DESTINI AR 2017

2. Basis of Preparation (Cont’d) (a) Statement of compliance (Cont’d) Standards issued but not yet effective (Cont’d) MFRS 9 Financial Instruments (IFRS 9 issued by IASB in July 2014) (Cont’d) Changes in accounting policies resulting from the adoption of MFRS 9 will generally be applied retrospectively. The Group and the Company will apply the exemption of not restating comparative information for prior periods with respect to classification and measurement (including impairment) changes. Differences in the carrying amounts of financial assets and financial liabilities resulting from the adoption of MFRS 9 will be recognised in retained profits as at 1 January 2018. Based on the preliminary assessment, the Group and the Company do not believe that the new classification requirements will have a material impact on its accounting for financial assets and financial liabilities. Furthermore, impairment losses arising from the new ECL model is estimated to not have a significant impact to the Group and to the Company. MFRS 15 Revenue from Contracts with Customers MFRS 15 replaces the guidance in MFRS 111: Construction Contracts, MFRS 118: Revenue , IC Interpretation 13: Customer Loyalty Programmes , IC Interpretation 15: Agreements for Construction of Real Estate , IC Interpretation 18: Transfers of Assets from Customers and IC Interpretation 131: Revenue - Barter Transactions involving Advertising Services . MFRS 15 provides a single model for accounting for revenue arising from contracts with customers, focusing on the identification and satisfaction of performance obligations. MFRS 15 is effective for annual periods beginning on or after 1 January 2018. The Group and the Company decide to apply MFRS 15 retrospectively with cumulative effect on initially applying this standard as an adjustment to the opening balance of retained profits of the annual reporting period that includes the date of initial application. Under this transition method, the Group and the Company apply this standard retrospectively only to revenue contracts that are not completed at the date of initial application (i.e. 1 January 2017). Based on the preliminary assessment, the Group and the Company do not expect that the application of MFRS 15 will have a significant impact on the financial instruments upon initial application except for the determination of transaction price of revenue contracts whereby variable consideration is deducted from the contract value as well as extensive new disclosures in the financial statements for the year ending 31 December 2018. In particular, the Group expects that the notes to the financial statements will be expanded because of the disclosure of significant judgments made: when determining the transaction price of those contracts that include variable consideration, how the transaction price has been allocated to each performance obligation, and the assumptions made to estimate the stand-alone selling prices of each performance obligation. In addition, revenue recognised is to be disaggregated into categories that depict the nature, timing and uncertainty of revenue and cash flows. 96 DESTINI BERHAD Financial Statements Notes to the 31 December 2017