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AFRICAN DAWN ANNUAL REPORT 2020

Accounting Policies

1. Accounting Policies

1.1 Summary of accounting policies

The consolidated financial statements of the Group have been prepared in accordance with International Financial Reporting Standards (IFRS) as
issued by the International Accounting Standards Board, the requirements of the Companies Act of 2008 and the JSE Listing Requirements and
Financial reporting pronouncements as issued by the Financial Reporting Standards Council.

The consolidated financial statements have been prepared using the historical cost convention, as modified for certain items measured at fair
value. Historical cost is generally based on the fair value of the consideration given in exchange for goods or services. The principal accounting
policies applied in the preparation of these consolidated financial statements are set out in this note. These policies have been consistently applied
to all the years presented, unless otherwise stated.

The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires
management to exercise its judgement in the process of applying the Group’s accounting policies. The areas that involve a higher degree of
judgement or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in
note 1.18.

1.2 Changes in accounting policies and basis of preparation
The following standards have been adopted during the current year

° IFRS 16 Leases

The group adopted IFRS 16 during the current period and has chosen not to adjust retrospectively. IFRS 16 ‘Leases’ replaces IAS 17 ‘Leases’ along
with three Interpretations (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’).

Until the 2019 financial year, the majority of leases were classified as operating leases. Payments made under operating leases (net of any
incentives received from the lessor) were charged to profit or loss on a straight-line basis over the period of the lease. On adoption of IFRS 16,
the Group recognised lease liabilities in relation to leases which had previously been classified as ‘operating leases’ under the principles of IAS
17 – Leases. On transition to IFRS 16 the lease liability is measured at the date of initial application by discounting future lease payments by
the incremental borrowing rate applicable to the lease. The land and buildings were of a similar size and location and for this reason a similar
incremental borrowing rate was used.
The right-of-use assets were measured at the amount equal to the lease liability, adjusted by the amount of any prepaid or accrued lease
payments relating to that lease recognised in the balance sheet as at 28 February 2019. There were no onerous lease contracts that would have
required an adjustment to the right-of-use assets at the date of initial application. There was no impact on retained earnings on 1 March 2019.

In applying IFRS 16 for the first time, the Group has used the following practical expedients permitted by the standard:
• The Group elected to make use of a single discount rate for portfolios of leases with reasonably similar characteristics.
• The Group elected not to include initial direct costs in the measurement of the right-of-use asset for operating leases in existence at the
date of initial application of IFRS 16, being 1 March 2019. At this date, the Group has also elected to measure the right-of-use assets at an
amount equal to the lease liability adjusted for any prepaid or accrued lease payments that existed at the date of transition.
• On transition, for leases previously accounted for as operating leases with a remaining lease term of less than 12 months and for leases of
low-value assets the Group has applied the optional exemptions to not recognise right-of-use assets but to account for the lease expense
on a straight-line basis over the remaining term.
• Instead of performing an impairment review on the right-of-use assets at the date of initial application, the Group has relied on its historic
assessment as to whether leases were onerous immediately before the date of initial application of IFRS 16.
• The Group benefited from the use of hindsight for determining lease terms when considering options to extend and terminate leases.

The Group elected not to reassess whether a contract is or contains a lease at the date of initial application. Instead, for contracts entered into
before the transition date, the Group relied on its assessment made applying IAS 17 and IFRIC 4.

On transition to IFRS 16 the lease liability is measured at the date of initial application by discounting future lease payments by the incremental
borrowing rate applicable to the lease. The land and buildings were of a similar size and location and for this reason a similar incremental
borrowing rate was used. A deferred tax asset and liability was raised with the recognition of the right-of-use assets and lease liabilities.

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