Urbanise.com Annual Report 2019

Annual Report 2019 Urbanise.com Limited 3. Changes in accounting policies and disclosures (continued) Debt instruments at amortised cost for financial assets that are held within the Group’s business model with the objective to hold the financial assets in order to collect contractual cash flows, representing solely payments of principal and interest on specified dates. Subsequently these financial assets are carried at amortised cost using the effective interest rate method less any impairment losses calculated under the expected credit loss (“ECL”) method outlined below. This category includes the Group’s trade and other receivables. Trade and Other receivables, previously classified as loans and receivables are now classified and measured as financial assets at amortised cost. The accounting for the Group’s financial liabilities remains largely the same as it was under AASB 139. b) Impairment The adoption of AASB 9 has changed the Group’s accounting for impairment losses for financial assets by replacing AASB 139’s incurred loss approach with a forward-looking ECL approach. AASB 9 requires the Group to record an allowance for ECLs for all receivables. ECLs are based on the difference between the contractual cash flows due in accordance with the contract and all the cash flows that the Group expects to receive. The shortfall is then discounted at an approximation to the asset’s original effective interest rate. The Group considers a financial asset in default when contractual payment are 90 days past due. However, in certain cases, the Group may also consider a financial asset to be in default when internal or external information indicates that the Group is unlikely to receive the outstanding contractual amounts in full before considering any credit enhancements held by the Group. For Contract assets and Trade and other receivables, the Group has applied the standard’s simplified approach and has calculated ECLs based on lifetime expected credit losses. The Group has established a provision matrix that is based on the Group’s historical credit loss experience, adjusted for forward-looking factors specific to the debtors and the economic environment. The adoption of the ECL requirements of AASB 9 did not result in a material increase in impairment allowances of the Group’s receivables. 4. Significant accounting judgements, estimates and assumptions The preparation of the Group’s consolidated financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures, and the disclosure of contingent liabilities. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstance, the results of which form the basis of making the judgments. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods. Judgements In the process of applying the Group’s accounting policies, management has made the following judgements, which have the most significant effect on the amounts recognised in the consolidated financial statements: a. Going concern The consolidated financial statements have been prepared on the going concern basis which assumes the Group will have sufficient cash to pay its debts as and when they become payable for a period of at least 12 months from the date the financial report was authorised for issue. For the financial year ended 30 June 2019, the Group produced a Net Loss After Tax (NLAT) of $4,754,740. The Group has net assets of $12,862,470 at reporting date inclusive of cash reserves of $3,702,341 with no external debt or borrowings. In addition, current assets exceed current liabilities by $2,476,318. The Group has prepared a cash flow forecast based on its current level of expenditure which indicates that the Group will not require an improved cash flow position within the next 12 months to meet its forecast net outgoings. Notes to the Consolidated Financial Statements for the year ended 30 June 2019 (continued) 54