AVBOB Integrated Annual Report 2020

NOTES TO THE SUMMARISED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 (continued) 29 AVBOB MUTUAL ASSURANCE SOCIETY AND ITS SUBSIDIARIES NOTES TO THE SUMMARISED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 (continued) 22. EVENTS SUBSEQUENT TO YEAR END 23. CHANGE IN ACCOUNTING POLICY Operating lease commitments SOCIETY GROUP 2020 2019 2020 2019 R 000 R 000 R 000 R 000 Not longer than a year - 27 095 - 45 001 Between one and five years - 48 824 - 76 096 Longer than five years - - - 1 999 - 75 919 - 123 096 SOCIETY GROUP 2020 2020 R 000 R 000 Operating lease commitments disclosed as at 30 June 2019 75 919 123 096 Discounted using the Group's incremental borrowing rate of 10.25% ( 13 424) ( 24 280) Lease liability recognised as at 1 July 2019 62 495 98 816 • • • On adoption of IFRS 16, the Group recognised lease liabilities in relation to leases which had previously been classified as operating leases under the principles of IAS 17: Leases. These liabilities were measured at the present value of the remaining lease payments, discounted using the lessee's incremental borrowing rate as of 1 July 2019. The weighted average incremental borrowing rate applied to the lease liabilities on 1 July 2019 was 10.25%. The lease commitments as at 30 June 2019 was as follows: the use of hindsight in determining the lease term where the contract contains options to extend or terminate the lease. The Group has also elected not to apply IFRS 16 to contracts that were not identified as containing a lease under IAS 17 and IFRIC 4: Determining whether an arrangement contains a lease. The associated right-of-use assets for property leases were measured at the amount equal to the lease liability, adjusted by the amount of any prepaid or accrued lease payments relating to the related lease recognised in the balance sheet as at 30 June 2019. Property, plant and equipment increased by R57,9 million on 1 July 2019 and trade and other payables increased by R62,5 million. the exclusion of initial direct costs for the measurement of the right-of-use asset at the date of initial application, and On 1 July 2019 a lease liability was recognised in terms of IFRS 16 for these leases as follows: No matter, including the COVID-19 impact as described above, which is material to the financial affairs of the Group as disclosed in these summarised financial statements, has occurred between the financial year end and the date of approval of the financial statements. The Group has adopted IFRS 16: Leases prospectively from 1 July 2019 and has not restated comparatives for the 2019 reporting period as permitted under the specific transition provisions in the standard. Future operating lease payments in respect of contracts that can not be cancelled were as follows: In applying IFRS 16 for the first time, the Group has used the following practical expedients permitted by the standard: the use of a single discount rate to a portfolio of leases with reasonably similar characteristics, FINANCIAL STATEMENTS AVBOB MUTUAL ASSURANCE SOCIETY AND ITS SUBSIDIARIES 115 INTEGRATED ANNUAL REPORT 2020