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KUWAIT ENERGY PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2017
16
2.
ADOPTION OF NEW AND REVISED STANDARDS (CONTINUED)
IFRS 9 Financial Instrument
The Group will adopt IFRS 9 Financial Instruments for periods beginning on or after 1 January 2018. IFRS 9 addresses
the classification, measurement and recognition of financial assets and financial liabilities, introduces a new
impairment model for financial assets, as well as new rules for hedge accounting. It replaces the old standard of IAS 39
in its entirety.
The classification and measurement of financial assets is now based on the entity’s business model for managing the
financial asset, and the contractual cash flow characteristics of the financial asset. The classification and measurement
of financial liabilities is materially consistent with that required by IAS 39 with the exception of the treatment of
modification or exchange of financial liabilities which do not result in de-recognition. No material impact as a result of
IFRS 9’s classification and measurement requirements has been identified.
The new impairment model requires the recognition of ‘expected credit losses’, in contrast to the requirement to
recognise ‘incurred credit losses’ under IAS 39. The Group has undertaken an assessment of the classification and
measurement requirements, as well as the new impairment model, and does not expect a significant impact on the
financial statements.
The new standard will also expand the Group’s disclosure requirements on financial instruments. Extended disclosures
in the initial period of adoption will also be required.
IFRS 15 Revenue from Contracts with Customers
The Group will adopt IFRS 15 Revenue from Contracts with Customers for periods beginning on or after 1 January 2018.
IFRS 15 address the principles of revenue recognition arising from contracts with customers. The new standard is based
on the principle that revenue is recognised when control of a good or service transfers to a customer. The standard
permits either a full retrospective or a modified retrospective approach for adoption. The Group does not expect
adoption of the standard to have material impact on the financial results of the Group. However, the Group will include
increased qualitative disclosures regarding the terms of the Group’s sales arrangements, including the basis for
determining pricing, significant payment terms, and elements of variable consideration (if any).
IFRS 16 Leases
The Group will adopt IFRS 16 Lease for periods beginning on or after 1 January 2019. IFRS 16 requires all leases over a
low value threshold and with lease terms longer than one year to be recognised in the lessee’s balance sheet in the
form of right-of-use asset, with a corresponding financial liability. Current contracts classified as ‘operating leases’ are
reported as off-balance sheet items. The cash flow statements will be affected as payments for the principal portion
of the lease liability will be presented within financing activities. The Company is in the process of identifying all lease
agreements that exist across the Group and yet to complete its full assessment of the expected financial impact of
transition to IFRS 16.
Changes in accounting policy
The Group’s accounting policies are consistent with the prior year.