed or
 
when the
lease payments have
 
changed as a
 
result of a change
 
in an index
 
or rate or a
 
change in the
 
assessment of a purchase
 
option.
Upon remeasurement, a corresponding adjustment is
 
made to the carrying
 
amount of the right of
 
use asset or is recorded
 
in profit
or loss if the carrying amount of the right of use asset has been reduced to zero.
 
Right of use assets
 
are presented in “property, plant and
 
equipment” and lease liabilities
 
are separately disclosed
 
in the statement
of financial position.
 
Short term leases and leases of low value assets
The Group has elected not to recognise right
 
of use assets and lease liabilities for short-term
 
leases of machinery and equipment
that have a lease term of 12 months
 
or less and leases of low value assets
 
which include IT equipment, security equipment and
administration equipment.
Provision for environmental rehabilitation
SIGNIFICANT ACCOUNTING ASSUMPTIONS AND ESTIMATES
Estimates of future environmental
 
rehabilitation costs are determined
 
with the assistance of
 
an independent expert and
 
are based
on the
 
Group’s environmental
 
management plans
 
which are developed
 
in accordance
 
with regulatory
 
requirements, the
 
life-of-
mine plan
 
(as discussed
 
in note 9)
 
which influences
 
the estimated
 
timing of
 
environmental rehabilitation cash
 
outflows and
 
the
planned method of rehabilitation which in turn is influenced by developments in trends and technology.
An average discount rate ranging between
8.9
% and
9.0
% (2020: between
8.1
% and
9.5
%), average inflation rate of
5.2
% (2020:
5.1
%) and the discount
 
periods as per the
 
expected life-of-mine were used in
 
the calculation of the
 
estimated net present value
of the rehabilitation liability.
ACCOUNTING POLICIES
The net present value of the
 
estimated rehabilitation cost as at reporting
 
date is provided for in
 
full. These estimates are reviewed
annually and are
 
discounted using a
 
pre-tax risk-free rate
 
that is adjusted to
 
reflect the current
 
market assessments of
 
the time
value of money and the risks specific to the obligation.
Annual changes
 
in the
 
provision consist
 
of financing
 
expenses relating
 
to the
 
change in
 
the present
 
value of
 
the provision
 
and
inflationary increases in the provision, as well as changes in estimates.
The present value
 
of dismantling and
 
removing the asset
 
created (decommissioning liabilities)
 
are capitalised to
 
property,
 
plant
and equipment against an increase in the rehabilitation provision. If a decrease in the liability exceeds the carrying
 
amount of the
asset, the excess is recognised in profit or loss. If the asset value is increased and there is
 
an indication that the revised carrying
value is not
 
recoverable, an impairment
 
test is performed
 
in accordance
 
with the accounting
 
policy dealing with
 
impairments of
property,
 
plant
 
and
 
equipment.
 
Over
 
time,
 
the
 
liability
 
is
 
increased
 
to
 
reflect
 
an
 
interest
 
element,
 
and
 
the
 
capitalised
 
cost
 
is
depreciated over the life of the related asset. Cash costs incurred to
 
rehabilitate these disturbances are charged to the provision
and are presented as investing activities in the statement of cash flows.
The present value
 
of environmental rehabilitation
 
costs relating to
 
the production of
 
inventories and sites
 
without related assets
(restoration liabilities) as
 
well as changes
 
therein are expensed
 
as incurred and
 
presented as operating
 
costs. Cash costs
 
incurred
to
 
rehabilitate
 
these
 
disturbances
 
are
 
presented
 
as
 
operating
 
activities
 
in
 
the
 
statement
 
of
 
cash
 
flows.
 
The
 
cost
 
of
 
ongoing
rehabilitation is recognised in profit or loss as incurred.
Investments of rehabilitation obligation funds
ACCOUNTING POLICIES
Cash and cash equivalents in environmental rehabilitation trusts
Cash
 
and
 
cash
 
equivalents
 
included
 
in
 
environmental
 
rehabilitation
 
trusts
 
comprise
 
low-risk,
 
interest-bearing
 
cash
 
and
 
cash
equivalents and are non-derivative financial assets categorised as financial assets measured at amortised cost.
Cash and cash
 
equivalents are initially
 
measured at fair
 
value. Subsequent to
 
initial recognition, cash
 
and cash equivalents
 
are
measured at amortised cost, which is equivalent to their fair value.
The
 
cash
 
and
 
cash
 
equivalents
 
in
 
environmental
 
rehabilitation
 
trusts
 
are
 
for
 
the
 
sole
 
use
 
of
 
material
 
future
 
environmental
rehabilitation payments and are therefore included in non-current assets.
Reimbursive right for environmental rehabilitation guarantees
Funds held in the cell captive that secure the environmental rehabilitation guarantees issued are recognised as a right to receive
a reimbursement and are
 
measured at the
 
lower of the
 
amount of the
 
consolidated environmental rehabilitation liability
 
recognised
and the consolidated fair value of the fund assets.
Changes in the carrying value
 
of the fund assets, other
 
than those resulting from contributions and
 
payments, are recognised in
finance income.
The funds held in the
 
cell captive are for the
 
sole use of material future environmental
 
rehabilitation payments and are
 
therefore
included in non-current assets
Cash and cash equivalents
ACCOUNTING POLICIES
Cash and cash equivalents are short-term, highly liquid investments that are readily convertible to cash without significant risk of
changes in
 
value and
 
comprise cash
 
on hand,
 
demand deposits,
 
and highly
 
liquid investments which
 
are readily
 
convertible to
known amounts of cash.
Cash and cash equivalents are non-derivative financial assets categorised as financial assets measured at amortised
 
cost. Cash
and
 
cash
 
equivalents
 
are
 
initially
 
measured
 
at
 
fair
 
value.
 
Subsequent
 
to
 
initial
 
recognition,
 
cash
 
and
 
cash
 
equivalents
 
are
measured at amortised cost, which is equivalent to their fair value.
Trade and other receivables
ACCOUNTING POLICIES
Recognition and measurement
Trade
 
and other
 
receivables, excluding
 
Value
 
Added Tax
 
and prepayments,
 
are non-derivative
 
financial assets
 
categorised as
financial assets at amortised cost.
These assets are initially measured at fair value plus directly attributable transaction costs. Subsequent to initial recognition, they
are measured at
 
amortised cost using
 
the effective interest
 
method less any
 
expected credit losses
 
using the Group’s
 
business
model for managing its financial assets.
 
The Group derecognises
 
a financial asset
 
when the contractual
 
rights to the cash
 
flows from the
 
asset expire, or it
 
transfers the
rights to receive the contractual cash
 
flows in a transaction in which substantially
 
all of the risks and rewards of
 
ownership of the
financial asset are transferred,
 
or it neither transfers
 
nor retains substantially all
 
of the risks and
 
rewards of ownership and
 
does
not retain control over the
 
transferred asset. Any interest in
 
such derecognised financial assets that
 
is created or retained by
 
the
Group is recognised as a separate asset or liability.
Impairment
The Group recognises loss
 
allowances for trade and
 
other receivables at an
 
amount equal to expected
 
credit losses (“ECLs”). The
Group uses the simplified ECL approach. When determining whether the credit risk of a financial asset has increased since initial
recognition and when estimating
 
ECLs, the Group
 
considers reasonable and supportable
 
information that is
 
relevant and available
without undue
 
cost or
 
effort. This
 
includes both
 
quantitative and
 
qualitative information
 
and analysis,
 
based on
 
informed credit
assessments and including forward-looking information. The maximum period considered when estimating ECLs is the maximum
contractual period over which the Group is exposed to credit risk.
 
ECLs are a probability
 
weighted estimate of credit
 
losses. Credit losses are
 
measured as the present
 
value of all cash
 
shortfalls
(i.e. the
 
difference between
 
the cash
 
flows due
 
to the
 
entity in
 
accordance with
 
the contract
 
and the
 
cash flows
 
that the
 
Group
expects to receive). The Group assesses whether the financial asset is credit impaired at each reporting
 
date. A financial asset is
credit impaired when one or more events that have a detrimental
 
impact on the estimated future cash flows of the financial asset
have occurred, including but not limited to financial difficulty or default of payment. The Group will write off a financial asset when
there is no
 
reasonable expectation of
 
recovering it
 
after considering whether
 
all means to
 
recovery the asset
 
have been exhausted,
or the counterparty has been liquidated and the Group has assessed that no recovery is possible.
Any impairment losses are recognised in the statement of profit or loss.
Trade
 
receivables relate
 
to gold
 
sold on
 
the bullion
 
market by
 
Rand Refinery
 
in its
 
capacity as
 
an agent.
 
Settlement is
 
usually
received two working days from gold sold date.
Trade and other payables
ACCOUNTING POLICIES
Trade and other payables, excluding Value Added Tax,
 
payroll accruals, accrued leave pay and provision for performance
 
based
incentives, are non-derivative financial liabilities categorised as financial liabilities measured at amortised cost.
These liabilities
 
are initially
 
measured at
 
fair value
 
plus directly
 
attributable transaction
 
costs. Subsequent
 
to initial
 
recognition,
they are
 
measured at
 
amortised cost
 
using the
 
effective interest
 
method. The
 
Group derecognises
 
a financial
 
liability when
 
its
contractual rights are discharged, or cancelled or expire.
Short-term employee benefits are
 
expensed as the related
 
service is provided. A
 
liability is recognised for
 
the amount expected
to be paid if the Group has
 
a present legal or constructive obligation to
 
pay this amount as a result
 
of past service provided by the
employee and the obligation can be estimated reliably.
Inventories
ACCOUNTING POLICIES
Gold
 
in process
 
is stated
 
at the
 
lower of
 
cost
 
and net
 
realisable value.
 
Costs are
 
assigned to
 
gold
 
in process
 
on a
 
weighted
average cost basis. Costs comprise all costs incurred to the stage immediately
 
prior to smelting, including costs of extraction and
processing as they are
 
reliably measurable at that
 
point. Gold bullion is
 
stated at the lower
 
of cost and net
 
realisable value. Selling
and general administration costs are excluded from inventory valuation.
Consumable stores
 
are stated
 
at cost
 
less allowances
 
for obsolescence.
 
Cost of
 
consumable stores
 
and stockpile
 
material is
based on
 
the weighted
 
average cost
 
principle and
 
includes expenditure
 
incurred in
 
acquiring inventories
 
and bringing
 
them to
their existing location and condition.
Net realisable value
 
is the estimated
 
selling price in
 
the ordinary course
 
of business, less
 
the estimated cost
 
of completion and
selling expenses.
Income tax
SIGNIFICANT ACCOUNTING ASSUMPTIONS AND ESTIMATES
Management periodically evaluates
 
positions taken where
 
tax regulations are
 
subject to interpretation.
 
This includes the
 
treatment
of both Ergo and FWGR as single mining operations respectively, pursuant to the relevant ring-fencing legislation.
The deferred tax liability is calculated
 
by applying a forecast weighted
 
average tax rate that is
 
based on a prescribed formula.
 
The
calculation of the forecast weighted average tax rate requires the use of assumptions and estimates and are inherently uncertain
and could change
 
materially over time.
 
These assumptions and
 
estimates include expected
 
future profitability and
 
timing of the
reversal of
 
the temporary
 
differences. Due
 
to the
 
forecast weighted
 
average tax
 
rate being
 
based on
 
a prescribed
 
formula that
increases the effective
 
tax rate with an
 
increase in forecast
 
future profitability,
 
and vice versa,
 
the tax rate can
 
vary significantly
year on year and can move contrary to current period financial performance.
A
100
 
basis points increase
 
in the effective
 
tax rate will
 
result in an
 
increase in the
 
net deferred tax
 
liability at June
 
30, 2021 of
approximately R
14.2
 
million (2020: R
10.3
 
million; 2019: R
8.6
 
million).
The assessment of the
 
probability that future taxable profits
 
will be available against
 
which the tax losses and
 
unredeemed capital
expenditure
 
can
 
be
 
utilised
 
requires
 
the
 
use
 
of
 
assumptions
 
and
 
estimates
 
and
 
are
 
inherently
 
uncertain
 
and
 
could
 
change
materially over time.
Capital expenditure
 
is assessed
 
by the
 
South African
 
Revenue Service
 
(“SARS”) when
 
it is
 
redeemed against
 
taxable mining
income rather than when
 
it is incurred. A
 
different interpretation by
 
SARS regarding the deductibility
 
of these capital allowances
may therefore become evident subsequent to the year of assessment when the capital expenditure is incurred.
ACCOUNTING POLICIES
Income tax
 
expense comprises
 
current and deferred
 
tax. Each
 
company is taxed
 
as a
 
separate entity
 
and tax
 
is not
 
set-off between
the companies.
Current tax
Current tax comprises the expected
 
tax payable or receivable on
 
the taxable income or loss
 
for the year and any
 
adjustment on
tax payable
 
or receivable
 
in respect
 
of the
 
previous year.
 
Amounts are
 
recognised in
 
profit or
 
loss except
 
to the
 
extent that
 
it
relates to items recognised directly in equity or
 
OCI. The current tax charge is calculated on
 
the basis of the tax laws enacted or
substantively enacted at the reporting date.
 
Deferred tax
Deferred tax
 
is recognised
 
in respect
 
of temporary
 
differences between
 
the carrying
 
amounts and
 
the tax
 
bases of
 
assets and
liabilities. Deferred
 
tax is
 
not recognised
 
on the
 
initial recognition
 
of assets
 
or liabilities
 
in a
 
transaction that
 
is not
 
a business
combination and that affects neither accounting nor taxable profit.
Deferred tax
 
assets relating
 
to unutilised
 
tax losses
 
and unutilised
 
capital allowances
 
are recognised
 
to the
 
extent that
 
it is
 
probable
that future taxable profits will
 
be available against which
 
the unutilised tax losses
 
and unutilised capital allowances
 
can be utilised.
The recoverability of these assets is reviewed at each reporting date and adjusted if recovery is no longer probable.
Deferred tax related to gold mining income is measured at a forecast weighted
 
average tax rate that is expected to be applied to
temporary differences when they
 
reverse, using tax rates enacted or
 
substantially enacted at the reporting
 
date.
Employee benefits
ACCOUNTING POLICIES
Cash settled share-based payments (“outgoing long-term incentive”)
Cash settled
 
share-based payments
 
are measured
 
at fair
 
value and
 
remeasured at
 
each reporting
 
date to
 
reflect the
 
potential
outflow of
 
cash resources
 
to settle
 
the liability,
 
with a
 
corresponding adjustment
 
in profit
 
or loss.
 
Vesting
 
assumptions for
 
non-
market conditions are reviewed at each reporting date to ensure they reflect current expectations.
Equity settled share-based payments (“new long-term incentive”)
The grant date fair
 
value of equity settled
 
share-based payment arrangements is
 
recognised as an expense,
 
with a corresponding
increase in equity,
 
over the vesting period of
 
the awards. The expense is
 
adjusted to reflect the number
 
of awards for which the
related service
 
and non-market
 
performance conditions
 
are expected
 
to be
 
met, such
 
that the
 
amount ultimately
 
recognised is
based on the number of awards that meet the related service and non-market performance conditions at vesting date.
Stated share capital
Stated share capital
Ordinary shares and the cumulative preference shares are
 
classified as equity. Incremental costs directly attributable to the issue
of ordinary shares are recognised as a deduction from equity, net of any tax effect.
Repurchase and reissue of ordinary shares (treasury shares)
Repurchase and reissue of share capital (treasury shares)
When shares
 
recognised as
 
equity are
 
repurchased, the
 
amount of
 
the consideration
 
paid, which
 
includes directly
 
attributable
costs is
 
recognised as
 
a deduction
 
from equity.
 
Repurchased shares
 
are classified
 
as treasury
 
shares and
 
are presented
 
as a
deduction from stated share capital.
Dividends
Dividends
Dividends are recognised
 
as a liability
 
on the date on
 
which they are declared
 
which is the date
 
when the shareholders’
 
right to
the dividends vests.
Operating Segments
ACCOUNTING POLICIES
Operating segments
 
are reported
 
in a
 
manner consistent
 
with internal
 
reports that
 
the Group’s
 
chief operating
 
decision maker
(CODM)
 
reviews
 
regularly
 
in
 
allocating
 
resources
 
and
 
assessing
 
performance
 
of
 
operating
 
segments.
 
The
 
CODM
 
has
 
been
identified as the
 
Group’s Executive Committee.
 
The Group has
 
one material revenue
 
stream, the sale
 
of gold. To identify operating
segments, management reviewed
 
various factors, including
 
operational structure and
 
mining infrastructure. It
 
was determined that
an
 
operating
 
segment
 
consists of
 
a single
 
or multiple
 
metallurgical plants
 
and reclamation
 
sites
 
that, together
 
with its
 
tailings
storage facility, is capable of operating independently.
When assessing profitability, the
 
CODM considers,
inter alia
, the revenue and cash operating costs of each segment. The
 
net of
these amounts
 
is the
 
segment operating
 
profit or
 
loss. Therefore,
 
segment operating
 
profit has
 
been disclosed
 
in the
 
segment
report as the primary
 
measure of profit or
 
loss. The CODM also
 
considers other costs that, in
 
addition to the segment
 
operating
profit or loss, result in the segment working profit or loss (before and after property, plant and equipment additions).
Interest in subsidiaries
ACCOUNTING POLICIES
Significant subsidiaries
 
of the Group
 
are those subsidiaries
 
with the most
 
significant contribution to
 
the Group's profit
 
or loss or
assets.
Ergo Mining
 
Proprietary Limited
 
and Far
 
West
 
Gold Recoveries
 
Proprietary Limited
 
are the
 
only significant
 
subsidiaries of
 
the
Group. They are both wholly owned subsidiaries and are incorporated in South Africa,
 
are primarily involved in the retreatment of
surface gold and all their operations are based in South Africa.
Payments made under protest
SIGNIFICANT ACCOUNTING JUDGEMENTS
Payments made under protest
The determination
 
of whether the
 
payments made under
 
protest give
 
rise to an
 
asset or
 
a contingent asset
 
or neither,
 
required
the use of significant judgement.
 
The definition of an asset
 
in the conceptual framework was
 
applied as well as the
 
considerations
in the outcome
 
of the IFRS Interpretations
 
Committee (“
IFRIC
”) agenda decision
 
– Deposits relating to
 
taxes other than income
tax (IAS 37 Provisions, Contingent Liabilities
 
and Contingent Assets) (“
IFRIC Agenda Decision
”) published in January 2019.
 
The
IFRIC Agenda Decision has a similar fact pattern to that of the payments made under protest. With the consideration of the facts
and circumstances
 
surrounding the
 
payments made
 
under protest
 
in applying
 
the definition
 
of an
 
asset and
 
the IFRIC
 
Agenda
Decision, management considered the following:
 
•
 
payments
 
were
 
made
 
under
 
protest
 
and
 
without
 
prejudice
 
or
 
admission
 
of
 
liability.
 
Such
 
payments
 
were
 
not
 
made
 
as
 
a
settlement of debt or recognition of expenditure;
•
 
the
 
Group
 
therefore
 
retains
 
a
 
right
 
to
 
recover
 
the
 
payments
 
from
 
the
 
City
 
of
 
Ekurhuleni
 
Metropolitan
 
Municipality
(“
Municipality
”) if the Group is successful in the Main Application;
•
 
if the Group
 
is not successful
 
in the Main
 
Application, the
 
payments will
 
be used
 
to settle
 
the resultant
 
liability to the
 
Municipality;
and
 
•
 
these two possible outcomes
 
(i.e. success in
 
the Main Application or
 
not) therefore, will
 
lead to economic
 
benefits to the Group.
Therefore, the
 
right to
 
recover the
 
payments made
 
under protest
 
is not
 
a contingent
 
asset because
 
it meets
 
the definition
 
and
recognition
 
criteria
 
of
 
an
 
asset.
 
No
 
specific
 
guidance
 
exists
 
in
 
developing
 
an
 
accounting
 
policy
 
for
 
such
 
asset.
 
Therefore,
management applied judgement in developing an accounting policy that
 
would lead to information that is relevant to the users of
these financial statements and information that can be relied upon.
Contingent liabilities
The assessment
 
of whether
 
an obligating
 
event results
 
in a
 
liability or
 
a contingent
 
liability requires
 
the exercise
 
of significant
judgement of the outcome of future events that are not wholly within the control of the Group.
Litigation and other judicial
 
proceedings inherently entail complex
 
legal issues that are subject
 
to uncertainties and complexities
and are subject to interpretation.
SIGNIFICANT ACCOUNTING ASSUMPTIONS AND ESTIMATES
The discounted amount of the
 
payments made under protest is
 
determined using assumptions about the
 
future that are inherently
uncertain and can change materially over time and includes the discount rate and discount period.
 
These assumptions about the future include estimating the timing of concluding on
 
the Main Application, i.e. the discount period,
the ultimate settlement terms, the discount rate applied and the assessment of recoverability.
ACCOUNTING POLICIES
Payments made under protest
Recognition and measurement
The
 
payment
 
made
 
under
 
protest
 
asset
 
that
 
arises
 
from
 
the
 
Municipality
 
Electricity
 
Tariff
 
Dispute
 
is
 
initially
 
measured
 
at
 
a
discounted amount, and any
 
difference between the face
 
value of payments made under
 
protest and the discounted
 
amount on
initial recognition is recognised in profit or loss
 
as a finance expense. Subsequent to initial recognition,
 
the payments made under
protest is measured using the effective interest method to unwind the discounted amount to the original face value less any write
downs for recovery. Unwinding of the carrying value and changes in the discount period are recognised in profit or loss.
Assessment of recoverability
The
 
discounted
 
amount of
 
the payments
 
under
 
protest is
 
assessed
 
at each
 
reporting date
 
to
 
determine whether
 
there is
 
any
objective
 
evidence
 
that
 
the
 
full
 
amount
 
is
 
no
 
longer
 
expected
 
to
 
be
 
recovered.
 
The
 
Group
 
considers
 
the
 
reasonable
 
and
supportable
 
information
 
related
 
to
 
the
 
creditworthiness
 
of
 
the
 
Municipality
 
and
 
events
 
surrounding
 
the
 
outcome
 
of
 
the
 
Main
Application.
 
Any write down is recognised in profit or loss.
Contingent liabilities
A contingent liability
 
is a possible obligation
 
arising from past events
 
and whose existence will
 
be confirmed only
 
by occurrence
or non-occurrence of one
 
or more uncertain future
 
events not wholly within
 
the control of the
 
Group. A contingent liability
 
may also
be a present obligation arising from past events
 
but is not recognised on the basis that
 
an outflow of economic resources to settle
the obligation
 
is not
 
viewed as
 
probable, or
 
the amount
 
of the
 
obligation cannot
 
be reliably
 
measured. When
 
the Group
 
has a
present obligation, an outflow of economic resources
 
is assessed as probable and the Group
 
can reliably measure the obligation,
a provision is recognised.
Other investments
ACCOUNTING JUDGEMENTS
The Group has one (1) director representative on
 
the Rand Refinery board. Therefore, judgement had to be applied
 
to ascertain
whether significant influence exists, and
 
if the investment should be
 
accounted for as an associate
 
under IAS 28 Investments in
Associates
 
and
 
Joint
 
Ventures.
 
The
 
director
 
representation
 
is
 
not
 
considered
 
significant
 
influence,
 
as
 
it
 
does
 
not
 
constitute
meaningful representation.
 
It represents
11.11
% of the entire board and
 
is proportional to the
11.3
% shareholding that the Group
has.
 
SIGNIFICANT ACCOUNTING ASSUMPTIONS AND ESTIMATES
The fair value of the listed equity instrument is determined
 
based on quoted prices on an active market. Equity instruments
 
which
are not listed on an
 
active market are measured using
 
other applicable valuation techniques depending
 
on the extent to which
 
the
technique maximises
 
the use
 
of relevant
 
observable inputs
 
and minimizes
 
the use
 
of unobservable
 
inputs. Where
 
discounted
cash flows are used, the estimated cash flows are based on management’s best estimate based on readily available information
at measurement
 
date. The
 
discounted cash
 
flows contain
 
assumptions about
 
the future
 
that are
 
inherently uncertain
 
and can
change materially over time.
ACCOUNTING POLICIES
On initial recognition of
 
an equity investment that is
 
not held for trading, the
 
Group may make an irrevocable
 
election to present
subsequent changes in
 
the investment’s
 
fair value in
 
other comprehensive income.
 
This election is
 
made on an
 
investment-by-
investment basis.
 
These assets are initially recognised at fair value plus any directly attributable transaction costs. Subsequent to initial recognition
they
 
are measured
 
at
 
fair value
 
and changes
 
therein are
 
recognised
 
in
 
OCI, and
 
are
 
never reclassified
 
to profit
 
or
 
loss, with
dividends recognised in profit or loss unless the dividend clearly represents a recovery of part of the cost of the investment.
The Group’s
 
listed and
 
unlisted investments
 
in equity
 
securities are
 
classified as
 
equity instruments
 
at fair
 
value through
 
other
comprehensive income (OCI).
Contingent liabilities and contingent assets
SIGNIFICANT ACCOUNTING JUDGEMENTS
The assessment
 
of whether
 
an obligating
 
event results
 
in a
 
liability or
 
a contingent
 
liability requires
 
the exercise
 
of significant
judgement
 
of
 
the
 
outcome
 
of
 
future
 
events
 
that
 
are
 
not
 
wholly
 
within
 
the
 
control
 
of
 
the
 
Group.
 
Litigation
 
and
 
other
 
judicial
proceedings
 
inherently
 
entail
 
complex
 
legal
 
issues
 
that
 
are
 
subject
 
to
 
uncertainties
 
and
 
complexities
 
and
 
are
 
subject
 
to
interpretation.
ACCOUNTING POLICIES
Contingent liabilities
A contingent liability is a possible obligation arising from
 
past events and whose existence will be confirmed only
 
by occurrence
or non-occurrence
 
of one
 
or more uncertain
 
future events not
 
wholly within
 
the control of
 
the Group.
 
A contingent liability
 
may
also be a present obligation arising from past events but is not recognised on
 
the basis that an outflow of economic resources to
settle the obligation is not
 
viewed as probable, or the amount
 
of the obligation cannot be
 
reliably measured. When the Group
 
has
a
 
present
 
obligation,
 
an
 
outflow
 
of
 
economic
 
resources
 
is
 
assessed
 
as
 
probable
 
and
 
the
 
Group
 
can
 
reliably
 
measure
 
the
obligation, a provision is recognised.
Contingent assets
Contingent assets are
 
possible assets whose
 
existence will be
 
confirmed by the
 
occurrence or
 
non-occurrence of uncertain
 
future
events that are not wholly within the control of the entity. Contingent assets are not recognised, but they are disclosed when it is
more
 
likely
 
than not
 
that an
 
inflow
 
of benefits
 
will occur.
 
However,
 
when the
 
inflow
 
of
 
benefits
 
is virtually
 
certain
 
an asset
 
is
recognised in the statement of financial position, because that asset is no longer considered to be contingent.