Professional Documents
Culture Documents
Preface
Important notices
Preface
Preface
Contents
Page
Contents
Page
Contents
Page
Appendices
Appendix A-1 Consolidated statement of comprehensive income in one statement –
Illustrating the analysis of expense by nature ................................................. 196
Appendix A-2 Hedge accounting ......................................................................................... 198
Appendix A-3 Agreements for the construction of real estate .............................................. 205
Appendix A-4 Defined benefit plans ..................................................................................... 209
Appendix B Comparison between FRS and IFRS ................................................................ 220
Co. Reg. No 123456789Z
The names of people and corporations included as illustrations are fictitious. Any resemblance to
any person or business is purely coincidental.
XYZ Holdings (Singapore) Limited and its subsidiaries
General information
Gneral information
Directors
Ang Beng Choo – Chairman
De Silva Elizabeth Frances – Chief Executive Officer
Goh Hock Inn
Jee Kim Leng
Musa Nasir Osman
Pek Que Ru
See Tong Tong
Registered office
[Address, telephone number, facsimile number and electronic mail address (if any)] SGX 1207.2
Solicitors
Laura & Co. LLP
Bankers
Good Bank Limited
South Bank Limited
CPA Bank Limited
Directors’ report
Diectors’ report
The directors are pleased to present their report to the members together with the audited CA 201.6A
consolidated financial statements of XYZ Holdings (Singapore) Limited (the Company) and its CA 201.5
subsidiaries (collectively, the Group) and the balance sheet and statement of changes in equity
of the Company for the financial year ended 31 December 2014.
1. Directors CA 201.6A.a
CA 201.6.a
The directors of the Company in office at the date of this report are:
Ang Beng Choo
De Silva Elizabeth Frances (appointed on 2 February 2014)
Goh Hock Inn
Jee Kim Leng
Musa Nasir Osman
Pek Que Ru
See Tong Tong
In accordance with Articles 93 and 94 of the Company’s Articles of Association, Jee Kim
Leng, Pek Que Ru and See Tong Tong retire and, being eligible, offer themselves for re-
election.
Except as described in paragraph five below, neither at the end of nor at any time during
the financial year was the Company a party to any arrangement whose objects are, or one
of whose objects is, to enable the directors of the Company to acquire benefits by means
of the acquisition of shares or debentures of the Company or any other body corporate.
The following directors, who held office at the end of the financial year, had, according to
the register of directors’ shareholdings required to be kept under section 164 of the
Singapore Companies Act, Chapter 50, an interest in shares and share options of the
Company and related corporations (other than wholly-owned subsidiaries) as stated
below:
Directors’ report
3. Directors’ interests in shares and debentures (continued)
There was no change in any of the above-mentioned interests in the Company between SGX 1207.7
the end of the financial year and 21 January 2015.
Except as disclosed in this report, no director who held office at the end of the financial
year had interests in shares, share options, warrants or debentures of the Company, or of
related corporations, either at the beginning of the financial year, or date of appointment
if later, or at the end of the financial year.
Except as disclosed in the financial statements, since the end of the previous financial
year, no director of the Company has received or become entitled to receive a benefit by
reason of a contract made by the Company or a related corporation with the director, or
with a firm of which the director is a member, or with a company in which the director has
a substantial financial interest.
At an Extraordinary General Meeting held on 23 December 2009, shareholders approved SGX 853
the Senior Executive Option Plan and the General Employee Share Option Plan for the
granting of non-transferable options that are settled by physical delivery of the ordinary
shares of the Company, to eligible senior executives and employees respectively.
The committee administering the employee share option plans comprise three directors, SGX 852.1.a
Musa Nasir Osman, Pek Que Ru and See Tong Tong.
During the financial year:
· The Company has granted 37,000 share options under the Senior Executive Option CA 201.11.b-d
Plan. These options expire on 30 June 2019 and are exercisable if and when the
Group’s earnings per share amount increases by 12% within three years from the date
of grant.
· The Company has also granted 163,000 share options under the General Employee CA 201.11.b-d
Share Option Plan. These options expire on 30 June 2018 and are exercisable if the
employee remains in service for three years from the date of grant and that certain
market conditions as detailed in Note 35 to the financial statements are met.
· 75,000 treasury shares were reissued at a weighted average exercise price of S$1.08 CA 201.12.a
each, upon the exercise of options granted pursuant to the employee share option
plans.
Directors’ report
5. Options (continued)
Details of all the options to subscribe for ordinary shares of the Company pursuant to the CA 201.12.b
employee share option plans as at 31 December 2014 are as follows:
Details of the options to subscribe for ordinary shares of the Company granted to SGX 852.1.b.i
directors of the Company pursuant to the Senior Executive Option Plan are as follows:
Aggregate
Options options granted Aggregate options Aggregate
granted since exercised since options
during commencement commencement of outstanding as
financial of plan to end of plan to end of at end of
Name of director year financial year financial year financial year
1
These options are exercisable between the periods from 30 June 2017 to 30 June 2019
at the exercise price of S$1.30 if the vesting conditions are met.
Since the commencement of the employee share option plans till the end of the financial SGX 852.2
year:
· No options have been granted to the controlling shareholders of the Company and their SGX 852.1.b.ii
associates
· No participant other than the two directors mentioned above has received 5% or more SGX 852.1.b.iii
of the total options available under the plans SGX 852.c.i
· No options have been granted to directors and employees of the holding company and SGX 852.1.c. ii
its subsidiaries
· No options that entitle the holder to participate, by virtue of the options, in any share CA 201.11
issue of any other corporation have been granted
· No options have been granted at a discount SGX 852.1.d
Directors’ report
6. Audit committee CA 201B.9
The audit committee (AC) carried out its functions in accordance with section 201B (5) of
the Singapore Companies Act, Chapter 50, including the following: Ê
· Reviewed the audit plans of the internal and external auditors of the Group and the
Company, and reviewed the internal auditor’s evaluation of the adequacy of the
Company’s system of internal accounting controls and the assistance given by the
Group and the Company’s management to the external and internal auditors
· Reviewed the quarterly and annual financial statements and the auditor’s report on the
annual financial statements of the Group and the Company before their submission to
the board of directors
· Reviewed effectiveness of the Group and the Company’s material internal controls,
including financial, operational and compliance controls and risk management via
reviews carried out by the internal auditor
· Met with the external auditor, other committees, and management in separate
executive sessions to discuss any matters that these groups believe should be
discussed privately with the AC
· Reviewed legal and regulatory matters that may have a material impact on the financial
statements, related compliance policies and programmes and any reports received
from regulators
· Reviewed the cost effectiveness and the independence and objectivity of the external
auditor
· Reviewed the nature and extent of non-audit services provided by the external auditor
· Recommended to the board of directors the external auditor to be nominated,
approved the compensation of the external auditor, and reviewed the scope and results
of the audit
· Reported actions and minutes of the AC to the board of directors with such
recommendations as the AC considered appropriate
· Reviewed interested person transactions in accordance with the requirements of the
Singapore Exchange Securities Trading Limited’s Listing Manual
The AC, having reviewed all non-audit services provided by the external auditor to the SGX 1207.6.b
Group, is satisfied that the nature and extent of such services would not affect the
independence of the external auditor. The AC has also conducted a review of interested
person transactions.
The AC convened four meetings during the year with full attendance from all members,
except for one where a member was absent. The AC has also met with internal and
external auditors, without the presence of the Company’s management, at least once a
year.
Further details regarding the AC are disclosed in the Report on Corporate Governance.
Directors’ report
7. Auditor
Ernst & Young LLP have expressed their willingness to accept reappointment as auditor.
____________________________ ___________________________
Ang Beng Choo De Silva Elizabeth Frances CA 201.5
Director Director
27 February 2015
Commentary:
Ê Section 201B (5) of the Companies Act requires a description of the nature and extent of the CA 201B.5
functions performed by the audit committee pursuant to section 201B (5). If the nature and
extent of the functions are described in the Report on Corporate Governance and the Directors’
Report makes reference to the Report on Corporate Governance instead, the directors must
ensure that the Report on Corporate Governance describes the functions pursuant to section
201B (5) of the Companies Act.
Statement by directors
Statement by directors
We, Ang Beng Choo and De Silva Elizabeth Frances, being two of the directors of XYZ Holdings
(Singapore) Limited, do hereby state that, in the opinion of the directors,
(i) the accompanying balance sheets Ê, consolidated income statement , consolidated CA 201.15.a
CA 201.15.b
statement of comprehensive income, statements of changes in equity, and consolidated
cash flow statement Ê together with notes thereto are drawn up so as to give a true and
fair view of the state of affairs of the Group and of the Company as at 31 December
2014 and the results of the business, changes in equity and cash flows of the Group and
the changes in equity of the Company for the year ended on that date, and
(ii) at the date of this statement, there are reasonable grounds to believe that the Company CA 201.15.c
will be able to pay its debts as and when they fall due.
___________________________ ___________________________
Ang Beng Choo De Silva Elizabeth Frances
Director Director
27 February 2015
Commentary:
FRS 1 uses the terms statement of financial position and statement of cash flows. However, an FRS 1.10
entity is not obliged to use these terminologies.
In this illustration, the Group has chosen to use the terms balance sheet and cash flow statement.
If an entity has chosen to use the terms introduced by FRS 1, the entity should make reference to
the new terms used in its financial statements.
In this illustration, the Group has chosen to present its comprehensive income in two linked
statements. If an entity has chosen to present its comprehensive income in one single statement,
the reference to consolidated income statement should be removed.
Presentation of the statement of changes in equity for the Company when consolidated financial
statements are presented is optional. In this illustration, the Company has chosen to present the
statement of changes in equity for the Company together with the consolidated financial
statements and balance sheet of the Company. Accordingly, the statement by directors includes
the directors’ opinion on whether the statement of changes in equity is drawn up so as to give a
true and fair view of the changes in equity of the Company. This applies to the auditor’s opinion
expressed in the auditor’s report as well.
Independent Auditor’s Report to the Members of XYZ Holdings (Singapore) Limited SSA 700.22,
CA 207.1
We have audited the accompanying financial statements of XYZ Holdings (Singapore) Limited (the SSA 700.23
“Company”) and its subsidiaries (collectively, the “Group”) set out on pages 10 to 195, which comprise the
balance sheets of the Group and the Company as at 31 December 2014, the statements of changes in
equity of the Group and the Company and the consolidated income statement , consolidated
statement of comprehensive income and consolidated cash flow statement of the Group for the year
then ended, and a summary of significant accounting policies and other explanatory information.
Management’s Responsibility for the Financial Statements SSA 700.25
Management is responsible for the preparation of financial statements that give a true and fair view in SSA 700.26
accordance with the provisions of the Singapore Companies Act, Chapter 50 (the “Act”) and Singapore
Financial Reporting Standards, and for devising and maintaining a system of internal accounting controls
sufficient to provide a reasonable assurance that assets are safeguarded against loss from unauthorised
use or disposition; and transactions are properly authorised and that they are recorded as necessary to
permit the preparation of true and fair profit and loss accounts and balance sheets and to maintain
accountability of assets.
Auditor’s Responsibility SSA 700.28
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted SSA 700.29 and
30
our audit in accordance with Singapore Standards on Auditing. Those standards require that we comply
with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the SSA 700.31
financial statements. The procedures selected depend on the auditor’s judgment, including the assessment
of the risks of material misstatement of the financial statements, whether due to fraud or error. In making
those risk assessments, the auditor considers internal control relevant to the entity’s preparation of
financial statements that give a true and fair view in order to design audit procedures that are appropriate
in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s
internal control. An audit also includes evaluating the appropriateness of accounting policies used and the
reasonableness of accounting estimates made by management, as well as evaluating the overall
presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our SSA 700.33
audit opinion.
Opinion SSA 700.34
In our opinion, the consolidated financial statements of the Group and the balance sheet and statement SSA 700.35
CA 207.2.a
of changes in equity of the Company are properly drawn up in accordance with the provisions of the Act
and Singapore Financial Reporting Standards so as to give a true and fair view of the state of affairs of the
Group and of the Company as at 31 December 2014 and the results, changes in equity and cash flows of
the Group and the changes in equity of the Company for the year ended on that date.
Report on Other Legal and Regulatory Requirements SSA 700.38
In our opinion, the accounting and other records required by the Act to be kept by the Company and by CA 207.2.b
those subsidiaries incorporated in Singapore of which we are the auditors have been properly kept in
accordance with the provisions of the Act.
___________________________
Ernst & Young LLP SSA 700.40
Commentary:
Profit from continuing operations, net of tax 5,500 5,429 FRS 1.85
Discontinued operation
FRS 1.82.e, FRS 105.33.a
Loss from discontinued operation, net of tax 11 (544) (188) & 33A
Attributable to:
Owners of the Company
Profit from continuing operations, net of tax 5,320 5,029 FRS 105.33.d
Loss from discontinued operation, net of tax (544) (188) FRS 105.33.d
Profit for the year attributable to owners of the Company 4,776 4,841 FRS 1.81B.ii
Non-controlling interests
Profit from continuing operations, net of tax 180 400
Loss from discontinued operation, net of tax – –
Profit for the year attributable to non-controlling interests 180 400 FRS 1.81B.i
Earnings per share from continuing operations attributable
to owners of the Company (cents per share)
Basic 12(a) 22.98 21.81 FRS 33.66 and 67A
Diluted 12(a) 22.73 21.58 FRS 33.66 and 67A
The accompanying accounting policies and explanatory notes form an integral part of the financial statements.
(7) 16
Other comprehensive income for the year, net of tax 1,305 2,430 FRS 1.81A.b
Total comprehensive income for the year 6,261 7,671 FRS 1.81A.c
Attributable to:
Owners of the Company 6,091 7,211 FRS 1.81B.b.ii
Non-controlling interests 170 460 FRS 1.81B.b.i
Attributable to:
Owners of the Company
Total comprehensive income from continuing operations,
net of tax 6,585 7,379 FRS 105.33.d
Total comprehensive income from discontinued operation,
net of tax (494) (168) FRS 105.33.d
Total comprehensive income for the year attributable to
owners of the Company 6,091 7,211
The accompanying accounting policies and explanatory notes form an integral part of the financial statements.
Commentary:
* FRS 1 replaces the term balance sheet with statement of financial position, and cash flow
statement with statement of cash flows. However, an entity is not obliged to use these new
titles.
** An entity shall present, as a minimum, two statements of financial position, two statements of FRS 1.38 and 38A
profits or loss and other comprehensive income, two separate statements of profit or loss (if
presented), two statements of cash flows and two statements of changes in equity, and related
notes. This shall include comparative information for narrative and descriptive information if it
is relevant to understanding the current period’s financial statements.
*** In such cases, a complete set of financial statements will include three statements of financial FRS 1.10 and 39
position.
Presentation of statement of profit or loss and other comprehensive income and analysis of expenses
An entity can present a single statement of profit or loss and other comprehensive income, with FRS 1.81A
profit or loss and other comprehensive income in two sections or as two linked statements.
When an entity present a single statement of profit or loss and other comprehensive income, with
profit or loss and other comprehensive income in two sections, the sections shall be presented
together, with the profit or loss section presented first followed directly by the other comprehensive
income section. When an entity present the profit or loss section in a separate statement of profit or
loss, the separate statement of profit or loss shall immediately precede the statement of
comprehensive income, which shall begin with profit or loss.
An entity shall present an analysis of expenses using a classification based on either the nature of FRS 1.99
expenses or their function within the entity, whichever provides information that is reliable and more
relevant. The main consideration in choosing an appropriate analysis for disclosure purposes should
be the entity’s accounting system and management reporting system.
In this illustration, the format adopted is two linked statements with analysis of expenses by their FRS 1.104
function within the entity. An illustration of a statement of comprehensive income in a single
statement with analysis of expenses by their nature is provided in Appendix A-1 Consolidated
statement of comprehensive income in one statement – illustrating the analysis of expenses by
nature. Where the former format is adopted (as in the case of this illustration), the entity shall
disclose additional information on the nature of expenses, including depreciation and amortisation as
well as employee benefits expense in the notes.
Commentary (continued):
The separate reporting of continuing and discontinued operations in the statement of FRS 105.30 and 33
comprehensive income is required only where there are discontinued operations as defined by FRS
105 Non-current Assets Held for Sale and Discontinued Operations.
An entity shall re-present the disclosures required for discontinued operations for prior periods FRS 105.34
presented in the financial statements so that the disclosures relate to all operations that have been
discontinued by the end of the reporting period for the latest period presented.
On disposal of the disposal group, the gain or loss from discontinued operation presented on the FRS 105.33.b.iii
statement of comprehensive income includes the gain or loss on disposal of the disposal group
constituting the discontinued operation.
Í Additional line items, heading and subtotals should be presented on the face of the statement of FRS 1.85
comprehensive income, when such presentation is relevant to the understanding of the entity’s
financial performance.
“Research and development” costs represent the aggregate amount of research and development FRS 38.126 and
expenditure recognised as an expense during the period, including amortisation of deferred 127
development cost.
“Share of results of associates” and “share of results of joint ventures” are presented net of tax and FRS 1.IG6
non-controlling interests in the associates.
Terminology used
Although FRS 1 uses the terms “other comprehensive income”, “profit or loss” and “total FRS 1.8
comprehensive income”, an entity may use other terms to describe the totals as long as the meaning
is clear. For example, an entity may use the term “net income” to describe profit or loss.
Commentary (continued):
Tax effects related to each component of other comprehensive income FRS 1.91
Either way, the amount of income tax relating to each component of other comprehensive income FRS 1.90
FRS 12.81.ab
must be disclosed either in the statement of comprehensive income or in the notes. In this
illustration, the entity has chosen to disclose the related tax effects in the Note 10 “Income tax
expense”.
In this illustration, the share of other comprehensive income of associates relates to property
revaluation attributable to owners of the associates, which is an item that will not be reclassified to
profit or loss. If an entity has share of other comprehensive income of associates which relates to
items that may be reclassified subsequently to profit or loss, the item shall be presented under the
group of items that may be reclassified subsequently to profit or loss.
Balance sheets
As at 31 December 2014
Balance sheets Group Company
31 December 1 January
2013 2013
2014 (Restated) (Restated) 2014 2013
Note $'000 $'000 $'000 $'000 $'000
Assets
Non-current assets
Property, plant and equipment 13 30,718 31,064 28,155 1,079 603 FRS 1.54.a
Investment properties 14 4,645 3,955 3,825 - - FRS 1.54.b
Intangible assets 15 2,419 1,333 1,368 - - FRS 1.54.c
Land use rights 16 5,811 5,733 5,730 - - FRS 1.55
Investment in subsidiaries 17 - - - 12,147 10,582 FRS 1.55
Investment in joint venture 18 1,674 1,523 1,370 - - FRS 1.54.e
Investment in associates 19 10,595 10,321 10,125 - - FRS 1.54.e
Deferred tax assets 20 470 463 455 21 26 FRS 1.54.o and 56
Other receivables 21 2,793 2,778 2,715 16,753 17,401 FRS 1.54.h
Investment securities 22 4,608 3,106 3,630 - - FRS 1.54.d
63,733 60,276 57,373 30,000 28,612
Current assets
Gross amount due from customers for
contract work-in-progress 23 651 398 67 - - FRS 11.42.a
Development properties 24 2,900 2,650 2,450 - - FRS 1.54.g
Inventories 25 24,020 24,400 25,300 - - FRS 1.54.g
Prepaid operating expenses 122 250 312 53 122 FRS 1.55
Trade and other receivables 21 22,852 24,967 22,095 338 350 FRS 1.54.h
Investment securities 22 1,512 1,260 1,150 - - FRS 1.54.d
Derivatives 26 170 105 95 - - FRS 1.54.d
Cash and short-term deposits 27 6,117 4,858 3,668 4,621 4,145 FRS 1.54.i
58,344 58,888 55,137 5,012 4,617
Assets of disposal group classified as held for FRS 1.54.j,
sale 11 2,270 - - 2,300 - FRS 105.38
60,614 58,888 55,137 7,312 4,617
Current liabilities
Provisions 28 801 295 155 - - FRS 1.54.l
Deferred capital grants 29 300 210 150 - - FRS 20.24
Income tax payable 2,927 6,734 6,362 1,447 2,115 FRS 1.54.n
Loans and borrowings 30 1,189 2,290 2,350 - - FRS 1.54.m
Gross amount due to customers for contract
work-in-progress 23 358 586 942 - - FRS 11.42.b
Trade and other payables 31 17,367 18,934 18,367 470 414 FRS 1.54.k
Other liabilities 32 3,659 2,579 3,067 1,166 446 FRS 1.54.m
Derivatives 26 22 - - - - FRS 1.54.m
26,623 31,628 31,393 3,083 2,975
Liabilities directly associated with disposal FRS 1.54.p,
group classified as held for sale 11 2,071 - - - - FRS 105.38
28,694 31,628 31,393 3,083 2,975
The accompanying accounting policies and explanatory notes form an integral part of the financial statements.
Balance sheets
As at 31 December 2014
Commentary:
Ë An entity shall disclose the amount expected to be recovered or settled after more than twelve FRS 1.61
months for each asset and liability line item that combines amounts expected to be recovered or
settled:
(a) no more than twelve months after the reporting period, and
(b) more than twelve months after the reporting period.
Ì An entity shall present current and non-current assets, and current and non-current liabilities, as FRS 1.60
separate classifications in its balance sheets in accordance with FRS1.66 to FRS 1.67 except when a
presentation based on liquidity provides information that is reliable and more relevant. When that
exception applies, an entity shall present all assets and liabilities in order of liquidity.
$’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000
Opening balance at 1 January
2014 2.2 68,849 66,949 9,665 - 51,627 5,657 426 4,414 740 (344) - 341 - 80 - 1,900
Profit for the year 4,956 4,776 – - 4,776 - - - - - - - - - - 180 FRS 1.106.d.i
FRS 1.106A,FRS
Net surplus on revaluation of 1.106.d.ii,
freehold land and buildings 1,250 1,250 – – – 1,250 – 1,250 – – – – – – – – FRS 1.82.g, FRS 16.77.f
FRS 1.106A,FRS
1.106.d.ii, FRS 1.82.g,
Foreign currency translation (181) (171) – – – (171) – – – (171) – – – – – (10) FRS 21.52.b
Contributions by and
distributions to owners FRS 1.106.d.iii
Shares issued for acquisition of a
subsidiary 33(a) 1,475 1,475 1,475 - - - - - - - - - - - - - FRS 1.106.d.iii
Share issuance expense 33(a) (50) (50) (50) - - - - - - - - - - - - - FRS 32.39
Grant of equity-settled share
options to employees 35 245 245 - - - 245 - - - - - 245 - - - - FRS 102.50
Purchase of treasury shares 33(b) (254) (254) - (254) - - - - - - - - - - - - FRS 32.33
Treasury shares reissued
pursuant to employee share FRS 102.50,
option plans 33(b) 81 81 - 95 - (14) - - - - - (79) 65 - - - FRS 32.33
Dividends on ordinary shares 43 (1,613) (1,613) - - (1,613) - - - - - - - - - - - FRS 1.106.d.iii
Total contributions by and
distributions to owners (116) (116) 1,425 (159) (1,613) 231 - - - - – 166 65 – - - FRS 1.106.d.iii
Others
Reserve attributable to disposal
group classified as held for
sale 11 - - - - - (128) - (128) - - - - - - 128 - FRS 105.38
The accompanying accounting policies and explanatory notes form an integral part of the financial statements.
Equity
Equity component of
attributable Foreign Employee convertible
to owners of Other Fair value Asset Statutory currency share redeemable Non-
2013 Equity, the Company, Share Retained reserves, adjustment revaluation reserve translation option preference controlling
Group Note total total capital earnings total reserve reserve fund reserve reserve shares interests
$’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000
Opening balance at 1 January 2013 2.2 62,458 61,018 9,510 48,477 3,031 328 2,000 613 (202) 292 - 1,440
Profit for the year 5,241 4,841 - 4,841 - - - - - - - 400 FRS 1.106.d.i
Total comprehensive income for the year 7,671 7,211 - 4,841 2,370 98 2,414 - (142) - - 460 FRS 1.106.a
Equity
Equity component of
attributable Foreign Employee convertible
to owners of Other Fair value Asset Statutory currency share redeemable Non-
2013 Equity, the Company, Share Retained reserves, adjustment revaluation reserve translation option preference controlling
Group Note total total capital earnings total reserve reserve fund reserve reserve shares interests
$’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000
Exercise of employee share options 33(a) 72 72 155 - (83) - - - - (83) - - FRS 102.50
Others
Closing balance at 31 December 2013 68,849 66,949 9,665 51,627 5,657 426 4,414 740 (344) 341 80 1,900
The accompanying accounting policies and explanatory notes form an integral part of the financial statements.
Equity component
2014 Gain or loss on of convertible
Other reserves, Employee share reissuance of redeemable
Company Note Equity, total Share capital Treasury shares Retained earnings total option reserve treasury shares preference shares
Profit for the year, representing total comprehensive income for FRS 1.106.d.i ,FRS
the year 3,974 - - 3,974 - - - - 1.106.a
Shares issued for acquisition of a subsidiary 33(a) 1,475 1,475 - - - - - - FRS 1.106.d.iii
Grant of equity-settled share options to employees 35 245 - - - 245 245 - - FRS 102.50
Treasury shares reissued pursuant to employee share option plans 81 - 95 - (14) (79) 65 - FRS 102.50, FRS 32.33
Total transactions with owners in their capacity as owners (116) 1,425 (159) (1,583) 201 136 65 - FRS 1.106.d.iii
Closing balance at 31 December 2014 28,253 11,090 (159) 16,700 622 477 65 80
The accompanying accounting policies and explanatory notes form an integral part of the financial statements.
Equity component
2013 Gain or loss on of convertible
Other reserves, Employee share reissuance of redeemable
Company Note Equity, total Share capital Treasury shares Retained earnings total option reserve treasury shares preference shares
Profit for the year, representing total comprehensive income for FRS 1.106.d.i , FRS
the year 2,449 - - 2,449 - - - - 1.106.a
Grant of equity-settled share options to employees 35 150 - - - 150 150 - - FRS 102.50
Exercise of employee share options 33(a) 72 155 - - (83) (83) - - FRS 102.50
Total transactions with owners in their capacity as owners (1,280) 155 - (1,564) 129 49 - 80 FRS 1.106.d.iii
The accompanying accounting policies and explanatory notes form an integral part of the financial statements.
Commentary:
Analysis of other comprehensive income for each component of equity in the statement of changes in
equity
FRS 1 Presentation of Financial Statements requires an analysis of other comprehensive income for FRS 1.106.d.ii
each component of equity to be presented either in the statement of changes in equity or in the notes FRS 1.106A
to the financial statements.
In this illustration, the Group has chosen to present an analysis of other comprehensive income for
each component of equity in the statement of changes in equity.
Presentation of the statement of changes in equity for the Company when consolidated financial
statements are presented is optional. Information relating to the equity items presented in the
Company’s balance sheet may be presented in the notes to the financial statements instead.
2014 2013
Consolidated cash flow statement (Restated)
Note $'000 $'000 FRS 7.18.b
Operating activities
Profit before tax from continuing operations 7,057 7,116
Loss before tax from discontinued operation 11 (551) (193)
Profit before tax, total 6,506 6,923
Adjustments for: FRS 7.20.b and c
Amortisation of deferred capital grant 29 (239) (180)
Amortisation of intangible assets 15 220 252
Amortisation of land use rights 16 132 130
Depreciation of property, plant and equipment 13 3,043 2,838
Grant of equity-settled share options to employees 35 245 150
Net fair value gains on investment properties 14 (489) (129)
Net fair value gains on held for trading investment securities 6 (135) (95)
Net fair value gains on derivatives 6 (43) (56)
Net fair value gains on available-for-sale financial assets (transferred from
equity on disposal of investment securities) 6 (120) (15)
Net gain on remeasuring previously held equity interest in associates to fair
value on business combination 140 -
Fair value adjustment of contingent consideration for a business
combination 17 235 –
Impairment loss on property, plant and equipment 13 500 –
Impairment loss on intangible assets 15 200 –
Impairment loss on investment securities 22 198 210
Impairment loss on trade receivables 135 115
Net loss/(gain) on disposal of property, plant and equipment 76 (120)
Finance costs 1,715 1,512
Dividend income from investment securities (526) (406)
Interest income (430) (327)
Loss recognised on re-measurement to fair value less costs to sell 11 450 –
Provisions (144) 105
Share of results of joint venture (151) (128)
Share of results of associates (657) (328)
Unrealised exchange (gain)/loss (240) 120 FRS 7.28
Total adjustments 4,115 3,648
Operating cash flows before changes in working capital 10,621 10,571
Changes in working capital FRS 7.20.a
Increase in development property (250) (200)
Increase in gross amount due from customers for contract work-in-progress (253) (331)
Decrease in gross amount due to customers for contract work-in-progress (228) (356)
Decrease/(increase) in inventories 942 (1,575)
Decrease in trade and other receivables 2,245 904
Decrease in prepaid operating expenses 128 62
Decrease in trade and other payables (1,562) (1,864)
Increase/(decrease) in other liabilities 630 (496)
Total changes in working capital 1,662 (3,856)
Cash flows from operations 12,283 6,715
Interest received 430 327 FRS 7.31
Interest paid (1,834) (1,550) FRS 7.31
Income taxes paid (5,682) (3,571) FRS 7.35
Net cash flows from operating activities 5,197 1,741 FRS 7.10
2014 2013
(Restated)
The accompanying accounting policies and explanatory notes form an integral part of the financial statements.
Commentary:
Ê In this illustration, the consolidated cash flow statement is presented using indirect method whereby FRS 7.18
profit or loss is adjusted for the effects of non-cash transactions, deferrals, accruals and investing or
financing cash flows. FRS 7.18 allows entities to report cash flows from operating activities using
either the direct method or indirect method. The cash flow from operating activities prepared using
the direct method is illustrated below:
2014 2013
$'000 $'000
Operating activities
Receipts from customers XXX XXX
Payments to suppliers and employees (XXX) (XXX)
Cash generated from operations XXX XXX
Interest paid (XXX) (XXX)
Income taxes paid (XXX) (XXX)
Net cash flows from/(used in) operating activities XXX (XXX)
The cash flow from financing and investing activities under the direct method are identical to that
prepared under indirect method.
Disposal of subsidiary
In this illustration, there is no disposal of subsidiary or other business units during the financial year. FRS 7.40.a-d
If there is such disposal, an entity should disclose:
(a) The total disposal consideration;
(b) The portion of the disposal consideration discharged by means of cash and cash equivalents;
(c) The amount of cash and cash equivalents in the subsidiary or business unit disposed of; and
(d) The amount of the assets and liabilities other than cash and cash equivalents in the subsidiary or
business unit disposed of, summarised by each major category.
An investment entity, as defined in FRS 110 Consolidated Financial Statements, need not apply (c) FRS 7.40A
and (d) above to an investment in subsidiary that is required to be measured at fair value through
profit or loss.
Illustrative note disclosure:
The company disposed of XXX Limited, a wholly owned subsidiary, on 30 November 2014 at its FRS 7.40.b
carrying value. The disposal consideration was fully settled in cash.
The value of assets and liabilities of XXX Limited recorded in the consolidated financial
FRS 7.40.d
statements as at 30 November 2014, and the cash flow effect of the disposal were:
$’000
Property, plant and equipment XXX
Trade and other receivables XXX
Inventories XXX
Cash and cash equivalents XXX FRS 7.40.c
XXX
Trade and other payables (XXX)
Income tax payable (XXX)
Carrying value of net assets XXX
Commentary (continued):
In this illustration, there is no payment of contingent consideration for business combination during
the year. For illustrative disclosure of contingent consideration for business combination in the year
when the amount is paid and its impact on the presentation in the statement of cash flows, please
refer to commentary no.1 of Note 32 Other liabilities.
Foreign currency translation differences that arise on translation of foreign currency cash and cash FRS 7.28
equivalents should be reported in the consolidated cash flow statement in order to reconcile opening
and closing balances of cash and cash equivalents, separately from operating, financing and investing
cash flows.
1. Corporate information Ê
XYZ Holdings (Singapore) Limited (the Company) is a limited liability company FRS 1.138.a and c
incorporated and domiciled in Singapore and is listed on the Singapore Exchange. The FRS 24.13
CA 201.10
immediate and ultimate holding company is Good Group (International) Ltd. Ì
The registered office and principal place of business of the Company is located at Level FRS 1.138.a
18, One Raffles Quay, North Tower, 048583, Singapore.
The principal activity of the Company is investment holding. The principal activities of the FRS 1.138.b
subsidiaries are disclosed in Note 17 to the financial statements.
Commentary:
Ê The following information may be provided in the notes to the financial statements or FRS 1.138
disclosed elsewhere in information published with the financial statements:
- the domicile and legal form of the entity, its country of incorporation and the address of
its registered office (or principal place of business, if different from the registered
office);
- a description of the nature of the entity’s operations and its principal activities; and
- the name of the parent and ultimate parent of the Group.
If the entity changes its name during the financial year, the change shall be disclosed. FRS 1.51.a
Illustrative disclosure where the entity changes its name during the financial year:
With effect from [insert effective date of change], the name of the company was
changed from [XXX] to [XXX].
Ì FRS 24 requires an entity to disclose the name of the entity’s parent and, if different, the FRS 24.13
ultimate controlling party. The ultimate controlling party can be either an entity or a person.
FRS 1.117
2. Summary of significant accounting policies
The consolidated financial statements of the Group and the balance sheet and FRS 1.16, FRS
1.51.b and FRS
statement of changes in equity of the Company have been prepared in accordance with 1.112.a
Singapore Financial Reporting Standards (FRS). SGX 1207.5.d
The financial statements have been prepared on the historical cost basis except as FRS 1.117.a
disclosed in the accounting policies below.
The financial statements are presented Ë in Singapore Dollars (SGD or $) and all values FRS 1.51.d and e
in the tables are rounded to the nearest thousand ($’000), except when otherwise
indicated.
Commentary:
Ê When preparing financial statements, management shall make an assessment of an FRS 1.25
entity’s ability to continue as a going concern. Where the effect of the judgement made in FRS 1.122
relation to the entity’s ability to continue as a going concern has significant effect on the
amounts recognised in the financial statements, the judgement made should be disclosed.
Financial statements shall be prepared on a going concern basis unless management FRS 1.25
either intends to liquidate the entity or to cease trading, or has no realistic alternative but
to do so. When management is aware, in making its assessment, of material uncertainties
related to events or conditions that may cast significant doubt upon the entity’s ability to
continue as a going concern, those uncertainties shall be disclosed.
Illustrative disclosure where the ability of the company to continue as a going concern is
dependent on the holding company undertaking to provide continuing financial support to
the company to enable it to continue as a going concern:
The Company incurred a net loss of $XXX (2013: $XXX) during the financial year
ended 31 December 2014 and as at that date, the Company’s current and total
liabilities exceeded its current and total assets by $XXX (2013: $XXX) and $XXX
(2013: $XXX) respectively. These factors indicate the existence of a material
uncertainty which may cast significant doubt about the Company’s ability to continue
as a going concern. The ability of the Company to continue as a going concern
depends on the holding company undertaking to provide continuing financial support
to enable the Company to continue as a going concern.
If the Company is unable to continue in operational existence for the foreseeable
future, the Company may be unable to discharge its liabilities in the normal course of
business and adjustments may have to be made to reflect the situation that assets
may need to be realised other than in the normal course of business and at amounts
which could differ significantly from the amounts at which they are currently recorded
in the balance sheet. In addition, the Company may have to reclassify non-current
assets and liabilities as current assets and liabilities. No such adjustments have been
made to these financial statements.
Ë When the presentation currency is different from the functional currency of the Company, FRS 21.53
that fact shall be stated, together with disclosure of the functional currency and the
reasons for using a different presentation currency.
The accounting policies adopted are consistent with those of the previous financial year
except in the current financial year, the Group has adopted all the new and revised
standards which are effective for annual financial periods beginning on or after 1
January 2014. The adoption of these standards did not have any effect on the financial
performance or position of the Group and the Company except as discussed below.
FRS 111 Joint Arrangements and Revised FRS 28 Investments in Associates and Joint
Ventures
The adoption of FRS 111 has resulted in the Group having to revise its method of
accounting for its joint arrangement. Investment in jointly controlled entity had been
previously consolidated proportionately. Under FRS 111, this arrangement is classified
as joint venture and is to be equity accounted.
The change in accounting policy has been applied in accordance with the transitional
provision in FRS 111.Ë The initial investment was measured as the aggregate of the
carrying amounts of the assets and liabilities that the Group previously proportionately FRS 8.28.b
consolidated. The effects of adoption of FRS 111 and FRS 28 are as follows: FRS 8.28.d
FRS 111.C2
Impact on statement of profit or loss (increase/(decrease)) in profit:
Group
As at 31
December
2013
$’000
Other income (214)
Administrative expenses 63
Share of profit of a joint venture 151
Net impact on profit before/after tax -
As at 31 As at 1
December January
2013 2013
$’000 $’000
Investment property (1,449) (1,411)
Investment in joint venture 1,523 1,370
Total non-current assets 74 41
Cash and cash equivalents (66) (56)
Trade and other receivables (454) (410)
Total assets (446) (425)
Loans and borrowings 240 230
Trade and other payables 206 195
Total liabilities 446 425
Net impact on equity - -
Commentary:
Commentary (continued):
Ì FRS 8 Accounting Policies, Changes in Accounting Estimates and Errors requires the
disclosure of the amount of the adjustment for the current period and each prior period
(to the extent practicable) upon initial application of a Standard or an Interpretation. In
this illustration, it is assumed that the adoption of the new and revised standards does not
have any impact on the financial statements.
Following are illustrative disclosure of changes in accounting policies on adoption of the
new and revised standards.
FRS 110 Consolidated Financial Statements
The following is an illustrative disclosure of the impending changes in accounting policy on
adoption of FRS 110 for de facto control.
Upon application of FRS 110, the Group concluded that it has control over ABC Ltd
which was previously accounted for as an associated company.
The Group acquired 47% of ownership interest in ABC Ltd in 2005 and there was no
change in the Group’s ownership in ABC Ltd since then. The remaining 53% of the
ordinary shares of ABC Ltd are owned by thousands of shareholders, which none of
the shareholders hold more than 1 per cent of the voting rights individually.
In assessing whether the Group has control over an investee where the Group holds
less than a majority of voting rights, the Group considers factors such as the size of
the Group’s holding of voting rights relative to the size and dispersion of holdings of
other vote holders as well as any additional facts and circumstances that indicate the
Group has, or does not have, the current ability to direct the relevant activities of the
investee, including the voting patterns at the investee’s previous shareholders’
meetings.
The change in accounting policy has been applied retrospectively in accordance with
the transitional positions in FRS 110. The assets, liabilities and non-controlling
interests in ABC Ltd are measured as if ABC Ltd had been consolidated from the date
when the Group obtained control in 2005, Í by applying the requirements of FRS 103
(issued 2004). ÎThe effects of adoption of the financial statements are as follows Ï:
Commentary (continued):
Group
As at 31 As at 1
December January
2013 2013
(Restated) (Restated)
$’000 $’000
(Decrease)/increase in:
Consolidated balance sheet
Investment in associate (XXX) (XXX)
Property, plant and equipment XXX XXX
Investment properties XXX XXX
Trade and other receivables XXX XXX
Cash and short-term deposits XXX XXX
Trade and other payables XXX XXX
Income tax payable XXX XXX
Provisions XXX XXX
Loans and borrowings XXX XXX
Deferred tax liabilities XXX XXX
Impact on net assets XXX XXX
Commentary (continued):
Group
2013
(Restated)
$’000
Increase/(decrease) in:
Consolidated income statement
Revenue XXX
Cost of sales XXX
Interest income XXX
Other income XXX
Marketing and distribution XXX
Administrative expenses XXX
Share of results of associates (XXX)
Finance costs XXX
Income tax expense XXX
Profit for the year XXX
Commentary (continued):
Group
As at 31 As at 1
December January
2013 2013
(Restated) (Restated)
$’000 $’000
Increase/(decrease) in:
Consolidated balance sheet
Investment in associate XXX XXX
Property, plant and equipment (XXX) (XXX)
Investment property (XXX) (XXX)
Trade and other receivables (XXX) (XXX)
Cash and cash equivalents (XXX) (XXX)
Trade and other payables (XXX) (XXX)
Current tax liabilities (XXX) (XXX)
Provisions (XXX) (XXX)
Loans and borrowings (XXX) (XXX)
Deferred tax liabilities (XXX) (XXX)
Impact on net assets (XXX) (XXX)
Commentary (continued):
Group
2014
$’000
(Decrease)/increase in:
Consolidated income statement
Revenue (XXX)
Cost of sales (XXX)
Interest income (XXX)
Other income (XXX)
Marketing and distribution (XXX)
Administrative expenses (XXX)
Share of results of associates XXX
Finance costs (XXX)
Income tax expenses (XXX)
Profit for the year (XXX)
(Decrease)/increase in:
Consolidated statement of comprehensive income
Net surplus on revaluation of freehold land and
buildings (XXX)
Foreign currency translation (XXX)
Share of other comprehensive income of associates XXX
Income tax effects (XXX)
Other comprehensive income for the year, net of
tax (XXX)
Total comprehensive income for the year (XXX)
Commentary (continued):
Í In this illustration, the Group measures the assets and liabilities and non-controlling FRS 110.C4.c.i
interests in the investee, ABC Ltd as if that investee had been consolidated from the date
when the Group obtained control of that investee. If measuring the investee’s assets,
liabilities and non-controlling interests retrospectively is impracticable, the deemed
acquisition date shall be the beginning of the earliest period for which retrospective
application is practicable, which may be the current period.
Î FRS 110 allows an entity to apply either FRS 103 (2008) or FRS 103 (issued in 2004). In FRS 110.C4B
this illustration, the Group applied the requirements of FRS 103 (issued 2004).
Alternatively, the Group may apply FRS 103 (issued 2008).
Ï In this illustration, the Group measures the retained interest in the investee, JJJ Ltd at the FRS 110.C5
amount at which it would have been measured if the requirements of FRS 110 had been
effective when the Group became involved with that investee. If measurement of the
retained interest is impracticable, the Group shall recognise any difference between the
previously recognised amount of the assets, liabilities and non-controlling interest and the
carrying amount of the Group’s involvement with the investee as an adjustment to equity
for that period. In addition, the Group shall provide comparative information and
disclosures of the circumstance that led to the condition that makes retrospective
application impracticable and from when the change in accounting policy has been applied.
The Group has not adopted the following standards that have been issued but not yet
effective:
Effective for annual periods
Description beginning on or after
Amendments to FRS 19 Defined Benefit Plans: Employee 1 July 2014 FRS 8.30, 31
Contributions
Improvements to FRSs (January 2014)
(a) Amendments to FRS 102 Share Based Payment 1 July 2014
(b) Amendments to FRS 103 Business Combinations 1 July 2014
(c) Amendments to FRS 108 Operating Segments
(d) Amendments to FRS 113 Fair Value Measurement 1 July 2014
(e) Amendments to FRS 16 Property, Plant and
Equipment and FRS 38 Intangible Assets 1 July 2014
(f) Amendments to FRS 24 Related Party Disclosures 1 July 2014
Improvements to FRSs (February 2014)
(a) Amendments to FRS 103 Business Combinations 1 July 2014
(b) Amendments to FRS 113 Fair Value Measurement 1 July 2014
The directors expect that the adoption of the standards above will have no material
impact on the financial statements in the period of initial application.
Commentary:
Commentary:
The following are IFRSs that have been issued by International Accounting Standards
Board (IASB) but have not been adopted as FRS in Singapore:
· IFRS 9 Financial Instruments, effective for annual periods beginning on or after 1
January 2018
· IFRS 15 Revenue Recognition, effective for annual periods beginning on or after 1
January 2017
· Amendments to IAS 16 Property, Plant and Equipment and IAS 38 Intangible Assets,
effective for annual periods beginning on or after 1 July 2016
· Amendments to IAS 16 Property, Plant and Equipment and IAS 41 Agriculture,
effective for annual periods beginning on or after 1 January 2016
· Amendments to FRS 27 Separate Financial Statements, effective for annual periods
beginning on or after 1 January 2016
If any of the above IFRSs are adopted as FRSs before the financial statements for the year
ended 31 December 2014 are authorised for issue, Note 2.3 should be updated to:
(a) include the new standards; and
(b) provide known or reasonably estimable information to assess the possible impact that
the application of such FRSs will have on the entity’s financial statements in the
period of initial application.
Notes to users:
The summary of significant accounting policies in this illustration are based on assumed
circumstances of XYZ Holdings (Singapore) Limited and may not be relevant to all entities. Each
entity should customise the significant accounting policies disclosed according to the specific
circumstances relevant to the entity.
a) Basis of consolidation
The consolidated financial statements comprise the financial statements of the FRS 110.4
FRS
Company and its subsidiaries as at the end of the reporting period. The 110.Appendix A
FRS 110.B92
financial statements of the subsidiaries used in the preparation of the
consolidated financial statements are prepared for the same reporting date as FRS 110.19 and
B87
the Company. Consistent accounting policies are applied to like transactions
and events in similar circumstances.
All intra-group balances, income and expenses and unrealised gains and losses FRS 110.B86.c
resulting from intra-group transactions and dividends are eliminated in full.
Subsidiaries are consolidated from the date of acquisition, being the date on FRS 110.20 and
which the Group obtains control, and continue to be consolidated until the date B88
that such control ceases.
Losses within a subsidiary are attributed to the non-controlling interest even if FRS 110.B94
that results in a deficit balance.
A change in the ownership interest of a subsidiary, without a loss of control, is FRS 110.23
FRS 110.B98
accounted for as an equity transaction. If the Group loses control over a
subsidiary, it:
- de-recognises the assets (including goodwill) and liabilities of the
subsidiary at their carrying amounts at the date when control is lost;
- de-recognises the carrying amount of any non-controlling interest;
- de-recognises the cumulative translation differences recorded in equity;
- recognises the fair value of the consideration received;
- recognises the fair value of any investment retained;
- recognises any surplus or deficit in profit or loss;
- re-classifies the Group’s share of components previously recognised in
other comprehensive income to profit or loss or retained earnings, as
appropriate.
combination are measured initially at their fair values at the acquisition date. FRS 103.53
Acquisition-related costs are recognised as expenses in the periods in which
the costs are incurred and the services are received.
Commentary:
Investment entities
FRS 110 provides exception to the consolidation requirement for entities that meet the
definition of an investment entity. The exception to consolidation requires investment
entities to account for subsidiaries at fair value through profit or loss in accordance with
FRS 39 Financial Instrument: Recognition and Measurement.
Please refer to commentary no.9 in Note 17 Investment in subsidiaries for disclosure
requirements.
The financial statements of the parent and its subsidiaries used in the preparation of the FRS 110.B92
consolidated financial statements shall be prepared as of the same reporting date. When
the end of the reporting period of the parent is different from that of a subsidiary, the
subsidiary prepares, for consolidation purposes, additional financial statements as of the
same date as the financial statements of the parent, unless it is impracticable to do so.
Where it is impracticable to do so, the parent may use the financial statements of a FRS 110.B93
subsidiary prepared as of a reporting date different from that of the parent, provided
adjustments are made for the effects of significant transactions or events that occur
between that date and the date of the parent’s financial statements, and the difference
between the reporting dates of the subsidiary and parent is no more than three months. In
addition, the length of the reporting periods and any difference in the reporting dates shall
be the same from period to period.
When the financial statements of a subsidiary used in the preparation of consolidated FRS 112.11
financial statements are as of a date or for a period that is different from that of the
consolidated financial statements, an entity shall disclose the date of the end of the
reporting period of the financial statements of that subsidiary and the reason for using a
different date or period.
Commentary (continued):
Business combinations achieved in stages
Ð FRS 103 provides acquirers with the option of measuring non-controlling interest arising FRS 103.19
in a business combination that are present ownership interests and entitle their holders to
a proportionate share of net assets of the subsidiary in the event of liquidation at either:
- Fair value; or
- The non-controlling interest’s proportionate interest in the acquiree’s identifiable net
assets.
The option is elected for each individual business combination and does not constitute an
accounting policy choice for similar transactions. Selecting the option will require
management to carefully consider their future intentions regarding transactions with non-
controlling interest, since the two options, combined with the revisions to accounting for
changes in ownership interest of a subsidiary will potentially result in significantly
different amounts of goodwill and equity.
Goodwill
Ñ FRS 36 Impairment of Assets permits annual impairment test for goodwill and intangible FRS 36.96 and
assets with indefinite useful lives to be performed at any time during the year provided it 10
is at the same time each year. Different goodwill and intangible assets may be tested at
different times.
Ò In this illustration, the Group does not have goodwill which forms cash generating unit in
which part of the operation within that cash generating unit is disposed of.
Illustrative accounting policy for goodwill which forms cash generating unit in which part
of the operation within that cash generating unit is disposed of:
Where goodwill forms part of a cash-generating unit and part of the operation within FRS 36.86
that cash-generating unit is disposed of, the goodwill associated with the operation
disposed of is included in the carrying amount of the operation when determining the
gain or loss on disposal of the operation. Goodwill disposed of in this circumstance is
measured based on the relative fair values of the operations disposed of and the
portion of the cash-generating unit retained.
Non-controlling interest represents the equity in subsidiaries not attributable, directly FRS 110.Appendix
A
or indirectly, to owners of the Company. FRS 110.22
Changes in the Company’s ownership interest in a subsidiary that do not result in a loss
of control are accounted for as equity transactions. In such circumstances, the carrying
amounts of the controlling and non-controlling interests are adjusted to reflect the FRS 110.23
FRS 110.B96
changes in their relative interests in the subsidiary. Any difference between the
amount by which the non-controlling interest is adjusted and the fair value of the
consideration paid or received is recognised directly in equity and attributed to owners
of the Company.
The financial statements are presented in Singapore Dollars, which is also the FRS 1.51.d
Company’s functional currency. Each entity in the Group determines its own functional
currency and items included in the financial statements of each entity are measured
using that functional currency.
a) Transactions and balances
Transactions in foreign currencies are measured in the respective functional FRS 21.21
currencies of the Company and its subsidiaries and are recorded on initial
recognition in the functional currencies at exchange rates approximating those
ruling at the transaction dates. Monetary assets and liabilities denominated in FRS 21.23
foreign currencies are translated at the rate of exchange ruling at the end of
the reporting period. Non-monetary items that are measured in terms of
historical cost in a foreign currency are translated using the exchange rates as
at the dates of the initial transactions. Non-monetary items measured at fair
value in a foreign currency are translated using the exchange rates at the date
when the fair value was measured.
Exchange differences arising on the settlement of monetary items or on FRS 21.28
translating monetary items at the end of the reporting period are recognised in
profit or loss. Ë
b) Consolidated financial statements
For consolidation purpose, the assets and liabilities of foreign operations are FRS 21.39
translated into SGD at the rate of exchange ruling at the end of the reporting
period and their profit or loss are translated at the exchange rates prevailing at
the date of the transactions. The exchange differences arising on the
translation are recognised in other comprehensive income. On disposal of a FRS 21.48
foreign operation, the component of other comprehensive income relating to
that particular foreign operation is recognised in profit or loss.
Commentary:
Partial disposal of foreign operation
Ê In this illustration, the Group does not have partial disposal of foreign operation.
Illustrative accounting policy for foreign currency for partial disposal of foreign
operation.
In the case of a partial disposal without loss of control of a subsidiary that FRS 21.48C
includes a foreign operation, the proportionate share of the cumulative
amount of the exchange differences are re-attributed to non-controlling
interest and are not recognised in profit or loss.
Commentary (continued):
Ë In this illustration, the Group does not have exchange differences arising from
monetary items that form part of the Group’s net investment in foreign
operation.
Illustrative accounting policy for exchange differences arising from monetary
items that form part of the Group’s net investment in foreign operation.
Exchange differences arising on monetary items that for part of the Group’s FRS 21.32 and 48
net investment in foreign operations are recognised initially in other
comprehensive income and accumulated under foreign currency translation
reserve in equity. The foreign currency translation reserve is reclassified
from equity to profit or loss of the Group on disposal of the foreign
operation.
All items of property, plant and equipment are initially recorded at cost. Subsequent to FRS 16.15 and 16
FRS 16.30
recognition, property, plant and equipment other than freehold land and buildings are
measured at cost less accumulated depreciation and any accumulated impairment
losses.
Freehold land and buildings are measured at fair value less accumulated depreciation FRS 16.31 and
on buildings and impairment losses recognised after the date of the revaluation. 73.a
Valuations are performed with sufficient regularity to ensure that the carrying amount
does not differ materially from the fair value of the freehold land and buildings at the
end of the reporting period.
Any revaluation surplus is recognised in other comprehensive income and accumulated FRS 16.39
in equity under the asset revaluation reserve, except to the extent that it reverses a
revaluation decrease of the same asset previously recognised in profit or loss, in which
case the increase is recognised in profit or loss. A revaluation deficit is recognised in FRS 16.40
profit or loss, except to the extent that it offsets an existing surplus on the same asset
carried in the asset revaluation reserve.
Any accumulated depreciation as at the revaluation date is eliminated against the gross FRS 16.35.b
carrying amount of the asset and the net amount is restated to the revalued amount of
the asset. Ê The revaluation surplus included in the asset revaluation reserve in
respect of an asset is transferred directly to retained earnings on retirement or
FRS 16.41
disposal of the asset. Ë
Freehold land has an unlimited useful life and therefore is not depreciated.
Depreciation is computed on a straight-line basis over the estimated useful lives of the FRS 16.73.b and c
assets as follows:
- Buildings: 40 years
- Plant and equipment: 3 to 15 years
- Furniture and fixtures: 5 to 20 years
Assets under construction included in plant and equipment are not depreciated as
these assets are not yet available for use.
The carrying values of property, plant and equipment are reviewed for impairment FRS 36.9
when events or changes in circumstances indicate that the carrying value may not be
recoverable.
The residual value, useful life and depreciation method are reviewed at each financial FRS 16.51
year-end, and adjusted prospectively, if appropriate. FRS 16.61
An item of property, plant and equipment is derecognised upon disposal or when no FRS 16.67
FRS 16.68
future economic benefits are expected from its use or disposal. Any gain or loss on de-
recognition of the asset is included in profit or loss in the year the asset is
derecognised.
Commentary:
Ê When an item of property, plant and equipment is revalued, any accumulated depreciation FRS 16.35.a
at the date of the revaluation may instead be restated proportionately with the change in
the gross carrying amount of the asset so that the carrying amount of the asset after
revaluation equals its revalued amount. This method is often used when an asset is
revalued by means of applying an index to its depreciated replacement cost.
Ë Alternatively, the entity may adopt a policy to make an annual transfer of the revaluation
FRS 16.41
surplus to retained earnings as the asset is used. In such a case, the amount of the
surplus transferred would be the difference between depreciation based on the revalued
carrying amount of the asset and depreciation based on the asset’s original cost.
Investment properties are properties that are either owned by the Group or leased FRS 40.5
under a finance lease that are held to earn rentals or for capital appreciation, or both,
rather than for use in the production or supply of goods or services, or for
administrative purposes, or in the ordinary course of business. Investment properties
comprise completed investment properties and properties that are being constructed FRS 40.8.e
or developed for future use as investment properties. Properties held under operating FRS 40.6
leases are classified as investment properties when the definition of an investment
property is met.
Investment properties are initially measured at cost, including transaction costs. FRS 40.20
Subsequent to initial recognition, investment properties are measured at fair value. Ë FRS 40.33
Gains or losses arising from changes in the fair values of investment properties are FRS 40.35
included in profit or loss in the year in which they arise.
Investment properties are derecognised when either they have been disposed of or FRS 40.66
when the investment property is permanently withdrawn from use and no future
economic benefit is expected from its disposal. Any gains or losses on the retirement or FRS 40.69
disposal of an investment property are recognised in profit or loss in the year of
retirement or disposal.
Commentary:
Investment properties
Ê Judgement is needed to determine whether a property qualifies as investment property. FRS 40.14 and 75.c
When classification is difficult, the entity should disclose the criteria developed by the
entity so that it can exercise that judgement consistently in accordance with the definition
of investment property.
Ë Alternatively, the entity may adopt the cost model which is to measure investment FRS 40.30 and 56
properties at cost less accumulated depreciation and accumulated impairment losses. In
these circumstances, disclosure about the cost basis and depreciation rates would be
required. This option is not available if the entity accounts for property interest held under FRS 40.34
an operating lease as investment property.
In addition, for any investment properties recorded at cost, FRS 40 requires disclosure FRS 40.79.e
about the fair value, including disclosures about the methods and significant assumptions
used to determine the fair value. Therefore, companies would still need to determine the
fair value of the investment properties. In the exceptional cases when an entity cannot
measure the fair value of investment properties reliably, it shall disclose:
(a) a description of the investment properties;
(b) an explanation of why fair value cannot be measured reliably; and
(c) if possible, the range of estimate within which fair value is highly likely to lie.
If an owner-occupied property becomes an investment property that will be carried at fair FRS 40.61
value, the entity shall treat any difference at that date between the carrying amount of
the property in accordance with FRS 16 and its fair value in the same way as a revaluation
in accordance with FRS 16.
Intangible assets acquired separately are measured initially at cost. Following initial FRS 38.24
FRS 38.33
acquisition, intangible assets are carried at cost less any accumulated amortisation and
any accumulated impairment losses. Ê Internally generated intangible assets, FRS 38.74
excluding capitalised development costs, are not capitalised and expenditure is
reflected in profit or loss in the year in which the expenditure is incurred.
The useful lives of intangible assets are assessed as either finite or indefinite. FRS 38.88
Intangible assets with finite useful lives are amortised over the estimated useful lives FRS 38.97 and
118.b
and assessed for impairment whenever there is an indication that the intangible asset FRS 36.9
may be impaired. The amortisation period and the amortisation method are reviewed at FRS 38.104
least at each financial year-end. Changes in the expected useful life or the expected
pattern of consumption of future economic benefits embodied in the asset is accounted
for by changing the amortisation period or method, as appropriate, and are treated as
changes in accounting estimates.
Intangible assets with indefinite useful lives or not yet available for use are tested for FRS 36.10.a
impairment annually Ë, or more frequently if the events and circumstances indicate FRS 36.9
that the carrying value may be impaired either individually or at the cash-generating
unit level. Such intangible assets are not amortised. The useful life of an intangible FRS 38.107
asset with an indefinite useful life is reviewed annually to determine whether the useful FRS 38.109
life assessment continues to be supportable. If not, the change in useful life from
indefinite to finite is made on a prospective basis.
Gains or losses arising from de-recognition of an intangible asset are measured as the FRS 38.113
difference between the net disposal proceeds and the carrying amount of the asset and
are recognised in profit or loss when the asset is derecognised.
a) Brands
The brands were acquired in business combinations. The useful lives of the FRS 38.118.a
brands are estimated to be indefinite because based on the current market FRS 38.122.a
share of the brands, management believes there is no foreseeable limit to the
period over which the brands are expected to generate net cash inflows for the
Group.
b) Research and development costs
Research costs are expensed as incurred. Deferred development costs arising FRS 38.54
FRS 38.57
from development expenditures on an individual project are recognised as an
intangible asset when the Group can demonstrate the technical feasibility of
completing the intangible asset so that it will be available for use or sale, its
intention to complete and its ability to use or sell the asset, how the asset will
generate future economic benefits, the availability of resources to complete
and the ability to measure reliably the expenditures during the development.
Commentary:
Intangible assets
Ê Alternatively, the entity may adopt the revaluation model which is to measure intangible FRS 38.75
assets at fair value less accumulated amortisation and accumulated impairment losses.
This option is only available if the fair value can be determined by reference to an active
market.
Ë Please refer to commentary no.6 of Note 2.4(b) Business combinations and goodwill.
Land use rights are initially measured at cost. Following initial recognition, land use
rights are measured at cost less accumulated amortisation. The land use rights are
amortised on a straight-line basis over the lease term of 50 years.
Commentary:
Ê Long-term land-use rights are leases under the definition of FRS 17. In this illustration, it FRS 17.8
is assumed that the lease does not transfer substantially all the risks and rewards
incidental to ownership of the land. Therefore, the lease is an operating lease and the
payments made on acquiring the land-use right represent prepaid lease payments.
The Group assesses at each reporting date whether there is an indication that an asset FRS 36.9
may be impaired. If any indication exists, or when an annual impairment testing for an
asset is required, the Group makes an estimate of the asset’s recoverable amount.
An asset’s recoverable amount is the higher of an asset’s or cash-generating unit’s fair FRS 36.18 and 22
value less costs of disposal and its value in use and is determined for an individual
asset, unless the asset does not generate cash inflows that are largely independent of
those from other assets or groups of assets. Where the carrying amount of an asset or FRS 36.59
cash-generating unit exceeds its recoverable amount, the asset is considered impaired
and is written down to its recoverable amount.
Impairment losses of continuing operations are recognised in profit or loss, except for FRS 36.60
assets that are previously revalued where the revaluation was taken to other
comprehensive income. In this case, the impairment is also recognised in other
comprehensive income up to the amount of any previous revaluation.
A previously recognised impairment loss is reversed only if there has been a change in FRS 36.114
the estimates used to determine the asset’s recoverable amount since the last
impairment loss was recognised. If that is the case, the carrying amount of the asset is
increased to its recoverable amount. That increase cannot exceed the carrying amount
that would have been determined, net of depreciation, had no impairment loss been FRS 36.117
recognised previously. Such reversal is recognised in profit or loss unless the asset is
measured at revalued amount, in which case the reversal is treated as a revaluation FRS 36.119
increase.
2.12 Subsidiaries
A subsidiary is an investee that is controlled by the Group. The Group controls an FRS 110.6
investee when it is exposed, or has rights, to variable returns from its involvement with
the investee and has the ability to affect those returns through its power over the
investee.
In the Company’s separate financial statements, investments in subsidiaries are FRS 27.17.c
accounted for at cost less impairment losses. Ê
Commentary:
Subsidiaries
Ê Alternatively, the entity may choose to account for its investment in subsidiary in FRS 27.10.b
accordance with FRS 39. The same accounting must be applied for all investments in
subsidiaries. When an entity accounts for a subsidiary at fair value in accordance with FRS
39, this treatment continues when the subsidiary is subsequently classified as held for
sale.
A joint arrangement is a contractual arrangement whereby two or more parties have FRS 111.4
FRS 111.7
joint control. Joint control is the contractually agreed sharing of control of an
arrangement, which exists only when decisions about the relevant activities require the
unanimous consent of the parties sharing control.
A joint arrangement is classified either as joint operation or joint venture, based on the FRS 111.14
rights and obligations of the parties to the arrangement.
To the extent the joint arrangement provides the Group with rights to the assets and FRS 111.15
obligations for the liabilities relating to the arrangement, the arrangement is a joint
operation. To the extent the joint arrangement provides the Group with rights to the FRS 111.16
net assets of the arrangement, the arrangement is a joint venture.
a) Joint operations
FRS 111.20
The Group recognises in relation to its interest in a joint operation,
(a) its assets, including its share of any assets held jointly;
(b) its liabilities, including its share of any liabilities incurred jointly;
(c) its revenue from the sale of its share of the output arising from the joint
operation;
(d) its share of the revenue from the sale of the output by the joint operation; and
(e) its expenses, including its share of any expenses incurred jointly.
The Group accounts for the assets, liabilities, revenues and expenses relating to its FRS 111.21
interest in a joint operation in accordance with the accounting policies applicable to
the particular assets, liabilities, revenues and expenses.
b) Joint ventures
The Group recognises its interest in a joint venture as an investment and accounts FRS 112.21.b.i
for the investment using the equity method. The accounting policy for investment
in joint venture is set out in Note 2.14.
Commentary:
An associate is an entity over which the Group has the power to participate in the FRS 28.3
financial and operating policy decisions of the investee but does not have control or
joint control of those policies.
The Group account for its investments in associates and joint ventures using the equity FRS 28.16
FRS 28.32
method from the date on which it becomes an associate or joint venture.
On acquisition of the investment, any excess of the cost of the investment over the FRS 28.32
Group’s share of the net fair value of the investee’s identifiable assets and liabilities is
accounted as goodwill and is included in the carrying amount of the investment. Any
excess of the Group’s share of the net fair value of the investee’s identifiable assets
and liabilities over the cost of the investment is included as income in the
determination of the entity’s share of the associate or joint venture’s profit or loss in
the period in which the investment is acquired.
Under the equity method, the investment in associates or joint ventures are carried in FRS 28.10
the balance sheet at cost plus post-acquisition changes in the Group’s share of net
assets of the associates or joint ventures. The profit or loss reflects the share of results
of the operations of the associates or joint ventures. Distributions received from joint
ventures or associates reduce the carrying amount of the investment. Where there has
been a change recognised in other comprehensive income by the associates or joint
venture, the Group recognises its share of such changes in other comprehensive
income. Unrealised gains and losses resulting from transactions between the Group FRS 28.28
and associate or joint venture are eliminated to the extent of the interest in the
associates or joint ventures.
When the Group’s share of losses in an associate or joint venture equals or exceeds its FRS 28.38
interest in the associate or joint venture, the Group does not recognise further
losses, unless it has incurred obligations or made payments on behalf of the associate
or joint venture.
After application of the equity method, the Group determines whether it is necessary to FRS 28.40
recognise an additional impairment loss on the Group’s investment in associate or joint
ventures. The Group determines at the end of each reporting period whether there is FRS 28.42
any objective evidence that the investment in the associate or joint venture is impaired.
If this is the case, the Group calculates the amount of impairment as the difference
between the recoverable amount of the associate or joint venture and its carrying value
and recognises the amount in profit or loss.
The financial statements of the associates and joint ventures are prepared as the same FRS 28.33 and 44
FRS 28.35
reporting date as the Company. Where necessary, adjustments are made to bring the
accounting policies in line with those of the Group.
Commentary:
Ê In this illustration, loss of significant influence over associate or joint control over joint
venture is not significant to the Group.
Illustrative accounting policy upon loss of significant influence over associate or joint
control over joint venture:
Upon loss of significant influence or joint control over the associate or joint venture, FRS 28.22
the Group measures the retained interest at fair value. Any difference between the fair
value of the aggregate of the retained interest and proceeds from disposal and the
carrying amount of the investment at the date the equity method was discontinued is
recognised in profit or loss.
Ì The interest in an associate or a joint venture is the carrying amount of the investment in FRS 28.38
the associate or joint venture under the equity method together with any long-term
interests that, in substance, form part of the investor’s net investment in the associate or
joint venture. For example, an item for which settlement is neither planned nor likely to
occur in the foreseeable future is, in substance, an extension of the entity’s investment in
that associate or joint venture. Such items may include preference shares and long-term
receivables or loans but do not include trade receivables, trade payables or any long-term
receivables for which adequate collateral exists, such as secured loans.
Í The financial statements of the associate or joint venture are prepared as of the same FRS 28.33
reporting date as the Company unless it is impracticable to do so. When the financial FRS 28.34
statements of an associate or joint venture used in applying the equity method are
prepared as of a different reporting date from that of the Company, adjustments are made
for the effects of significant transactions or events that occur between that date and the
reporting date of the Company. In any case, the difference between the end of the
reporting period of the associate or joint venture and that of the investor shall be no more
than three months. The length of the reporting periods and any difference between the
ends of the reporting periods shall be the same from period to period.
When the financial statements of an associate or joint venture used in applying the equity FRS 112.22.b
method are as of a reporting date or for a period that is different from that of the
Company, the reporting date of the financial statements of the associate or joint venture
and the reason for using a different reporting date or different period shall be disclosed.
a) Financial assets
b) Financial liabilities
Initial recognition and measurement
Financial liabilities are recognised when, and only when, the Group becomes a FRS 39.14
party to the contractual provisions of the financial instrument. The Group
determines the classification of its financial liabilities at initial recognition.
All financial liabilities are recognised initially at fair value plus in the case of FRS 39.43
financial liabilities not at fair value through profit or loss, directly attributable
transaction costs.
Subsequent measurement
FRS 39.56
After initial recognition, financial liabilities that are not carried at fair value FRS 107.B5.e
through profit or loss are subsequently measured at amortised cost using the
effective interest method. Gains and losses are recognised in profit or loss
when the liabilities are derecognised, and through the amortisation process.
De-recognition
A financial liability is de-recognised when the obligation under the liability is FRS 39.39
discharged or cancelled or expires. When an existing financial liability is FRS 39.40 and 41
replaced by another from the same lender on substantially different terms, or
the terms of an existing liability are substantially modified, such an exchange
or modification is treated as a de-recognition of the original liability and the
recognition of a new liability, and the difference in the respective carrying
amounts is recognised in profit or loss.
Commentary:
In this illustration, transfers between levels of the fair value hierarchy are not common for
the Group.
Illustrative accounting policy for transfers between levels of the fair value hierarchy.
FRS 113.95
Transfers between levels of the fair value hierarchy are deemed to have occurred on
the date of the event or change in circumstances that caused the transfers.
The policy for determining the timing of transfers between levels of the fair include the
following:
(a) The date of the event or change in circumstances that caused the transfer
(b) the beginning of the reporting period
(c) the end of the reporting period
The policy about the timing of recognising transfers shall be the same for transfers into
levels as for transfers out of the levels.
Commentary (continued):
Ë In this illustration, the Group does not have regular way purchases and sales of financial
assets.
Illustrative accounting policy for regular way purchase and sale of a financial asset:
All regular way purchases and sales of financial assets are recognised or derecognised FRS 39.9
on the trade date i.e. the date that the Group commits to purchase or sell the asset. FRS 39.38
Regular way purchases or sales are purchases or sales of financial assets that require
delivery of assets within the period generally established by regulation or convention
in the marketplace concerned.
Alternatively, regular way purchases and sales can be accounted for on settlement dates.
Financial assets and financial liabilities at fair value through profit or loss
Ì In this illustration, financial assets and financial liabilities at fair value through profit or
loss which are classified as held for trading are not significant to the Group.
Illustrative accounting policies for financial assets at fair value through profit or loss which
are classified as held for trading (if significant):
Financial assets at fair value through profit or loss include financial assets held for FRS 39.9
trading. Î Financial assets are classified as held for trading if they are acquired for the
purpose of selling or repurchasing in the near term. This category includes derivative
financial instruments entered into by the Group. Derivatives, including separated
embedded derivatives are also classified as held for trading.
Subsequent to initial recognition, financial assets at fair value through profit or loss FRS 39.46
FRS 39.55.a
are measured at fair value. Any gains or losses arising from changes in fair value of the FRS 107.AGB5.e
financial assets are recognised in profit or loss. Net gains or net losses on financial
assets at fair value through profit or loss include exchange differences, interest and
dividend income. Ï
Derivatives embedded in host contracts are accounted for as separate derivatives and FRS 39.11
recorded at fair value if their economic characteristics and risks are not closely related
to those of the host contracts and the host contracts are not measured at fair value
with changes in fair value recognised in profit or loss. These embedded derivatives are
measured at fair value with changes in fair value recognised in profit or loss.
Reassessment only occurs if there is a change in the terms of the contract that INT FRS 109.7
significantly modifies the cash flows that would otherwise be required.
Illustrative accounting policies for financial liabilities at fair value through profit or loss
which are classified as held for trading (if significant):
Financial liabilities at fair value through profit or loss include financial liabilities held FRS 39.9
FRS 39.47.a
for trading. Î Financial liabilities are classified as held for trading if they are acquired
for the purpose of selling in the near term. This category includes derivative financial
instruments entered into by the Group that are not designated as hedging instruments
in hedge relationships. Separated embedded derivatives are also classified as held for
trading unless they are designated as effective hedging instruments.
Subsequent to initial recognition, financial liabilities at fair value through profit or loss FRS 39.47
are measured at fair value. Any gains or losses arising from changes in fair value of the FRS 39.55.b
FRS 107.B5.e
financial liabilities are recognised in profit or loss.
Commentary (continued):
Held–to-maturity investments
Financial assets or financial liabilities designated as at fair value through profit or loss
Î In this illustration, no financial instrument has been designated as financial assets or FRS 107.AGB5.a
financial liabilities at fair value through profit or loss. The following disclosures of
accounting policies apply if there is any financial asset or financial liability designated as at
fair value through profit or loss:
(a) The nature of the financial assets or financial liabilities the entity has designated as
at fair value through profit or loss;
(b) The criteria for so designating such financial assets or financial liabilities on initial
recognition; and
(c) How the entity has satisfied the conditions in paragraph 9, 11A or 12 of FRS 39 for
such designation. For instruments designated as at fair value through profit or loss
in accordance with FRS 39.9.b.i, that disclosure includes a narrative description of
the circumstances underlying the measurement or recognition inconsistency that
would otherwise arise. For instruments designated as at fair value through profit or
loss in accordance with paragraph FRS 39.9.b.ii, that disclosure includes a narrative
description of how designation at fair value through profit or loss is consistent with
the entity’s documented risk management or investment strategy.
Net gain or loss on financial assets at fair value through profit or loss
Ï Alternatively, interest and dividend income may be recognised separately. FRS 107.AGB5.e
Commentary (continued):
The Group assesses at each reporting date whether there is any objective evidence that FRS 39.58
a financial asset is impaired. Ê
If an available-for-sale financial asset is impaired, an amount comprising the FRS 39.67 and
difference between its acquisition cost (net of any principal repayment and 68
amortisation) and its current fair value, less any impairment loss previously
recognised in profit or loss, is transferred from other comprehensive income
and recognised in profit or loss. Reversals of impairment losses in respect of
FRS 39.69
equity instruments are not recognised in profit or loss; increase in their fair
value after impairment are recognised directly in other comprehensive income.
Commentary:
Ê When the terms of financial assets that would otherwise be past due or impaired have FRS 107.AGB5.g
been renegotiated, the entity shall disclose the accounting policy for financial assets that
are the subject of renegotiated terms.
Ë When there is an impairment loss, the carrying amount of the asset may be reduced either FRS 39.63
directly or through the use of an allowance account.
Ì The determination of what is “significant” or “prolonged” depends on the circumstances at FRS 39.59 and
61
the end of the reporting period. This requires judgement and so it varies among entities.
Cash and cash equivalents comprise cash at bank and on hand, demand deposits, and FRS 7.46
short-term, highly liquid investments that are readily convertible to known amount of
cash and which are subject to an insignificant risk of changes in value. These also FRS 7.6
include bank overdrafts that form an integral part of the Group’s cash management. FRS 7.8
The Group principally operates fixed price contracts. Contract revenue and contract FRS 11.22
FRS 11.25
costs are recognised as revenue and expenses respectively by reference to the stage of
completion of the contract activity at the end of the reporting period (the percentage
of completion method), when the outcome of a construction contract can be estimated
reliably.
When the outcome of a construction contract cannot be estimated reliably (principally FRS 11.32
during early stages of a contract), contract revenue is recognised only to the extent of
contract costs incurred that are likely to be recoverable and contract costs are
recognised as expense in the period in which they are incurred.
An expected loss on the construction contract is recognised as an expense immediately FRS 11.36
FRS 11.22
when it is probable that total contract costs will exceed total contract revenue. FRS 11.32
In applying the percentage of completion method, revenue recognised corresponds to FRS 11.30.a
the total contract revenue (as defined below) multiplied by the actual completion rate
based on the proportion of total contract costs (as defined below) incurred to date and
the estimated costs to complete. Ê
Commentary:
Stage of completion
Ê The stage of completion of a contract may be determined in a variety of ways. The entity FRS 11.9
uses the method that measures reliably the work performed. Depending on the nature of
the contract, other acceptable methods include surveys of work performed and
completion of a physical proportion of the contract work.
Development properties are properties acquired or being constructed for sale in the FRS 2.6.a and b
ordinary course of business, rather than to be held for the Group’s own use, rental or
capital appreciation.
Development properties are held as inventories and are measured at the lower of cost FRS 2.9
Commentary:
Sale of completed development property and pre-completion contracts for sale of development
property
Ê In this illustration, the Group does not have any sale of completed development property
and pre-completion contracts for sale of development property.
For illustration of accounting policies relating to sale of completed development property
and pre-completion contracts for sale of development property, please refer to Appendix
A-3 Agreements for the construction of real estate.
Ë Alternatively, the Group can capitalise commission paid on real estate as an asset and
amortise it as the entity expects to recognise the related revenue.
Illustrative accounting policy for capitalisation of commission paid on real estate contracts.
Non-refundable commissions paid to sales or marketing agents on the sale of real
estate units are capitalised and amortised to profit or loss as the Group expects to
recognise the related revenue.
2.20 Inventories
Inventories are stated at the lower of cost and net realisable value. Costs incurred in FRS 2.9, 10 and
36.a
bringing the inventories to their present location and condition are accounted for as
follows:
- Raw materials: purchase costs on a first-in first-out basis. Ê FRS 2.25
- Finished goods and work-in-progress: costs of direct materials and labour and a FRS 2.12 and 13
proportion of manufacturing overheads based on normal operating capacity. These
costs are assigned on a first-in first-out basis.
Where necessary, allowance is provided for damaged, obsolete and slow moving items
to adjust the carrying value of inventories to the lower of cost and net realisable value.
Net realisable value is the estimated selling price in the ordinary course of business, FRS 2.6 and 36.a
less estimated costs of completion and the estimated costs necessary to make the sale.
Commentary:
Cost formulas
Ê Alternatively, the costs may be assigned by using the weighted average cost formula. An FRS 2.25
entity shall use the same cost formula for all inventories having a similar nature and use to
the entity. For inventories with a different nature or use, different cost formulas may be
justified.
2.21 Provisions Ê
General
Provisions are recognised when the Group has a present obligation (legal or FRS 37.14
constructive) as a result of a past event, it is probable that an outflow of resources
embodying economic benefits will be required to settle the obligation and the amount
of the obligation can be estimated reliably.
Provisions are reviewed at the end of each reporting period and adjusted to reflect the FRS 37.59
current best estimate. If it is no longer probable that an outflow of economic resources
will be required to settle the obligation, the provision is reversed. If the effect of the FRS 37.45-47
time value of money is material, provisions are discounted using a current pre-tax rate
that reflects, where appropriate, the risks specific to the liability. When discounting is FRS 37.60
used, the increase in the provision due to the passage of time is recognised as a finance
cost.
Warranty provisions
Provisions for warranty-related costs are recognised when the product is sold or
service provided. Initial recognition is based on historical experience. The initial
estimate of warranty-related costs is revised annually.
Commentary:
Ê In this illustration, the Group does not have any decommissioning liability or restructuring
provision.
Illustrative accounting policy for de-commissioning liability when the related asset is
measured using the cost model:
The provision for de-commissioning costs arose on construction of a manufacturing FRS 16.16.c
facility for the production of fire retardant materials. De-commissioning costs are
provided at the present value of expected costs to settle the obligation using FRS 37.45
estimated cash flows and are recognised as part of the cost of that particular asset. FRS 37.47
The cash flows are discounted at a current pre-tax rate that reflects the risks specific INT FRS 101.8
to the de-commissioning liability. The unwinding of the discount is expensed as
incurred and recognised in profit or loss as a finance cost. The estimated future costs FRS 37.59
of decommissioning are reviewed annually and adjusted as appropriate. Changes in INT FRS 101.5
the estimated future costs or in the discount rate applied are added to or deducted
from the cost of the asset.
Restructuring provision
Government grants are recognised when there is reasonable assurance that the grant FRS 20.39.a
FRS 20.7
will be received and all attaching conditions will be complied with. Where the grant
FRS 20.23 and 24
relates to an asset, the fair value is recognised as deferred capital grant on the balance
sheet and is amortised to profit or loss over the expected useful life of the relevant
asset by equal annual instalments. ÊË
Where loans or similar assistance are provided by governments or related institutions FRS 20.10A
with an interest rate below the current applicable market rate, the effect of this
favourable interest is regarded as additional government grant.
Commentary:
Ê Alternatively, government grants related to an asset may be presented in the balance FRS 20.24
sheet by deducting the grant in arriving at the carrying amount of the asset.
In this illustration, it is assumed that the Group did not receive non-monetary government FRS 20.23
grants. If an entity receives non-monetary government grant, the asset and the grant may
be accounted for either at fair value or at nominal amount.
FRS 20.12
Ë Government grant shall be recognised in profit or loss on a systematic basis over the
periods in which the entity recognises as expenses the related costs for which the grants FRS 20.29
are intended to compensate. Grants related to income may be presented as a credit in
profit or loss, either separately or under a general heading such as “Other income”.
Alternatively, they are deducted in reporting the related expenses.
FRS 107.21
2.23 Financial guarantee
A financial guarantee contract is a contract that requires the issuer to make specified FRS 39.9
payments to reimburse the holder for a loss it incurs because a specified debtor fails to
make payment when due in accordance with the terms of a debt instrument.
Financial guarantees are recognised initially as a liability at fair value, adjusted for FRS 39.43
transaction costs that are directly attributable to the issuance of the guarantee.
Subsequent to initial recognition, financial guarantees are recognised as income in
profit or loss over the period of the guarantee. If it is probable that the liability will be FRS 39.47.c
higher than the amount initially recognised less amortisation, the liability is recorded at
the higher amount with the difference charged to profit or loss.
Convertible redeemable preference shares are separated into liability and equity FRS 32.28
components based on the terms of the contract.
FRS 32.32
On issuance of the convertible redeemable preference shares, the fair value of the
liability component is determined using a market rate for an equivalent non-convertible
bond. This amount is classified as a financial liability measured at amortised cost (net
of transaction costs) until it is extinguished on conversion or redemption in accordance
with the accounting policy set out in Note 2.15(b).
The remainder of the proceeds is allocated to the conversion option that is recognised FRS 32.31
and included in shareholders’ equity. Transaction costs are deducted from equity, net
of associated income tax. The carrying amount of the conversion option is not
remeasured in subsequent years.
FRS 32.38
Transaction costs are apportioned between the liability and equity components of the
convertible redeemable preference shares based on the allocation of proceeds to the
liability and equity components when the instruments are initially recognised.
Commentary:
Ê In this illustration, the convertible preference shares are classified as compound financial
instruments with liability and equity components based on the terms of the contract.
Illustrative accounting policy if the convertible instruments are classified as hybrid
instruments with embedded derivative:
Convertible loan with conversion option are accounted for as financial liability with an FRS 39.AG28
embedded equity conversion derivative based on the terms of the contract.
On issuance of convertible loans, the embedded option is recognised at its fair value as
derivative liability with subsequent changes in fair value recognised in profit or loss.
The remainder of the proceeds is allocated to the liability component that is carried at
amortised cost until the liability is extinguished on conversion or redemption.
When an equity conversion option is exercised, the carrying amounts of the liability
component and the equity conversion option are derecognised with a corresponding
recognition of share capital.
Commentary:
Employee leave entitlement
Ê In this illustration, it is assumed that employee leave entitlement is not significant and is
not included in the list of significant accounting policies.
Illustrative accounting policy for employee leave entitlement (if significant): FRS 19.13
Employee entitlements to annual leave are recognised as a liability when they are
accrued to the employees. The undiscounted liability for leave expected to be settled
wholly before twelve months after the end of the reporting period is recognised for
services rendered by employees up to the end of the reporting period. The liability for FRS 19.155
FRS 19.156
leave expected to be settled beyond twelve months from the end of the reporting
period is determined using the projected unit credit method. The net total of service
costs, net interest on the liability and remeasurement of the liability are recognised in
profit or loss.
Commentary:
Termination benefit
Ë In this illustration, the Group does not provide any termination benefit to its employees.
Illustrative accounting policy for termination benefit:
Termination benefits are employee benefits provided in exchange for the termination FRS 19.8
of an employee’s employment as a result of either an entity’s decision to terminate an
employee’s employment before the normal retirement date or an employee’s decision
to accept an offer of benefits in exchange for the termination of employment.
A liability and expense for a termination benefits is recognised at the earlier of when FRS 19.165
the entity can no longer withdraw the offer of those benefits and when the entity FRS 19.169
recognises related restructuring costs. Initial recognition and subsequent changes to
termination benefits are measured in accordance with the nature of the employment
benefits, short-term employee benefits, or other long-term employee benefits.
Ì In this illustration, the Group does not have any defined benefit plans. For illustration of
change in accounting policies relating to Revised FRS 19 Employee Benefits for defined
benefit plan, please refer to Appendix A-4 Defined benefit plans.
Commentary (continued):
In this illustration, the employee share option plans are equity-settled share-based
payment transactions. Cash-settled share-based payment transactions are not illustrated.
Illustrative accounting policy for cash-settled share-based payment transactions:
The cost of a cash-settled share-based payment transaction is measured initially at FRS 102.30
fair value at the grant date. This fair value is recognised in profit or loss over the FRS 102.32
FRS 102.33
vesting period with recognition of a corresponding liability. Until the liability is settled,
it is remeasured at each reporting date with changes in fair value recognised in profit
or loss.
In situations where equity instruments are issued and some or all of the goods or services
FRS 102.13A
received by the entity as consideration cannot be specifically identified, the unidentified
goods or services received (or to be received) are measured as the difference between the
fair value of the share-based payment transaction and the fair value of any identifiable
goods or services received at the grant date. This is then capitalised or expensed as
appropriate.
Vesting condition are conditions that determine whether the entity receives the services FRS 102.App A
that entitle the counterparty to receive cash, other assets or equity instruments of the
entity under a share-based payment arrangement.
Vesting conditions are limited to two types: FRS 102.App A
The transfer of the employee share option reserve to retained earnings upon expiry of the
option is not mandatory. Alternatively, the employee share option reserve may be kept as
a separate reserve upon expiry of the option.
2.27 Leases
a) As lessee
Finance leases which transfer to the Group substantially all the risks and FRS 17.8
rewards incidental to ownership of the leased item, are capitalised at the
FRS 17.20
inception of the lease at the fair value of the leased asset or, if lower, at the
present value of the minimum lease payments. Any initial direct costs are also
added to the amount capitalised. Lease payments are apportioned between the FRS 17.25
finance charges and reduction of the lease liability so as to achieve a constant
rate of interest on the remaining balance of the liability. Finance charges are
charged to profit or loss. Contingent rents, if any, are charged as expenses in
the periods in which they are incurred.
Capitalised leased assets are depreciated over the shorter of the estimated FRS 17.27
useful life of the asset and the lease term, if there is no reasonable certainty
that the Group will obtain ownership by the end of the lease term.
Operating lease payments are recognised as an expense in profit or loss on a FRS 17.33
INT FRS 15.5
straight-line basis over the lease term. The aggregate benefit of incentives
provided by the lessor is recognised as a reduction of rental expense over the
lease term on a straight-line basis.
b) As lessor
Leases where the Group retains substantially all the risks and rewards of FRS 17.8
FRS 17.52
ownership of the asset are classified as operating leases. Initial direct costs
incurred in negotiating an operating lease are added to the carrying amount of
the leased asset and recognised over the lease term on the same bases as
rental income. The accounting policy for rental income is set out in Note
2.29(c). Contingent rents are recognised as revenue in the period in which
they are earned.
Non-current assets and disposal groups classified as held for sale are measured at the FRS 105.15
lower of their carrying amount and fair value less costs to sell. Non-current assets and FRS 105.6
disposal groups are classified as held for sale if their carrying amounts will be
recovered principally through a sale transaction rather than through continuing use. A FRS 105.32
component of the Group is classified as a ‘discontinued operation’ when the criteria to
be classified as held for sale have been met or it has been disposed of and such a
component represents a separate major line of business or geographical area of
operations or is part of a single coordinated plan to dispose of a separate major line of
business or geographical area of operations.
Property, plant and equipment and intangible assets once classified as held for sale are FRS 105.25
not depreciated or amortised.
2.29 Revenue
Revenue is recognised to the extent that it is probable that the economic benefits will FRS 18.14, 20 and 29
FRS 18.35.a
flow to the Group and the revenue can be reliably measured, regardless of when the FRS 18.9
payment is made. Revenue is measured at the fair value of consideration received or
receivable, taking into account contractually defined terms of payment and excluding
taxes or duty.
a) Sale of goods
FRS 18.14
Revenue from sale of goods is recognised upon the transfer of significant risk
and rewards of ownership of the goods to the customer, usually on delivery of
goods. Revenue is not recognised to the extent where there are significant
uncertainties regarding recovery of the consideration due, associated costs or
the possible return of goods.
b) Rendering of services
Revenue from the installation of fire prevention equipment is recognised by FRS 18.20
reference to the stage of completion at the end of the reporting period. Stage
of completion is determined by reference to labour hours incurred to date as a
percentage of total estimated labour hours for each contract. Where the FRS 18.26
contract outcome cannot be measured reliably, revenue is recognised to the
extent of the expenses recognised that are recoverable.
c) Rental income
FRS 17.50
Rental income arising from operating leases on investment properties is INT FRS 15.5
accounted for on a straight-line basis over the lease terms. The aggregate
costs of incentives provided to lessees are recognised as a reduction of rental
income over the lease term on a straight-line basis.
Commentary:
Revenue
Ê In this illustration, revenue from interest income and dividend income is not significant to
the Group.
Illustrative accounting policy for interest income and dividend income (if significant):
Interest income
Interest income is recognised using the effective interest method. FRS 18.30.a
Dividend income
Dividend income is recognised when the Group’s right to receive payment is FRS 18.30.c
established.
2.30 Taxes
b) Deferred tax
Deferred tax is provided using the liability method on temporary differences at
the end of the reporting period between the tax bases of assets and liabilities
and their carrying amounts for financial reporting purposes.
Deferred tax liabilities are recognised for all temporary differences, except:
- Where the deferred tax liability arises from the initial recognition of FRS 12.22.c
goodwill or of an asset or liability in a transaction that is not a business
combination and, at the time of the transaction, affects neither the
accounting profit nor taxable profit or loss; and
- In respect of taxable temporary differences associated with investments in FRS 12.39
subsidiaries, associates and interests in joint ventures, where the timing of
the reversal of the temporary differences can be controlled and it is
probable that the temporary differences will not reverse in the foreseeable
future.
Deferred tax assets are recognised for all deductible temporary differences, FRS 12.34
the carry forward of unused tax credits and unused tax losses, to the extent
that it is probable that taxable profit will be available against which the
deductible temporary differences, and the carry forward of unused tax credits
and unused tax losses can be utilised except:
FRS 12.24
- Where the deferred tax asset relating to the deductible temporary
difference arises from the initial recognition of an asset or liability in a
transaction that is not a business combination and, at the time of the
transaction, affects neither the accounting profit nor taxable profit or loss;
and
FRS 12.44
- In respect of deductible temporary differences associated with
investments in subsidiaries, associates and interests in joint ventures,
deferred tax assets are recognised only to the extent that it is probable
that the temporary differences will reverse in the foreseeable future and
taxable profit will be available against which the temporary differences can
be utilised.
c) Sales tax
Revenues, expenses and assets are recognised net of the amount of sales tax FRS 18.8
except:
- Where the sales tax incurred on a purchase of assets or services is not
recoverable from the taxation authority, in which case the sales tax is
recognised as part of the cost of acquisition of the asset or as part of the
expense item as applicable; and
- Receivables and payables that are stated with the amount of sales tax
included.
Proceeds from issuance of ordinary shares are recognised as share capital in equity. FRS 32.37
Incremental costs directly attributable to the issuance of ordinary shares are deducted
against share capital.
The Group’s own equity instruments, which are reacquired (treasury shares) are FRS 32.33
recognised at cost and deducted from equity. No gain or loss is recognised in profit or
loss on the purchase, sale, issue or cancellation of the Group’s own equity instruments.
Any difference between the carrying amount of treasury shares and the consideration
received, if reissued, is recognised directly in equity. Voting rights related to treasury
shares are nullified for the Group and no dividends are allocated to them respectively.
2.33 Contingencies
Commentary:
Commentary (continued):
Ê In this illustration, it is assumed that these are the judgements made in applying
accounting policies that has the most significant effect on the amounts recognised in the
financial statements.
Illustrative disclosures of other judgements made in applying accounting policies:
The key assumptions concerning the future and other key sources of estimation
uncertainty at the end of the reporting period are discussed below. The Group based its
assumptions and estimates on parameters available when the financial statements
were prepared. Existing circumstances and assumptions about future developments,
however, may change due to market changes or circumstances arising beyond the
control of the Group. Such changes are reflected in the assumptions when they occur.
Commentary:
Key sources of estimation uncertainty
Ê In this illustration, it is assumed that these are the key assumptions and estimation
uncertainty that have a significant risk of causing a material adjustment to the carrying
amounts of the assets and liabilities within the next financial year.
Illustrative disclosures of other key sources of estimation uncertainty:
Construction contracts
The Group recognises contract revenue by reference to the stage of completion of
the contract activity at the end of each reporting period, when the outcome of a
construction contract can be estimated reliably. The stage of completion is
measured by reference to the proportion that contract costs incurred for work
performed to date to the estimated total contract costs. Significant assumptions are
required to estimate the total contract costs and the recoverable variation works
that affect the stage of completion. In making these estimates, management has
relied on past experience and knowledge of the project engineers. The carrying
amounts of assets and liabilities arising from construction contracts at the end of
each reporting period are disclosed in Note X to the financial statements. If the
estimated total contract cost had been 5% higher than management estimate, the
carrying amount of the assets and liabilities arising from construction contracts
would have been $XXX (2013: $XXX) lower and $XXX (2013: $XXX) higher
respectively.
Commentary (continued):
Key sources of estimation uncertainty (continued)
Development costs
Development costs are capitalised in accordance with the accounting policy in Note
X. Initial capitalisation of costs is based on management’s judgement that
technological and economic feasibility is confirmed, usually when a product
development project has reached a defined milestone according to an established
project management model. In determining the amounts to be capitalised,
management makes assumptions regarding the expected future cash generation of
the project, discount rates to be applied and the expected period of benefits. As at
31 December 2014, the carrying amount of development costs capitalised at the
end of the reporting period was $XXX (2013: $XXX). If the expected future cash
generation of the project had been 20% lower than management’s estimate, the
carrying amount of development costs would have been $XXX (2013: $XXX) lower.
4. Revenue
Group
2014 2013
$’000 $’000
5. Interest income
Group
2014 2013
$’000 $’000
Included in interest income from loans and receivables is interest of $98,000 (2013: FRS 107.20.d
$92,000) from an impaired loan to a fellow subsidiary (Note 21).
6. Other income Ì
Group
2014 2013
$’000 $’000
Amortisation of deferred capital grants (Note 29) 239 180 FRS 20.39
Rental income from investment properties (Note 14) 345 291 FRS 40.75.f.i
Net gain from fair value adjustment of investment properties (Note 14) 489 129 FRS 40.76.d
Net gain on disposal of property, plant and equipment – 120 FRS 1.98.c
Net fair value gains on financial instruments:
- Held for trading investment securities 135 95 FRS 107.20.a.i
- Derivatives 43 56 FRS 107.20.a.i
- Available-for-sale financial assets (transferred from equity on
disposal of investment securities) 120 15 FRS 107.20.a.ii
7. Finance costs
Group
2014 2013
$’000 $’000
8. Other expenses Ì
2014 2013
$’000 $’000
The following items have been included in arriving at profit before tax from continuing FRS 1.97 and 104
operations:
Group
2014 2013
$’000 $’000
Audit fees:
SGX 1207.6a
- Auditors of the Company 400 400
- Other auditors 50 50
Non-audit fees:
SGX 1207.6a
- Auditors of the Company 250 250
- Other auditors 30 30
Depreciation of property, plant and equipment 3,043 2,838 FRS 1.104
Inventories recognised as an expense in cost of sales (Note 25) 80,567 82,122 FRS 2.36.d
Legal and other professional fees 325 228 FRS 1.97 and 104
Commentary:
Separate disclosure of income and expenses
Ê FRS 107.20.b only requires total income (calculated using the effective interest method) for FRS 107.20.b
financial assets that are not at fair value through profit or loss to be disclosed.
In this illustration, we have illustrated interest income aggregated by categories of financial FRS 1.97
asset. Although this level of aggregation is optional, when items of income and expense are
material, their nature and amount should be disclosed separately.
Ë When items of income and expense are material, their nature and amount should be disclosed FRS 1.97 and 98
separately. Circumstances that would give rise to the separate disclosure of items of income
and expense include:
(a) Write-downs of inventories to net realisable value or of property, plant and equipment to
recoverable amount, as well as reversals of such write-downs;
(b) Restructurings of the activities of an entity and reversals of any provisions for the costs of
restructuring;
(c) Disposals of items of property, plant and equipment;
(d) Disposals of investments;
(e) Discontinued operations;
(f) Litigation settlements; and
(g) Other reversals of provisions.
Commentary (continued):
Ì An entity shall disclose the fee income and expense (other than amounts included in FRS 107.20.c
determining the effective interest rate) arising from financial assets or financial liabilities that
are not at fair value through profit or loss and trust and other fiduciary activities that result in
the holding or investing of assets on behalf of individuals, trusts, retirement benefit plans, and
other institutions, either on the face of the financial statements or in the notes.
- Reconciliation of change in allowance account for credit losses if an entity chooses FRS 107.16
under FRS 39 to have a separate allowance account;
- Credit risk; FRS 107.36
- Accounting policy for recognising any difference between fair value at initial FRS 107.28
recognition and the amount that would be determined at that date using valuation
technique and the aggregate difference yet to be recognised in profit or loss; and
- Transfers of financial assets that are not derecognised in their entirety. FRS 107.42D
FRS 107 requires an entity to group financial instruments into classes that are FRS 107.6
appropriate to the nature of information disclosed and that take into account the
FRS 107.B1
characteristics of those financial instruments. These classes are determined by the
reporting entity and are distinct (usually lower in level) from the categories of financial
instruments (e.g., available-for-sale financial asset, loans and receivables) specified in
FRS 39.
In determining classes of financial instruments, an entity shall, at a minimum: FRS 107.B2
The entity is also required to provide sufficient information to permit reconciliation of FRS 107.6
the classes of financial instruments to the line items presented in the balance sheet.
These expense items have been disclosed separately as they are considered to be material in FRS 1.97
the assumed scenario due to their size or nature.
Reclassification adjustments
In this illustration, the entity has chosen to disclose the reclassification adjustments and FRS 1.94
current year gain or loss in the notes. An entity may choose to present this information in the
statement of comprehensive income itself.
FRS 1.7
Reclassification adjustments are amounts reclassified to profit or loss in the current period
that were recognised in other comprehensive income in the current or previous periods. Such FRS 1.92
amounts must be separately disclosed. For example, when an available-for-sale financial asset FRS 1.93
is sold, accumulated amounts previously recognised in fair value adjustment reserve will be
reclassified into profit or loss for the period.
Group
2014 2013
$’000 $’000
Group Company
Group
2014 2013
$’000 $’000
Tax at the domestic rates applicable to profits in the countries where the
Group operates 1,322 1,571
Adjustments:
Non-deductible expenses 560 473
Income not subject to taxation (170) (388)
Effect of partial tax exemption and tax relief (35) (20)
Deductions on treasury shares issued pursuant to employee share option
plan (3) –
Deferred tax on convertible redeemable preference shares (4) (3)
Benefits from previously unrecognised tax losses (6) (8)
Deferred tax assets not recognised 46 21
(Over)/under provision in respect of previous years (50) 91
Share of results of associates (112) (56)
Others 2 1
Income tax expense recognised in profit or loss 1,550 1,682
Commentary:
Ê Alternatively, an entity may present a numerical reconciliation between the average effective FRS 12.81.c.ii and 86
tax rate (i.e., tax expense/income divided by the accounting profit) and the applicable tax rate,
disclosing also the basis on which the applicable tax rate is computed.
In explaining the relationship between tax expense/income and accounting profit, an entity FRS 12.85
uses an applicable tax rate that provides the most meaningful information to the users of its
financial statements. Often, the most meaningful rate is the domestic rate of tax in the
country in which the entity is domiciled, aggregating the tax rate applied for national taxes
with the rates applied for any local taxes which are computed on a substantially similar level of
taxable profit (tax loss). However, for an entity operating in several jurisdictions, it may be
more meaningful to aggregate separate reconciliations prepared using the domestic rate in
each individual jurisdiction.
Tax deduction for treasury shares transferred under employee share scheme
A Singapore company is granted a tax deduction for the cost incurred in acquiring treasury
shares which are transferred to any person under a stock option scheme or share award
scheme by reason of any office or employment held in Singapore by that person.
Disclosure of nature of expenses that are not deductible for income tax purposes
The nature of :
- expenses that are not deductible for income tax purposes; and
- income not subject to taxation
that give rise to a tax effect should be disclosed if the amount was material in accordance with
FRS 1.29
Illustrative note disclosure on the nature of expenses that are not deductible for income tax
purposes :
The nature of expenses that are not deductible for income tax purposes are as follows:
Group
2014 2013
$’000 $’000
Transaction costs related to acquisition of a
subsidiary XXX -
Exchange loss arising from revaluation of non-trade
balances XXX XXX
Private car expenses XXX XXX
Entertainment and transportation expenses incurred
for personal purposes XXX XXX
XXX XXX
11. Discontinued operation and disposal group classified as held for sale Ê
On 15 May 2014, the Company announced the decision of its board of directors to FRS 105.41.a, b and d
dispose of one of its wholly-owned subsidiary, Good Fire Prevention Pte Ltd (GFP), which
was previously reported in the fire prevention equipment and services segment. The
decision is consistent with the Group’s strategy to focus on its core electronics and
property businesses and to divest its fire prevention equipment business, which has been
underperforming for the last five years. As at 31 December 2014, the assets and
liabilities related to GFP have been presented in the balance sheet as “Assets of disposal
group classified as held for sale” and “Liabilities directly associated with disposal group
classified as held for sale”, and its results are presented separately on profit or loss as
“Loss from discontinued operation, net of tax”. The disposal of GFP was completed on 15
February 2015 (Note 44).
Balance sheet disclosures
The major classes of assets and liabilities of GFP classified as held for sale and the related FRS 105.38 and 40
asset revaluation reserve as at 31 December are as follows: ËÌ
Group
2014
$’000
Assets:
Property, plant and equipment 1,016
Inventories 190
Trade and other receivables 814
Cash and short-term deposits 250
Assets of disposal group classified as held for sale 2,270
Liabilities:
Trade and other payables (1,043)
Deferred tax liabilities (28)
8.5% p.a. fixed rate SGD bank loan due 1 January 2015 (1,000)
Liabilities directly associated with disposal group classified as held for sale (2,071)
Net liabilities directly associated with disposal group classified as held for sale 199
Reserve:
Asset revaluation reserve 128
11. Discontinued operation and disposal group classified as held for sale Ê (continued)
Group
2014 2013
$’000 $’000
Group
2014 2013
$’000 $’000
Group
2014 2013
$’000 $’000
The basic and diluted loss per share from discontinued operation are calculated by dividing
the loss from discontinued operation, net of tax, attributable to owners of the Company by
the weighted average number of ordinary shares for basic earnings per share computation
and weighted average number of ordinary shares for diluted earnings per share
computation respectively. These loss and share data are presented in the tables in Note
12(a).
11. Discontinued operation and disposal group classified as held for sale Ê (continued)
Commentary:
FRS 5.5B clarifies that disclosure requirements in other FRSs do not apply to non-current FRS 105.5B
assets held for sale (or disposal groups) unless those FRSs explicitly refer to those assets and
disposals groups. Disclosure requirements continue to apply for assets and liabilities that are FRS 105.5B.b
not within the scope of the measurement requirements of FRS 105, but within the disposal
group.
These analysis/disclosures are not required for disposal groups that are newly acquired FRS 105.33.b and 39
subsidiaries that meet the criteria to be classified as held for sale on acquisition.
Ì Alternatively, these analysis/disclosures may be presented on the face of the financial FRS 105.33.b
statements. If so presented for the purposes of the statement of comprehensive income, a
separate section identified as relating to discontinued operations is required.
Í An entity should re-present the disclosures in FRS 105.33 for prior periods presented in the FRS 105.34
statement of comprehensive income and cash flow statement so that the disclosures relate to
all operations that have been discontinued by the end of the reporting period for the latest
period presented.
In this illustration, loss per share from discontinued operations has been presented in the note. FRS 33.68
Alternatively, this information may be presented on the face of the statement of
comprehensive income.
a) Continuing operations
Basic earnings per share from continuing operations are calculated by dividing profit FRS 33.10 and 12
from continuing operations, net of tax, attributable to owners of the Company by the
weighted average number of ordinary shares outstanding during the financial year.
Diluted earnings per share from continuing operations are calculated by dividing profit FRS 33.31 and 33
from continuing operations, net of tax, attributable to owners of the Company (after
adjusting for interest expense on convertible redeemable preference shares) by the
weighted average number of ordinary shares outstanding during the financial year plus
the weighted average number of ordinary shares that would be issued on the
conversion of all the dilutive potential ordinary shares into ordinary shares.
The following tables reflect the profit and share data used in the computation of basic
and diluted earnings per share for the years ended 31 December:
Group
2014 2013
$’000 $’000
Profit for the year attributable to owners of the Company 4,776 4,841 FRS 33.70.a
Add back: Loss from discontinued operation, net of tax, attributable
to owners of the Company Ë 544 188
Profit from continuing operations, net of tax, attributable to owners
of the Company used in the computation of basic earnings per share
from continuing operations 5,320 5,029
No. of No. of
shares shares
‘000 ‘000
Weighted average number of ordinary shares for basic earnings per
share computation * 23,150 23,055 FRS 33.70.b
* The weighted average number of shares takes into account the weighted average
effect of changes in treasury shares transactions during the year.
325,000 (2013: 200,000) share options granted to employees under the existing FRS 33.70.c
employee share option plans have not been included in the calculation of diluted
earnings per share because they are anti-dilutive.
Since the end of the financial year, senior executives have exercised the options to FRS 33.70.d
acquire 2,000 (2013: nil) ordinary shares. There have been no other transactions
involving ordinary shares or potential ordinary shares since the reporting date and
before the completion of these financial statements. Î
Commentary:
Ê If the number of ordinary or potential ordinary shares outstanding increases as a result of a FRS 33.64
capitalisation, bonus issue or share split, or decreases as a result of a reverse share split, the
calculation of basic and diluted earnings per share for all periods presented shall be adjusted
retrospectively. If these changes occur after the end of the reporting period but before the
financial statements are authorised for issue, the per share calculations for current and prior
period presented shall be based on the new number of shares and this fact should be
disclosed. In addition, basic and diluted earnings per share of all periods presented shall be
adjusted for the effects of errors and adjustments resulting from changes in accounting
policies accounted for retrospectively.
Ë In this illustration, it is assumed that the discontinued operation is not attributable to non-
controlling interests.
Ì The objective of diluted earnings per share is consistent with that of basic earnings per share FRS 33.32
which is to provide a measure of the interest of each ordinary share in the performance of an
entity while giving effect to all dilutive potential ordinary shares outstanding during the
period. As a result:
(a) profit or loss attributable to ordinary equity holders of the parent entity is increased by
the after-tax amount of dividends and interest recognised in the period in respect of the
dilutive potential ordinary shares and is adjusted for any other changes in income or
expense that would result from the conversion of the dilutive potential ordinary shares;
and
(b) the weighted average number of ordinary shares outstanding is increased by the weighted
average number of additional ordinary shares that would have been outstanding assuming
the conversion of all dilutive potential ordinary shares.
Í Potential ordinary shares shall be treated as dilutive only when their conversion to ordinary FRS 33.41
shares would decrease earnings per share or increase loss per share from continuing
operations.
Î An entity shall disclose a description of ordinary share transactions or potential ordinary share FRS 33.70.d
transactions, other than those resulted from share capitalisation, bonus issue or share split,
that occur after the end of the reporting period and that would have changed significantly the
number of ordinary shares or potential ordinary shares outstanding at the end of the period if
those transactions had occurred before the end of the reporting period.
Example of such transactions include: FRS 33.71
Furniture
Freehold Plant and and
Group land Buildings equipment fixtures Total
$’000 $’000 $’000 $’000 $’000
Cost or valuation: At valuation At cost FRS 16.73.a
At 31 December 2013 and 1 January 2014 10,726 3,574 23,933 2,752 40,985 FRS 16.73.d
Transfer from investment properties (Note 14) – 300 – – 300 FRS 16.73.e.ix
At 31 December 2013 and 1 January 2014 – – 8,364 1,557 9,921 FRS 16.73.d
Depreciation charge for the year – 115 2,628 300 3,043 FRS 16.73.e.vii
Furniture
Company and fixtures
$’000
Cost: FRS 16.73.a
Accumulated depreciation:
At 1 January 2013 669 FRS 16.73.d
the financial year, the borrowing costs capitalised as cost of plant and equipment FRS 23.26 b
amounted to $57,000 (2013: $60,000). The rate used to determine the amount of
borrowing costs eligible for capitalisation was 4.5% (2013: 5.0%), which is the effective
interest rate of the specific borrowing. Ì
Revaluation of freehold land and buildings
The Group engaged Chartered Surveyors Pte Ltd, an independent valuer to determine the FRS 16.77.a-b
fair value of the freehold land and buildings. The date of the revaluation was 31 December SGX 1207.11
2014 (2013: 31 December 2013). Details of valuation techniques and inputs used are
disclosed in Note 39.
If the freehold land and buildings were measured using the cost model, the carrying FRS 16.77.e
Group
2014 2013
$’000 $’000
Commentary:
Changes in estimates
Ê In this illustration, there was no change in the useful life of property, plant and equipment of FRS 8.39
the Group. Where applicable, an entity should disclose the nature and effect of a change in FRS 16.76
accounting estimate that has an effect in the current or subsequent periods.
Illustrative note disclosure for change in estimated useful life of equipment:
During the financial year, the Group conducted an operational efficiency review on its
production lines. The Group revised the estimated useful lives of some automation
machines from five to eight years, after refurbishments that will enable these automation
machines to remain in production for an additional three years. The revision in estimate
has been applied on a prospective basis from 1 January 2013. The effect of the above
revision on depreciation charge in current and future periods are as follows:
Ë Entities are also encouraged to disclose the following information, which users of financial FRS 16.79
statements may find relevant to their needs:
- The carrying amount of temporarily idle property, plant and equipment;
- The gross carrying amount of any fully depreciated property, plant and equipment that is still
in use;
- The carrying amount of property, plant and equipment retired from active use and not
classified as held for sale in accordance with FRS 105; and
- When the cost model is used, the fair value of property, plant and equipment when this is
materially different from the carrying amount.
Commentary (continued):
Ì If the amount of borrowing costs eligible for capitalisation have been determined by applying a FRS 23.14 and
26.b
capitalisation rate to the expenditures on a qualifying asset because funds used for the
purpose of obtaining the qualifying asset are borrowed generally (rather than specifically), the
capitalisation rate should be the weighted average of the borrowing costs applicable to the
borrowings of the entity that are outstanding during the period, other than borrowings made
specifically for the purpose of obtaining a qualifying asset. The amount of borrowing costs
capitalised during a period should not exceed the amount of borrowing costs incurred during
that period.
Group
2014 2013
$’000 $’000
Income statement:
Rental income from investment properties:
- Minimum lease payments 324 246
- Contingent rent based on tenant’s turnover 21 45 FRS 17.56.b
345 291 FRS 40.75.f.i
Direct operating expenses (including repairs and maintenance) arising
from:
- Rental generating properties (60) (55) FRS 40.75.f.ii
- Non-rental generating properties (12) (10) FRS 40.75.f.iii
(72) (65)
The Group has no restrictions on the realisability of its investment properties and no FRS 40.75.g
contractual obligations to purchase, construct or develop investment property or for FRS 40.75.h
repairs, maintenance or enhancements.
Valuation of investment properties
Investment properties are stated at fair value, which has been determined based on FRS 40.75.a
valuations performed as at 31 December 2014 and 31 December 2013. The valuations FRS 40.75.e
Unexpired
Description and Location Existing Use Tenure lease term
8-storey shopping podium, 3 basements and twin 27-storey Shops Leasehold 983 years
office towers along South Park, Singapore
18-storey office tower along Xujing Road, Qingpu District, Offices Leasehold 58 years
Shanghai
Commentary
Ê Contractual obligations to purchase, construct or develop investment property or for repairs, FRS 40.75.h
maintenance or enhancements should be disclosed, if applicable.
Additions to investment properties resulting from: i) acquisitions of properties; ii) subsequent FRS 40.76.a and
b
expenditure recognised in the carrying amount of an asset; and iii) acquisitions through business
combinations should be disclosed separately.
When a valuation obtained for investment property is adjusted significantly for the purpose of FRS 40.77
the financial statements, for example to avoid double-counting of assets or liabilities that are
recognised as separate assets and liabilities, the entity should disclose a reconciliation between
the valuation obtained and the adjusted valuation included in the financial statements, showing
separately the aggregate amount of any recognised lease obligations that have been added
back, and any other significant adjustments.
If there has been no such valuation performed by an independent valuer, that fact should be FRS 40.75.e
disclosed.
Group
Deferred
Club Development
Goodwill Brands Membership Costs Total
FRS 1.77
$’000 $’000 $’000 $’000 $’000
Cost:
At 1 January 2013 245 240 100 984 1,569 FRS 38.118.c
Additions – internal development – – – 200 200 FRS 38.118.e.i
Exchange differences 5 5 – 12 22 FRS 38.118.e.vii
At 31 December 2013 and 1 January 2014 250 245 100 1,196 1,791 FRS 38.118.c
Additions:
- Internal development – – – 200 200 FRS 38.118.e.i
- Acquisition of a subsidiary (Note 17) 772 500 – – 1,272 FRS 38.118.e.i
Amortisation expense
The amortisation of deferred development costs and club membership is included in the FRS 38.118.d
“Research and development” and “Administrative expenses” line items in profit of loss
respectively.
Impairment testing of goodwill and brands
Goodwill acquired through business combinations and brands have been allocated to two FRS 36.80.b
cash-generating units (CGU), which are also the reportable operating segments, for
impairment testing as follows:
- Electronic components segment
- Property segment
The carrying amounts of goodwill and brands allocated to each CGU are as follows: Ë
Electronic
components Property
segment segment Total
The recoverable amounts of the CGUs have been determined based on value in use ÌÍ FRS 36.130.e. 134.c
and d.iii
calculations using cash flow projections from financial budgets approved by management
covering a five-year period. The pre-tax discount rate applied to the cash flow projections
and the forecasted growth rates used to extrapolate cash flow projections beyond the
five-year period are as follows:
Electronic Property
components segment segment
Commentary:
Ê The disclosure of a description, the carrying amount and remaining amortisation period are FRS 38.122.b
required for any individual intangible asset that is material to the entity’s financial
statements.
Ë If some or all of the carrying amount of goodwill or intangible assets with indefinite useful FRS 36.135
lives is allocated across multiple CGUs (groups of units), and the amount so allocated to each
unit (group of units) is not significant in comparison with the entity’s total carrying amount of
goodwill or intangible assets with indefinite useful lives, that fact shall be disclosed, together
with the aggregate carrying amount of goodwill or intangible assets with indefinite useful
lives allocated to those CGUs (group of units). In addition, if the recoverable amounts of any
of those CGUs (group of units) are based on the same key assumption(s) and the aggregate
carrying amount of goodwill or intangible assets with indefinite useful lives allocated to them
is significant in comparison with the entity’s total carrying amount of goodwill or intangible
assets with indefinite useful lives, an entity shall disclose that fact, together with:
(a) The aggregate carrying amount of goodwill allocated to those units (groups of units)
(b) The aggregate carrying amount of intangible assets with indefinite useful lives allocated
to those units (groups of units)
(c) A description of the key assumption(s)
(d) A description of management’s approach to determining the value(s) assigned to the
key assumption(s), whether those value(s) reflect past experience or, if appropriate,
are consistent with external sources of information, and, if not, how and why they differ
from past experience or external sources if information.
(e) If a reasonably possible change in the key assumption(s) would cause the aggregate of
the units’ (groups of units’) carrying amounts to exceed the aggregate of their
recoverable amounts:
(i) The amount by which the aggregate of the units’ (group of units’) recoverable
amounts exceeds the aggregate of their carrying amounts.
(ii) The value(s) assigned to the key assumption(s).
(iii) The amount by which the value(s) assigned to the key assumption(s) must change,
after incorporating any consequential effects of the change on the other variables
used to measure recoverable amount, in order for the aggregate of the unit’s
(groups of units’) recoverable amounts to be equal to the aggregate of their
carrying amounts.
Recoverable amount of CGU containing goodwill or intangible assets with indefinite lives
determined based on fair value less costs to sell
Ì In this illustration, the recoverable amounts of such CGUs were determined based on value in FRS 36.134.e
use calculations. If an entity uses fair value less costs of disposal to measure the recoverable
amount of CGU and the fair value less costs of disposal is not determined using a quoted
price, the entity should disclose the valuation technique(s) and other information including:
the key assumption used; a description of management’s approach to each key assumption
(whether those values reflect past experience or are consistent with external information,
and if not, how and why they differ); the level of fair value hierarchy and the reason(s) for
changing valuation techniques, if there is any change, are required to be provided in the
financial statements.
Illustrative note disclosure:
The recoverable amounts of CGU A, CGU B and CGU C are determined based on fair value
less costs of disposal of the CGUs. To calculate these values, an appropriate multiple was
applied to the maintainable operating earnings of the CGUs. The fair value less costs of
disposal of the CGUs are determined by applying an appropriate market multiple to its
earnings before interest, tax, depreciation and amortisation (EBITDA), which
management believes is sustainable in view of the current and anticipated business
conditions.
Commentary (continued):
Recoverable amount of CGU containing goodwill or intangible assets with indefinite lives
determined based on fair value less costs to sell (continued)
If fair value less costs to sell is determined using discounted cash flow projections, the
following information shall also be disclosed:
- The period over which management has projected cash flows
Í Provided specified criteria are met, if the most recent detailed calculation made in a FRS 36.136
preceding period of the recoverable amount of a CGU (group of units) is used in the
impairment test for that unit (group of units) in the current period, the disclosures required
in the financial statements by paragraphs 134 and 135 relate to the carried forward
calculation of recoverable amount.
Forecasted growth rates used to extrapolate cash flow projections beyond the five-year period
Î The entity is required to disclose the justification if the growth rate used to extrapolate cash FRS 36.134.d.iv
flows projections beyond the period covered by the most recent budgets/forecasts exceeds
the long-term average growth rate for the products, industries, or countries in which the
entity operates.
Illustrative note disclosure:
The growth rate used to extrapolate the cash flows of the electronics component
segment exceeds the average growth rate for the industry in which the electronics
segment operates by three quarters of a percentage point. Management of the
electronics component segment believes this growth rate is justified based on the
acquisition of XXX Limited that has resulted in the control of an industry patent,
preventing other entities from manufacturing a specialised product for a period of 10
years with the option for renewal after the 10 years period have expired.
Ï If a reasonably possible change in any key assumptions used by management would cause FRS 36.134.f
the carrying values of CGUs to materially exceed the recoverable amounts, an entity should
disclose
- the amount by which the CGU’s recoverable amount exceeds its carrying amount,
- the value assigned to the key assumption,
- the amount by which the value assigned to the key assumption must change, after
incorporating any consequential effects of that change on the other variables used to
measure recoverable amount, in order for the CGU’s recoverable amount to be equal to
its carrying amount.
Group
2014 2013
$’000 $’000
Cost:
At 1 January 6,500 6,360
Exchange differences 220 140
At 31 December 6,720 6,500
Accumulated amortisation:
At 1 January 767 630
Amortisation for the year 132 130
Exchange differences 10 7
At 31 December 909 767
Amount to be amortised:
FRS 17.35.a
- Not later than one year 137 132
- Later than one year but not later than five years 548 528
- Later than five years 5,126 5,073
The Group has land use rights over two plots of state-owned land in People’s Republic of FRS 17.35.d
China (PRC) where the Group’s PRC manufacturing and storage facilities reside. The land
use rights are not transferable and have a remaining tenure of 43 years (2013: 44 years).
Company
2014 2013
$’000 $’000
i
Audited by Ernst & Young LLP, Singapore SGX 717
ii
Audited by member firms of EY Global in the respective countries
* The Group holds 25% ownership interest in MSAX Sdn Bhd in 2013 and account for it as an associate
(Note 19).
The Group has the following subsidiaries that have NCI that are material to the
Group. FRS 112.B10.a
31 December 2013:
Significant restrictions:
The nature and extent of significant restrictions on the Group’s ability to use or FRS 112.10.b.i
access assets and settle liabilities of subsidiaries with material non-controlling FRS 112.13
interests are:
Cash and cash equivalents of $49,000 held in People’s Republic of China are subject
to local exchange control regulations. These regulations places restriction on the
amount of currency being exported other than through dividends.
Summarised financial information including goodwill on acquisition and consolidation FRS 112.12.g
FRS 112.B10.6
adjustments but before intercompany eliminations of subsidiaries with material non-
controlling interests are as follows:
Commentary:
Ê An entity shall disclose information that enables users of its consolidated financial statements FRS 112.10
(a) to understand:
i. the composition of the group; and
ii. the interest that non-controlling interests have in the group’s activities and cash flows;
and
(b) to evaluate:
i. the nature and extent of significant restrictions on its ability to access or use assets,
and settle liabilities, of the group
ii. the nature of, and changes in, the risks associated with its interests in consolidated
structured entities
iii. the consequences of changes in its ownership interest in a subsidiary that do not result
in a loss of control; and
iv. the consequences of losing control of a subsidiary during the reporting period.
Commentary (continued):
FRS 112.B2
Ë An entity shall decide, in the light of its circumstances, how much detail it provides to satisfy
the information needs of users, how much emphasis it places on different aspects of the
requirements and how it aggregates the information. It is necessary to strike a balance
between burdening financial statements with excessive detail that may not assist users of
financial statements and obscuring information as a result of too much aggregation.
Ì In this illustration, it is assumed that there was no reversal of impairment loss on investment in FRS 36.130.a
subsidiaries. Where applicable, an entity should disclose the events and circumstances that led
to the reversal of such impairment loss.
Í An entity shall disclose the country of incorporation if different from the principal place of FRS 112.12.b
business of the subsidiary. FRS 27.17.b.ii
Î An entity shall disclose the proportion of voting rights if different from the proportion of FRS 112.12.d
ownership interests held. FRS 27.17.b.iii
Ð The summarised financial information presented shall be the amounts before inter-company FRS 112.B11
eliminations.
Commentary (continued):
Nature of the risks associated with an entity’s interests in consolidated structured entities
In this illustration, the Group does not consolidate any structured entity. If the Group provides
financial support to consolidated structured entities, please refer to the following disclosure
requirements:
An entity shall disclose the terms of any contractual arrangements that could require the FRS 112.14
parent or its subsidiaries to provide financial support to a consolidated structured entity,
including events or circumstances that could expose the reporting entity to a loss (e.g. liquidity
arrangements or credit rating triggers associated with obligations to purchase assets of the
structured entity or provide financial support).
If during the reporting period a parent or any of its subsidiaries has, without having a FRS 112.15
contractual obligation to do so, provided financial or other support to a consolidated structured
entity (e.g. purchasing assets of or instruments issued by the structured entity), the entity shall
disclose:
(a) the type and amount of support provided, including situations in which the parents or its
subsidiaries assisted the structured entity in obtaining financial support; and
(b) the reasons for providing the support.
If during the reporting period a parent or any of its subsidiaries has, without having a FRS 112.16
contractual obligation to do so, provided financial or other support to a previously
unconsolidated structured entity and that provision of support resulted in the entity controlling
the structured entity, the entity shall disclose an explanation of the relevant factors in reaching
that decision.
An entity shall disclose any current intentions to provide financial or other support to a FRS 112.17
consolidated structured entity, including intentions to assist the structured entity in obtaining
financial support.
Investment entities
In this illustration, the Company does not meet the definition of an investment entity and
therefore does not apply the exception to consolidation under FRS 110. When a parent
determines that it is an investment entity in accordance with FRS 110, the following disclosures
are required.
(a) Information about significant judgements and assumptions it has made in determining that FRS 112.9A
it is an investment entity. If the investment entity does not have one or more of the typical
characteristics of an investment entity, it shall disclose its reasons for concluding that it is
nevertheless an investment entity.
FRS 112.9B
(b) When an entity becomes, or ceases to be, an investment entity, it shall disclose the change
of investment entity status and the reasons for the change. In addition, an entity that
becomes an investment entity shall disclose the effect of the change of status on the
financial statements for the period presented including:
- The total fair value, as of the date of change of status, of the subsidiaries that cease to
be consolidated
- The total gain or loss, if any, calculated in accordance with paragraph B101 of FRS 110
- The line item(s) in profit or loss in which the gain or loss is recognised (if not presented
separately)
Commentary (continued):
Investment entities (continued)
(c) For each unconsolidated subsidiary, an investment entity shall disclose: FRS 112.19B
Technologies Pte Ltd (XYZ Technologies) acquired an additional 55% equity interest
in its 25% owned associate, MSAX Sdn Bhd (“MSAX”), a manufacturer of electronic
components in Malaysia. Upon the acquisition, MSAX became a subsidiary of the
Group.
The Group has acquired MSAX in order to strengthen its position as a leading FRS 103.B64.d
manufacturer of electronic components in the ASEAN region and to enlarge the
range of products it can offer to its clients. The acqusition is also expected to reduce
costs through economies of scale.
The Group has elected to measure the non-contolling interest at the non-controlling
interest’s proportionate share of MSAX’s net identifiable assets.
The fair value of the identifiable assets and liabilities of MSAX as at the acquisition
date were:
3,005
3,005
$’000
Effect of the acquisition of MSAX on cash flows
Total consideration for 55% equity interest acquired 2,325 FRS 7.40.a
Less: non-cash consideration (2,125) FRS 7.43
FRS 7.40.b
Consideration settled in cash 200
Less: Cash and cash equivalents of subsidiay acquired (417) FRS 7.40.c
consideration has been agreed. Additional cash payments shall be payable to the
previous owner of MSAX of:
a) $385,000, if the entity generates $1,000,000 profit before tax for a period of FRS 103.B64.g.iii
12 months after the acquisition date, or
b) $705,000 if the entity generates $1,500,000 profit before tax for a period of
12 months after the acquisition date.
As at the acquisition date, the fair value of the contingent consideration was FRS 103.B64.g.i
estimated at $450,000.
As of 31 December 2014, the key performance indicators of MSAX show clearly that
target (a) will be achieved and the achievement of target (b) is probable due to a
significant expansion of the business and synergies implemented. Accordingly, the
fair value of the contingent consideration has been adjusted to reflect this
development and such change has been recognised through profit or loss.
The fair value of the contingent consideration as at 31 December 2014 has been FRS 103.58
FRS 103.B67.b
increased by $235,000 to $685,000. The fair value of the contingent consideration
was calculated by applying the income approach using the probability-weighted
payout approach and at a discount rate of 8%. This fair value adjustment of
contingent consideration is recognised in the “Other expenses” line item in the
Group’s profit or loss for the year ended 31 December 2014.
Transaction costs
Transaction costs related to the acquisition of $300,000 have been recognised in the FRS 103.B64.l and m
“Administrative expenses” line item in the Group’s profit or loss for the year ended
31 December 2014.
The Group recognised a gain of $140,000 as a result of measuring at fair value its FRS 103.B64.p.ii
25% equity interest in MSAX held before the business combination. The gain is
included in the “Other income” line item in the Group’s profit or loss for the year
ended 31 December 2014.
Trade and other receivables acquired
Trade and other receivables acquired comprise of trade receivables and bills of FRS 103.B64.h
exchange and promissory notes with fair values of $600,000 and $489,000,
respectively. Their gross amounts are $655,000 and $489,000, respectively. At the
acquisition date, $55,000 of the contractual cash flows pertaining to trade
receivables are not expected to be collected. It is expected that the full contractual
amount of the bills of exchange and promissory notes can be collected.
Goodwill arising from acquisition
The goodwill of $772,000 comprises the value of strengenthing the Group’s market
position in the ASEAN region, improved resilience to sector specific volatilities, and
cost reduction syngeries expected to arise from the acquisition. It also includes the
value of a customer list, which has not been recognised separately. Goodwill is
allocated entirely to the electronic components segment. Due to the contractual
terms imposed on the acquisition, the customer list is not separable and therefore FRS 103.B64.e
does not meet the criteria for recognition as an intangible asset under FRS 38. None FRS 103.B64.k
of the goodwill recognised is expected to be deductible for income tax purposes.
Impact of the acquisition on profit or loss
From the acquisition date, MSAX has contributed $8,000,000 of revenue and FRS 103.B64.q.i
$301,000 to the Group’s profit for the year. If the business combination had taken FRS 103.B64.q.ii
place at the beginning of the year, the revenue from continuing operations would
have been $144,720,000 and the Group’s profit from continuing operations, net of
tax would have been $5,801,000.
Provisional accounting of the acquisition of MSAX
A brand has been identified as an intangible asset arising from this acquisition. The FRS 103.B67.a
Group has engaged an independent valuer to determine the fair value of the brand.
As at 31 December 2014, the fair value of the brand amounting to $500,000 has
been determined on a provisional basis as the final results of the independent
valuation have not been received by the date the financial statements was authorised
for issue. Goodwill arising from this acquisition, the carrying amount of the brand,
deferred tax liability, and amortisation of the brand will be adjusted accordingly on a
retrospective basis when the valuation of the brand is finalised.
$’000
Commentary:
Acquisition of subsidiary
Ê An entity shall also make disclosures of business combinations in accordance to FRS 103.B64 FRS 103.59.b and
B66
even if they were effected after the end of the reporting date but before the financial
statements are authorised for issue, unless the initial accounting for the business
combination is incomplete at the time the financial statements are authorised for issue. In
that situation, the entity shall describe which disclosures cannot be made and the reasons
why they cannot be made.
For individually immaterial business combinations occurring during the reporting period that FRS 103.B65
are material collectively, an entity shall disclose in aggregate the information required by FRS
103.B64.e-q.
Commentary (continued):
Ì An acquirer shall also disclose information that enables users of its financial statements to FRS 103.61 and
evaluate the financial effects of adjustments recognised in the current reporting period that B67
relate to business combinations that occurred in the current period or previous reporting
periods.
Illustrative disclosure for adjustments to initial accounting for a business combination that FRS 103.B67.a
was determined provisionally in the previous reporting period:
The purchase price allocation of the acquisition of Acquiree Group (Acquiree) in the
financial year ended 31 December 2014 were provisional as the Group had sought an
independent valuation for the land and buildings owned by Acquiree. The results of this
valuation had not been received at the date the 2014 financial statements were
authorised for issue. The valuation of the land and buildings was received in April 2014
and showed that the fair value at the date of acquisition was $XXX, an increase of $XXX
compared to the provisional value.
The 2013 comparative information has been restated to reflect this adjustment. The
value of the land and buildings increased by $XXX, there was an increase in the deferred
tax liability of $XXX and an increase in non-controlling interest of $XXX. There was also a
corresponding reduction in goodwill of $XXX, to give total goodwill arising on the
acquisition of $XXX. The depreciation charge on the buildings from the acquisition date
to 31 December 2013 increased by $XXX.
Commentary (continued):
Please refer to commentary no. 7 of Note 2.4 Basis of consolidation and business
combinations.
In this illustration, the Group has elected to measure non-controlling interest arising from
acquisition of MSAX at the non-controlling interest’s proportionate share of MSAX’s
identifiable net assets. The following is an illustrative disclosure when an entity chooses to
measure non-controlling interest arising in a business combination at fair value:
Fair value of non-controlling interest in Acquiree
The fair value of the non-controlling interest in Acquiree, an unlisted company, was FRS 103.B64.o.ii
estimated by applying the income approach that is corroborated by market approach. The
fair value estimates are based on:
- A discount rate range of XX% to XX%;
- Terminal value, calculated based on the long term sustainable growth rate for the
industry ranging from XX% to XX%, which has been used to determine income for the
future years; and
- Adjustments because of the lack of control and marketability that market participants
would consider when estimating the fair value of the non-controlling interest in
Acquiree.
If the acquisition results in a bargain purchase instead of goodwill recognised, the acquirer FRS 103.B64.n
shall disclose the amount of the gain recognised and the line item in the consolidated
statement of comprehensive income in which the gain is recognised, and a description of the
reasons why the transaction resulted in a gain.
2014
$’000
Proceeds from sale of 5% ownership interest XXX
Net assets attributable to NCI (XXX)
Increase in equity attributable to parent XXX
Represented by:
Decrease in foreign currency translation reserve (XXX)
Decrease in asset revaluation reserve (XXX)
Other reserves XXX
Increase in equity attributable to parent entity XXX
Commentary (continued):
2014
$’000
Property, plant and equipment XXX
Trade and other receivables XXX
Inventories XXX
Cash and short-term deposits XXX
XXX
Trade and other payables (XXX)
Income tax payable (XXX)
Carrying value of net assets (XXX)
Gain on disposal:
2014
$’000
The gain or loss on disposal attributable to measuring the retained interest amounted to FRS 112.19
$XXX was included in other income in profit or loss.
The Group has 50% (2013: 50%) interest in the ownership and voting rights Ï in a joint FRS 112.21
FRS 27.17.b
venture, XYZ-ABC JV Co. Ltd that is held through a subsidiary. This joint venture is
incorporated in People’s Republic of China Ð and is a strategic venture in the business or
property investment. The Group jointly controls the venture with other partner under the
contractual agreement and requires unanimous consent for all major decisions over the
relevant activities.
Summarised financial information in respect of XYZ-ABC JV Co. Ltd. based on its FRS FRS 112.21.b.ii
FRS 112.B12
financial statements, and reconciliation with the carrying amount of the investment in the FRS 112.B13
consolidated financial statements are as follows: Ñ
Group
2014 2013
$’000 $’000
Cash and cash equivalents 176 132
Trade receivables 542 808
Current assets 718 940
Non-current assets excluding goodwill 3,220 2,898
Goodwill 100 100
Non-current assets 3,320 2,998
Total assets 4,038 3,938
Current liabilities (200) (412)
Non-current liabilities (excluding trade, other payables and
provisions) (490) (480)
Other non-current liabilities (100) (100)
Total non-current liabilities (590) (580)
Total liabilities (790) (992)
Net assets 3,248 2,946
Net assets excluding goodwill 3,148 2,846
Proportion of the Group’s ownership 50% 50%
Group’s share of net assets 1,574 1,423
Goodwill on acquisition 100 100
Carrying amount of the investment 1,674 1,523
2014 2013
$’000 $’000
Revenue 214 199
Operating expenses (58) (65)
Interest expense (5) (6)
Profit before tax 151 128
Income tax expense - -
Profit after tax 151 128
Other comprehensive income - -
Total comprehensive income 151 128
Dividends of $60,000 (2013:$50,000) were received from XYZ-ABC JV Co. Ltd. ABC-XYZ
JV Co. Ltd is restricted by regulatory requirements by paying dividends greater than 50%
of the annual profit. Ò FRS 112.B12.a
FRS 112.22.a
Commentary:
Ê In this illustration, the Group does not have investment in joint operation.
The following disclosures are required for investments in joint operations:
(a) the name of the joint operation
(b) the nature of the entity’s relationship with the joint operations, (by, for example, FRS 112.21.a
describing the nature of the activities of the joint operation and whether it is strategic to
the entity’s activities)
Other disclosures required for joint ventures are not applicable for joint operations.
Ë For interests in joint arrangements, an entity shall disclose information that enables users of
its financial statements to evaluate:
FRS 112.20
(a) the nature, extent and financial effects of its interests in joint arrangements, including
the nature and effects of its contractual relationship with the other investors with joint
control of joint arrangements; and
(b) the nature of, and changes in, the risks associated with its interests in joint ventures.
Ì If the joint venture is accounted for using the equity method, the entity shall disclose the fair
value of its investment in the joint venture or associate, if there is a quoted market price for
the investment. FRS 112.21.b.iii
Í In this illustration, the Group have only one investment in joint venture which is material
The following disclosures are required, in aggregate for all individually immaterial joint
ventures: FRS 112.B16
Commentary (continued):
Î In this illustration, the Group does not have any unrecognised share of losses of its FRS 112.22.c
investment in joint venture.
If the Group have stopped recognising its share of losses of its joint venture when applying
the equity method, it shall disclose the unrecognised share of losses of the joint venture,
both for the reporting period and cumulatively.
Ï An entity shall disclose the proportion of voting rights held for each joint arrangement if FRS 112.21.a.iv
different from the proportion of ownership interests held.
Ð An entity shall disclose the principal place of business for each joint arrangement if different FRS 112.21.a.iii
from the country of incorporation of the joint arrangement.
Ñ An entity may present the summarised financial information on the basis of the joint FRS 112.B15
venture’s financial statements if:
(a) the entity measures its interest in the joint venture at fair value; and
(b) the joint venture does not prepare FRS financial statements and preparation on that
basis would be impracticable or cause undue cost.
In that case, the entity shall disclose the basis on which the summarised financial information
has been prepared.
In this illustration, the joint venture does not have depreciation and amortisation and interest FRS 112.B13
income. For each material joint venture, an entity shall disclose the following information:
(a) cash and cash equivalents
(b) current financial liabilities (excluding trade and other payables and provisions)
(c) non-financial liabilities (excluding trade and other payables and provisions)
(d) depreciation and amortisation
(e) interest income
(f) interest expense
(g) income tax expense or income
Ò An entity shall also disclose the nature and extent of any significant restrictions (e.g. FRS 112.22.a
resulting from borrowing arrangements, regulatory requirements or contractual
arrangements between investors with joint control of a joint venture) on the ability of joint
ventures to transfer funds to the entity in the form of cash dividends, or to repay loans and
advances.
The Group’s material investments in associates are summarised below: FRS 112.21.a.i
2014 2013
$’000 $’000
QSpeed Pte Ltd 4,560 4,465
HKI Pte Ltd 5,576 5,420
Other associates 459 436
10,595 10,321 FRS 112.B16
2014 2013
Held through subsidiaries:
i
Audited by Ernst & Young LLP, Singapore SGX 717
ii
Audited by member firm of EY Global in Malaysia
*The Group holds 80% of ownership interest in MSAX Sdn Bhd in 2013 and accounts for it as a subsidiary
(Note X).
The activities of the associates are strategic to the Group activities. The Group has not FRS 112.21.a.ii
FRS 112.22.c
recognised losses relating to Heart Land Ltd where its share of losses exceeds the Group’s
interest in this associate. The Group’s cumulative share of unrecognised losses at the end
of the reporting period was $50,000 (2013: $35,000), of which $15,000 (2013: $5,000)
was the share of the current year’s losses. The Group has no obligation in respect of
these losses.
The Group has not recognised its share of the current year profit of $8,000 (2013: nil)
relating to Drill Pte Ltd as the Group’s cumulative share of unrecognised losses with
respect to that associate was $17,000 (2013: $25,000) at the end of the reporting
period.
Dividends of $40,000 (2013: $30,000) and $60,000 (2013: $50,000) were received FRS 112.B12.a
from QSpeed Pte Ltd and HKI Pte Ltd respectively. QSpeed Pte Ltd. is restricted by FRS 112.22.a
regulatory requirements by paying dividends greater than 60% of the annual profit.
Aggregate information about the Group’s investments in associates that are not FRS 112.21.c.ii
individually material are as follows: FRS 112.B16
2014 2013
$’000 $’000
Profit or loss after tax from continuing operations 1,237 555
Other comprehensive income 223 174
Total comprehensive income 1,460 729
The summarised financial information in respect of QSpeed Pte Ltd and HKI Pte Ltd, FRS 112.21.b.i
based on its FRS financial statements and a reconciliation with the carrying amount of FRS 112.B12
FRS 112.B14
the investment in the consolidated financial statements are as follows:
Summarised balance sheet
Commentary:
Investment in associates
FRS 112.20
Ê For interests in associates, an entity shall disclose information that enables users of its
financial statements to evaluate:
(a) the nature, extent and financial effects of its interests in associates, including the nature
and effects of its contractual relationship with the other investors with significant
influence over associates; and
(b) the nature of, and changes in, the risks associated with its interests in associates.
FRS 112.21.b.iii
Ë If the associate is accounted for using the equity method, the entity shall disclose the fair
value of its investment in the associate, if there is a quoted market price for the investment.
FRS 112.21.a.iii
Ì An entity shall disclose the principal place of business for each associate if different from the
country of incorporation of the associate.
Í An entity shall disclose the proportion of voting rights held for each associate if different from FRS 112.21.a.iv
the proportion of ownership interests held.
Î If the Group have stopped recognising its share of losses of its associate when applying the FRS 112.22.c
equity method, it shall disclose the unrecognised share of losses of the associate, both for the
reporting period and cumulatively.
Ï An entity shall also disclose the nature and extent of any significant restrictions (e.g. resulting FRS 112.22.a
from borrowing arrangements, regulatory requirements or contractual arrangements
between investors with significant influence over an associate) on the ability of associates to
transfer funds to the entity in the form of cash dividends, or to repay loans and advances.
Ð In this illustration, the Group does not have any immaterial associate that is classified as
discontinued operation.
FRS 112.B16
The following disclosures are required, in aggregate for all individually immaterial associates:
(a) the carrying amount of its interests
(b) its share of the associates’
i. profit or loss from continuing operations
ii. post-tax profit or loss from discontinued operations
iii. other comprehensive income
iv. total comprehensive income
These disclosures above shall be disclosed separately for associates.
Ñ An entity may present the summarised financial information on the basis of the associate’s
FRS 112.B15
financial statements if:
(a) the entity measures its interest in the associate at fair value
(b) the associate does not prepare FRS financial statements and preparation on that basis
would be impracticable or cause undue cost.
In that case, the entity shall disclose the basis on which the summarised financial information
has been prepared.
Consolidated
Consolidated balance income
sheet statement Ê Balance sheet
At the end of the reporting period, the Group has tax losses of approximately $867,000
(2013: $682,000) that are available for offset against future taxable profits of the
companies in which the losses arose, for which no deferred tax asset is recognised due to
uncertainty of its recoverability. The use of these tax losses is subject to the agreement of
the tax authorities and compliance with certain provisions of the tax legislation of the
respective countries in which the companies operate. The tax losses have no expiry date
except for an amount of $101,000 (2013:$101,000) which will expire in 2015.
Unrecognised temporary differences relating to investments in subsidiaries and joint FRS 12.81.f
venture
At the end of the reporting period, no deferred tax liability (2013: nil) has been
recognised for taxes that would be payable on the undistributed earnings of certain of the
Group’s subsidiaries and joint venture as:
- The Group has determined that undistributed earnings of its subsidiaries will not be
distributed in the foreseeable future; and
- The joint venture of the Group cannot distribute its earnings until it obtains the
consent of both the venturers. At the end of the reporting period, the Group does not
foresee giving such consent.
FRS 12.87
Such temporary differences for which no deferred tax liability has been recognised
aggregate to $450,000 (2013: $340,000). The deferred tax liability is estimated to be
$81,000 (2013: $68,000).
Tax consequences of proposed dividends
There are no income tax consequences (2013: nil) attached to the dividends to the FRS 12.81.i
shareholders proposed by the Company but not recognised as a liability in the financial
statements (Note 43).
Commentary:
Ê This disclosure is required in situations where the amount of the deferred tax income or FRS 12.81.g.ii
expense recognised in profit or loss relating to each type of deferred tax assets/liabilities is
not apparent from the changes in the amounts recognised in the balance sheet.
SGD loan to a fellow subsidiary 1,500 1,500 1,500 1,500 FRS 24.18.b
Staff loans 63 48 51 36
2,793 2,778 16,753 17,401
Total trade and other receivables (current and
non-current) 25,645 27,745 17,091 17,751
Add: Cash and short-term deposits (Note 27) 6,117 4,858 4,621 4,145
Less: Sales tax receivables (15) (13) (3) (2) FRS 107.8.c
Trade receivables
Trade receivables are non-interest bearing and are generally on 30 to 90 days’ terms. FRS 107.7 and
31
They are recognised at their original invoice amounts which represent their fair values on
initial recognition.
At the end of the reporting period, trade receivables arising from export sales amounting FRS 107.36.b
to $1,560,000 (2013: $1,750,000) are arranged to be settled via letters of credit issued
by reputable banks in countries where the customers are based. Trade receivables from
first-time customers that are insured by trade credit insurance underwritten by a
reputable insurer in Singapore amount to $520,000 (2013: nil) at the end of the
reporting period.
Trade receivables denominated in foreign currencies at 31 December are as follows: FRS 107.34.a
Group Company
- Amounts due from subsidiaries and loans to subsidiaries are unsecured, non-interest
bearing and are to be settled in cash. The former are not expected to be repaid within
the next 12 months while the latter are due on 30 June 2017.
- Loans to associates bear interest at SIBOR + 2% p.a. (2013: SIBOR + 2% p.a.), have an
average maturity of 1.5 years (2013: 2.5 years), secured by corporate guarantees
issued by their respective holding companies and are to be settled in cash.
- Loan to a fellow subsidiary is unsecured, bears interest at SIBOR + 2% p.a. (2013:
SIBOR + 2% p.a.), repayable on 30 September 2016 and is to be settled in cash.
- Staff loans are unsecured and non-interest bearing. Non-current amounts have an
average maturity of 1.5 years (2013: 1.5 years). The loans are recognised initially at
fair value. The difference between the fair value and the absolute loan amount
represents payment for services to be rendered during the period of the loan and is
recorded as part of prepaid operating expenses.
Receivables that are past due but not impaired
The Group has trade receivables amounting to $5,760,000 (2013: $6,852,000) that are FRS 107.37.a
FRS 107.36.b
past due at the end of the reporting period but not impaired. These receivables are FRS 107.IG28
unsecured and the analysis of their aging at the end of the reporting period is as follows:
Group
2014 2013
$’000 $’000
Group
Collectively impaired Individually impaired FRS 107 IG29.a
Trade receivables that are individually determined to be impaired at the end of the FRS 107.37.b
FRS 107.36.b
reporting period relate to debtors that are in significant financial difficulties and have
defaulted on payments. These receivables are not secured by any collateral or credit
enhancements.
At the end of the reporting period, the Group and the Company have provided an FRS 107.37.b
FRS 107.36.b
allowance of $100,000 (2013: $100,000) for impairment of the unsecured loan to a FRS 24.18.c
fellow subsidiary company with a nominal amount of $1,600,000 (2013: $1,600,000).
This related party has been suffering significant financial losses for the current and past
two financial years.
There has been no movement in this allowance account for the financial year ended 31 FRS 107.16 and 6
FRS 24.18.d
December 2014 (2013: charge of $100,000 for impairment loss).
31 December 2014
$‘000
Description
Trade receivables 6,100 (2,540) 3,560
Trade payables - (2,540) -
31 December 2013
$‘000
Description
Trade receivables 5,450 (1,730) 3,720
Trade payables - (1,730) -
Receivables subject to an enforceable master netting arrangement that are not otherwise
set-off Ð
The Group regularly purchases electronic raw materials from and sell electronic products FRS 107.13E
to PQR Pte Ltd. Both parties do not have an arrangement to settle the amount due to or
from each other on a net basis but have the right to set off in the case of default and
insolvency or bankruptcy.
The Group’s trade receivables and trade payables subject to an enforceable master
netting arrangement that are not otherwise set-off are as follows:
FRS 107.13C.d.i
31 December 2014 FRS 107.13C.e
$‘000
Gross carrying Related amounts Net amount
amounts not set off in the
balance sheet
Description
Trade receivables 3,560 (1,493) 2,067
Trade payables 1,493 (1,493) -
31 December 2013
$‘000
Description
Trade receivables 4,230 (1,699) 2,531
Trade payables 1,699 (1,699) -
Commentary:
Ê When an entity holds collateral (of financial or non-financial assets) and is permitted to sell or FRS 107.15
repledge the collateral in the absence of default by the owner of the collateral, it shall disclose:
(a) the fair value of the collateral held; (b) the fair value of any such collateral sold or
repledged, and whether the entity has an obligation to return it; and (c) the terms and
conditions associated with its use of the collateral.
When an entity obtains financial or non-financial assets during the period by taking possession FRS 107.38
of collateral it holds as security or calling on other credit enhancements (e.g., guarantees), and
such assets meet the recognition criteria under FRS, an entity shall disclose for such assets
held at the reporting date:
(a) the nature and carrying amount of the assets; and
(b) when the assets are not readily convertible into cash, its policies for disposing of such
assets or for using them in its operations.
The above disclosure required for financial assets obtained by taking possession of collateral or
other credit enhancements are only applicable to assets still held at the reporting date.
Ì An entity shall disclose a description of collateral held as security and of other credit FRS 107.36.b
enhancements, and their financial effect (e.g. a quantification of the extent to which collateral
or other credit enhancements mitigate credit risk) in respect of the amount that best
represents the maximum exposure to credit risk.
Ageing analysis of financial assets that are past due but not impaired
Î FRS 107 requires the disclosure of an analysis by class of the age of financial assets that are FRS 107.37.a and IG
28
past due but not impaired. Any entity uses its judgement to determine the appropriate time
bands to be disclosed.
Ï FRS 107 requires disclosure requirements where financial assets are impaired by credit losses FRS 107.16
and the entity records the impairment in a separate account (e.g., an allowance account used
to record individual impairments or a similar account used to record a collective impairment of
assets) rather than directly reducing the carrying amount of the asset. In such circumstances,
the entity shall disclose a reconciliation of changes in that account (the “reconciliation”) during
the period for each class of financial assets.
In this illustration, the entity has presented the reconciliation of changes in the two allowance
accounts that it has used to record impairment of trade receivables, i.e., trade receivables that
are collectively impaired and those that are individually impaired.
Commentary (continued):
Ð FRS 107 require an entity to disclose information to enable users of its financial statements to FRS 107.13B
evaluate the effect or potential effect of netting arrangements on the entity’s financial position
which includes the effect or potential effect of rights of set-off associated with the entity’s
recognised financial assets and recognised financial liabilities that are within the scope of
paragraph 13A of FRS 107.
These disclosures are required for all recognised financial instruments that are set off in FRS 107.13A
accordance with paragraph 42 of FRS 32 and also apply to recognised financial instruments
that are subject to an enforceable master netting arrangement or similar agreement
irrespective of whether they are set off in accordance with paragraph 42 of FRS 32.
To meet the objective above, an entity shall disclose, at the end of the reporting period, the FRS 107.13C
following quantitative information separately for recognised financial assets and recognised
financial liabilities that are within the scope of paragraph 13A of FRS 107:
(a) the gross amounts of those recognised financial assets and recognised financial liabilities;
(b) the amounts that are set off in accordance with the criteria in FRS 32.42 when
determining the net amounts presented in the balance sheet;
(c) the net amounts presented in the balance sheet;
(d) the amounts subject to an enforceable master netting arrangement or similar
arrangement that are not otherwise include in (b), including Ñ
i. amounts related to recognised financial instruments that do not meet some or all of
the offsetting criteria of FRS 32.42; and
ii. amounts related to financial collateral (including cash collateral); and
(e) the net amounts after deducting the amounts in (d) from the amounts in (c) above.
The information above shall be presented in a tabular format, separately for financial assets
and financial liabilities, unless another format is more appropriate.
Ñ The total amount disclosed for an instrument in accordance with (d) above shall be limited to FRS 107.13D
the net amounts presented in the balance sheet for that instrument.
Group
2014 2013
$’000 $’000
Current:
FRS 107.8.a.ii
Held for trading investments Ê
- Equity securities (quoted) 1,512 1,260
Non-current:
FRS 107.8.d
Available-for-sale financial assets Ê
FRS 107.31
- Other debt securities (unquoted) 1,563 980
- Equity securities (quoted) 1,746 848
- Equity securities (unquoted) 139 28
- Equity securities (unquoted), at cost 500 600
3,948 2,456
Held-to-maturity investment Ê
- 3% p.a. SGD government bonds due 31 March 2016 (quoted) Ë 660 650 FRS 107.8.b
4,608 3,106
· Impairment loss of $70,000 (2013: $150,000) and $11,000 (2013: $35,000) for
quoted and unquoted equity securities respectively as there were “significant” or
“prolonged” decline in the fair value of these investments below their costs. The Group
treats “significant” generally as X% and “prolonged” as greater than X months.
· Impairment loss of $100,000 (2013: nil) pertaining to unquoted equity securities
carried at cost, reflecting the write-down in the carrying value of this private equity
investment in a Singapore company that was placed under receivership.
· Impairment loss of $17,000 (2013: $25,000) for unquoted other debt securities after
taking into considerations the probability of default or significant delay in repayments
by the debtors.
Commentary:
Commentary (continued):
Nature and extent of risks arising from financial instruments
Information such as the interest rates and maturity dates of the debt securities, and countries FRS 107.31
where the equity securities are listed should be disclosed if material and enables the users of
the financial statements to evaluate the nature and extent of the risks arising from financial
instruments to which the entity is exposed to at the reporting date. In this illustration, the
countries where the equity securities are listed are disclosed in Note 40 (e) Market price risk.
If an entity has reclassified any financial asset measured at cost or amortised cost to fair value FRS 107.12
or reclassified any financial asset at fair value, rather than at cost or amortised cost, FRS 107
requires disclosure of the amount and reason for the reclassification.
Illustrative disclosure for reclassification of financial assets at cost to fair value:
On 30 November 2014, the Group reclassified its investment in equity instruments of a
private Singapore company (XXX Pte Ltd) that was previously measured at cost of $XXX
to available-for-sale investments measured at fair value of $XXX, when a reliable measure
of fair value became available upon its listing on the SGX-ST.
Please refer to commentary no. 3 of Note 2.16 (c) Impairment of available-for-sale financial
assets.
Group
2014 2013
$’000 $’000
Aggregate amount of costs incurred and recognised profits (less
recognised losses) to date 34,089 24,552 FRS 11.40.a
Gross amount due to customers for contract work-in-progress (358) (586) FRS 11.42.b
293 (188)
Advances received included in gross amount due to customers for
FRS 11.40.b
contract work 45 60
Retention sums on construction contract included in trade receivables 65 80 FRS 11.40.c
Commentary:
Ê Where applicable, an entity is required to disclose the amount of advances received from FRS 11.40.b
customer before the related construction work is performed.
Group
2014 2013
$’000 $’000
During the financial year, borrowing costs of $35,000 (2013: $33,000), arising from FRS 23.26.a and
b
borrowings obtained specifically for the development property were capitalised under
“Development costs”. The rate used to determine the amount of borrowing costs eligible
for capitalisation was 7.5% (2013: 7.2%), which is the effective interest rate of the specific
borrowing. Ì
The freehold land under development has been pledged as security for a bank loan (Note FRS 2.36.h
30).
Commentary:
Ê Where the aggregate value for all properties for development, sale or for investment purposes SGX 1207.11
held by the entity represent more than 15% of the value of the consolidated net tangible
assets, or contribute more than 15% of the consolidated pre-tax operating profit, entities
listed on the SGX-ST are required to disclose further information regarding development
properties.
Illustrative disclosure pursuant to requirements of SGX 1207.11:
Ë In this illustration, the entire amount included in development property is expected to be FRS 1.61
recovered or settled no more than twelve months after the reporting period.
If the amount includes amounts expected to be recovered more than twelve months after the
reporting period, an entity shall disclose the amount expected to be recovered more than
twelve months after the reporting period.
Borrowing costs capitalised
Ì Please refer to commentary no. 3 of Note 13 Property plant and equipment.
Group
2014 2013
$’000 $’000
The reversal of write-down of inventories was made when the related inventories were FRS 2.36.g
sold above their carrying amounts in 2013.
The Group has subjected finished goods amounting to $1,500,000 (2013: $1,500,000), FRS 2.36.h
to a floating charge as security for bank overdraft facilities (Note 30).
26. Derivatives
FRS 107.7
and 31
Group
2014 2013
$’000 $’000
Contract/ Contract/
Notional Notional
Amount Assets Liabilities Amount Assets Liabilities
At the Company level, the carrying amount of financial liability at fair value through profit FRS 107.8.e
or loss is the contingent consideration for business combination amounting to
$685,000 as at 31 December 2014 (2013: Nil).
Forward currency contracts are used to hedge foreign currency risk arising from the
Group’s sales and purchases denominated in USD for which firm commitments existed at
the end of the reporting period, extending to March 2015 (2013: March 2013) (Note
40(d)).
The interest rate swap receives floating interest equal to SIBOR + 3% p.a. (2013: SIBOR +
3% p.a.), pays a fixed rate of interest of 7.5% p.a. (2013: 7.5% p.a.) and matures on 30
November 2014 (2013: 30 November 2013).
Commentary:
Group Company
Cash at banks earns interest at floating rates based on daily bank deposit rates. Short-
term deposits are made for varying periods of between one day and three months,
depending on the immediate cash requirements of the Group and the Company, and earn
interests at the respective short-term deposit rates. The weighted average effective FRS 107.7,31 and
34
interest rates as at 31 December 2014 for the Group and the Company were 2.60%
(2013: 2.80%) and 0.15% (2013: 0.20%) respectively.
Cash and short-term deposits denominated in foreign currencies at 31 December are as FRS 107.34.a
follows:
Group Company
For the purpose of the consolidated cash flow statement, cash and cash equivalents FRS 7.45
comprise the following at the end of the reporting period:
Group
2014 2013
Commentary:
Ê In this illustration, it is assumed that the Group does not have any cash and cash equivalents
that are not available for use by the Group.
Where applicable, disclosure is required, together with a commentary by management, for the FRS 7.48
amount of significant cash and cash equivalent balances held by the enterprise that are not
available for use by the group. There are various circumstances in which cash and cash FRS 7.49
equivalent balances held by an enterprise are not available for use by the group. Examples
include cash and cash equivalent balances held by a subsidiary that operates in a country
where exchange controls or other legal restrictions apply when the balances are not available
for general use by the parent or other subsidiaries.
Cash and cash equivalents which are restricted in its use for more than twelve months shall be FRS 1.66.d
classified as non-current assets.
Group
Maintenance
warranties Legal claim Total
Maintenance warranties
A provision is recognised for expected warranty claims on certain specialised electronic FRS 37.85
components sold during the last two years, based on past experience of the level of
repairs and returns. It is expected that most of these costs will be incurred in the next two
financial years and all will have been incurred within three years from the end of the
reporting period. Assumptions used to calculate the provision for maintenance warranties
were based on current sales levels and current information available about returns based
on the three-year warranty period for the relevant specialised electronic components
sold.
During the financial year, based on the earlier mentioned statistics and warranty claims FRS 1.98.g
experience, management concluded that the provision for maintenance warranties
exceeded the amount necessary to cover warranty claims on products sold during the last
two years. Accordingly, $60,000 (2013: nil) of the warranty provision has been reversed.
Legal claim
On 30 June 2014, a competitor of the Group made a claim against one of the Group’s FRS 37.85
subsidiaries for infringing its technology licence from 2013 to 2014. At the end of the
reporting period, the management is in the process of negotiating a settlement
agreement with the plaintiff. The provision made represents the management’s estimate
of the settlement consideration, being the account of profit for the periods covered by the
licence. The settlement and compensation is expected to be concluded in 2015.
Commentary:
Ê FRS 37 does not require comparatives of movements in provision to be presented. FRS 37.84
Commentary (continued):
Contingent liability
In this illustration, no contingent liabilities are recognised in the business combination.
For contingent liabilities recognised in a business combination, the acquirer is required to FRS 103.B67.c
disclose the information required by paragraphs 84 and 85 of FRS 37 Provisions,
Contingent Liabilities and Contingent Assets for each class of provision.
Group
2014 2013
$’000 $’000
Cost:
At 1 January 2,694 1,644
Received during the financial year 2,040 1,030
Exchange differences 34 20
At 31 December 4,768 2,694
Accumulated amortisation:
At 1 January 730 540
Amortisation 239 180
Exchange differences 11 10
At 31 December 980 730
Deferred capital grants relate to government grants received for the acquisition of FRS 20.39.b
equipment for research activities undertaken by the Group’s subsidiary in People’s
Republic of China to promote technology advancement and transfer. There are no FRS 20.39.c
unfulfilled conditions or contingencies attached to these grants.
Current:
Obligations under finance leases (Note
37(d)) 2015 216 16 – –
Bank overdrafts On demand 498 1,444 – –
6% p.a. fixed rate SGD bank loan 2015 475 830 – –
1,189 2,290 – –
Non-current:
Obligations under finance leases (Note
37(d)) 2016-2024 720 160 – –
7.5% p.a. fixed rate SGD bonds 2016-2020 3,100 3,000 3,100 3,000
Bank loans:
- 8% p.a. fixed rate USD loan 31 July 2020 1,545 – – –
- SGD loan at LIBOR + 2.0% p.a. 2016-2020 2,200 2,200 2,200 2,200
- SGD loan at SIBOR + 3.0% p.a. 30 November 2018 5,400 5,400 – –
- 8.5% p.a. fixed rate SGD loan – – 2,000 – –
2014 2013
$’000 $’000
Commentary:
Defaults or breaches
Ê If during the period, there were defaults or breaches of loan agreement terms, the entity FRS 107.18
should disclose:
(a) Details of any defaults during the period of principal, interest, sinking fund, or
redemption terms of those loans payable;
(b) The carrying amount of the loans payable in default at the reporting date; and
(c) Whether the default was remedied, or the terms of the loans payable were renegotiated,
before the financial statements were authorised for issue.
These disclosure requirements are also applicable to breaches of loan agreement terms other FRS 107.19
than those mentioned above whose breaches permitted the lender to demand accelerated
repayment (unless the breaches were remedied, or the terms of the loan were renegotiated,
on or before the reporting date).
Illustrative note disclosure for default on interest payment:
The Company has defaulted in interest payment of $XXX on bank borrowings carried at
$XXX at the end of the reporting period. The Company experienced a temporary shortage
of funds due to decrease in market demand in the Company’s products in the first two
quarters. The interest payable of $XXX which was overdue since October 2014 remained
unpaid as at the date when these financial statements were authorised for issue.
Illustrative note disclosure for breach of loan covenant:
During the current financial year, the Company breached a covenant of a bank loan. The
Company did not fulfil the requirement to maintain gearing ratio at X.XX for a credit line of
$XXX. The credit line was fully drawn down and presented as current liability at the end of
the reporting period. The bank is contractually entitled to request for immediate
repayment of the outstanding loan amount in the event of breach of covenant.
The bank had not requested for immediate repayment of the outstanding loan amount as
at the date when these financial statements were authorised for issue. Management
commenced renegotiation of the loan agreement terms in December 2014. As of the date
the financial statements were authorised for issue, the renegotiation was still in progress.
Ë If an entity has issued an instrument that contains both a liability and an equity component FRS 107.17
and the instrument has multiple embedded derivatives whose values are interdependent (such
as a callable convertible debt instrument), it shall disclose the existence of those features.
Group Company
Group Company
Commentary:
Ë Disclosures that related party transactions were made on terms equivalent to those that FRS 24.23
prevail in arm’s length transactions are made only if such terms can be substantiated.
Group Company
Commentary:
Contingent consideration for business combination
Ê Illustrative note disclosure for contingent consideration for business combination when the
amount is finalised in 2015:
Note X Other liabilities
As part of the purchase agreement with the previous owners of MSAX dated 18 October FRS 103.B64
2014, a portion of the consideration was determined to be contingent on the
performance of the acquired entity. At 18 October 2015, a total of $700,000 was paid to
the previous owner of MSAX under this arrangement.
Group
2015
$’000
Initial fair value of the contingent consideration at acquisition date 450 FRS 103.B64.g.i
Fair value adjustment as at 31 December 2014 235
Financial liability for the contingent consideration as of 31 December 2014 685
Fair value adjustment as at 18 October 2015 15
Total consideration paid 700
As of 31 December 2013 and prior to payment, the fair value of the contingent
consideration was reassessed which led to additional cost charged to profit or loss.
FRS 103.58
The initial fair value of the consideration of $450,000 is included in cash flows from
investing activities, the remainder, totalling to $250,000, is recognised in cash flows
from operating activities.
Group
Extract of Consolidated Cash Flow Statement
2015
$’000
Cash flows from operating activities:
Settlement of contingent consideration for business combination ( 250)
Cash flows from investing activities:
Settlement of contingent consideration for business combination (450) FRS 7.16
2014 2013
No. of No. of
shares shares
‘000 $’000 ‘000 $’000
Issued and fully paid ordinary shares FRS 1.79.a.ii
The holders of ordinary shares (except treasury shares) are entitled to receive FRS 1.79.a.v
dividends as and when declared by the Company. All ordinary shares carry one vote per FRS 1.79.a.iii
share without restrictions. The ordinary shares have no par value.
The Company has two employee share option plans under which options to subscribe FRS 1.79.a.vii
for the Company’s ordinary shares have been granted to employees of the Group.
b) Treasury shares
Group and Company
FRS 1.79.a.vi
2014 2013
No. of No. of
shares shares
‘000 $’000 ‘000 $’000
At 1 January – – – –
Acquired during the financial year (200) (254) – –
Reissued pursuant to employee share option
plans:
- For cash on exercise of employee share
options (Note 35) 75 81 – –
- Transferred from employee share option
reserve – 79 – –
- Gain transferred to gain or loss on reissuance
of treasury shares – (65) – –
75 95 – –
At 31 December (125) (159) – –
Treasury shares relate to ordinary shares of the Company that is held by the Company.
The Company acquired 200,000 (2013: nil) shares in the Company through purchases FRS 32.33
on the Singapore Exchange during the financial year. The total amount paid to acquire
the shares was $254,000 (2013: nil) and this was presented as a component within
shareholders’ equity.
The Company reissued 75,000 (2013: nil) treasury shares pursuant to its employee
share option plans at a weighted average exercise price of $1.08 (2013: nil) each.
Group
2014 2013
$’000 $’000
Share-based payments (Employee share option plans) 245 150 FRS 102.51.a
Other short-term benefits 392 376
20,502 19,024 FRS 1.104
2014 2013
The fair value of the share options granted under the SEOP is estimated at the grant date FRS 102.47.a.i
using a binomial option pricing model, taking into account the terms and conditions upon
which the share options were granted.
The fair value of share options granted under the GESP is estimated at the date of the FRS 102.47.a.i and iii
grant using a Monte Carlo simulation model, taking into account the terms and conditions
upon which the options were granted. The model simulates the TSR and compares it
against the group of principal competitors. It takes into account historic dividends, share
price fluctuation covariance of the Company and each entity of the group of competitors
to predict the distribution of relative share performance.
The following table lists the inputs to the option pricing models for the years ended 31 FRS 102.47.a.i
December 2014 and 2013:
The expected life of the share options is based on historical data and is not necessarily FRS 102.47.a.ii
indicative of exercise patterns that may occur. The expected volatility reflects the
assumption that the historical volatility over a period similar to the life of the options is
indicative of future trends, which may not necessarily be the actual outcome.
Commentary:
Ê In this illustration, all the share-based payment transactions are equity-settled. If an entity has FRS 102.51.a and b
share-based payment transactions that are either cash-settled or with cash alternatives (for
example, share appreciation rights), the entity should disclose:
- The total expense recognised for the period arising from the share-based payment
transactions;
- The total carrying amount of liabilities at the end of the period; and
- The total intrinsic value at the end of the period of liabilities for which the counterparty’s
right to cash or other assets had vested by the end of the period (e.g., vested share
appreciation rights).
Illustrative note disclosures:
Share Appreciation Rights (SARs) Plan
Business development managers in the electronic components segment are granted share FRS 102.45.a
options, which can only be settled in cash. These SARs will vest when a specified target
number of new sales contracts are closed. The contractual life of the options is six years.
The expense recognised in profit or loss granted under the Share Appreciation Rights Plan FRS 102.51.a
during the financial year is $XXX (2013: $XXX).
The carrying amount of the liability recognised in the Group’s and the Company’s balance FRS 102.51.b.i
sheets relating to such share options at 31 December 2014 is $XXX (2013: $XXX).
No Share Appreciation Rights granted under this plan had vested at the end of the FRS 102.51.b.ii
reporting period (2013: nil).
Ë If options were exercised on a regular basis throughout the period, an entity may instead FRS 102.45.c
disclose the weighted average share price during the period.
Ì If the range of exercise prices is wide, the outstanding options shall be divided into ranges that FRS 102.45.d
are meaningful for assessing the number and timing of additional shares that may be issued
and the cash that may be received upon exercise of those options.
2014 2013
$’000 $’000
Related companies:
These are subsidiaries and associates of Good Group (International) Ltd and its
subsidiaries, excluding entities within the Group.
Company / firm related to a director:
- One of the directors of the Company, through his 25% (2013: 25%) equity interest in FRS 24.18
CA 201.8
Unik-One Pte Ltd (UOPL), had an interest in a contract for the supply of specialised
digital components to UOPL. During the financial year, the Group sold specialised
digital components of $225,000 (2013: $135,000) to UOPL. No balance with UOPL
was outstanding at the end of the reporting period (2013: nil).
- The Group has entered into a contract with LPS Associates LLP, a firm of which the
wife of one of the directors of the Company is the managing partner, for the
provision of consolidation accounting services to the Company for an amount of
$25,000 (2013: $18,000). No balance with the firm was outstanding at the end of
the reporting period (2013: nil).
Group
2014 2013
$’000 $’000
- 37,000 (2013: 25,000) share options were granted to two of the Company's
executive directors under the SEOP (Note 35) at an exercise price of $1.30 (2013:
$1.26) each.
- These directors exercised options for 10,000 (2013: 5,000) ordinary shares of the
Company at a price of $1.05 (2013: $1.05) each, with a total cash consideration of
$10,500 (2013: $5,250) paid to the Company.
At the end of the reporting period, the total number of outstanding share options
granted by the Company to the abovementioned directors under the SEOP amount to
120,000 (2013: 93,000). No share options have been granted to the Company's non-
executive directors.
Commentary:
Ê An entity should make disclosures for transactions with related parties separately for each of FRS 24.19 and 20
the following categories:
(a) the parent;
(b) entities with joint control or significant influence over the entity;
(c) subsidiaries;
(d) associates;
(e) joint ventures in which the entity is a venturer;
(f) key management personnel of the entity or its parent; and
(g) other related parties.
Such categorisation help provide a more comprehensive analysis of related party balances and
transactions.
Commentary (continued):
Ë The following are examples of transactions that are disclosed if they are with a related party: FRS 24.21
Ì Items of a similar nature may be disclosed in aggregate except when separate disclosure is FRS 24.24
necessary for an understanding of the effects of related party transactions on the financial
statements of the entity.
Í Key management personnel are those persons having authority and responsibility for planning, FRS 24.9
directing and controlling the activities of the entity, directly or indirectly, including any director
(whether executive or otherwise) of that entity.
(a) The Group uses the legal services provided by Mrs. May Lim who is a close family member FRS 24.18.b
of Mr. Goh Hock Inn, a Director of the Company. The legal fees paid were in relation to
purchase of certain non-current assets of the Group. The fees charged were based on
normal market rates for such services and were due and payable under normal payment
terms.
(b) The Group purchases its office stationeries from Draco Pte. Ltd., a Company controlled by
Mr. Goh Hock Inn, a Director of the Company. These purchases are based on normal
market rates for such supplies and were due and payable under normal payment terms.
37. Commitments
a) Capital commitments
Capital expenditure contracted for as at the end of the reporting period but not
recognised in the financial statements are as follows:
Group Company
2014 2013 2014 2013
$’000 $’000 $’000 $’000
1,753 718 90 55
Group
2014 2013
$’000 $’000
Group
2014 2013
$’000 $’000
Commentary:
Ê An entity shall disclose total commitments it has made but not recognised at the reporting date FRS 112.B18
(including its share of commitments made jointly with other investors with joint control of a
joint venture) relating to its interests in joint ventures. Commitments are those that may give
rise to a future outflow of cash or other resources.
Unrecognised commitments that may give rise to a future outflow of cash or other resources FRS 112.B19
include:
(a) unrecognised commitments to contribute funding or resources as a result of, for example:
i. the constitution or acquisition agreements of a joint venture (that, for example,
require an entity to contribute funds over a specific period).
ii. capital-intensive projects undertaken by a joint venture.
iii. unconditional purchase obligations, comprising procurement of equipment, inventory
or services that an entity is committed to purchasing from, or on behalf of, a joint
venture.
iv. unrecognised commitments to provide loans or other financial support to a joint
venture.
v. unrecognised commitments to contribute resources to a joint venture, such as assets
or services.
vi. other non-cancellable unrecognised commitments relating to a joint venture.
(b) Unrecognised commitments to acquire another party’s ownership interest (or a portion of
that ownership interest) in a joint venture if a particular event occurs or does not occur in
the future.
Ë The disclosure of future minimum lease payments according to time bands relates only to non- FRS 17.4
cancellable operating leases. A non-cancellable lease is a lease that is cancellable only:
(a) upon the occurrence of some remote contingency;
(b) with the permission of the lessor;
(c) if the lessee enters into a new lease for the same or an equivalent asset with the same
lessor; or
(d) upon payment by the lessee of such an additional amount that, at inception of the lease,
continuation of the lease is reasonably certain.
A leasing arrangement where the lessee has the right to terminate lease by providing a written
notice to the lessor without incurring losses significant in comparison to the value of remaining
lease payments is generally not considered a non-cancellable lease and is not included in such
disclosure.
Group
2014 2013
$’000 $’000
Present Present
Minimum value of Minimum value of
lease payments lease payments
payments (Note 30) payments (Note 30)
Not later than one year 251 216 30 16
Later than one year but not later than
five years 392 252 265 120
Later than five years 643 468 117 40
Total minimum lease payments 1,286 936 412 176
Less: Amounts representing finance
charges (350) – (236) –
Present value of minimum lease
payments 936 936 176 176
38. Contingencies
FRS 37.86
a) Contingent liabilities
Legal claim
On 30 November 2014, a customer has commenced an action against the Group in FRS 11.45
respect of construction works claimed to be sub-standard. The estimated payout is
$250,000 should the action be successful. A trial date has not yet been set and
therefore it is not practicable to state the timing of any payment. The Group has been
advised by its legal counsel that it is possible, but not probable, that the action will
succeed and accordingly no provision for any liability has been made in these financial
statements.
Guarantees
The Group has provided the following guarantees at the end of the reporting period: FRS 24.20.h
- It has guaranteed its share of $20,000 (2013: $15,000) of the associate’s FRS 112.23.b
contingent liabilities which have been incurred jointly with other investors.
- It has guaranteed part of the bank overdraft of the associate to a maximum FRS 112.23.b
amount of $300,000 (2013: nil), which it is severally liable for in the event of
default by the associate.
- It has guaranteed its interest in its share of the joint venture’s loan of $245,000 FRS 112.23.b
(2013: $240,000) (Note 30).
- It has guaranteed to an unrelated party the performance of a contract for the joint FRS 112.23.b
venture. No liability is expected to arise (2013: nil).
The Company has provided a corporate guarantee to a bank for a $5,400,000 (2013: FRS 24.20.h
$5,400,000) loan (Note 30) taken by a subsidiary.
b) Contingent asset
a) A legal claim for defamation of $500,000 was lodged against one of the Group’s FRS 37.89
competitors in October 2013. Based on advice from the legal counsel, the Group is
confident that the dispute will be settled in its favour.
b) The Group is claiming amounts (such as variations and additional works under the FRS 11.45
construction contracts) and pending proceedings and disputes with clients. It is not
possible to reasonably determine the extent and timing of possible inflow of
economic benefits. These claims are therefore not recognised in these financial
statements.
Commentary:
Ê An entity shall disclose information that helps users of its financial statements assess both of FRS 113.91
the following:
(a) For assets and liabilities that are measured at fair value on a recurring or non-recurring
basis in the balance sheet after initial recognition, the valuation techniques and inputs
used to develop those measurements.
(b) For recurring fair value measurements using significant unobservable inputs (Level 3), the
effect of the measurements on profit or loss or other comprehensive income for the
period.
To meet the objective above, an entity shall consider all the following: FRS 113.92
Group
2014
$’000
Non-financial assets: Ë
Investment properties Ì
Commercial - - 2,831 2,831
Residential - 1,814 - 1,814
Property, plant and equipment Ì
Freehold land - - 11,874 11,874
Buildings - - 3,291 3,291
Disposal group classified as held for sale* - - 199 199
Non-financial assets as at 31 December 2014 - 1,814 18,195 20,009
*Disposal group classified as held for sale with a carrying amount of $649,000 were
written down to their fair value of $219,000, less costs to sell of $20,000 (or $199,000),
resulting in a net loss of $450,000, which was included in the profit or loss for the period.
Non-financial assets: Ë
Investment properties Ì
Commercial - - 2,380 2,380
Residential - 1,575 - 1,575
Property, plant and equipment Ì
Freehold land - - 10,726 10,726
Buildings - - 3,574 3,574
Non-financial assets as at 31 December 2013 - 1,575 16,680 18,255
*The yield adjustments are made for any difference in the nature, location or condition of
the specific property.
*The yield adjustments are made for any difference in the nature, location or condition of
the specific property.
For unquoted equity securities, a significant increase (decrease) in the expected FRS 113.93.h.i
dividend yield would result in a significantly higher (lower) fair value measurement. A
significant increase (decrease) in discount for lack of marketability would result in a
significantly lower (higher) fair value measurement. A change in assumption used for
dividend yield may warrant a directionally opposite change in assumption for discount
for lack of marketability.
For unquoted debt securities, significant increases (decreases) in prepayment rates,
probability of default and loss severity in the event of default would result in a
significant lower (higher) fair value measurement. Generally, a change in the
assumption used for the probability of default is accompanied by a directionally
similar change in the assumption used for the loss severity and a directionally
opposite change in the assumption used for prepayment rates.
For contingent consideration, a significant increase (decrease) in the probability of
meeting the contractual earnings target would result in a significantly higher (lower)
fair value measurement.
For freehold land and buildings and commercial investment properties, a significant
increase (decrease) in yield adjustments based on management’s assumptions would
result in a significantly lower (higher) fair value measurement.
31 December 2013
Effect of reasonably possible
alternative assumptions
Carrying Profit or loss Other
amount comprehensive
income
$’000 $’000 $’000
Recurring fair value measurements
Available-for-sale financial assets:
Unquoted equity securities 28 - 10
Unquoted debt securities 980 - 18
Group
2013
$’000
Fair value measurements using significant unobservable inputs (Level 3)
Group
2014
$’000
Fair value measurements using significant unobservable inputs (Level 3)
Available-for-sale financial Property, plant and Investment Contingent Total
assets equipment properties consideration
Unquoted Unquoted Freehold Buildings Commercial
equity debt land
securities securities
Other
comprehensive
FRS 113.93.e.ii
income:
- Net gain on fair
value changes
of available-for-
sale financial
assets 42 28 - - - - 70
- Net surplus on
revaluation of
land and
buildings - - 1,001 249 - - 1250
(i) Relates to net gain from fair value adjustment of investment properties held as at 31 December
2014.
(ii) Relates to unrealised loss from fair value adjustment of contingent consideration for business
combination as at 31 December 2014.
Group
2013
$’000
Fair value measurements using significant unobservable inputs (Level 3)
Available-for-sale Property, plant and Investment Contingent Total
financial assets equipment properties consideration
Unquoted Unquoted Freehold Buildings Commercial
equity debt land
securities securities
Total gains and
losses for the period
included in
Profit or loss: FRS 113.93.e.i
- Other income
Net gain
from fair
value
adjustment
of
investment
properties (i) - - 50 - 50
Other
comprehensive
income: FRS 113.93.e.ii
- Net gain on fair
value changes
of available-for-
sale financial
assets 15 9 - - - - 24
- Net surplus on
revaluation of
land and
buildings - - 1,784 620 - - 2,404
(i) Relates to net gain from fair value adjustment of investment properties held as at 31 December
2013.
The Group’s Chief Financial Officer (CFO), who is assisted by the Head of Treasury
and senior controller (collectively referred to as the “CFO office”) oversees the
Group’s financial reporting valuation process and is responsible for setting and
documenting the Group’s valuation policies and procedures. In this regard, the CFO
office reports to the Group’s Audit Committee.
For all significant financial reporting valuations using valuation models and significant
unobservable inputs, it is the Group’s policy to engage external valuation experts who
possess the relevant credentials and knowledge on the subject of valuation, valuation
methodologies and FRS 113 fair value measurement guidance to perform the
valuation.
For valuations performed by external valuation experts, the appropriateness of the
valuation methodologies and assumptions adopted are reviewed along with the
appropriateness and reliability of the inputs (including those developed internally by
the Group) used in the valuations.
In selecting the appropriate valuation models and inputs to be adopted for each
valuation that uses significant non-observable inputs, external valuation experts are
requested to calibrate the valuation models and inputs to actual market transactions
(which may include transactions entered into by the Group with third parties as
appropriate) that are relevant to the valuation if such information are reasonably
available. For valuations that are sensitive to the unobservable inputs used, external
valuation experts are required, to the extent practicable to use a minimum of two
valuation approaches to allow for cross-checks.
Significant changes in fair value measurements from period to period are evaluated
for reasonableness. Key drivers of the changes are identified and assessed for
reasonableness against relevant information from independent sources, or internal
sources if necessary and appropriate.
The CFO office documents and reports its analysis and results of the external
valuations to the Audit Committee on a quarterly basis. The Audit Committee
performs a high-level independent review of the valuation process and results and
recommends if any revisions need to be made before presenting the results to the
Board of Directors for approval.
e) Assets and liabilities not carried at fair value but for which fair value is disclosed Ñ FRS 113.97
FRS 107.25
The following table shows an analysis of the Group’s assets and liabilities not measured at
fair value but for which fair value is disclosed:
Group
2014
$’000
Fair value measurements at the end of the reporting period using
Quoted
prices in
active Significant
markets observable
for inputs other Significant
identical than quoted unobservable Carrying
assets prices inputs Total amount
(Level 1) (Level 2) (Level 3)
Assets
Government bonds 675 - - 675 660
Investment in associates 10,600 - - 10,600 10,595
Staff loans (non-current) - - 60 60 63
Liabilities:
Deferred cash settlement - - (205) (205) (200)
Financial guarantees - - (29) (29) (26)
Loans and borrowings (non-
current)
- Fixed rate bank loans and
bonds - - (4,983) (4,983) (4,890)
- Convertible redeemable
preference shares - - (509) (509) (450)
Company
Assets
Amounts and loans due from
subsidiaries - 13,432 - 13,432 13,563
Staff loans (non-current) - - 49 49 51
Liabilities:
Financial guarantees - - (85) (85) (80)
Loans and borrowings (non-
current)
- Fixed rate bank loans and
bonds - - (3,162) (3,162) (3,100)
- Convertible redeemable
preference shares - - (509) (509) (450)
e) Assets and liabilities not carried at fair value but for which fair value is disclosed Ñ FRS 113.97
FRS 107.25
(continued)
Group
2013
$’000
Fair value measurements at the end of the reporting period using
Quoted
prices in
active Significant
markets observable
for inputs other Significant
identical than quoted unobservable Carrying
assets prices inputs Total amount
(Level 1) (Level 2) (Level 3)
Assets
Government bonds 665 - - 665 650
Investment in associates 10,400 - - 10,400 10,321
Staff loans (non-current) - - 45 45 48
Liabilities:
Financial guarantees - - (11) (11) (8)
Loans and borrowings (non-
current)
- Fixed rate bank loans and
bonds - - (5,342) (5,342) (5,240)
- Convertible redeemable
preference shares - - (459) (459) (428)
Company
Assets
Amounts and loans due from
subsidiaries - 14,161 - 14,161 14,635
Staff loans (non-current) - - 34 34 36
Liabilities:
Financial guarantees - - (105) (105) (100)
Loans and borrowings (non-
current)
- Fixed rate bank loans and
bonds - - (3,060) (3,060) (3,000)
- Convertible redeemable
preference shares - - (459) (459) (428)
The fair values as disclosed in the table above are estimated by discounting expected
future cash flows at market incremental lending rate for similar types of lending,
borrowing or leasing arrangements at the end of the reporting period.
f) Fair value of financial instruments by classes that are not carried at fair value
and whose carrying amounts are not reasonable approximation of fair value
The fair value of financial assets and liabilities by classes that are not carried at fair FRS 107.7 and 31
value and whose carrying amounts are not reasonable approximation of fair value are FRS 107.25,26 and
29
as follows:
Group Company
Financial assets:
Government bonds 22 660 675 650 665 – – – –
Equity securities, at
22 500 T 600 T – – – –
cost
Amounts and loans due
from subsidiaries 21 – – – – 13,972 13,432 14,635 14,161
Financial liabilities:
Deferred cash
settlement 31 (200) (205) – – – – – –
Financial guarantee 32 (26) (29) (8) (11) (80) (85) (100) (105)
- Obligations under
finance leases (720) (769) (160) (169) – – – –
- Convertible
redeemable
preference shares (450) (509) (428) (459) (450) (509) (428) (459)
Commentary:
Ë In this illustration, the current use of the non-financial assets does not differ from their highest FRS 113.93.i
and best use. If for recurring and non-recurring fair value measurements, the highest and best
use of a non-financial asset differs from its current use, an entity shall disclose the fact and
why the non-financial asset is being used in a manner that differs from its highest and best use.
Ì In this illustration, the Group’s commercial properties are categorised within Level 3 of the fair
value hierarchy as the properties’ fair values are determined based on comparable market
transactions adjusted for significant unobservable inputs such as yield adjustments relating to
nature, location and condition of the specific property.
In this illustration, the Group’s residential investment properties are categorised within Level 2
of the fair value hierarchy as the properties’ fair values are determined solely based on
observable inputs other than quoted prices.
Í In this illustration, the Group does not have any liability measured at fair value and issued with FRS 113.98
an inseparable third-party credit enhancement.
For a liability measured at fair value and issued with an inseparable third-party credit
enhancement, an issuer shall disclose the existence of that credit enhancement and whether it
is reflected in the fair value measurement of the liability.
Commentary (continued):
Group
2013
$’000
Financial assets held-for-trading
- Quoted equity securities XXX
Financial investments available-for-sale
- Other debt securities XXX
The above financial assets were transferred from Level 1 to Level 2 as they were
delisted from the stock exchange and therefore ceased to be actively traded during the
year and fair values were consequently measured using valuation techniques and using
observable market inputs.
Commentary (continued):
In this illustration, there has been no change in valuation technique for recurring and non- FRS 113.93.d
recurring fair value measurements categorised within Level 2 and Level 3 of the fair value
hierarchy. If there has been a change in valuation technique (e.g. changing from a market
approach to an income approach or use of an additional valuation technique), the entity shall
disclose that change and the reason(s) for making it.
For recurring and non-recurring fair value measurements categorised within Level 3 of the fair FRS 113.93.g
value hierarchy, a description of valuation processes used by the entity (including, for
example, how an entity decides its valuation policies and procedures and analyses changes in
fair value measurements from period to period.
An entity might disclose the following: FRS 113.IE65
(a) for the group within the entity that decides the entity’s valuation policies and
procedures:
i. its description;
ii. to whom that group reports; and
iii. the internal reporting procedures in place (e.g. whether and, if so, how pricing, risk
management or audit committees discuss and assess the fair value measurements.
(b) the frequency and methods for calibration, back testing and other testing procedures of
pricing models;
(c) the process for analysing changes in fair value measurements from period to period;
(d) how the entity determined that third-party information, such as broker quotes or pricing
services, used in the fair value measurement was developed in accordance with FRS 113;
and
(e) the methods used to develop and substantiate the unobservable inputs used in a fair
value measurement.
It is important to note that the illustration on valuation policies and procedures for
recurring and non-recurring fair value measurements categorised within Level 3 of the
fair value hierarchy is based on certain assumed facts regarding circumstances
surrounding XYZ Holdings (Singapore) Limited. The valuation policies and procedures
of other entities may be different and disclosures would have to be customised in the
light of specific facts and circumstances applicable to the entity.
In this illustration, investment properties are carried at fair value. For any investment
properties recorded at cost, FRS 40 requires disclosure about fair value. Please refer to
commentary no.2 of Note 2.8 Investment properties.
Where investment properties are carried at cost for which fair value are disclosed, FRS 113.97 FRS 113.97
requires the disclosures of
- the level of the fair value hierarchy within which the fair value measurements are FRS 113.93.b
categorised in their entirety (Level 1, 2 or 3),
- a description of the valuation technique(s) and inputs used in the fair value measurement. FRS 113.93.d
If there has been a change in valuation technique, the entity shall disclose the reason for
making it,
- the fact and why the non-financial asset is being used in a manner that differs from its FRS 113.93.i
highest and best use if the highest and best use of a non-financial asset differs from its
current use
Commentary (continued):
FRS 107.25 requires the fair value of each class of financial assets and liabilities to be FRS 107.25 and 29
disclosed in a way that permits it to be compared with its carrying amount. However,
disclosures of fair value are not required:
- When the carrying amount is a reasonable approximation of fair value (e.g., short-term
trade and other receivables and payables, and long-term loans that are re-priced to market
rate);
- For an investment in equity instruments that do not have a quoted market price in an active
market, or derivatives linked to such equity instruments, that is measured at cost in
accordance with FRS 39 because its fair value cannot be measured reliably; or
- For a contract containing a discretionary participation feature (as described in FRS 104) if
the fair value of that feature cannot be measured reliably.
In this illustration, in addition to the above exemptions, the comparison between carrying
amount and fair value of financial assets or liabilities that are carried at fair value (e.g., held for
trading investments and derivatives) has not been disclosed as these assets are carried at fair
value.
FRS 107 requires the disclosure of fair value information for financial instruments whose fair FRS 107.20.d
value cannot be reliably measured to include disclosure of whether and how the entity intends
to dispose of such financial instruments.
FRS 107.30.e
If financial instruments whose fair value previously could not be reliably measured are
derecognised, that fact, their carrying amounts at the time of de-recognition, and the amount
of gain or loss recognised shall be disclosed.
40. Financial risk management objectives and policies ÊËÌ FRS 107.7 and 31
The Group and the Company is exposed to financial risks arising from its operations and FRS 107.31-33
the use of financial instruments. The key financial risks include credit risk, liquidity risk, and IG15
interest rate risk, foreign currency risk and market price risk. The board of directors
reviews and agrees policies and procedures for the management of these risks, which are
executed by the Chief Financial Officer, Head of Treasury and Head of Credit Control. The
Audit Committee provides independent oversight to the effectiveness of the risk
management process. It is, and has been throughout the current and previous financial
year, the Group’s policy that no trading in derivatives for speculative purposes shall be
undertaken.
The following sections provide details regarding the Group’s and Company’s exposure to
the above-mentioned financial risks and the objectives, policies and processes for the
management of these risks.
Commentary:
Example illustrative financial risk management objectives and policies for a non-complex trading
entity which is exposed mainly to credit risk and liquidity risk.
The Group and the Company is exposed to financial risks arising from its operations and the
use of financial instruments. The key financial risks include credit risk and liquidity risk.
The following sections provide details regarding the Group and Company's exposure to the
above-mentioned financial risks and the objectives, policies and processes for the
management of these risks.
Ê FRS 107 requires an entity to disclose qualitative and quantitative information that enables
users of its financial statements to evaluate the nature and extent of risks arising from
financial instruments to which the entity is exposed at the reporting date, including the
entity’s policies and processes for accepting, measuring, monitoring and controlling such
risks. In addition, an entity is required to disclose any change in the qualitative information
from the previous period and explain the reasons for the change.
The disclosures in response to FRS 107 illustrated in this note are based on assumed
circumstances of XYZ Holdings (Singapore) Limited and may not be applicable or
relevant to other entities. Each entity should customise the information disclosed FRS 107.AGB6
according to the specific circumstances, financial risk exposures, and risk management
policies and procedures relevant to the entity.
Commentary (continued):
Ë Incorporating disclosures by cross reference
The disclosures of information regarding the nature and extent of risks arising from financial
instruments may instead be incorporated in the financial statements by cross-reference from
the financial statements to some other statement, such as management commentary or risk
report, that is available to users of the financial statements on the same terms as the financial
statements and at the same time. Without the information incorporated by cross-reference,
the financial statements are incomplete.
Ì In this illustration, there’s no change to the Group’s exposure to risk arising from financial
instruments. FRS 107 requires disclosures of changes from previous period for
(a) exposures to risk and how they arise; (or)
(b) its objective, policies and processes for managing the risk and the methods used to
measure the risks from the previous period.
Group
2014 2013
$’000 % of total $’000 % of total
By country:
Singapore 10,019 46% 12,950 53%
People’s Republic of China 4,989 23% 4,995 21%
Malaysia 3,467 16% 3,442 14%
Vietnam 1,981 9% 1,619 7%
Other countries 1,238 6% 1,185 5%
21,694 100% 24,191 100%
By industry sectors:
Multi-industry conglomerates 8,590 39% 9,989 41%
Electronics 7,539 35% 7,496 31%
Property 4,719 22% 5,883 24%
Others 846 4% 823 4%
21,694 100% 24,191 100%
Trade and other receivables that are neither past due nor impaired are with
creditworthy debtors with good payment record with the Group. Cash and short-term
deposits, investment securities and derivatives that are neither past due nor impaired
are placed with or entered into with reputable financial institutions or companies with
high credit ratings and no history of default.
Financial assets that are either past due or impaired FRS 107.37
Information regarding financial assets that are either past due or impaired is disclosed
in Note 21 (Trade and other receivables) and Note 22 (Investment securities).
Commentary:
Credit risk relating to financial assets or financial liabilities at fair value through profit or loss
Ê In this illustration, no financial instrument has been designated as financial assets or financial FRS 107.9-11
liabilities at fair value through profit or loss. If an entity has designated a loan or receivable or
financial liability as at fair value through profit or loss, FRS 107 requires further disclosures
regarding the maximum credit risk exposures of such receivables and the amount by which
any related credit derivatives or similar instruments mitigate that credit risk exposure;
changes in fair value during the period and cumulatively, of such loan or receivable or financial
liabilities that is attributable to changes in credit risk (including the methods of determining
such fair value changes) and of any related credit derivatives or similar instruments; and the
difference between the financial liability’s carrying amount and the contractual repayment
amount.
Ë For financial instruments where the carrying amount best represents the maximum exposure FRS 107.36.a
to credit risk, the disclosure of the maximum exposure to credit risk is not required.
Quantitative disclosures
Ì FRS 107 requires the disclosure of summary quantitative data about an entity’s exposure to FRS 107.34.a
financial risk (e.g., credit risk, liquidity risk and market risk) that is based on the information
provided internally to key management personnel of the entity (as defined in FRS 24, Related
Party Disclosures), e.g., the board of directors or CEO. As such, the disclosures would be
defined by the actual information used by management in managing financial risks, which may
be different from those disclosed in this illustration.
In addition, if the above-mentioned quantitative data disclosed as at the end of the reporting FRS 107.35 and
IG20
period are unrepresentative of the entity’s exposure to risk during the period, the entity shall
provide further information that is representative e.g., an entity might disclosed the highest,
lowest and average amount of risk to which it was exposed during the period to meet the
disclosure requirement.
Í The identification of concentrations of credit risk requires judgement taking into account the FRS 107.AGB8 and
circumstances of the entity. Apart from country and industry sectors, other measures of IG18
credit risk concentrations may include credit rating or other measures of credit quality, limited
number of individual counterparties, or groups of closely related counterparties.
b) Liquidity risk
Liquidity risk is the risk that the Group or the Company will encounter difficulty in FRS 107.33.a-b,
39.c and IG5
meeting financial obligations due to shortage of funds. The Group’s and the Company’s
exposure to liquidity risk arises primarily from mismatches of the maturities of financial
assets and liabilities. The Group’s and the Company’s objective is to maintain a balance
between continuity of funding and flexibility through the use of stand-by credit
facilities.
The Group’s and the Company’s liquidity risk management policy is that not more than FRS 107.33.b, 39.c
and AGB11F.e
20% (2013: 20%) of loans and borrowings (including overdrafts and convertible
redeemable preference shares) should mature in the next one year period, and that to FRS 107.AGB11F.a
and c
maintain sufficient liquid financial assets and stand-by credit facilities with three
different banks. At the end of the reporting period, approximately 8% (2013: 15%) of
the Group’s loans and borrowings will mature in less than one year based on the
carrying amount reflected in the financial statements, excluding discontinued
operation. None (2013: none) of the Company’s loans and borrowings will mature in
less than one year at the end of the reporting period. Ê
The Group assessed the concentration of risk with respect to refinancing its debt and FRS 107.34.a, 34.c
and AGB8
concluded it to be low. Access to sources of funding is sufficiently available and debt
maturing within 12 months can be rolled over with existing lenders.
Analysis of financial instruments by remaining contractual maturities
The table below summarises the maturity profile of the Group’s and the Company’s FRS 107.39.a, b and
AGB11D
financial assets and liabilities at the end of the reporting period based on contractual
undiscounted repayment obligations.
2014 2013
$’000 $’000
One to
One year or five Over five One year One to Over five
less years years Total or less five years years Total
Group
Financial assets:
Trade and other
receivables 24,921 2,984 – 27,905 26,936 2,980 – 29,916
Total undiscounted
financial assets 31,208 2,984 – 34,192 31,899 2,980 – 34,879
Financial liabilities:
Trade and other payables 17,517 250 – 17,767 19,140 – – 19,140
Other liabilities 2,974 – – 2,974 2,579 – – 2,579
Loans and borrowings 1,189 12,817 4,275 18,281 2,290 12,659 3,277 18,226
Contingent consideration
for business combination 685 – – 685 – – – –
Derivatives 22 – – 22 – – – –
Total undiscounted
financial liabilities 22,387 13,067 4,275 39,729 24,009 12,659 3,277 39,945
2014 2013
$’000 $’000
One year or One to Over five One year One to Over five
less five years years Total or less five years years Total
Company
Financial assets:
Trade and other
receivables 338 17,289 – 17,627 350 17,855 – 18,205
Cash and short-term
deposits 4,621 – 4,621 4,145 – – 4,145
Total undiscounted
financial assets 4,959 17,289 – 22,248 4,495 17,855 – 22,350
Financial liabilities:
Trade and other payables 470 – – 470 414 – – 414
Other liabilities 481 – – 481 446 – – 446
Loans and borrowings – 4,682 2,084 6,766 – 3,796 2,540 6,336
Total undiscounted
financial liabilities 951 4,682 2,084 7,717 860 3,796 2,540 7,196
The table below shows the contractual expiry by maturity of the Group and Company’s FRS 107.AGB11C.c
contingent liabilities and commitments. The maximum amount of the financial
guarantee contracts are allocated to the earliest period in which the guarantee could
be called.
2014 2013
$’000 $’000
One to
One year or five Over five One year One to Over five
less years years Total or less five years years Total
Group
Financial guarantees 320 245 – 565 15 240 – 255
Company
Financial guarantees – 5,400 – 5,400 – 5,400 – 5,400
Commentary:
Quantitative disclosures
The application guidance in FRS 107 illustrates the other factors that an entity might also FRS 107.AGB11F
consider disclosing which include, but are not limited to, whether the entity:
(a) has committed borrowing facilities (e.g., commercial paper facilities) or other lines of
credit (e.g., stand-by credit facilities) that it can access to meet liquidity needs;
(b) holds deposits at central banks to meet liquidity needs;
(c) has very diverse funding sources;
(d) has significant concentrations of liquidity risk in either its assets or its funding sources;
(e) has internal control processes and contingency plans for managing liquidity risk;
(f) has instruments that include accelerated repayment terms (e.g., on the downgrade of
the entity’s credit rating);
(g) has instruments that could require the posting of collateral (e.g., margin calls for
derivatives);
(h) has instruments that allows the entity to choose whether it settles its financial liabilities
by delivering cash (or another financial asset) or by delivering its own shares; or
(i) has instruments that are subject to master netting agreements.
In this illustration, certain undiscounted payments presented differ from the carrying amount FRS 107.AGB11D
included in the balance sheet because the balance sheet amounts are based on discounted
cash flows.
When the amount payable is not fixed, the maturity analysis is determined by reference to the
conditions existing at the reporting date. For example, when the amount payable varies with
changes in an index, the amount disclosed may be based on the level of the index at the
reporting date.
The number of time bands illustrated is only an example. An entity should use its judgement FRS 107.AGB11
to determine the number of time bands that is suitable for the entity.
When the counterparty has a choice of when an amount is paid, the liability is included on the
basis of the earliest date on which the entity can be required to pay. For example, financial
liabilities that the entity can be required to repay on demand are included in the earliest time
band.
Commentary (continued):
FRS 107.39.c requires an entity to describe how it manages the liquidity risk inherent in the FRS 107.AGB11E
items disclosed in the quantitative disclosures required in FRS 107.39.a and b. If financial
assets are readily saleable or expected to generate cash inflows to meet cash outflows on
financial liabilities and if that information is necessary to enable users of its financial
statements to evaluate the nature and extent of liquidation risk. An entity shall disclose a
maturity analysis of financial assets it holds for managing liquidity risks.
FRS 107 specified minimum liquidity risk disclosures, i.e., the contractual maturity analysis of
financial liabilities, required by FRS 107.39.
FRS 107 permits derivative liabilities to be excluded from the paragraph 39 maturity analysis, FRS 107.AGB11B
unless the “contractual maturities are essential for an understanding of the timing of the cash
flows”. The application guidance cites an interest rate swap designated in a cash flow hedging
relationship as an example of such an essential case. Given that the hedged cash flows are
required to be highly probable, the swap would normally be expected to be held to maturity.
For those derivatives included in the contractual maturity analysis, the guidance still requires FRS 107.AGB11D
gross cash flows to be disclosed for those derivatives which will involve a gross exchange of
cash flows, such as currency swaps. Below is an illustration of such a presentation:
Group
$’000
Derivatives:
- Interest rate swaps – settled net XXX – – XXX
FRS 107 requires issued financial guarantee contracts to be recorded in the contractual FRS 107.AGB11C.c
maturity analysis based on the maximum amount guaranteed. They are to be allocated to the
earliest date they can be drawn down, irrespective of whether it is likely that those
guarantees will be drawn or the amount that is expected to be paid.
interest rates. The Group’s and the Company’s exposure to interest rate risk arises
primarily from their loans and borrowings, interest-bearing loans given to related
parties and investments in debt securities. The Group does not hedge its investment in
fixed rate debt securities as they have active secondary or resale markets to ensure
liquidity. The Company’s loans at floating rate given to related parties form a natural
hedge for its non-current floating rate bank loan. All of the Group’s and the Company’s
financial assets and liabilities at floating rates are contractually re-priced at intervals of
less than 6 months (2013: less than 6 months) from the end of the reporting period.
The Group’s policy is to manage interest cost using a mix of fixed and floating rate FRS 107.33.b
and 34.a
debts. The Group’s policy is to keep 40% to 70% (2013: 40% to 70%) of its loans and
borrowings at fixed rates of interest. To manage this mix in a cost-efficient manner, the
Group enters into interest rate swaps. At the end of the reporting period, after taking
into account the effect of an interest rate swap, approximately 62% (2013: 58%) of the
Group’s borrowings are at fixed rates of interest. Ë
Sensitivity analysis for interest rate risk Ì
At the end of the reporting period, if SGD interest rates Í had been 75 (2013: 75) FRS 107.40,
basis points lower/higher with all other variables held constant, the Group’s profit IG36 and AGB18
before tax would have been $20,000 (2013: $18,000) higher/lower, arising mainly as
a result of lower/higher interest expense on floating rate loans and borrowings,
lower/higher interest income from floating rate loans to related parties and
lower/higher positive fair value of an interest rate swap, and the Group’s other reserve
in other comprehensive income would have been $30,000 (2013: $30,000)
higher/lower, arising mainly as a result of an increase/decrease in the fair value of
fixed rate debt securities classified as available-for-sale. The assumed movement in
basis points for interest rate sensitivity analysis is based on the currently observable
market environment, showing a significantly higher volatility as in prior years.
Commentary:
Ê Interest rate risk arises on interest-bearing financial instruments recognised in the balance FRS 107.AGB22
sheet (e.g., loans and receivables and debt instruments issued) and on some financial
instruments not recognised in the balance sheet (e.g., some loan commitments).
Quantitative disclosures
Ì FRS 107 requires disclosure of sensitivity analysis for each type of market risk to which an FRS 107.40.a
entity is exposed at the reporting date, showing how profit or loss and equity would have been
affected by changes in the relevant risk variable that were reasonably possible at that date.
These analyses shall be provided for the whole of an entity’s business. However, an entity may FRS 107.AGB21
also “drill down” to provide different types of sensitivity analysis for different classes of
financial instruments.
The sensitivity analysis should be based on changes in the risk variable that were reasonably FRS 107.AGB19 and
possible at the reporting date having considered the economic environments in which the IG35
entity operates, the type of market risk concerned and the time frame over which the
assessment is being made i.e., the period until the entity will next present the analysis e.g.,
next annual reporting period. A reasonably possible change should not include remote or
“worst case” scenarios or “stress test”.
An entity should also disclose the methods and assumptions used in preparing the sensitivity FRS 107.40.b and c
analysis, and changes from the previous period in the methods and assumptions used,
including the reasons for such changes.
Instead of the sensitivity analysis illustrated, FRS 107 permits an entity to use a sensitivity FRS 107.41 and
analysis that reflects interdependencies between risk variables, such as a value-at-risk AGB20
methodology, if it uses this analysis to manage its exposure to financial risks. This applies
even if such a methodology measures only the potential for loss and does not measure the
potential for gain. In such cases, the entity should also disclose an explanation of the method
and objective of the analysis (e.g., whether the model relies on Monte Carlo simulations), the
main parameters and assumptions used (e.g., the holding period and confidence level), and
limitations that may result in the information disclosed not fully reflecting the fair value of
assets and liabilities involved.
When the sensitivity analyses disclosed are unrepresentative of a risk inherent in a financial FRS 107.42 and
instrument (e.g., because the end of the reporting period exposure does not reflect exposure IG37-40
during the financial year), the entity shall disclose that fact and the reason it believes the
sensitivity analyses are unrepresentative, including additional disclosures regarding the risk
inherent in that financial instrument.
In this illustration, company-level sensitivity analysis has not been disclosed because FRS 107.34.b
according to the assumed scenario, XYZ Holdings (Singapore) Limited is an investment holding
company with no significant net exposure to market price risk. If this is not the case, the entity
should provide company-level disclosures as appropriate.
Commentary (continued):
Í In this illustration, the interest rate risk sensitivity analysis has been performed for the effect of FRS 107.IG34
a change in SGD interest rates because it is relevant to the interest rate risk exposure of XYZ
Holdings (Singapore) Limited. An entity might disclose a sensitivity analysis for interest rate
risk for each currency in which the entity has material exposure to interest rate risk.
Illustrative tabular disclosure of interest rate risk sensitivity analysis where more than one
currency is involved:
The table below demonstrates the sensitivity to a reasonably possible change in interest
rates with all other variables held constant, of the Group’s profit before tax (through the
impact on interest expense on floating rate loans and borrowings) and the Group’s equity
(through the impact on other reserves for fixed rate debt securities classified as available-
for-sale).
Group
$’000
2014
- Singapore dollar +15 (XX) (XX)
- US dollar -15 XX XX
2013
- Singapore dollar +15 (XX) (XX)
- US dollar -15 XX XX
Group
2014 2013
$’000 $’000
Profit before tax Profit before tax
USD/SGD - strengthened 3% (2013: 3%) –30 –30
- weakened 3% (2013: 3%) +28 +28
USD/RMB - strengthened 4% (2013: 4%) –15 –12
- weakened 4% (2013: 4%) +15 +12
RMB/SGD - strengthened 4% (2013: 4%) +57 +66
- weakened 4% (2013: 4%) –57 –66
Ringgit/SGD - strengthened 3% (2013: 4%) +40 +68
- weakened 3% (2013: 4%) –40 –68
Commentary:
Ê The disclosure of exposures to foreign currency amounts is required under the disclosure FRS 107.31 and 34
principles of FRS 107.31 (nature and extent of risks) as well as the specific requirement in FRS
107.34 to disclose summary quantitative data about the entity's exposure to risks (including
foreign currency risks) arising from financial instruments. In this illustration, most of the
information regarding foreign currency risk exposures is presented in Note 40(d), Note 21,
Note 27 and Note 31. These disclosures include a mixture of quantitative data that are
measured in dollar amounts (e.g., cash and short-term deposits amount denominated in foreign
currency) as well as data that are not measured in dollar amounts, e.g., the exposures arising
from trade receivables are represented by the percentage of total trade receivables
denominated in foreign currencies.
Each entity should customise the information disclosed according to its specific circumstances.
Quantitative disclosures
According to FRS 107, foreign currency risk arises on financial instruments that are FRS 107.AG B23
denominated in a foreign currency i.e., in a currency other than the functional currency in
which they are measured. For the purpose of FRS 107, currency risk does not arise from
financial instruments that are non-monetary items or from financial instruments denominated
in the functional currency. Currency translation risk arising from its net investments in foreign
operations does not fall within the definition of foreign currency risk according to FRS 107.
In the scenario illustrated, there is no impact (other than those affecting net profit) to equity
arising from exposures to currency risk as defined by FRS 107.
Illustrative disclosure if there are impact to equity arising from exposures to currency risk:
The following table demonstrates the sensitivity of the Group’s profit before tax and equity to
a reasonably possible change in the USD, RMB and Ringgit exchange rates against the
respective functional currencies of the Group entities, with all other variables held constant.
Group
2014 2013
$’000 $’000
Profit Equity Profit Equity
before before
tax tax
USD/SGD - strengthened X% (2013: X%) –XX –XX –XX –XX
- weakened X% (2013: X%) +XX +XX +XX +XX
USD/RMB - strengthened X% (2013: X%) –XX –XX –XX –XX
- weakened X% (2013: X%) +XX +XX +XX +XX
RMB/SGD - strengthened X% (2013: X%) –XX –XX –XX –XX
- weakened X% (2013: X%) +XX +XX +XX +XX
Ringgit/SGD - strengthened X% (2013: X%) –XX –XX –XX –XX
- weakened X% (2013: X%) +XX +XX +XX +XX
shares with higher volatility. The Group’s policy is to limit its interest in the latter type
of investments to 25% (2013: 25%) of its entire equity portfolio. Any deviation from
this policy is required to be approved by the CEO and audit committee. At the end of
the reporting period, 24% (2013: 19%) of the Group’s equity portfolio consist of non-
investment grade shares of companies operating in PRC and Singapore, while the
remaining portion of the equity portfolio comprise investment grade shares included in
the Straits Times Index (STI). Ê
Sensitivity analysis for equity price risk ËÌ
At the end of the reporting period, if the STI had been 2% (2013: 2%) higher/lower with FRS 107.40,
all other variables held constant, the Group’s profit before tax would have been AGB17-18 and
AGB25-27
$88,000 (2013: $78,000) higher/lower, arising as a result of higher/lower fair value
gains on held for trading investments in equity instruments, and the Group’s other
comprehensive income would have been $66,000 (2013: $77,000) higher/lower,
arising as a result of an increase/decrease in the fair value of equity securities
classified as available-for-sale.
Commentary:
Quantitative disclosures
Ì In this illustration, the sensitivity analysis for equity price risk has been performed by
analysing the effect of a reasonably possible change in STI on the fair value of the equity
instruments held by the Group, as it is assumed that all the quoted equity securities held by
the Group are listed in Singapore.
Capital includes debt and equity items as disclosed in the table below. FRS 1.135.a.i
The primary objective of the Group’s capital management is to ensure that it maintains a FRS 1.135.a
strong credit rating and healthy capital ratios in order to support its business and
maximise shareholder value.
The Group manages its capital structure and makes adjustments to it, in light of changes FRS 1.135.a and c
in economic conditions. To maintain or adjust the capital structure, the Group may adjust
the dividend payment to shareholders, return capital to shareholders or issue new shares.
No changes were made in the objectives, policies or processes during the years ended 31
December 2014 and 31 December 2013.
As disclosed in Note 34(c), a subsidiary of the Group is required by the Foreign Enterprise FRS 1.135.a.ii and d
Law of the PRC to contribute to and maintain a non-distributable statutory reserve fund
whose utilisation is subject to approval by the relevant PRC authorities. This externally
imposed capital requirement has been complied with by the above-mentioned subsidiary
for the financial years ended 31 December 2014 and 2013. Ë
The Group monitors capital using a gearing ratio, which is net debt divided by total capital FRS 1.135.a
plus net debt. The Group’s policy is to keep the gearing ratio between 20% and 40%. The
Group includes within net debt, loans and borrowings (excluding convertible redeemable
preference shares), trade and other payables, less cash and short-term deposits excluding
discontinued operations. Capital includes convertible redeemable preference shares,
equity attributable to the owners of the Company less the fair value adjustment reserve
and the abovementioned restricted statutory reserve fund.
2014 2013
$’000 $’000
Commentary:
Ê FRS 1 requires the disclosure of information (as provided to key management personnel) that FRS 1.134 and
enables users of financial statements to evaluate the entity’s objectives, policies and processes 135
for managing capital, including (but not limited to) a description and summary quantitative data
of what it manages as capital, the presence and impact of externally imposed capital
requirements and how the entity is meeting its objectives for managing capital etc. This note as
well as FRS 1.IG10 provide illustrative examples of such disclosures of an entity that is not a
regulated financial institution.
It is important to note that the illustration provided in this note is based on certain
assumed facts regarding circumstances surrounding XYZ Holdings (Singapore) Limited
and its objectives, policies and processes for managing capital. For example, a gearing
ratio with a specific measurement basis has been disclosed as this is the measure used to
monitor capital. The Group considers both capital and net debt as relevant components of
funding, hence part of its capital management. Other entities may use different methods
to monitor capital or use gearing ratios with different measurement bases. Disclosures
would have to be customised in the light of specific facts and circumstances applicable to
the entity.
Also, an entity may manage capital in a number of ways and be subject to a number of different FRS 1.136
capital requirements. For example, a conglomerate may include entities that undertake
insurance and banking activities, and those entities may also operate in several jurisdictions.
When an aggregate disclosure of capital requirements and how capital is managed would not
provide useful information or distorts a financial statement user’s understanding of an entity’s
capital resources, the entity shall disclose separate information for each capital requirement to
which the entity is subject to.
Ë In this illustration, it is assumed that the externally imposed capital requirement has been FRS 1.135.e
complied with. When an entity has not complied with externally imposed capital requirements,
the consequences of such non-compliance shall be disclosed. FRS 1.IG 11 has an example that
illustrates the application of FRS 1.135.e when an entity has not complied with externally
imposed capital requirement during the period.
For management purposes, the Group is organised into business units based on their FRS 108.22
products and services, and has four reportable segments as follows:
I. The electronic components segment is a supplier of digital and analogue electronic
components for consumer and industrial-grade electronics manufacturers. It offers
products and services in the areas of common and specialised electronic components,
energy efficiency, and electrical architecture.
II. The property segment is in the business of constructing, developing and leasing out of FRS 108.12
residential and commercial properties. This reportable segment has been formed by
aggregating the property construction/development operating segment and the
investment properties operating segment, which are regarded by management to
exhibit similar economic characteristics.
III. The corporate segment is involved in Group-level corporate services, treasury
functions and investments in marketable securities.
IV. The fire prevention equipment and services segment produces and installs
extinguishers, fire prevention equipment and fire retardant fabrics. This segment has
been classified as a discontinued operation during the financial year (Note 11).
Except as indicated above, no operating segments have been aggregated to form the
above reportable operating segments.
Management monitors the operating results of its business units separately for the FRS 108.27
purpose of making decisions about resource allocation and performance assessment.
Segment performance is evaluated based on operating profit or loss which in certain FRS 108.28.b
respects, as explained in the table below, is measured differently from operating profit or
loss in the consolidated financial statements. Group financing (including finance costs)
and income taxes are managed on a group basis and are not allocated to operating
segments.
Transfer prices between operating segments are on an arm’s length basis in a manner FRS 108.27.a
similar to transactions with third parties.
Total revenue 105,292 103,965 31,428 38,606 265 120 13,152 14,598 (13,417) (14,718) 136,720 142,571
Results:
Interest income Ì – – – – 430 327 – – – – 430 327 FRS 108.23.c
Fair value gains on investment properties – – 489 129 – – – – – – 489 129 FRS 108.23.f
Depreciation and amortisation 2,188 2,092 925 883 150 115 150 125 (150) (125) A 3,263 3,090 FRS 108.23.e
Share of results of joint ventures - - 151 128 - - - - - - 151 128 FRS 108.23.g
Segment profit/(loss) 6,035 5,698 2,001 2,635 452 438 (551) (193) (880) (1,462) D 7,057 7,116 FRS 108.23
Assets:
Investment in joint ventures - - 1,674 1,523 - - - - - - 1,674 1,523 FRS 108.24.a
Additions to non-current assets 8,134 2,872 2,803 1,560 758 221 – – – – E 11,695 4,653 FRS 108.24.b
Segment assets Í 76,689 73,426 20,449 19,200 12,450 11,960 2,270 2,450 12,489 12,128 F 124,347 119,164 FRS 108.23
Segment liabilities Í 16,076 15,748 10,383 8,152 1,314 1,189 1,043 1,130 20,779 24,096 G 49,595 50,315 FRS 108.23
C Other non-cash expenses consist of amortisation of land use rights, share- FRS 108.28.e
based payments, inventories written-down, provisions, and impairment of
financial assets as presented in the respective notes to the financial
statements.
D The following items are added to/(deducted from) segment profit to arrive at FRS 108.28.b
“profit before tax from continuing operations” presented in the consolidated
income statement:
2014 2013
$’000 $’000
Segment results of discontinued operation 551 193
Share of results of joint ventures 151 128
Share of results of associates 657 328
Profit from inter-segment sales (105) (50)
Finance costs (1,715) (1,512)
Unallocated corporate expenses (419) (549)
(880) (1,462)
F The following items are added to/(deducted from) segment assets to arrive at FRS 108.28.c
total assets reported in the consolidated balance sheet:
2014 2013
$’000 $’000
Investment in joint ventures 1,674 1,523
Investment in associates 10,595 10,321
Deferred tax assets 470 463
Inter-segment assets (250) (179)
12,489 12,128
FRS 108.28.d
G The following items are added to/(deducted from) segment liabilities to arrive
at total liabilities reported in the consolidated balance sheet:
2014 2013
$’000 $’000
Deferred tax liabilities 2,378 1,926
Income tax payable 2,927 6,734
Loans and borrowings (including discontinued operation) 15,604 15,478
Inter-segment liabilities (25) (20)
20,779 24,069
Geographical information
Revenue and non-current assets information based on the geographical location of FRS 108.33.a and b
FRS 108.20
customers and assets respectively are as follows:
Non-current assets information presented above consist of property, plant and equipment,
investment properties, intangible assets, and land use rights as presented in the
consolidated balance sheet.
Information about a major customer
Revenue from one major customer amount to $15,102,000 (2013: $16,080,000), arising
from sales by the electronics components segment.
FRS 108.34
Commentary:
Ê In addition to a measure of profit or loss and total assets for each reportable segments, entities
are required to disclose the following about each reportable segment if the specified amounts
are included in the measure of segment profit or loss reviewed by the chief operating decision FRS 108.23
maker (CODM), or are otherwise regularly provided to the CODM, even if not included in that
measure of segment profit or loss:
(a) Revenues from external customers
(b) Revenues from transactions with other operating segments of the same entity
(c) Interest revenue
(d) Interest expense*
(e) Depreciation and amortisation
(f) Material items of income and expense disclosed in accordance with paragraph 86 of FRS 1
Presentation of Financial Statements
(g) The entity’s interest in profit or loss of associates and joint ventures accounted for by the
equity method
(h) Income tax expense or income*
(i) Material non-cash items other than depreciation and amortisation
* In this illustration, interest expense and income tax expense have not been disclosed by
segment as these items are managed on a group basis, and are not provided to the CODM at
the operating segment level.
Commentary (continued):
Discontinued operation
Ë FRS 108 does not provide specific disclosure requirements for an operating segment classified as FRS 108.13
discontinued operation. An entity is therefore not required to provide such segment information
as long as the classification criteria held for sale is met. It is however allowed to continue to
present segment information as long as the definition as operating segment is met.
In this illustration, an entire reportable segment has been classified as discontinued operation in
the current period. As this operating segment still meet the quantitative thresholds for separate
reporting, it continues to be reported in the segment information.
Interest income
Ì An entity shall report interest revenue separately from interest expense for each reportable FRS 108.23
segment unless a majority of the segment’s revenues are from interest and the CODM relies
primarily on net interest revenue to assess the performance of the segment and make decisions
about resources to be allocated to the segment. In that situation, an entity may report that
segment’s interest revenue net of its interest expense and disclose that it has done so.
Í Disclosure of operating segment assets and liabilities are required only where such measures are FRS 108.23
provided to the CODM.
Explanation of measurements of segment profit or loss, segment assets and segment liabilities
Î If not apparent from the disclosures of reconciliations in this note, entities are required to disclose FRS 108.27.b-d
further information regarding the nature of differences between the measurements of segment
profit or loss, segment assets, segment liabilities, and the entity’s profit or loss before tax and
discontinued operations, assets and liabilities. Those differences could include accounting policies
and policies for allocation of centrally incurred costs, jointly used assets, jointly utilised liabilities
that are necessary for an understanding of the reported segment information.
The following should also be disclosed, where applicable:
- The nature of any changes from prior periods in the measurement methods used to FRS 108.27.e-f
determine reported segment profit or loss and the effect, if any, of those changes on the
measure of segment profit or loss.
- The nature and effect of any asymmetrical allocations to reportable segments. For example,
an entity might allocate depreciation expense to a segment without allocating the related
depreciable assets to that segment.
Commentary (continued):
Ð For the purposes of disclosing information about major customers, a group of entities known to FRS 108.34
a reporting entity to be under common control shall be considered a single customer, and a
government (national, state, provincial, territorial, local or foreign) and entities known to the
reporting entity to be under the control of that government shall be considered a single
customer.
43. Dividends
2014 2013
$’000 $’000
On 14 January 2015, a building of the Group, with net carrying value of $900,000, was FRS 10.21 and 22.d
severely damaged by fire and inventories with net carrying value of $157,000 were lost.
It is expected that insurance proceeds will fall short of the costs of rebuilding and loss of
inventories by $250,000. The financial statements for the year ended 31 December 2014
have not been adjusted for the financial effect of this incident.
On 15 February 2015, the Company completed the disposal of one of its wholly-owned FRS 10.21 and 22.a
subsidiary, Good Fire Prevention Pte Ltd (GFP), which has been classified as discontinued
operation (Note 11) as at 31 December 2014, for a cash consideration of $150,000.
The financial statements for the year ended 31 December 2014 were authorised for issue FRS 10.17
in accordance with a resolution of the directors on 27 February 2015.
2014 2013
Note $’000 $’000 FRS 1.81.10A, FRS 1.102
Continuing operations
Revenue X 136,720 142,571 FRS 1.82.a, FRS 1.102
Total comprehensive income for the year 6,261 7,671 FRS 1.81A.c
Attributable to:
Owners of the Company
Total comprehensive income from continuing operations, net of tax X 6,585 7,379 FRS 105.33.d
Total comprehensive income from discontinued operations, net of tax X (494) (168) FRS 105.33.d
6,091 7,211
2014 2013
Note $’000 $’000 FRS 1.81.a, FRS 1.102
Commentary:
An entity may present components of other comprehensive income either: FRS 1.91
(a) net of related tax effects, as illustrated in the statement of comprehensive income,
or
(b) before related tax effects with one amount shown for the aggregate amount of
income tax relating to those items.
If an entity elects alternative (b), it shall allocate the tax between the items that might be
reclassified subsequently to the profit or loss section and those that will not be
reclassified subsequently to the profit or loss section.
Ë In this illustration, the share of other comprehensive income of associates relates to FRS 1.82A
property revaluation attributable to owners of the associates, an item which will not be
reclassified to profit or loss subsequently.
If an entity has share of other comprehensive income of associates which relates to items
that may be reclassified subsequently to profit or loss, the item shall be presented under
the group of items that may be reclassified subsequently to profit or loss.
The Group applies hedge accounting for certain hedging relationships which qualify for FRS 107.21
hedge accounting.
For the purpose of hedge accounting, hedges are classified as:
§ fair value hedges when hedging the exposure to changes in the fair value of a FRS 39.86.a
recognised asset or liability or an unrecognised firm commitment
FRS 39.86.b
§ cash flow hedges when hedging exposure to variability in cash flows that is either
attributable to a particular risk associated with a recognised asset or liability or a
highly probable forecast transaction or the foreign currency risk in an unrecognised
firm commitment; or
FRS 39.86.c
§ hedges of a net investment in a foreign operation.
At the inception of a hedging relationship, the Group formally designates and documents FRS 39.88
the hedging relationship to which the Group wishes to apply hedge accounting and the risk
management objective and strategy for undertaking the hedge. The documentation
includes identification of the hedging instrument, the hedged item or transaction, the
nature of the risk being hedged and how the entity will assess the effectiveness of changes
in the hedging instrument’s fair value in offsetting the exposure to changes in the hedged
item’s fair value or cash flows attributable to the hedged risk. Such hedges are expected to
be highly effective in achieving offsetting changes in fair value or cash flows and are
assessed on an ongoing basis to determine that they actually have been highly effective
throughout the financial reporting periods for which they were designated.
Hedges which meet the strict criteria for hedge accounting are accounted for as follows:
Extracts of notes to the financial statements illustrating the disclosures of fair value hedge
accounting:
X. Hedging activities
At 31 December 2014, the Group had an interest rate swap agreement in place with a FRS 107.22
notional amount of USDXXX ($XXX) (2013: nil) whereby the Group receives a fixed rate of FRS 107.24.a
interest of X.XX% and pays a variable rate equal to LIBOR+X% on the notional amount. The
swap is being used to hedge the exposure to changes in the fair value of its X.XX% secured
loan.
The decrease in fair value of the interest rate swap of $XXX (2013: nil) has been
recognised in finance costs and offset with a similar gain on the bank borrowings. The
ineffectiveness recognised in 2014 was immaterial.
Commentary:
Ê FRS 107 requires separate disclosures of the amount of gain or loss on the hedging instrument FRS 107.24.a
and on the hedged item attributable to the hedged risk in a fair value hedge relationship.
Extracts of notes to the financial statements illustrating the disclosures of cash flow hedge
accounting:
X. Hedging activities
2014 2013
Assets Liabilities Assets Liabilities
The terms of the foreign currency forward contracts have been negotiated for the FRS 107.24.b
expected highly probable forecast transactions. As a result, no hedge ineffectiveness
arises requiring recognition through profit or loss. Notional amounts are as provided in
Note X.
The cash flow hedges of the expected future sales in January 2015 were assessed to be FRS 107.23.c
highly effective and a net unrealised gain of $XXX, with a deferred tax liability of $XXX
relating to the hedging instruments, is included in other comprehensive income.
The cash flow hedges of the expected future purchases in February and March 2015 were FRS 107.23.c
assessed to be highly effective, and as at 31 December 2014, a net unrealised loss of
$XXX, with a related deferred tax asset of $XXX was included in other comprehensive
income in respect of these contracts.
At the end of December 2013, the cash flow hedges of the expected future sales in the FRS 107.23.c
first quarter of 2014 were assessed to be highly effective and an unrealised gain of $XXX
with a deferred tax liability of $XXX was included in other comprehensive income in
respect of these contracts. The cash flow hedges of the expected future purchases in the
first quarter of 2014 were also assessed to be highly effective and an unrealised loss of
$XXX, with a deferred tax asset of $XXX was included in other comprehensive income in
respect of these contracts.
The amount removed from other comprehensive income during the year and included in FRS 107.23.d, e and
the carrying amount of the hedging items as a basis adjustment was immaterial for both a
2014 and 2013. The amounts retained in other comprehensive income at 31 December
2014 are expected to mature and affect profit or loss in 2015.
Extracts of notes to the financial statements illustrating the disclosures of cash flow hedge
accounting:
X. Hedging activities
Extracts of notes to the financial statements illustrating the disclosures of cash flow hedge
accounting: (continued)
X. Hedging activities
Hedging reserve
The cash flow hedge reserve contains the effective portion of the cash flow hedge FRS 1.79.b
relationships incurred as at the reporting date. $XXX are made up of the net movements in
cash flow hedges and the effective portion of the forward commodity contract, net of tax.
Group
Commentary:
Ê Where applicable, FRS 107 requires the disclosure of the ineffectiveness recognised in profit or FRS 107.24.b
loss that arises from cash flow hedges.
FRS 107.23.d
Ë FRS 107 requires the disclosure of the amount of gain or loss on a hedging instrument in a cash
flow hedge relationship reclassified from equity to profit or loss, showing the amount included in
each line in the statement of comprehensive income.
Extracts of notes to the financial statements illustrating the disclosures of hedge of net
investments in foreign operations:
X. Hedging activities
Included in loans at 31 December 2014 was a borrowing of USDXXX which has been FRS 107.22
designated as a hedge of the net investment in the two subsidiaries in the United States,
XX Inc. and XXX Inc. This borrowing is being used to hedge the Group’s exposure to foreign
exchange risk on these investments. Gains or losses on the retranslation of this borrowing
are transferred to other comprehensive income to offset any gains or losses on translation
of the net investments in the subsidiaries. There is no ineffectiveness in the years ended
31 December 2014 and 2013. Ê
The foreign currency translation reserve is also used to record the effect of hedging of net FRS 1.79.b
investments in foreign operations.
Group
2014 2013
$’000 $’000
Commentary:
Ê Where applicable, FRS 107 requires the disclosure of the ineffectiveness recognised in profit or
FRS 107.24.c
loss that arises from hedges of net investments in foreign operations.
X.X Revenue
X) Sale of completed development property
A development property is regarded as sold when the significant risks and returns have FRS 18.14
been transferred to the buyer, which is normally on unconditional exchange of contracts.
For conditional exchanges, sales are recognised only when all the significant conditions are
satisfied.
XX) Sale of development property under construction
Where development property is under construction and agreement has been reached to FRS 18.14
sell such property when construction is complete, the Directors consider whether the
contract comprises:
- A contract to construct a property; or
- A contract for the sale of completed property
INT FRS 115.13
a) Where a contract is judged to be for the construction of a property, revenue is
recognised using the percentage of completion method as construction progresses.
b) Where the contract is judged to be for the sale of a completed property, revenue is
recognised when the significant risks and rewards of ownership of the real estate have
been transferred to the buyer (i.e. revenue is recognised using the completed contract
method).
i) If, however, the legal terms of the contract are such that the construction
represents the continuous transfer of work in progress to the purchaser, the
percentage of completion method of revenue recognition is applied and revenue INT FRS 115.17
is recognised as work progresses.
ii) In Singapore context, INT FRS 115 includes an accompanying note on the INT FRS 115.20.a
application of INT FRS 115 in Singapore which requires the percentage of
completion method of revenue recognition to be applied to sale of private
residential properties in Singapore prior to completion of the properties that are
regulated under the Singapore Housing Developers (Control and Licensing) Act
(Chapter 130) and uses the standard form of sale and purchase agreements
(SPAs) prescribed in the Housing Developers Rules. The accompanying note to
INT FRS 115 does not address the accounting treatment for other SPAs,
including SPAs with a Deferred Payment Scheme feature in Singapore.
In the above situations (i) and (ii), the percentage of work completed is measured INT FRS 115.17,
based on the costs incurred up until the end of the reporting periods as a proportion of INT FRS 115.20.c
total costs expected to be incurred. Ê
Commentary:
Stage of completion
Ê The stage of completion of a contract may be determined in a variety of ways. The entity uses INT FRS 115.17
the method that measures reliably the work performed. Depending on the nature of the contract, FRS 11.30
other acceptable methods include surveys of work performed and completion of a physical
proportion of the contract work.
Extract of notes to financial statements illustrating the disclosure of revenue from sale of
development property:
X. Revenue
Group
2014 2013
$’000 $’000
Revenue from sale of development properties (recognised on XXX XXX FRS 18.35.b.i,
percentage of completion basis) INT FRS 115.20.b
Extract of notes to the financial statements illustrating the disclosure of development property:
X. Development property
The Group includes a division that develops residential property, which it sells in the ordinary
course of business and has entered into contracts to sell certain of these properties on
completion of construction.
The Group has considered the application of INT FRS 15 to these contracts and concluded that INT FRS 115.20
there pre-completion contracts were not, in substance, construction contracts. However,
where the legal terms were such that the construction represented the continuous transfer of
work in progress to the purchaser, the percentage of completion method of revenue
recognition has been applied and revenue recognised as work progressed. Development
expenditure incurred in respect of inventory property dealt with under the percentage of
completion method is recognised in profit or loss in the period incurred.
Revenue from sales of residential property where the contracts are not in substance
construction contracts and do not lead to a continuous transfer of work in progress, is
recognised when both: (i) construction is complete; and (ii) either legal title to the property
has been transferred or there has been an unconditional exchange of contracts. Construction
and other expenditure attributable to such property is included in inventory property until
disposal. During the year, the Group transferred the remaining unsold units of a residential
property to investment property, in conjunction with the commencement of operating lease of
these units to a third party.
The amount recognised in costs of sales for the year in respect of inventory property is: FRS 2.36(d)
Group
2014 2013
$’000 $’000
Group
2014 2013
$’000 $’000
X. Development property
The following table provides information about such continuous transfer agreements that are
in progress at the reporting date:
Group
The net defined benefit liability or asset is the aggregate of the present value of the FRS 19.8
defined benefit obligation (derived using a discount rate based on high quality corporate
bonds) at the end of the reporting period reduced by the fair value of plan assets (if any),
adjusted for any effect of limiting a net defined benefit asset to the asset ceiling. The asset
ceiling is the present value of any economic benefits available in the form of refunds from
the plan or reductions in future contributions to the plan.
The cost of providing benefits under the defined benefit plans is determined separately for FRS 19.67
each plan using the projected unit credit method.
Defined benefit costs comprise the following:
FRS 19.120
- Service cost
- Net interest on the net defined benefit liability or asset
- Remeasurements of net defined benefit liability or asset
Service costs which include current service costs, past service costs and gains or losses on FRS 19.8
non-routine settlements are recognised as expense in profit or loss. Past service costs are FRS 19.103
recognised when plan amendment or curtailment occurs.
Net interest on the net defined benefit liability or asset is the change during the period in FRS 19.8
the net defined benefit liability or asset that arises from the passage of time which is FRS 19.123
determined by applying the discount rate based on high quality corporate bonds to the net
defined benefit liability or asset. Net interest on the net defined benefit liability or asset is
recognised as expense or income in profit or loss.
Remeasurements comprising actuarial gains and losses, return on plan assets and any FRS 19.127
change in the effect of the asset ceiling (excluding net interest on defined benefit liability) FRS 19.122
are recognised immediately in other comprehensive income in the period in which they
arise. Remeasurements are recognised in retained earnings within equity and are not
reclassified to profit or loss in subsequent periods.
Plan assets are assets that are held by a long-term employee benefit fund or qualifying FRS 19.8
insurance policies. Plan assets are not available to the creditors of the Group, nor can they FRS 19.113
be paid directly to the Group. Fair value of plan assets is based on market price
information. When no market price is available, the fair value of plan assets is estimated by
discounting expected future cash flows using a discount rate that reflects both the risk
associated with the plan assets and the maturity or expected disposal date of those assets
(or, if they have no maturity, the expected period until the settlement of the related
obligations).
The Group’s right to be reimbursed of some or all of the expenditure required to settle a FRS 19.116
defined benefit obligation is recognised as a separate asset at fair value when and only
when reimbursement is virtually certain.
Extracts of notes to the financial statements illustrating the disclosures relating to defined benefit plan:
The Group operates two defined benefit pension plans, both of which require contributions to be made to separately administered funds. One provides a pension FRS 19.135.a
FRS 19.139.a.i
of 2% of final salary for each year of service (Singapore plan), while the other provides 2.5% of average salary (US plan). Both benefit plans become vested after
five years of service and require contributions to be made to separately administered funds.
The Group also provides additional post employment healthcare benefits to certain senior employees in Singapore. These benefits are unfunded.
The amount included in the consolidated balance sheet arising from the entity’s obligation in respect of its defined benefit plans is as follows:
Changes in present value of the defined benefit obligations are as follow: FRS 19.140.a.ii
FRS 19.141
Contributions from
plan participants
- - - - - - XXX XXX
Liabilities extinguished
on settlements
- - (XXX) - (XXX) - - -
Benefits paid
(XXX) (XXX) (XXX) (XXX) (XXX) (XXX) (XXX) (XXX)
Effects of business
combinations and
disposal XXX (XXX) - - XXX (XXX) - -
Exchange differences
XXX XXX XXX XXX XXX XXX XXX XXX
At 31 December XXX XXX XXX XXX XXX XXX XXX XXX
Assets distributed on
settlements - - (XXX) - (XXX) -
Effects of business
combinations and disposal XXX (XXX) - - XXX (XXX)
Changes in the effect of the asset ceiling are as follow: FRS 19.140.a.iii
FRS 19.141
Singapore plan
2014 2013
$’000 $’000
At 1 January XXX -
Interest income XXX -
Remeasurement gains/(losses)
Changes in the effect of
limiting to asset ceiling1 (XXX) XXX
Exchange differences – –
At 31 December - XXX
1
The maximum economic benefit available is a combination of expected refunds from the plan and
reductions in future contributions.
Cash and cash equivalents XXX XXX XXX XXX XXX XXX
Equity instruments
- Manufacturing XXX XXX XXX XXX XXX XXX
- Financial institutions XXX XXX XXX XXX XXX XXX
- Telecommunications XXX XXX XXX XXX XXX XXX
XXX XXX XXX XXX XXX XXX
Debt instruments
- Government securities XXX XXX XXX XXX XXX XXX
- AAA rated debt securities XXX XXX XXX XXX XXX XXX
- Not rated debt securities XXX XXX XXX XXX XXX XXX
XXX XXX XXX XXX XXX XXX
Property
- Singapore XXX XXX XXX XXX XXX XXX
- Australia XXX XXX XXX XXX XXX XXX
XXX XXX XXX XXX XXX XXX
Derivatives
- Interest rate swaps XXX XXX XXX XXX XXX XXX
- Forward currency contracts XXX XXX XXX XXX XXX XXX
XXX XXX XXX XXX XXX XXX
Asset-backed securities XXX XXX XXX XXX XXX XXX
Structured debts XXX XXX XXX XXX XXX XXX
Fair value of plan assets XXX XXX XXX XXX XXX XXX
All equity and debt instruments held have quoted prices in active market. The remaining plan assets do not have quoted market prices in active market. FRS 19.143
The plan assets include a property occupied by a subsidiary of the Group with a fair value of $XXX (2013: $XXX) and ordinary shares of XYZ Holdings Limited
with a fair value of $XXX (2013: $XXX).
The cost of defined benefit pension plans and other post-employment medical benefits as well FRS 19.144
as the present value of the pension obligation are determined using actuarial valuations. The
actuarial valuation involves making various assumptions. The principal assumptions used in
determining pension and post-employment medical benefit obligations for the defined benefit
plans are shown below:
2014 2013
% %
Discount rates:
Singapore plan/ post employment medical plan XX XX
US plan XX XX
Future salary increases:
Singapore plan XX XX
US plan XX XX
Future pension increases:
Singapore plan XX XX
US plan XX XX
Post retirement mortality for pensioners at 65:
Singapore plan/ post employment medical plan
Male XX XX
Female XX XX
US plan
Male XX XX
Female XX XX
Healthcare cost increase rate: XX XX
The sensitivity analysis below has been determined based on reasonably possible changes of FRS 19.145
each significant assumption on the defined benefit obligation as of the end of the reporting
period, assuming if all other assumptions were held constant:
31 December 2014
Unfunded
post-
employment
Singapore medical
Increase/(decrease) Plan US Plan benefits
Discount rates +XX basis points (XXX) (XXX) (XXX)
- XX basis points XXX XXX XXX
Future salary increases +XX % XXX XXX XXX
- XX % (XXX) (XXX) (XXX)
Future pension increases +XX % XXX XXX XXX
- XX % (XXX) (XXX) (XXX)
Post retirement mortality for
pensioners at 65:
Male +XX % XXX XXX XXX
- XX % (XXX) (XXX) (XXX)
Female +XX % XXX XXX XXX
- XX % (XXX) (XXX) (XXX)
Healthcare cost increase rate +XX % XXX XXX XXX
- XX % (XXX) (XXX) (XXX)
The management performed an Asset-Liability Matching Study (ALM) annually. The principal
FRS19.146
technique of the Group’s ALM is to ensure the expected return on assets to be sufficient to support
the desired level of funding arising from the defined benefit plans. The Group’s current strategic
investment strategy consists of 50% of equity instruments, 30% of debt instruments, 15% of
investment properties and 5% of cash. The use of debt instruments in combination with interest rate
swaps will reduce the sensitivities caused by the term of the defined benefit obligation by 25%.
The Group’s defined benefit pension plans are funded by its subsidiaries. The employees of the
FRS19.147.a
Group contribute 6% of the pensionable salary and the remaining residual contributions are paid by
the subsidiaries of the Group.
The Group expects to contribute $XXX (2013: $XXX) to the defined benefit pension plans in 2015.
FRS19.147.b
The average duration of the defined benefit obligation at the end of the reporting period is 18.4
years (2013: 17.5 years). FRS19.147.c
Commentary:
Ê To meet the disclosure objective of Revised FRS 19 for defined benefit plans, an entity shall FRS 19.136
consider all the following:
(a) the level of detail necessary to satisfy the disclosure requirements,
(b) how much emphasis to place on each of the various requirements,
(c) how much aggregation or disaggregation to undertake; and
(d) whether users of financial statements need additional information to evaluate the
quantitative information disclosed.
If the disclosures provided in accordance with the specific requirements of Revised FRS 19 FRS 19.137
are insufficient to meet the objectives above, the entity shall disclose additional information
necessary to meet those objectives. For example, an entity may present an analysis of the
present value of defined benefit obligation that distinguishes the nature, characteristics and
risks of the obligation. Such a disclosure could distinguish:
- between amounts owing to active members, deferred members, and pensioners
- between vested benefits and accrued but not vested benefits
- between conditional benefits, amounts attributable to future salary increases and other
benefits
An entity shall assess whether all or some disclosures should be disaggregated to FRS 19.138
distinguish plans or groups of plans with materially different risks. For example, an entity
may disaggregate disclosure about plans showing one or more of the following features:
- different geographical locations
- different characteristics such as flat salary pension plans, final salary pension plans or
post-employment medical plans
- different regulatory environments
- different reporting segments
- different funding arrangements (e.g. wholly unfunded, wholly or partly funded)
When disclosing the characteristics of defined benefit plans and risks associated with them, FRS 19.139
an entity shall disclose:
(a) information about the characteristics including
- the nature of benefits provided by the plan (e.g. final salary defined benefit plan or
contribution-based plan with guarantee).
- a description of the regulatory framework in which the plan operates, for example
the level of any minimum funding requirements, and any effect of the regulatory
framework on the plan, such as the asset ceiling.
- a description of any other entity’s responsibilities for the governance of the plan,
for example responsibilities of trustees or of board members of the plan.
(b) a description of the risks to which the plan exposes the entity, focused on any unusual
entity-specific or plan-specific risks, and of any significant concentrations of risk. For
example, if plan assets are invested primarily in one class of investments, e.g. property,
the plan may expose the entity to a concentration of property market risk.
(c) a description of any plan amendments, curtailments and settlements.
An entity shall provide reconciliation from the opening balance to the closing balance for FRS 19.140.b
any reimbursement rights and the related obligation, if applicable.
Commentary (continued):
Í Past service cost and gains and losses arising from settlements need not be distinguished if FRS 19.141.d
they occur together.
Î In the financial statements for periods beginning before 1 January 2014, an entity need not FRS 19.173.b
present comparative information for the disclosures about the sensitivity of the defined
benefit obligation.
- Information about the maturity profile of the defined benefit obligation (including, FRS 19.147.c
but not limited to, weighted average duration of the defined benefit obligation).
Ð Multi-employer plans
In this illustration, we do not illustrate multi-employer plans. If the Group participates in a
multi-employer plan and accounts for that plan as a defined benefit plan, it shall disclose the FRS 19.33.b
following in addition to information required by paragraphs 135-147 of the Revised FRS 19:
(a) a description of the funding arrangements, including the method used to determine the FRS 19.148
entity’s rate of contributions and any minimum funding requirements.
(b) a description of the extent to which the entity can be liable to the plan for other
entities’ obligations under the terms and conditions of the multi-employer plan.
(c) a description of any agreed allocation of a deficit or a surplus on:
i. wind-up of the plan; or
ii. the entity’s withdrawal from the plan.
(d) if the entity accounts for that plan as if it were a defined contribution plan, it shall
disclose the following, in addition to the information required by (a) – (c) and instead of
the information required by paragraph 139 to 147 of the Revised FRS 19:
i. the fact that the plan is a defined benefit plan.
ii. the reason why sufficient information is not available to enable the entity to
account for the plan as a defined benefit plan.
Commentary (continued):
iv. information about any deficit or surplus in the plan that may affect the amount of
future contributions, including the basis used to determine that deficit or surplus
and the implications, if any, for the entity.
v. an indication of the level of participation of the entity in the plan compared with
other participating entities. Examples of measures that might provide such an
indication include the entity’s proportion of the total contributions to the plan or
the entity’s proportion of the total number of active members, retired members,
and former members entitled to benefits, if that information is available.
Ñ Defined benefit plans that share risks between entities under common control
In this illustration, we do not illustrate defined benefit plans that share risks between FRS 19.149
entities under common control. If an entity participates in a defined benefit plan that shares
risks between entities under common control, it shall disclose:
(a) the contractual agreement or stated policy for charging the net defined benefit cost or
the fact that there is no such policy.
(b) the policy for determining the contribution to be paid by the entity.
(c) if the entity accounts for an allocation of the net defined benefit cost as noted in
paragraph 41 of Revised FRS 19 , all the information about the plan as a whole
required by paragraph 135-147 of Revised FRS 19.
(d) if the entity accounts for the contribution payable for the period as noted in paragraph
41 of Revised FRS 19 , the information about the plan as a whole required by
paragraphs 135 – 137, 142 - 144 and 147 (a) and (b) of Revised FRS 19.
The information required by (c) and (d) can be disclosed by cross-reference to disclosures in FRS 19.150
another group entity’s financial statements if:
(a) that group entity’s financial statements separately identify and disclose the information
required about the plan; and
(b) that group entity’s financial statements are available to users of the financial
statements on the same terms as the financial statements of the entity and at the same
time as, or earlier than, the financial statements of the entity.
Ò Paragraph 41 of Revised FRS 19 requires an entity participating in a defined benefit plan FRS 19.41
that share risks between entities under common control to obtain information about the
plan as a whole measured in accordance with Revised FRS 19 on the basis of assumptions
that apply to the plan as a whole. If there is a contractual agreement or stated policy for
charging to individual group entities the net defined benefit cost for the plan as a whole
measured in accordance with Revised FRS 19, the entity shall, in its separate or individual
financial statements, recognise the net defined benefit cost so charged. If there is no such
agreement or policy, the net defined benefit cost shall be recognised in the separate or
individual financial statements of the group entity that is legally the sponsoring employer
for the plan. The other group entities shall, in their separate or individual financial
statements, recognise a cost equal to their contribution payable for the period.
One of the conditions for exemption from preparing consolidated financial statements or equity
accounting under IFRS 10 and IAS 28 is ‘the ultimate or any intermediate parent of the parent
produces consolidated financial statements available for public use that comply with
International Financial Reporting Standards.’ The requirement that the consolidated financial
statements comply with IFRS is not required under FRS 110 and FRS 28.
IFRS 3 applies to the accounting for business combinations for which the agreement date is on
or after 31 March 2004.
FRS 103 is effective for annual periods beginning on or after 1 July 2004.
FRS 102 is aligned with IFRS 2 except for the scope and the effective date for non-listed
companies. IFRS 2 applies to grants of shares, share options or other equity instruments that
were granted after 7 November 2002 and had not yet vested at the effective date of IFRS 2.
However, the reference date in FRS 102 is 22 November 2002 instead of 7 November 2002.
For non-listed companies, FRS 102 is effective only for financial periods beginning from 1
January 2006 whereas IFRS 2 applies to all companies for financial periods beginning from 1
January 2005.
IFRS 10, IFRS 11, IFRS 12, Revised IAS 27 and Revised IAS 28 are effective for annual periods
beginning on or after 1 January 2013. FRS 110, FRS 111, FRS 112, Revised FRS 27 and
Revised FRS 28 are effective only for annual periods beginning on or after 1 January 2014.
The following RAP issued by the Institute of Singapore Chartered Accountants set out
recommendations on accounting treatment relating to foreign income not remitted to Singapore.
Ê IFRIC 15 is effective for annual periods beginning on or after 1 January 2009. INT FRS 115 is
effective only for annual periods beginning on or after 1 January 2011.
INT FRS 115 includes an accompanying note on application of INT FRS 115 in Singapore. The
accompanying note deals with the accounting treatment for revenue and associated expenses
by housing developers who develop more than four units of private residential properties in
Singapore for sale prior to completion of the properties. These developers are regulated under
the Singapore Housing Developers (Control and Licensing) Act (Chapter 130) and use the
standard form of the sales and purchase agreement prescribed in the schedule to the Housing
Developers Rules.
The following IFRIC Interpretation has not been adopted as INT FRS:
§ IFRIC 2 Members’ Shares in Co-operative Entities and Similar Instruments, effective for
annual periods beginning on or after 1 January 2005
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