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AFRICAN DAWN ANNUAL REPORT 2020

Accounting Policies continued

Forward-looking information
It is a fundamental principle of IFRS9 that the ECL impairment provision that the company holds against potential future losses should take into
account changes in the economic environment in the future. To capture the effects of changes to the economic environment management have
taken into consideration market forward-looking impairment rates applied and benchmarked this against their own assessments. Three economic
scenarios (negative, baseline and positive scenario) are taken into account when calculating future expected credit losses. The probability of each
scenario is determined by management estimation, and are factored into the calculation of the probability of default (“PD”), exposure at default
(“EAD”), and the loss given default (“LGD”) within the ECL calculation.

Useful lives of property, plant and equipment and intangible assets

Property, plant and equipment is depreciated and intangible assets are amortised on a straight-line basis over its estimated useful life to residual
value. Residual values and useful lives are based on management's best estimates and actual future outcomes may differ from these estimates.

When the estimated useful life of an asset differs from previous estimates, the change is applied prospectively in the determination of the
depreciation or amortisation charge. The residual values, useful lives and depreciation / amortisation methods applied to property, plant and
equipment and intangible assets are reviewed by management on an annual basis, taking into account market conditions as well as
historical trends.
Lease extensions

In assessing the lease period of the office facilities, management considers the nature of the office to be adaptable to variety of facilities and as
a result the likelihood of the extending of the lease term or termination of the lease term are both possible. The agreed lease period is therefore
used in determining the lease payment until such time as the likelihood of extending or terminating the lease becomes probable.

2. New Standards and Interpretations
Standards and interpretations not yet effective

IFRS 16 Leases

IFRS 16 Leases is a new standard which replaces IAS 17 Leases, and introduces a single lessee accounting model.
Refer to note 1.4 for details on the policy adopted.

Standards and interpretations not yet effective

The company has chosen not to early adopt the following standards and interpretations, which have been published and are mandatory for the
company’s accounting periods beginning on or after 01 March 2020 or later periods:

Unlikely there will be a material impact

Standard/ Interpretation Effective date: Years beginning on or after
The Conceptual Framework for Financial Reporting – update 01 January 2020
Presentation of the Financial Statements – IAS1 01 January 2022
Presentation of Financial Statements IAS1 and Accounting Policies, changes in Accounting 01 January 2020
Estimates and Errors IAS8
Leases amendments - IFRS16 01 June 2020

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