MKH Annual Report 2019

103 M K H B e r h a d NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2019 2. BASIS OF PREPARATION OF THE FINANCIAL STATEMENTS (CONT’D) (a) Statement of compliance (Cont’d) Transitioning to MFRS Framework The Group and the Company’s financial statements for the financial year ended 30 September 2019 have been prepared in accordance with MFRSs for the first time. In the previous financial years, the financial statements were prepared in accordance with Financial Reporting Standards (“FRSs”). The financial statements of the Group and of the Company for the financial year ended 30 September 2019 are the first set of financial statements prepared in accordance with MFRS, including MFRS 1 First-time Adoption of Malaysian Financial Reporting Standards . The MFRS Framework is effective for the Group and the Company from 1 October 2018 and the date of transition to the MFRS Framework for the purpose of preparation of the MFRS compliant financial statements is on 1 October 2017. As provided in MFRS 1, a first-time adopter of MFRS Framework can elect optional exemptions from full retrospective application of MFRS. The Group has elected not to apply MFRS 3 Business Combinations , MFRS 9 Financial Instruments and MFRS 10 Consolidated Financial Statements retrospectively, that is not to restate any of its business combinations that occurred before the date of transition to MFRS. During the financial year, the Group has early adopted IFRIC Agenda Decision on MFRS 123 Borrowing Costs as detailed in Note 3. The transition to MFRS framework did not result in significant changes in the accounting policies of the Group and the Company and have no significant effect on the financial performance or position of the Group and the Company, except as disclosed below: Impact of initial application of MFRS 9 Financial Instruments In the current year, the Group and the Company have applied MFRS 9 Financial Instruments and the related consequential amendments to other MFRS Standards that are effective for an annual period that begins on or after 1 January 2018. The transition provisions of MFRS 9 allow an entity not to restate comparative information, accordingly, the Group and the Company have applied MFRS 9 prospectively and have not elected to restate comparative information. As a result, the comparative information provided continues to be accounted for in accordance with the Group’s and the Company’s previous accounting policy as disclosed in Note 3. MFRS 9 introduced new requirements for: (1) The classification and measurement of financial assets and financial liabilities; and (2) Impairment of financial assets. Details of these new requirements as well as their impact on the Group’s and the Company’s financial statements are described below. The Group and the Company have applied MFRS 9 in accordance with the transitional provisions set out in MFRS 9.