KENANGA ANNUAL REPORT 2018

NOTES TO THE FINANCIAL STATEMENTS 31 December 2018 120 KENANGA INVESTMENT BANK BERHAD 2. CHANGES IN ACCOUNTING POLICIES AND REGULATORY REQUIREMENT (CONT’D.) 2.2 Standards issued but not yet effective The following are new MFRSs, amended MFRSs and Interpretation Committee’s (“IC”) Interpretation issued by the Malaysian Accounting Standards Board (“MASB”) that will be effective for the Group and the Bank in future years. The Group and the Bank intend to adopt the relevant standards when they become effective. Description Effective for annual periods beginning on or after MFRS 16: Leases 1 January 2019 Amendments to MFRS 9: Prepayment Features with Negative Compensation 1 January 2019 Amendments to MFRS 128: Long-term interests in Associates and Joint Ventures 1 January 2019 IC Interpretation 23: Uncertainty Over Income Tax Treatments 1 January 2019 Amendments to MFRS 3: Business Combinations contained in the documents entitled “Annual Improvements to MFRS Standards 2015-2017 Cycle” 1 January 2019 Amendments to MFRS 11: Joint Arrangements contained in the documents entitled “Annual Improvements to MFRS Standards 2015-2017 Cycle” 1 January 2019 Amendments to MFRS 112: Income Tax Consequences of Payments on Financial Instruments Classified as Equity contained in the documents entitled “Annual Improvements to MFRS Standards 2015-2017 Cycle” 1 January 2019 Amendments to MFRS 123: Borrowing Costs Eligible for Capitalisation contained in the documents entitled “Annual Improvements to MFRS Standards 2015-2017 Cycle” 1 January 2019 Amendments to MFRS 119: Plan Amendment, Curtailment or Settlement 1 January 2019 MFRS 17: Insurance Contracts 1 January 2022 Amendments to MFRS 10 and MFRS 128: Sale or Contribution of Assets between an Investor and its Associate or Joint Venture To be announced by MASB The directors expect that the adoption of the above standards will have no material impact on the financial statements in the period of initial application except as discussed below: MFRS 16 Leases MFRS 16 introduces a single accounting model for a lessee and eliminates the distinction between finance lease and operating lease. All leases will be brought onto the balance sheet as recording certain leases as off-balance sheet leases will no longer be allowed except for some limited practical exemptions. The lessee is required to recognise assets and liabilites for all leases with a term of more than 12 months, unless the underlying assets are low-value assets. Upon adoption of MFRS 16, an entity is required to account for major part of operating leases in the balance sheet by recognizing the ‘right-of-use’ assets and lease liability. MFRS 16 is effective for annual periods beginning on or after 1 January 2019, with early application permitted provided MFRS 15 is also applied. Based on the current assessment, the Group and the Bank expect the rental of branch premises to be affected by this standard with future leases to be recognised on balance sheet. However, the Group and the Bank do not expect the amount to be significant in relation to the size of their total assets and total liabilities. The preliminary estimation of the net impact to the profit or loss arising from the change of accounting standard is approximately RM0.2 million for the financial year 2019.